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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Master's in

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Speaker 1: Business with Barry Ridholds on Bloomberg Radio. This week on

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Speaker 1: the podcast, I have an extra special guest. Samarcone is. Wow.

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Speaker 1: What a career. She has Chief Investment Officer of ETF

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Speaker 1: and Index Investments for Blackrock, the investing giant that manages

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Speaker 1: ten trillion dollars. She's responsible for about six point six

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Speaker 1: trillion of that. She sits on the Blackrock Global Markets

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Speaker 1: Executive Committee. She leads a team of portfolio managers and

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Speaker 1: traders and platform marketecs and market structure developers. Really a

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Speaker 1: unique insight into how markets operate, how money flows, what

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Speaker 1: investors are looking for. Just an absolutely fascinating set of

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Speaker 1: positions at the largest investing firm in the world. I

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Speaker 1: found our conversation about passive versus active, about the bitcoin ETF,

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Speaker 1: and about changes in market structure really to be absolutely intriguing.

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Speaker 1: With no further ado my discussion with black Rocks. Samara Cone,

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Speaker 1: thanks so much.

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Speaker 2: It's great to be here in person with you. Barry.

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Speaker 1: Yes, it's great to have you so Last time we

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Speaker 1: went pretty in depth into your background and education. You

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Speaker 1: have a BS in economics, from Wharton and a BA

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Speaker 1: in Theater Arts from their College of Arts and Sciences

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Speaker 1: at the University of Pennsylvania. As a refresher, how do

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Speaker 1: you go from theater to finance? What's the relationship?

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Speaker 2: Well, I started with theater, as you said, because when

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Speaker 2: I was in high school, I loved it. And now

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Speaker 2: I am the parent of two high schoolers Berry, so

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Speaker 2: I think back to how important it was to me

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Speaker 2: to go all in on something that I loved. And

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Speaker 2: that's my hope for them that they find something they're

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Speaker 2: passionate about. For me, it was theater, not film, not entertainment.

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Speaker 2: It was bringing people together in a live way in

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Speaker 2: an audience to have some sort of experience that would

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Speaker 2: maybe change them a little bit. And that's big, the

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Speaker 2: total big theater nerd, right, And so I went to

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Speaker 2: college wanting to pursue that as a major. Now in

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Speaker 2: high school, I was also very good at math, but

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Speaker 2: it didn't feel like something I loved, but it was

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Speaker 2: something I was good at. But when I got to college,

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Speaker 2: I had all of this credit so that I didn't

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Speaker 2: need to take another math class, and to my surprise,

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Speaker 2: I found that I missed it. So I discovered economics.

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Speaker 2: I heard about a professor he was supposed to be good,

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Speaker 2: and felt like learning about markets and economics felt like

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Speaker 2: math with a purpose to me, and so I started

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Speaker 2: pursuing that in parallel. That made my parents really happy,

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Speaker 2: of course, because I was spending my summers working for

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Speaker 2: regional theater companies, so they felt secure in the idea

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Speaker 2: that I had a backup plan, and I felt like

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Speaker 2: I got to live in these two different worlds, which

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Speaker 2: really kind of widened my aperture on lots of things.

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Speaker 2: And then when it was time to graduate, I wanted

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Speaker 2: to take my backup plan out for a test drive

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Speaker 2: and make some money so that I could support myself

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Speaker 2: and be financially independent. And I found that I really

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Speaker 2: loved markets.

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Speaker 1: Huh, that's really interesting. I'm kind of intrigued by something

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Speaker 1: you told Fortune magazine not too long ago. Ninety percent

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Speaker 1: of directing is casting, right, fascinating conversation. Lots of film

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Speaker 1: directors have said similar things to that, and the world

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Speaker 1: has changed so much that they're even now adding a

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Speaker 1: casting director oscar, which amazingly hasn't existed for years. But

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Speaker 1: I'm curious how you think of casting in the job

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Speaker 1: you have now, where you're managing so many different teams

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Speaker 1: and so many different people, is ninety five percent of

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Speaker 1: index management casting?

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Speaker 2: I think ninety five percent of leadership Barry is putting

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Speaker 2: the right person in the right job and assembling teams

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Speaker 2: that build trust and can work together and maximize their

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Speaker 2: individual strengths. So, I guess what felt so specific to

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Speaker 2: theater to me when I was doing it, and especially

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Speaker 2: when I was directing, now feels like a pretty profound

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Speaker 2: lesson in leadership.

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Speaker 1: It's less a specific idea to theater and instead is

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Speaker 1: really a very broad principle.

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Speaker 2: I think it's absolutely true. Look, when you're a leader,

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Speaker 2: your job is to make the most to get the

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Speaker 2: most out of people and organizations. It's not what you yourself

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Speaker 2: can do. It's how you position other people to do

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Speaker 2: their best work. That's pretty much what casting is.

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Speaker 1: So you mentioned you spend summers doing regional theater. There's

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Speaker 1: a lot of technical work that goes into that direction.

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Speaker 1: Lighting design, set design, There's just a ton of background

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Speaker 1: work that goes to staging the show. What parallels can

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Speaker 1: we draw to asset management? How much of the daily

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Speaker 1: block and tackling that goes into putting on a show,

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Speaker 1: it goes onto managing assets.

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Speaker 2: So I've often been asked about the theater part of

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Speaker 2: my background. I've never been asked that question, so thank you,

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Speaker 2: because I love bringing back those memories of being in theater,

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Speaker 2: being in tech week of a show. And I would

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Speaker 2: start by saying, there's lots of different types of theater,

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Speaker 2: and there's lots of different types of asset management. So

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Speaker 2: the place that has the most relevant parallel for me

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Speaker 2: was putting on large scale musical productions during theater festivals

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Speaker 2: where you had multiple stages going at the same time.

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Speaker 2: In the business that I'm in right now, which is

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Speaker 2: the ETF business at Blackrock, I would say that work

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Speaker 2: is similarly orchestral. We like to say it takes an

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Speaker 2: ecosystem for our ETFs to really deliver to investors, which

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Speaker 2: means really being sensitized to all of the different places

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Speaker 2: how they work together, and how they work together, especially

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Speaker 2: during moments of high velocity in markets.

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Speaker 1: So let's talk about a moment of high velocity. We're

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Speaker 1: recording this twenty twenty four. Twenty twenty two was one

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Speaker 1: of those years where velocity picked up, volatility picked up.

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Speaker 1: It was a big negative for equities, it was a

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Speaker 1: double digit loser for fixed income, unusual both of those

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Speaker 1: in one year. How did ETFs hold up and what

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Speaker 1: did we learn in that rough year of twenty twenty

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Speaker 1: two about the ETF complex.

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Speaker 2: Well, as you said, twenty twenty two was a remarkable

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Speaker 2: year for markets around the world because we had declines

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Speaker 2: in both equity markets and bond markets. It was the

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Speaker 2: worst bond market in fifty years. I will say, as

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Speaker 2: someone who has really had the bulk of my career

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Speaker 2: in the bond market, markets overall, in the bond market

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Speaker 2: in particular, are much more resilient, transparent, and excessive today

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Speaker 2: because ETFs are in them. So ETFs have contributed in

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Speaker 2: a very important way to market structure, growth and development.

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Speaker 2: And what we saw in twenty twenty two is first

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Speaker 2: a lot of really important portfolio reallocation decisions being made.

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Speaker 2: All of a sudden. Investors really had to think the

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Speaker 2: role of bonds in their portfolio, how they were going

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Speaker 2: to position for higher interest rates, what inflation would actually

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Speaker 2: look like, what was the meaning of this new regime.

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Speaker 2: And the first place that they turned to to do

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Speaker 2: this was off in ETFs. So we saw ETF trading pickup.

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Speaker 2: And that's not flows, that's just people using ETFs buyers

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Speaker 2: and sellers to manage their risk and reallocate their portfolios.

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Speaker 2: And we did also see ETF inflows, particularly in fixed

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Speaker 2: income ETFs. So fixed income ETFs gathered really over two

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Speaker 2: hundred billion dollars in twenty twenty two. And the reason

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Speaker 2: for that is the bond market has historically really lacked

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Speaker 2: transparency and been harder to access for individual investors who

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Speaker 2: all of a sudden were realizing they probably needed a

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Speaker 2: much more significant allocation to fixed income than they'd had before,

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Speaker 2: so they turned to ETFs.

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Speaker 1: You know, it's funny we're talking about this now looking

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Speaker 1: back at twenty twenty two. When you and I spoke

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Speaker 1: in the spring of twenty twenty two, we talked about

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Speaker 1: the volatility of twenty twenty and you pointed out ETFs

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Speaker 1: held up splendidly. If anything, there were certain stocks that

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Speaker 1: were halted, other parts of the market had structural issues.

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Speaker 1: ETFs came through that with flying colors. Is that a

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Speaker 1: fair statement.

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Speaker 2: That's exactly right. And during these stressed markets, high velocity markets,

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Speaker 2: investors need some outlet for risk management and for transparency.

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Speaker 2: And so if ETFs have matured in the market, which

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Speaker 2: has been over the past thirty years in the US.

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Speaker 2: It has actually improved markets broadly.

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Speaker 1: So you mentioned flows. I think people assume there flows

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Speaker 1: into a particular fund and the prices go up, but

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Speaker 1: that it's not always correlated. That easily. What we saw

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Speaker 1: into the rally in twenty twenty three were outflows and

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Speaker 1: the market went up regardless. How do you at Blackrock

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Speaker 1: and you overseeing all these ETFs think about the role

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Speaker 1: of money flows into and out of various funds and

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Speaker 1: what it might mean for the health of those funds

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Speaker 1: and the subsequent performance of those funds and the market.

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Speaker 2: Well across the ETF complex, As you pointed out, there

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Speaker 2: are you know, at I Shares we have thirteen hundred

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Speaker 2: different ETFs. So being able to provide ways for investors

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Speaker 2: to quickly change their exposures move out of one fund

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Speaker 2: into another fund, it's a healthy thing for markets, it's

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Speaker 2: a healthy thing for portfolios. I don't know if your

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Speaker 2: question is more around the role of ETFs and price

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Speaker 2: formation and markets just generally.

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Speaker 1: So you know, I'm always astonished when I flip on

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Speaker 1: the TV and I hear someone say, oh, there are

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Speaker 1: a lot of outfunds from mutual funds and ETFs. That

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Speaker 1: bodes poorly for the market. We sort outflows pretty much

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Speaker 1: right from the lows in twenty twenty two in October

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Speaker 1: straight up to the recent highs. It's only recently they

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Speaker 1: started turning positive. It seems like people are drawing the

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Speaker 1: wrong conclusion by tracking flows. I don't know if I'm

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Speaker 1: getting into the weeds too much. This is too much arkana.

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Speaker 1: It just seems that whenever I hear people discuss flows,

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Speaker 1: the context doesn't always tell the full story.

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Speaker 2: I think that's right with respect to direction of markets. Now,

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Speaker 2: we actually love talking about our investment strategists actually have

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Speaker 2: a piece that they published called Flow and Tell, where

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Speaker 2: they look to flows which give lots of different types

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Speaker 2: of information, but not necessarily directional information. So one of

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Speaker 2: the things about ETFs is because they are trading in trade,

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Speaker 2: they're super transparent, they're measured on exchange, they actually give

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Speaker 2: us some pretty useful measures around investor sentiment, also around positioning,

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Speaker 2: around allocation decisions, and so there is lots of information

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Speaker 2: that can be extracted from the transparency and availability of

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Speaker 2: fund flow data, particularly with ETFs. But to your point,

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Speaker 2: that doesn't necessarily translate into direction of markets. And just

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Speaker 2: as an example, there's a statistic that I love to

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Speaker 2: look at. We call it the imputed flow statistic, which

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Speaker 2: tells you how much flow into or out of ETFs

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Speaker 2: was present in a particular stock And if I look

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Speaker 2: across the entire US stock market, that statistic is usually

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Speaker 2: about five or six percent. It actually goes down during

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Speaker 2: times of market stress that there's actually less market flow

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Speaker 2: attributable to ETFs. So I think there's a lot of

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Speaker 2: other things going on with respect to price formation, but

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Speaker 2: there are really important I think sentiment conclusions you can

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Speaker 2: draw from, you know, flow intel type data.

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Speaker 1: I love that name flow and tell use it. Sentiment

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Speaker 1: is obvious. I think if you suddenly see people selling

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Speaker 1: value funds and flowing into anything that's tech heavy, clearly

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Speaker 1: there's been a shift in investor sentiment when that happens.

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Speaker 1: What other data points do you look at and flow

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Speaker 1: and tell that might surprise people?

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Speaker 2: Definitely asset allocation decisions. So how people are shifting portfolios around.

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Speaker 1: Is that from stocks to bonds or is it even

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Speaker 1: within the equity market? What sectors are dominating?

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Speaker 2: It can be from stocks to bonds, and it also

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Speaker 2: can be very interestingly within the fixed income complex, and

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Speaker 2: that's been important particularly lately given kind of all of

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Speaker 2: the focus and you know, potential surprises coming out of

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Speaker 2: the FED and direction of monetary policy. So you've seen

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Speaker 2: a lot of kind of implicit curve positioning happening across

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Speaker 2: the fixed income ETF complex.

