1 00:00:06,000 --> 00:00:09,080 Speaker 1: Welcome the trillions. I'm Eric Beltis, and I'm Rachel Levin's 2 00:00:11,880 --> 00:00:14,440 Speaker 1: and Joel Webber, who you're normally used to hearing, is 3 00:00:14,440 --> 00:00:16,599 Speaker 1: not here. He's in China. He's editor of Business Week, 4 00:00:16,640 --> 00:00:20,560 Speaker 1: so occasionally his job somehow Trump's this which I can't believe. 5 00:00:20,560 --> 00:00:23,279 Speaker 1: This is should be way more important. But anyway, Rachel's 6 00:00:23,280 --> 00:00:25,880 Speaker 1: filling in. Um, welcome, Rachel. How are you? It feels 7 00:00:25,880 --> 00:00:27,400 Speaker 1: pretty good to be on this side of the desk. 8 00:00:27,440 --> 00:00:29,720 Speaker 1: I can tell you that Joel better watch his back. 9 00:00:30,040 --> 00:00:34,479 Speaker 1: I'm liking where I'm sat. Um. Actually, I think I'm 10 00:00:34,560 --> 00:00:38,159 Speaker 1: Joel and you're me. If that's okay. I'm not sure 11 00:00:38,240 --> 00:00:41,080 Speaker 1: whose shoes I'm wearing. Either way, big shoes to fail, 12 00:00:41,159 --> 00:00:42,800 Speaker 1: so I will do my best to keep up. You 13 00:00:42,800 --> 00:00:44,800 Speaker 1: even came a little late, which is normally what I do. 14 00:00:44,920 --> 00:00:46,920 Speaker 1: And I was here early, which is normally Joel. But 15 00:00:46,960 --> 00:00:49,360 Speaker 1: Joel has to leave early, so I might just bolting 16 00:00:49,400 --> 00:00:52,400 Speaker 1: them halfway through. God, don't do that. I'll have to 17 00:00:52,479 --> 00:00:54,440 Speaker 1: round things out. No, No, this is good. So we 18 00:00:54,480 --> 00:00:56,640 Speaker 1: have a great episode. I think this is a unique one. 19 00:00:56,640 --> 00:00:58,960 Speaker 1: It's wanted I've been wanting to do a while. You 20 00:00:58,960 --> 00:01:01,400 Speaker 1: don't really see much written about this topic, which was 21 00:01:01,800 --> 00:01:04,200 Speaker 1: the gatekeepers of the E t F world. What does 22 00:01:04,200 --> 00:01:06,360 Speaker 1: that mean? So the metaphor I like to use is, 23 00:01:07,160 --> 00:01:09,800 Speaker 1: let's say you're you make salad dressing and you're trying 24 00:01:09,840 --> 00:01:12,800 Speaker 1: to get it into Whole Foods. Whole Foods has a gatekeeper. 25 00:01:13,360 --> 00:01:16,280 Speaker 1: If they accept your salad dressing, you're in the You're 26 00:01:16,280 --> 00:01:18,400 Speaker 1: in the money, right, your your your whole life changes. 27 00:01:18,840 --> 00:01:22,280 Speaker 1: So the E t F industry has something like that. So, um, Rachel, 28 00:01:22,319 --> 00:01:24,280 Speaker 1: talk a little bit about, you know, why this is 29 00:01:24,319 --> 00:01:27,640 Speaker 1: important and what the platform can do to an E 30 00:01:27,720 --> 00:01:29,880 Speaker 1: t F. Yeah, So, I mean this is something we've 31 00:01:29,880 --> 00:01:31,560 Speaker 1: seen kind of in the E t F industry over 32 00:01:31,560 --> 00:01:33,759 Speaker 1: the last I say five to ten years. We used 33 00:01:33,760 --> 00:01:36,080 Speaker 1: to talk about the spaghetti cannon and the idea that 34 00:01:36,120 --> 00:01:38,080 Speaker 1: you would just kind of fire ideas at the wall 35 00:01:38,120 --> 00:01:40,959 Speaker 1: and see what sticks. Well, increasingly you need to have, 36 00:01:41,000 --> 00:01:43,920 Speaker 1: I don't know, a rotating spaghetti cannon. You need to 37 00:01:44,000 --> 00:01:46,839 Speaker 1: paper that wall with a kind of Jackson Pollock esque 38 00:01:47,040 --> 00:01:49,520 Speaker 1: sort of canvas in order to actually get your product 39 00:01:49,520 --> 00:01:53,200 Speaker 1: to the masses, because having a great idea isn't enough anymore. 40 00:01:53,240 --> 00:01:56,040 Speaker 1: You need to get that great idea out to the masses. 