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Speaker 1: Boken to Trillions. I'm Joel Webber and I'm Eric bel Tunis. Eric,

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Speaker 1: did you know that it was possible to work for

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Speaker 1: Goldman Sacks and live in California? I didn't. It sounds

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Speaker 1: like a pretty good deal. There's only as far as

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Speaker 1: I know, there's only one person that has that gig,

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Speaker 1: and he's going to be on trillions today. Who is he?

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Speaker 1: Cole Fineberg. So he's somebody that I originally met when

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Speaker 1: he was at black Rock, which I guess is we'll

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Speaker 1: find out. That's probably why he was in San Francisco

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Speaker 1: or California to begin with. They have a huge San

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Speaker 1: franc office there. Um. But I met him at black

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Speaker 1: Rock and then he moved to Goldman when they started

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Speaker 1: their et F business, I want to say, like six

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Speaker 1: years ago ish um, and they have been very successful. Um.

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Speaker 1: It's it's interesting. Goldman is just thought of business monster

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Speaker 1: Wall Street company that has a lot of power and influence.

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Speaker 1: But you know, when they came into E t F,

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Speaker 1: it's a meritocracy. It's a terra done for them too,

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Speaker 1: and so there was nothing given. They had to earn

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Speaker 1: all of it. And you know they've had some successes,

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Speaker 1: some not so successful, um so even for them, uh

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Speaker 1: that they've had to sort of start from scratch and

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Speaker 1: be a nubie in the E t F industry. So

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Speaker 1: we have one of their funds they caught our radar

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Speaker 1: in the past week was GSLC. We've been watching this

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Speaker 1: one since it came out. It's the um Active Beta

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Speaker 1: e t F UM. It's a basically a e t

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Speaker 1: F that has value, quality, momentum, and low ball all

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Speaker 1: packaged together. Those are the factories. And then it just

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Speaker 1: hit ten billion dollars, which puts it in the top

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Speaker 1: one hundred biggest ETFs. Now it's very rare for anyone

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Speaker 1: outside of Black Rock, Vanguard and State Street to be

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Speaker 1: in the top one hundred, and to do it without

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Speaker 1: doing like a plane beta e t F you know,

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Speaker 1: like a regular index to do something it's a little

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Speaker 1: activish is a real feat and so I figured the

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Speaker 1: ten billion we would, uh, you know, it was a

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Speaker 1: good excuse to talk to to talk to Goldman. Also

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Speaker 1: joining us is Katie Greifield, who's an et F reporter

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Speaker 1: for Bloomberg News. This time on Trillians. Goldman's e t

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Speaker 1: F Guy Cole, Welcome to Trilliance glad to be here.

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Speaker 1: Thanks so much for having me. Okay, I gotta ask you,

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Speaker 1: Are you the only Goldman employee in California? Did I

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Speaker 1: get it right? Not exactly right. We have a pretty

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Speaker 1: good presence in in both Los Angeles and San Francisco. Um,

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Speaker 1: there's not a lot of asset management, though, there's a

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Speaker 1: good amount of private wealth investment, banking and some other divisions.

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Speaker 1: So I'm I am one of the lucky ones on

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Speaker 1: the asset management side. And I have to ask, because

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Speaker 1: you're there right now and the whole West Coast seems

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Speaker 1: to be on fire. Um, how are how are you

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Speaker 1: faring with the wildfires? I appreciate you asking. Um, it's

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Speaker 1: scary bride orange skies and um, lots of smoke oake.

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Speaker 1: And I think the thing I'll say is we're very

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Speaker 1: fortunate to be safe where we are in the in

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Speaker 1: the Bay area. We live in the East Bay, and

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Speaker 1: somewhat fortunate also that at least during this pandemic, we're

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Speaker 1: not expected to be in crossing bridges and all that

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Speaker 1: other good stuff. Right, So working from home is a

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Speaker 1: benefit as well. But the real thing that I would

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Speaker 1: want to say is just incredibly grateful and thankful for

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Speaker 1: firefighters and all the men and women out there who

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Speaker 1: are working, you know, literally days and nights for weeks

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Speaker 1: in a row to to keep us safe. It's it's

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Speaker 1: yeoman's work that they do. It's incredible and we're all

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Speaker 1: very fortunate to have them, uh working as hard as

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Speaker 1: they are. So I gotta ask about this product that

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Speaker 1: Eric mentioned in the intro g s l C, which

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Speaker 1: has just been on a on a terror for you

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Speaker 1: guys at Goldman. Can you describe it because it sounds

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Speaker 1: like a smart Beta fund basically, right? Is that? Is

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Speaker 1: that how you describe it? Yeah? I think so. I mean,

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Speaker 1: you know, look, I think the the Goldman brand name

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Speaker 1: within smart Beta is active Beta. Eric alluded to the

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Speaker 1: four factors and are offering value, quality, low volatility, and momentum.

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Speaker 1: So what we do is is we equally wait each

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Speaker 1: of those factors when we rebalance on a quarterly basis.

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Speaker 1: And the reason I think that's important actually goes back

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Speaker 1: to the naming convention. Right, active Beta it's a little

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Speaker 1: bit of an oxymoron um beta. You get some of

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Speaker 1: the traditional benefits with g SLC and our active Beta

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Speaker 1: suite that you do with pure passive right, tradeability, transparency,

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Speaker 1: low cost, tax efficiency, benchmark awareness um. But you also

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Speaker 1: get some of the what I would say are are

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Speaker 1: kind of key attributes of active management, which is, you know,

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Speaker 1: leveraging factors and and kind of tried and true methods

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Speaker 1: to try to achieve a little bit of alpha, you know,

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Speaker 1: to try to take a little bit of volatility off

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Speaker 1: the table. And I think we've been successful not to

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Speaker 1: break our arms, you know, hadding ourselves on the back,

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Speaker 1: but I think we've been successful in raising assets because

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Speaker 1: the products have done exactly what they're supposed to do right,

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Speaker 1: low cost um four years straight of of alpha relative

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Speaker 1: to the index, taking vall off the table. Um investors

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Speaker 1: have taken notice, and we've been the beneficiar area flows

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Speaker 1: as a result. So cool gotta ask. Looked at the holdings,

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Speaker 1: you guys are cheap, but the holdings basically kind of

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Speaker 1: look like SNP holdings. And I can get SMP five

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Speaker 1: stuff cheaper elsewhere. Why would I invest in g s

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Speaker 1: l C when I can do something like SMP elsewhere.

