Speaker 1: Walcaner Schillions.
Speaker 2: I'm Joe Webber and I'm Eric Belchunas.
Speaker 3: Eric, it's that time of year, not that I've been
Speaker 3: counting or anything, but we are halfway.
Speaker 2: It's water park season, Joel.
Speaker 1: It's these communities come in.
Speaker 2: It's summer splash plex in Mount Laurel shout out.
Speaker 3: That also means that we have a pretty good sample
Speaker 3: size that we can take stock of twenty twenty four
Speaker 3: and see what's been happening in the ETF industry.
Speaker 2: Isn't it crazy? It's like it's basically the year's basically
Speaker 2: half over.
Speaker 1: I mean, this is it's all downhill.
Speaker 2: Time flies so fast.
Speaker 1: You reach the top and now it's all downhill it.
Speaker 2: Is, and we get focused on a couple of things.
Speaker 2: All of a sudden you look up and you're like, okay,
Speaker 2: what what actually happens?
Speaker 1: So the market's been up, that's been one.
Speaker 2: Yeah, honestly, that's made time go faster because it's not different.
Speaker 2: It's like the same old kind.
Speaker 1: Of interest rates didn't come down.
Speaker 2: Yeah, what did anything happen?
Speaker 1: No, it's just like here we are a couple of
Speaker 1: months later.
Speaker 2: Besides the viccornyts I've been I've been living on Planet
Speaker 2: Crypto for like the last.
Speaker 3: Okay, so we've done this before. But halftime reports we
Speaker 3: assess some stuff that's gone down, maybe a little sneak
Speaker 3: peak of a few things to come take stock of everything.
Speaker 1: We've got some guests we do.
Speaker 2: We've got two of my favorite people from Vitafi, Todd
Speaker 2: Rosenbluth and Cynthia Murphy, both of whom I would consider
Speaker 2: og ETF analysts. They both at some point worked at
Speaker 2: ETF dot com, which was formerly Index Universe, and that
Speaker 2: to me was where I got inspired to even get
Speaker 2: in the industry. So it's always nice to have them on.
Speaker 3: Todd regular Cynthia's first time on the podcast, this time
Speaker 3: on Trillions Halftime Report. Todd, Cynthia, wocome to Trillions.
Speaker 4: Thanks for having us on the show.
Speaker 5: I'm so glad to be back.
Speaker 3: Before we talk about the play of the first half,
Speaker 3: do you want to set the scene here a little bit.
Speaker 1: I don't know Cynthia yet. Yeah, you don't know Todd
Speaker 1: from previous recording.
Speaker 2: You know Todd very well, but you kind of know Cynthia.
Speaker 2: I bring her up once every six months when I
Speaker 2: bring up the story of how when there was the
Speaker 2: Pundit's panel competition. I was robbed because I did uranium,
Speaker 2: which is now like a jillion percent since then, and
Speaker 2: the winner was Cynthia Murphy.
Speaker 1: So I know you by your legend.
Speaker 2: Yes, you know I bring every six months.
Speaker 1: What was the one that you beat him with?
Speaker 4: TDV Tech Dividends front pro Share.
Speaker 1: Yeah, now you know, I might have won the long
Speaker 1: game on that one.
Speaker 4: I'll just say that everyone who lost that day, because
Speaker 4: I was the newbie doing for the first time, has
Speaker 4: been saying that they were robbed. It's kind of a
Speaker 4: cliche at this point.
Speaker 2: Yeah.
Speaker 3: Look, I'm just in favor of Eric getting beat so
Speaker 3: you know whatever, whatever.
Speaker 5: She crushed it, she crushed it that day though.
Speaker 2: I think everyone tried too hard that day and Cynthia
Speaker 2: just was so organic and natural and it just played
Speaker 2: well because I didn't come in second either, which is
Speaker 2: so it's worse than I even say.
Speaker 1: Okay, so Eric, how are we going to do this?
Speaker 1: Evaluate the first half of play.
Speaker 2: Let's start with as classes roll, so you look at
Speaker 2: something like equities. They took in two hundred and eleven billion.
Speaker 2: So while it's down from like the second half of
Speaker 2: twenty twenty three, and it has peaked it. It once
Speaker 2: took in three hundred and fifty billion, so that's the record.
Speaker 2: But I would say two hundred and eleven is probably
Speaker 2: like the fourth best half on record.
Speaker 1: Wait, it was three fifty and a half or a
Speaker 1: full year.
Speaker 2: That's for a half a year, Okay, Yeah, So if
Speaker 2: you look at all halves, if you compare this half
Speaker 2: to every half in existence, this would be the one,
Speaker 2: two three fourth best half ever.
Speaker 5: Believe.
Speaker 6: I mean, we've seen in the time in the recent
Speaker 6: past where the equity market climbed higher and ETF investors
Speaker 6: were not participating. After the strong year we had in
Speaker 6: twenty twenty three, I think it's really encouraging to see
Speaker 6: money continue to go into equity ETFs, and in particular
Speaker 6: some of the broad acid allocation oriented products that investors'
Speaker 6: advisors keep embracing, the ETF rapper for the five hundred,
Speaker 6: for the Nasdaq one hundred, and so forth.
Speaker 2: This is a good point you're bringing up, actually, because
Speaker 2: last year this time we called the FOMO drought, stocks
Speaker 2: were up at the flows weren't there. So this time
Speaker 2: last year equities took an one hundred and ten billion,
Speaker 2: So one hundred billion more this year. Clearly investors are
Speaker 2: getting in. You know why there was a FOMO drought
Speaker 2: though money market funds were yielding five percent. Seems like
Speaker 2: people are like, well, I'd rather have fifteen twenty percent
Speaker 2: equity returns than five percent in money market. So that
Speaker 2: seems to be the difference this year.
