WEBVTT - The ETF Era Is Going to Be Here for a While 0:00:05.680 --> 0:00:10.639 Welcome to Trallians. I'm Joel Webber and I'm Eric beltunas Eric. 0:00:11.800 --> 0:00:15.520 But it's about to help people get ready for that. 0:00:16.360 --> 0:00:19.600 The analysts and Bloomberg Intelligence that you work with and 0:00:19.720 --> 0:00:22.960 lead have helped us come up with a list. What's 0:00:23.000 --> 0:00:25.479 going to be on this list? Well, this list is 0:00:25.560 --> 0:00:28.520 essentially called the outlook um Outlooks are one of those 0:00:28.560 --> 0:00:30.200 required things that we haven't b I We have a 0:00:30.240 --> 0:00:32.000 lot of freedom, but a couple of things we have 0:00:32.080 --> 0:00:34.839 to do, primers and an outlook. Now we're a little late. 0:00:34.840 --> 0:00:37.519 A lot of outlooks coming out in November, smoothing in October. 0:00:37.560 --> 0:00:40.200 We put out ours out in December, and we look, 0:00:40.240 --> 0:00:42.400 We look at the year that just happened, obviously, and 0:00:42.440 --> 0:00:45.760 then we sort of forecast forward what we think and 0:00:45.840 --> 0:00:48.960 just cope with an overall theme. Our overall theme this 0:00:49.040 --> 0:00:50.839 year was that the era of the e t F 0:00:51.040 --> 0:00:53.760 will be here for a while, and largely because of 0:00:53.800 --> 0:00:55.959 the flows. The volume and the number of launches were 0:00:56.000 --> 0:01:01.960 just so high and extraordinary for the market being completely decimated. 0:01:02.000 --> 0:01:04.040 Both stocks and bonds had one of the worst years ever. 0:01:04.080 --> 0:01:06.679 You would think that would put a suppressive force on 0:01:06.800 --> 0:01:10.200 most of those things, but they almost reached records of 0:01:10.240 --> 0:01:13.160 everything again. So you have a crystal ball and you 0:01:13.200 --> 0:01:14.800 look into it and tell me that E t f 0:01:14.920 --> 0:01:19.479 s are gonna keep getting bigger. Yeah. Absolutely. I mean 0:01:20.200 --> 0:01:22.640 we always had this phrase on the team that we've 0:01:22.720 --> 0:01:26.600 used in fact our twenty twenty one outlook, I think 0:01:26.720 --> 0:01:29.399 was bowl markets are good for ets, but bear markets 0:01:29.400 --> 0:01:32.240 are even better, and we were right. This year showed 0:01:32.280 --> 0:01:37.120 exactly that. So but I actually stunned at how much 0:01:37.560 --> 0:01:40.600 they both the launches and the flows in particular, uh, 0:01:40.760 --> 0:01:44.080 almost six billion dollars and flows I would have guessed lower. 0:01:44.120 --> 0:01:47.000 I would have guessed more like three four and mutual 0:01:47.000 --> 0:01:50.160 funds almost a trillion, and outflows. So this shift to 0:01:50.520 --> 0:01:53.680 e t f s and passive has expedited in this 0:01:53.800 --> 0:01:57.680 kind of brutal environment. So I don't know, I feel justified. 0:01:57.680 --> 0:01:59.800 I'm glad I voted my career to this stuff because 0:01:59.800 --> 0:02:04.640 it's it's definitely growing. It's the vehicle of the century. Okay, 0:02:04.680 --> 0:02:07.840 So who's gonna be joining us? And how are we 0:02:07.840 --> 0:02:10.880 gonna structure this one? So we have the whole team here. 0:02:10.919 --> 0:02:13.000 I think this might be the first time everybody is here. 0:02:13.040 --> 0:02:15.320 We might have done what this once before. So you've 0:02:15.360 --> 0:02:18.480 got Athanasio, Sara Fagus, and James Seffert who are both 0:02:18.480 --> 0:02:20.320 here in the studio with us, who are on regularly. 