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Speaker 1: It's it's a good question, and I would I would

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Speaker 1: say two things. One is you can't get it much

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Speaker 1: cheaper elsewhere. Right, G s l C is nine bits.

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Speaker 1: You can't get too much lower than that. UM. But

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Speaker 1: but I think you bring up a good point, which is,

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Speaker 1: you know, look by design, as I mentioned, it's benchmark aware, right,

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Speaker 1: we look at incorporating the factors that we talked about,

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Speaker 1: but we do so equally, right, So we are in

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Speaker 1: my view, there's three ways that you can construct a

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Speaker 1: multi factor product. You can do what we'll call factor timing, right,

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Speaker 1: Hey and Q three were overweight momentum and underweight value

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Speaker 1: as an example UM or vice versa or whatever it

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Speaker 1: may be. Number two is you can you know, kind

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Speaker 1: of put what I would call persistent overweights in place,

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Speaker 1: something like the Faum of French model, which is well

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Speaker 1: followed and and a lot of E T f s

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Speaker 1: out there, you know, kind of benchmark to a Faum

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Speaker 1: of French type of model UM where something in the

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Speaker 1: neighborhood of about seventy percent is in value. As a result,

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Speaker 1: you've got a lot of eggs in one basket. With

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Speaker 1: either of those, you're making bigger bets um relative to

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Speaker 1: the benchmark with G s LC. To your point, Joel,

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Speaker 1: and I think you hit the nail on the head.

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Speaker 1: You're not taking as big of a bet, right, we're

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Speaker 1: making very small tweaks to the market cap weights. Our

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Speaker 1: view is on that, I think, um, look, we like

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Speaker 1: market cap waiting. We just don't necessarily believe that the

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Speaker 1: size of the company should be only in put into

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Speaker 1: how much of it you own. So while there is

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Speaker 1: like you said, definitely you know, pretty good overlap, call

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Speaker 1: it low active share relative to the benchmark, you'll see

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Speaker 1: a lot of of a lot of the same names,

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Speaker 1: but different weights in those names. Right, So, where Apple

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Speaker 1: and Microsoft and Amazon are the biggest holdings in the

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Speaker 1: S and P, they are some of our biggest holdings

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Speaker 1: as well, they're just not as significant because of it

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Speaker 1: currently anyways, right, modest underweights based on how they score

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Speaker 1: in those factors, and so you know, and in reverse,

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Speaker 1: when you look at the bottom of the index, the

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Speaker 1: very few, you know, the very smallest weighted names at

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Speaker 1: the bottom of the index, News Corp. And you know

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Speaker 1: some names like that, Um, they start out at such

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Speaker 1: small weights, but if they score well based on our

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Speaker 1: factor kind of ranking, you're gonna see some pretty good overweights.

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Speaker 1: So again you're gonna see a lot of the same

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Speaker 1: names but with different weights. UM, to how much of

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Speaker 1: those you own. And the idea is we think, you know, look,

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Speaker 1: if companies show the attributes of those factors, we want

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Speaker 1: to have a little bit more of it. Call it

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Speaker 1: a modest overweight. Where companies do not show those attributes.

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Speaker 1: Of course we're going to have a modest underweight. And

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Speaker 1: so small tweaks to all of the names rather than

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Speaker 1: biby tweaks to some of the names. Is kind of

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Speaker 1: the way I like to think about it. Yeah, and

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Speaker 1: you know you talked about benchmark aware and this e

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Speaker 1: t F. I I'm going to actually go out on

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Speaker 1: a limb here and say this is really the future

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Speaker 1: of active management. UM. I wrote a Bloomberg opinion piece

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Speaker 1: about three years ago. I want to say I called

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Speaker 1: this actually UM where I referred to this e t

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Speaker 1: F as the T two thousand terminator. Uh, you know,

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Speaker 1: from terminator to the liquid nitrogen one that they send

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Speaker 1: from the future to try to kill the the other terminator. Anyway,

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Speaker 1: long story short, it's very futuristic to me because it

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Speaker 1: is using quant quant uh research. Right, It's got value growth,

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Speaker 1: all this stuff, and it does it all in one shot.

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Speaker 1: It doesn't pick one because I think it visers maybe

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Speaker 1: don't know which one to pick at what time. But

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Speaker 1: here's the key thing to me, which I think is

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Speaker 1: might be a little cynical, which is you get Goldman's name,

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Speaker 1: but for Vanguard's fees. And I do think if it

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Speaker 1: didn't charge nine bibs and you charge thirty, it would

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Speaker 1: struggle more. I think there's a real priority for cheap

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Speaker 1: and I just want to ask you this is that

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Speaker 1: I give Goldman and JP Morgan for that. The Wall

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Speaker 1: Street banks have been really good about just going there

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Speaker 1: quickly and ripping the band aid off in terms of

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Speaker 1: having some products that are what we call dirt cheap. Um,

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Speaker 1: what was that like? That decision to go there immediately?

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Speaker 1: Because you see like some of the bigger mutual fund

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Speaker 1: legacy firms coming in, they're all thirty to sixty BIPs.

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Speaker 1: You came in at nine with some pretty secret sauce

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Speaker 1: kind of stuff here. What was behind that? Yeah, it's

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Speaker 1: a great point, and I think it's a really important

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Speaker 1: one as to also why we've been successful with the

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Speaker 1: asset rays, right, which is let's just take cost off

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Speaker 1: the table. Right. You think this is a scale game. Um,

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Speaker 1: you know, when you think about competitor pure passive offerings

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Speaker 1: the obvious behemoth in US large cap as Spy right,

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Speaker 1: and Spy is also nine BIPs. So basically you're paying

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Speaker 1: the same freight, but you're getting opportunity for a little

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Speaker 1: more bang for your buck. Again, whether that's alpha less

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Speaker 1: of all, ideally both. And that's been the result for

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Speaker 1: our for our shareholders. And so what I would say

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Speaker 1: is is the logic being it being a scale game.

