WEBVTT - ICYMI: Jennifer Grancio on Volatility and Trade War

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>You're listening to Bloomberg Business Week with Carol Masser and

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<v Speaker 2>Tim Stenoveek on Bloomberg Radio.

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<v Speaker 1>Muckle, now about you let me drive?

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<v Speaker 2>Oh no, no, no no, this is not a toy, honey.

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<v Speaker 3>Please, I'll do the gravels.

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<v Speaker 1>Excuse mate, I want to try it.

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<v Speaker 2>It's a good question.

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<v Speaker 1>This is the drive to the Clothes Punks music on

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<v Speaker 1>Bloomberg Radio.

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<v Speaker 3>All right, everybody, we are just about eighteen minutes away

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<v Speaker 3>from the closing bell on this Tuesday. We've mentioned how

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<v Speaker 3>during the two o'clock hour Wall Street time we did

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<v Speaker 3>see a leg down in terms of equities, going near

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<v Speaker 3>our lows of the session. We've bounced back, not completely,

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<v Speaker 3>but definitely off our lows. But as you have heard

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<v Speaker 3>from Bill and both Charlie so down about half a

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<v Speaker 3>percent in the S and P five hundred, NASDEK one hundred.

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<v Speaker 3>Tim still down to also about half a percent.

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<v Speaker 2>I want to bring in Jennifer Grantcio. She's head of

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<v Speaker 2>ETFs and Global head of ETFs ATTCW. She was also

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<v Speaker 2>former a CEO of the impact investment firm Engine Number one.

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<v Speaker 2>Remember they took on Exelon back in twenty twenty one

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<v Speaker 2>and scored a major victory by winning three seats on

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<v Speaker 2>the board. She's back in our Bloomberg Interactive Brokers studio

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<v Speaker 2>usually in LA spends a lot of time on the road.

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<v Speaker 2>We are happy to see you here in New York.

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<v Speaker 2>How are you.

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<v Speaker 4>I'm great.

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<v Speaker 2>Well, it's good to have you with us. Carol and

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<v Speaker 2>I were talking a little earlier about sort of the

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<v Speaker 2>strangeness of the market since quote unquote, I guess the

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<v Speaker 2>April eighth liberate post so called Liberation Day low. What

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<v Speaker 2>do you make of what's happened over the last six

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<v Speaker 2>weeks or so, because we are pretty close to all

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<v Speaker 2>time highs on the S and P five hundred.

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<v Speaker 4>Yeah, I mean it's an interesting question. I think everybody

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<v Speaker 4>wrestles with the same question from an equity perspective. You know,

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<v Speaker 4>we actually at TCW are doing concentrated fundamental portfolios, so

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<v Speaker 4>we're looking for opportunities high quality management teams, quality revenue

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<v Speaker 4>growth through trends like how we use energy and electricity

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<v Speaker 4>and supply chain. We're shoring. So they're like, we like

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<v Speaker 4>the names we have in the portfolios. We think it's

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<v Speaker 4>a good time for people to be investing at the

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<v Speaker 4>same time. You know, we're a big bond investor, and

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<v Speaker 4>so when we are managing the core bond products, one

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<v Speaker 4>of the ETFs there it's done very well, is flexor

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<v Speaker 4>and when we're managing that, we're a value investor. So

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<v Speaker 4>we took advantage of the volatility in credit spreads in particular,

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<v Speaker 4>drove a lot of alpha for clients looking back a

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<v Speaker 4>couple of weeks. But in the bond fund, we're still

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<v Speaker 4>being cautionary. We want to be positioned so if the

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<v Speaker 4>economy does slow, we're doing the right thing for investors.

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<v Speaker 3>What kind of visibility do you feel right now that

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<v Speaker 3>you have on the outlook?

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<v Speaker 4>I think it's uncertain, yeah, and we just don't know,

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<v Speaker 4>and we have data. We have this debate internally within

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<v Speaker 4>TCW all the time on to what extent is it's slowing.

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<v Speaker 4>How many rate cuts will there be this year? We

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<v Speaker 4>do not have the answer. But in the bond part

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<v Speaker 4>of the portfolio, we think people should be positioned with

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<v Speaker 4>an active manager so that we're managing that for them

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<v Speaker 4>as things unlined.