0:02:20.440 --> 0:02:22.960 We've got Henry jim Over in Europe and Rebecca Soon 0:02:23.160 --> 0:02:26.959 in Hong Kong. And Henry leads up Europe, Rebecca leads 0:02:27.040 --> 0:02:29.560 up Asia. And so everybody's going to give their two 0:02:29.560 --> 0:02:35.960 cents from where they sit this time on Trillions, the 0:02:36.040 --> 0:02:43.240 twenty three outlook, Henry, Rebecca, Athanasios, James. Welcome back to Trillions, Henry, 0:02:43.240 --> 0:02:46.520 first time, welcome, Hello, How are you doing? Before we 0:02:46.560 --> 0:02:50.000 hear from everybody? Eric, you want to tell us how 0:02:50.040 --> 0:02:54.320 great you are? That wasn't how I asked you to 0:02:54.320 --> 0:02:58.959 set me up. Okay, fine, listen, Um, we've been right 0:02:59.040 --> 0:03:01.120 a lot. I gotta be honest, like our calls have 0:03:01.160 --> 0:03:04.560 been pretty good. One thing about outlooks that I find 0:03:05.360 --> 0:03:07.480 frustrating on the cell side is they tann't tend to 0:03:07.520 --> 0:03:11.040 just repackage the past with the future tents, and what 0:03:11.080 --> 0:03:13.280 happens is the future tends to change. So they're wrong 0:03:13.280 --> 0:03:15.880 a lot. Honestly, We've made a lot of calls that 0:03:15.919 --> 0:03:18.120 were against the grain, and I just want to take 0:03:18.120 --> 0:03:20.400 a victory lap here I'm sorry. Now I will go 0:03:20.400 --> 0:03:21.760 over the ones we got wrong. We have a couple 0:03:21.800 --> 0:03:23.640 wrong too, but here's the ones we got right. Over 0:03:23.720 --> 0:03:27.200 the past two years, ARC would hang tough, called it 0:03:27.360 --> 0:03:30.160 got it right. They've seen influence. This year, the SEC 0:03:30.280 --> 0:03:32.760 would approve a bitcoin futures et F and pro Shares 0:03:32.800 --> 0:03:35.280 would be the first out with it. This was all James, 0:03:35.640 --> 0:03:37.840 He nailed it. We picked up a lot of crypto 0:03:37.880 --> 0:03:39.839 people because we were the most aggressive on that call, 0:03:40.240 --> 0:03:43.040 and it both turned out to be correct. We Um 0:03:43.280 --> 0:03:45.640 also said bear markets would expedite the e t F 0:03:45.680 --> 0:03:49.480 and passive move. UM yours truly said an inverse Jim 0:03:49.520 --> 0:03:52.680 Kramer et F would be filed, and it was um. 0:03:52.760 --> 0:03:54.960 We thought that mutual fund to et F conversions would 0:03:54.960 --> 0:03:58.800 grow quickly, and they have. They're actually getting Uh. Fidelity 0:03:58.840 --> 0:04:01.920 just jumped in that that call is not totally right yet, 0:04:01.960 --> 0:04:04.839 but it's in the right direction. Um. And when March, 0:04:05.640 --> 0:04:08.080 when the bond sell off and the and everything was 0:04:08.280 --> 0:04:11.080 really going bad and bondy TF showed like discounts and stuff, 0:04:11.360 --> 0:04:15.200 I said, listen, bond ETFs are gonna double in assets 0:04:15.240 --> 0:04:17.600 over the next three years. And I said that rate 0:04:17.640 --> 0:04:19.720 in the dark of the night before the FED even 0:04:19.760 --> 0:04:22.280 came in. They're almost there. It's still we got a 0:04:22.360 --> 0:04:24.600 year ago, but there are two thirds of that asset level. 0:04:24.800 --> 0:04:28.200 Bond ETFs crushed it this year in terms of flows. Um, 0:04:28.360 --> 0:04:32.239 big passive fund companies should democratize their voting. They should 0:04:32.279 --> 0:04:36.599 decentralize it. They did. Vanguard, Fidelity, and Schwab all announced plans. 0:04:37.080 --> 0:04:39.359 E s G would confuse people and then struggle to 0:04:39.360 --> 0:04:43.000 break two to three percent market share. I was probably 0:04:43.040 --> 0:04:45.400 the most aggressive and negative on this, but they are. 0:04:45.480 --> 0:04:46.960 I mean, they haven't seen any flows this year. Even 0:04:47.000 --> 0:04:49.040 black Rock sold out the e s G funderal model. 0:04:49.240 --> 0:04:51.800 They'll exist. I just don't think they're gonna grow beyond 0:04:52.000 --> 0:04:54.040 I guess that one's not quite done yet. And then 0:04:54.960 --> 0:04:57.640 I said two would be the last crypto super Bowl. 0:04:58.000 --> 0:04:59.640 Now I said it because I thought they might approve 0:04:59.640 --> 0:05:01.279 a spot et F and that would pull people off 0:05:01.320 --> 0:05:03.840 the exchanges and make them lower their fees for trading. 0:05:04.040 --> 0:05:05.520 I didn't say it because I thought there would be 0:05:05.520 --> 0:05:07.760 some big scandal with f t X. But I think 0:05:07.800 --> 0:05:09.279 that is going to be the last curve of surouable. 