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Speaker 1: Though since the last time we spoke two years ago,

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Speaker 1: the ETF space has definitely evolved. What do you see

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Speaker 1: as some of the bigger changes since we last spoke.

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Speaker 2: So I feel like, Barry, if you have me back

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Speaker 2: in two years, I'm probably going to say the last

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Speaker 2: two years have been the most exciting years.

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Speaker 1: We'll talk about remember that volatility right after we had

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Speaker 1: the recording.

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Speaker 2: In exact years. But the point is this has been

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Speaker 2: a fast moving stream. A lot has been happening in

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Speaker 2: the ETF space and in markets. What I would say

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Speaker 2: to me has really defined the last two years since

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Speaker 2: we spoke are two things, and they're both really exciting.

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Speaker 2: The first is the move that we are seeing around

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Speaker 2: the world with what we call self directed investors, but

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Speaker 2: more and more invest more and more savers becoming investors,

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Speaker 2: and we can measure that globally, there were about forty

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Speaker 2: million individual investor accounts that have been open in the

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Speaker 2: last two years. That's more than the past decade combined.

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Speaker 2: Forty million individual investors coming to the market. Now. When

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Speaker 2: I when I say, and I will say this everywhere

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Speaker 2: markets are better today, it's because to me, a healthy

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Speaker 2: capital marketplace is one that has the transparency, resilience and

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Speaker 2: agility to bring more people off the sidelines so that

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Speaker 2: they can save for retirement or whatever financial wellness looks

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Speaker 2: like to them. So that's theme number one, and the

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Speaker 2: second one is the ongoing convergence between index and active

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Speaker 2: And you will never hear me use the word passive barrier.

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Speaker 2: In fact, if I ever have my own podcast, it's

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Speaker 2: going to be called there is nothing passive about ETF

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Speaker 2: and index investing, because we've really obliterated that concept. There

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Speaker 2: are so many different types of strategies and outcomes that

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Speaker 2: are available now through index strategies which investors buy through

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Speaker 2: ETFs that it gives them again much more agility with

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Speaker 2: respect to their portfolios and their goals.

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Speaker 1: And even the S and P five hundred is there

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Speaker 1: are a lot of active decisions. It's market cap weighted

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Speaker 1: that's a choice. There are rules that determine who can

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Speaker 1: and can't be in there. Companies get added and subtracted

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Speaker 1: all the time. There's a decent amount of active within passive.

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Speaker 1: But I want to come back to the forty million

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Speaker 1: new accounts. When I think of new accounts, I kind

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Speaker 1: of harken back to twenty twenty in the pandemic lockdown

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Speaker 1: and all the kids playing on Robinhood and that sort

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Speaker 1: of stuff. Are these small fun accounts or are these

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Speaker 1: people really saving for things like paying for college or

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Speaker 1: retirement or buying a home? Like when what are the

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Speaker 1: constitution of these forty million new accounts?

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Speaker 2: I think it's both of those things. So when people

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Speaker 2: had their stimulus checks and there was commission free trading,

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Speaker 2: and to your point, they were home and learning about

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Speaker 2: all of the things they could do with technology, maybe

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Speaker 2: some people got involved more to just check out the

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Speaker 2: ecosystem and what it felt like. But when you look

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Speaker 2: at the data, despite all of the headline excitement that

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Speaker 2: meets stock mania generated, more people were actually buying ETFs

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Speaker 2: than we're buying meme stocks. So I think it has

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Speaker 2: been a really important moment for investors who are coming

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Speaker 2: into the market and coming in maybe because they're starting

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Speaker 2: with a single stock decision, but actually moving and learning

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Speaker 2: about ETFs and then participating in a more diversified and

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Speaker 2: long term way.

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Speaker 1: I would like to see the flow and tel piece

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Speaker 1: that looks at potential investors looking at some of the

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Speaker 1: crazy meme stocks and saying, you know what, I'm just

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Speaker 1: going to buy a broad index and put it away

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Speaker 1: for a few decades and not get sucked into this mania.

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Speaker 1: Do you guys track that closely?

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Speaker 2: We do. We do track it closely, and a few

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Speaker 2: people have done really interesting work, particularly Nasdaq has done

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Speaker 2: some interesting work on individual stocks versus allocations to ETFs

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Speaker 2: and to index And this trend that we're talking about,

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Speaker 2: the individual investor trend, is absolutely across the market. We've

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Speaker 2: seen it in options as well, which is why ETFs

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Speaker 2: that have some sort of embedded options outcome are also

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Speaker 2: seeing a lot of interest, particularly from the self directed investors.

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Speaker 1: Really really intriguing. So let's talk a little bit about

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Speaker 1: some interesting news. Recently, low cost index atfs and mutual

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Speaker 1: funds now make up more than fifty percent of the

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Speaker 1: fun complex. Put a flag in the ground and declare victory.

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Speaker 1: Does this mean that it's the end of active. Is

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Speaker 1: there a ceiling for passive? What does that fifty percent

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Speaker 1: line mean?

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Speaker 2: First of all, Barry, I am a huge fan of

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Speaker 2: active managers and what they can achieve. My disclosure here

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Speaker 2: will be that I'm married to a brilliant active manager,

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Speaker 2: So I like to say that we are an alpha

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Speaker 2: beta couple. But increasingly active managers use have beta allocations.

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Speaker 2: They always have. Of course, they might use SMP futures,

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Speaker 2: for example, as part of their strategies, and increasingly, really

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Speaker 2: all of the biggest active asset managers in the world

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Speaker 2: use ETFs for some part of their alpha seeking strategy.

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Speaker 2: So let's look at two things. Number one, the statistics

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Speaker 2: that you gave. This is really about the fund market.

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Speaker 2: It's important to realize that what is available through an

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Speaker 2: index strategy has evolved massively over the past few years.

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Speaker 2: So we're really not just talking about traditional cap weighted strategies,

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Speaker 2: which are kind of what you would get in a

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Speaker 2: future type strategy like with you know, Russell two or

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Speaker 2: SMP five hundred. There are factor strategies. There are increasingly

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Speaker 2: diverse range of bond market strategies across the different subasset

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Speaker 2: classes of fixed income, so increasingly for us, we like

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Speaker 2: to think of that whole new genre of index ETFs

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Speaker 2: as almost active risk benchmark. Anything that's not cap weighted

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Speaker 2: represents a decision by the investor to take some active

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Speaker 2: risk versus the standard cap weoided benchmarks. So that's why

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Speaker 2: I really think of index and active as a really

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Speaker 2: broad continuum, with index being able to take on more

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Speaker 2: and more types of strategies that importantly were never accessible

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Speaker 2: to individual investors before. And that's why I maintain that

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Speaker 2: today's markets as a function of index and ETF technology

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Speaker 2: are simply better because they're more accessible and diversification and

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Speaker 2: more sophisticated strategies. For example, like target date funds. For

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Speaker 2: the fifty seven million Americans that actually don't have a

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Speaker 2: workplace savings account, they can now through an ETF access

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Speaker 2: target date investor investing where they basically make one decision,

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Speaker 2: which is when do I think I'm going to retire,

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Speaker 2: and then they can allocate to the ETF and the

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Speaker 2: ETF will manage their risk exposure.

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Speaker 1: Their stock bond proportion over time automatically adjust it. And

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Speaker 1: since it's an ETF rapper, there's no capital gains to

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Speaker 1: pay until you finally cash that in.

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Speaker 2: So it's a victory for investors, and it's a victory

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Speaker 2: for those, you know, millions of people who are moving

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Speaker 2: from being savers to investors, which is incredibly important in

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Speaker 2: today's world as we think about you know, retirement and

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Speaker 2: what and people being able to retire with dignity. And

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Speaker 2: then the other important part of your question though, and

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Speaker 2: I know you agree with me on this because I've

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Speaker 2: heard you talk about it, is we have to look

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Speaker 2: at the equity market overall. Right, So that fifty percent stat,

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Speaker 2: you know, is a little bit misleading with respect to

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Speaker 2: the denominator. ETFs are probably about twelve or thirteen percent

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Speaker 2: of the equity market, not fifty percent. And that gets

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Speaker 2: back to these questions about, you know, is there a

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Speaker 2: ceiling like there is mostly active management happening in price

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Speaker 2: formation in global equity market.

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Speaker 1: The broadest interpretation of passive indexing that I've seen is

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Speaker 1: of the total equity market, about seventeen percent can be

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Speaker 1: described as managed through a broad index, not active stock selection.

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Speaker 1: People have argued that, well, you can look at flows

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Speaker 1: and foundations and sovereign well funds are managing stuff passively

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Speaker 1: quote unquote, but some of the numbers, thirty five forty

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Speaker 1: percent seem kind of fabricated. You want to say it's

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Speaker 1: twenty percent, okay, back of the envelope, we can pretend,

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Speaker 1: but there's just no data, no evidence showing that it's

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Speaker 1: even that big. And when we look at we can

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Speaker 1: add up what's in ETFs, we can add up what's

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Speaker 1: in mutual funds, and it's a relatively small part of

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Speaker 1: the total asset management world. Unless you think I'm overstating.

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Speaker 2: This, I think you're exactly right. And I think additionally,

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Speaker 2: if we agree that as a gut check, twenty percent

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Speaker 2: of the equity market is indexed, right ETFs or otherwise,

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Speaker 2: it's important to remember that that is often by active managers,

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Speaker 2: who are who have beta as some component of their

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Speaker 2: alpha seeking strategy. So their decision to make a beta

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Speaker 2: allocation through some sort of index strategy is an active

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Speaker 2: one and as part of the broader setup of their portfolio.

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Speaker 2: And potentially given the technology, and you know, indexing has

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Speaker 2: risen alongside computing power, it actually required Actually the first

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Speaker 2: kind of commercial microchip came about around the same time

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Speaker 2: as index investing, because you needed computing power to be

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Speaker 2: able to do that and now that asset managers can

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Speaker 2: make beta allocations, they can focus their attention and resources

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Speaker 2: on their highest conviction single stock or bond opportunities.

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Speaker 1: And let's put a little flesh on that, because I

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Speaker 1: don't know if lay people are aware of how fund

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Speaker 1: managers behave. You're running a concentrated portfolio, you have thirty

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Speaker 1: or forty stocks, and suddenly this stock generates a cels

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Speaker 1: IGNO and you remove it from your portfolio, and that

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Speaker 1: stock gets taken over by another company and it's achieved

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Speaker 1: ninety nine percent of your price target. Now suddenly you

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Speaker 1: have a five or ten percent slug of cash, which

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Speaker 1: if it's sitting around in cash, you're going to be

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Speaker 1: underperforming an upmarket. So instead you turn around and say,

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Speaker 1: my benchmark is this. Here's the ETF that tracks that.

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Speaker 1: I'm going to park this cash here so I don't

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Speaker 1: fall behind my benchmark. And when I'm ready to actively

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Speaker 1: select a replacement for these stocks, I'll swap out of

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Speaker 1: one to another. Again, fair description of how it works

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Speaker 1: in the real world.

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Speaker 2: Totally fair description, But I would say it's a relatively

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Speaker 2: modern one because even five years ago those managers might

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Speaker 2: buy futures instead of et apps and what we found

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Speaker 2: when we engaged with a lot of them. One of

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Speaker 2: the things we did was we built technology to help

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Speaker 2: asset managers evaluate the relative value between an ETF and

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Speaker 2: a futures contract. It really mattered what they were earning

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Speaker 2: on their cash had to be earning something in order

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Speaker 2: to make it worth the price of the futures. Otherwise,

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Speaker 2: the ETF looked quite cheap, and as it turned out,

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Speaker 2: remember where rates were five years ago, it was much

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Speaker 2: more economic for them to move into the ETF. So

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Speaker 2: using the ETF for the cash equitization has become a

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Speaker 2: really standard active use of an ETF strategy, but it

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Speaker 2: is a more modern one.

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Speaker 1: So let's talk a little bit about You mentioned market structure,

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Speaker 1: and we're talking about active versus passive. Last month I

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Speaker 1: had hedge fund manager David Einhorn of Greenlight Capital on

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Speaker 1: and he said, I view the markets as fundamentally broken.

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Speaker 1: Passive investors have no opinion about value. They're going to

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Speaker 1: assume everybody else has done the work. Claused the big Star.

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Speaker 1: Everybody kind of freaked out about a little bit. But

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Speaker 1: it raises the question, what has been the impact of

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Speaker 1: this shift towards indexing and passive investing. I know you

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Speaker 1: don't love that word on overall market, its structure and

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Speaker 1: the resiliency of our modern market economy.

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Speaker 2: Markets are more transparent and resilient as a result of

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Speaker 2: ETFs being in them than they have ever been in history.

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Speaker 2: Barry and I reject the notion that a transparent, resilient,

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Speaker 2: and more accessible market. Again, look at these forty million

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Speaker 2: investors that are coming into the market and are only

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Speaker 2: able to do it through diversified strategies because of ETFs

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Speaker 2: and index. I reject the notion that there's anything broken

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Speaker 2: about that. That is a healthy market, and that is

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Speaker 2: a market that is better positioned for the next decade

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Speaker 2: of growth than ever before.

