Speaker 1: Boken to Trillions. I'm Joel Webber and I'm Eric bel Tunis. Eric,
Speaker 1: did you know that it was possible to work for
Speaker 1: Goldman Sacks and live in California? I didn't. It sounds
Speaker 1: like a pretty good deal. There's only as far as
Speaker 1: I know, there's only one person that has that gig,
Speaker 1: and he's going to be on trillions today. Who is he?
Speaker 1: Cole Fineberg. So he's somebody that I originally met when
Speaker 1: he was at black Rock, which I guess is we'll
Speaker 1: find out. That's probably why he was in San Francisco
Speaker 1: or California to begin with. They have a huge San
Speaker 1: franc office there. Um. But I met him at black
Speaker 1: Rock and then he moved to Goldman when they started
Speaker 1: their et F business, I want to say, like six
Speaker 1: years ago ish um, and they have been very successful. Um.
Speaker 1: It's it's interesting. Goldman is just thought of business monster
Speaker 1: Wall Street company that has a lot of power and influence.
Speaker 1: But you know, when they came into E t F,
Speaker 1: it's a meritocracy. It's a terra done for them too,
Speaker 1: and so there was nothing given. They had to earn
Speaker 1: all of it. And you know they've had some successes,
Speaker 1: some not so successful, um so even for them, uh
Speaker 1: that they've had to sort of start from scratch and
Speaker 1: be a nubie in the E t F industry. So
Speaker 1: we have one of their funds they caught our radar
Speaker 1: in the past week was GSLC. We've been watching this
Speaker 1: one since it came out. It's the um Active Beta
Speaker 1: e t F UM. It's a basically a e t
Speaker 1: F that has value, quality, momentum, and low ball all
Speaker 1: packaged together. Those are the factories. And then it just
Speaker 1: hit ten billion dollars, which puts it in the top
Speaker 1: one hundred biggest ETFs. Now it's very rare for anyone
Speaker 1: outside of Black Rock, Vanguard and State Street to be
Speaker 1: in the top one hundred, and to do it without
Speaker 1: doing like a plane beta e t F you know,
Speaker 1: like a regular index to do something it's a little
Speaker 1: activish is a real feat and so I figured the
Speaker 1: ten billion we would, uh, you know, it was a
Speaker 1: good excuse to talk to to talk to Goldman. Also
Speaker 1: joining us is Katie Greifield, who's an et F reporter
Speaker 1: for Bloomberg News. This time on Trillians. Goldman's e t
Speaker 1: F Guy Cole, Welcome to Trilliance glad to be here.
Speaker 1: Thanks so much for having me. Okay, I gotta ask you,
Speaker 1: Are you the only Goldman employee in California? Did I
Speaker 1: get it right? Not exactly right. We have a pretty
Speaker 1: good presence in in both Los Angeles and San Francisco. Um,
Speaker 1: there's not a lot of asset management, though, there's a
Speaker 1: good amount of private wealth investment, banking and some other divisions.
Speaker 1: So I'm I am one of the lucky ones on
Speaker 1: the asset management side. And I have to ask, because
Speaker 1: you're there right now and the whole West Coast seems
Speaker 1: to be on fire. Um, how are how are you
Speaker 1: faring with the wildfires? I appreciate you asking. Um, it's
Speaker 1: scary bride orange skies and um, lots of smoke oake.
Speaker 1: And I think the thing I'll say is we're very
Speaker 1: fortunate to be safe where we are in the in
Speaker 1: the Bay area. We live in the East Bay, and
Speaker 1: somewhat fortunate also that at least during this pandemic, we're
Speaker 1: not expected to be in crossing bridges and all that
Speaker 1: other good stuff. Right, So working from home is a
Speaker 1: benefit as well. But the real thing that I would
Speaker 1: want to say is just incredibly grateful and thankful for
Speaker 1: firefighters and all the men and women out there who
Speaker 1: are working, you know, literally days and nights for weeks
Speaker 1: in a row to to keep us safe. It's it's
Speaker 1: yeoman's work that they do. It's incredible and we're all
Speaker 1: very fortunate to have them, uh working as hard as
Speaker 1: they are. So I gotta ask about this product that
Speaker 1: Eric mentioned in the intro g s l C, which
Speaker 1: has just been on a on a terror for you
Speaker 1: guys at Goldman. Can you describe it because it sounds
Speaker 1: like a smart Beta fund basically, right? Is that? Is
Speaker 1: that how you describe it? Yeah? I think so. I mean,
Speaker 1: you know, look, I think the the Goldman brand name
Speaker 1: within smart Beta is active Beta. Eric alluded to the
Speaker 1: four factors and are offering value, quality, low volatility, and momentum.
Speaker 1: So what we do is is we equally wait each
Speaker 1: of those factors when we rebalance on a quarterly basis.