41 00:01:56,080 --> 00:01:58,320 Speaker 1: And one way of doing that is to get your 42 00:01:58,360 --> 00:02:01,480 Speaker 1: e t F onto a platform. So those platforms are 43 00:02:01,520 --> 00:02:04,160 Speaker 1: often run by class some of the biggest banks out there, 44 00:02:04,200 --> 00:02:06,760 Speaker 1: what we call the wire houses and kind of the 45 00:02:06,760 --> 00:02:09,880 Speaker 1: industry terminology. And once you get onto those platforms, you 46 00:02:09,919 --> 00:02:13,079 Speaker 1: have access to all of the financial advisors that use 47 00:02:13,160 --> 00:02:16,200 Speaker 1: their architecture. Now that can be a huge step up 48 00:02:16,240 --> 00:02:19,240 Speaker 1: for some of the ETF issues out there, because, let's 49 00:02:19,240 --> 00:02:23,079 Speaker 1: not forget the big three are really dominant here. We're 50 00:02:23,080 --> 00:02:26,920 Speaker 1: talking of assets. You know, they're getting huge amounts of 51 00:02:26,960 --> 00:02:29,280 Speaker 1: flows because they are so dominant in this space. So 52 00:02:29,320 --> 00:02:32,080 Speaker 1: if you are a smaller issuer, you really really need 53 00:02:32,160 --> 00:02:34,280 Speaker 1: to find a way to get your distribution so that 54 00:02:34,320 --> 00:02:37,200 Speaker 1: you can even compete with these guys. Yeah, you frequently 55 00:02:37,240 --> 00:02:39,800 Speaker 1: hear the smaller issuers at the conferences sort of you know, 56 00:02:39,880 --> 00:02:42,320 Speaker 1: grape to you or on Twitter. You can't get on 57 00:02:42,360 --> 00:02:46,639 Speaker 1: the platforms. The platforms. So we have with us today 58 00:02:46,800 --> 00:02:49,200 Speaker 1: two people who know this world very well and are 59 00:02:49,200 --> 00:02:53,240 Speaker 1: going to take us inside the platform world Gatekeepers, and 60 00:02:54,120 --> 00:02:59,760 Speaker 1: we're joined today by Marianna Bush of Wells Fargo. Marianna, welcome, 61 00:03:00,080 --> 00:03:02,040 Speaker 1: thank you very much. It's a pleasure being here. We 62 00:03:02,080 --> 00:03:04,240 Speaker 1: also have John Mayer who is from global X who 63 00:03:04,280 --> 00:03:07,160 Speaker 1: is an issuer trying to get on the platforms sort 64 00:03:07,200 --> 00:03:09,920 Speaker 1: of like refer to them as the key masters, but 65 00:03:10,000 --> 00:03:12,560 Speaker 1: he was also a gatekeeper in his former life at MARL. 66 00:03:12,680 --> 00:03:17,200 Speaker 1: Welcome John, Thanks Eric, thanks for having me so this 67 00:03:17,240 --> 00:03:23,760 Speaker 1: week on trillions, gatekeepers and key masters. So welcome guys. 68 00:03:23,919 --> 00:03:26,400 Speaker 1: I'm very excited to have you guys here. Um, before 69 00:03:26,440 --> 00:03:28,200 Speaker 1: we start, I just want to get a sense for 70 00:03:28,560 --> 00:03:31,480 Speaker 1: the platforms and how much they actually take in. So 71 00:03:31,560 --> 00:03:36,240 Speaker 1: there's twentytfs right, give or take a dozen. How many 72 00:03:36,240 --> 00:03:39,080 Speaker 1: would you say are on the platforms out of that? Like, so, 73 00:03:39,160 --> 00:03:41,200 Speaker 1: what what? What percentage are we talking here? It's probably 74 00:03:42,440 --> 00:03:46,000 Speaker 1: so it's an exclusive club. It's hard to get into. Marianna, 75 00:03:46,080 --> 00:03:49,720 Speaker 1: let's start with you. I actually met you over a 76 00:03:49,760 --> 00:03:52,440 Speaker 1: decade ago. I was in data. I used to call 77 00:03:52,520 --> 00:03:55,960 Speaker 1: Marianna the George Martin of Bloomberg, you know, the fifth Beatle, 78 00:03:56,480 --> 00:03:59,240 Speaker 1: because she would come at us with such great suggestions 79 00:03:59,280 --> 00:04:01,480 Speaker 1: for the funds data base. Why don't you have this? 80 00:04:01,520 --> 00:04:04,200 Speaker 1: Morning store has this? And they would turn into great ideas. 