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Speaker 1: So let's talk a little bit about index and ETF technology.

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Speaker 1: What is it specifically about that approach that rapper around

437
00:25:48,400 --> 00:25:52,960
Speaker 1: in a stock investment that provides transparency and resiliency. How

438
00:25:53,040 --> 00:25:56,080
Speaker 1: is this different than the way we used to manage

439
00:25:56,119 --> 00:25:57,680
Speaker 1: assets twenty thirty years ago.

440
00:25:58,960 --> 00:26:02,400
Speaker 2: Well, first, ETFs are literally transparent. You always can see

441
00:26:02,400 --> 00:26:05,600
Speaker 2: what's in the holdings of a particular ETF that's available

442
00:26:05,600 --> 00:26:10,280
Speaker 2: on a daily basis. But even more critically, ETFs trade

443
00:26:10,359 --> 00:26:15,000
Speaker 2: on exchange all day long and provide price formation in

444
00:26:15,040 --> 00:26:17,000
Speaker 2: that way. So one of the things we often see,

445
00:26:17,040 --> 00:26:20,960
Speaker 2: for example, in country fund ETFs. Perfect example of it

446
00:26:21,040 --> 00:26:25,560
Speaker 2: is looking at ETFs with China equities underlying them over

447
00:26:25,600 --> 00:26:29,359
Speaker 2: the Lunar New Year. They are providing price formation by

448
00:26:29,560 --> 00:26:34,680
Speaker 2: trading on stock exchanges, so investors can exchange risk on exchange,

449
00:26:34,960 --> 00:26:39,000
Speaker 2: while those underlying equity markets are actually closed. The bond market,

450
00:26:39,000 --> 00:26:40,960
Speaker 2: by the way, you probably know this, I'm a bond

451
00:26:41,000 --> 00:26:43,479
Speaker 2: market veteran, like the bond market has a lot of

452
00:26:43,680 --> 00:26:48,000
Speaker 2: closure days where equity markets aren't open. So bond ETFs

453
00:26:48,040 --> 00:26:52,440
Speaker 2: are providing a price transparency to fixed income markets all

454
00:26:52,480 --> 00:26:56,280
Speaker 2: of the time. And we really saw that profoundly over

455
00:26:56,320 --> 00:27:00,199
Speaker 2: the COVID volatility period where bonds, because you know, the

456
00:27:00,200 --> 00:27:04,480
Speaker 2: bond market had largely traded and still trades, big parts

457
00:27:04,480 --> 00:27:07,240
Speaker 2: of the bond market trade in a very bilateral voice

458
00:27:07,320 --> 00:27:11,560
Speaker 2: over telephone way, and these traders were literally packing up

459
00:27:11,600 --> 00:27:14,280
Speaker 2: their desks and having to go home and reconstruct their

460
00:27:14,320 --> 00:27:17,320
Speaker 2: workstations at home. And so there were days where if

461
00:27:17,320 --> 00:27:21,240
Speaker 2: you took an investment grade ETF, its top ten holdings

462
00:27:21,320 --> 00:27:24,119
Speaker 2: might trade thirty five times in the day. In the

463
00:27:24,160 --> 00:27:27,000
Speaker 2: bond market, we can see that through trace reporting, while

464
00:27:27,040 --> 00:27:31,880
Speaker 2: the ETF itself traded ninety thousand times. So that's an

465
00:27:31,880 --> 00:27:36,080
Speaker 2: example of real time price formation that just wasn't available

466
00:27:36,359 --> 00:27:38,359
Speaker 2: in the bond market before the ETF.

467
00:27:38,680 --> 00:27:41,439
Speaker 1: I think a lot of lay people don't realize the

468
00:27:41,520 --> 00:27:45,200
Speaker 1: Russell five thousand is what thirty four hundred stocks. Today,

469
00:27:45,520 --> 00:27:49,399
Speaker 1: there are millions and millions of q SIPs of specific bonds,

470
00:27:49,840 --> 00:27:55,000
Speaker 1: different credit ratings, different vintages. Every municipality has a run

471
00:27:55,040 --> 00:27:58,400
Speaker 1: of bonds, every state, every city, there are tons of bonds,

472
00:27:59,119 --> 00:28:02,760
Speaker 1: hundreds of thousands, maybe even millions of bonds. So pricing

473
00:28:02,880 --> 00:28:07,960
Speaker 1: is opaque and it's not always current. That's not true

474
00:28:08,000 --> 00:28:11,520
Speaker 1: on the fixed income side. For ETFs, it's all day

475
00:28:11,560 --> 00:28:14,159
Speaker 1: long and you get a price whenever you look at

476
00:28:14,160 --> 00:28:14,720
Speaker 1: the ETF.

477
00:28:15,000 --> 00:28:17,120
Speaker 2: Yeah, so that's totally true. But one of the things

478
00:28:17,119 --> 00:28:20,160
Speaker 2: that gets me super excited, because I am just a

479
00:28:20,320 --> 00:28:25,280
Speaker 2: career markets modernizer, is that there's been a virtuous cycle

480
00:28:25,359 --> 00:28:28,480
Speaker 2: and effect back on the bond market. Because investors have

481
00:28:28,560 --> 00:28:32,119
Speaker 2: really demanded and wanted to participate in fixed income ETFs,

482
00:28:32,480 --> 00:28:36,320
Speaker 2: bond dealers in trading desks have had to develop algorithmic

483
00:28:36,359 --> 00:28:40,880
Speaker 2: pricing capabilities so that they could make markets in those ETFs,

484
00:28:40,880 --> 00:28:44,760
Speaker 2: and that has had the effect of increasing electronification and

485
00:28:44,800 --> 00:28:49,200
Speaker 2: transparency in the underlying bond market, which is why again

486
00:28:49,280 --> 00:28:52,320
Speaker 2: there's been this you know, introduction of ETFs as a

487
00:28:52,360 --> 00:28:56,320
Speaker 2: new bond tool has actually had an important modernizing effect

488
00:28:56,720 --> 00:28:58,720
Speaker 2: on that underlying market ecosystem.

489
00:28:58,960 --> 00:29:02,440
Speaker 1: So you guys have in one of the larger bond

490
00:29:02,720 --> 00:29:07,120
Speaker 1: fund managers. Over years and in old Wall Street there

491
00:29:07,120 --> 00:29:11,040
Speaker 1: were hundreds of shops that were managing individual bond portfolios.

492
00:29:11,680 --> 00:29:14,080
Speaker 1: What's it like when you want to put together a

493
00:29:14,120 --> 00:29:18,840
Speaker 1: bond ETF. I would imagine your desk has to revert

494
00:29:18,920 --> 00:29:23,479
Speaker 1: to some form of old school, you know, picking up

495
00:29:23,480 --> 00:29:26,640
Speaker 1: the phone and hey, who has these bonds? We want

496
00:29:26,680 --> 00:29:29,480
Speaker 1: to we're a buyer. What can you get us? How

497
00:29:29,520 --> 00:29:31,840
Speaker 1: do you marry the old with the new? How do

498
00:29:31,880 --> 00:29:34,720
Speaker 1: you marry the phone with the algorithm?

499
00:29:35,280 --> 00:29:38,160
Speaker 2: Well, one of the things we talked about before are

500
00:29:38,280 --> 00:29:41,560
Speaker 2: the challenges of cash management in a portfolio, and certainly

501
00:29:41,640 --> 00:29:44,720
Speaker 2: in a bond market portfolio. That's a challenge for a

502
00:29:44,760 --> 00:29:47,800
Speaker 2: manager who doesn't want to underperform the benchmark.

503
00:29:47,360 --> 00:29:50,120
Speaker 1: But especially when you have some yield these days, that's.

504
00:29:50,000 --> 00:29:52,480
Speaker 2: Right, who has to put cash to work? Now? One

505
00:29:52,520 --> 00:29:57,360
Speaker 2: of the most exciting aspects of the ETF innovation is

506
00:29:57,400 --> 00:30:02,920
Speaker 2: the fact that portfolio managers ETFs don't have to manage

507
00:30:02,960 --> 00:30:05,440
Speaker 2: the cash. They can if they want to, but they

508
00:30:05,440 --> 00:30:10,120
Speaker 2: can also do what we call in kind trades with

509
00:30:10,920 --> 00:30:14,400
Speaker 2: the street or with liquidity providers if so. First, if

510
00:30:14,400 --> 00:30:17,080
Speaker 2: people are buying the ETF, number one difference, just to

511
00:30:17,120 --> 00:30:18,960
Speaker 2: take a step back, is that you can go and

512
00:30:19,000 --> 00:30:21,880
Speaker 2: buy the ETF on exchange through your brokerage account. You

513
00:30:21,920 --> 00:30:23,880
Speaker 2: don't have to write a check and send it into

514
00:30:23,920 --> 00:30:27,040
Speaker 2: a mutual fund company. You are buying the ETF on exchange.

515
00:30:27,320 --> 00:30:29,600
Speaker 2: Somebody is selling it to you, and if they have

516
00:30:29,800 --> 00:30:32,840
Speaker 2: the seller on the other side, then there's nothing that

517
00:30:32,880 --> 00:30:35,880
Speaker 2: the portfolio manager has to do. The buyers and sellers

518
00:30:35,920 --> 00:30:39,280
Speaker 2: match off on exchange, and that's important because on average

519
00:30:39,440 --> 00:30:42,840
Speaker 2: it's about six to eight times as much trading happens

520
00:30:42,880 --> 00:30:47,040
Speaker 2: on exchange as in the actual ETF. But let's say

521
00:30:47,080 --> 00:30:50,360
Speaker 2: that there is an imbalance of demand. More people want

522
00:30:50,360 --> 00:30:53,800
Speaker 2: to buy that ETF than sell that ETF, so we

523
00:30:53,880 --> 00:30:57,240
Speaker 2: start to see the price of the ETF. Actually we

524
00:30:57,480 --> 00:31:00,680
Speaker 2: traded a little bit of a premium to those underlying bonds,

525
00:31:01,200 --> 00:31:05,120
Speaker 2: So then what the market maker can do is create

526
00:31:05,320 --> 00:31:09,360
Speaker 2: more ETF shares to meet that demand by buying the

527
00:31:09,440 --> 00:31:13,000
Speaker 2: underlying bonds delivering it to me. I will be the

528
00:31:13,040 --> 00:31:15,920
Speaker 2: portfolio manager in this case, and then we give you

529
00:31:15,960 --> 00:31:18,400
Speaker 2: the ETF shares, so I don't have to put the

530
00:31:18,440 --> 00:31:21,240
Speaker 2: cash to work. The market has done that for me.

531
00:31:21,360 --> 00:31:25,160
Speaker 2: They've been incentivized to do that because this market maker,

532
00:31:25,280 --> 00:31:29,560
Speaker 2: she has captured the arbitrage spread that was available, and

533
00:31:29,960 --> 00:31:33,240
Speaker 2: I didn't have to incur transaction cost drag for the

534
00:31:33,280 --> 00:31:36,520
Speaker 2: shareholders in my fund. So that's one of the mechanisms

535
00:31:36,560 --> 00:31:40,320
Speaker 2: that have made ETFs deliver so effectively for investors.

536
00:31:40,600 --> 00:31:44,880
Speaker 1: So let's talk about who are the holders of ETFs.

537
00:31:45,480 --> 00:31:50,280
Speaker 1: How granular can you get in identifying here's who who

538
00:31:50,480 --> 00:31:54,239
Speaker 1: owns our ETFs for this fixed thing, hump product, this

539
00:31:54,680 --> 00:31:59,520
Speaker 1: equity product. As a mutual fund company, you know exactly

540
00:31:59,640 --> 00:32:03,680
Speaker 1: who owns that fund. Is it the same thing with

541
00:32:03,760 --> 00:32:05,560
Speaker 1: ETFs or is it a little fuzzier.

542
00:32:05,680 --> 00:32:08,720
Speaker 2: It's a little bit harder with ETFs. But our ability

543
00:32:08,800 --> 00:32:11,880
Speaker 2: to capture an analyzed data just is this much more

544
00:32:11,960 --> 00:32:14,760
Speaker 2: information on everything, even if it's just looking at the

545
00:32:14,880 --> 00:32:18,600
Speaker 2: nature of prints on exchange, we are able to derive

546
00:32:18,800 --> 00:32:23,000
Speaker 2: much more data to make assumptions and really educated guesses

547
00:32:23,040 --> 00:32:26,880
Speaker 2: about who owns the ETFs, and increasingly we actually do

548
00:32:27,040 --> 00:32:30,800
Speaker 2: have end user information. So really important and exciting announcement

549
00:32:30,840 --> 00:32:33,440
Speaker 2: we may and we're the first to do this, is

550
00:32:33,480 --> 00:32:37,920
Speaker 2: to in our SMP five hundred ETF for certain investors

551
00:32:38,000 --> 00:32:42,160
Speaker 2: individual investors, give them the ability to decide if they

552
00:32:42,160 --> 00:32:45,040
Speaker 2: want to vote their shares. And that's been a really

553
00:32:45,080 --> 00:32:48,000
Speaker 2: important dialogue in the market because as an asset manager,

554
00:32:48,080 --> 00:32:51,040
Speaker 2: we don't own the shares, but for our ETFs often

555
00:32:51,080 --> 00:32:53,600
Speaker 2: the laws say we need to vote the share, but

556
00:32:53,680 --> 00:32:55,840
Speaker 2: our job is to be asset managers, and so if

557
00:32:55,840 --> 00:32:58,480
Speaker 2: clients want us to vote their shares for them, we can,

558
00:32:58,920 --> 00:33:01,880
Speaker 2: but we prefer and with our institutional clients, we give

559
00:33:01,880 --> 00:33:05,440
Speaker 2: them voting choice so they can tell us Blackrock, we

560
00:33:05,880 --> 00:33:07,800
Speaker 2: want to vote our own shares, or we give them

561
00:33:07,800 --> 00:33:10,640
Speaker 2: a menu of options and they direct us. And so

562
00:33:11,240 --> 00:33:14,560
Speaker 2: we have been until now really unable to offer that

563
00:33:14,640 --> 00:33:18,080
Speaker 2: to individuals. But as we get better data and information,

564
00:33:18,680 --> 00:33:22,040
Speaker 2: we're able to expand choices to our clients.

