WEBVTT - The 2025 ETF Mailbag 0:00:06.000 --> 0:00:06.720 Welcome to Trillions. 0:00:06.720 --> 0:00:09.280 I'm Joel Webber and I'm Eric Belchunas. 0:00:12.600 --> 0:00:15.040 Eric, we have not done a mail bag episode in 0:00:15.080 --> 0:00:17.440 a really long time, and people have questions. 0:00:18.480 --> 0:00:21.479 Yeah, and we have all kinds of vacation schedules that 0:00:21.520 --> 0:00:23.360 we're managing around, so this is a good time to 0:00:23.480 --> 0:00:25.239 just phone one in. 0:00:25.360 --> 0:00:29.800 Joel, Well, when we never phone anything in, I happen 0:00:29.880 --> 0:00:32.000 to be remote in the off while we're recording this, 0:00:32.080 --> 0:00:35.640 and I'm still gonna ask some questions on behalf of 0:00:36.800 --> 0:00:39.400 many of our listeners and some of your Twitter followers 0:00:39.400 --> 0:00:42.559 and your LinkedIn followers and anybody else who had some 0:00:42.680 --> 0:00:45.600 questions that they want to get answered to help us 0:00:46.600 --> 0:00:48.360 wade through some of the weeds. We're also going to 0:00:48.360 --> 0:00:51.720 be joined by Athanasio Sarah Figus, an ETF analyst with 0:00:51.720 --> 0:00:58.800 Bloomberg Intelligence, this time on Trillians bail Bag. Athanasos, Welcome 0:00:58.800 --> 0:00:59.440 back to Trillions. 0:01:00.040 --> 0:01:01.040 Hey, thanks for having me on. 0:01:01.680 --> 0:01:03.400 Okay, so you know how this works. We've asked for 0:01:03.400 --> 0:01:05.479 a bunch of questions and we're going to rattle through 0:01:05.480 --> 0:01:08.480 as many of them as we can this episode. You're 0:01:08.520 --> 0:01:11.720 going to hop in whenever warranted. Eric, the first question, 0:01:11.800 --> 0:01:14.840 I'm going to ask of you comes from John Andrew 0:01:14.880 --> 0:01:19.959 Carter Junior, who asked, what's the next big tech innovation 0:01:20.560 --> 0:01:25.360 in exchange traded funds that will affect the way I invest? 0:01:27.680 --> 0:01:29.360 I mean i'd have to go with eat the ETF 0:01:29.360 --> 0:01:32.760 share class which is coming out this summer, probably later 0:01:32.840 --> 0:01:37.759 this summer or early fall, where a mutual fund will 0:01:37.800 --> 0:01:39.880 just be able to bolt on an ETF share class. 0:01:40.080 --> 0:01:43.399 Only Vanguard does that currently, but there's I think over 0:01:43.520 --> 0:01:49.160 sixty different active managers that have filed for this basically 0:01:49.360 --> 0:01:54.280 exception to a rule, and if they get approved, which 0:01:54.280 --> 0:01:57.919 we heard they will, we're looking at basically all mutual 0:01:57.920 --> 0:01:59.560 funds will I mean not all of them, but a 0:01:59.600 --> 0:02:01.840 lot of them. You'll be able to just transfer from 0:02:01.880 --> 0:02:04.440 your mutual fund share to your ETF share. So I 0:02:04.480 --> 0:02:06.640 think for people out there who are you know, have 0:02:06.680 --> 0:02:09.799 been wanting to leave and not have a tax hit 0:02:09.840 --> 0:02:12.840 when they leave, they can now do that and it 0:02:12.919 --> 0:02:15.200 should be very interesting. I think it will be a 0:02:15.720 --> 0:02:18.840 drain from the mutual fund to the ETF, but that 0:02:18.880 --> 0:02:20.640 money was probably going to go over there anyway. This 0:02:20.800 --> 0:02:24.119 just makes it a little easier, more tax efficient, and lets 0:02:24.120 --> 0:02:27.280 some of these old legacy active managers save a client 0:02:27.400 --> 0:02:30.920 rather than losing one. So that's I would it's not 0:02:31.400 --> 0:02:33.760 the most interesting tech innovation. I think that's what they're 0:02:33.760 --> 0:02:36.720 talking about tech with the structure, would you do something different? 