Speaker 4: Yeah, but isn't within that equity sleeve. Isn't a lot
Speaker 4: of it going to international equity, which I think it's
Speaker 4: a little actually speaks more about risk off than risk on.
Speaker 4: It's that search for value, which I think has been interesting.
Speaker 4: A lot of money has gone for We always talk
Speaker 4: about every year being the year of diversification into international,
Speaker 4: and we are actually seeing that.
Speaker 2: This year international did take in its fair share. But
Speaker 2: US still rules for sure, but in portion a lot
Speaker 2: of countries and regions are having all time highs. We
Speaker 2: don't it doesn't break through in the US media because
Speaker 2: whatever you're doing in another country out there, the QUES
Speaker 2: is beating you.
Speaker 6: It's like well and money and yeah, and money's going
Speaker 6: into the Q the QS and QQQM in particular.
Speaker 5: I know we're gonna get to the bottom up.
Speaker 2: We on our team sometimes we like how much sell
Speaker 2: side research could be summed up with by QQQ like it. Honestly,
Speaker 2: it's it's really much easier than people make it out
Speaker 2: to be. I mean, just this index is just lethal.
Speaker 2: I mean, what's the point of investing anywhere else? Troll?
Speaker 3: Well, you could do mag right, just the magnificent seven.
Speaker 3: How does that compare?
Speaker 2: That is interesting? By the way, are you surprised by
Speaker 2: this that the ques are mostly Magnificent seven stocks? I
Speaker 2: believe it's like fifty percent of the rest. But the
Speaker 2: round hills, like, oh, why don't we just come out
Speaker 2: with a magnificent seven cret cream of the crop and
Speaker 2: it's got like a ton of money. Yeah, it just
Speaker 2: seems like it's like, really, it was that simple.
Speaker 6: You focus on those seven companies, eight stocks that's performed well,
Speaker 6: even if a couple of them have dropped off. But yeah,
Speaker 6: we're just excited to see the equity ETF adoption, both
Speaker 6: actively managed equity ETFs which are quite strong, and even
Speaker 6: the broad index space products as well.
Speaker 3: Okay, what about fixed income because it's always been like,
Speaker 3: this is always the year of the fixed income ETF.
Speaker 2: It's you know, it's always the year of something, isn't it.
Speaker 2: I mean, yeah, well, you know, you're an editorial, you
Speaker 2: get everything like you.
Speaker 1: Got three years running of like this is the year.
Speaker 2: We doing out look for next year. I mean, anyway,
Speaker 2: it's getting rair until in July. Okay, so let's look
Speaker 2: at fixed income eighty nine billion. That would be about
Speaker 2: the sixth best half ever. But I will say if
Speaker 2: you look at a chart of fixed income flows, they
Speaker 2: used to average forty thirty five billion a year a
Speaker 2: half a year. Sorry, Now they're averaging one hundred you know,
Speaker 2: ninety to one hundred and ten billion, So they around
Speaker 2: twenty twenty around the pandemic, they just kind of went
Speaker 2: into this other gear and they've lived up there.
Speaker 1: Now.
Speaker 5: Yeah.
Speaker 6: I mean, well, we saw adoption of fixed income ETFs
Speaker 6: as the go to vehicle for institutional investors.
Speaker 5: Who favored the liquidity.
Speaker 6: But you got to even put this year in perspective
Speaker 6: because coming in we had the overall industry expected multiple
Speaker 6: rate cuts. We haven't had any yet as the time
Speaker 6: we're recording this, and probably going to have one maybe
Speaker 6: by the end of the year. That's just a different environment.
Speaker 6: But it just shows that investors have rotated, they've been
Speaker 6: comfortable taking on interest rate risk or taking it off
Speaker 6: but using the ETFs as the vehicle of choice.
Speaker 4: Yeah, I would just sad. Just this morning, actually, I
Speaker 4: was talking to the guy who does our vetafy pro
Speaker 4: data analytics tool and codes all that stuff and he
Speaker 4: runs all the portfolios, and he was telling me, like,
Speaker 4: all the behavioral data shows that by far people are
Speaker 4: playing around and trying to figure out how to build
Speaker 4: equities even alternatives, and that fixed income is still that
Speaker 4: after thought. Advisors are still like not quite sure what
Speaker 4: to do about it. So I think there may be
Speaker 4: still be like you know, early innings just going for
Speaker 4: easy button choices because they're not quite sure how to
Speaker 4: position at this point.
Speaker 1: I love the easy button Eric.
Speaker 2: I know he loves that, but by the way, he
Speaker 2: thinks there should be an ETF, which makes it's a
Speaker 2: logical thought where it's just everything in the entire world
Speaker 2: in one ETF. You can just hit by and you.
Speaker 1: Own it easy, but take her easy.
Speaker 2: The problem is advisors want to be the deciders. It's
Speaker 2: like you're putting advisors out of busess with that roll.
Speaker 5: That's but it's a great self directed tool.
Speaker 2: Yeah, so one thing about fixed income that's interesting free
Speaker 2: By the way, thanks for listening, we can create the
Speaker 2: ind they have fixed income active managers are still in demand,
Speaker 2: and so yes, there's some active fixed income ETFs, but
Speaker 2: the active fixed income mutual funds have taken in money
Speaker 2: so like bond managers. I think it's because it's like
Speaker 2: there's so many bonds. The element of time is like
Speaker 2: makes it more like chess than checkers. And I think
Speaker 2: advisors still are willing to give money to a bond
Speaker 2: manager and that will always I think, put somewhat of
Speaker 2: a lid on fixed income relative to equities in the
Speaker 2: ETF wrapper.