81 00:04:04,200 --> 00:04:06,080 Speaker 1: So I always thought you'd deserve like a little cut 82 00:04:06,120 --> 00:04:09,880 Speaker 1: from the Bloomberg. But UM. That that aside, talk about 83 00:04:09,960 --> 00:04:12,080 Speaker 1: what you do it wells fargo and how it involves 84 00:04:12,080 --> 00:04:15,600 Speaker 1: et F s UM. I've been with the firm for 85 00:04:15,640 --> 00:04:19,240 Speaker 1: a while. I started with them in We've gone through 86 00:04:19,279 --> 00:04:22,800 Speaker 1: a few name changes, but except for the first two years, UH, 87 00:04:22,960 --> 00:04:25,680 Speaker 1: since then, I've been doing pretty much the same thing, 88 00:04:26,040 --> 00:04:29,200 Speaker 1: covering close end funds and since the mid nineties covering 89 00:04:29,279 --> 00:04:32,480 Speaker 1: exchange traded funds. And what does that mean covering them again? 90 00:04:32,520 --> 00:04:35,400 Speaker 1: You're you're I'm considering you sort of a gatekeeper. You 91 00:04:35,440 --> 00:04:39,599 Speaker 1: are vetting them so that they get onto a platform 92 00:04:39,720 --> 00:04:42,800 Speaker 1: and then the advisors that you service can use them. 93 00:04:42,839 --> 00:04:45,159 Speaker 1: By covering a fund, whether it's on a close end 94 00:04:45,160 --> 00:04:48,760 Speaker 1: funder and exchange traded fund, it means doing research on them, 95 00:04:48,800 --> 00:04:51,200 Speaker 1: trying to understand them very well. In the case of 96 00:04:51,200 --> 00:04:53,719 Speaker 1: an e t F, UM making sure that we understand 97 00:04:53,720 --> 00:04:57,080 Speaker 1: the index methodology of the benchmark that the e t 98 00:04:57,200 --> 00:05:01,680 Speaker 1: F is tracking, UM, understanding the risks, the volatility them, 99 00:05:02,400 --> 00:05:08,000 Speaker 1: the liquidity UH efficiency metrics of them, doing research DP 100 00:05:08,120 --> 00:05:11,640 Speaker 1: research on them, and trying to identify which are the 101 00:05:11,720 --> 00:05:15,360 Speaker 1: e t f s that best fit a specific exposure. 102 00:05:15,520 --> 00:05:19,080 Speaker 1: And in the case where UM they are tracking different 103 00:05:19,160 --> 00:05:22,880 Speaker 1: ets are tracking exactly the same index. What are the 104 00:05:22,920 --> 00:05:28,119 Speaker 1: differences between them besides the easy factor which is expense ratio? 105 00:05:28,800 --> 00:05:32,600 Speaker 1: Um so, just covering them and recommending them to UH 106 00:05:32,760 --> 00:05:35,680 Speaker 1: to the to our advisors and John, when did you 107 00:05:35,760 --> 00:05:38,480 Speaker 1: first meet Marianna? Was as part of that role or 108 00:05:38,520 --> 00:05:40,839 Speaker 1: are you kind of doing something to gentile? I actually 109 00:05:40,880 --> 00:05:43,440 Speaker 1: think it was two decades ago that I met Marianna 110 00:05:44,040 --> 00:05:46,440 Speaker 1: when I was the closed and fund research channel. Is 111 00:05:46,520 --> 00:05:49,800 Speaker 1: that pain Webber, which obviously no longer exists, and then 112 00:05:49,960 --> 00:05:54,520 Speaker 1: UBS purchased pain Webber, and then I left UBS in 113 00:05:54,560 --> 00:05:57,000 Speaker 1: two thousand seven went to Merrill Lynch to do the 114 00:05:57,000 --> 00:06:00,479 Speaker 1: same thing, covering closed down funds. Um so it's in 115 00:06:00,880 --> 00:06:04,919 Speaker 1: Maryland two thousand seven to two thou seventeen, covering clothes 116 00:06:04,960 --> 00:06:08,280 Speaker 1: in funds and then cover I wouldn't say covering E 117 00:06:08,400 --> 00:06:10,960 Speaker 1: t F s. I was managing their et F model 118 00:06:10,960 --> 00:06:14,080 Speaker 1: portfolio business WI started. I started doing that in about 119 00:06:14,080 --> 00:06:17,080 Speaker 1: two thousand nine to interject that model portfolio is what 120 00:06:17,240 --> 00:06:19,640 Speaker 1: exactly is that and how does that kind of relate 121 00:06:19,760 --> 00:06:22,560 Speaker 1: to us? So that the coverage aspect of Marianna was 122 00:06:22,600 --> 00:06:26,840 Speaker 1: talking about, Sure, well, model portfolios is a good way 123 00:06:26,839 --> 00:06:28,640 Speaker 1: to think of it. As it's kind of a managed 124 00:06:28,720 --> 00:06:32,960 Speaker 1: portfolio of using the components of something. And the component 125 00:06:33,080 --> 00:06:34,920 