0:02:36.800 --> 0:02:39.200 No, I think that's spot on. I was thinking maybe 0:02:39.280 --> 0:02:42.240 like tokenization, which is like what Robinhood's trying to do. 0:02:42.680 --> 0:02:45.920 They just announced that that could be something, you know, 0:02:46.080 --> 0:02:50.760 maybe allowing access to things that were not able to 0:02:50.800 --> 0:02:54.440 fit into the ETF, like private equity. But that might 0:02:54.480 --> 0:02:56.680 be a tall order, right. ETFs give you a really 0:02:56.720 --> 0:02:59.040 good deal. You have pretty much access to everything. But 0:02:59.160 --> 0:03:02.600 I think that the tokenization stories can be around for 0:03:03.919 --> 0:03:04.360 some time. 0:03:04.720 --> 0:03:08.720 Okay, as long as we're talking about tokenization, Alvarro Martinez asks, 0:03:09.360 --> 0:03:13.880 as tokenization of real world assets gains traction, how do 0:03:13.919 --> 0:03:19.679 you envision tokenized ETFs transforming the traditional ETF structure, particularly 0:03:19.680 --> 0:03:25.280 in terms of settlement efficiency, investor access, regulatory oversight. Could 0:03:25.320 --> 0:03:28.440 this technology catalyze the emergence of twenty four to seven 0:03:28.480 --> 0:03:32.320 ETF markets or fractional ownership beyond what's already achievable with 0:03:32.400 --> 0:03:33.240 standard ETFs. 0:03:34.280 --> 0:03:39.240 So it's very interesting, it's exciting to Robinhood just announced 0:03:39.240 --> 0:03:43.800 their tokenizing everything for Europeans who want to get easier 0:03:43.840 --> 0:03:47.640 access to US equities, and they even said, oh, we're 0:03:47.640 --> 0:03:51.560 going to tokenize VU. But there's already a Vanguard SMPO 0:03:51.560 --> 0:03:54.000 five underd ETF in Europe called v USA, which is 0:03:54.000 --> 0:03:57.560 easily accessible and cheap. So I think, you know, when 0:03:57.600 --> 0:04:02.200 you think about tokenization, what is it actually do? If anything, 0:04:02.320 --> 0:04:05.600 it cleans up the back office a little. Using the blockchain, 0:04:05.960 --> 0:04:08.920 you can have faster settlement times, you could do twenty 0:04:08.920 --> 0:04:11.440 four to seven, But I mean, how many people really 0:04:11.480 --> 0:04:14.400 need that. I think the big thing for tokenization is 0:04:14.440 --> 0:04:17.320 for people who don't have access to a stock market, 0:04:17.400 --> 0:04:21.080 right So for the developing countries, tokens can be a 0:04:21.080 --> 0:04:24.640 life saver, especially stable coins, which are just basically tokenized dollars. 0:04:25.200 --> 0:04:28.839 There I'm very bullish on that. But for the developing world, 0:04:28.920 --> 0:04:33.120 for the developed world, where we all have the ability 0:04:33.160 --> 0:04:37.080 to roll out of bed in our underwear, still roll 0:04:37.120 --> 0:04:42.920 over to Schwab, open up the Internet and hit by 0:04:43.440 --> 0:04:45.800 and we can own almost anything under the sun in 0:04:45.839 --> 0:04:49.360 one second for almost no fee. I just don't really 0:04:49.440 --> 0:04:51.600 know how you're going to disrupt that. That's about is 0:04:52.560 --> 0:04:55.720 clean and easy and low cost as you could possibly get, 0:04:56.080 --> 0:04:59.440 and convenient so I think the tokenization story will be 0:04:59.440 --> 0:05:01.400 one of a back office story. I think they'll use 0:05:01.400 --> 0:05:05.440 the blockchain to maybe streamline some stuff in the back office, 0:05:05.440 --> 0:05:08.239 but you, as the user, probably won't know that notice 0:05:08.240 --> 0:05:12.160 the difference. But I could be wrong. So I'm bullish 0:05:13.200 --> 0:05:19.200 tokenization as a back office a disintermediator, but I'm bearished 0:05:19.200 --> 0:05:23.320 tokenization in terms of killing the ETF at least for now. 0:05:23.320 --> 0:05:26.200 I'm evolving on this issue, but I just don't see 0:05:26.320 --> 0:05:30.400 enough to disrupt what I just described in the rolling 0:05:30.400 --> 0:05:31.720 out of bed visual. 0:05:32.400 --> 0:05:34.520 I mean, I mostly aligned with Eric on this, like 0:05:35.040 --> 0:05:37.880 the back end, Like do people really care about that 0:05:37.960 --> 0:05:40.320 for the most part, Like it's for the you know, 0:05:40.360 --> 0:05:42.120 it's pretty good already we already have you know, they're 0:05:42.120 --> 0:05:43.640 already trying to move the T one settlement. 