Speaker 6: Yeah, but we are seeing the products that people have
Speaker 6: gone to and the managers that they've gone to for
Speaker 6: years in the mutual fun world are now available and
Speaker 6: offering products in the ETF world. Capital Group has had
Speaker 6: a lot of success with active fixed income ETFs.
Speaker 5: PIMPO has been there the longest.
Speaker 6: Blackrock, I know we're going to talk about individual products,
Speaker 6: but Blackrock has had success with the bink ETF that's
Speaker 6: run by Rick Reader not even or just past the
Speaker 6: year and is crushing it in terms of asset gathering.
Speaker 6: We are seeing more and more active management within the
Speaker 6: fixed income space.
Speaker 2: Yeah, no, it's got everything and corporate did the best
Speaker 2: of every sector in bonds this year, and treasuries down
Speaker 2: a little bit from last year. They switched places this
Speaker 2: year as again investors taking on more risk. And then
Speaker 2: you know what did really well that was kind of
Speaker 2: introduced for recently is colo ETFs collateralized loan obligations, which
Speaker 2: everybody kind of gets memories of two thousand and eight.
Speaker 2: But I've talked to some of these people. They came
Speaker 2: on ETF. It's not as bad as it's not as
Speaker 2: risky as you think that JAW is now ten billion
Speaker 2: dollars this the janis. Yeah, that crazy that we got
Speaker 2: to have a segment called they grow Up So Fast.
Speaker 2: JAW would be a great candidate.
Speaker 6: Yeah, that's Janis Henderson putting their best in the ETF
Speaker 6: structure and just tremendous demand. It just shows that the
Speaker 6: ETF rapper works for many investment styles well.
Speaker 4: And just to go back to the memory of the
Speaker 4: CLOS is, we hope they don't grow up too fast.
Speaker 4: We hope we know what we're doing this time around, right.
Speaker 2: Fair point, Yeah, you don't want clos to grow up
Speaker 2: too fast?
Speaker 1: Right?
Speaker 3: Okay, I want to talk about another asset class. And
Speaker 3: we've gone through the usual ones. What about alternatives?
Speaker 2: Yeah, so alternative is a thirty five billion. That would
Speaker 2: be the biggest year everag role by like fivefold. But
Speaker 2: the thing is we put in the bitcoin ETFs into alternative,
Speaker 2: so that's why that number is so big. If we
Speaker 2: carve that out, alternative would be having an average year.
Speaker 2: But the bitcoin ETFs all told are you know, fifteen
Speaker 2: billions about between all the new ones that came out
Speaker 2: and then even ibit has taken in a little bit,
Speaker 2: So that is a tremendous start. We've talked about on
Speaker 2: the show many times. But alternative overall is just pretty
Speaker 2: small like hedge fund style ETFs, so that number is
Speaker 2: a little skewed. But also interesting is commodities outflows this year,
Speaker 2: so how much five billion dollars? So that's also interesting
Speaker 2: is that the bitcoin ETFs cleaned up gold seeing outflows
Speaker 2: even though that the price is up. That was an
Speaker 2: interesting combo there with the.
Speaker 1: Cashion on the real gold and put it in the
Speaker 1: digital gold.
Speaker 2: It seems like that's what people did, but you know,
Speaker 2: we don't can't ever tell what exactly what they're doing,
Speaker 2: but that seems like what happened.
Speaker 6: Yeah, but we're hearing it vetify from advisors that are
Speaker 6: now heading into the middle of the year. They're looking
Speaker 6: towards alternative investments. They're not only looking to crypto, they're
Speaker 6: looking to gold. We had verified would consider covered call
Speaker 6: ETFs as perhaps within the alternative space that are options
Speaker 6: based strategies from NEOs and JP Morgan among others. We're
Speaker 6: seeing advisors investors looking for something else besides stock and
Speaker 6: bond exposure using ETFs.
Speaker 2: Yeah, and I think twenty twenty two, which was the
Speaker 2: really bad year, the sixty and the forty both went down,
Speaker 2: and since that moment, people have said, Okay, I'm open
Speaker 2: to something else that can hedge the sixty forty. So
Speaker 2: I think that's where Active actually comes into play. Active,
Speaker 2: by the way, having another big year. I think they've
Speaker 2: taken in like twenty to thirty percent of the flows.
Speaker 5: Again, and not just one category. We've seen it for categories.
Speaker 6: We've seen it for equity, and we've seen it for
Speaker 6: fixed income, which is just encourage.
Speaker 1: What is it at this point? What's driving that? Do
Speaker 1: you think? Todd?
Speaker 6: I think the fact that we have supply is helping
Speaker 6: that we have some of these leading asset managers Hero
Speaker 6: Price and Fidelity Capital Group that I mentioned earlier. That's
Speaker 6: playing a role. But given the market volatility, and certainly
Speaker 6: in fixed income where I certainly don't know the next
Speaker 6: move of the FED, the average investor may not know that.
Speaker 6: Either they're comfortable turning to active management to get that expertise,
Speaker 6: but they're also coming to active management for stock specific
Speaker 6: ideas as well. We've seen some success and I know
Speaker 6: when we get to the leader board we're going to
Speaker 6: see some active products there.
Speaker 4: Yeah, but I do think the branding power that has
Speaker 4: stepped into the space has made a difference. Because if
Speaker 4: you have to sit in front of a client and
Speaker 4: explain why did you pick this active manager I never
Speaker 4: heard of and it's not working, it's a really tough conversation.
