WEBVTT - Fighting Inflation With ETFs 0:00:13.920 --> 0:00:17.520 Hello, and welcome to What Goes Up, a weekly markets podcast. 0:00:17.800 --> 0:00:19.920 My name is Mike Reagan. I'm a senior editor at 0:00:19.920 --> 0:00:24.000 Bloomberg and I'm Baldonna Higher Across Acid reporter with Bloomberg. 0:00:24.200 --> 0:00:26.960 And this week on the show, Well, investors have been 0:00:27.040 --> 0:00:30.840 scrambling to find somewhere to park their money where red 0:00:30.880 --> 0:00:34.280 hot inflation doesn't erode the value of their holdings. We're 0:00:34.280 --> 0:00:37.000 gonna talk to someone from the world's largest asset manager 0:00:37.040 --> 0:00:39.960 who has a lot of ideas about that. But first, 0:00:40.280 --> 0:00:44.479 l Donna, as a preview of my craziest thing of 0:00:44.479 --> 0:00:47.000 the week, I need to ask you, what is the 0:00:47.080 --> 0:00:53.760 most you've ever spent on sneakers? Sneakers, tennis shoes, trainers, 0:00:53.840 --> 0:00:58.800 if you will, the most, the most hundred bucks? Maybe 0:00:59.080 --> 0:01:01.720 not a lot your bucks. Yeah, you can get kids 0:01:01.760 --> 0:01:06.840 for like kids, Yeah, do you actually own kids? Of course, 0:01:07.000 --> 0:01:10.040 Taylor Swift owns kids, so I must own kids. And 0:01:10.520 --> 0:01:12.120 they're only twenty bucks. I didn't even know they were 0:01:12.120 --> 0:01:14.039 still around. I think you can get them for pretty cheap. 0:01:14.080 --> 0:01:17.000 I mean they're made of like cotton, they ripped very easily. 0:01:17.720 --> 0:01:19.560 Huh do you think I could talk my daughters and 0:01:19.720 --> 0:01:23.560 wearing kids? They if they like Taylor Swift. Yeah, I'm 0:01:23.680 --> 0:01:26.640 as you know, I'm notoriously at a cheap skate at heart, 0:01:26.840 --> 0:01:29.880 but I actually recently spent almost two bucks on a 0:01:29.920 --> 0:01:33.160 pair of running shoes. But it's the kind that comes 0:01:33.200 --> 0:01:35.080 with like you go to one of those running shoe 0:01:35.120 --> 0:01:38.400 stores and they take a video your foot. They oh, 0:01:38.480 --> 0:01:43.760 you fell, And I'm a true believer in it. Look 0:01:44.880 --> 0:01:46.920 as you get older, your feet become a bit of 0:01:46.959 --> 0:01:50.280 a problem. You know, you got your corns and your bunians. 0:01:50.400 --> 0:01:58.160 Oh my god, my listeners don't want to know. I 0:01:58.320 --> 0:02:00.480 fell for the gimmick, and I'm a true leaver in it. 0:02:00.520 --> 0:02:02.960 I think it has helped my feet, even though I don't. 0:02:03.000 --> 0:02:04.840 I don't really run. The only time I actually run 0:02:05.000 --> 0:02:06.760 is when I'm late for the train. But I walk 0:02:06.800 --> 0:02:09.280 a lot. I walk almost like five miles a day, 0:02:09.520 --> 0:02:11.960 you know, to the train, back from the train, up 0:02:12.000 --> 0:02:14.960 to the snack bar a hundred times. You know, I'm 0:02:15.040 --> 0:02:17.400 running away from this conversation right now. I'm going to 0:02:17.480 --> 0:02:20.960 go introduce our guests. Well, I'm so happy that we 0:02:21.000 --> 0:02:23.840 have j Jcobs. He's the US head of Thematics and 0:02:23.919 --> 0:02:26.440 Active Equity E T F said black Rock he's joining 0:02:26.520 --> 0:02:28.680 us this week. I'm thrilled to have you on. Thanks 0:02:28.680 --> 0:02:30.800 so much for joining us, Jay, that's a pleasure to 0:02:30.800 --> 0:02:33.680 be here. We won't ask you about how much you've 0:02:33.720 --> 0:02:37.040 spent on on sneakers just yet. I'm feeling better after 0:02:37.080 --> 0:02:39.720 hearing about Mike's dollar purchase. I think I'm I'm closer 0:02:39.760 --> 0:02:42.560 to your built Anna. Oh thank god. Yeah, I'm so 0:02:42.600 --> 0:02:46.160 happy to hear that. Anyway, you recently started at black Rock. 0:02:46.240 --> 0:02:48.120 I'm I'm sort of hoping we can just start out 0:02:48.160 --> 0:02:50.640 and you can tell us a little bit about you, 0:02:50.639 --> 0:02:54.320 your path to black Rock, and then what your current 0:02:54.400 --> 0:02:58.000 role entails. Absolutely so. I've spent my entire career in 0:02:58.040 --> 0:03:00.560 the E t F industry, which, in some ways the 0:03:00.600 --> 0:03:02.800 industry has been around for a while. It you know, 0:03:02.840 --> 0:03:05.920 got its legs in the mid nineties and now is 0:03:06.080 --> 0:03:09.040 so guests, you know, coming up on thirty years almost. 