0:05:43.720 --> 0:05:45.080 Anyways, I think. 0:05:44.920 --> 0:05:49.159 The benefits are marginal, like okay, twenty four seven trading whatever, 0:05:49.200 --> 0:05:51.800 So just it's not it's not enough benefits to be 0:05:51.839 --> 0:05:54.919 a disruptor like the ETF was to the mutual fund. 0:05:55.520 --> 0:05:57.520 You know, I might give you act some cool stuff, 0:05:57.560 --> 0:06:00.760 but I'm still I'm with Eric on this one. 0:06:00.880 --> 0:06:04.000 The other thing is, what is an etfis that would 0:06:04.000 --> 0:06:07.760 be cool if it was tokenized. Okay, private equity maybe art, 0:06:08.000 --> 0:06:11.200 you know, stuff like this, but a lot of that, 0:06:11.279 --> 0:06:14.240 like private equity, let's take that. You can't really like 0:06:14.360 --> 0:06:18.560 sidestep to the regulations and just have a token out 0:06:18.560 --> 0:06:21.560 there for retail. I believe that the regulators won't really 0:06:21.600 --> 0:06:25.760 appreciate that. So even if something seems like, oh it 0:06:25.800 --> 0:06:28.640 hasn't been etfised, a token would fill in. I don't 0:06:28.640 --> 0:06:32.000 know how cleanly you can get that done without dealing 0:06:32.000 --> 0:06:35.440 with regulations. So the regulatory issue is a whole nother 0:06:35.760 --> 0:06:38.680 problem here that will have to be surmounted. That said, 0:06:39.120 --> 0:06:42.280 this particular sec somebody had commented to me when I 0:06:42.320 --> 0:06:45.320 was basically saying, I don't I'm not really bullish on 0:06:45.400 --> 0:06:48.160 robin Hood. And also, you see the guy from robin 0:06:48.160 --> 0:06:50.359 Hood with it looks like Johnny Depp from the movie 0:06:50.360 --> 0:06:54.880 Blow Yeah, and he's out there talking about tokenization and 0:06:55.440 --> 0:06:58.640 in like in con Paris or whatever, and I mean 0:06:58.680 --> 0:07:00.719 it was pretty showy. And I'm I'm not saying he's 0:07:00.760 --> 0:07:05.520 not smart, But when I think about that company trying 0:07:05.520 --> 0:07:07.280 to advertise is like, oh, we're going to give you 0:07:07.320 --> 0:07:09.800 all this stuff for low cost, And then I think 0:07:09.800 --> 0:07:12.160 of like Jack Bogel and Vanguard. I just don't know 0:07:12.320 --> 0:07:15.560 if people are going to leave that boy Scout, trust 0:07:15.560 --> 0:07:18.280 the Vanguard and black Rock and move over to Robinhood 0:07:19.040 --> 0:07:21.440 at least the big giant blob of money. Maybe some 0:07:21.520 --> 0:07:25.560 of the younger people. I don't really see that being 0:07:25.640 --> 0:07:29.080 that attractive. And if something's free, if Robinhood's saying it free, 0:07:29.280 --> 0:07:32.320 don't trust me. They are charging you somewhere else. It's 0:07:32.360 --> 0:07:35.360 probably going to pay for orderflow. They're probably selling your 0:07:35.480 --> 0:07:38.080 order flow to like Citadel, getting money there and you 0:07:38.120 --> 0:07:41.680 don't know it. So be careful out there when it 0:07:41.720 --> 0:07:44.120 comes to those kind of pitches, in my opinion, And 0:07:44.200 --> 0:07:47.800 so I don't know. I'm just skeptical because the US 0:07:47.880 --> 0:07:51.000 ETF market is the terroor dome. It is so hard. 0:07:51.000 --> 0:07:54.560 I've seen so many legacy companies come here and get humbled. 0:07:55.040 --> 0:07:59.280 It's hell for issuers but heaven for investors. And that 0:07:59.440 --> 0:08:02.560 hell is something that I feel like Robin Hood's trying 0:08:02.600 --> 0:08:06.000 to sidestep here. I just I have more faith in 0:08:06.040 --> 0:08:08.120 a more bullish on companies that have come into the 0:08:08.120 --> 0:08:11.160 ETF terrodome and figured out a way to survive and 0:08:11.240 --> 0:08:15.080 thrive in an honest fashion. I'm just so I'm not 0:08:15.120 --> 0:08:17.320 willing to like let go of all that and be like, oh, 0:08:17.360 --> 0:08:18.320 token to the new thing. 