0:05:09.360 --> 0:05:12.200 So indirectly got that one. Something we got wrong. We 0:05:12.240 --> 0:05:15.640 thought hold on, let's just okay, let's just take a moment, okay, 0:05:16.560 --> 0:05:19.320 and just saver as long as you can save. He that, 0:05:19.360 --> 0:05:21.719 but that's also you know, let's hear about the ones 0:05:21.800 --> 0:05:25.440 that you you missed, all right, um, Ethan and I 0:05:25.440 --> 0:05:28.120 in particular, we thought multi factor et s would take 0:05:28.160 --> 0:05:31.800 over Smart Beta. That's when you put all the factors together. Uh. 0:05:31.960 --> 0:05:35.480 Turns out people like their factors severally, but you know, 0:05:35.560 --> 0:05:38.159 multi factors there, they got a legit like niche, but 0:05:38.279 --> 0:05:41.040 they definitely didn't. They're not going to take over UM. 0:05:41.080 --> 0:05:43.279 I think it's interesting in e t F land sometimes 0:05:43.279 --> 0:05:47.880 when they when they merge, when they put too much together, 0:05:47.920 --> 0:05:49.680 like you want. I know, Joel, you've been asking about 0:05:49.720 --> 0:05:52.679 this everything e t F. I think sometimes that doesn't 0:05:52.680 --> 0:05:55.720 actually work. People actually like the pieces sometimes more than 0:05:55.839 --> 0:05:59.159 everything together. And that's I think the case here. We 0:05:59.240 --> 0:06:02.960 also thought that the JP Morgan and Goldman like SMP 0:06:03.080 --> 0:06:07.279 five hundred knockoff ETFs would get bigger and JP would 0:06:07.320 --> 0:06:09.080 pull out of SPY and IVV and put it in 0:06:09.120 --> 0:06:11.240 their own e t F s, and they haven't. The 0:06:11.480 --> 0:06:15.080 SNP five under brand name is more powerful than we thought. UM. 0:06:15.160 --> 0:06:16.800 And then fixed income smart bait, and we thought this 0:06:16.800 --> 0:06:18.880 would be a much bigger deal by now it's really 0:06:19.200 --> 0:06:22.279 it's still pretty small. I think it's fifty sixty billion equity. 0:06:22.320 --> 0:06:24.920 Smart Bait is one trillion. So there's a whole disconnect 0:06:24.920 --> 0:06:27.279 there and it just hasn't grown like we thought. James, 0:06:27.279 --> 0:06:29.520 do we miss anything. Yeah, there's one that I got 0:06:29.520 --> 0:06:31.320 to call myself out on. I thought we'd have an 0:06:31.320 --> 0:06:33.960 ethereum future zt F two based on the fact that 0:06:34.000 --> 0:06:36.800 we got bitcoin futures and feed different things. But that 0:06:36.839 --> 0:06:39.320 has not happened. Um, so we got I got that 0:06:39.360 --> 0:06:46.440 one wrong me personally. All right, congratulations on being great. Listen, 0:06:47.440 --> 0:06:49.080 I'm sure you could do the same thing with Business 0:06:49.120 --> 0:06:52.600 Week articles. I know. So this is my version of that. 0:06:52.920 --> 0:06:56.799 Let me have it in my life here and and 0:06:56.640 --> 0:06:58.880 we roll the dice on these takes. Sometimes we put 0:06:58.920 --> 0:07:00.600 ourselves out on a limb. We'd don't we don't play 0:07:00.640 --> 0:07:03.160 it safe. We are in our your head issue. The 0:07:03.160 --> 0:07:06.040 thing that we got right was the weak link in 0:07:06.120 --> 0:07:09.520 crypto was going to be the brokerages, and that's it 0:07:09.600 --> 0:07:12.160 was a broadway. We didn't say FTX specifically, but listen, 0:07:12.280 --> 0:07:14.360 let's pet each other on the back right now, go 0:07:15.120 --> 0:07:27.960 all right, Ethanasios, let's talk about what's your number one man? Well, 0:07:28.000 --> 0:07:30.520 I'll start grim Um. I think closures are going to 0:07:30.600 --> 0:07:32.720 pick up. We did the episode on the graveyard. I 0:07:32.760 --> 0:07:36.560 think a couple on Halloween. Uh. There's two parts of 0:07:36.560 --> 0:07:39.160 the equation, obviously, launches and closures. I don't see launches 0:07:39.200 --> 0:07:42.400 slowing down. It was a you know, despite the market 0:07:42.400 --> 0:07:44.760 being tough, launches still came in pretty strong this year. 0:07:45.320 --> 0:07:47.120 