0:03:09.160 --> 0:03:12.160 But uh, just in the last ten years or so, 0:03:12.240 --> 0:03:14.960 we've seen an explosion of assets and E t F as. 0:03:15.000 --> 0:03:17.960 People have really seen them as these efficient vehicles for 0:03:17.960 --> 0:03:21.160 getting exposure to everything from different asset classes to different 0:03:21.160 --> 0:03:25.400 geographies and maybe even most recently, different themes and looking 0:03:25.440 --> 0:03:28.919 at different structural trends that are accelerating around the world 0:03:28.960 --> 0:03:31.359 and the packet of the different baskets of companies that 0:03:31.400 --> 0:03:34.880 are participating in those themes. So I started very early 0:03:34.880 --> 0:03:37.000 in my career at the New York Stock Exchange, the 0:03:37.000 --> 0:03:40.360 ETF listing group. There, I moved on to join what 0:03:40.440 --> 0:03:42.240 was a start up at the time at Global Acts 0:03:42.240 --> 0:03:45.200 and helped build out their business, and three and a 0:03:45.240 --> 0:03:47.880 half months ago join black Rock as a really exciting 0:03:48.240 --> 0:03:51.840 transition to join what to the great thematic platform. Here 0:03:52.320 --> 0:03:55.200 we not only have index based themes where we're tracking 0:03:55.200 --> 0:03:59.240 targeted baskets of themes like cybersecurity or merchant food and 0:03:59.320 --> 0:04:03.680 actech or robotics, but also actively managed products to where 0:04:03.720 --> 0:04:06.200 we tap into the full platform of black Rocks offering 0:04:06.200 --> 0:04:08.720 with Fundamental Equities and black Rock Systematics. So it's a 0:04:08.840 --> 0:04:11.560 very very exciting place to be with so much depth 0:04:11.600 --> 0:04:14.800 of knowledge in the thematic area. So, Jay, what are 0:04:14.960 --> 0:04:17.920 some of the hot thematic Etcfs of the year. I 0:04:18.080 --> 0:04:23.120 have a inkling as to what they are considering everything 0:04:23.120 --> 0:04:24.479 going on in the world, but what are some of 0:04:24.480 --> 0:04:27.760 the sort of bright spots of the thematics world this year? 0:04:27.800 --> 0:04:29.640 For you? Well, Mike, I'm sorry to say, there's no 0:04:29.680 --> 0:04:31.440 sneaker e t F yet, we can work on that, 0:04:31.480 --> 0:04:33.760 but I'm not sure. If there's we'll work on it. 0:04:33.800 --> 0:04:35.800 At two bucks. I think that's a pretty good. Uh, 0:04:36.120 --> 0:04:38.680 there's some profits out there to be had. Well, you 0:04:38.720 --> 0:04:41.000 get some My craziest thing, you're you're gonna be blown 0:04:41.000 --> 0:04:44.599 away with where the sneaker conversation goes. It's it's absolutely nuts. 0:04:44.680 --> 0:04:46.960 But you work on that, get get get an edgeword 0:04:46.960 --> 0:04:49.320 in EATSF and I think, uh, you know, the sky's 0:04:49.320 --> 0:04:51.159 the limit. But well, but our best people on it. 0:04:51.480 --> 0:04:56.200 We so within within the thematic space, it's been really interesting. 0:04:56.200 --> 0:04:58.840 You know, over the last three or four years, a 0:04:58.839 --> 0:05:00.760 lot of leadership in the f attic space has been 0:05:00.760 --> 0:05:04.279 around disruptive technology. It's been looking at things like cloud computing. 0:05:04.360 --> 0:05:06.480 During the pandemic when we were all working from home, 0:05:07.040 --> 0:05:10.320 it was around genomics and biomedicine when we were you know, 0:05:10.360 --> 0:05:14.239 trying to figure out the vaccine situation and testing um. 0:05:14.279 --> 0:05:17.240 But now it's really pivoted, especially as we've seen broader 0:05:17.279 --> 0:05:19.840 shifts within the market from growth to value. People are 0:05:19.839 --> 0:05:21.880 looking for more themes that are in the value space, 0:05:22.040 --> 0:05:25.000 especially themes that they think that we think are going 0:05:25.040 --> 0:05:27.920 to be more resilient amid this high inflationary environment. So 0:05:28.000 --> 0:05:30.760 we've seen a lot of interest in infrastructure as a theme. 