Speaker 1: And the reason I think that's important actually goes back
Speaker 1: to the naming convention. Right, active Beta it's a little
Speaker 1: bit of an oxymoron um beta. You get some of
Speaker 1: the traditional benefits with g SLC and our active Beta
Speaker 1: suite that you do with pure passive right, tradeability, transparency,
Speaker 1: low cost, tax efficiency, benchmark awareness um. But you also
Speaker 1: get some of the what I would say are are
Speaker 1: kind of key attributes of active management, which is, you know,
Speaker 1: leveraging factors and and kind of tried and true methods
Speaker 1: to try to achieve a little bit of alpha, you know,
Speaker 1: to try to take a little bit of volatility off
Speaker 1: the table. And I think we've been successful not to
Speaker 1: break our arms, you know, hadding ourselves on the back,
Speaker 1: but I think we've been successful in raising assets because
Speaker 1: the products have done exactly what they're supposed to do right,
Speaker 1: low cost um four years straight of of alpha relative
Speaker 1: to the index, taking vall off the table. Um investors
Speaker 1: have taken notice, and we've been the beneficiar area flows
Speaker 1: as a result. So cool gotta ask. Looked at the holdings,
Speaker 1: you guys are cheap, but the holdings basically kind of
Speaker 1: look like SNP holdings. And I can get SMP five
Speaker 1: stuff cheaper elsewhere. Why would I invest in g s
Speaker 1: l C when I can do something like SMP elsewhere.
Speaker 1: It's it's a good question, and I would I would
Speaker 1: say two things. One is you can't get it much
Speaker 1: cheaper elsewhere. Right, G s l C is nine bits.
Speaker 1: You can't get too much lower than that. UM. But
Speaker 1: but I think you bring up a good point, which is,
Speaker 1: you know, look by design, as I mentioned, it's benchmark aware, right,
Speaker 1: we look at incorporating the factors that we talked about,
Speaker 1: but we do so equally, right, So we are in
Speaker 1: my view, there's three ways that you can construct a
Speaker 1: multi factor product. You can do what we'll call factor timing, right,
Speaker 1: Hey and Q three were overweight momentum and underweight value
Speaker 1: as an example UM or vice versa or whatever it
Speaker 1: may be. Number two is you can you know, kind
Speaker 1: of put what I would call persistent overweights in place,
Speaker 1: something like the Faum of French model, which is well
Speaker 1: followed and and a lot of E T f s
Speaker 1: out there, you know, kind of benchmark to a Faum
Speaker 1: of French type of model UM where something in the
Speaker 1: neighborhood of about seventy percent is in value. As a result,
Speaker 1: you've got a lot of eggs in one basket. With
Speaker 1: either of those, you're making bigger bets um relative to
Speaker 1: the benchmark with G s LC. To your point, Joel,
Speaker 1: and I think you hit the nail on the head.
Speaker 1: You're not taking as big of a bet, right, we're
Speaker 1: making very small tweaks to the market cap weights. Our
Speaker 1: view is on that, I think, um, look, we like
Speaker 1: market cap waiting. We just don't necessarily believe that the
Speaker 1: size of the company should be only in put into
Speaker 1: how much of it you own. So while there is
Speaker 1: like you said, definitely you know, pretty good overlap, call
Speaker 1: it low active share relative to the benchmark, you'll see
Speaker 1: a lot of of a lot of the same names,
Speaker 1: but different weights in those names. Right, So, where Apple
Speaker 1: and Microsoft and Amazon are the biggest holdings in the
Speaker 1: S and P, they are some of our biggest holdings
Speaker 1: as well, they're just not as significant because of it
Speaker 1: currently anyways, right, modest underweights based on how they score
Speaker 1: in those factors, and so you know, and in reverse,
Speaker 1: when you look at the bottom of the index, the
Speaker 1: very few, you know, the very smallest weighted names at
Speaker 1: the bottom of the index, News Corp. And you know
Speaker 1: some names like that, Um, they start out at such
Speaker 1: small weights, but if they score well based on our
Speaker 1: factor kind of ranking, you're gonna see some pretty good overweights.
Speaker 1: So again you're gonna see a lot of the same
Speaker 1: names but with different weights. UM, to how much of
Speaker 1: those you own. And the idea is we think, you know, look,
Speaker 1: if companies show the attributes of those factors, we want
Speaker 1: to have a little bit more of it. Call it
Speaker 1: a modest overweight. Where companies do not show those attributes.
Speaker 1: Of course we're going to have a modest underweight. And
Speaker 1: so small tweaks to all of the names rather than
Speaker 1: biby tweaks to some of the names. Is kind of
Speaker 1: the way I like to think about it. Yeah, and
Speaker 1: you know you talked about benchmark aware and this e
Speaker 1: t F. I I'm going to actually go out on
Speaker 1: a limb here and say this is really the future
Speaker 1: of active management. UM. I wrote a Bloomberg opinion piece
Speaker 1: about three years ago. I want to say I called
Speaker 1: this actually UM where I referred to this e t
Speaker 1: F as the T two thousand terminator. Uh, you know,
Speaker 1: from terminator to the liquid nitrogen one that they send
Speaker 1: from the future to try to kill the the other terminator. Anyway,
Speaker 1: long story short, it's very futuristic to me because it
Speaker 1: is using quant quant uh research. Right, It's got value growth,
Speaker 1: all this stuff, and it does it all in one shot.