565
00:33:22,400 --> 00:33:26,280
Speaker 1: So there's so many things to unpack with that. There's

566
00:33:26,320 --> 00:33:30,440
Speaker 1: been a lot of pushback to the concept of indexing

567
00:33:30,680 --> 00:33:35,240
Speaker 1: generally as well, look at it's Blackrock, Vanguard, and State Street.

568
00:33:35,720 --> 00:33:40,280
Speaker 1: They control almost x percent of the market, and therefore

569
00:33:41,040 --> 00:33:44,120
Speaker 1: they're running the world, and we should break this up.

570
00:33:44,520 --> 00:33:48,280
Speaker 1: It seems to be a fundamental misunderstanding of who owns

571
00:33:48,360 --> 00:33:51,600
Speaker 1: this stock and what the role of the big index

572
00:33:51,680 --> 00:33:56,240
Speaker 1: providers and big etf providers are in this space. You're

573
00:33:56,280 --> 00:33:59,760
Speaker 1: owning these shares not on behalf of you or Larry

574
00:33:59,760 --> 00:34:03,320
Speaker 1: Fans or Blackrock, You're owning these on behalf of millions

575
00:34:03,360 --> 00:34:04,080
Speaker 1: of investors.

576
00:34:04,400 --> 00:34:07,719
Speaker 2: Yeah, you're spot on. So the number one misunderstanding is

577
00:34:08,120 --> 00:34:11,960
Speaker 2: who owns them. We are a fiduciary, the investors own

578
00:34:12,040 --> 00:34:14,640
Speaker 2: those stocks. And then beyond that, it's more of a

579
00:34:14,680 --> 00:34:18,400
Speaker 2: regulatory and technology problem to fix. The regulations say that

580
00:34:18,480 --> 00:34:22,040
Speaker 2: the asset manager votes the shares, and so what we

581
00:34:22,080 --> 00:34:25,440
Speaker 2: started to do in our institutional accounts where regulation permitted

582
00:34:25,440 --> 00:34:28,520
Speaker 2: it was just technology and operations, was to create a

583
00:34:28,560 --> 00:34:32,000
Speaker 2: program of voting choice that other asset managers actually then

584
00:34:32,080 --> 00:34:35,720
Speaker 2: went and copied to say to institutions, let's let's separate

585
00:34:35,760 --> 00:34:37,560
Speaker 2: the two and if you want to vote your shares,

586
00:34:37,640 --> 00:34:40,000
Speaker 2: go ahead and vote your shares. But it's been much

587
00:34:40,040 --> 00:34:43,120
Speaker 2: harder to do that for individual investors. So being able

588
00:34:43,160 --> 00:34:46,479
Speaker 2: to take a first step towards that is a really

589
00:34:46,520 --> 00:34:47,440
Speaker 2: exciting progress.

590
00:34:47,920 --> 00:34:50,759
Speaker 1: I kind of feel like I'm cheating, like I brought

591
00:34:50,840 --> 00:34:54,000
Speaker 1: in a ringer, because this is just an exercise in

592
00:34:54,080 --> 00:34:58,480
Speaker 1: confirmation bias for me. You know, it's you know, I

593
00:34:58,680 --> 00:35:02,799
Speaker 1: have read over the years that indexing is un American,

594
00:35:03,040 --> 00:35:07,239
Speaker 1: it's Marxist, it's a communist plot, there's going to be

595
00:35:07,320 --> 00:35:12,160
Speaker 1: price fixing, just every crazy theory that you could come

596
00:35:12,239 --> 00:35:15,319
Speaker 1: up with as to why indexing is so bad. And

597
00:35:15,360 --> 00:35:19,840
Speaker 1: when you trace these arguments back, they invariably are coming

598
00:35:19,880 --> 00:35:23,080
Speaker 1: back to people who are the ones who are losing

599
00:35:23,200 --> 00:35:29,360
Speaker 1: market share to indexing. And it's hard to have a

600
00:35:29,480 --> 00:35:33,560
Speaker 1: legitimate discussion where hey, you know, you're talking your book,

601
00:35:33,640 --> 00:35:37,640
Speaker 1: and again, full disclosure for both of us, I'm talking

602
00:35:37,719 --> 00:35:41,400
Speaker 1: my book because I'm a big believer in indexers. But

603
00:35:41,600 --> 00:35:46,320
Speaker 1: you guys, of the ten trillion you have in assets,

604
00:35:46,800 --> 00:35:48,880
Speaker 1: how much of this is indexed and how much of

605
00:35:48,920 --> 00:35:51,320
Speaker 1: this is more active management?

606
00:35:52,000 --> 00:35:57,760
Speaker 2: Well, remember, even within the index category, it's becoming increasingly active.

607
00:35:58,080 --> 00:36:00,759
Speaker 2: So there are index strategies that take a lot of

608
00:36:01,000 --> 00:36:05,520
Speaker 2: design principles around how to algorithmically provide a strategy right

609
00:36:05,560 --> 00:36:07,719
Speaker 2: and those are like everything as we talked about these

610
00:36:07,800 --> 00:36:13,320
Speaker 2: active risk benchmarks, anything beyond upmarket cap weighted. But also importantly,

611
00:36:13,760 --> 00:36:17,719
Speaker 2: in twenty twenty three in the United States, twenty five

612
00:36:17,880 --> 00:36:23,040
Speaker 2: percent of new money going into ETFs was in active ETFs.

613
00:36:23,280 --> 00:36:27,200
Speaker 2: So in twenty nineteen, actually the SEC passed a long

614
00:36:27,320 --> 00:36:30,839
Speaker 2: awaited ETF rule that made it much easier for any

615
00:36:30,880 --> 00:36:33,880
Speaker 2: type of asset manager who wanted to distribute their strategy

616
00:36:33,960 --> 00:36:36,520
Speaker 2: in the ETF wrapper to do so. And there was

617
00:36:36,560 --> 00:36:40,680
Speaker 2: actually a lot of questioning at the beginning, well, because

618
00:36:40,719 --> 00:36:44,640
Speaker 2: ETFs are transparent, would they do that, would they actually

619
00:36:44,680 --> 00:36:47,840
Speaker 2: want to have to publish their holdings on a daily basis,

620
00:36:47,920 --> 00:36:50,000
Speaker 2: or would they resist thinking that that was giving up

621
00:36:50,040 --> 00:36:52,239
Speaker 2: some sort of secret sauce. And as it turns out,

622
00:36:52,640 --> 00:36:55,560
Speaker 2: a lot of managers were comfortable with the transparency. There

623
00:36:55,640 --> 00:36:59,839
Speaker 2: was some experimentation with non transparent active ETFs, but as

624
00:36:59,840 --> 00:37:03,680
Speaker 2: it turns out, I think those were pretty easily reverse engineered.

625
00:37:03,760 --> 00:37:06,120
Speaker 2: So going through the trouble of making it non transparent

626
00:37:06,200 --> 00:37:09,200
Speaker 2: didn't help that much given how much they trade. But

627
00:37:09,320 --> 00:37:14,160
Speaker 2: investors still want active strategies. The question is is that

628
00:37:14,360 --> 00:37:19,480
Speaker 2: manager delivering alpha or excess return such that the incremental

629
00:37:19,520 --> 00:37:23,920
Speaker 2: fees justify it, and the transparency of return that traditional

630
00:37:23,920 --> 00:37:29,200
Speaker 2: ETFs give investors really holds those alpha seeking managers accountable.

631
00:37:29,560 --> 00:37:32,319
Speaker 2: But when they can produce it, people will pay for it,

632
00:37:32,360 --> 00:37:34,160
Speaker 2: and they'll pay for it in an ETF wrapper.

633
00:37:34,560 --> 00:37:37,680
Speaker 1: Really interesting. So let's talk a little bit about the

634
00:37:37,760 --> 00:37:43,319
Speaker 1: bitcoin ETF. What are your thoughts on the process of

635
00:37:43,440 --> 00:37:46,520
Speaker 1: getting here, What do you think is happening in that

636
00:37:46,560 --> 00:37:47,120
Speaker 1: space now?

637
00:37:47,520 --> 00:37:50,480
Speaker 2: It's been a journey for markets, Barry, I think when

638
00:37:50,480 --> 00:37:54,000
Speaker 2: I first started getting asked about bitcoin ETFs it was

639
00:37:54,120 --> 00:37:57,239
Speaker 2: about five years ago, and when I first heard about

640
00:37:57,280 --> 00:38:01,200
Speaker 2: bitcoin it was probably about ten years go. And for us,

641
00:38:01,239 --> 00:38:05,880
Speaker 2: the question of whether we should provide access to bitcoin

642
00:38:06,080 --> 00:38:09,160
Speaker 2: in an ETF is something that came about really in

643
00:38:09,200 --> 00:38:12,600
Speaker 2: the last few years. There were issuers that filed for

644
00:38:12,640 --> 00:38:16,680
Speaker 2: bitcoin ETFs before we did. There were issuers that actually

645
00:38:16,840 --> 00:38:21,160
Speaker 2: launched futures based bitcoin ETFs before we did, And I

646
00:38:21,200 --> 00:38:24,320
Speaker 2: think that journey for the industry showed us a few things. First,

647
00:38:24,320 --> 00:38:27,560
Speaker 2: it showed us, with respect to the futures ETFs, that

648
00:38:28,239 --> 00:38:31,400
Speaker 2: wasn't really delivering what investors were looking for, meaning for

649
00:38:31,440 --> 00:38:35,680
Speaker 2: a whole bunch of reasons, particularly position limits. The futures

650
00:38:35,719 --> 00:38:39,880
Speaker 2: ETF actually underperformed spot bitcoin, which is what investors wanted

651
00:38:40,239 --> 00:38:42,560
Speaker 2: now full disclosure. When I first got asked a few

652
00:38:42,640 --> 00:38:45,840
Speaker 2: years ago about bitcoin ETFs, and remember I am a

653
00:38:45,880 --> 00:38:49,040
Speaker 2: bond market veteran, so I thought to myself, look, I

654
00:38:49,160 --> 00:38:51,840
Speaker 2: will come into the office like all day long. I

655
00:38:51,880 --> 00:38:56,440
Speaker 2: get excited about bringing access and transparency to markets where

656
00:38:56,480 --> 00:38:59,399
Speaker 2: it didn't exist before. So the high yield market, high

657
00:38:59,440 --> 00:39:02,080
Speaker 2: you old bond market, for example, that's a no brainer

658
00:39:02,120 --> 00:39:04,520
Speaker 2: to put into an ETF wrapper. But to me, it

659
00:39:04,600 --> 00:39:08,560
Speaker 2: seemed like it was pretty straightforward to just buy some

660
00:39:08,600 --> 00:39:11,719
Speaker 2: bitcoin using your mobile phone. And so for us to

661
00:39:11,840 --> 00:39:15,000
Speaker 2: really be convinced as to the value proposition of an

662
00:39:15,040 --> 00:39:20,080
Speaker 2: ETF really took hearing from investors, all types of investors

663
00:39:20,480 --> 00:39:22,560
Speaker 2: over the subsequent years, and this is what we heard.

664
00:39:22,640 --> 00:39:25,839
Speaker 2: Number one. We heard they wanted access to bitcoin. Many

665
00:39:25,920 --> 00:39:28,640
Speaker 2: of them, for different reasons, were interested in as kind

666
00:39:28,680 --> 00:39:31,800
Speaker 2: of an emerging asset classet. They wanted some access, and

667
00:39:31,840 --> 00:39:34,480
Speaker 2: they were trying to get access in a variety of ways,

668
00:39:34,800 --> 00:39:37,600
Speaker 2: none of which were fully satisfying. Whether they were buying

669
00:39:37,680 --> 00:39:39,719
Speaker 2: it in a trust structure where they didn't have a

670
00:39:39,760 --> 00:39:42,640
Speaker 2: lot of liquidity and high fees, if they were buying

671
00:39:42,680 --> 00:39:46,279
Speaker 2: a futures based product which really wasn't delivering bitcoin. If

672
00:39:46,320 --> 00:39:49,279
Speaker 2: they were buying actual bitcoin, they were having to deal

673
00:39:49,400 --> 00:39:52,200
Speaker 2: with a whole new set of infrastructure and pipes and

674
00:39:52,280 --> 00:39:56,560
Speaker 2: custody questions that weren't transparent and hard to understand.