Speaker 1: The star power helps.
Speaker 4: When you have that star power really helps.
Speaker 2: And also we dug into the numbers of active it's
Speaker 2: a little more nuanced than just oh, the return of
Speaker 2: the stock picker. A lot of the active is the
Speaker 2: cover qull atfs, which you could argue is people aren't
Speaker 2: buying for the manager, they're buying for the actual income.
Speaker 2: Then there's a chunk of active into like DFA, but
Speaker 2: it's equal to the amount coming out of its mutual funds,
Speaker 2: so there might be some just transfer.
Speaker 5: Some of that.
Speaker 6: But again fidality bondecounts I had already. Bond eef has
Speaker 6: been popular this year.
Speaker 2: The other thing is the fees finally got low inactive,
Speaker 2: they finally got below like the twenty basis point all
Speaker 2: important line and then and the other ones are below forty.
Speaker 2: As long as you're below forty and you're active, you
Speaker 2: have a fighting chance for organic growth in my opinion.
Speaker 3: Which by the way, just back to bitcoin, where did
Speaker 3: they come out at and where did they end up at?
Speaker 1: From a few standpoint, Well.
Speaker 2: I remember the arc was first I think there was
Speaker 2: seventy five in a prospectus, and then Fidelite came in
Speaker 2: thirty nine. Those are the first two and then boom.
Speaker 2: There was like at twenty four period where Invesco was like, Okay,
Speaker 2: we're twenty five, but we have a waiver, and then
Speaker 2: BlackRock's like, oh, we're twenty five or something like that.
Speaker 2: Once Blackrock went in twenty five, I think they went in.
Speaker 2: Everybody had to get real close to that because you
Speaker 2: can't be too farway from Blackrock if someone won't buy
Speaker 2: your stuff, so then Blackrock I think then in introduce
Speaker 2: the waiver after the dust subtle droll. All of them
Speaker 2: were between twenty and thirty basis points. I think Franklin
Speaker 2: actually went one lower to nineteen. And that's where we're at,
Speaker 2: which I'm surprised to get. Well, not yet right now,
Speaker 2: there's still the zero over You're right, there's waivers and stuff,
Speaker 2: but I don't like to count the waiver too much
Speaker 2: because it runs out, but the fee behind it is
Speaker 2: still cheap, because sometimes there's waivers and the fee is
Speaker 2: expensive behind it, but in this case, the fee behind
Speaker 2: it isn't that bad either, which again speaks to the
Speaker 2: terrodome aspect of the US market, where in other countries
Speaker 2: and other vehicles, these bitcoin funds are over one percent,
Speaker 2: so this is really monumentally cheap.
Speaker 4: Yeah, but I'm curious to see how they unwind all
Speaker 4: the waivers. I know they're specific, you know, dead end
Speaker 4: dates on prospectuses and stuff. But you know, we've seen
Speaker 4: that it's really hard to go from zero up, so
Speaker 4: you end up getting a bunch of extensions and you know,
Speaker 4: waiver to infinity. So I'm curious to see when when
Speaker 4: the unwinding comes, where the reaction is.
Speaker 1: The revenge of total Yeah, alright, Act two.
Speaker 2: Okay, so we're gonna go tickers. So is the leaderboard
Speaker 2: top five inflows of the year number one? You can
Speaker 2: guess it VU, yes, Well, guess the number twenty five bill? Nope?
Speaker 2: Higher forty yes? Uh? Forty billion is ridiculous. Okay, just
Speaker 2: so you know, the record for a calendar year is
Speaker 2: fifty So VU is already christion it. Yeah, I mean,
Speaker 2: what a monster this thing is. The next one is
Speaker 2: sixteen billion.
Speaker 1: Joel, who's that hold on? Cynthia is gonna guess IVV?
Speaker 2: Yes, good job, See told.
Speaker 1: You it wasn't that hard. It's like the other It is.
Speaker 5: Very very well.
Speaker 2: It's kind of a tie. There's a tie for second.
Speaker 2: IVV is one another one.
Speaker 1: It was the other one, Todd.
Speaker 5: It's I BIT right, that's right.
Speaker 6: So so black Rock has the second and the third
Speaker 6: largest EV.
Speaker 2: It's the figure, the actual figure sixteen point nine, sixteen
Speaker 2: point six. So IVV, I B I T But that
Speaker 2: tells you vou is on another planet. Then you have
Speaker 2: IVV and I BIT and then four and five you
Speaker 2: guys can guess that that's a tougher one. We already
Speaker 2: mentioned on this program.
Speaker 1: Just I'm putting my money on Cynthia again.
Speaker 2: Oh pressure, the ticker was already said on Yes.
Speaker 1: How much did the ques take in twelve.
Speaker 2: Point nine billions? So we'll run up to thirteen and
Speaker 2: number five will run up to thirteen and you can
Speaker 2: get this. Come on, I would go with fidelities. No,
Speaker 2: that's seven, okay, this this is always in the top five.
Speaker 2: It's always lingering. It's never one or two, but it's
Speaker 2: always like five, four through six. This is a stud ETF.
Speaker 2: It just slowly hoovers up money. This isoring. This is
Speaker 2: Vanguard Total Stock Market. That's it VTI. So that's your
Speaker 2: top five.
Speaker 6: You don't like it when I bring the boring ETFs
Speaker 6: to the top.
Speaker 4: The problem is no fixed income in there.
Speaker 2: No six is agg but you're right. The top five
Speaker 2: is all stocks and bitcoin, which is in my opinion,
Speaker 2: risk gone. But yeah, that's I'm not too surprised by this.