0:08:18.400 --> 0:08:20.840 Can't do it now, I'm with you, okay. 0:08:21.000 --> 0:08:25.520 Just on the topic of tokenization, Brian Tovar asks, from 0:08:25.600 --> 0:08:29.520 a custody ownership perspective, what's the difference between owning a 0:08:29.560 --> 0:08:32.840 tokenized stock versus an ETF stock? 0:08:35.320 --> 0:08:36.679 I mean, that's kind of where I get hung up, 0:08:36.760 --> 0:08:40.080 is I don't understand the difference. Like, if Microsoft is 0:08:40.160 --> 0:08:42.320 Microsoft stock and you knowing that in a token form, 0:08:42.640 --> 0:08:45.640 why not just own the ETF owned Microsoft stock unless 0:08:45.679 --> 0:08:49.920 they're issuing tokens like Microsoft tokens. Why I don't Still 0:08:50.200 --> 0:08:53.839 I'm struggling to wrap my head around. Besides the back 0:08:53.960 --> 0:08:56.439 end benefits and maybe twenty four hour trading, those sort 0:08:56.480 --> 0:09:00.800 of marginal benefits, what's the real meaningful difference between the two. 0:09:01.000 --> 0:09:02.720 The other problem is, you know, you got all these 0:09:02.760 --> 0:09:05.400 market makers and aps involved that people don't see. And 0:09:05.440 --> 0:09:08.720 this is like heavy duty liquidity and financial institutions, and 0:09:08.720 --> 0:09:12.800 they're smart. They arbitrage the price and the underlying all 0:09:12.840 --> 0:09:16.000 the time. And I've asked people, what's gonna happen if 0:09:16.040 --> 0:09:19.559 people start using tokens? Well, will the whole Wall Street 0:09:19.559 --> 0:09:23.920 apparatus just move over? Because then what about exchanges too, 0:09:24.040 --> 0:09:26.439 And there's some people say all that's gonna go away 0:09:26.840 --> 0:09:29.440 and everything's gonna be on the blockchain. But a couple 0:09:29.480 --> 0:09:33.240 of things. A. I think you're gonna find percent prems 0:09:33.240 --> 0:09:36.240 and discounts. Some people say we can automate the market making. 0:09:36.520 --> 0:09:38.680 I don't know, Like I think the system right now 0:09:38.800 --> 0:09:41.760 is what we call antifragile. You can call somebody, people 0:09:41.840 --> 0:09:46.440 have experience, there's many of them. The token world seems like, okay, 0:09:46.480 --> 0:09:49.400 we could like save a little time on the settlement. 0:09:50.040 --> 0:09:52.480 You can trade twenty four to seven. Costs are gonna 0:09:52.480 --> 0:09:53.800 be the same. It's not like token to be cheap. 0:09:53.800 --> 0:09:56.600 It can't be cheaper than ETFs. So again, it's marginal 0:09:56.640 --> 0:10:00.240 benefit for a lot more fragility, it seems to me. 0:10:00.280 --> 0:10:04.160 And as I've joked about with somebody on Twitter, centralization 0:10:04.400 --> 0:10:07.000 has its benefits, which is meaning you can call somebody 0:10:07.640 --> 0:10:10.880 if there's a real problem, you can take legal action. 0:10:11.120 --> 0:10:15.600 There's prospectuses. This is where I think centralization has its 0:10:15.679 --> 0:10:19.120 perkss you go full DeFi it's a little while west. 0:10:19.720 --> 0:10:23.319 So I don't actually know how all these questions will 0:10:23.320 --> 0:10:27.079 be answered again. The reason ETFs were such a big 0:10:27.160 --> 0:10:33.240 hit is because mutual funds were slow, expensive, not that liquid, 0:10:33.440 --> 0:10:35.800 and a lot of the costs were internalized. The taxes 0:10:35.800 --> 0:10:39.240 weren't good. ETFs corrected like five things. I mean, it 0:10:39.280 --> 0:10:43.559 was like five evolutionary steps. Tokenization seemed like one little baby, 0:10:44.200 --> 0:10:45.720 like a little mouse step. 0:10:45.800 --> 0:10:49.000 Yeah, I feel it doesn't change the experience, right, go 0:10:49.040 --> 0:10:51.400 one to your schwabap whatever you buy Microsoft boom, and 0:10:51.440 --> 0:10:53.280 I feel like when the market's open, I get a 0:10:53.280 --> 0:10:55.839 fail fair price on Microsoft. I don't know what I'm 0:10:55.840 --> 0:10:58.480 doing if I'm trading at like three am right like 0:10:58.559 --> 0:11:01.400 on the blockchain, it just feels like I don't understand 0:11:01.440 --> 0:11:04.920 how that really like improves the user experience. 