675
00:39:56,160 --> 00:40:01,279
Speaker 1: Passwords and anti hacking, and what's easier than an ETF

676
00:40:01,480 --> 00:40:05,440
Speaker 1: and what could be harder than buying bitcoin? For the

677
00:40:06,000 --> 00:40:09,520
Speaker 1: average mom and pop investor, it seems like a natural marriage.

678
00:40:09,600 --> 00:40:12,160
Speaker 2: And we heard from advisors too, who were getting asked

679
00:40:12,239 --> 00:40:16,520
Speaker 2: by their clients and they wanted to provide whole portfolio

680
00:40:16,719 --> 00:40:21,719
Speaker 2: solutions to their clients. So I think we really became convinced,

681
00:40:21,800 --> 00:40:26,480
Speaker 2: first of all, that investors wanted access, and second that

682
00:40:26,560 --> 00:40:29,880
Speaker 2: the ETF would actually provide a better access path than

683
00:40:30,040 --> 00:40:33,160
Speaker 2: was currently available out there in the market.

684
00:40:33,480 --> 00:40:35,400
Speaker 1: Why do you think it took so long for this

685
00:40:35,480 --> 00:40:38,520
Speaker 1: ETF to get over the finish line? I mean, the

686
00:40:38,560 --> 00:40:42,759
Speaker 1: SEC has been talking about this and having hearings and

687
00:40:42,840 --> 00:40:46,200
Speaker 1: listening to investor input on this. It seems like it's

688
00:40:46,239 --> 00:40:48,040
Speaker 1: been years five years.

689
00:40:48,680 --> 00:40:53,080
Speaker 2: Well, first, I think the narrative from investors really grew

690
00:40:53,200 --> 00:40:56,880
Speaker 2: over the past few years. The infrastructure in the crypto

691
00:40:56,920 --> 00:41:01,239
Speaker 2: world was also evolving, but regulation and policy has been

692
00:41:01,360 --> 00:41:05,040
Speaker 2: evolving as well and still has a long ways to go.

693
00:41:05,239 --> 00:41:08,719
Speaker 2: So I think regulators needed to and the SEC in

694
00:41:08,760 --> 00:41:12,719
Speaker 2: particular needed to hear from investors, needed to work through

695
00:41:12,760 --> 00:41:15,719
Speaker 2: the operating model. And then also remember, I mean you

696
00:41:15,760 --> 00:41:17,640
Speaker 2: and I have talked about what the past three years

697
00:41:17,680 --> 00:41:21,600
Speaker 2: have looked like. This SEC has a very ambitious equity

698
00:41:21,640 --> 00:41:25,000
Speaker 2: market structure agenda on their plate, and that's really been

699
00:41:25,080 --> 00:41:29,640
Speaker 2: their priority. But I think ultimately investor demand and desire

700
00:41:29,800 --> 00:41:31,800
Speaker 2: for access in an ETF one out.

701
00:41:32,000 --> 00:41:34,760
Speaker 1: I never had any doubt that it would eventually happen.

702
00:41:34,800 --> 00:41:37,160
Speaker 1: I just had no idea if it was this decade

703
00:41:37,239 --> 00:41:41,239
Speaker 1: next decade. But I'm curious as to your experience. What

704
00:41:41,400 --> 00:41:44,920
Speaker 1: was it like going through the process of applying for approval.

705
00:41:45,480 --> 00:41:49,400
Speaker 1: Blackrock is such a giant participant in the market. I

706
00:41:49,480 --> 00:41:51,840
Speaker 1: have to imagine that you were one of the key

707
00:41:51,880 --> 00:41:57,040
Speaker 1: firms the SEC was consulting with about things like security

708
00:41:57,120 --> 00:42:01,000
Speaker 1: and password protection and anti hacking issues and all the

709
00:42:01,040 --> 00:42:04,160
Speaker 1: custody issues that go with that. What was it like

710
00:42:04,520 --> 00:42:08,680
Speaker 1: processing the oh, here's a new ETF application. We're just

711
00:42:08,680 --> 00:42:10,759
Speaker 1: going to sneak this in with a big pile of

712
00:42:10,800 --> 00:42:11,600
Speaker 1: other ETFs.

713
00:42:11,880 --> 00:42:14,680
Speaker 2: Look, I think for all types of ETPs, as we

714
00:42:14,800 --> 00:42:18,960
Speaker 2: talked about, it takes an ecosystem to make them work.

715
00:42:19,120 --> 00:42:23,719
Speaker 2: Given our experience as a market's risk manager in all

716
00:42:23,800 --> 00:42:27,759
Speaker 2: types of markets, we engage frequently with all types of

717
00:42:27,800 --> 00:42:31,080
Speaker 2: regulators who are a key part of the ecosystem on

718
00:42:31,200 --> 00:42:35,840
Speaker 2: how things are working with our observations around ETFs, around markets,

719
00:42:35,880 --> 00:42:39,120
Speaker 2: around trading, and around liquidity. So with respect to the

720
00:42:39,160 --> 00:42:43,719
Speaker 2: sec our engagement was much less about the if and

721
00:42:43,840 --> 00:42:46,880
Speaker 2: much more about the how. Here are the ways to

722
00:42:46,960 --> 00:42:50,800
Speaker 2: provide robust and resilient access to investors in an ETF.

723
00:42:51,280 --> 00:42:54,560
Speaker 1: So you guys came out much less expensive than just

724
00:42:54,600 --> 00:42:58,680
Speaker 1: about every other provider. Where do you think the bitcoin

725
00:42:58,760 --> 00:43:03,760
Speaker 1: ETF can go this scale up to something along the

726
00:43:03,800 --> 00:43:08,759
Speaker 1: sizes of any sort of large index or is this

727
00:43:08,920 --> 00:43:10,360
Speaker 1: going to be a little niche product.

728
00:43:10,840 --> 00:43:13,800
Speaker 2: I don't know yet, Barry. I'm definitely curious your thoughts

729
00:43:13,800 --> 00:43:16,440
Speaker 2: on that as well. We know that there is demand

730
00:43:16,480 --> 00:43:19,200
Speaker 2: for access. We know that there were and are a

731
00:43:19,239 --> 00:43:23,040
Speaker 2: lot of holders in bitcoin in vehicles that investors view

732
00:43:23,080 --> 00:43:25,880
Speaker 2: is less preferable to the ETFs that are now out there.

733
00:43:26,120 --> 00:43:28,760
Speaker 2: So in terms of the flows that we're seeing, unclear

734
00:43:28,840 --> 00:43:32,920
Speaker 2: is that new demand? Is that just rapper switching demand?

735
00:43:33,200 --> 00:43:33,520
Speaker 1: Sure?

736
00:43:33,640 --> 00:43:36,520
Speaker 2: So I think this is like early stages of how

737
00:43:36,600 --> 00:43:38,399
Speaker 2: the story is going to play out. I would say,

738
00:43:38,400 --> 00:43:40,480
Speaker 2: by the way, though, I think we're kind of middle

739
00:43:40,520 --> 00:43:43,319
Speaker 2: of the pack when we think about what investors will

740
00:43:43,320 --> 00:43:46,640
Speaker 2: look for in terms of costs of an ETF, we

741
00:43:46,760 --> 00:43:49,360
Speaker 2: really encourage people to look at what we call total

742
00:43:49,480 --> 00:43:53,200
Speaker 2: cost of ownership, which is not just the expense ratio,

743
00:43:53,560 --> 00:43:56,840
Speaker 2: but the liquidity, the spread, the access on exchange, the

744
00:43:56,880 --> 00:43:59,839
Speaker 2: resilience of the operating model. So all of those things

745
00:43:59,840 --> 00:44:04,000
Speaker 2: can tribute to total cost of ownership, which isn't necessarily

746
00:44:04,440 --> 00:44:06,560
Speaker 2: all captured by the expense ratio.

747
00:44:06,960 --> 00:44:10,040
Speaker 1: So there's so many different ways to go with that. First,

748
00:44:10,200 --> 00:44:14,359
Speaker 1: there's some crazy stat twenty twenty five percent of all bitcoin. Ever,

749
00:44:14,719 --> 00:44:17,759
Speaker 1: mind it's lost has been good lost, right, the passwords, lost,

750
00:44:17,800 --> 00:44:22,880
Speaker 1: the art drivers. So I think people, especially main street investors,

751
00:44:23,280 --> 00:44:26,880
Speaker 1: are looking for a familiar name black Rock clearly is that.

752
00:44:27,600 --> 00:44:30,560
Speaker 1: The other thing is all of the interim solutions that

753
00:44:30,600 --> 00:44:34,640
Speaker 1: have come out. You described that as rapper migration. I

754
00:44:34,760 --> 00:44:38,160
Speaker 1: have to think that the futures bitcoin products are all

755
00:44:38,160 --> 00:44:42,480
Speaker 1: gonna move to ETFs, along with the various trusts and

756
00:44:42,560 --> 00:44:46,880
Speaker 1: mutual funds. It seems this is the ideal structure to

757
00:44:47,280 --> 00:44:50,799
Speaker 1: put that in. Other than that, I have no guess

758
00:44:50,880 --> 00:44:53,120
Speaker 1: as to where this. If you were to tell me

759
00:44:53,520 --> 00:44:57,360
Speaker 1: five years from now it's one hundred billion dollars, I

760
00:44:57,360 --> 00:44:59,600
Speaker 1: would shrug. And if you said, oh, you've never really

761
00:44:59,600 --> 00:45:02,440
Speaker 1: caught on and it's just a couple of billion dollars,

762
00:45:03,239 --> 00:45:05,960
Speaker 1: maybe I'm more surprised by that outcome. But it's certainly

763
00:45:06,040 --> 00:45:09,000
Speaker 1: in the range of possibilities. It could be a giant smash,

764
00:45:09,080 --> 00:45:12,040
Speaker 1: it could be pretty good, or maybe it goes nowhere.

765
00:45:12,440 --> 00:45:17,640
Speaker 1: It's hard to judge. If you're decentralizing finance. If that

766
00:45:17,960 --> 00:45:21,600
Speaker 1: narrative about crypto is we're going to take finance away

767
00:45:21,640 --> 00:45:24,120
Speaker 1: from the big banks, well then the whole concept of

768
00:45:24,120 --> 00:45:25,040
Speaker 1: an ETF.

769
00:45:24,680 --> 00:45:27,759
Speaker 2: Does right exactly. That was initially what we thought when

770
00:45:27,760 --> 00:45:30,440
Speaker 2: people approached us, like there were a lot, We got

771
00:45:30,480 --> 00:45:34,400
Speaker 2: so many calls from you know, various crypto players who

772
00:45:34,520 --> 00:45:37,919
Speaker 2: wanted us to list in ETF, and the question we asked,

773
00:45:37,960 --> 00:45:40,520
Speaker 2: the first question I asked, was why do you even

774
00:45:40,560 --> 00:45:44,840
Speaker 2: want this? Isn't this whole isn't the whole point like disintermediation,

775
00:45:45,320 --> 00:45:49,440
Speaker 2: DeFi like I'm pretty cefi with this, with this you know,

776
00:45:49,520 --> 00:45:52,719
Speaker 2: etf rapper thing going, But I guess, you know, as

777
00:45:52,760 --> 00:45:56,759
Speaker 2: it turns out, it really is that desire buy investors

778
00:45:56,800 --> 00:46:00,760
Speaker 2: for whole portfolio risk management. So for me, I guess

779
00:46:00,760 --> 00:46:03,520
Speaker 2: I think about what is the best long term outcome

780
00:46:03,680 --> 00:46:08,680
Speaker 2: for investors, and it's probably an integration of these ecosystems

781
00:46:08,719 --> 00:46:11,480
Speaker 2: as opposed to them living separately so that you can

782
00:46:11,520 --> 00:46:14,520
Speaker 2: manage risk holistically. But like you, we need to see

783
00:46:14,520 --> 00:46:15,359
Speaker 2: how it plays out.

784
00:46:15,760 --> 00:46:19,960
Speaker 1: And the other thing that is obvious in hindsight the

785
00:46:19,960 --> 00:46:24,600
Speaker 1: whole concept of trustless transactions where you don't need to

786
00:46:24,640 --> 00:46:28,759
Speaker 1: have a trust relationship with the opposite party. How has

787
00:46:28,800 --> 00:46:33,240
Speaker 1: that worked out. We've seen all the big crypto exchanges implode.