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Speaker 1: And I think going back to the logic as to

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Speaker 1: why that's helped us raise assets is couple the low

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Speaker 1: cost with the benchmark awareness, right, that allows advisors to

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Speaker 1: think about it as core and and yes, you can

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Speaker 1: go after more of the portfolio and they have a

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Speaker 1: fear of getting fired I think, or at least getting

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Speaker 1: um feedback from their clients. So why is this underperforming

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Speaker 1: GSLC will never really straight from the index too much

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Speaker 1: because it's got a lot of the index in there

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Speaker 1: or the SMP rather. That's right, cool. Can you can

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Speaker 1: you rewind the clock and and like put us in

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Speaker 1: the room, did you have the the dryer race pen

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Speaker 1: and go up to the board and we're like nine

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Speaker 1: basis points And who got that through the management committee,

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Speaker 1: because I have to feel like Goldman would be like,

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Speaker 1: we're not selling something for nine pips. You know, it's

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Speaker 1: really I learned this after having joined the firm a

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Speaker 1: little over five years ago. The mandate within all of

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Speaker 1: g SAM and this is for our mutual funds and

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Speaker 1: our e t s is to be below the average

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Speaker 1: price of the morning Star peer universe. So where I

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Speaker 1: don't necessarily think folks always think, you know, low cost

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Speaker 1: provider when they hear the words Goldman Sachs. In the

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Speaker 1: case of our asset management business, it really is UM,

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Speaker 1: it really is applicable and and you know, I won't

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Speaker 1: let you maybe all the way behind the curtain as

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Speaker 1: to what the white board looked like in that room,

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Speaker 1: but I think the the discussion ended in a really

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Speaker 1: smart place where we realize that the go to market

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Speaker 1: strategy and the ability to compete with you know, the

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Speaker 1: Big three as you like to refer to America, right,

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Speaker 1: and I think that spot on. In order to compete

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Speaker 1: we needed to be really thoughtful on price, and and

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Speaker 1: that that feedback has been really obvious from clients and

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Speaker 1: again in the end via their dollars going towards those

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Speaker 1: these products. UM and it's it's proven really successful. Well,

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Speaker 1: I wanted to ask about the inflows. They've been very

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Speaker 1: steady all year. You know, g s LC has taken

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Speaker 1: in cash every month. I think August was particularly strong.

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Speaker 1: And I know that model portfolios are focus for g SAM,

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Speaker 1: Goldman bought s and p S model portfolio business last year.

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Speaker 1: So rocking it all together, I wanted to ask, you know,

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Speaker 1: how important have model flows been for G s l

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Speaker 1: c S growth and if not model flows, you know,

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Speaker 1: where is that demand coming from. Yeah, it's a great question.

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Speaker 1: So specific to our models business, you know, we do

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Speaker 1: have some of the kind of G SAM models um incorporating,

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Speaker 1: incorporating G S l C and our other e t

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Speaker 1: s Really candidly, I think we've been really thoughtful there too.

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Speaker 1: Our models are not chopped full of exclusively Goldman offerings, right,

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Speaker 1: so we're thoughtful about where we don't have offerings, right,

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Speaker 1: we have twenty or twenty five e t s. We

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Speaker 1: don't have the you know, the kind of catalog of

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Speaker 1: e t s that some of the competitors do. And

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Speaker 1: we're really thoughtful about incorporating our peers, right and other

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Speaker 1: issuers into our models where it makes sense. Where it's

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Speaker 1: the right exposure. UM, So i'd start there. In terms

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Speaker 1: of the flows generally this year and and kind of

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Speaker 1: historically into g s LC, we've been really fortunate that

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Speaker 1: it's a very wide swath of you know, call it

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Speaker 1: investor types. UM. Obviously you know approvals that all of

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Speaker 1: the wire house platforms has been helpful and certainly extremely

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Speaker 1: helpful in the early days. UM. You know, across our

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Speaker 1: I A s and independent broker dealers, we seen tremendous

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Speaker 1: flow and more and more. We're also you know, involved

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Speaker 1: with with institutional clients and bank trust apartments and you

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Speaker 1: know key platforms and so forth, and other models external

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Speaker 1: model providers where we've seen a lot of growth. And

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Speaker 1: I think success beget success. Assets beget assets, Liquidity begets liquidity, right,

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Speaker 1: and we've been we've leveraged that into being able to

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Speaker 1: have kind of more and more conversations with different client types.

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Speaker 1: I would kind of focus on institutional, especially there right

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Speaker 1: where you hit kind of key milestones in terms of

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Speaker 1: asset levels and all of a sudden, pension plans be

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Speaker 1: a public or corporate, you know, insurance companies, hedge funds,

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Speaker 1: all kinds of different investors have have taken notice, um

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Speaker 1: and as a result, we are very widely held across

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Speaker 1: a number of you know, client types. UM. You know

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Speaker 1: you talk about fees and costs. Obviously it's a huge

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Speaker 1: thing in the e t F world. I give you

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Speaker 1: guys credit for actually forcing the cost fee war that

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Speaker 1: kind of broke out in E s G. Um you

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Speaker 1: came out with just it's the Goldman Sacks just large

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Speaker 1: cape equity e t F twenty BIPs. At the time,

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Speaker 1: I think it might have been the cheapest or close

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Speaker 1: to it. This is before Vanguard vanguarded that category. But anyway, UM,

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Speaker 1: I want to also talk about the et F a

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Speaker 1: little bit. You teamed up with Paul Tutor Jones, the

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Speaker 1: billionaire hedge fund manager, and I actually like this because

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Speaker 1: I do find that there's a disconnect between like what

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Speaker 1: like hardcore E s G people who live in Manhattan think,

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Speaker 1: and like regular Americans, you know, that sort of gap

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Speaker 1: that we have in the country, and just polls America

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Speaker 1: for what they want out of out of companies and

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Speaker 1: then invest that way. And thus it owns a company

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Speaker 1: like Exxon and Amazon which can be screened out of

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Speaker 1: some of the other systems. Can you talk about this

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Speaker 1: alternative approach to E. S G. Yeah, it's I'm really

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Speaker 1: excited about just UM. You know, the issues we measure

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Speaker 1: UM and how we prioritize them. I think you're really important. So,

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Speaker 1: based on the most comprehensive surveys literally ever conducted, we

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Speaker 1: engage about seventy two people UM since inception, and you know,

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Speaker 1: call it about fifteen to twenty thousand people a year

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Speaker 1: to identify what the most important issues are regarding kind

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Speaker 1: of just business behavior. Right, So, despite kind of the

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Speaker 1: current narrative of a nation divided UM, we find that

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Speaker 1: Americans across age, gender, partisanship, you know, ideologies, income agree

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Speaker 1: on the steps that corporations need to take UM to

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Speaker 1: act more equitably. And and we asked, you know, we

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Speaker 1: ask in these surveys just capital does and then we

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Speaker 1: leverage that index that they've created. We've asked the American

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Speaker 1: public to to kind of prioritize, you know, what is

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Speaker 1: that the corporations need to do? What is just business behavior?