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<v Speaker 2>I think one thing that we've been thinking a lot

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<v Speaker 2>about is really the and we'll talk about some of

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<v Speaker 2>these ETFs in just a second, but from a big

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<v Speaker 2>picture perspective, and Eric Weener from our equities team was

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<v Speaker 2>just in here talking about how professionals that we've reported

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<v Speaker 2>on are still kind of thinking about this other shoe

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<v Speaker 2>that's going to drop. There's like just around the corner,

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<v Speaker 2>there could be some sort of big risk, whether it's

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<v Speaker 2>trade related, whether it's related to the economy. What do

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<v Speaker 2>you see as the risks out there right now?

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<v Speaker 4>I think from a tariff perspective, it's come back a lot,

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<v Speaker 4>but tariffs that are in the low single digits, low

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<v Speaker 4>double digits rather, I mean, that's still a big tax

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<v Speaker 4>on the consumer. So we're watching that. It's better, they're lower,

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<v Speaker 4>they're a little bit more reasonable, but we don't know

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<v Speaker 4>how much of an impact that will have on the consumer.

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<v Speaker 4>So that's probably the main thing we're watching, and we're

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<v Speaker 4>looking at everything. We look at employment data, we look

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<v Speaker 4>at the earnings calls to see what consumer companies thinking.

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<v Speaker 2>That's funny because I thought, I mean when we were

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<v Speaker 2>talking to Eric earlier, it was like, yeah, we were

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<v Speaker 2>waiting for the companies reporting earnings for the most recent

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<v Speaker 2>quarter to talk about the impact and certainly a lot

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<v Speaker 2>of them did, but we didn't necessarily see the equity

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<v Speaker 2>market reaction that I think people thought they would. Like

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<v Speaker 2>the concern is, Okay, maybe it's happening now rather than

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<v Speaker 2>in the last quarter.

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<v Speaker 3>Well, it does feel like if we're going to see

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<v Speaker 3>things like the tariff impact, it's not necessarily showing up

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<v Speaker 3>in the statistics, right, And as you said, Tim, like

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<v Speaker 3>in the earnings reports, that's maybe a second half thing

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<v Speaker 3>and we've got to kind of wait and see for that.

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<v Speaker 4>Yeah, that's right, and that's why we think we have

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<v Speaker 4>we have to be careful from a portfolio positioning perspective.

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<v Speaker 3>Jennifer, I want to ask you. I know I probably

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<v Speaker 3>do this before, but I'm always curious about flows where

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<v Speaker 3>you see investors moving in and out of at this point,

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<v Speaker 3>because obviously it's been an interesting what four weeks, six weeks,

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<v Speaker 3>and I'm just curious how much movement was going on.

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<v Speaker 4>Yeah, I mean, I think at the at a wealth

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<v Speaker 4>and retail level, what we've seen is a lot of

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<v Speaker 4>money rebalancing back towards equities. So people certainly moved right

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<v Speaker 4>back into equity, they really did, so we've seen that completely.

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<v Speaker 3>The money that came out.

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<v Speaker 4>They've taken they've taken money out of cash and other

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<v Speaker 4>things and put it back in equity and then in

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<v Speaker 4>our shop, a lot of what we do is are

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<v Speaker 4>these thematic or complementary equity strategies, and so some of

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<v Speaker 4>them have done very well. I mean they've done great

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<v Speaker 4>from a performance perspective in terms of beating the S

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<v Speaker 4>and P. But from a flows perspective, we've seen money

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<v Speaker 4>come into high quality company defensive growth grow is the

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<v Speaker 4>ETF there, as well as into powered, which is the

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<v Speaker 4>energy system transition product.

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<v Speaker 3>I mean that has been such a dominant theme. I

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<v Speaker 3>was asking before we got going Tom if you were

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<v Speaker 3>at Milkin, and I mean that was one of despital

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<v Speaker 3>the uncertainty and teriff conversations. One of the things that

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<v Speaker 3>seemed to be again beating the drum was that of

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<v Speaker 3>the AI play and the energy that's going to be

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<v Speaker 3>needed that build out was still happening. And is that

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<v Speaker 3>what you're talking about?

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<v Speaker 4>First? For sure? And so from an from an investment perspective,

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<v Speaker 4>the way that we're managing products that people can come into.