Speaker 1: that what we're talking about now is is e t 126 00:06:35,120 --> 00:06:37,400 Speaker 1: F s. Now, those e t fs have to be 127 00:06:37,440 --> 00:06:40,480 Speaker 1: approved by a particular firm. So there's a different group 128 00:06:40,560 --> 00:06:42,960 Speaker 1: that actually is kind of the gatekeepers within Mery Lynch 129 00:06:43,400 --> 00:06:46,359 Speaker 1: and in that group actually has to approve the funds 130 00:06:46,640 --> 00:06:48,479 Speaker 1: based on some of the things that that Marianna just 131 00:06:49,040 --> 00:06:54,599 Speaker 1: brought up, assets, exposures, spreads, So in other words, sees 132 00:06:55,400 --> 00:06:59,479 Speaker 1: the gatekeeper of the platform says, okay, this is good 133 00:06:59,560 --> 00:07:01,440 Speaker 1: enough to be the platform. And then you were the 134 00:07:01,480 --> 00:07:04,520 Speaker 1: model maker, so you choose from amongst what's on the platform, 135 00:07:05,200 --> 00:07:06,480 Speaker 1: and if you're in the model, you get like a 136 00:07:06,520 --> 00:07:10,120 Speaker 1: billion dollars instantly. So it's like depends on depends firm. Right, 137 00:07:10,200 --> 00:07:12,400 Speaker 1: So yeah, if you're a big Meryl, yeah, because we 138 00:07:12,520 --> 00:07:15,320 Speaker 1: see we actually see when Meryl rotates. You can tell 139 00:07:15,320 --> 00:07:17,880 Speaker 1: in the flows it's just this giant spike out of 140 00:07:17,880 --> 00:07:20,480 Speaker 1: nowhere and you okay, Meryl probably rotated in you know, 141 00:07:20,520 --> 00:07:23,000 Speaker 1: out of this into this. But those ets have to 142 00:07:23,040 --> 00:07:25,040 Speaker 1: be on the platform first. That's the first step, right, 143 00:07:25,120 --> 00:07:28,200 Speaker 1: That's that's correct. And and there's periods of time, or 144 00:07:28,320 --> 00:07:32,559 Speaker 1: like where I may have thought a certain fund should 145 00:07:32,560 --> 00:07:34,480 Speaker 1: be in my portfolios, but it was not approved on 146 00:07:34,520 --> 00:07:38,160 Speaker 1: the platform, so that there would be a process behind 147 00:07:38,160 --> 00:07:40,920 Speaker 1: the scenes, like I was talking to, I would be 148 00:07:40,920 --> 00:07:42,760 Speaker 1: talking to the gatekeepers out of the firm. Would you 149 00:07:42,800 --> 00:07:45,800 Speaker 1: consider using X Y Z fund? Uh? They would say no. 150 00:07:45,920 --> 00:07:48,920 Speaker 1: I say please, UM, and try to make my case 151 00:07:49,000 --> 00:07:52,200 Speaker 1: more than just saying please. So so to to Eric's point, 152 00:07:52,200 --> 00:07:53,840 Speaker 1: I mean, we can definitely see in the flows, you know, 153 00:07:53,880 --> 00:07:56,480 Speaker 1: when we see a big rotation by those models. But 154 00:07:56,600 --> 00:07:59,320 Speaker 1: I'm curious to your point about kind of getting onto 155 00:07:59,840 --> 00:08:02,320 Speaker 1: the platform first, Marianna, can you speak to sort of 156 00:08:02,360 --> 00:08:05,560 Speaker 1: the criteria that you're looking at or that the firm 157 00:08:05,680 --> 00:08:08,160 Speaker 1: is looking at when it's deciding whether this e t 158 00:08:08,360 --> 00:08:12,160 Speaker 1: F versus this ETF is actually available to financial advisors 159 00:08:12,160 --> 00:08:15,600 Speaker 1: to either bio order to put into models. UM. Currently, 160 00:08:16,200 --> 00:08:18,800 Speaker 1: my team and I are in the Well's Farrego Investment 161 00:08:18,840 --> 00:08:23,440 Speaker 1: Institute and within that, within the Global Manager Research Division, 162 00:08:24,080 --> 00:08:26,800 Speaker 1: and so we serve a number of lines of businesses. 