Speaker 1: It doesn't pick one because I think it visers maybe
Speaker 1: don't know which one to pick at what time. But
Speaker 1: here's the key thing to me, which I think is
Speaker 1: might be a little cynical, which is you get Goldman's name,
Speaker 1: but for Vanguard's fees. And I do think if it
Speaker 1: didn't charge nine bibs and you charge thirty, it would
Speaker 1: struggle more. I think there's a real priority for cheap
Speaker 1: and I just want to ask you this is that
Speaker 1: I give Goldman and JP Morgan for that. The Wall
Speaker 1: Street banks have been really good about just going there
Speaker 1: quickly and ripping the band aid off in terms of
Speaker 1: having some products that are what we call dirt cheap. Um,
Speaker 1: what was that like? That decision to go there immediately?
Speaker 1: Because you see like some of the bigger mutual fund
Speaker 1: legacy firms coming in, they're all thirty to sixty BIPs.
Speaker 1: You came in at nine with some pretty secret sauce
Speaker 1: kind of stuff here. What was behind that? Yeah, it's
Speaker 1: a great point, and I think it's a really important
Speaker 1: one as to also why we've been successful with the
Speaker 1: asset rays, right, which is let's just take cost off
Speaker 1: the table. Right. You think this is a scale game. Um,
Speaker 1: you know, when you think about competitor pure passive offerings
Speaker 1: the obvious behemoth in US large cap as Spy right,
Speaker 1: and Spy is also nine BIPs. So basically you're paying
Speaker 1: the same freight, but you're getting opportunity for a little
Speaker 1: more bang for your buck. Again, whether that's alpha less
Speaker 1: of all, ideally both. And that's been the result for
Speaker 1: our for our shareholders. And so what I would say
Speaker 1: is is the logic being it being a scale game.
Speaker 1: And I think going back to the logic as to
Speaker 1: why that's helped us raise assets is couple the low
Speaker 1: cost with the benchmark awareness, right, that allows advisors to
Speaker 1: think about it as core and and yes, you can
Speaker 1: go after more of the portfolio and they have a
Speaker 1: fear of getting fired I think, or at least getting
Speaker 1: um feedback from their clients. So why is this underperforming
Speaker 1: GSLC will never really straight from the index too much
Speaker 1: because it's got a lot of the index in there
Speaker 1: or the SMP rather. That's right, cool. Can you can
Speaker 1: you rewind the clock and and like put us in
Speaker 1: the room, did you have the the dryer race pen
Speaker 1: and go up to the board and we're like nine
Speaker 1: basis points And who got that through the management committee,
Speaker 1: because I have to feel like Goldman would be like,
Speaker 1: we're not selling something for nine pips. You know, it's
Speaker 1: really I learned this after having joined the firm a
Speaker 1: little over five years ago. The mandate within all of
Speaker 1: g SAM and this is for our mutual funds and
Speaker 1: our e t s is to be below the average
Speaker 1: price of the morning Star peer universe. So where I
Speaker 1: don't necessarily think folks always think, you know, low cost
Speaker 1: provider when they hear the words Goldman Sachs. In the
Speaker 1: case of our asset management business, it really is UM,
Speaker 1: it really is applicable and and you know, I won't
Speaker 1: let you maybe all the way behind the curtain as
Speaker 1: to what the white board looked like in that room,
Speaker 1: but I think the the discussion ended in a really
Speaker 1: smart place where we realize that the go to market
Speaker 1: strategy and the ability to compete with you know, the
Speaker 1: Big three as you like to refer to America, right,
Speaker 1: and I think that spot on. In order to compete
Speaker 1: we needed to be really thoughtful on price, and and
Speaker 1: that that feedback has been really obvious from clients and
Speaker 1: again in the end via their dollars going towards those
Speaker 1: these products. UM and it's it's proven really successful. Well,
Speaker 1: I wanted to ask about the inflows. They've been very
Speaker 1: steady all year. You know, g s LC has taken
Speaker 1: in cash every month. I think August was particularly strong.
Speaker 1: And I know that model portfolios are focus for g SAM,
Speaker 1: Goldman bought s and p S model portfolio business last year.
Speaker 1: So rocking it all together, I wanted to ask, you know,
Speaker 1: how important have model flows been for G s l
Speaker 1: c S growth and if not model flows, you know,
Speaker 1: where is that demand coming from. Yeah, it's a great question.