0:05:31.560 --> 0:05:33.680 Part of that, the infrastructure investments that jobs act and 0:05:33.680 --> 0:05:36.839 what's happening there. We've seen really an incredible amount of 0:05:36.839 --> 0:05:40.080 interest in food related themes, especially as we've seen inflation 0:05:40.120 --> 0:05:42.440 at the not maybe not so much at foot locker, 0:05:42.520 --> 0:05:45.599 but we're seeing it at at the supermarket um. And 0:05:45.640 --> 0:05:48.600 then also we've seen interest in in clean energy as 0:05:48.640 --> 0:05:50.560 a play on inflation as well as some of the 0:05:50.600 --> 0:05:53.320 most recent news out of Washington. So we're seeing again 0:05:53.400 --> 0:05:55.800 kind of this shift. It's not just about disruptive tech anymore. 0:05:55.800 --> 0:05:57.440 We're seeing themes that are playing a little bit more 0:05:57.480 --> 0:06:00.640 in that value into the spectrum as investors look for 0:06:00.720 --> 0:06:03.159 long term structural trends. But those that can still do 0:06:03.240 --> 0:06:06.520 well in this different environment than we've been in, and 0:06:06.520 --> 0:06:10.880 those different themes Jade, they're sort of for this inflationary environment, right, 0:06:10.920 --> 0:06:14.280 So could you maybe walk us through those key themes 0:06:14.279 --> 0:06:18.640 of yours and why exactly they work in a world 0:06:18.640 --> 0:06:21.760 like we're having today. Absolutely so, a lot of it 0:06:21.800 --> 0:06:23.719 has to do with what are the underlying companies in 0:06:23.720 --> 0:06:25.400 this theme and why do we think that it's going 0:06:25.440 --> 0:06:28.880 to benefit in an inflationary environment. So starting with infrastructure, 0:06:29.440 --> 0:06:32.640 a lot of infrastructure asset owners, you know, companies that 0:06:32.760 --> 0:06:37.560 run airports, run toll roads, run supports, or utilities companies, 0:06:38.040 --> 0:06:40.880 they literally get to change their tolls based off of 0:06:41.120 --> 0:06:44.279 cp I, So that is a natural built in business 0:06:44.279 --> 0:06:46.920 hedge for inflation. When inflation has higher, they get to 0:06:47.000 --> 0:06:49.400 raise their rates, especially if they're regulated rates tied to 0:06:49.440 --> 0:06:52.200 c p I, and that just sort of neutralizes those 0:06:52.240 --> 0:06:56.160 businesses from an inflation perspective. I think what's also happening 0:06:56.160 --> 0:06:57.920 in that space is you have a lot of money 0:06:57.920 --> 0:07:01.559 coming into infrastructure from the infant structure investments and jobs acts. 0:07:01.560 --> 0:07:03.800 So there's a lot of build out of infrastructure that frankly, 0:07:03.800 --> 0:07:05.880 these companies don't have to pay for or they get 0:07:05.920 --> 0:07:08.640 tax credits or other benefits to build out this infrastructure, 0:07:08.640 --> 0:07:11.360 which is helping. And then finally, when we think about 0:07:11.400 --> 0:07:14.760 the economic environment that we're in, infrastructure tends to be 0:07:14.880 --> 0:07:18.840 very um uh non cyclical. So if we start to 0:07:18.880 --> 0:07:22.119 see a recession or if the economy slows down, people 0:07:22.120 --> 0:07:24.800 still turn on the lights, they still use their ovens, 0:07:24.840 --> 0:07:27.680 they still pay their water bills, and so not only 0:07:27.720 --> 0:07:29.920 does it have this inflation component, but there's also a 0:07:29.960 --> 0:07:33.400 defensive component within this theme, which is which is kind 0:07:33.400 --> 0:07:36.120 of giving people that sweet spot of we don't know 0:07:36.160 --> 0:07:38.240 if there's a recession, we don't know how a long 0:07:38.240 --> 0:07:40.360 inflation is going to be around, and we also want 0:07:40.360 --> 0:07:43.040 to participate in long term structural growth. Inflation really hits 0:07:43.040 --> 0:07:45.560 on all three of those points. I think the second 0:07:45.600 --> 0:07:47.880 theme that we are um, you know, really excited about 0:07:47.880 --> 0:07:52.360 from that inflation perspective is ag tech and food innovation. 