You had last year, you had a lot of crazy 0:07:47.160 --> 0:07:49.800 stuff coming to the market. I actually think that other 0:07:49.800 --> 0:07:51.760 part of the equation is going to pick up. I 0:07:51.800 --> 0:07:53.960 think people threw a lot of product out that's not 0:07:54.000 --> 0:07:56.920 gonna you know, you need a bowl market, and I 0:07:56.960 --> 0:07:59.360 don't think we're gonna have that next year, or you know, 0:07:59.360 --> 0:08:00.680 it might be a tough from market. So I think 0:08:00.680 --> 0:08:02.680 we're gonna see closures start to pick up on people 0:08:03.160 --> 0:08:05.120 or issue or start to clean up their lineups. So 0:08:05.160 --> 0:08:08.880 do you think more closures than than this year? Uh? Yeah, 0:08:08.880 --> 0:08:11.680 I don't. I mean this year was higher than last year. 0:08:11.720 --> 0:08:13.960 I think it will be pretty high. I could probably 0:08:16.360 --> 0:08:18.120 is just another call we have to pat ourselves in 0:08:18.160 --> 0:08:20.400 the back. Next year, I think we could be a 0:08:20.400 --> 0:08:22.720 really rough year. For closures. Okay, I guess we're starting 0:08:22.720 --> 0:08:26.800 off on a bad note. Henry, first time on trillions 0:08:27.400 --> 0:08:31.480 number one. Sure, I don't know if there's a whow you, 0:08:31.600 --> 0:08:35.400 but what's allowing me is um active ETS. I think 0:08:35.640 --> 0:08:39.560 Active is going to be uh continue their rocket tractory 0:08:39.640 --> 0:08:42.920 in the US and the Europe. In Europe were falling 0:08:42.920 --> 0:08:46.319 close behind two reasons. One, I think investors in the 0:08:46.400 --> 0:08:49.280 US are starting to look beyond the structure and looking 0:08:49.280 --> 0:08:51.319 at the strategy itself, so don't really care if it's 0:08:51.360 --> 0:08:54.360 active or index anymore. In Europe, I don't think we've 0:08:54.400 --> 0:08:59.760 actually finished the consolidating the ETS story. Um, so before 0:08:59.800 --> 0:09:01.840 you can talk about active ETS, we have to get 0:09:01.880 --> 0:09:05.320 the ETS story down first. However, people are still gravitiing 0:09:05.360 --> 0:09:09.559 tourist Active. Yeah, it's interesting. Um semi transparent or non 0:09:09.559 --> 0:09:12.679 transparent Active just total flop another call we got right, 0:09:12.720 --> 0:09:15.280 I should have put that on the list. Oh my god, Sorry, 0:09:15.400 --> 0:09:17.560 I'm annoying every listener right now. They're like, all right, dude, 0:09:17.600 --> 0:09:21.719 it's just the patent the back show. We'll have a 0:09:21.840 --> 0:09:26.520 roast next time. Okay. Uh, my other shoulder, but transparent 0:09:26.559 --> 0:09:29.679 Active doing great Capital group came in transparent. They got 0:09:29.679 --> 0:09:32.559 like five or six billion fidelity. Like there's a lot 0:09:32.559 --> 0:09:34.920 of the transparent Active is doing just fine. I mean 0:09:34.960 --> 0:09:39.000 Active is really I think carving out a nice niche, right, Tom, Yeah, 0:09:39.080 --> 0:09:41.640 I think going back to your other there's another patent 0:09:41.679 --> 0:09:43.559 the back, but the Cathy would call I think her 0:09:43.640 --> 0:09:47.360 being transparent and her having that success might even kill 0:09:47.480 --> 0:09:51.520 that narrative that you need to be non transparent to succeed. Yeah, 0:09:51.559 --> 0:09:54.120 and so I think I think the non transparent Active 0:09:54.200 --> 0:09:57.680 is probably gonna slowly it lives in a very very 0:09:57.720 --> 0:10:02.079 small niche, if not just go away eventually, and transparency 0:10:02.120 --> 0:10:04.920 will will be how they do active. I think what's 0:10:05.080 --> 0:10:08.160 what we're seeing though, also with the adoption of active 0:10:08.240 --> 0:10:11.719 is a lot of intermediary not intermangors like I ra 0:10:11.840 --> 0:10:14.199 A S are coming in. We have white labels are 0:10:14.280 --> 0:10:16.439 trying to start out their own et S shops and 0:10:16.520 --> 0:10:19.440 launching their active strategies because there's