Speaker 1: So specific to our models business, you know, we do
Speaker 1: have some of the kind of G SAM models um incorporating,
Speaker 1: incorporating G S l C and our other e t
Speaker 1: s Really candidly, I think we've been really thoughtful there too.
Speaker 1: Our models are not chopped full of exclusively Goldman offerings, right,
Speaker 1: so we're thoughtful about where we don't have offerings, right,
Speaker 1: we have twenty or twenty five e t s. We
Speaker 1: don't have the you know, the kind of catalog of
Speaker 1: e t s that some of the competitors do. And
Speaker 1: we're really thoughtful about incorporating our peers, right and other
Speaker 1: issuers into our models where it makes sense. Where it's
Speaker 1: the right exposure. UM, So i'd start there. In terms
Speaker 1: of the flows generally this year and and kind of
Speaker 1: historically into g s LC, we've been really fortunate that
Speaker 1: it's a very wide swath of you know, call it
Speaker 1: investor types. UM. Obviously you know approvals that all of
Speaker 1: the wire house platforms has been helpful and certainly extremely
Speaker 1: helpful in the early days. UM. You know, across our
Speaker 1: I A s and independent broker dealers, we seen tremendous
Speaker 1: flow and more and more. We're also you know, involved
Speaker 1: with with institutional clients and bank trust apartments and you
Speaker 1: know key platforms and so forth, and other models external
Speaker 1: model providers where we've seen a lot of growth. And
Speaker 1: I think success beget success. Assets beget assets, Liquidity begets liquidity, right,
Speaker 1: and we've been we've leveraged that into being able to
Speaker 1: have kind of more and more conversations with different client types.
Speaker 1: I would kind of focus on institutional, especially there right
Speaker 1: where you hit kind of key milestones in terms of
Speaker 1: asset levels and all of a sudden, pension plans be
Speaker 1: a public or corporate, you know, insurance companies, hedge funds,
Speaker 1: all kinds of different investors have have taken notice, um
Speaker 1: and as a result, we are very widely held across
Speaker 1: a number of you know, client types. UM. You know
Speaker 1: you talk about fees and costs. Obviously it's a huge
Speaker 1: thing in the e t F world. I give you
Speaker 1: guys credit for actually forcing the cost fee war that
Speaker 1: kind of broke out in E s G. Um you
Speaker 1: came out with just it's the Goldman Sacks just large
Speaker 1: cape equity e t F twenty BIPs. At the time,
Speaker 1: I think it might have been the cheapest or close
Speaker 1: to it. This is before Vanguard vanguarded that category. But anyway, UM,
Speaker 1: I want to also talk about the et F a
Speaker 1: little bit. You teamed up with Paul Tutor Jones, the
Speaker 1: billionaire hedge fund manager, and I actually like this because
Speaker 1: I do find that there's a disconnect between like what
Speaker 1: like hardcore E s G people who live in Manhattan think,
Speaker 1: and like regular Americans, you know, that sort of gap
Speaker 1: that we have in the country, and just polls America
Speaker 1: for what they want out of out of companies and
Speaker 1: then invest that way. And thus it owns a company
Speaker 1: like Exxon and Amazon which can be screened out of
Speaker 1: some of the other systems. Can you talk about this
Speaker 1: alternative approach to E. S G. Yeah, it's I'm really
Speaker 1: excited about just UM. You know, the issues we measure
Speaker 1: UM and how we prioritize them. I think you're really important. So,
Speaker 1: based on the most comprehensive surveys literally ever conducted, we
Speaker 1: engage about seventy two people UM since inception, and you know,
Speaker 1: call it about fifteen to twenty thousand people a year
Speaker 1: to identify what the most important issues are regarding kind
Speaker 1: of just business behavior. Right, So, despite kind of the
Speaker 1: current narrative of a nation divided UM, we find that
Speaker 1: Americans across age, gender, partisanship, you know, ideologies, income agree
Speaker 1: on the steps that corporations need to take UM to
Speaker 1: act more equitably. And and we asked, you know, we
Speaker 1: ask in these surveys just capital does and then we
Speaker 1: leverage that index that they've created. We've asked the American
Speaker 1: public to to kind of prioritize, you know, what is
Speaker 1: that the corporations need to do? What is just business behavior?