Speaker 2: I think I bit taking in sixteen point six billion
Speaker 2: as a surprise to anybody. That's a ton of money
Speaker 2: for a new ETF. And the queues obviously going strong,
Speaker 2: even though there's a cheaper option with QQQM, which is twelve.
Speaker 1: Okay, do you think ibit can maintain this pace?
Speaker 2: No, James and I have a calculation that the bitcoiny
Speaker 2: tips will net ten to fifteen billion in one year.
Speaker 2: They're already right about fifteen billion, so they've already gotten
Speaker 2: to our ceiling. But remember, things can happen. Bitcoin could
Speaker 2: have you know, it's very volatile. But I we're probably
Speaker 2: going to be proven wrong. But let me give you
Speaker 2: this stat. We just ran I bit touched twenty billion
Speaker 2: in assets the other day barely. It's down in nineteen
Speaker 2: point eight I think right now, but it touched twenty billion.
Speaker 2: It reached twenty billion dollars in one hundred and it's
Speaker 2: fifty seven days. The next fastest ETF to reach twenty
Speaker 2: billion dollar? Do did it in nine hundred and like
Speaker 2: forty days? Can you get the ticker? Well, I would
Speaker 2: think it's GLD no cut, so it's a more recent one.
Speaker 6: Oh that's Jeppie then yes, okay, I was trying to
Speaker 6: think of who was recent.
Speaker 2: So anyway, this thing is breaking all kinds of records.
Speaker 5: I just think it's impressive.
Speaker 6: Well, first of all, VU on its own, that's going
Speaker 6: to hit the record, as you mentioned, is impressive. We've
Speaker 6: got those two IVV and VU and SPLG, which is
Speaker 6: the stage street low cost ETF that's also punching above
Speaker 6: its weight and gathering assets. I just come back to,
Speaker 6: it's just so exciting that this is how people are
Speaker 6: starting to get exposure to ETFs is through the S
Speaker 6: and P five hundred, and then we're seeing the next
Speaker 6: wave that's narrower slices or bitcoin or what have you.
Speaker 2: You know, it's interesting. And eighthan look at this last
Speaker 2: year the percentage of flows going into the S and
Speaker 2: P five hundred ETFs. There's now four of them. We
Speaker 2: got an spl and they're all again almost free. But
Speaker 2: it's it's got to be over a quarter of the flows.
Speaker 2: So even though we talk about these niche things there's
Speaker 2: cheap Beta is just the real deal. It's just Hoover's
Speaker 2: in cash hand over for Yeah.
Speaker 4: But the Bitcoin is is ah object, Yeah, I mean
Speaker 4: super shiny, and in the case of the success of
Speaker 4: the launch, part of it is you know, oh the
Speaker 4: ATF repper, that's awesome. We're all super you know protfs here,
Speaker 4: But part of it is Bitcoin is a new asset
Speaker 4: so can we repeat that unless somebody comes up with
Speaker 4: a new acid, I don't think we'll ever see something
Speaker 4: like that again. I don't even think the Ether ETFs
Speaker 4: would be the same same phenomenon. I think, for one,
Speaker 4: we're all tired. It all happened in the same year.
Speaker 4: I don't think we can take much more or you're.
Speaker 2: Gonna get to You know what Ethan said today when
Speaker 2: when someone filed for a Ether spot covered call each other, Yeah, no,
Speaker 2: make it stop. It's never gonna stop anyway. One more
Speaker 2: thing on the I agree with you. Ether maybe takes
Speaker 2: twenty percent of what bitcoin has. But Joel, what she
Speaker 2: just said is something that I've been trying to explain
Speaker 2: to people who might not love the fact that I've
Speaker 2: gotten so into it. It's a once in a lifetime
Speaker 2: opportunity or situation. As an analyst, I wasn't really around.
Speaker 2: I just started covering ets when GLD came out, so
Speaker 2: it wasn't really aware of how big that was. And
Speaker 2: this is the biggest new asset class situation since gold.
Speaker 2: So definitely again once every twenty years.
Speaker 1: Maybe I just want to put that on record. You
Speaker 1: think four billion for Ether? Yeah like that? That seems fair,
Speaker 1: right or over under five you're going to take the under.
Speaker 2: I would take the under any year.
Speaker 4: Ah me too.
Speaker 1: I say.
Speaker 4: The closest to this experience that I remember is when
Speaker 4: DXJ came out and we were all going nuts and
Speaker 4: we're currency hadgi yes and by comparison.
Speaker 2: By the way, that was the Remember that was one
Speaker 2: of our trivia questions. That was the last THETF to
Speaker 2: win the flow crown. That wasn't black Rock or Vanguard. Yeah,
Speaker 2: that cool stat that is I think you might have
Speaker 2: gotten it, Todd.
Speaker 5: I got it right and and I won that.
Speaker 2: By the way, we need a new bet. We were
Speaker 2: thinking what can we bet on? So we'll see what
Speaker 2: we come up with.
Speaker 1: The We're not.
Speaker 2: Done yet, all right now. The outflows which is interesting, okay,
Speaker 2: GBTC negative eighteen billion, that is a bomb. What an
Speaker 2: unlocked There's a whole can of worms there.
Speaker 3: Spy is because all the other bitcoin ETFs took in inflows.
Speaker 2: Well we no, but like FTX had some legal money
Speaker 2: in there that went out that didn't go to the
Speaker 2: bigcoin ETFs. There was some other lawsuits I would call
Speaker 2: these like unnatural operational money that left I think half
Speaker 2: of it the other half probably found a cheaper ETF. Okay,
Speaker 2: but definitely that is just unbelievable. No ETF has ever
Speaker 2: seen that much money come out, and that short of.