no more stigma if 0:10:19.480 --> 0:10:21.959 there ever were on active ets. So they're just bringing 0:10:21.960 --> 0:10:25.480 out there there there either they're trying improving strategies to 0:10:25.640 --> 0:10:28.240 act to space or the strategies that weren't working out 0:10:28.280 --> 0:10:30.760 that well, they're putting it into the et F wrapper 0:10:30.760 --> 0:10:32.640 to try them out, so I'm gonna see how big 0:10:32.679 --> 0:10:36.240 growth there. I do have one variation on this active call, 0:10:36.320 --> 0:10:39.840 which is I think that you're going to see um 0:10:40.000 --> 0:10:43.440 big legacy companies like Franklin Templeton Fidelity. At least, this 0:10:43.440 --> 0:10:45.120 is what I would do. I will come out with 0:10:45.160 --> 0:10:48.839 my best ideas funds, a concentrated portfolio, just twenty five 0:10:48.880 --> 0:10:51.400 stocks like Cathy would style, but it's the best ideas 0:10:51.520 --> 0:10:53.720 of your whole brain trust and make that a separate 0:10:53.720 --> 0:10:56.120 et F and then just keep your mutual funds because 0:10:56.120 --> 0:10:58.800 they're good cash cows right now, or convert them. But 0:10:58.880 --> 0:11:02.200 then I think that a concentrated active fund fits well 0:11:02.280 --> 0:11:05.680 on our otherwise boring beta core allah Cathey would and 0:11:05.679 --> 0:11:07.520 I think she showed that. So I think we might 0:11:07.559 --> 0:11:11.839 see legacy sort of archives itself a little and come 0:11:11.840 --> 0:11:14.720 out with these best idea funds. That's just my call, 0:11:14.880 --> 0:11:16.880 but you know, we'll see. Yeah, we's gonna have calls. 0:11:16.960 --> 0:11:20.000 Do I'm only like, I'm only batting eight fifty, But 0:11:20.000 --> 0:11:24.360 we'll see, we'll see, we'll see. Okay, James, what's your 0:11:24.440 --> 0:11:27.440 number one? Yeah, So I'm gonna actually look a little 0:11:27.440 --> 0:11:30.520 bit beyond here. A tad But so I mean, first 0:11:30.760 --> 0:11:32.960 start by saying when I talk about mutual funds and everything, 0:11:33.000 --> 0:11:35.520 I'm about to say, I'm excluding money market funds. We 0:11:35.520 --> 0:11:38.120 don't really we don't consider them to be the same 0:11:38.160 --> 0:11:40.439 type of situation when you're looking at ets first, mutual 0:11:40.480 --> 0:11:44.280 funds um But so the one that is, we think 0:11:44.360 --> 0:11:48.040 that passive could pass active and assets for ets and 0:11:48.120 --> 0:11:51.040 mutual funds by the end of three Right now, the 0:11:51.080 --> 0:11:54.160 trend is accelerated. Eric mentioned earlier, it actually has slowed 0:11:54.200 --> 0:11:55.760 down in some furrors of the market. So one of 0:11:55.800 --> 0:11:59.600 the reasons why passive tends to overtake or pass gain 0:11:59.679 --> 0:12:01.680 market share and active during bear markets it is because 0:12:02.040 --> 0:12:05.079 active has historically been so much larger. So if you're 0:12:05.080 --> 0:12:07.320 a tent trall and you go down ten percent, that's 0:12:07.440 --> 0:12:09.040 a lot more money that's going down if E t 0:12:09.160 --> 0:12:10.800 F s are half or less than half that size, 0:12:10.840 --> 0:12:12.959 So the bear market really hurts. You see outflows on 0:12:13.040 --> 0:12:15.160 top of that, and then E t F really gained 0:12:15.200 --> 0:12:17.360 market share. But what's happened now on the equity side 0:12:17.400 --> 0:12:20.480 of things, there's passive equity assets are larger than active 0:12:20.520 --> 0:12:23.360 equity assets, and the mutual fund ETF space combined, so 0:12:23.480 --> 0:12:27.559 the exact opposite is happening. That said, we're still seeing 0:12:27.679 --> 0:12:31.160 enough growth in the ETF to overcome that that that 0:12:31.360 --> 0:12:33.640 lead that PASSI have had. So passive should be losing 0:12:33.720 --> 0:12:36.200 more money than active in this bear market, but they're 0:12:36.200 --> 0:12:39.160 not because so much money is pouring out. So because 0:12:39.200 --> 0:12:40.839 of that, we think the trend