Speaker 1: And you know, the results are we've identify fied the
Speaker 1: order of importance really kind of seven key issues that
Speaker 1: I'll touch on really quickly, workers, UM, customers, products, what
Speaker 1: kind of products. Are these these companies you know, bringing
Speaker 1: the market, environment, community, jobs, and then finally kind of
Speaker 1: management and shareholders and so you know, we take all
Speaker 1: these inputs and deliver what I think is really unique
Speaker 1: in the E. S G space, which is a a
Speaker 1: benchmark neutral, a sector neutral UM exposure to the Russell
Speaker 1: one thousand. So basically with just you own five hundred
Speaker 1: names out of the one thousand names in the Russell
Speaker 1: one thousand, the idea being the five hundred that you
Speaker 1: own are all of the above average names based on
Speaker 1: all those inputs and how they rank, And I think
Speaker 1: it's really it's really interesting. Right. So the bottom line, right,
Speaker 1: to compare to the corporations that are excluded, the companies
Speaker 1: that are included, Right, So the just five hundred relative
Speaker 1: to the Russell one thousand, the five hundred that make
Speaker 1: the cut are they pay thirty three percent more to
Speaker 1: their media and US worker UM, They're ten times more
Speaker 1: likely to have conducted gender pay analyzes UM, they employ
Speaker 1: thirty eight percent more workers in the US UM. They
Speaker 1: use less water, they use less fuel, they use less electricity,
Speaker 1: the emit fewer greenhouse gases. They give more to charity.
Speaker 1: So the result of all that, you add it all up,
Speaker 1: and I think it's really compelling. What's interesting is is,
Speaker 1: on average, you see about a seven percent higher r
Speaker 1: o E. You see about a seven percent higher return
Speaker 1: on equity in the names that make the cut into
Speaker 1: just relative to to the names that kind of don't
Speaker 1: make the cut. So to your point, Ericin, I want
Speaker 1: a case in point, because I think this is really interesting. Right,
Speaker 1: you talked about how other issuers will will maybe you know,
Speaker 1: kind of very specifically exclude energy as an example. Well,
Speaker 1: let's just you know, you mentioned x on. Let's just
Speaker 1: use Xon and Chevron as a really quick example. If
Speaker 1: Xon and Chevron are the only two names in the
Speaker 1: benchmark and we're just going to keep one of them, well,
Speaker 1: one of them is doing more in terms of you know,
Speaker 1: giving back to their community. One of them is doing
Speaker 1: more in terms of research and development of solar and
Speaker 1: you know, renewable energy and so forth, and so it's
Speaker 1: all relative. They get ranked versus each other, and the
Speaker 1: one that's doing a better job quite simply gets you know,
Speaker 1: remains in in in the index. And um the result
Speaker 1: I think is compelling because you get low cost us
Speaker 1: large cap core exposure to the Russell one. But you
Speaker 1: also kind of scratch that E s G. H Eric,
Speaker 1: you're such an E s G skeptic. Yeah, thank you
Speaker 1: for not saying hater. I don't hate it. I just
Speaker 1: find it's active management and you need to know that
Speaker 1: does does the framework that coal is laid out for
Speaker 1: just intrigue you. What do you? What do you make
Speaker 1: of it? Um? I like it better because also companies
Speaker 1: like Excen could very well be part of the future
Speaker 1: in in terms of providing some of the clean energy solutions.
Speaker 1: I'm generally of the feeling that demand follows supply and
Speaker 1: that if you change your life as a consumer, that's
Speaker 1: where all most of your E s G focus should be.
Speaker 1: The companies will follow you. If you stop demanding gasoline,
Speaker 1: excens not is gonna start selling, you know, the clean
Speaker 1: energy stuff. UM. I don't know we should beat up
Speaker 1: companies for just servicing demand that in a legal way.
Speaker 1: That said, Uh, if you are into E s G
Speaker 1: and you want to invest this way, I like just
Speaker 1: I think treating workers and employees is probably the most
Speaker 1: important thing for me too. I think companies can be
Speaker 1: greedy corporations, and if you're rewarding the ones that are
Speaker 1: nicer to their employees, especially massive companies that employ like
Speaker 1: tens of thousands of people. I like that. I think
Speaker 1: for most of people that might be more important. And say,
Speaker 1: climate change, Can I add something in there? I I
Speaker 1: because I totally agree with with everything you said there, Eric,
Speaker 1: and I would just say it's intuitive that if if
Speaker 1: a company is treating its employees and shareholders and you know,
Speaker 1: customers better, um, you would expect that probably more talent
Speaker 1: be it kind of coming out of college or transitioning
Speaker 1: to a different kind of career path or whatever it
Speaker 1: may be. It's it's intuitive that somebody would want to
Speaker 1: go work at a firm like that, So you're gonna
Speaker 1: probably acquire and and keep better talent um, and as
Speaker 1: a result, you're probably going to see better performance. So
Speaker 1: I think that you could almost make the argument that
Speaker 1: there's like a just alpha that exists. And I'll button
Speaker 1: that up by saying, since Inception just has outperformed its benchmark, uh,
Speaker 1: and you're to date, it's actually been really pretty compelling,
Speaker 1: So you know, I do think it's it's really an
Speaker 1: interesting story, so cool. I want to talk about the
Speaker 1: opposite of E s G, which is funds, UM. You
Speaker 1: have a really interesting product in your lineup, g v
Speaker 1: I P, which is the Goldman Sachs Hedge Fund Industry
Speaker 1: v I P and E T F, which I think
Speaker 1: is interesting because it doesn't try to replicate hedge funds
Speaker 1: strategies per se. Instead, it combs through thirteen F filings
Speaker 1: and tries to identify the favorite stocks among hedge funds UM.