0:11:06.440 --> 0:11:08.240 Okay, there are a number of things in there to 0:11:08.320 --> 0:11:10.400 follow up on, but I want to start with one 0:11:10.440 --> 0:11:15.760 from an ex username discover Lightcoin, who asks how profitable 0:11:15.960 --> 0:11:20.880 are ETFs really to the issuers and what variables determine 0:11:20.880 --> 0:11:23.880 if a new ETF launches a success or failure. 0:11:24.840 --> 0:11:27.160 ETFs are not that profitable for the assets they have. 0:11:27.280 --> 0:11:31.680 So they have like eleven trillion in assets and they 0:11:31.720 --> 0:11:35.160 bring in what like ten billion in revenue every year, right, 0:11:35.240 --> 0:11:38.280 so maybe a little more, and then market makers make 0:11:38.520 --> 0:11:41.760 about that too. So but to contrast, I believe mutual 0:11:41.800 --> 0:11:44.920 funds pulling like one hundred and twenty five billion in revenue, 0:11:45.000 --> 0:11:50.160 so it's just like and hedge funds pulling like triple ETFs, 0:11:50.160 --> 0:11:53.080 and they have less assets, so every other structure makes 0:11:53.160 --> 0:11:54.679 way more money. That's why when I go to these 0:11:54.679 --> 0:11:57.079 crypto conferences and they think they're like the big disruptor, 0:11:57.120 --> 0:11:59.760 and I'm like, dude, ETFs are way more punk rock 0:11:59.800 --> 0:12:01.760 than you think. That's why all the money goes into 0:12:01.760 --> 0:12:05.199 the bitcoin ETF is because it's so cheap and easy 0:12:05.240 --> 0:12:09.720 that the ETF has a lot of disruptive power because 0:12:09.720 --> 0:12:14.720 the consumers know it's a good deal and they will 0:12:15.160 --> 0:12:17.760 sell you out for an ETF that's like two basis 0:12:17.760 --> 0:12:21.280 points cheaper. I mean, they are brutal consumers, but when 0:12:21.320 --> 0:12:22.880 you service them, and like you said, if you can 0:12:22.880 --> 0:12:25.080 make it there, you're going to do well. Now, there's 0:12:25.080 --> 0:12:28.679 certainly room for some etf to be profitable. You know, 0:12:28.720 --> 0:12:31.040 you can carve out a good living there. Black Rock 0:12:31.080 --> 0:12:35.600 probably the best example. And then there's some hail mary's 0:12:35.600 --> 0:12:38.040 that do well, like the two X Navidia that makes 0:12:38.080 --> 0:12:41.760 six million a year. So there's been some like one 0:12:41.840 --> 0:12:43.840 off Hail Mary ones that have really done well. But 0:12:43.880 --> 0:12:46.920 for the most part, it's a hard business. It's tough. 0:12:47.000 --> 0:12:50.040 Wall Street would rather ETFs have not been this successful. 0:12:50.080 --> 0:12:50.680 I can tell you that. 0:12:51.240 --> 0:12:54.320 Okay, follow up question from the same user, what will 0:12:54.360 --> 0:12:58.560 happen to see a bitcoin or Ethereum etf sell off 0:12:58.600 --> 0:13:00.760 their assets and shut down and say they're on the 0:13:00.760 --> 0:13:03.359 bottom of the list for flows. Are they still profitable? 0:13:03.960 --> 0:13:07.400 So at Bitcoin ETF, even the lowest one of the 0:13:07.440 --> 0:13:11.120 spots is totally profitable. That's why this was such a 0:13:11.440 --> 0:13:13.920 crazy launch, is that I think wisdom Tree might have 0:13:13.960 --> 0:13:17.160 the least of the eleven or twelve out there, maybe hashtacks, 0:13:17.640 --> 0:13:20.520 but they're all in profit mode already. That's rare. Now 0:13:20.559 --> 0:13:23.319 on ether, I believe the couple towards the bottom are 0:13:23.880 --> 0:13:26.360 maybe not profitable. I would say, if you're going to 0:13:26.440 --> 0:13:29.000 charge twenty five thirty BIPs, which is what they most charge, 0:13:29.080 --> 0:13:32.800 you would need like about eighty million right to be profitable, 0:13:33.240 --> 0:13:34.840 and I don't know if all the ether have that. 0:13:35.000 --> 0:13:39.360 So over the next five years, you know, the spot 0:13:39.440 --> 0:13:41.200 ETFs look pretty good, but there's going to be some 0:13:41.320 --> 0:13:43.679 like you know, option overlay. It's not going to try 0:13:43.679 --> 0:13:45.440 all kinds of stuff. And there will be closures that 0:13:45.480 --> 0:13:48.280 are in the crypto ETF space for sure. And if 0:13:48.280 --> 0:13:50.920 a closure happens, if it's a company like Wisdom Tree 0:13:50.920 --> 0:13:53.880 and they close a fund, there's the company's still profitable. 