is going to be. 0:12:40.880 --> 0:12:44.000 It could happen by December. That's next year. I think 0:12:44.080 --> 0:12:46.719 it's definitely going to happen by We would need a 0:12:46.880 --> 0:12:49.440 massive regime shift of the last fifteen to twenty years 0:12:49.800 --> 0:12:52.120 for that not to be the case. What percent of 0:12:52.240 --> 0:12:55.880 the funds market is passive when it comes to equity, Uh, 0:12:56.000 --> 0:13:00.160 it's so it's about okay, what about fixed than um 0:13:00.280 --> 0:13:02.319 fixed income it's a it's about third. It's in the 0:13:02.480 --> 0:13:05.520 mid thirties. And what this is, what's total total? It's 0:13:05.559 --> 0:13:08.679 about So that you're saying that's going to go to 0:13:08.760 --> 0:13:11.160 fifty one or fifty point one at the end of 0:13:11.240 --> 0:13:14.240 next year, theoretically by December three, I think could happen. 0:13:14.320 --> 0:13:16.280 It's going I would bet a lot of like you 0:13:16.320 --> 0:13:17.960 would be you would I would be very confident that's 0:13:18.000 --> 0:13:21.280 gonna happen. In Now, let's shift to mutual fund to 0:13:21.320 --> 0:13:23.480 e t F that's a whole another like sort of war. 0:13:23.600 --> 0:13:26.800 We're looking at what is that person, what percentage of 0:13:26.840 --> 0:13:29.480 assets the ETFs have relative to mutual funds, and where 0:13:29.480 --> 0:13:32.120 do you see that going? Yeah, so again x money markets, 0:13:32.120 --> 0:13:33.959 because there are trillions of dollars in money markets. But 0:13:34.000 --> 0:13:37.439 we're about so if you take ets mutual funds, et 0:13:37.600 --> 0:13:40.920 s makeup about and based on the current trajectory and 0:13:40.960 --> 0:13:43.640 all the stuff we're talking about E t f s democratizing, 0:13:43.960 --> 0:13:46.959 revolutionizing finance. People still pointing the ts. I think it's 0:13:46.960 --> 0:13:49.480 gonna happen by It could happen within five years. So 0:13:49.559 --> 0:13:51.600 that's a big jump to go from twenty eight to fifty. 0:13:51.679 --> 0:13:53.360 But at the current rate of change, it's it's not 0:13:53.520 --> 0:13:55.560 that crazy to put out there. And I think most 0:13:55.600 --> 0:13:58.880 people listening might actually feel like, I can't believe ETFs 0:13:58.920 --> 0:14:01.000 only have twenty eight percent end of those assets. But 0:14:01.640 --> 0:14:04.400 the media has really shifted to covering a t f 0:14:04.480 --> 0:14:06.559 s and mutual funds don't get much coverage. We're actually 0:14:07.360 --> 0:14:10.120 hiring somebody to cover mutual funds because a lot of 0:14:10.160 --> 0:14:12.080 our clients actually want to read about there's still twenty 0:14:12.160 --> 0:14:14.080 trillion in them and they've kind of been left behind 0:14:14.120 --> 0:14:15.640 by the media, but they still have a ton of money, 0:14:16.000 --> 0:14:17.839 and you know, it's slipping. But this is going to 0:14:17.920 --> 0:14:19.760 take a long time for this all the playout, but 0:14:19.840 --> 0:14:23.200 I agree with James, they will become the majority at 0:14:23.280 --> 0:14:29.440 some point. Alright, your number two number two one is, 0:14:30.000 --> 0:14:33.920 you know, beating the SMP is hard right over time, 0:14:33.960 --> 0:14:36.480 it's just really hard to beat the index. So we 0:14:36.560 --> 0:14:39.080 looked at this year. Actually a lot of ETFs did 0:14:39.160 --> 0:14:41.360 better than the SMP five hundred, and it's because it 0:14:41.440 --> 0:14:44.120 was a violatle market. And so I think next year, 0:14:44.120 --> 0:14:45.960 if we're gonna be violat again, I think it will 0:14:45.960 --> 0:14:48.720 be a good opportunity for other et f that'll perform. 