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Speaker 1: And you know, the results are we've identify fied the

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Speaker 1: order of importance really kind of seven key issues that

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Speaker 1: I'll touch on really quickly, workers, UM, customers, products, what

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Speaker 1: kind of products. Are these these companies you know, bringing

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Speaker 1: the market, environment, community, jobs, and then finally kind of

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Speaker 1: management and shareholders and so you know, we take all

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Speaker 1: these inputs and deliver what I think is really unique

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Speaker 1: in the E. S G space, which is a a

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Speaker 1: benchmark neutral, a sector neutral UM exposure to the Russell

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Speaker 1: one thousand. So basically with just you own five hundred

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Speaker 1: names out of the one thousand names in the Russell

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Speaker 1: one thousand, the idea being the five hundred that you

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Speaker 1: own are all of the above average names based on

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Speaker 1: all those inputs and how they rank, And I think

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Speaker 1: it's really it's really interesting. Right. So the bottom line, right,

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Speaker 1: to compare to the corporations that are excluded, the companies

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Speaker 1: that are included, Right, So the just five hundred relative

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Speaker 1: to the Russell one thousand, the five hundred that make

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Speaker 1: the cut are they pay thirty three percent more to

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Speaker 1: their media and US worker UM, They're ten times more

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Speaker 1: likely to have conducted gender pay analyzes UM, they employ

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Speaker 1: thirty eight percent more workers in the US UM. They

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Speaker 1: use less water, they use less fuel, they use less electricity,

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Speaker 1: the emit fewer greenhouse gases. They give more to charity.

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Speaker 1: So the result of all that, you add it all up,

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Speaker 1: and I think it's really compelling. What's interesting is is,

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Speaker 1: on average, you see about a seven percent higher r

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Speaker 1: o E. You see about a seven percent higher return

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Speaker 1: on equity in the names that make the cut into

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Speaker 1: just relative to to the names that kind of don't

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Speaker 1: make the cut. So to your point, Ericin, I want

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Speaker 1: a case in point, because I think this is really interesting. Right,

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Speaker 1: you talked about how other issuers will will maybe you know,

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Speaker 1: kind of very specifically exclude energy as an example. Well,

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Speaker 1: let's just you know, you mentioned x on. Let's just

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Speaker 1: use Xon and Chevron as a really quick example. If

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Speaker 1: Xon and Chevron are the only two names in the

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Speaker 1: benchmark and we're just going to keep one of them, well,

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Speaker 1: one of them is doing more in terms of you know,

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Speaker 1: giving back to their community. One of them is doing

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Speaker 1: more in terms of research and development of solar and

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Speaker 1: you know, renewable energy and so forth, and so it's

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Speaker 1: all relative. They get ranked versus each other, and the

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Speaker 1: one that's doing a better job quite simply gets you know,

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Speaker 1: remains in in in the index. And um the result

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Speaker 1: I think is compelling because you get low cost us

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Speaker 1: large cap core exposure to the Russell one. But you

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Speaker 1: also kind of scratch that E s G. H Eric,

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Speaker 1: you're such an E s G skeptic. Yeah, thank you

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Speaker 1: for not saying hater. I don't hate it. I just

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Speaker 1: find it's active management and you need to know that

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Speaker 1: does does the framework that coal is laid out for

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Speaker 1: just intrigue you. What do you? What do you make

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Speaker 1: of it? Um? I like it better because also companies

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Speaker 1: like Excen could very well be part of the future

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Speaker 1: in in terms of providing some of the clean energy solutions.

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Speaker 1: I'm generally of the feeling that demand follows supply and

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Speaker 1: that if you change your life as a consumer, that's

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Speaker 1: where all most of your E s G focus should be.

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Speaker 1: The companies will follow you. If you stop demanding gasoline,

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Speaker 1: excens not is gonna start selling, you know, the clean

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Speaker 1: energy stuff. UM. I don't know we should beat up

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Speaker 1: companies for just servicing demand that in a legal way.

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Speaker 1: That said, Uh, if you are into E s G

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Speaker 1: and you want to invest this way, I like just

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Speaker 1: I think treating workers and employees is probably the most

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Speaker 1: important thing for me too. I think companies can be

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Speaker 1: greedy corporations, and if you're rewarding the ones that are

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Speaker 1: nicer to their employees, especially massive companies that employ like

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Speaker 1: tens of thousands of people. I like that. I think

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Speaker 1: for most of people that might be more important. And say,

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Speaker 1: climate change, Can I add something in there? I I

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Speaker 1: because I totally agree with with everything you said there, Eric,

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Speaker 1: and I would just say it's intuitive that if if

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Speaker 1: a company is treating its employees and shareholders and you know,

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Speaker 1: customers better, um, you would expect that probably more talent

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Speaker 1: be it kind of coming out of college or transitioning

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Speaker 1: to a different kind of career path or whatever it

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Speaker 1: may be. It's it's intuitive that somebody would want to

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Speaker 1: go work at a firm like that, So you're gonna

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Speaker 1: probably acquire and and keep better talent um, and as

390
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Speaker 1: a result, you're probably going to see better performance. So

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Speaker 1: I think that you could almost make the argument that

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Speaker 1: there's like a just alpha that exists. And I'll button

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Speaker 1: that up by saying, since Inception just has outperformed its benchmark, uh,

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Speaker 1: and you're to date, it's actually been really pretty compelling,

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Speaker 1: So you know, I do think it's it's really an

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Speaker 1: interesting story, so cool. I want to talk about the

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Speaker 1: opposite of E s G, which is funds, UM. You

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Speaker 1: have a really interesting product in your lineup, g v

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Speaker 1: I P, which is the Goldman Sachs Hedge Fund Industry

400
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Speaker 1: v I P and E T F, which I think

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Speaker 1: is interesting because it doesn't try to replicate hedge funds

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Speaker 1: strategies per se. Instead, it combs through thirteen F filings

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Speaker 1: and tries to identify the favorite stocks among hedge funds UM.