Speaker 1: What was that figure?
Speaker 2: Eighteen billion? Okay, and the next under five months and
Speaker 2: number two number two is SPY. Now here's the thing
Speaker 2: with SPY, so negative eleven billion. We just talked about
Speaker 2: how great s andp P five hundred ETFs are. SPY
Speaker 2: took in forty billion in December or something like that,
Speaker 2: so some of this was people going into do tax
Speaker 2: loss harvesting. So I think some of Spy's money is
Speaker 2: the leaving what went in December. So again i'd call
Speaker 2: that operational.
Speaker 1: But it can't get any cheaper like the others can.
Speaker 2: That's the thing though, is there's generally a headwind with
Speaker 2: SPY because it is more expensive.
Speaker 1: And yet qqq has the same problem with these investment
Speaker 1: trust structures.
Speaker 2: I also think that QQQM still isn't liquid enough to
Speaker 2: get the trading money yet, whereas IVV and V were
Speaker 2: actually getting so liquid that even a hedge fund will
Speaker 2: be like, I'm fine with the liquidity there. So when
Speaker 2: QQQM gets a little more liquidity, I think q's are
Speaker 2: going to be in the same boat as Spy Number
Speaker 2: three is a fascinating small caps IWM. How about ever,
Speaker 2: it's supposed to be the year of small caps a lot,
Speaker 2: it never happens.
Speaker 6: Yeah, I mean, well, the interest rate environment plays a
Speaker 6: role in that that we haven't seen cuts that would
Speaker 6: have been conducive for small caps. And yes, there's cheaper
Speaker 6: alternatives for getting small cap exposure, whether it's tied to
Speaker 6: the S and P six hundred from I shares or
Speaker 6: a stage street. The stage Street small Cap BTF has
Speaker 6: been actually quite popular as of late, but there's other
Speaker 6: alternatives in IWM.
Speaker 3: So far, we've checked three year of favorites, international fixed
Speaker 3: income and small.
Speaker 2: Caps and small caps. There's another issue whereas companies more
Speaker 2: and more, they ipo larger, so it's like the small
Speaker 2: they don't even get to be small caps for a
Speaker 2: little bit and get a little of that juice. So
Speaker 2: I think they're almost like there's a would you call
Speaker 2: that like a secular issue with the IPOs now, it's
Speaker 2: almost like when Kobe Bryant went right to the NBA,
Speaker 2: it was in no college at all that you can't
Speaker 2: do that anymore. It's one and done, but you have
Speaker 2: to go into a college now. But small caps, the
Speaker 2: IPOs go right to the large cap area now, so
Speaker 2: small caps I think also suffer because they don't have
Speaker 2: any star power, right and if you are a star,
Speaker 2: you quickly go up the ranks to large caps quickly,
Speaker 2: so you're left with a lot of junk. That's why
Speaker 2: CALF I think did so well. It's small cap free
Speaker 2: cash list, so at least you're with quality cash generating
Speaker 2: small caps and that is a was a monster hit.
Speaker 5: Yeah.
Speaker 2: ETF of the Year. By the way, in the ETF awards,
Speaker 2: remember okay, but you got one more I do and
Speaker 2: us m V is the fourth most outflows. Remember that's
Speaker 2: the ice shares minimum volatility. This was the bell of
Speaker 2: the ball right for about five years back then everybody
Speaker 2: was into minim minimum volatility. Local Athan has a theory
Speaker 2: on this is that you know the buffer ets which
Speaker 2: target your outcome perfectly. They've kind of stolen the thunder
Speaker 2: of low vall because if you're a boomer and you
Speaker 2: want the stock market but with less risk the boomer,
Speaker 2: the buffer ETFs actually gets you more targeted outcome. Then
Speaker 2: you can predict with a low vall. What do you
Speaker 2: think of that theory.
Speaker 6: I see the merit of that, and certainly the buffer
Speaker 6: and defined outcome and controlling that plays a role. But
Speaker 6: I think also we've seen a rotation from menwhile to
Speaker 6: Quality and so the I shares Quality ETF QUA L
Speaker 6: saw it strong net inflows earlier in the year, and
Speaker 6: I think that's probably some of that might be a
Speaker 6: model rotation out of menvall and into quality.
Speaker 4: Plus VALL hasn't been that high anyway this year, you know,
Speaker 4: so maybe we're not that worried.
Speaker 2: Yeah, no, I I those are definitely obviously good answers,
Speaker 2: and I think though the buffer, there's just more competition
Speaker 2: now for like, hey, I want the market, but I
Speaker 2: don't I want less risk diet market or something like that.
Speaker 2: And minvall used to have the whole, the.
Speaker 6: Whole, uh yeah, I mean even Calamos that just launched
Speaker 6: the one hundred percent downside Protection ETF strecture Protection, thank you,
Speaker 6: Structure Protection ETF has seen strong demand out of the
Speaker 6: gate for these two new products.
Speaker 1: Okay, pack three.
Speaker 2: All right, let's look at issuers. Okay, Number one, no
Speaker 2: shocker here, Vanguard with one hundred and three billion Okay,
Speaker 2: so that's a third of all the money. Just like
Speaker 2: a giant vacuum cleaner. Number two is a vacuum cleaner.
Speaker 2: What a Pennsylvania vacuum cleaner? Yeah, Keystone State. I don't understand.
Speaker 2: We're talking about Allentown. It's kind of visual some manufacturing jobs.
Speaker 2: I don't know that Pennsylvania vacuum cleaners are really good.
Speaker 1: It's like American maid Yeah.