0:14:49.160 --> 0:14:51.440 Now I get it, not every ETF is supposed to 0:14:51.640 --> 0:14:54.680 perform the market, but I think when you have a 0:14:54.760 --> 0:14:57.000 market like we did this year, a lot of stuff 0:14:57.160 --> 0:15:02.280 like value, energy, active, smart beta, things like that tend 0:15:02.360 --> 0:15:04.200 to do well. So I'll probably be looking for a 0:15:04.280 --> 0:15:08.200 lot of the same stuff next year. So more opportunities, 0:15:08.280 --> 0:15:10.760 more trading, more ways to beat the market. So I 0:15:10.840 --> 0:15:13.640 think that's you know, people don't realize not every ETF 0:15:13.800 --> 0:15:15.560 is just supposed to be like an active strategy or 0:15:15.560 --> 0:15:18.160 smart beta, A lot of people will trade throughout of them, right, 0:15:18.240 --> 0:15:20.480 So there's just as many energy ETFs as there are 0:15:20.600 --> 0:15:23.040 tech ETFs. And energy was really great this year, so 0:15:23.360 --> 0:15:25.360 I think it will give opportunity to a lot of 0:15:25.440 --> 0:15:27.400 things that were left for dead to be able to 0:15:27.560 --> 0:15:29.400 perform next year. So that's something I'd be looking at. 0:15:29.480 --> 0:15:31.120 A couple of comments. This is very interesting to me. 0:15:31.520 --> 0:15:33.080 I think this also speaks to the fact that a 0:15:33.120 --> 0:15:35.280 lot of smart beta e t f s tend to 0:15:35.320 --> 0:15:38.400 be designed by people who overweight fundamentals and like stuff 0:15:38.440 --> 0:15:40.200 that you learned in your cf A class that stuff 0:15:40.200 --> 0:15:43.240 matters now they don't like, actually designed smart batts to 0:15:43.280 --> 0:15:46.680 go after nonprofitable tech companies which work clearly for a while, 0:15:46.720 --> 0:15:48.480 and left all these value funds which use you know, 0:15:48.560 --> 0:15:51.440 more classic fundamentals like price to earnings ratios and stuff. 0:15:51.920 --> 0:15:55.640 They now are kind of working. There what they They 0:15:55.680 --> 0:15:58.040 were designed with a lot of evidence and now there 0:15:58.280 --> 0:16:00.600 it's working because the market is value these things that 0:16:01.080 --> 0:16:04.680 tend to always be valued after the bull market comes down, right, 0:16:04.760 --> 0:16:07.520 it is a return a mean version kind of thing. Um. 0:16:07.720 --> 0:16:09.760 And then to your point of the stuff like if 0:16:09.840 --> 0:16:11.600 energy does well, you'll probably see a couple more energy 0:16:11.640 --> 0:16:14.360 ETF launched, and so the product will start to go 0:16:14.480 --> 0:16:18.880 towards the things that are working value energy materials and 0:16:19.000 --> 0:16:21.320 then all there there where you're going to see some 0:16:21.400 --> 0:16:25.280 out performance. Yeah. I agree. It's like spurs basketball, right, 0:16:25.360 --> 0:16:27.840 like back to fundamentals. I think that's gonna work next year. 0:16:28.080 --> 0:16:30.360 Last year was all like aliops and like you know, 0:16:30.480 --> 0:16:32.200 and we're going crazy. I think this year it's going 0:16:32.240 --> 0:16:35.760 to be just back to like most boring basketball. Yeah, 0:16:35.800 --> 0:16:38.840 you know, pick and rolls, like just basic basic. I'd 0:16:38.880 --> 0:16:42.080 like that metaphor that it works, Henry, Let's here what 0:16:42.280 --> 0:16:45.920 else you got for Europe. For Europe, my synkoll is 0:16:45.920 --> 0:16:49.200 actually fixed income products UM. This last month for example, 0:16:49.920 --> 0:16:54.080 bad massive flows UM back into e tps in general 0:16:54.160 --> 0:16:57.120 and have the flows were into fixed income whereas they 0:16:57.160 --> 0:17:02.520 only make up total assets. So in terms of fixing income, 0:17:03.200 --> 0:17:05.440 my cul for next year is going to be fixing 0:17:05.480 --> 0:17:12.639 in products for income generation and UH for combating inflation. 