0:07:52.880 --> 0:07:54.560 And I'll be honest, this is a theme that we 0:07:54.600 --> 0:07:56.360 thought was really going to be playing out over the 0:07:56.400 --> 0:07:58.680 next twenty years. We looked at we took a step back, 0:07:58.720 --> 0:08:02.679 and we said, the world's arable land is pretty much limited. 0:08:02.720 --> 0:08:05.400 There's a finite amount of land in the world, if anything, 0:08:05.400 --> 0:08:08.160 that has been shrinking due to you know, changes in 0:08:08.200 --> 0:08:11.760 the climate and more floods and more you know, forest fires, 0:08:11.760 --> 0:08:14.440 which is making arable land somewhat shrink. But on the 0:08:14.480 --> 0:08:17.360 demand side of the equation, we've seen a rising emerging 0:08:17.400 --> 0:08:19.640 market consumer which is spending more money on food and 0:08:19.680 --> 0:08:22.520 more complex foods like proteins and dairies. We've seen a 0:08:22.560 --> 0:08:25.440 growing global population which will reach tenderly and people by 0:08:25.840 --> 0:08:28.840 the year tift um. And we're seeing a change in 0:08:28.880 --> 0:08:32.640 food preferences where people are increasingly demanding sustainable food. So 0:08:32.760 --> 0:08:35.040 just looking at that, we were believing that over the 0:08:35.080 --> 0:08:37.080 next several decades we were going to have this supply 0:08:37.080 --> 0:08:40.000 and demand to balance around food that would create food inflation. 0:08:40.520 --> 0:08:43.240 Of course, that's been pulled forward twenty years earlier than 0:08:43.280 --> 0:08:46.680 we expected because of conflict in Eastern Europe, which has 0:08:46.679 --> 0:08:49.640 brought a lot of weed offline, because of general global 0:08:49.640 --> 0:08:51.839 supply chain disruptions, which has made it more difficult to 0:08:51.840 --> 0:08:55.640 ship food around the world. So, um, we're seeing food inflation, 0:08:55.679 --> 0:08:58.079 we're seeing it in really powerful ways. But we also 0:08:58.120 --> 0:09:00.200 have these solutions that are already out there or with 0:09:00.240 --> 0:09:04.559 attact like precision farming, precision watering, reduced use of chemicals, 0:09:04.600 --> 0:09:09.120 more resilient crops, and that is getting accelerated by this environment. 0:09:09.760 --> 0:09:12.280 And then the third team is clean energy, where we've 0:09:12.280 --> 0:09:15.079 seen that a lot of the cost and clean energy 0:09:15.160 --> 0:09:16.680 is really in the initial build out. You know, you 0:09:16.720 --> 0:09:19.000 build out a solar farm, you build out a wind turbine, 0:09:19.559 --> 0:09:21.880 That cost is mostly up front. Yes, there's some servicing 0:09:21.920 --> 0:09:24.960 that's ongoing, but a lot of those costs are basically 0:09:25.040 --> 0:09:28.199 fixed compared to you know, more traditional forms of energy 0:09:28.200 --> 0:09:31.400 production where you're constantly paying for fuels. So in an 0:09:31.400 --> 0:09:36.160 inflationary environment where you have rising commodity prices, upfront payment 0:09:36.200 --> 0:09:38.360 of a lot of those costs tends to be beneficiary. 0:09:38.440 --> 0:09:40.680 So those are the three segments where we think really 0:09:40.679 --> 0:09:43.280 are in the sweet spot of of inflation. But also 0:09:43.320 --> 0:09:47.560 how these long term tail ones. Yeah, I wonder how 0:09:47.600 --> 0:09:51.760 often uh you're sort of studying the headlines out of Washington, 0:09:52.240 --> 0:09:55.920 uh and and trying to figure out what themes um 0:09:56.120 --> 0:09:59.680 could possibly emerge from sort of the shifting politics of 0:09:59.800 --> 0:10:02.480 the see it and really you know politics globally, you know, 0:10:03.000 --> 0:10:06.240 especially the clean energy e t f UM. You know, 0:10:06.280 --> 0:10:09.040 I'm impressed it's it's actually up here to date. So 0:10:09.200 --> 0:10:11.360 very few things are actually positive year to date, but 0:10:11.720 --> 0:10:14.559 clean energy, uh is it? I c l n is 0:10:14.600 --> 0:10:16.640 the ticker is actually up I think three or four 0:10:16.720 --> 0:10:20.880 percent year to date. But how big of a sort 0:10:20.920 --> 0:10:24.480 of government risk do you see to the clean energy space? 