Speaker 1: But I wanted to ask, you know, hedge funds on
Speaker 1: average haven't really done that well this year. They were
Speaker 1: up about two percent in the first eight months of
Speaker 1: twenty that's according to hedge fund research, which is kind
Speaker 1: of surprising since you know, we've got volatility out the wazoo.
Speaker 1: You know, you have countries with different outlooks, you know
Speaker 1: where they are and controlling the virus, and hedge fund
Speaker 1: managers just haven't shown up. And I do want to
Speaker 1: make the point that g v I P is actually
Speaker 1: up eighteen percent year to date. It's eating the SMP
Speaker 1: five hundred, which is up less than five percent. But
Speaker 1: you know, given the hedge fund managers haven't really done
Speaker 1: this year and a year they should have shines, is
Speaker 1: that a marketing challenge for a product like this it
Speaker 1: is a challenge, I think. I think it's a really
Speaker 1: good question. I think it is a challenge to be
Speaker 1: really candid. Um, you would think performance that you referenced, right,
Speaker 1: I mean it's it's not just beating the index. It's
Speaker 1: three x the SNP year to date or something to
Speaker 1: that tune. Um. You know what's interesting is when you
Speaker 1: get under the hood why that's happening, right. I think
Speaker 1: often it goes you know, maybe unnoticed. But with g
Speaker 1: v i P, we're only giving you exposure to what
Speaker 1: hedge funds are doing on the long side of their books, right,
Speaker 1: So we kind of take a look at what are
Speaker 1: you know, what are the most widely held holdings across
Speaker 1: a very large universe of hedge funds, and it gives
Speaker 1: you the offer to and then we give you exposure
Speaker 1: to you know what, what you get with g v
Speaker 1: i P is fifty stocks equally weighted at two percent each,
Speaker 1: where what you hold are the fifty stock that are
Speaker 1: most widely held across that hedge fund universe. So you
Speaker 1: get kind of a you get a you know, not
Speaker 1: that concentrated kind of position. But importantly you're only looking
Speaker 1: at the long side, right, And so often. I think
Speaker 1: what goes unnoticed, as I was getting ready to say,
Speaker 1: is is hedge funds often make their their money on
Speaker 1: the long side, right short the short side of the
Speaker 1: book can sometimes be where they have misss. When when
Speaker 1: the short side of the book is wrong, that doesn't
Speaker 1: negatively affect the long side of the book. Um And
Speaker 1: g v I P is exclusively tracking the long positions.
Speaker 1: Um and and you know it's proven with a with
Speaker 1: an index track record that's now something in the neighborhood
Speaker 1: twelve or thirteen years and the E t F with
Speaker 1: four or five years now, um, you know, the performance
Speaker 1: is spoken for itself. I want to follow up on
Speaker 1: g v I P while I have you. So, the
Speaker 1: SEC is considering changing disclosure rules. You might see fewer institutions,
Speaker 1: you know, filing each quarter. I'm curious how that would
Speaker 1: affect g v I P. If you're not if you
Speaker 1: don't have that data to pull from, how do you
Speaker 1: construct your holdings? Yeah, it's definitely an interesting question. What
Speaker 1: what's As we've kind of navigated this potential decision right
Speaker 1: from from the SEC to remove the mandate of of
Speaker 1: report of you know, of asset managers and hedge funds
Speaker 1: and others having to report their holdings. I think it's
Speaker 1: still the reporting will still account for over of total
Speaker 1: assets held in the US UM, but I think less
Speaker 1: than ten percent of asset holders will have to report anymore.
Speaker 1: So it's kind of an interesting kind of ninety ten
Speaker 1: rule there. UM. It'll be interesting to see how that
Speaker 1: plays out. UM. You know, I don't pretend to be
Speaker 1: an expert on the subject, but my guess is is
Speaker 1: that that that does not end up happening. To be
Speaker 1: really honest with you, I think the transparency that it
Speaker 1: offers is a benefit to investors UM and and especially
Speaker 1: in E t F Land, we know what a benefit
Speaker 1: transparency is. UM. I have a hard time of believing
Speaker 1: that that, you know, the SEC and any other powers
Speaker 1: that we are going to look to actually take transparency
Speaker 1: off of the table. UM. So I'm hopeful that it
Speaker 1: doesn't happen. It's beneficial to US as an industry, and
Speaker 1: I think it's beneficial to end clients as well to know,
Speaker 1: you know who owns what. UM And Cole, real quick,
Speaker 1: I gotta bring this up. Cole was on E t
Speaker 1: F i Q like a year ago and we talked
Speaker 1: g V I p and I compared it to Buzz,
Speaker 1: which is the e t F that scrapes Twitter for
Speaker 1: stock picks, and Buzz was was sticking it to g
Speaker 1: v I P and I said, what's a bunch of
Speaker 1: people on fin twick can beat the hedge funds? Um
Speaker 1: that question was not in the prep note. So he
Speaker 1: still hates me for that. But I want to just
Speaker 1: follow up here and say that g v I P
Speaker 1: has caught up. It is now tied with the Twitter
Speaker 1: e t F and so anyway, just to just to
Speaker 1: give g v I P. It's do, it's tied with
Speaker 1: the fin Twick crowd. The the small ish but growing
Speaker 1: firm based in Canada who managed Buzz actually reached out
Speaker 1: to me to see if they're as a way we
Speaker 1: could partner up on some marketing opportunities. So you know, no,
Speaker 1: no good deed goes unpunished. It was a good conversation.