0:17:13.400 --> 0:17:15.480 So that could be fixed for inflation, actually could be 0:17:15.800 --> 0:17:18.080 fixed income, or it could be hard assets. So I 0:17:18.440 --> 0:17:22.280 keep an eye out also for UM for like gold 0:17:22.359 --> 0:17:26.240 bullion and other medals funds UM. There's a lot of 0:17:26.320 --> 0:17:29.919 cryptocurrency e tps here in Europe, and I think um 0:17:30.680 --> 0:17:34.440 some investors saw it as a store of value. Given 0:17:34.480 --> 0:17:37.840 the current situation, I think we'll see some people um 0:17:37.920 --> 0:17:41.040 flowing out of the cryptocurrency TVs and back into a 0:17:41.119 --> 0:17:45.080 gold bullion or other metals. Inflation and Income m E 0:17:45.200 --> 0:17:47.240 t p s are mar caul for next year. Yeah, 0:17:47.280 --> 0:17:49.600 so piggybacking on what Henry said here in the US, 0:17:50.000 --> 0:17:53.000 we've fixed active fixed incommutual funds have It's been a 0:17:53.080 --> 0:17:55.159 it's been a little bud blood bath so far in 0:17:55.240 --> 0:17:57.879 two they've seen hundreds of billions of dollars and now 0:17:58.040 --> 0:18:00.480 I think we have four hundred billion right now. Yeah, 0:18:00.520 --> 0:18:04.119 half a trillion. Hold on half a trillion is six 0:18:04.320 --> 0:18:07.480 times more than any other year of outflows, so it's 0:18:07.520 --> 0:18:10.560 the record six times over. Yeah, So fixed income has 0:18:10.600 --> 0:18:14.840 been active fixing. Commutual funds specifically have been crushed. But 0:18:15.200 --> 0:18:17.159 et f s we've taken in a decent amount of 0:18:17.160 --> 0:18:19.520 money and fixed income despite this rising rate environment, despite 0:18:19.560 --> 0:18:22.720 the worst performance virtually ever for fixed income, and the 0:18:22.880 --> 0:18:25.240 et f s are still taking in money. So that's 0:18:25.560 --> 0:18:28.040 that goes into the fact that I talked about equity 0:18:28.200 --> 0:18:30.240 wasn't gaining as much market share on the passive side 0:18:30.240 --> 0:18:32.560 of things, but on the fixed income side of things, 0:18:32.640 --> 0:18:35.000 it's really ramped up. Like we've seen a couple percentage 0:18:35.000 --> 0:18:37.080 points ramp up in the passive verse active side of 0:18:37.119 --> 0:18:38.560 things and on the E t F side of things 0:18:38.640 --> 0:18:41.840 because of this mass outflow from mutual funds and into 0:18:41.920 --> 0:18:43.600 e t s. At the same time, I think there's 0:18:43.600 --> 0:18:46.280 a demographic a shift as well. Here a lot of 0:18:46.359 --> 0:18:48.600 fixed in commutual funds were bought by boomers when they 0:18:48.640 --> 0:18:50.399 were young, and their four one case, they're now seventy 0:18:50.480 --> 0:18:53.600 eight years old. And if the Feds aggressively hiking I 0:18:53.920 --> 0:18:55.479 if I was a boomer at that age, I might 0:18:55.520 --> 0:18:57.119 not want to wait around. I might just take I 0:18:57.200 --> 0:18:59.760 had a good run. It was like thirty year of 0:19:00.359 --> 0:19:03.280 lowering of rates. I mean it was brilliant. I might 0:19:03.359 --> 0:19:05.480 just cash out. I also think that the e t 0:19:05.600 --> 0:19:08.359 F s are used more by institutions and allocators now 0:19:08.800 --> 0:19:11.399 to pinpoint what they want right now. Like Tom had 0:19:11.680 --> 0:19:14.040 a great note on the cash like a TS which 0:19:14.040 --> 0:19:16.399 now yield four percent. So now you just buy one 0:19:16.400 --> 0:19:18.640 of these cash like ats. You can buy any exchange 0:19:18.880 --> 0:19:20.879 gives you four percent yield, you've got some cash you 0:19:20.920 --> 0:19:22.960 wait to deploy to equities. So I think e t 0:19:23.080 --> 0:19:25.680 f s are used for their tool purposes, whereas the 0:19:25.760 --> 0:19:27.480 mutual funds were used a little more for like the 0:19:27.520 --> 0:19:30.680 whole enchilada. Yeah, we we we we. We've talked on 0:19:30.720 --> 0:19:33.080 the show about the single stock ets and that potential 0:19:33.119 --> 0:19:34.960 growth area which hasn't really panned out. But one area 0:19:35.000 --> 0:19:37.520 that has panned out is a single bond ets, the 0:19:37.560 --> 0:19:39.600 one from FM Acceleration. They have hundreds of millions of 0:19:39.600 --> 0:19:42.680 dollars they just launched this year, and they're targeting specific 0:19:42.840 --> 0:19:45.520 on the run rolling of treasuries, which basically allows you 0:19:45.600 --> 0:19:48.760 if you if you watch Bloomberg TV or CNBC, they 0:19:48.800 --> 0:19:51.440