Speaker 2: I mean, also it's interesting Vanguard just rolls on. I
Speaker 2: just don't see anything that really takes away from the
Speaker 2: reputational inertia they have, not to mention, again, everybody loves
Speaker 2: cheap beta, and this is before they've really rolled in
Speaker 2: any of their active strategies with full with you know,
Speaker 2: especially on the equity side, they could easily keep leading
Speaker 2: by almost two lengths if they were to fold in
Speaker 2: some of their active strategies in my opinion.
Speaker 6: Yeah, I mean, if and when they bring more of
Speaker 6: the best of Vanguard into the ETF structure, I would
Speaker 6: agree with you. But we've even seen bn d X,
Speaker 6: the Vanguard International bond ETF be very popular this year.
Speaker 6: You get, of course, what it says international bonds to
Speaker 6: broadly diversify, not just equities, but also overseas that's been
Speaker 6: hoovering up money as well.
Speaker 2: And what do you think of the new CEO? So
Speaker 2: they just hired Blackrocks Salem Ramsey who used to be
Speaker 2: the CEO, the head of Blackrocks Global ETF business. It's
Speaker 2: interesting he's gonna he's a little more dynamic. I think
Speaker 2: we're the.
Speaker 4: Person he the first one who wasn't internally bred so outside.
Speaker 2: I think that helps, right, Do you think that helps
Speaker 2: or hurts?
Speaker 6: I think it helps and that you can bring in
Speaker 6: a fresh perspective as opposed to just the Vanguard way
Speaker 6: of doing things. But I think he's going to keep
Speaker 6: a lot of the same thing as the same and
Speaker 6: we'll see just an evolution bringing the best. Blackrock has
Speaker 6: been increasingly bringing active managers like Rick Reader into the
Speaker 6: ETF space.
Speaker 5: I think we're going to see more of that from Vanguard.
Speaker 3: How does one hundred and three billion compare with previous issuer.
Speaker 2: Performance, Well, I'd say it's largely on part because if
Speaker 2: you look at the last ten years, Vanguard's taken in
Speaker 2: about nine hundred million dollars a day. There's two hundred
Speaker 2: and fifty training days in a year, so they're at
Speaker 2: one hundred and three billion. If they go to two
Speaker 2: hundred and six billion by the end of the year,
Speaker 2: that's about eight hundred million, So they're just about on pace.
Speaker 6: I totally would have done that using market share numbers
Speaker 6: in my head of what their percentage of their market
Speaker 6: share is versus the market share they're pulling in. You
Speaker 6: were going nine hundred million a day and trying to
Speaker 6: do that by two hundred and fifty business.
Speaker 5: The reason the.
Speaker 2: Reason I do that is because that is a crazy
Speaker 2: stat not nine hundred million a day for like a
Speaker 2: couple months when you got hot, but like a decade.
Speaker 2: Think about that. Certain firms are happy to be nine
Speaker 2: hundred million total.
Speaker 4: Okay, So, so far as we talk about changing leadership,
Speaker 4: what it means for the future a Vanguard is is
Speaker 4: Vanguard's reach multi generational? Is this like younger, different generations
Speaker 4: of investors coming in and they're all buying Vanguard or
Speaker 4: is this just the existing you know, our generation just
Speaker 4: putting more of their money within Vanguard.
Speaker 2: It's a good question. And the people who are at
Speaker 2: Vanguard are if they came in early, they're they're rich now,
Speaker 2: they're boomers. They have almost all the money in America.
Speaker 2: So it's a good point. I think translating Vanguard's message
Speaker 2: to younger people will be a challenge. But at the
Speaker 2: end of the day, once you like settle down from
Speaker 2: like your gambling, like meme stocks and all that, I
Speaker 2: know young people like to get lottery ticket investing. Once
Speaker 2: you kind of get a little older and like you
Speaker 2: have more pressure for money, I just think you're going
Speaker 2: to find your way to the benefits of a low
Speaker 2: cost index fund. It's just natural progression.
Speaker 1: What is the number for issue or number two?
Speaker 2: It's Blackrock at sixty five billion, so a little over
Speaker 2: half only of what Vanguard has.
Speaker 5: But still a strong a strong year.
Speaker 2: Yeah, we talked about half a year and it's yes, yes.
Speaker 5: So we've talked about IBIT already. We talked about IVV.
Speaker 6: They've had some success. They've had success with active management
Speaker 6: as well. They made some model allocation changes. So d
Speaker 6: y n F, which is the Blackrock Equity Factor Rotation ETF.
Speaker 6: That's among the more popular ETFs for the year. Bank
Speaker 6: I mentioned earlier, the Blackrock Active fixed Income ETFO.
Speaker 5: I know a few tickers off.
Speaker 1: Top of my head.
Speaker 6: I've got three thousand plus children to try to remember.
Speaker 6: I gotta throw some I gotta throw some love to
Speaker 6: some of them.
Speaker 3: I'm not surprised at all here you got Vanguard number one,
Speaker 3: black Rock number two.
Speaker 1: Surprise.
Speaker 2: But here's one thing about BlackRock's number that's interesting. Is
Speaker 2: twenty five percent of that number though, is ibit. So
Speaker 2: had they not gotten into the bitcoiny T, if they
Speaker 2: weren't approved or they weren't improved, then Vanguard would be
Speaker 2: over double anybody else easily, which again I don't think
Speaker 2: there's been a year where one issuer took in twice
Speaker 2: anyone else. So this Vanguard is playing with a sort
Speaker 2: of a record situation here. And what's it was amazing
Speaker 2: is all that could happen despite them not having the
Speaker 2: bitcoin ETFs, which have been real huge successes for black Rock.