163 00:08:27,400 --> 00:08:31,000 Speaker 1: The biggest one is Well's farre Go Advisors, the brokerage firm, 164 00:08:31,440 --> 00:08:35,839 Speaker 1: but also the private bank and family wealth, and so 165 00:08:37,000 --> 00:08:39,960 Speaker 1: it is possible that there may be a search request 166 00:08:40,040 --> 00:08:42,600 Speaker 1: from one of those lines of businesses, that there are 167 00:08:42,640 --> 00:08:46,240 Speaker 1: clients there's demand for a specific exposure or for a 168 00:08:46,240 --> 00:08:50,800 Speaker 1: specific e t F. Sometimes we may also decide that 169 00:08:51,080 --> 00:08:54,280 Speaker 1: our master list is missing a certain type of e 170 00:08:54,400 --> 00:08:57,280 Speaker 1: t F, a certain exposure, and so therefore we will 171 00:08:57,600 --> 00:09:01,120 Speaker 1: UM look into what's available, UM impair them contrast of 172 00:09:01,240 --> 00:09:04,760 Speaker 1: analyze them and figure out which is the most optimal 173 00:09:04,920 --> 00:09:08,400 Speaker 1: one to to add. Well, let's go over that, because 174 00:09:08,720 --> 00:09:10,480 Speaker 1: do you start with a list let's just say it's 175 00:09:10,520 --> 00:09:12,839 Speaker 1: a tech ETF or let's go dividend. I think that's 176 00:09:12,920 --> 00:09:16,959 Speaker 1: just makes sense. They're divid in d TF. Right, there's them, right, 177 00:09:17,400 --> 00:09:20,200 Speaker 1: How do you trim that list to come up with 178 00:09:20,320 --> 00:09:24,360 Speaker 1: what is going to be put on the platform from twos? 179 00:09:24,840 --> 00:09:27,840 Speaker 1: Good question? Assets. It's is definitely a factor, and I 180 00:09:27,840 --> 00:09:31,880 Speaker 1: would say is an important factor because while the factor 181 00:09:31,920 --> 00:09:35,480 Speaker 1: appears to be very simple and very plain vanilla, I 182 00:09:35,520 --> 00:09:41,079 Speaker 1: think it does uh keep us from taking certain types 183 00:09:41,120 --> 00:09:44,600 Speaker 1: of risks, a lot of types of risks. Uh. The 184 00:09:44,720 --> 00:09:47,040 Speaker 1: more assets there are, the more liquid the e t 185 00:09:47,240 --> 00:09:52,240 Speaker 1: F is, UH, the cheaper it will probably be uh 186 00:09:52,320 --> 00:09:56,880 Speaker 1: not only from an expense perspective, but also something that 187 00:09:57,360 --> 00:09:59,760 Speaker 1: maybe not that many people focus on is from a 188 00:10:00,080 --> 00:10:05,120 Speaker 1: udity perspective, bitas spreads um. Closure risk is something else 189 00:10:05,240 --> 00:10:08,480 Speaker 1: that just looking at assets will help you to identify 190 00:10:09,000 --> 00:10:11,400 Speaker 1: closure risk, or at least try to stay away from that. 191 00:10:11,679 --> 00:10:14,800 Speaker 1: You wouldn't want to recommend an e t F that 192 00:10:14,840 --> 00:10:17,640 Speaker 1: doesn't raise enough assets and then a few weeks later, 193 00:10:17,679 --> 00:10:21,080 Speaker 1: a few months later, the sponsor decides, Oops, we couldn't 194 00:10:21,160 --> 00:10:24,559 Speaker 1: raise enough acids, so let's just um close the fund 195 00:10:24,679 --> 00:10:27,560 Speaker 1: or maybe change the index too, hopefully it will be 196 00:10:27,600 --> 00:10:31,200 Speaker 1: more successful then. So assets is a very simple, but 197 00:10:31,280 --> 00:10:33,560 Speaker 1: I think a very effective. And do you have like 198 00:10:33,840 --> 00:10:36,800 Speaker 1: a particular bar you're looking at fifty million, a hundred million, 199 00:10:36,920 --> 00:10:39,160 Speaker 1: a billion, Like if I'm an ECFS, you are how 200 00:10:39,240 --> 00:10:41,319 Speaker 1: much have I got to raise before I am eligible 201 00:10:41,360 --> 00:10:44,800 Speaker 1: to be considered. There's nothing written in stone, but I 202 00:10:44,840 --> 00:10:48,839 Speaker 1: think it is very common um for the minimum to 203 00:10:48,880 --> 00:10:52,960 Speaker 1: be a hundred million dollars. Certain broader exposures I would 204 00:10:52,960 --> 00:10:56,880 Speaker 1: say they can easily go to get to a billion dollars. 