0:13:54.280 --> 0:13:56.600 They just choosing to close that fund rather than sort 0:13:56.640 --> 0:13:58.600 of like you know, put more money into to try 0:13:58.600 --> 0:14:00.880 to sell it to make it profitable. It's really no 0:14:00.960 --> 0:14:02.080 different than any other business. 0:14:02.160 --> 0:14:02.320 You know. 0:14:02.520 --> 0:14:05.520 You you attempt all these products, you hope some of 0:14:05.520 --> 0:14:09.360 them hit. Usually have a couple of blockbuster hits, a 0:14:09.360 --> 0:14:12.120 couple in the middle, and then maybe a couple duds, 0:14:12.600 --> 0:14:15.800 and some issuers will keep those duds alive longer than others. 0:14:16.559 --> 0:14:19.480 Some close quicker. But I'd imagine in the crypto space, 0:14:19.520 --> 0:14:23.320 since it is so fledgling and new, you'll probably have 0:14:23.680 --> 0:14:26.200 them hang in a little longer than if they were 0:14:26.200 --> 0:14:27.760 trying some random theme ETF. 0:14:28.080 --> 0:14:30.280 Oh okay, you now understand, Yeah, you're Right's probably punched 0:14:30.280 --> 0:14:32.600 his way above its weight, like profitability wise and some 0:14:32.680 --> 0:14:35.640 other categories. And I think Bloomberg News just covered this 0:14:35.800 --> 0:14:38.640 right that black rocks ibit is like one of their 0:14:38.640 --> 0:14:42.360 most profitable. I think third or second. It makes more 0:14:42.400 --> 0:14:45.920 than their SMP product, So yeah, it definitely it speaks 0:14:45.920 --> 0:14:47.440 to the demand there too, and the ability to be 0:14:47.480 --> 0:14:48.600 able to charge a little bit more. 0:14:48.800 --> 0:14:48.960 Yeah. 0:14:49.040 --> 0:14:52.760 Joel Ethan actually helped News with this data. Ibit is 0:14:52.880 --> 0:14:56.720 third in profitability out of twelve hundred ETFs that Blackrock has, Joel, 0:14:56.800 --> 0:14:59.880 it's number three, and if it gets nine billion more 0:15:00.640 --> 0:15:02.880 based on the fee, it will be the most profitable. 0:15:02.960 --> 0:15:06.000 And nine billion is only a ten or eleven percent 0:15:06.280 --> 0:15:09.240 increase in Bitcoin's price, so it doesn't even need any 0:15:09.280 --> 0:15:11.800 new flows, just a nice little run in bitcoin. It 0:15:11.840 --> 0:15:14.040 will be the number one most profitable et from black 0:15:14.120 --> 0:15:16.520 Rock at a year and a half old. It's it's 0:15:16.600 --> 0:15:21.200 absolutely bonkers. So that said, people are like, oh, Blackrock 0:15:21.280 --> 0:15:23.120 is getting away with murder. He I'm like not really. 0:15:23.360 --> 0:15:25.880 Twenty five BIPs for that is pretty fair. Up until 0:15:25.880 --> 0:15:28.200 Blackrock came out, you had to pay two percent or 0:15:28.200 --> 0:15:30.960 one point five percent at best in Europe or in 0:15:31.000 --> 0:15:35.360 hedge funds, so twenty five is dramatically cheaper. I think 0:15:35.400 --> 0:15:38.000 this is a win win. You know, in capitalism, you 0:15:38.040 --> 0:15:40.320 want to if somebody's first has a good idea, has 0:15:40.320 --> 0:15:43.360 a good price, point, it's okay to make some money. 0:15:43.760 --> 0:15:45.880 I just so, I think this is a case where 0:15:45.880 --> 0:15:46.760 everybody won here. 0:15:47.240 --> 0:15:47.720 Yeah, I agree. 