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Speaker 1: But I wanted to ask, you know, hedge funds on

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Speaker 1: average haven't really done that well this year. They were

406
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Speaker 1: up about two percent in the first eight months of

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Speaker 1: twenty that's according to hedge fund research, which is kind

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Speaker 1: of surprising since you know, we've got volatility out the wazoo.

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Speaker 1: You know, you have countries with different outlooks, you know

410
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Speaker 1: where they are and controlling the virus, and hedge fund

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Speaker 1: managers just haven't shown up. And I do want to

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Speaker 1: make the point that g v I P is actually

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Speaker 1: up eighteen percent year to date. It's eating the SMP

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Speaker 1: five hundred, which is up less than five percent. But

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Speaker 1: you know, given the hedge fund managers haven't really done

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Speaker 1: this year and a year they should have shines, is

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Speaker 1: that a marketing challenge for a product like this it

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Speaker 1: is a challenge, I think. I think it's a really

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Speaker 1: good question. I think it is a challenge to be

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Speaker 1: really candid. Um, you would think performance that you referenced, right,

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Speaker 1: I mean it's it's not just beating the index. It's

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Speaker 1: three x the SNP year to date or something to

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Speaker 1: that tune. Um. You know what's interesting is when you

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Speaker 1: get under the hood why that's happening, right. I think

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Speaker 1: often it goes you know, maybe unnoticed. But with g

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Speaker 1: v i P, we're only giving you exposure to what

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Speaker 1: hedge funds are doing on the long side of their books, right,

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Speaker 1: So we kind of take a look at what are

429
00:23:42,680 --> 00:23:44,840
Speaker 1: you know, what are the most widely held holdings across

430
00:23:44,840 --> 00:23:47,480
Speaker 1: a very large universe of hedge funds, and it gives

431
00:23:47,480 --> 00:23:49,400
Speaker 1: you the offer to and then we give you exposure

432
00:23:49,440 --> 00:23:51,240
Speaker 1: to you know what, what you get with g v

433
00:23:51,320 --> 00:23:56,399
Speaker 1: i P is fifty stocks equally weighted at two percent each,

434
00:23:56,760 --> 00:24:00,360
Speaker 1: where what you hold are the fifty stock that are

435
00:24:00,359 --> 00:24:04,040
Speaker 1: most widely held across that hedge fund universe. So you

436
00:24:04,119 --> 00:24:07,400
Speaker 1: get kind of a you get a you know, not

437
00:24:07,640 --> 00:24:11,160
Speaker 1: that concentrated kind of position. But importantly you're only looking

438
00:24:11,160 --> 00:24:13,960
Speaker 1: at the long side, right, And so often. I think

439
00:24:13,960 --> 00:24:15,920
Speaker 1: what goes unnoticed, as I was getting ready to say,

440
00:24:16,000 --> 00:24:20,280
Speaker 1: is is hedge funds often make their their money on

441
00:24:20,320 --> 00:24:23,000
Speaker 1: the long side, right short the short side of the

442
00:24:23,040 --> 00:24:26,720
Speaker 1: book can sometimes be where they have misss. When when

443
00:24:26,720 --> 00:24:28,720
Speaker 1: the short side of the book is wrong, that doesn't

444
00:24:28,760 --> 00:24:32,000
Speaker 1: negatively affect the long side of the book. Um And

445
00:24:32,119 --> 00:24:35,320
Speaker 1: g v I P is exclusively tracking the long positions.

446
00:24:35,880 --> 00:24:38,280
Speaker 1: Um and and you know it's proven with a with

447
00:24:38,359 --> 00:24:40,720
Speaker 1: an index track record that's now something in the neighborhood

448
00:24:40,720 --> 00:24:43,119
Speaker 1: twelve or thirteen years and the E t F with

449
00:24:43,200 --> 00:24:45,800
Speaker 1: four or five years now, um, you know, the performance

450
00:24:45,840 --> 00:24:48,560
Speaker 1: is spoken for itself. I want to follow up on

451
00:24:48,800 --> 00:24:50,760
Speaker 1: g v I P while I have you. So, the

452
00:24:50,920 --> 00:24:57,280
Speaker 1: SEC is considering changing disclosure rules. You might see fewer institutions,

453
00:24:57,560 --> 00:25:00,920
Speaker 1: you know, filing each quarter. I'm curious how that would

454
00:25:00,960 --> 00:25:03,359
Speaker 1: affect g v I P. If you're not if you

455
00:25:03,400 --> 00:25:05,479
Speaker 1: don't have that data to pull from, how do you

456
00:25:05,840 --> 00:25:10,160
Speaker 1: construct your holdings? Yeah, it's definitely an interesting question. What

457
00:25:10,160 --> 00:25:14,640
Speaker 1: what's As we've kind of navigated this potential decision right

458
00:25:14,680 --> 00:25:19,000
Speaker 1: from from the SEC to remove the mandate of of

459
00:25:19,160 --> 00:25:21,640
Speaker 1: report of you know, of asset managers and hedge funds

460
00:25:21,640 --> 00:25:24,160
Speaker 1: and others having to report their holdings. I think it's

461
00:25:24,160 --> 00:25:28,080
Speaker 1: still the reporting will still account for over of total

462
00:25:28,119 --> 00:25:31,440
Speaker 1: assets held in the US UM, but I think less

463
00:25:31,480 --> 00:25:35,320
Speaker 1: than ten percent of asset holders will have to report anymore.

464
00:25:35,600 --> 00:25:37,720
Speaker 1: So it's kind of an interesting kind of ninety ten

465
00:25:37,840 --> 00:25:40,359
Speaker 1: rule there. UM. It'll be interesting to see how that

466
00:25:40,400 --> 00:25:43,000
Speaker 1: plays out. UM. You know, I don't pretend to be

467
00:25:43,080 --> 00:25:45,800
Speaker 1: an expert on the subject, but my guess is is

468
00:25:45,840 --> 00:25:48,040
Speaker 1: that that that does not end up happening. To be

469
00:25:48,119 --> 00:25:50,399
Speaker 1: really honest with you, I think the transparency that it

470
00:25:50,480 --> 00:25:55,040
Speaker 1: offers is a benefit to investors UM and and especially

471
00:25:55,080 --> 00:25:56,919
Speaker 1: in E t F Land, we know what a benefit

472
00:25:56,960 --> 00:26:00,560
Speaker 1: transparency is. UM. I have a hard time of believing