205 00:10:57,520 --> 00:11:00,520 Speaker 1: So it depends. So John, you're a global X, you 206 00:11:00,600 --> 00:11:02,760 Speaker 1: probably have I don't know a bunch of ets that 207 00:11:02,760 --> 00:11:05,920 Speaker 1: are blow a hundred million, just a just think you 208 00:11:05,920 --> 00:11:08,280 Speaker 1: have a bunch of big ones to um take those 209 00:11:08,280 --> 00:11:10,880 Speaker 1: small ones or new ones? What do you what do 210 00:11:10,960 --> 00:11:18,800 Speaker 1: you saying to Marianna to get her to add them? Please? UM? So, 211 00:11:20,000 --> 00:11:22,640 Speaker 1: I think we have seventy three between seventy three and 212 00:11:22,679 --> 00:11:26,560 Speaker 1: seventy six funds and we have uh twenty five funds 213 00:11:26,559 --> 00:11:29,120 Speaker 1: that are a hundred million dollars or more. When we 214 00:11:29,160 --> 00:11:31,160 Speaker 1: have certainly some new funds, that we should come out 215 00:11:31,200 --> 00:11:32,959 Speaker 1: with that two million and a half million dollars in 216 00:11:33,000 --> 00:11:38,360 Speaker 1: seat capital. Now, different firms require different things. Some firms 217 00:11:38,679 --> 00:11:42,040 Speaker 1: are more quant based and in terms of how they 218 00:11:42,080 --> 00:11:47,120 Speaker 1: look at uh covering certain funds for the stepping back 219 00:11:47,200 --> 00:11:50,480 Speaker 1: once one moment. UH, certain firms won't even look at 220 00:11:50,480 --> 00:11:52,440 Speaker 1: you if you have just one or two funds out there. 221 00:11:52,640 --> 00:11:56,680 Speaker 1: They want a significant firm, a firm that has every aspect, 222 00:11:56,720 --> 00:12:00,600 Speaker 1: whether it be product management and marketing and research and 223 00:12:01,000 --> 00:12:03,600 Speaker 1: sales and all that kind of stuff. Global X certainly 224 00:12:03,640 --> 00:12:05,679 Speaker 1: falls into that kind of category. We have about eleven 225 00:12:05,679 --> 00:12:09,679 Speaker 1: billion dollars in assets UM. But certain firms required at 226 00:12:09,720 --> 00:12:12,120 Speaker 1: least three months of his trading history, and it doesn't 227 00:12:12,160 --> 00:12:15,320 Speaker 1: necessarily matter if there are a smaller fund. Other firms 228 00:12:15,360 --> 00:12:19,480 Speaker 1: require million fifty million or a hundred million. There's certain 229 00:12:19,480 --> 00:12:23,160 Speaker 1: exposures that certain funds aren't going to cover. There's some 230 00:12:23,240 --> 00:12:25,280 Speaker 1: new funds out there that some of the wirehouses are 231 00:12:25,559 --> 00:12:27,640 Speaker 1: not quite ready to cover yet. We haven't one of 232 00:12:27,679 --> 00:12:35,160 Speaker 1: those funds. Um Yes Marijuana e TF. You caught X 233 00:12:37,280 --> 00:12:40,040 Speaker 1: which which went up like ten percent to that. It's 234 00:12:40,040 --> 00:12:42,160 Speaker 1: one of the tamer tickers, believe it or not, like 235 00:12:42,320 --> 00:12:44,440 Speaker 1: you you kind of sometimes you guys, when I see 236 00:12:44,440 --> 00:12:47,120 Speaker 1: you're filing, I'm expecting something wild and you take it 237 00:12:47,160 --> 00:12:49,680 Speaker 1: down a notch. Actually now, I mean global X is 238 00:12:49,760 --> 00:12:54,240 Speaker 1: very thoughtful and how we market our our funds. Um 239 00:12:53,960 --> 00:12:57,200 Speaker 1: Uh pot x are cannabisy TF is one of our 240 00:12:57,240 --> 00:13:00,600 Speaker 1: newest funds, and we thought long and before we came 241 00:13:00,640 --> 00:13:02,880 Speaker 1: out with that fun But but I digress. There's certain 242 00:13:02,880 --> 00:13:05,920 Speaker 1: other firms that just you're automatically on so usually not 243 00:13:05,960 --> 00:13:08,280 Speaker 1: the wirehouse, and that's where there you get a huge 244 00:13:08,280 --> 00:13:11,320 Speaker 1: amount of But are you talking to Marianna constantly? Do 245 00:13:11,360 --> 00:13:13,679 Speaker 1: you shoot your emails? Like how do you? How do 246 00:13:13,720 --> 00:13:15,960 Speaker 1: you how often are you talking to her to try 247 00:13:16,000 --> 00:13:18,600 Speaker 1: to get her to cover more of your stuff? Global 248 00:13:18,760 --> 00:13:22,280 Speaker 1: X does. It's not me personally. We talk, We talk 249 00:13:22,360 --> 00:13:25,280 Speaker 1: we know each other, but maybe somebody else at global 250 00:13:25,280 --> 00:13:27,280 Speaker 1: ex that will reach out to how many global x 251 00:13:27,320 --> 00:13:29,040 Speaker 1: cts do you cover? Are? Do you do you have 252 00:13:29,080 --> 00:13:34,160 Speaker 1: you allowed on out of seventy three I I don't 253 00:13:34,160 --> 00:13:36,320 Speaker 1: know the answer right now, but not all right and 254 00:13:36,360 --> 00:13:39,440 Speaker 1: not no, not at all right? Okay, please every second? 