0:10:24.520 --> 0:10:26.200 If you know, we get to the mid terms and 0:10:26.240 --> 0:10:30.120 there's a all of a sudden, Republicans are controlling Congress 0:10:30.120 --> 0:10:34.320 and they're not so friendly to to clean energies. Does that, 0:10:34.559 --> 0:10:37.680 you know, sort of political risk play into you into 0:10:37.679 --> 0:10:41.600 you're thinking very much when when a deciding to to 0:10:41.720 --> 0:10:44.920 create a a thematic etf like that and and be 0:10:45.240 --> 0:10:46.960 you know, saying now it's a good time to to 0:10:47.040 --> 0:10:49.960 get into it or not. So with any theme, what 0:10:50.000 --> 0:10:51.439 we try to look for is what is going to 0:10:51.520 --> 0:10:54.320 be the catalyst that is the game changer for the theme. 0:10:54.520 --> 0:10:56.520 So you know, it takes take anything. We can take 0:10:56.520 --> 0:11:00.560 cybersecurity for example, UM cybersecurity technology. It's a little bit 0:11:00.559 --> 0:11:03.920 better each year companies spend more money on cybersecurity. But 0:11:04.040 --> 0:11:07.160 oftentimes you see a catalyst like a major cyber attack 0:11:07.320 --> 0:11:09.800 or something that happens in the space that suddenly everyone 0:11:09.840 --> 0:11:13.320 is thinking about cybersecurity and becomes a transformational moment for 0:11:13.400 --> 0:11:16.439 the trajectory of that theme. Sometimes it can be a 0:11:16.480 --> 0:11:21.080 technological advancement. Sometimes it can be new policy and legislation. Uh. 0:11:21.160 --> 0:11:23.680 Sometimes it can be something that's changing in society like 0:11:23.760 --> 0:11:26.880 COVID and how much that accelerated certain themes. So earlier 0:11:26.920 --> 0:11:29.720 in this year, a lot of our focus was what 0:11:30.000 --> 0:11:31.800 you know now that we're past the peak of COVID. 0:11:31.840 --> 0:11:33.800 What does this mean for things like healthcare? What does 0:11:33.800 --> 0:11:35.959 this mean for disrupted supply chains? What does this mean 0:11:36.000 --> 0:11:38.960 for the rising consumer that has continued to become more 0:11:38.960 --> 0:11:42.160 and more powerful even amid COVID, like millennials and emerging 0:11:42.200 --> 0:11:46.160 market consumers, UM, specifically with clean energy. You know, of course, 0:11:46.200 --> 0:11:48.880 there's a lot of policy that comes into play as 0:11:48.920 --> 0:11:52.040 a potential catalyst for this theme. Uh. You know, most 0:11:52.080 --> 0:11:56.520 recently we've seen some interesting headlines around the Inflation Reduction 0:11:56.600 --> 0:12:00.640 Act and specifically targeting about three sixty billion dollars that 0:12:00.679 --> 0:12:02.880 could go to clean energy and electric vehicles. And when 0:12:02.920 --> 0:12:06.800 you see that amount of money potentially potentially entering the space, 0:12:07.360 --> 0:12:09.680 that can be a massive catalyst for the trajectory of 0:12:09.679 --> 0:12:13.160 this theme. UM specifically because it changes the economics of 0:12:13.160 --> 0:12:16.000 a theme. So if clean energy becomes cheaper or electric 0:12:16.080 --> 0:12:20.800 vehicles become cheaper, that accelerates the adoption and um that 0:12:20.920 --> 0:12:24.160 increases the scale of these technologies. As you see scale increase, 0:12:24.200 --> 0:12:27.520 you sent disease costs come down. That's rights law or 0:12:27.559 --> 0:12:30.400 the learning curve, and then you start to see really 0:12:30.440 --> 0:12:33.640 the acceleration of of these themes snowball from there. So UM, 0:12:33.679 --> 0:12:35.880 you know. Absolutely, we look to Washington, but we also 0:12:35.880 --> 0:12:38.080 looked to Silicon Valley, and we also look to you know, 0:12:38.160 --> 0:12:41.160 general trends that are happening around society for these catalysts. 0:12:42.120 --> 0:12:45.679 So J Mike mentioned I C L N, which I 0:12:45.720 --> 0:12:49.480 guess we can pronounce. Is I clean? Yeah? Clean? Absolutely? 0:12:49.840 --> 0:12:53.079 And also you had sent us some some notes before 0:12:53.080 --> 0:12:56.520 we started the podcast about I D R V I drive. 