Speaker 2: And then also the number three Ashore, which is Invesco,
Speaker 2: and then number five is Fidelity. Fidelity's fifteen point eight billion.
Speaker 2: The bitcoin ETF is fifty six percent of that number,
Speaker 2: So it's lifted up some people into the leaderboard and
Speaker 2: help them a lot. That just makes Vanguard's number all
Speaker 2: that more impressive because they don't have any of that.
Speaker 6: Yeah, but you're to the other point of it that
Speaker 6: bitcoin ETFs have been a game changer in the ETF space.
Speaker 6: They've appropriately gotten attention from the issuers that are not
Speaker 6: only competing on price, but some of the firms it's
Speaker 6: helping to drive their overall flows. So Fidelity, it certainly
Speaker 6: is as well. As you mentioned, Fidelity has increasingly been
Speaker 6: turning to active management in the ETF structure. So FBND,
Speaker 6: which has a tremendous long term track record, has continued
Speaker 6: to see love and attention. I'm assuming most of that
Speaker 6: Invesco is the Triple QS and qqq M, but they've
Speaker 6: had some success also with some other products.
Speaker 2: Yeah. Absolutely, they're having a good year. I gotta say
Speaker 2: they're not normally the top five.
Speaker 3: Okay, so Vanguard number one, black Rock number two, I'm
Speaker 3: not that surprised take it away from there.
Speaker 2: Yeah, so Invesco three, that's they're not normally that high.
Speaker 2: At thirty five billion JP Morgan, then there's a huge drop.
Speaker 2: JP Morgan is eighteen billion, Fidelity sixteen billion, DFA, Schwab, Pacer,
Speaker 2: Capitol Group, Avantas, JP Morgan eighteen point three. Now they've
Speaker 2: been punching above their weight for five six years now,
Speaker 2: but they lost their main guy, Brian Lake. He went
Speaker 2: to Goldman, which is you know, it's like a division
Speaker 2: rival and Goldman has fallen on hard time. So do
Speaker 2: you think that Goldman will rise up? JP Morgan fall
Speaker 2: a little bit?
Speaker 6: So yes, but I think just that's inevitable. I'm not
Speaker 6: Brian Lake. Shifting teams is going to play a part
Speaker 6: on that. But covered qual ETFs have been driving a
Speaker 6: lot of what JP Morgan's success has been. I think
Speaker 6: Goldman has the in house expertise in other areas, and
Speaker 6: I expect we're going to see product development towards active management,
Speaker 6: bringing the best of Goldman into the ETF world. And
Speaker 6: so yes, I would expect a year from now when
Speaker 6: you bring us back for another halftime report, we'll be
Speaker 6: talking about the success of Goldman.
Speaker 5: See I just invited us back.
Speaker 3: I was going to say, it just assumes that he's
Speaker 3: coming over for the holidays every year.
Speaker 5: If I show up with food, you'll you'll let me in.
Speaker 1: The other one in there, Pacer.
Speaker 2: Yeah, Well, we went over Calf earlier, but Calf and
Speaker 2: Cal's are blockbuster hits.
Speaker 1: To me.
Speaker 2: Pacer is the arc of the higher rates era, because
Speaker 2: once rates went up It really made cash flow so
Speaker 2: much more important, whereas ARC stocks are a little more
Speaker 2: like we don't care about cash flow, We're just betting
Speaker 2: on the future. But now the rates are up, everybody's like,
Speaker 2: where's the money. So now these are like perfectly targeted
Speaker 2: to go after free cash flow. Greats thought about CALF.
Speaker 2: By the way, it's not just destroying IWM, it's beating
Speaker 2: the S and P. So it's interesting we talk about
Speaker 2: small caps doing so poorly, but CAF managed to select
Speaker 2: one hundred of them that could beat large caps and
Speaker 2: that's why the money is so good. You know that
Speaker 2: CAF is taken in flows every month since the pandemic. Again,
Speaker 2: it's very ARC esque in that it just its number
Speaker 2: came up, the stars aligned on it, the sun shone,
Speaker 2: whatever metaphor you want to use. Right when the Fed
Speaker 2: raised rates, it's like when the Fed raised rates, they
Speaker 2: sort of like it's like the soccer ball got kicked
Speaker 2: to a different part of the field and a kind
Speaker 2: of away from the growth thing into the cash flow thing.
Speaker 5: Totally did not see a soccer analogy coming from you.
Speaker 2: I know I'm not a huge fan, but it just
Speaker 2: seems like a good metaphor because you have to stay
Speaker 2: home in soccer, you know, because people like chase the
Speaker 2: ball around. Like if you've seen like little kids play soccer,
Speaker 2: that's what I feel like. Sometimes these flows remind me
Speaker 2: of little kids chasing the ball around. But it's better
Speaker 2: to stay home because it will get kick.
Speaker 1: Vanguard's just sitting there like score.
Speaker 2: Yeah, there are wherever the ball. They're in the field.
Speaker 1: They are all right.
Speaker 3: On that note, Cynthia Todd, thanks so much for joining
Speaker 3: us on Trillions.
Speaker 4: Hey listen, thanks for having us.
Speaker 5: It's our pleasure. We'll see you next year.
Speaker 3: Thanks for listening to Trillions until next time. You can
Speaker 3: find us on the Bloomberg terminal, Bloomberg dot com, Apple Podcasts, Spotify,
Speaker 3: or wherever else you'd like to listen. We'd love to
Speaker 3: hear from you. We're on Twitter. I'm at Joel Webbers Show.
Speaker 3: He's at Eric Balchunis. This episode of Trillions was produced
Speaker 3: by Magnus Hendrickson.
Speaker 1: Bye