0:15:47.760 --> 0:15:49.800 I mean they're giving you IVV at three BIPs, right, 0:15:49.880 --> 0:15:53.360 like everything can't be free. But yeah, overall, it's a 0:15:53.400 --> 0:15:56.120 tough business. It's not even for these ascid managers. ETFs 0:15:56.160 --> 0:15:58.800 are such a small part of their revenue. Like JP Morgan, 0:15:58.800 --> 0:16:01.840 who's killing it, it's still like one percent of their 0:16:01.880 --> 0:16:02.680 total revenue. 0:16:02.840 --> 0:16:06.480 They're so lucky. Some jol some of these companies. I 0:16:06.480 --> 0:16:10.400 always said, the Wall Street banks probably have the best position. 0:16:11.160 --> 0:16:13.640 If you have other things that make you money, you 0:16:13.680 --> 0:16:16.600 can afford to get guts when it comes to your 0:16:16.600 --> 0:16:18.880 ETF business. And JP Morgan did. They had the guts 0:16:18.920 --> 0:16:21.720 to get cheap. They sold active at vanguardian fees and 0:16:21.760 --> 0:16:24.520 they're killing it. But it's harder for a company to 0:16:24.520 --> 0:16:27.200 do that when that's your only thing, because then you're 0:16:27.400 --> 0:16:30.600 instantly cannibalizing. But for JP Morgan, because they got so 0:16:30.680 --> 0:16:33.200 much going on, it's a little easier to have that 0:16:34.280 --> 0:16:38.280 intestinal fortitude. 0:16:40.920 --> 0:16:46.960 Okay, next question from pick god on X looking forward, 0:16:47.800 --> 0:16:50.600 is there ever going to be a product that catches 0:16:51.200 --> 0:16:54.760 or matches VU, which is obviously vanguards just and P 0:16:54.840 --> 0:16:57.680 five ETFs interesting. 0:16:59.080 --> 0:17:02.840 I think VO will be king for I don't want 0:17:02.880 --> 0:17:06.119 to say ever, but I'd say at least ten years. 0:17:06.600 --> 0:17:10.879 So Michael Saylor, famous for micro Strategy CEO, replied to 0:17:10.960 --> 0:17:14.840 one of my tweets colored weeks strategy. Sorry, yeah, it's 0:17:14.880 --> 0:17:21.600 just hey, it's cleaner, that's okay. Anyway, strategy, he said, 0:17:22.280 --> 0:17:25.000 mark my words, ibit will be the biggest ETF. So 0:17:25.240 --> 0:17:26.920 I did the math on this, and I think he 0:17:27.000 --> 0:17:30.040 said within ten years. I did the math, Joel. It 0:17:30.080 --> 0:17:35.040 would have to like Quinn triple its flows. WU would 0:17:35.119 --> 0:17:37.919 have to chill, and the S and P would have 0:17:37.960 --> 0:17:40.000 to stop going up, and Bitcoin would have to rally. 0:17:40.359 --> 0:17:44.320 So a lot would have to happen in that scenario. 0:17:44.400 --> 0:17:46.760 I think you have a case where maybe the US 0:17:47.000 --> 0:17:50.280 stock market has real issues and somehow Bitcoin is looked 0:17:50.280 --> 0:17:52.160 at as the savior asset like and it just goes 0:17:52.240 --> 0:17:54.560 up and up while the stock market goes down. That 0:17:54.680 --> 0:17:57.200 scenario hasn't really happened. Bitcoin tends to have a little 0:17:57.200 --> 0:17:59.920 more correlation to stocks, So as long as it's correlated, 0:18:00.359 --> 0:18:03.800 I stn't see how that's possible, but I bits rise. 0:18:03.840 --> 0:18:06.120 It's now the twenty third biggest ETF of all time 0:18:06.200 --> 0:18:08.879 at one point four years old, which is insane to 0:18:08.880 --> 0:18:11.760 be that high that quickly. I will never say never 0:18:11.800 --> 0:18:14.960 with IBIT. I thought vt I would be bigger one 0:18:15.040 --> 0:18:17.200 day because VOO and IVV be fighting over that same 0:18:17.240 --> 0:18:20.280 assets and the total market. But it turns out people 0:18:20.359 --> 0:18:22.720 want the S and P so bad, especially over any 0:18:22.720 --> 0:18:25.680 other index or the total market that they just VU 0:18:25.800 --> 0:18:28.399 and IVV can actually split some of that money and 0:18:28.480 --> 0:18:31.160 VOU will still be the biggest. So I don't see 0:18:31.200 --> 0:18:33.240 anything passing VU for at least a decade. 