0:12:56.920 --> 0:12:58.760 So some of these et f s in the clean 0:12:58.840 --> 0:13:01.800 energy space, and you said that the market is missing 0:13:01.880 --> 0:13:03.920 a sea change moment. So is that the sea change 0:13:03.960 --> 0:13:06.080 moment you're referring to. Can you talk a little bit 0:13:06.080 --> 0:13:08.959 more about that when it comes to the specific you 0:13:09.000 --> 0:13:11.600 know e t f s in this space. Absolutely, So 0:13:11.640 --> 0:13:14.720 what we're seeing is really the economics of these different 0:13:14.760 --> 0:13:18.600 themes shifting because of uh, this potential policy that you 0:13:18.600 --> 0:13:20.040 know that could be passed. Right. So if we look 0:13:20.080 --> 0:13:24.880 at electric vehicles, for example, UM, right now, your average 0:13:25.000 --> 0:13:27.840 cost of the average purchase price of electric vehicles about 0:13:28.840 --> 0:13:30.960 higher than the average purchase price of all cars in 0:13:30.960 --> 0:13:32.679 the United States. So it's about a fifth to a 0:13:32.760 --> 0:13:36.240 quarter higher. Um. But actually when you look under the hood, 0:13:36.320 --> 0:13:38.480 you see no pun intended If you actually look under 0:13:38.480 --> 0:13:41.080 the hood of these cars. Uh, the total cost of 0:13:41.080 --> 0:13:43.920 ownership over the lifespan of the car is already cheaper 0:13:43.920 --> 0:13:47.440 for electric vehicles. That's because it's cheaper to fuel up 0:13:47.440 --> 0:13:49.120 and it's cheaper to maintain. I was just doing some 0:13:49.200 --> 0:13:52.000 back to the Napkin math. Uh, it's about ten dollars 0:13:52.000 --> 0:13:55.080 to fuel up about three miles of range an electric vehicle. 0:13:55.400 --> 0:13:57.760 It's about forty to fifty dollars nationally right now to 0:13:57.800 --> 0:14:00.800 fuel up a similar internal combustion GIN. So you can 0:14:00.840 --> 0:14:02.079 think about every time you fill it up. Is a 0:14:02.080 --> 0:14:05.000 little bit cheaper electric vehicles that help closes That helps 0:14:05.040 --> 0:14:07.720 to close the price gap. When you add on top 0:14:07.760 --> 0:14:09.880 of that incentives from the government, which could be as 0:14:09.960 --> 0:14:13.120 high as seventy for a new electric vehicle, then the 0:14:13.160 --> 0:14:15.920 economics will really start to get more attractive to consumers 0:14:16.160 --> 0:14:19.160 and it becomes it no longer becomes a question of 0:14:19.440 --> 0:14:22.040 you know, do you like one car more than the other? Um, 0:14:22.080 --> 0:14:23.760 I think the most powerful driver and a lot of 0:14:23.800 --> 0:14:26.600 these things is just purely economics. And if there's a 0:14:26.680 --> 0:14:29.160 cheaper car off the lot, or a similar priced car 0:14:29.240 --> 0:14:31.520 off the lot, but you're filling up for ten dollars 0:14:31.520 --> 0:14:34.200 instead of forty to fifty dollars. That's a really compelling 0:14:34.280 --> 0:14:36.960 argument for a lot of consumers. So when we see 0:14:37.000 --> 0:14:40.480 policy come through that can help change those economics to 0:14:40.520 --> 0:14:43.000 be more attractive to a specific theme, we see that 0:14:43.080 --> 0:14:47.200 as a very powerful accelerant. I'm gonna call j out 0:14:47.240 --> 0:14:50.280 on that. I think that under the hood pawn wasn't 0:14:50.400 --> 0:14:55.600 was actually intended and I'm sorry, it was really good. Yeah, 0:14:55.800 --> 0:15:07.120 I can't let that slipt the speaking of under the hood, Jay, 0:15:07.160 --> 0:15:09.800 I was looking at some of the stocks uh in 0:15:10.280 --> 0:15:12.880 the I d r V, the self driving and e 0:15:13.000 --> 0:15:16.520 V eat t F. I'm curious how a few of 0:15:16.560 --> 0:15:18.960 these fit into the theme. I mean, obviously, Tesla is 0:15:19.000 --> 0:15:21.960 in there, that's that's clear enough. A bunch of chip makers, 0:15:22.040 --> 0:15:28.880 Qualcom and Video Until Eating the engine maker fine, um, 0:15:29.080 --> 0:15:34.280 But Apple, Alphabet and Samsung UM, and maybe I just 0:15:34.320 --> 0:15:36.640 haven't been paying close off attention, but how did those 0:15:36.680 --> 0:15:41.480 companies fit into um a self driving theme. I'm assuming 0:15:41.520 --> 0:15:45.120 it's just they must have ambitions somewhere along the line 0:15:45.120 --> 0:15:48.320 to to somehow be involved in this space to some degree. 