473
00:26:00,640 --> 00:26:03,840
Speaker 1: that that, you know, the SEC and any other powers

474
00:26:03,880 --> 00:26:06,880
Speaker 1: that we are going to look to actually take transparency

475
00:26:07,000 --> 00:26:09,960
Speaker 1: off of the table. UM. So I'm hopeful that it

476
00:26:10,000 --> 00:26:13,000
Speaker 1: doesn't happen. It's beneficial to US as an industry, and

477
00:26:13,000 --> 00:26:15,239
Speaker 1: I think it's beneficial to end clients as well to know,

478
00:26:15,680 --> 00:26:18,760
Speaker 1: you know who owns what. UM And Cole, real quick,

479
00:26:18,760 --> 00:26:20,960
Speaker 1: I gotta bring this up. Cole was on E t

480
00:26:21,080 --> 00:26:23,040
Speaker 1: F i Q like a year ago and we talked

481
00:26:23,119 --> 00:26:26,399
Speaker 1: g V I p and I compared it to Buzz,

482
00:26:26,440 --> 00:26:28,399
Speaker 1: which is the e t F that scrapes Twitter for

483
00:26:28,480 --> 00:26:32,280
Speaker 1: stock picks, and Buzz was was sticking it to g

484
00:26:32,400 --> 00:26:34,040
Speaker 1: v I P and I said, what's a bunch of

485
00:26:34,080 --> 00:26:36,440
Speaker 1: people on fin twick can beat the hedge funds? Um

486
00:26:36,520 --> 00:26:38,679
Speaker 1: that question was not in the prep note. So he

487
00:26:38,760 --> 00:26:40,919
Speaker 1: still hates me for that. But I want to just

488
00:26:41,200 --> 00:26:42,600
Speaker 1: follow up here and say that g v I P

489
00:26:42,680 --> 00:26:46,040
Speaker 1: has caught up. It is now tied with the Twitter

490
00:26:46,080 --> 00:26:49,119
Speaker 1: e t F and so anyway, just to just to

491
00:26:49,160 --> 00:26:50,879
Speaker 1: give g v I P. It's do, it's tied with

492
00:26:50,920 --> 00:26:54,240
Speaker 1: the fin Twick crowd. The the small ish but growing

493
00:26:54,359 --> 00:26:58,720
Speaker 1: firm based in Canada who managed Buzz actually reached out

494
00:26:58,720 --> 00:27:00,520
Speaker 1: to me to see if they're as a way we

495
00:27:00,520 --> 00:27:04,200
Speaker 1: could partner up on some marketing opportunities. So you know, no,

496
00:27:04,280 --> 00:27:06,480
Speaker 1: no good deed goes unpunished. It was a good conversation.

497
00:27:06,560 --> 00:27:09,640
Speaker 1: I appreciated it. I appreciate it as always, Eric, good

498
00:27:09,640 --> 00:27:12,760
Speaker 1: to keep me on you keep me on my toes. Okay, cool,

499
00:27:12,840 --> 00:27:15,639
Speaker 1: let's talk about things that you can maybe control a

500
00:27:15,720 --> 00:27:18,160
Speaker 1: little bit more than what the SEC decides to do.

501
00:27:19,000 --> 00:27:20,800
Speaker 1: And I want to bring it back to like what

502
00:27:20,800 --> 00:27:23,960
Speaker 1: what you think is capable of being innovated in the

503
00:27:23,960 --> 00:27:26,640
Speaker 1: E t F space going forward. You know, we've talked

504
00:27:26,640 --> 00:27:29,960
Speaker 1: about g s LC a little bit and and sort

505
00:27:29,960 --> 00:27:32,600
Speaker 1: of what you guys brought to bear there. We we've

506
00:27:32,600 --> 00:27:35,320
Speaker 1: had Kathy would on the podcast before and see what

507
00:27:35,560 --> 00:27:38,159
Speaker 1: she's been able to accomplish with ARC, which is a

508
00:27:38,240 --> 00:27:40,600
Speaker 1: real innovative way of playing with E t F as

509
00:27:40,720 --> 00:27:44,040
Speaker 1: a rapper and an active strategy. I'm curious, how do

510
00:27:44,080 --> 00:27:46,800
Speaker 1: you compete with that and and where else do you

511
00:27:46,840 --> 00:27:49,800
Speaker 1: think we can can innovate in e t F s

512
00:27:49,840 --> 00:27:53,119
Speaker 1: going forward. Is it just more themes, more thematic stuff,

513
00:27:53,240 --> 00:27:55,960
Speaker 1: or or is there a real innovation to be tapped into.

514
00:27:56,520 --> 00:27:58,159
Speaker 1: You know, the direction I'd like to go with. The

515
00:27:58,160 --> 00:28:00,199
Speaker 1: answer to the question is really on fixed in um

516
00:28:00,280 --> 00:28:03,840
Speaker 1: joel Um. I think that you know, when you look

517
00:28:03,880 --> 00:28:07,280
Speaker 1: at the world of E t f s, equity e

518
00:28:07,440 --> 00:28:09,720
Speaker 1: t f s make up about something in the neighborhood

519
00:28:09,720 --> 00:28:12,080
Speaker 1: of six or seven percent of the total equity market.

520
00:28:12,720 --> 00:28:15,760
Speaker 1: Um fixed income ets make up less than one percent

521
00:28:15,920 --> 00:28:18,320
Speaker 1: of the total bond market. So I think there's a

522
00:28:18,400 --> 00:28:22,040
Speaker 1: lot of room to run. And I think historically also clients,

523
00:28:22,400 --> 00:28:25,200
Speaker 1: you know, be a certain asset classes or subasset classes.

524
00:28:25,240 --> 00:28:28,840
Speaker 1: Think that active managers can do better in certain places,

525
00:28:29,160 --> 00:28:32,600
Speaker 1: you know, less less efficient marketplaces and so forth. Fixed

526
00:28:32,640 --> 00:28:35,760
Speaker 1: income has historically been one of those places. Right. I

527
00:28:35,840 --> 00:28:38,959
Speaker 1: want an active manager for fixed income because you know

528
00:28:39,000 --> 00:28:41,520
Speaker 1: that manager he or she can can weed out the

529
00:28:41,560 --> 00:28:44,360
Speaker 1: bad stuff or whatever it may be. Well, now what

530
00:28:44,440 --> 00:28:47,080
Speaker 1: we're seeing, and we certainly have some offerings that do

531
00:28:47,160 --> 00:28:50,200
Speaker 1: this as well across our what we branded our Access

532
00:28:50,240 --> 00:28:52,959
Speaker 1: Suite with our fixed income ets, but we put some

533
00:28:53,040 --> 00:28:57,760
Speaker 1: kind of liquidity screens, technical screens, fundamental screens in place.