0:18:34.000 --> 0:18:36.280 Yeah, it's too it's too big, and we can't live 0:18:36.280 --> 0:18:38.640 in a world where ibit is the biggest ETF. VU 0:18:38.800 --> 0:18:41.520 keeps us in check, right, It's like it is going 0:18:41.560 --> 0:18:41.920 to quit. 0:18:42.119 --> 0:18:44.240 He yeah, I will quit if I'm going to retire 0:18:44.359 --> 0:18:46.840 if I BIT passes VU. It's like you know that 0:18:46.880 --> 0:18:49.800 phrase no country for old analysts roll like this is 0:18:49.840 --> 0:18:52.080 another one of the If I bid is the biggest ETF, 0:18:52.119 --> 0:18:55.240 it's like a whole generation of people are just gonna 0:18:55.240 --> 0:18:56.280 be like, I'm out. 0:18:57.040 --> 0:18:59.880 Yeah, VU VO gives us some hope. 0:19:00.800 --> 0:19:02.880 But all the point you said, though, they're spot on 0:19:02.920 --> 0:19:05.399 that people you know, ibit's still always going to be 0:19:05.440 --> 0:19:08.120 like a satellite position, so it's got to all come 0:19:08.160 --> 0:19:11.800 from price, which vol you know, people can have sixty percent, 0:19:11.920 --> 0:19:13.600 seventy percent allocations to VOO. 0:19:14.600 --> 0:19:18.040 There's one black sheep here and that is a Fidelity 0:19:18.680 --> 0:19:21.880 We're to do a conversion of its index SMP five 0:19:21.960 --> 0:19:25.400 entered ETF. I believe right now that's already bigger than SPY, 0:19:25.560 --> 0:19:27.960 So that would come in almost that where VU is. 0:19:28.640 --> 0:19:31.159 And if Fidelity were to really you know, put in 0:19:31.200 --> 0:19:34.440 its advisor network and Vanguard, you know, stumbled a little. 0:19:34.480 --> 0:19:37.800 There's an outside chance that could be something is the 0:19:37.800 --> 0:19:41.240 Fidelity conversion of an index mutual fund to an ETF, 0:19:41.240 --> 0:19:42.159 But that's a little out. 0:19:42.000 --> 0:19:45.560 There, okay. Next question comes from Liz Simmy who asked, 0:19:45.840 --> 0:19:48.840 since active is the coolest thing in ETFs, can you 0:19:49.160 --> 0:19:53.200 break down the difference between flows to traditional active strategies 0:19:53.240 --> 0:19:56.960 in ETFs versus thematic in ets and how the flows 0:19:57.000 --> 0:19:57.840 have changed over time. 0:19:58.400 --> 0:20:01.240 Yeah, Active is a pretty fluid turn and ETFs, and 0:20:01.560 --> 0:20:05.440 it's not traditional stock picking like, so flows to that 0:20:05.520 --> 0:20:09.920 type of stuff is pretty pretty low. When we say active, 0:20:10.080 --> 0:20:15.520 it's more things like single stock ETFs option overlays buffers, 0:20:15.720 --> 0:20:18.439 which technically get classified as active. I get it that 0:20:18.480 --> 0:20:22.320 it's not the traditional like stock picking, but I feel 0:20:22.359 --> 0:20:25.879 like with all these ETF options single stocks, people are 0:20:25.880 --> 0:20:28.280 their own active managers now, right, So instead of like 0:20:28.320 --> 0:20:31.920 going to Kathy Wood to buy these like stocks, there's 0:20:31.960 --> 0:20:33.960 like single stock versions of all these so they're just 0:20:34.119 --> 0:20:37.520 ended up doing on themselves. So the breakdown if you 0:20:37.720 --> 0:20:40.680 if you really look at it closely, it's not going 0:20:40.720 --> 0:20:43.640 to like the how we think active traditionally. It's sort 0:20:43.640 --> 0:20:47.560 of like this new generation of active, like mostly derivatives 0:20:47.640 --> 0:20:48.720 usage and things like that. 0:20:49.280 --> 0:20:52.720 Yeah, I think active is taking in forty percent of 0:20:52.760 --> 0:20:54.560 all the flows, and that sounds like, oh my god, 0:20:55.119 --> 0:20:57.480 active is back. It's a I could see a reporter 0:20:57.520 --> 0:21:00.200 a tempted to write that headline, But as Ethan's said, 0:21:00.240 --> 0:21:02.159 most of it is buffers and sort of you know, 0:21:02.280 --> 0:21:06.600 derivative using stuff that is more solution oriented. That said, 0:21:06.760 --> 0:21:12.760 there is some traction with traditional grandpa stockpicking active. You've 0:21:12.800 --> 0:21:16.520 got Capital Group DFA, JP Morgan JP Morgan in particular, 0:21:17.240 --> 0:21:20.119