Speaker 1: I appreciated it. I appreciate it as always, Eric, good
Speaker 1: to keep me on you keep me on my toes. Okay, cool,
Speaker 1: let's talk about things that you can maybe control a
Speaker 1: little bit more than what the SEC decides to do.
Speaker 1: And I want to bring it back to like what
Speaker 1: what you think is capable of being innovated in the
Speaker 1: E t F space going forward. You know, we've talked
Speaker 1: about g s LC a little bit and and sort
Speaker 1: of what you guys brought to bear there. We we've
Speaker 1: had Kathy would on the podcast before and see what
Speaker 1: she's been able to accomplish with ARC, which is a
Speaker 1: real innovative way of playing with E t F as
Speaker 1: a rapper and an active strategy. I'm curious, how do
Speaker 1: you compete with that and and where else do you
Speaker 1: think we can can innovate in e t F s
Speaker 1: going forward. Is it just more themes, more thematic stuff,
Speaker 1: or or is there a real innovation to be tapped into.
Speaker 1: You know, the direction I'd like to go with. The
Speaker 1: answer to the question is really on fixed in um
Speaker 1: joel Um. I think that you know, when you look
Speaker 1: at the world of E t f s, equity e
Speaker 1: t f s make up about something in the neighborhood
Speaker 1: of six or seven percent of the total equity market.
Speaker 1: Um fixed income ets make up less than one percent
Speaker 1: of the total bond market. So I think there's a
Speaker 1: lot of room to run. And I think historically also clients,
Speaker 1: you know, be a certain asset classes or subasset classes.
Speaker 1: Think that active managers can do better in certain places,
Speaker 1: you know, less less efficient marketplaces and so forth. Fixed
Speaker 1: income has historically been one of those places. Right. I
Speaker 1: want an active manager for fixed income because you know
Speaker 1: that manager he or she can can weed out the
Speaker 1: bad stuff or whatever it may be. Well, now what
Speaker 1: we're seeing, and we certainly have some offerings that do
Speaker 1: this as well across our what we branded our Access
Speaker 1: Suite with our fixed income ets, but we put some
Speaker 1: kind of liquidity screens, technical screens, fundamental screens in place.
Speaker 1: Call it in the end smart beta fixed income. Saying
Speaker 1: on the innovation theme, I wanted to ask about active
Speaker 1: non transparent funds or as I know this podcast like
Speaker 1: to call them ants. UM. I know that Goldman has
Speaker 1: filed for an ants funds. I'm curious just in looking
Speaker 1: across the et F landscape and where there's still innovation
Speaker 1: to be had. I mean, where do ants factor into
Speaker 1: that conversation or do you see fixed income as the
Speaker 1: bigger opportunity here? You know, that's a that's a that's
Speaker 1: a tough one. I think that there are benefits to UM.
Speaker 1: There are benefits to different parts of e T F structure,
Speaker 1: right and and um, you know what gets put into
Speaker 1: active non transparent, what gets put into traditional kind of
Speaker 1: forty act um. You know, I think it remains to
Speaker 1: be seen about a tremendous amount of success there, right,
Speaker 1: And and UM, I will just say I think if
Speaker 1: it's good for the end client, it good, right And
Speaker 1: and that's kind of the way we think about it.
Speaker 1: And you know, if we have demand from clients, we
Speaker 1: want to have solutions for our clients. And and I'll
Speaker 1: maybe just leave that one there. I think the answer
Speaker 1: are going to struggle. I know, coal you've got you
Speaker 1: can't really say that, but um, active stock picking it's tough.