788
00:46:33,400 --> 00:46:38,400
Speaker 1: It seems there's just between the criminals and the blackmailers,

789
00:46:38,440 --> 00:46:45,960
Speaker 1: and the just crazy run of crypto criminals. Doing it

790
00:46:46,000 --> 00:46:49,000
Speaker 1: yourself seems so fraught with risk. But if I could

791
00:46:49,080 --> 00:46:51,640
Speaker 1: say to black Rock, hey, I'm going to outsource all

792
00:46:51,719 --> 00:46:55,480
Speaker 1: of my risk management to you. Take care of the custody,

793
00:46:55,520 --> 00:46:57,560
Speaker 1: take care of the passwords, I don't want to deal

794
00:46:57,640 --> 00:47:00,279
Speaker 1: with any of this stuff just seems to be so

795
00:47:00,360 --> 00:47:03,600
Speaker 1: much easier. I guess it's laziness. I want the most

796
00:47:03,800 --> 00:47:08,400
Speaker 1: friction free approach to making a purchase, and I don't

797
00:47:08,440 --> 00:47:12,120
Speaker 1: want to have to engrave a password that's ninety seven

798
00:47:12,200 --> 00:47:14,920
Speaker 1: letters long on a piece of metal and bury it

799
00:47:14,960 --> 00:47:17,920
Speaker 1: in my backyard. That doesn't appeal to me. So what

800
00:47:17,960 --> 00:47:21,400
Speaker 1: are you hearing from others in the space in terms

801
00:47:21,440 --> 00:47:25,800
Speaker 1: of what they're looking for in a crypto.

802
00:47:25,400 --> 00:47:30,759
Speaker 2: Etf The convenience of ETFs is incredibly compelling for investors.

803
00:47:31,160 --> 00:47:35,839
Speaker 2: They understand the ecosystem. Now importantly with the Bitcoin ETFs,

804
00:47:36,400 --> 00:47:42,000
Speaker 2: the institutional greed custody is really important for investors as well.

805
00:47:42,360 --> 00:47:47,000
Speaker 2: Now to your question about the crypto ecosystem separate for metfs,

806
00:47:47,200 --> 00:47:49,359
Speaker 2: I think there's a lot of questions there around how

807
00:47:49,400 --> 00:47:51,640
Speaker 2: that evolves in terms of what we've seen so far.

808
00:47:52,280 --> 00:47:54,640
Speaker 2: Is it the technology that's created it, or is it

809
00:47:54,680 --> 00:47:57,120
Speaker 2: really the fact that there have been no guardrails around

810
00:47:57,120 --> 00:47:59,799
Speaker 2: the ecosystem that is built around it. I would say

811
00:47:59,800 --> 00:48:03,200
Speaker 2: the technology has a lot of promise in terms of

812
00:48:03,239 --> 00:48:08,600
Speaker 2: its transparency and auditability. This is a technology that presumably

813
00:48:08,640 --> 00:48:13,719
Speaker 2: could actually decrease the utility for illicit finance. However, we

814
00:48:13,800 --> 00:48:18,080
Speaker 2: would really need a regulatory and policy environment supporting it,

815
00:48:18,440 --> 00:48:20,440
Speaker 2: and I think that's where there's a lot of questions,

816
00:48:20,440 --> 00:48:22,800
Speaker 2: particularly in the US, around future direction.

817
00:48:23,000 --> 00:48:26,040
Speaker 1: So we have a bitcoin ETF, what about other coins

818
00:48:26,160 --> 00:48:26,880
Speaker 1: like ethereum.

819
00:48:27,000 --> 00:48:29,600
Speaker 2: We'll have to watch this space, I think. I think

820
00:48:29,640 --> 00:48:33,560
Speaker 2: there's really with respect to what we hear from investors,

821
00:48:33,560 --> 00:48:35,920
Speaker 2: there's one other coin right now, and then a whole

822
00:48:35,920 --> 00:48:38,960
Speaker 2: lot of coins that we'll just call them alt coins. Right,

823
00:48:39,160 --> 00:48:41,920
Speaker 2: But the question as to whether investors are interested in

824
00:48:41,920 --> 00:48:45,600
Speaker 2: an ethereum METF, yes, we're definitely hearing that they are.

825
00:48:46,080 --> 00:48:49,239
Speaker 2: I think we're early days of bitcoin ETF trading. There's

826
00:48:49,280 --> 00:48:53,280
Speaker 2: a lot of policy and regulator change that will probably

827
00:48:53,320 --> 00:48:55,919
Speaker 2: have been in twenty twenty four. We'll have to see

828
00:48:55,920 --> 00:48:56,919
Speaker 2: what happens from here.

829
00:48:57,280 --> 00:49:02,440
Speaker 1: And the Blackrock I shares Bitcoin ETF is IBIT, right,

830
00:49:02,520 --> 00:49:07,040
Speaker 1: that's the stock symbol. What have the assets flows looked like?

831
00:49:07,520 --> 00:49:11,040
Speaker 1: Where is this is this thought of as a successful launch?

832
00:49:11,200 --> 00:49:14,760
Speaker 1: Where have you gone so far in assets under management? There?

833
00:49:14,920 --> 00:49:18,480
Speaker 2: So ibit is a little bit over five billion dollars.

834
00:49:18,080 --> 00:49:22,000
Speaker 1: In really assets. That's pretty quick to five billion considering

835
00:49:22,040 --> 00:49:22,799
Speaker 1: how new this is.

836
00:49:23,000 --> 00:49:26,279
Speaker 2: It is and remember this dynamic that we talked about

837
00:49:26,320 --> 00:49:29,520
Speaker 2: with respect to Rapper switching. So we do know that

838
00:49:29,560 --> 00:49:32,640
Speaker 2: there were a lot of you know, bitcoin holders that

839
00:49:32,680 --> 00:49:37,360
Speaker 2: were in rappers that they felt were less convenient, less transparent,

840
00:49:37,440 --> 00:49:39,400
Speaker 2: maybe didn't offer them the same sort of you know,

841
00:49:39,480 --> 00:49:42,200
Speaker 2: custody that they have, and also maybe holders who are

842
00:49:42,239 --> 00:49:45,480
Speaker 2: also interested in being able to lend out ETF shares

843
00:49:45,560 --> 00:49:49,280
Speaker 2: where it was harder to deploy securities lending type trading

844
00:49:49,400 --> 00:49:52,279
Speaker 2: in underlying cryptos. So I think this question that we

845
00:49:52,280 --> 00:49:54,719
Speaker 2: were talking about before, in terms of where does the

846
00:49:54,760 --> 00:49:57,799
Speaker 2: long term demand come out, it really depends on on

847
00:49:57,840 --> 00:50:00,640
Speaker 2: how investors and how advisors think about this in the

848
00:50:00,640 --> 00:50:02,240
Speaker 2: context of portfolio allocation.

849
00:50:02,560 --> 00:50:06,160
Speaker 1: So I'm going to assume black Rock doesn't take bitcoin,

850
00:50:06,520 --> 00:50:09,200
Speaker 1: or do you If a client pulls up and says, hey,

851
00:50:09,200 --> 00:50:13,080
Speaker 1: I have a million dollars at my bit X custodian

852
00:50:13,120 --> 00:50:15,600
Speaker 1: and I want to transfer it into an ETF, is

853
00:50:15,640 --> 00:50:18,880
Speaker 1: that something a broker can do a custodian can do

854
00:50:19,400 --> 00:50:21,439
Speaker 1: or are we not quite at that point yet?

855
00:50:21,600 --> 00:50:25,279
Speaker 2: Oh, we are absolutely holding crypto on behalf of our

856
00:50:25,320 --> 00:50:27,920
Speaker 2: clients in these ETFs. I would think of it very

857
00:50:27,960 --> 00:50:32,120
Speaker 2: similarly to gold, where an investor who buys our gold

858
00:50:32,160 --> 00:50:36,080
Speaker 2: ETF or our silver ETF we have a custodian who

859
00:50:36,160 --> 00:50:42,160
Speaker 2: is storing silver bars or gold bars in their vault. Physically,

860
00:50:42,680 --> 00:50:45,080
Speaker 2: it's the same thing in bitcoin. So we work with

861
00:50:45,120 --> 00:50:49,960
Speaker 2: a custodian who is storing the actual bitcoin for our

862
00:50:50,000 --> 00:50:53,640
Speaker 2: investors in cold storage, and on a daily basis, we

863
00:50:53,680 --> 00:50:57,600
Speaker 2: are sweeping actual coin into that cold storage and that

864
00:50:57,719 --> 00:51:00,880
Speaker 2: custody and the fact that they are actually owning the crypto.

865
00:51:00,960 --> 00:51:02,880
Speaker 2: That's an important part of the value proposition.

866
00:51:03,160 --> 00:51:07,920
Speaker 1: That's really interesting. Since all bitcoins are created equal, I

867
00:51:07,960 --> 00:51:13,319
Speaker 1: assume it's not like this fund manager or that stockscreen

868
00:51:13,600 --> 00:51:17,600
Speaker 1: or that index. At a certain point, it has to

869
00:51:17,719 --> 00:51:23,640
Speaker 1: come down to cost. Given your guys expertise scale the

870
00:51:23,719 --> 00:51:26,640
Speaker 1: ability to drive costs down. Is this just going to

871
00:51:26,680 --> 00:51:29,720
Speaker 1: become a race to the bottom in terms of fees

872
00:51:29,840 --> 00:51:32,279
Speaker 1: or how do you see this evolving over time?

873
00:51:32,640 --> 00:51:35,680
Speaker 2: Investors care about total cost of ownership, Barris, we were

874
00:51:35,680 --> 00:51:36,520
Speaker 2: talking about.

875
00:51:36,400 --> 00:51:38,800
Speaker 1: So it's not just the fee, it's everything.

876
00:51:38,360 --> 00:51:42,000
Speaker 2: Else that's evolved with It's the liquidity, it's the on

877
00:51:42,080 --> 00:51:45,680
Speaker 2: exchange access, it's the diversity of the counterparty ecosystem. All

878
00:51:45,680 --> 00:51:48,240
Speaker 2: of these things you can measure broadly in thinking about

879
00:51:48,280 --> 00:51:51,399
Speaker 2: market quality. Is there an options ecosystem on the et

880
00:51:51,560 --> 00:51:55,560
Speaker 2: ap and importantly, the operating model matters as well. How

881
00:51:55,680 --> 00:51:59,800
Speaker 2: is the custody working, is it? You know, institutional grade custody,

882
00:51:59,840 --> 00:52:02,040
Speaker 2: And if you really want to get into the details,

883
00:52:02,080 --> 00:52:04,680
Speaker 2: you will start to see differences in some of the

884
00:52:04,719 --> 00:52:07,719
Speaker 2: operating models, as you would with commodity ETFs as well.

885
00:52:08,400 --> 00:52:12,560
Speaker 1: So it's not strictly going to be a competition based

886
00:52:12,560 --> 00:52:15,840
Speaker 1: on fees. There are other factors there. Because you guys

887
00:52:15,840 --> 00:52:18,640
Speaker 1: have the ability to dominate in terms of fees versus

888
00:52:19,040 --> 00:52:22,879
Speaker 1: smaller competitors. You know, my instinct is, oh, we can

889
00:52:23,080 --> 00:52:27,440
Speaker 1: dominate this market share by just undercutting everybody else. It

890
00:52:27,560 --> 00:52:30,279
Speaker 1: sounds like you're taking a more holistic approach than that.

891
00:52:31,120 --> 00:52:33,120
Speaker 2: We just take a more holistic approach, and I think

892
00:52:33,160 --> 00:52:35,920
Speaker 2: that's what investors ask us for. We're certainly seeing this

893
00:52:36,120 --> 00:52:41,040
Speaker 2: in the fixed income ETF complex, particularly in treasury ETFs,

894
00:52:41,080 --> 00:52:44,000
Speaker 2: where there's been a lot of interest and attention lately

895
00:52:44,080 --> 00:52:46,279
Speaker 2: in the longer part of the curve. And what you

896
00:52:46,360 --> 00:52:50,279
Speaker 2: will see as is ETFs that have much more liquidity

897
00:52:50,760 --> 00:52:57,359
Speaker 2: options ecosystems will actually maintain higher price points, but from

898
00:52:57,400 --> 00:53:01,680
Speaker 2: an investor's experience perspective, probably a lower total cost of

899
00:53:01,719 --> 00:53:03,000
Speaker 2: ownership and they're bigger.

900
00:53:03,760 --> 00:53:08,760
Speaker 1: Interesting. I haven't seen a whole lot of marketing for IBIT.

901
00:53:08,960 --> 00:53:10,840
Speaker 1: In fact, I haven't seen a whole lot of marketing

902
00:53:11,200 --> 00:53:15,759
Speaker 1: for many bitcoin ETFs, although they're starting to bubble up online.

903
00:53:16,480 --> 00:53:19,800
Speaker 1: Is this a product that requires a lot of marketing

904
00:53:19,880 --> 00:53:22,640
Speaker 1: muscle or is this something that hey, if you want

905
00:53:22,680 --> 00:53:24,839
Speaker 1: to buy a bitcoin etf, you know where to go

906
00:53:24,920 --> 00:53:25,640
Speaker 1: find one.