255 00:13:39,480 --> 00:13:44,480 Speaker 1: Every second? Um, do you ever point out like, let's 256 00:13:44,480 --> 00:13:46,719 Speaker 1: say an e T F has a nice run, right, 257 00:13:46,720 --> 00:13:48,640 Speaker 1: it's up a lot, or it's assets just one over 258 00:13:48,640 --> 00:13:51,520 Speaker 1: a hundred million? Do you fire out emails to the platform? 259 00:13:51,559 --> 00:13:55,120 Speaker 1: But I'm sure there you know it's in terms of performance. 260 00:13:55,120 --> 00:13:57,520 Speaker 1: I don't think that's necessarily helpful. I mean, these are 261 00:13:57,640 --> 00:14:01,559 Speaker 1: index funds um and they go up and down based 262 00:14:01,600 --> 00:14:04,480 Speaker 1: on the underlying exposures, and I don't think they're necessarily 263 00:14:04,520 --> 00:14:10,600 Speaker 1: judged on on that portion. They're they're more judged on fees, assets, liquidity, 264 00:14:10,720 --> 00:14:14,320 Speaker 1: exposures and the actual firm. But certainly, if a fund 265 00:14:14,320 --> 00:14:16,320 Speaker 1: gets to scale, there's going to be a group of 266 00:14:16,320 --> 00:14:20,040 Speaker 1: people within our firm. That's that's calling the Marianna Bushes 267 00:14:20,080 --> 00:14:22,640 Speaker 1: of the world. I would say on on performance, I 268 00:14:22,640 --> 00:14:25,080 Speaker 1: would it shows up in a slightly different way for 269 00:14:25,200 --> 00:14:27,480 Speaker 1: E T s. I would say, Um, if it happens 270 00:14:27,520 --> 00:14:30,680 Speaker 1: to be it's really an index, not the the e 271 00:14:30,800 --> 00:14:33,000 Speaker 1: t F, but an index that or an exposure that 272 00:14:33,120 --> 00:14:36,160 Speaker 1: is doing really, really well. Chances are there's going to 273 00:14:36,160 --> 00:14:39,480 Speaker 1: be more demand for that exposure, especially if it's a 274 00:14:39,600 --> 00:14:42,920 Speaker 1: unique and niche exposure. And that's where we're going to 275 00:14:43,000 --> 00:14:45,840 Speaker 1: start seeing the demand from the financial advisors or from 276 00:14:45,880 --> 00:14:49,720 Speaker 1: the client saying you don't offer this, I'm interested in 277 00:14:49,720 --> 00:14:52,040 Speaker 1: this e t F and this exposure. Can you please 278 00:14:52,040 --> 00:14:54,240 Speaker 1: look into that? So that's how performance is going to 279 00:14:54,400 --> 00:14:58,800 Speaker 1: show up. And maybe performance is measured a slightly different 280 00:14:58,840 --> 00:15:02,400 Speaker 1: way with e t S, for example tracking error. Um, 281 00:15:02,720 --> 00:15:05,840 Speaker 1: so it's it's a different way of well attracts the index, right, 282 00:15:06,000 --> 00:15:08,400 Speaker 1: which is its job in life, right, but the performance 283 00:15:08,760 --> 00:15:12,120 Speaker 1: Sometimes ETF will just have a shardy object moment and um, 284 00:15:12,160 --> 00:15:15,960 Speaker 1: nobody can ignore it like pot a year ago or robotics. 285 00:15:16,040 --> 00:15:19,120 Speaker 1: And you're saying that advisors itself might come up to 286 00:15:19,120 --> 00:15:21,960 Speaker 1: you and say, hey, starting to get some inquiries about this, 287 00:15:22,320 --> 00:15:24,720 Speaker 1: and that's when performance would matter, right. Well, Well, there's 288 00:15:24,720 --> 00:15:28,120 Speaker 1: certain firms where the interest by the financial advisor is 289 00:15:28,160 --> 00:15:32,200 Speaker 1: the first point that is required before a firm will 290 00:15:32,240 --> 00:15:34,680 Speaker 1: actually look at the fund for the due diligence process. 