Speaker 1: I think the new active is what we discussed. Um
Speaker 1: it's smart beta like g SLC, it's E s G
Speaker 1: and it's thematics. These are more rule based, cheaper. They're
Speaker 1: all active. I mean they're just kind of not active
Speaker 1: under another name. But anyway, UM, speaking of non active,
Speaker 1: which is the beta, Um, you guys came out with
Speaker 1: really these these Beta Van Guardian type Beta E T
Speaker 1: S called actually it's like a market beta, so basically
Speaker 1: we call him the core. These are the things that
Speaker 1: go in the Courier portfolio they'd compete with i VV
Speaker 1: or spy. Gesus is one of them, right, so you
Speaker 1: look at the performance, it's basically the same thing. I
Speaker 1: frequently refer to these as the McDowell's E t F
Speaker 1: remember that coming to America, where it's like basically the
Speaker 1: SMP five hundred, but like tiny little tweaks, like instead
Speaker 1: of the Golden Arches, it's the Golden arcs. And so
Speaker 1: you know, JP Morgan has some. Bank of New York
Speaker 1: has some, you guys have some. It's smart, I mean,
Speaker 1: why not. You've got a built in client base, and
Speaker 1: if a client an advisor needs just basically like US
Speaker 1: Equity Beta, you can use yours instead of going to
Speaker 1: Vanguard black Rock, which I think could be some natural
Speaker 1: headwind to their Juggernot growth, which arguably could be somewhat
Speaker 1: good because they're taking in so much, so much of
Speaker 1: the cash. Is that really the what they're there for
Speaker 1: is to say, hey, look we've got that for for
Speaker 1: any of your clients or customers that have portfolios. You
Speaker 1: can then plug in Gesus instead of IBV. Yeah. I
Speaker 1: think that's exactly it. I mean, you know, look, we
Speaker 1: didn't bring them out to compete with ourselves. But what again,
Speaker 1: just going back to the theme of client feedback, right,
Speaker 1: we have UM, we have E SG, We obviously have
Speaker 1: the very successful g SLC and the other you know
Speaker 1: offerings in the active beta suite. That said, we have
Speaker 1: plenty of clients, UM, you know and and opportunities out
Speaker 1: there who have said, you know, we're just not interested
Speaker 1: in active beta or or kind of anything that's not
Speaker 1: just benchmark hugging. UM. We we you know, we have
Speaker 1: plenty of folks who have told us that they're not
Speaker 1: yet ready if you will, or maybe they don't believe
Speaker 1: in the factors or whatever the case may be. And
Speaker 1: so we want to bring solutions to all parties. UM.
Speaker 1: And and by bringing you know, uh G S US
Speaker 1: and and you know the others UM, we've we've i
Speaker 1: think really helped clients UM by offering a solution that
Speaker 1: they didn't otherwise have, at least not from us, right
Speaker 1: and so UM, there are plenty of good partners who
Speaker 1: who want to do business with us and and but
Speaker 1: they don't want to necessarily make a leap that they're
Speaker 1: uncomfortable with. And so again, all driven by client demand,
Speaker 1: we brought these products to market to UM, you know,
Speaker 1: to kind of scratch that itch for those clients. UM.
Speaker 1: And you know, look, I think UM, the Active Beta suite,
Speaker 1: the G S l C, the G E M for
Speaker 1: emerging markets, the G S I E for international developed
Speaker 1: those will continue to be, in my opinion, UM, the
Speaker 1: bell weathers of our product lineup. UM. But you know,
Speaker 1: if clients, it's it's all about options, right. We now
Speaker 1: have a more robust menu from from which clients can select.
Speaker 1: Did you expect Eric to transition from coming to America
Speaker 1: to E t F S Did you see that one coming?
Speaker 1: I didn't exactly see that one coming. I was gonna
Speaker 1: dry only give coal. Yeah, I only give coal half
Speaker 1: of what we're going to ask, because you don't want
Speaker 1: to have the whole thing scripted. Okay, cool. I'm gonna
Speaker 1: ask you a question that I asked a lot on
Speaker 1: trillions and on a preface it with a caveat, which
Speaker 1: is you can't pick one of your own? What is
Speaker 1: your favorite et F ticker? That's a good question, man,
Speaker 1: I do like one of ours, but I won't I
Speaker 1: won't go with a uh, you know, against the rules plug.
Speaker 1: This is silly, but one of my favorite ones has
Speaker 1: always been move Um the vadak Um Agri business, agriculture. Yeah,
Speaker 1: that's a pretty good one ticker. Symbol recognition matters, right,
Speaker 1: I mean, the the good ticker is really really helpful.
Speaker 1: Go Findberg. Thanks so much for joining us on Trilliance
Speaker 1: Out of Ball. Thanks guys, thanks for listening to Trilliance
Speaker 1: until next time. You can find us on the Bloomberg Terminal,
Speaker 1: Bloomberg dot com, Apple Podcast, Spotify, and wherever else you'd
Speaker 1: like to listen. We'd love to hear from you. We're
Speaker 1: on Twitter, I'm at Joel Webber Show, He's at aerb VAULTUNUS.
Speaker 1: You can find Katie at k Greifeld, and you can
Speaker 1: find Cole at Cole Fineberg and Goldman Sax Goldman Sachs.
Speaker 1: This episode of Trillions was produced by Magnus Hendrickson. Francesca
Speaker 1: Levy is the head of Bloomberg Podcast by