907
00:53:26,080 --> 00:53:28,920
Speaker 2: This is a product that was launched in answer to

908
00:53:29,360 --> 00:53:34,200
Speaker 2: investor demand for access. So it really is a journey

909
00:53:34,280 --> 00:53:39,000
Speaker 2: of education in terms of what access we're providing and

910
00:53:39,040 --> 00:53:43,160
Speaker 2: for investors who want to learn more, not just about bitcoin,

911
00:53:43,239 --> 00:53:46,400
Speaker 2: but also it's an opportunity to teach investors about ETFs,

912
00:53:46,440 --> 00:53:49,480
Speaker 2: to get them to participate in a market's ecosystem that

913
00:53:49,560 --> 00:53:53,000
Speaker 2: allows them to get diversified exposures across lots of different

914
00:53:53,040 --> 00:53:56,080
Speaker 2: types of asset classes. So for us, it's an opportunity

915
00:53:56,160 --> 00:53:59,200
Speaker 2: to talk about access to markets in a broader way,

916
00:53:59,480 --> 00:54:01,759
Speaker 2: and that's it's going to bring us the next you know,

917
00:54:01,840 --> 00:54:05,600
Speaker 2: one hundred million of savers into equity and bond markets.

918
00:54:05,760 --> 00:54:09,279
Speaker 1: And this is still really very early days. Right when

919
00:54:09,320 --> 00:54:11,080
Speaker 1: did the ibit come out?

920
00:54:11,200 --> 00:54:12,320
Speaker 2: Second week of January?

921
00:54:12,440 --> 00:54:14,399
Speaker 1: I read somewhere you were like the fourth or fifth

922
00:54:14,560 --> 00:54:19,279
Speaker 1: largest flows for bitcoin ETFs without doing a whole lot

923
00:54:19,280 --> 00:54:23,560
Speaker 1: of marketing. What does that say about where investors want

924
00:54:23,560 --> 00:54:25,919
Speaker 1: to manage their risk, who they're comfortable with, who they're

925
00:54:25,960 --> 00:54:26,560
Speaker 1: familiar with.

926
00:54:27,480 --> 00:54:30,480
Speaker 2: I think that looking at the bitcoin ETF flows, you

927
00:54:30,480 --> 00:54:33,400
Speaker 2: do have to be very sensitive to the rapper switching

928
00:54:33,480 --> 00:54:35,600
Speaker 2: dynamics and what's driving it right now.

929
00:54:35,680 --> 00:54:40,960
Speaker 1: For running, were you running a Future's bitcoin ETF.

930
00:54:41,560 --> 00:54:43,520
Speaker 2: No, we weren't running it show, So it's not like it.

931
00:54:43,400 --> 00:54:46,280
Speaker 1: Was coming from internally. This is flows from.

932
00:54:46,160 --> 00:54:47,440
Speaker 2: Out Oh absolutely, yeah.

933
00:54:47,600 --> 00:54:47,640
Speaker 1: No.

934
00:54:47,760 --> 00:54:50,240
Speaker 2: When I say rapper switching, I'm talking about all different

935
00:54:50,239 --> 00:54:53,479
Speaker 2: types of rapper switching, whether it's from a trust, whether

936
00:54:53,520 --> 00:54:56,279
Speaker 2: it's from a Future's ETF, or whether it's somebody who

937
00:54:56,400 --> 00:54:58,680
Speaker 2: is holding bitcoin who actually you know, would prefer to

938
00:54:58,719 --> 00:55:01,240
Speaker 2: hold their bitcoin in any yeah, because they're worried about

939
00:55:01,480 --> 00:55:03,000
Speaker 2: losing their key or whatever it is.

940
00:55:03,000 --> 00:55:05,960
Speaker 1: For there seems a much more secure way to do it.

941
00:55:06,000 --> 00:55:09,040
Speaker 2: So we were talking earlier Barry about flow and tell

942
00:55:09,680 --> 00:55:12,480
Speaker 2: what do you read into from flows? The point that

943
00:55:12,520 --> 00:55:14,920
Speaker 2: I'm just making here is a month in it's a

944
00:55:14,920 --> 00:55:18,600
Speaker 2: little early to extract anything about demand for bitcoin. It's

945
00:55:18,880 --> 00:55:22,359
Speaker 2: very clear what investors are saying about ETFs and their

946
00:55:22,440 --> 00:55:26,640
Speaker 2: desire to manage whole portfolio risk and the convenience of

947
00:55:26,680 --> 00:55:30,080
Speaker 2: the rapper for the exposures that they want, the ETF

948
00:55:30,239 --> 00:55:32,560
Speaker 2: is the first choice, and I think you're going to

949
00:55:32,640 --> 00:55:34,440
Speaker 2: have to just have me back in a couple of

950
00:55:34,520 --> 00:55:36,319
Speaker 2: years to see what the bitcoin journey is.

951
00:55:36,680 --> 00:55:38,399
Speaker 1: So I don't want to put words in your mouth,

952
00:55:38,440 --> 00:55:40,719
Speaker 1: and I'm going to say what you're not saying. We

953
00:55:40,760 --> 00:55:42,920
Speaker 1: already know. Vanguard came out and they said they're not

954
00:55:43,000 --> 00:55:45,880
Speaker 1: going to do it. State Street seems to be lagging.

955
00:55:46,520 --> 00:55:51,160
Speaker 1: I can easily see Blackrock being the dominant bitcoin ETF

956
00:55:51,760 --> 00:55:55,160
Speaker 1: twelve eighteen months from now, especially because you don't have

957
00:55:55,239 --> 00:55:59,359
Speaker 1: those internal flows that some of your bitcoin competitors do.

958
00:56:00,080 --> 00:56:03,560
Speaker 1: And you're still kicking butt. So I'm being complimentary and

959
00:56:03,600 --> 00:56:06,840
Speaker 1: you're kind of being coy about it, and I understand

960
00:56:06,640 --> 00:56:10,200
Speaker 1: what your corporate charge is. But I think it's a

961
00:56:10,239 --> 00:56:14,360
Speaker 1: really fascinating story and it's going to be interesting to

962
00:56:14,520 --> 00:56:18,319
Speaker 1: watch what happens with Ethereum. But really it's come down

963
00:56:18,400 --> 00:56:23,120
Speaker 1: to a couple of coins that serve slightly different technological

964
00:56:23,200 --> 00:56:27,200
Speaker 1: purposes and then the rest of the technology around it.

965
00:56:27,200 --> 00:56:29,640
Speaker 1: It feels like We've been talking about a bit quinny

966
00:56:29,719 --> 00:56:34,000
Speaker 1: TF for years and years and now it's here and

967
00:56:34,400 --> 00:56:37,040
Speaker 1: five billion dollars in a month, is, you know, just

968
00:56:37,160 --> 00:56:41,120
Speaker 1: kind of bonkers. Let's leave the ibit story behind and

969
00:56:41,239 --> 00:56:43,600
Speaker 1: jump to my favorite questions that I get to ask

970
00:56:44,120 --> 00:56:48,200
Speaker 1: all of my guests, starting with what are you streaming

971
00:56:48,239 --> 00:56:51,000
Speaker 1: these days? Tell us what you're watching or listening to.

972
00:56:51,320 --> 00:56:53,479
Speaker 2: I know you always asked this, Barry. So, so here's

973
00:56:53,520 --> 00:56:56,200
Speaker 2: the secret with me and podcasts. I do listen to them.

974
00:56:56,480 --> 00:56:58,839
Speaker 2: I'm not a regular on any My trick is that

975
00:56:58,880 --> 00:57:00,759
Speaker 2: if there's a topic I want to learn about or

976
00:57:00,800 --> 00:57:03,000
Speaker 2: a person that I'm interested in, I search for that

977
00:57:03,080 --> 00:57:05,480
Speaker 2: and just listen to recent podcasts. So I've been interested

978
00:57:05,480 --> 00:57:09,040
Speaker 2: in hearing how people are covering bitcoiny taffs. And I

979
00:57:09,080 --> 00:57:11,880
Speaker 2: also actually currently am listening to a podcast with a

980
00:57:11,880 --> 00:57:14,759
Speaker 2: woman named Randy Brown, who we are having speak at

981
00:57:14,800 --> 00:57:17,360
Speaker 2: Black Rock. But she just wrote the new playbook for

982
00:57:17,480 --> 00:57:20,160
Speaker 2: women at work and I'm excited to meet her. I'll

983
00:57:20,160 --> 00:57:23,160
Speaker 2: be interviewing her. So that's how I listen to podcasts.

984
00:57:23,560 --> 00:57:26,800
Speaker 1: What about Netflix, Amazon Prime, anything like that.

985
00:57:27,200 --> 00:57:30,040
Speaker 2: So my husband is the curator of family shows and

986
00:57:30,120 --> 00:57:33,640
Speaker 2: right now he's going through like a zombie series phase.

987
00:57:34,120 --> 00:57:37,480
Speaker 2: So I don't have a current show that I'm super.

988
00:57:37,520 --> 00:57:39,520
Speaker 1: Not a zombie fan, not a big zombie fan.

989
00:57:39,640 --> 00:57:41,160
Speaker 2: I'm not a big zombie fandary.

990
00:57:41,320 --> 00:57:44,960
Speaker 1: Yeah, everybody talked about Walking Dead and it's not what

991
00:57:45,000 --> 00:57:45,520
Speaker 1: I want to see.

992
00:57:45,520 --> 00:57:48,640
Speaker 2: I love Buffy the Vampire Slayer, but that's a.

993
00:57:48,600 --> 00:57:51,840
Speaker 1: Whole First of all, it's got an element of humor

994
00:57:52,000 --> 00:57:55,240
Speaker 1: and wit in it. It inverts the whole model of

995
00:57:55,320 --> 00:57:57,920
Speaker 1: instead of the pretty cheerleader being killed by the monster,

996
00:57:58,800 --> 00:58:01,600
Speaker 1: it's exactly it turns it on its head and she's

997
00:58:01,680 --> 00:58:06,560
Speaker 1: the vampire Slayer from its inception. It has a certain

998
00:58:07,040 --> 00:58:10,960
Speaker 1: snarky knowingness that I just didn't pick up in The

999
00:58:10,960 --> 00:58:13,000
Speaker 1: Walking Dead. The Walking Dead was just a forwarfit.

1000
00:58:13,320 --> 00:58:15,240
Speaker 2: I'm really happy to hear you're a Buffy fan.

1001
00:58:15,680 --> 00:58:18,520
Speaker 1: I'm a big sci fi geek, so me too. And

1002
00:58:18,560 --> 00:58:22,320
Speaker 1: it's always funny when you discover people that you would

1003
00:58:22,400 --> 00:58:25,640
Speaker 1: never in a million years guess are like deep sci

1004
00:58:25,640 --> 00:58:28,680
Speaker 1: fi nerds. So it kind of comes with the math territory.

1005
00:58:28,720 --> 00:58:30,960
Speaker 1: There's a big you know, the Venn diagram has a

1006
00:58:31,000 --> 00:58:35,160
Speaker 1: big overlap with that. I'm still having an image in

1007
00:58:35,240 --> 00:58:38,520
Speaker 1: my mind of I don't remember if it was the

1008
00:58:38,560 --> 00:58:41,800
Speaker 1: series of the movie where it's Peewee Herban at the

1009
00:58:41,920 --> 00:58:45,400
Speaker 1: end where he's impaled on the stake and the death

1010
00:58:45,440 --> 00:58:50,240
Speaker 1: scene of him just going ah, just slowly dying. It

1011
00:58:50,600 --> 00:58:55,200
Speaker 1: like that sort of hilarious parody of the genre. If

1012
00:58:55,200 --> 00:58:57,680
Speaker 1: you're a film buffer a sci fi you have to

1013
00:58:57,720 --> 00:59:01,840
Speaker 1: really appreciate that. It's just sick people, you know, don't

1014
00:59:01,840 --> 00:59:04,320
Speaker 1: make movies that way. But it's really interesting. I don't

1015
00:59:04,360 --> 00:59:08,919
Speaker 1: remember if last time we spoke about my two favorite

1016
00:59:08,960 --> 00:59:11,200
Speaker 1: streaming sci fi recommendations.

1017
00:59:11,520 --> 00:59:11,960
Speaker 2: I don't think so.

1018
00:59:12,960 --> 00:59:16,520
Speaker 1: One is Altered Carbon, which is this short two season

1019
00:59:16,640 --> 00:59:20,320
Speaker 1: series that if you're like a hardcore sci fi game, okay,

1020
00:59:20,760 --> 00:59:21,640
Speaker 1: it's amazing.

1021
00:59:21,880 --> 00:59:22,560
Speaker 2: I've heard of it.

1022
00:59:22,600 --> 00:59:27,240
Speaker 1: And then second on Amazon Prime was The Expanse, which

1023
00:59:27,280 --> 00:59:31,480
Speaker 1: is insane and just it morphs over time and goes

1024
00:59:31,520 --> 00:59:36,400
Speaker 1: in all sorts of crazy places. But the universe it

1025
00:59:36,600 --> 00:59:40,280
Speaker 1: creates that's not a million years in the future. It's

1026
00:59:40,320 --> 00:59:44,120
Speaker 1: not radical technology. It's far enough in the future that

1027
00:59:44,400 --> 00:59:47,200
Speaker 1: people live on Moon, people live in Mars, people live

1028
00:59:47,240 --> 00:59:49,680
Speaker 1: out in the work in the asteroid belt, and they

1029
00:59:49,720 --> 00:59:52,640
Speaker 1: live out on I think Titan, one of the moons

1030
00:59:52,840 --> 00:59:57,080
Speaker 1: of Jupiter. And then what are the geopolitics of the Belters,

1031
00:59:57,800 --> 01:00:02,040
Speaker 1: the Earthers, and the Martians. So the technology is close

1032
01:00:02,160 --> 01:00:05,720
Speaker 1: enough to today that it's very believable, and the world

1033
01:00:05,720 --> 01:00:11,040
Speaker 1: that it creates is just it's completely mayhem, really really fascinating.