534
00:28:58,200 --> 00:29:01,440
Speaker 1: Call it in the end smart beta fixed income. Saying

535
00:29:01,440 --> 00:29:04,880
Speaker 1: on the innovation theme, I wanted to ask about active

536
00:29:04,920 --> 00:29:08,160
Speaker 1: non transparent funds or as I know this podcast like

537
00:29:08,400 --> 00:29:11,320
Speaker 1: to call them ants. UM. I know that Goldman has

538
00:29:11,360 --> 00:29:15,880
Speaker 1: filed for an ants funds. I'm curious just in looking

539
00:29:16,080 --> 00:29:19,959
Speaker 1: across the et F landscape and where there's still innovation

540
00:29:20,440 --> 00:29:22,720
Speaker 1: to be had. I mean, where do ants factor into

541
00:29:22,800 --> 00:29:25,520
Speaker 1: that conversation or do you see fixed income as the

542
00:29:25,560 --> 00:29:31,000
Speaker 1: bigger opportunity here? You know, that's a that's a that's

543
00:29:31,000 --> 00:29:35,240
Speaker 1: a tough one. I think that there are benefits to UM.

544
00:29:35,280 --> 00:29:38,440
Speaker 1: There are benefits to different parts of e T F structure,

545
00:29:38,840 --> 00:29:42,800
Speaker 1: right and and um, you know what gets put into

546
00:29:43,280 --> 00:29:46,320
Speaker 1: active non transparent, what gets put into traditional kind of

547
00:29:46,360 --> 00:29:50,280
Speaker 1: forty act um. You know, I think it remains to

548
00:29:50,320 --> 00:29:53,560
Speaker 1: be seen about a tremendous amount of success there, right,

549
00:29:53,640 --> 00:29:57,960
Speaker 1: And and UM, I will just say I think if

550
00:29:58,000 --> 00:30:01,120
Speaker 1: it's good for the end client, it good, right And

551
00:30:01,120 --> 00:30:02,560
Speaker 1: and that's kind of the way we think about it.

552
00:30:02,600 --> 00:30:05,600
Speaker 1: And you know, if we have demand from clients, we

553
00:30:05,680 --> 00:30:08,520
Speaker 1: want to have solutions for our clients. And and I'll

554
00:30:08,560 --> 00:30:11,600
Speaker 1: maybe just leave that one there. I think the answer

555
00:30:11,600 --> 00:30:13,760
Speaker 1: are going to struggle. I know, coal you've got you

556
00:30:13,800 --> 00:30:17,960
Speaker 1: can't really say that, but um, active stock picking it's tough.

557
00:30:18,600 --> 00:30:20,920
Speaker 1: I think the new active is what we discussed. Um

558
00:30:20,960 --> 00:30:23,840
Speaker 1: it's smart beta like g SLC, it's E s G

559
00:30:24,360 --> 00:30:28,600
Speaker 1: and it's thematics. These are more rule based, cheaper. They're

560
00:30:28,640 --> 00:30:31,360
Speaker 1: all active. I mean they're just kind of not active

561
00:30:31,400 --> 00:30:34,920
Speaker 1: under another name. But anyway, UM, speaking of non active,

562
00:30:34,960 --> 00:30:38,200
Speaker 1: which is the beta, Um, you guys came out with

563
00:30:39,440 --> 00:30:43,160
Speaker 1: really these these Beta Van Guardian type Beta E T

564
00:30:43,440 --> 00:30:46,400
Speaker 1: S called actually it's like a market beta, so basically

565
00:30:46,480 --> 00:30:47,920
Speaker 1: we call him the core. These are the things that

566
00:30:48,000 --> 00:30:50,720
Speaker 1: go in the Courier portfolio they'd compete with i VV

567
00:30:50,920 --> 00:30:53,880
Speaker 1: or spy. Gesus is one of them, right, so you

568
00:30:53,880 --> 00:30:56,360
Speaker 1: look at the performance, it's basically the same thing. I

569
00:30:56,480 --> 00:30:59,800
Speaker 1: frequently refer to these as the McDowell's E t F

570
00:31:00,000 --> 00:31:03,960
Speaker 1: remember that coming to America, where it's like basically the

571
00:31:04,040 --> 00:31:07,240
Speaker 1: SMP five hundred, but like tiny little tweaks, like instead

572
00:31:07,240 --> 00:31:10,200
Speaker 1: of the Golden Arches, it's the Golden arcs. And so

573
00:31:10,960 --> 00:31:14,040
Speaker 1: you know, JP Morgan has some. Bank of New York

574
00:31:14,080 --> 00:31:17,160
Speaker 1: has some, you guys have some. It's smart, I mean,

575
00:31:17,240 --> 00:31:20,080
Speaker 1: why not. You've got a built in client base, and

576
00:31:20,520 --> 00:31:24,240
Speaker 1: if a client an advisor needs just basically like US

577
00:31:24,280 --> 00:31:27,720
Speaker 1: Equity Beta, you can use yours instead of going to

578
00:31:27,880 --> 00:31:31,160
Speaker 1: Vanguard black Rock, which I think could be some natural

579
00:31:31,200 --> 00:31:35,120
Speaker 1: headwind to their Juggernot growth, which arguably could be somewhat

580
00:31:35,120 --> 00:31:37,680
Speaker 1: good because they're taking in so much, so much of

581
00:31:37,720 --> 00:31:40,960
Speaker 1: the cash. Is that really the what they're there for

582
00:31:41,400 --> 00:31:44,640
Speaker 1: is to say, hey, look we've got that for for

583
00:31:44,680 --> 00:31:49,120
Speaker 1: any of your clients or customers that have portfolios. You

584
00:31:49,160 --> 00:31:53,120
Speaker 1: can then plug in Gesus instead of IBV. Yeah. I

585
00:31:53,160 --> 00:31:55,600
Speaker 1: think that's exactly it. I mean, you know, look, we

586
00:31:55,640 --> 00:31:59,400
Speaker 1: didn't bring them out to compete with ourselves. But what again,