0:15:49.240 --> 0:15:51.560 A lot of the big tech players are investing very 0:15:51.600 --> 0:15:55.720 heavily in autonomous vehicles, and a lot of it is that. UM. 0:15:55.720 --> 0:15:58.120 Part of this is it's a brute force equation to 0:15:58.160 --> 0:16:00.240 try to figure out autonomous vehicles. There's a lot of 0:16:00.280 --> 0:16:02.200 processing power and a lot of data that needs to 0:16:02.200 --> 0:16:04.400 be collected to be able to figure out something like 0:16:04.480 --> 0:16:07.880 a unprotected left hand turn, which sounds simple, but when 0:16:07.920 --> 0:16:09.600 you do it in a car, it's it's hard for me, 0:16:09.880 --> 0:16:11.360 and a computer has to take in a lot of 0:16:11.440 --> 0:16:13.840 inputs to figure out how to do that safely. So 0:16:13.920 --> 0:16:17.760 who's really the best position to take in all that data, 0:16:17.800 --> 0:16:20.880 to process that data to apply artificial intelligence. Well, no surprise, 0:16:20.920 --> 0:16:23.200 it's a lot of the companies that lead in uh, 0:16:23.360 --> 0:16:26.240 data collection and artificial intelligence. So we've seen, you know, 0:16:26.320 --> 0:16:29.720 major players in in big tech coming into this space. Um, 0:16:29.760 --> 0:16:32.040 you know, maybe it's kind of pre revenue, but they 0:16:32.040 --> 0:16:35.360 are behind the scenes developing some very powerful products going forward. 0:16:35.920 --> 0:16:37.680 I think the bigger point is when we look at 0:16:37.720 --> 0:16:40.880 thematic investing, we're really trying to understand the entire ecosystem 0:16:40.920 --> 0:16:44.120 of who benefits from this theme. So I'm sure many 0:16:44.160 --> 0:16:46.240 listeners can name a couple of car companies off the 0:16:46.240 --> 0:16:49.040 top of their head that are powerful electric vehicle companies. 0:16:49.640 --> 0:16:53.040 But looking across the ecosystem. You know, who are the 0:16:53.080 --> 0:16:55.360 companies that are building the batteries that go into those 0:16:55.360 --> 0:16:59.000 electric vehicles. Who are the companies supplying those battery manufacturers 0:16:59.000 --> 0:17:03.080 with lithium and other critical medal metals that go into batteries. UM, 0:17:03.200 --> 0:17:05.359 Where the a V developers, Who are the parts suppliers 0:17:05.400 --> 0:17:08.320 Because the parts suppliers in the electric vehicle space are 0:17:08.400 --> 0:17:10.960 very different than internal combustion engines. There's very different parts 0:17:10.960 --> 0:17:13.960 that are required in these two vehicles. So UM in 0:17:14.040 --> 0:17:16.640 thematic investing, A lot of the research that goes into 0:17:16.720 --> 0:17:20.040 these funds is really happening up front trying to understand 0:17:20.359 --> 0:17:22.720 what is the what is the you know, what is 0:17:22.760 --> 0:17:24.880 the state of the world, and what are the subsectors 0:17:24.880 --> 0:17:26.879 and sub industries that are really going to benefit if 0:17:26.960 --> 0:17:30.480 we see this theme really materialize. So last year was 0:17:30.480 --> 0:17:33.560 actually already a transformational year for electric vehicles. About ten 0:17:34.000 --> 0:17:37.000 cars sold year around the world were UM, we're electric. 0:17:37.280 --> 0:17:40.080 We were a little bit further behind in the United States. UM, 0:17:40.119 --> 0:17:43.359 but we expect that gap will close UM again because 0:17:43.359 --> 0:17:45.840 of the economic argument we have, right, we have higher 0:17:45.840 --> 0:17:48.880 gas prices, UM, we have more models that are coming 0:17:48.920 --> 0:17:51.520 into this space and electric vehicles. We have prices generally 0:17:51.520 --> 0:17:54.600 following electric vehicles, and now we might have another tax 0:17:54.640 --> 0:17:58.000 credit which makes the economics even more attractive. And Jay, 0:17:58.000 --> 0:18:00.119 when you're talking to clients and you're talking about the 0:18:00.160 --> 0:18:04.000 other two categories that you mentioned to agriculture and infrastructure, 0:18:04.359 --> 0:18:06.160 