1034
01:00:11,440 --> 01:00:13,800
Speaker 1: You don't have to build weapons if you have the

1035
01:00:13,800 --> 01:00:19,040
Speaker 1: ability to just heave asteroids towards your enemy. It's just wild.

1036
01:00:19,480 --> 01:00:23,040
Speaker 1: So it definitely takes a couple of wacky turns in

1037
01:00:23,120 --> 01:00:26,000
Speaker 1: the latter seasons, but the whole ride is if you're

1038
01:00:26,000 --> 01:00:29,000
Speaker 1: a sci fi geek, you may appreciate it. On my list,

1039
01:00:29,400 --> 01:00:33,160
Speaker 1: let's talk about your mentors who helped shape your career.

1040
01:00:33,440 --> 01:00:37,160
Speaker 2: My earliest mentors were actually in theater. I had my

1041
01:00:37,200 --> 01:00:41,280
Speaker 2: first real backstage experience being a stage manager. The head

1042
01:00:41,320 --> 01:00:44,160
Speaker 2: of the drama department reached out to me. He wrote

1043
01:00:44,200 --> 01:00:46,480
Speaker 2: me a note afterwards, and he let me follow him

1044
01:00:46,480 --> 01:00:48,600
Speaker 2: everywhere and just taught me a lot that He wrote

1045
01:00:48,640 --> 01:00:51,680
Speaker 2: me a note that said, and I kept this note

1046
01:00:51,680 --> 01:00:54,560
Speaker 2: for years. It said, you've got what it takes tomorrow,

1047
01:00:54,600 --> 01:00:56,920
Speaker 2: thanks for sharing it with us. And I remember I

1048
01:00:56,960 --> 01:00:58,760
Speaker 2: saved that note, and even when I was doing things

1049
01:00:58,800 --> 01:01:01,240
Speaker 2: that had nothing to do with it, gave me a

1050
01:01:01,240 --> 01:01:03,280
Speaker 2: lot of confidence. So I would say that was kind

1051
01:01:03,320 --> 01:01:05,840
Speaker 2: of my first real mentorship experience.

1052
01:01:06,320 --> 01:01:08,760
Speaker 1: You mentioned some books earlier. Let's talk about some of

1053
01:01:08,760 --> 01:01:10,760
Speaker 1: your favorites and what you're reading now.

1054
01:01:11,120 --> 01:01:12,920
Speaker 2: Well, now that you said the sci fi thing, I

1055
01:01:12,920 --> 01:01:16,360
Speaker 2: will share my favorite book that I read in twenty three.

1056
01:01:16,440 --> 01:01:17,920
Speaker 2: I don't know if you've read this. It was called

1057
01:01:18,040 --> 01:01:22,520
Speaker 2: Cloud Cuckoo Land, which is a really cool book. It's

1058
01:01:22,600 --> 01:01:27,520
Speaker 2: I think six or seven different intertwined stories that range

1059
01:01:27,560 --> 01:01:31,840
Speaker 2: from ancient Greece to sometime in the future, but it's

1060
01:01:31,840 --> 01:01:36,440
Speaker 2: a story about hope and resilience and space and time

1061
01:01:36,560 --> 01:01:40,120
Speaker 2: and connections. And I thought it was just gorgeously written.

1062
01:01:40,120 --> 01:01:41,680
Speaker 2: And I read a lot of fiction, and I like

1063
01:01:41,760 --> 01:01:44,280
Speaker 2: things that just kind of expand how I think about

1064
01:01:44,320 --> 01:01:47,560
Speaker 2: the world. So I would definitely recommend Cloud Cuckoo Land.

1065
01:01:47,640 --> 01:01:50,320
Speaker 2: And then I'm also a market's history nerd and I

1066
01:01:50,400 --> 01:01:53,640
Speaker 2: always will be. So I am reading right now the

1067
01:01:53,680 --> 01:01:57,800
Speaker 2: Bitcoin Standard, which is less about bitcoin, I think, and

1068
01:01:57,920 --> 01:02:03,000
Speaker 2: more about the history of money and the ways civilizations

1069
01:02:03,200 --> 01:02:08,920
Speaker 2: have sought to find different ways to transfer value across space,

1070
01:02:09,040 --> 01:02:13,280
Speaker 2: across time. That's fascinating to me, and I think really

1071
01:02:13,320 --> 01:02:15,640
Speaker 2: instructive and thinking about the future markets.

1072
01:02:16,240 --> 01:02:18,720
Speaker 1: Did you happen to read either of the two big

1073
01:02:18,800 --> 01:02:23,160
Speaker 1: crypto Sam bankmin Freed FTX books, either Going Infinite or

1074
01:02:23,240 --> 01:02:28,680
Speaker 1: Number Go Up. They're both delightful in different ways. Number

1075
01:02:28,760 --> 01:02:32,440
Speaker 1: Goes Up is a little more horrifying because you see

1076
01:02:32,960 --> 01:02:38,880
Speaker 1: the cd underworld of how criminals, yeah and human traffickers

1077
01:02:39,000 --> 01:02:41,840
Speaker 1: use bitcoin. I'll use all sorts of crypto, but it's

1078
01:02:41,920 --> 01:02:46,200
Speaker 1: really a great work of journalism and revealing and Going Infinite.

1079
01:02:46,280 --> 01:02:50,400
Speaker 1: Anything Michael Lewis writes is always going to be delightful.

1080
01:02:50,680 --> 01:02:53,880
Speaker 1: So our last two questions, what sort of advice would

1081
01:02:53,880 --> 01:02:57,400
Speaker 1: you give a recent college grad interest in a career

1082
01:02:57,560 --> 01:03:02,880
Speaker 1: in investing, at indexing, any of the work you do

1083
01:03:03,080 --> 01:03:04,320
Speaker 1: at Blackrock.

1084
01:03:04,000 --> 01:03:06,840
Speaker 2: If they are interested, My advice would be to go

1085
01:03:06,920 --> 01:03:10,400
Speaker 2: for it. I talk to a lot of college grads

1086
01:03:10,520 --> 01:03:13,080
Speaker 2: who are wondering, well, I be good at this? Should

1087
01:03:13,120 --> 01:03:16,080
Speaker 2: I try it? And look, I had a theater background

1088
01:03:16,480 --> 01:03:18,640
Speaker 2: and I gave it a shot. There are so many

1089
01:03:18,680 --> 01:03:22,240
Speaker 2: different ways to be successful in investing in markets, and

1090
01:03:22,280 --> 01:03:24,840
Speaker 2: I've heard people say, you know, know your strengths and

1091
01:03:24,920 --> 01:03:28,120
Speaker 2: lean into your strengths, and sure that's true in the

1092
01:03:28,200 --> 01:03:31,240
Speaker 2: long term, but I think college and learning, and again

1093
01:03:31,240 --> 01:03:34,120
Speaker 2: I'm saying this is a parent of teens. It's about

1094
01:03:34,200 --> 01:03:37,040
Speaker 2: uncovering your passions and leaning into those. You have no

1095
01:03:37,200 --> 01:03:40,600
Speaker 2: idea what you're going to be good at until you try. So,

1096
01:03:40,680 --> 01:03:43,960
Speaker 2: if you're interested in investing and in markets, there's so

1097
01:03:44,120 --> 01:03:47,080
Speaker 2: many different jobs and types of ways to get involved,

1098
01:03:47,080 --> 01:03:50,040
Speaker 2: whether it's in an asset manager or a trading firm,

1099
01:03:50,200 --> 01:03:53,040
Speaker 2: or a broker dealer or a wealth manager. So get

1100
01:03:53,040 --> 01:03:55,840
Speaker 2: your foot in the door, start to see if it

1101
01:03:55,920 --> 01:03:57,280
Speaker 2: is you know what you want it to be.

1102
01:03:57,800 --> 01:04:00,600
Speaker 1: And finally, what do you know about the world of

1103
01:04:00,640 --> 01:04:03,600
Speaker 1: investing today you wish you knew thirty years or so

1104
01:04:03,640 --> 01:04:05,800
Speaker 1: ago when you were first getting started.

1105
01:04:06,080 --> 01:04:10,840
Speaker 2: The moments that feel the worst in markets, the scariest,

1106
01:04:11,040 --> 01:04:15,600
Speaker 2: the most volatile, are the moments where you can define

1107
01:04:15,920 --> 01:04:20,120
Speaker 2: the outcomes that you're delivering investors and define your career.

1108
01:04:20,320 --> 01:04:22,880
Speaker 2: I look across my career at these moments that I thought,

1109
01:04:22,880 --> 01:04:26,160
Speaker 2: oh my gosh, we never thought, you know, this sort

1110
01:04:26,160 --> 01:04:29,160
Speaker 2: of flash crash, this sort of dislocation, this sort of

1111
01:04:29,200 --> 01:04:31,960
Speaker 2: black Swan event would happen. But over the course of

1112
01:04:31,960 --> 01:04:34,760
Speaker 2: a thirty year career, which I've had, there have been

1113
01:04:34,840 --> 01:04:37,800
Speaker 2: many of those. And what we learn in those moments,

1114
01:04:37,840 --> 01:04:41,880
Speaker 2: how we stay close in those moments manage risk for investors,

1115
01:04:41,920 --> 01:04:44,560
Speaker 2: and what we learn coming out of them are the

1116
01:04:44,560 --> 01:04:48,280
Speaker 2: biggest contributions we can make from a portfolio perspective, and

1117
01:04:48,840 --> 01:04:51,640
Speaker 2: I think from a market's perspective. So it would have

1118
01:04:51,680 --> 01:04:54,520
Speaker 2: been interesting to have been told that on my first

1119
01:04:54,600 --> 01:04:56,480
Speaker 2: day of work, which was about thirty years ago.

1120
01:04:56,880 --> 01:05:00,040
Speaker 1: I love that answer. I have a vivid collection in

1121
01:05:00,120 --> 01:05:04,360
Speaker 1: the middle of the financial crisis of saying to one

1122
01:05:04,400 --> 01:05:09,240
Speaker 1: of the traders a line from Apocalypse Now the Daval character.

1123
01:05:09,760 --> 01:05:12,920
Speaker 1: You know, someday this war is going to end, he says,

1124
01:05:12,920 --> 01:05:18,040
Speaker 1: with a bit of longing and bittersweet recognition, that it's

1125
01:05:18,080 --> 01:05:22,160
Speaker 1: a unique moment in time, and drink it all in

1126
01:05:22,240 --> 01:05:24,440
Speaker 1: because you're not going to see anything like this again.

1127
01:05:24,760 --> 01:05:27,960
Speaker 1: And I think people sometimes don't appreciate that, at least

1128
01:05:28,000 --> 01:05:32,080
Speaker 1: in the mayhem of the moment. Exactly, really fascinating take

1129
01:05:32,120 --> 01:05:35,000
Speaker 1: on this. Samaraw thank you so much for being so

1130
01:05:35,200 --> 01:05:38,640
Speaker 1: generous with your time. We have been speaking with Samara Khone.

1131
01:05:38,720 --> 01:05:43,560
Speaker 1: She is chief investment Officer of ETF and Index Investments

1132
01:05:43,560 --> 01:05:47,400
Speaker 1: for black Rock. If you enjoy this conversation, check out

1133
01:05:47,480 --> 01:05:51,080
Speaker 1: any of the five hundred previous discussions we've had over

1134
01:05:51,120 --> 01:05:55,240
Speaker 1: the past ten years. You can find those at iTunes, Spotify, YouTube,

1135
01:05:55,560 --> 01:05:59,720
Speaker 1: wherever you get your favorite podcast. Check out my new

1136
01:05:59,720 --> 01:06:04,040
Speaker 1: post podcast At the Money, short ten minute conversations with

1137
01:06:04,200 --> 01:06:09,920
Speaker 1: experts about issues that matter deeply for your earning, spending,

1138
01:06:10,040 --> 01:06:14,240
Speaker 1: and most importantly, investing money. At the Money, wherever you

1139
01:06:14,360 --> 01:06:18,200
Speaker 1: find your favorite podcasts, and in the Masters and Business feed.

1140
01:06:18,560 --> 01:06:20,440
Speaker 1: I would be remiss if I did not thank the

1141
01:06:20,520 --> 01:06:24,080
Speaker 1: crack team that helps us put these conversations together. Paris

1142
01:06:24,120 --> 01:06:27,720
Speaker 1: Wald is my producer, Jan Taurus is my audio engineer.

1143
01:06:28,200 --> 01:06:31,600
Speaker 1: Sean Russo is my researcher. Atika al Broun is my

1144
01:06:31,680 --> 01:06:36,040
Speaker 1: project manager. I'm bat Rdholtz. You've been listening to Masters

1145
01:06:36,040 --> 01:06:39,520
Speaker 1: in Business on Bloomberg Radio.