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<v Speaker 4>We have an AI product we have for a very

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<v Speaker 4>long time, as well as the powered ETF strategy, which

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<v Speaker 4>are a way to get access to that theme, but

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<v Speaker 4>we think don't do it in a way that is

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<v Speaker 4>too narrow. Both trends how companies use AI, how companies

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<v Speaker 4>get power and use electricity. We're very early innings on

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<v Speaker 4>these mega trends.

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<v Speaker 3>Can I just say powered is app almost twenty percent

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<v Speaker 3>over the past month, up about eleven percent year to date.

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<v Speaker 2>Jennifer, how would you characterize the flows that you've seen

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<v Speaker 2>in the last six weeks or so? Would they be

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<v Speaker 2>more defensive or more oriented toward growth in your view?

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<v Speaker 4>It's somewhere. It's somewhere in between. Just the real answer.

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<v Speaker 4>We're seeing both. And then on the fixed income side

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<v Speaker 4>of the business. So with Flexer, which is total return

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<v Speaker 4>bond fund but also as a very strong income target,

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<v Speaker 4>it's yielding around six percent. We've seen very strong flows there.

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<v Speaker 4>So from a portfolio perspective, it certainly doesn't feel like

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<v Speaker 4>people are doing one thing or the other. They're just

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<v Speaker 4>topping up positions.

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<v Speaker 2>How's it yielding six percent?

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<v Speaker 4>From an SEC yield perspective, we have a target and

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<v Speaker 4>we're managing for income while we're doing till return at

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<v Speaker 4>the same time. Okay, So I think that's what sort

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<v Speaker 4>of rocketed that particular fund up to the top of

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<v Speaker 4>the category.

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<v Speaker 2>Yeah, this is nearly tripled since it was converted back in, showing.

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<v Speaker 3>Exactly you know, we introduced you and we said, you know,

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<v Speaker 3>former CEO of Engine number one, you did take on

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<v Speaker 3>Xon major victory three seats.

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<v Speaker 2>On the board.

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<v Speaker 3>We're now looking at an administration that seems to be

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<v Speaker 3>rolling back perhaps on energy things. Although there was a

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<v Speaker 3>positive for wind farms today based on Trump administration initiatives.

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<v Speaker 3>How do you think about that? I don't knowether I

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<v Speaker 3>should say ESG, but the alternative energy space, that kind

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<v Speaker 3>of transitioning that we were seeing pretty aggressively, how do

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<v Speaker 3>you think about that? Does that continue in terms of

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<v Speaker 3>the move away maybe from fossil fuel companies or do

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<v Speaker 3>you think maybe this is another pivotal change that we

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<v Speaker 3>kind of roll back a little bit.

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<v Speaker 4>Yeah, I mean, I think we have such a demand

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<v Speaker 4>for energy. I think that we're going to continue to

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<v Speaker 4>continue both so prudent, more efficient fossil fuel. But some

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<v Speaker 4>of the companies we hold in the powered portfolio, for example,

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<v Speaker 4>are its natural gas and other sources of non intermittent power.

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<v Speaker 4>Data centers need those, and then the more effective we

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<v Speaker 4>can get with wind and solar. People are still investing there.

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<v Speaker 4>So I think it's again it's a massive trend and

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<v Speaker 4>we need so much energy. We'll see balanced growth across

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<v Speaker 4>the brown and the green parts of the industry.

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<v Speaker 3>Where does the environment come into all of this? Just

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<v Speaker 3>thirty seconds? Like, is there like a concern among companies? Like,

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<v Speaker 3>I don't know if you guys are talking with investors,

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<v Speaker 3>do they care about it? Do CEO's leaders and forgive

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<v Speaker 3>me just got about twenty twenty five seconds.

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<v Speaker 4>Yeah, I think from an environmental perspective, I think both

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<v Speaker 4>asset owners like public pension funds and sovereign wealth funds,

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<v Speaker 4>as well as CEOs of companies care about these issues.

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<v Speaker 4>But we're having a conversation that's based on financial metrics, yeah,

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<v Speaker 4>and long term outcomes.

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<v Speaker 3>Okay, so that plays into it in a big way.

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<v Speaker 3>So good to have you in studio, So good to

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<v Speaker 3>see you.

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<v Speaker 4>Be well.

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<v Speaker 3>Be well, Jennifer Grencio, head of ETFs and Global head

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<v Speaker 3>of ETFs over at TCW. Right here any