what are some of the e t F that you're 0:18:06.160 --> 0:18:10.680 focusing on when it comes to those two themes. Absolutely 0:18:10.760 --> 0:18:13.639 so in the infrastructure space, it's IFRA um. I'm a 0:18:13.680 --> 0:18:15.960 big I'm a big fan of ticket pronunciation as well, 0:18:16.000 --> 0:18:18.520 So I f r A we pronounced IFRA. It's our 0:18:18.600 --> 0:18:21.640 US infrastructure funds. So we're looking, uh, not only at 0:18:21.680 --> 0:18:24.920 traditional infrastructure owners, the companies that kind of own and 0:18:24.960 --> 0:18:28.120 operate infrastructure around the United States, but also the companies 0:18:28.119 --> 0:18:30.600 that are building infrastructure of the future and the inputs 0:18:30.600 --> 0:18:33.159 that go into building infrastructure of the future. Part of 0:18:33.160 --> 0:18:35.320 that is due to the Infrastructure Investments on Jobs Act 0:18:35.320 --> 0:18:37.520 and at one point two trillion dollars that's going into 0:18:37.560 --> 0:18:40.359 infrastructure around the United States. Part of that is increased 0:18:40.359 --> 0:18:45.040 investment from the private side, from states, from local municipalities. Basically, 0:18:45.080 --> 0:18:47.960 there's a lot of investment coming into infrastructure which had 0:18:48.040 --> 0:18:51.320 largely been neglected over the last several decades in this country. 0:18:51.359 --> 0:18:53.719 And you know, there's a great report that comes out 0:18:53.720 --> 0:18:56.080 every four years, the American Society of Civil Engineers, and 0:18:56.119 --> 0:18:59.120 they gave the u S a D plus on infrastructure. 0:18:59.480 --> 0:19:01.119 So we knew this was coming. We knew there was 0:19:01.160 --> 0:19:02.920 going to be a need for a lot more investment. 0:19:03.440 --> 0:19:05.960 We don't just want to own the existing asset owners, 0:19:06.000 --> 0:19:08.159 but also who are building the new airports and the 0:19:08.160 --> 0:19:10.920 new seaports and the new six lane highways going through 0:19:10.960 --> 0:19:14.399 the country. And then on the on the food side 0:19:14.400 --> 0:19:17.200 of things are tickers I VE EDGE, I V E 0:19:17.200 --> 0:19:20.600 g Um, which is our emergent food and Actec Multisectory 0:19:20.640 --> 0:19:23.399 TF and that's really looking at who are the innovators 0:19:23.400 --> 0:19:26.560 within food. Um I did a kind of a fun 0:19:26.640 --> 0:19:31.200 test within the office. Um I bought two types of strawberries, 0:19:31.480 --> 0:19:35.199 traditional strawberries and my fancy New age strawberries. And a 0:19:35.280 --> 0:19:39.480 traditional strawberry has grown about miles away from New York City, 0:19:39.520 --> 0:19:43.040 oftentimes grown in California. UM Oftentimes it can use as 0:19:43.080 --> 0:19:45.520 much as three hundred times the way to the strawberry 0:19:45.600 --> 0:19:48.360 and water. UH. It could have up to eight pesticides 0:19:48.400 --> 0:19:51.119 being used in that strawberry UH and of course it 0:19:51.200 --> 0:19:53.080 has to be transported across the country so that we 0:19:53.119 --> 0:19:55.080 can enjoy it um. You know, in New York City. 0:19:56.200 --> 0:19:59.520 My special fancy strawberry UM that I also brought in 0:20:00.200 --> 0:20:04.399 is grown in Jersey City, so about a hundred times closer. Uh. 0:20:04.440 --> 0:20:07.200 In an indoor vertical farm. It can be grown year round, 0:20:07.560 --> 0:20:11.600 It uses about nine less water. Oftentimes, it can use 0:20:11.640 --> 0:20:14.600 no pesticides at all because it's grown inside and there's 0:20:14.800 --> 0:20:17.720 less risk of of of pests coming in and eating 0:20:17.720 --> 0:20:22.320 the crops um and so uh and the cherry on 0:20:22.359 --> 0:20:25.920 top of this strawberry is that a robot can actually 0:20:25.960 --> 0:20:28.919 analyze the strawberry when it's growing and perfectly optimize the 0:20:28.960 --> 0:20:32.280 time to harvet for its juiciest, most flavorful moment. So 0:20:32.359 --> 0:20:34.080 we did a little taste test in the office with 0:20:34.080 --> 0:20:37.040 these two different kinds of strawberries, and naturally, people gravitated 0:20:37.040 --> 0:20:41.879