587
00:31:59,480 --> 00:32:01,880
Speaker 1: just going back to the theme of client feedback, right,

588
00:32:01,920 --> 00:32:05,240
Speaker 1: we have UM, we have E SG, We obviously have

589
00:32:05,320 --> 00:32:08,479
Speaker 1: the very successful g SLC and the other you know

590
00:32:08,560 --> 00:32:12,080
Speaker 1: offerings in the active beta suite. That said, we have

591
00:32:12,160 --> 00:32:15,640
Speaker 1: plenty of clients, UM, you know and and opportunities out

592
00:32:15,680 --> 00:32:17,680
Speaker 1: there who have said, you know, we're just not interested

593
00:32:17,840 --> 00:32:21,960
Speaker 1: in active beta or or kind of anything that's not

594
00:32:22,120 --> 00:32:25,400
Speaker 1: just benchmark hugging. UM. We we you know, we have

595
00:32:25,480 --> 00:32:28,080
Speaker 1: plenty of folks who have told us that they're not

596
00:32:28,160 --> 00:32:30,880
Speaker 1: yet ready if you will, or maybe they don't believe

597
00:32:30,920 --> 00:32:33,320
Speaker 1: in the factors or whatever the case may be. And

598
00:32:33,360 --> 00:32:36,960
Speaker 1: so we want to bring solutions to all parties. UM.

599
00:32:37,240 --> 00:32:41,440
Speaker 1: And and by bringing you know, uh G S US

600
00:32:41,480 --> 00:32:45,160
Speaker 1: and and you know the others UM, we've we've i

601
00:32:45,200 --> 00:32:49,800
Speaker 1: think really helped clients UM by offering a solution that

602
00:32:49,840 --> 00:32:52,680
Speaker 1: they didn't otherwise have, at least not from us, right

603
00:32:52,760 --> 00:32:55,640
Speaker 1: and so UM, there are plenty of good partners who

604
00:32:55,680 --> 00:32:58,440
Speaker 1: who want to do business with us and and but

605
00:32:58,520 --> 00:33:00,880
Speaker 1: they don't want to necessarily make a leap that they're

606
00:33:00,920 --> 00:33:04,400
Speaker 1: uncomfortable with. And so again, all driven by client demand,

607
00:33:04,520 --> 00:33:07,320
Speaker 1: we brought these products to market to UM, you know,

608
00:33:07,360 --> 00:33:10,440
Speaker 1: to kind of scratch that itch for those clients. UM.

609
00:33:10,560 --> 00:33:14,000
Speaker 1: And you know, look, I think UM, the Active Beta suite,

610
00:33:14,120 --> 00:33:16,360
Speaker 1: the G S l C, the G E M for

611
00:33:16,400 --> 00:33:19,360
Speaker 1: emerging markets, the G S I E for international developed

612
00:33:19,720 --> 00:33:23,520
Speaker 1: those will continue to be, in my opinion, UM, the

613
00:33:23,520 --> 00:33:27,760
Speaker 1: bell weathers of our product lineup. UM. But you know,

614
00:33:27,880 --> 00:33:31,520
Speaker 1: if clients, it's it's all about options, right. We now

615
00:33:31,560 --> 00:33:34,479
Speaker 1: have a more robust menu from from which clients can select.

616
00:33:35,400 --> 00:33:39,000
Speaker 1: Did you expect Eric to transition from coming to America

617
00:33:39,240 --> 00:33:41,200
Speaker 1: to E t F S Did you see that one coming?

618
00:33:41,360 --> 00:33:44,400
Speaker 1: I didn't exactly see that one coming. I was gonna

619
00:33:44,440 --> 00:33:47,680
Speaker 1: dry only give coal. Yeah, I only give coal half

620
00:33:47,720 --> 00:33:49,320
Speaker 1: of what we're going to ask, because you don't want

621
00:33:49,320 --> 00:33:51,800
Speaker 1: to have the whole thing scripted. Okay, cool. I'm gonna

622
00:33:51,840 --> 00:33:55,320
Speaker 1: ask you a question that I asked a lot on

623
00:33:55,440 --> 00:33:58,960
Speaker 1: trillions and on a preface it with a caveat, which

624
00:33:59,000 --> 00:34:00,960
Speaker 1: is you can't pick one of your own? What is

625
00:34:01,000 --> 00:34:05,000
Speaker 1: your favorite et F ticker? That's a good question, man,

626
00:34:05,160 --> 00:34:07,680
Speaker 1: I do like one of ours, but I won't I

627
00:34:07,720 --> 00:34:11,280
Speaker 1: won't go with a uh, you know, against the rules plug.

628
00:34:12,120 --> 00:34:13,920
Speaker 1: This is silly, but one of my favorite ones has

629
00:34:13,920 --> 00:34:21,080
Speaker 1: always been move Um the vadak Um Agri business, agriculture. Yeah,

630
00:34:21,120 --> 00:34:24,440
Speaker 1: that's a pretty good one ticker. Symbol recognition matters, right,

631
00:34:24,440 --> 00:34:28,800
Speaker 1: I mean, the the good ticker is really really helpful.

632
00:34:29,440 --> 00:34:31,600
Speaker 1: Go Findberg. Thanks so much for joining us on Trilliance

633
00:34:32,719 --> 00:34:38,800
Speaker 1: Out of Ball. Thanks guys, thanks for listening to Trilliance

634
00:34:38,960 --> 00:34:41,200
Speaker 1: until next time. You can find us on the Bloomberg Terminal,

635
00:34:41,320 --> 00:34:45,560
Speaker 1: Bloomberg dot com, Apple Podcast, Spotify, and wherever else you'd

636
00:34:45,600 --> 00:34:47,879
Speaker 1: like to listen. We'd love to hear from you. We're

637
00:34:47,920 --> 00:34:52,080
Speaker 1: on Twitter, I'm at Joel Webber Show, He's at aerb VAULTUNUS.

638
00:34:52,880 --> 00:34:56,560
Speaker 1: You can find Katie at k Greifeld, and you can

639
00:34:56,600 --> 00:35:00,920
Speaker 1: find Cole at Cole Fineberg and Goldman Sax Goldman Sachs.

640
00:35:01,600 --> 00:35:05,200
Speaker 1: This episode of Trillions was produced by Magnus Hendrickson. Francesca

641
00:35:05,320 --> 00:35:08,080
Speaker 1: Levy is the head of Bloomberg Podcast by