291 00:15:34,720 --> 00:15:37,320 Speaker 1: So the tell where the dog, and sometimes that tell 292 00:15:37,400 --> 00:15:40,280 Speaker 1: is really strong for us. It is a factor, it 293 00:15:40,440 --> 00:15:43,800 Speaker 1: is an input. It's not necessarily I don't think I 294 00:15:43,800 --> 00:15:48,560 Speaker 1: would say it's the number one factor, um, but certainly 295 00:15:48,560 --> 00:15:51,480 Speaker 1: if there's demand, we certainly want to serve our clients. 296 00:15:51,760 --> 00:15:55,520 Speaker 1: And so there's demand, we want to meet that demand. Uh. 297 00:15:55,560 --> 00:15:59,720 Speaker 1: Now with demand also it is possible that it is 298 00:15:59,720 --> 00:16:05,920 Speaker 1: a hot area and it may not become hot it 299 00:16:06,040 --> 00:16:08,720 Speaker 1: maybe like the parents would be like, look, let's see 300 00:16:09,240 --> 00:16:14,800 Speaker 1: x IV. You don't trust me on this. But there 301 00:16:14,840 --> 00:16:17,560 Speaker 1: were times at Meryl where I really wanted to cover 302 00:16:18,040 --> 00:16:22,160 Speaker 1: include a certain funds within the models that I was managing, 303 00:16:22,920 --> 00:16:24,440 Speaker 1: and I would have to go to the due diligence 304 00:16:24,480 --> 00:16:28,040 Speaker 1: department and say this is the reason why I want 305 00:16:28,040 --> 00:16:31,920 Speaker 1: to include X y Z fund and over time they 306 00:16:32,000 --> 00:16:35,000 Speaker 1: usually would kind of work with me. So again, the 307 00:16:35,040 --> 00:16:44,120 Speaker 1: tail wagon the dog. So when we're looking at kind 308 00:16:44,120 --> 00:16:45,920 Speaker 1: of what makes it onto the platform, So you've got 309 00:16:45,960 --> 00:16:48,480 Speaker 1: all of these different inputs. You've got that the assets 310 00:16:48,520 --> 00:16:50,080 Speaker 1: that that you want to see from a fund. You've 311 00:16:50,080 --> 00:16:52,400 Speaker 1: got potentially track record and that kind of an amount 312 00:16:52,440 --> 00:16:55,120 Speaker 1: of time trading. You've got maybe the issuer like how 313 00:16:55,280 --> 00:16:58,320 Speaker 1: established they are and potentially kind of that demand and 314 00:16:58,400 --> 00:17:02,080 Speaker 1: performance kind of aspect. John, when you don't get onto 315 00:17:02,160 --> 00:17:04,639 Speaker 1: a platform, what does that kind of look like for 316 00:17:04,680 --> 00:17:06,400 Speaker 1: you guys? I mean, is it a question of well, 317 00:17:06,440 --> 00:17:07,960 Speaker 1: we've we've got to get on one, so we're going 318 00:17:08,040 --> 00:17:10,560 Speaker 1: to keep on lobbying, or do you think about other 319 00:17:10,720 --> 00:17:13,840 Speaker 1: kind of strategies to kind of get distribution. Well, so 320 00:17:14,000 --> 00:17:17,800 Speaker 1: there are certain firms that on day one that that 321 00:17:17,840 --> 00:17:20,000 Speaker 1: a E T F trades that you can you can 322 00:17:20,040 --> 00:17:24,520 Speaker 1: buy UM that particularly TF like SWAB and Pershing and 323 00:17:24,640 --> 00:17:28,560 Speaker 1: Commonwealth and Raymond James and RBC to name a few. Um, 324 00:17:28,600 --> 00:17:31,440 Speaker 1: there's there's there's several others. Then there's other firms where 325 00:17:31,480 --> 00:17:35,960 Speaker 1: there's three months requirements, so that that's the starting points. 326 00:17:36,560 --> 00:17:40,200 Speaker 1: Now if there's major interest, obviously the assets will grow 327 00:17:41,160 --> 00:17:43,960 Speaker 1: that certainly will help get onto some of the other 328 00:17:44,000 --> 00:17:48,160 Speaker 1: platforms over time. There's certain platforms like Wells which takes 329 00:17:48,160 --> 00:17:52,280 Speaker 1: about a year before they'll consider, and there's kind of 330 00:17:52,720 --> 00:17:56,080 Speaker 1: different firms in between. And then in that time we 331 00:17:56,160 --> 00:17:58,720 Speaker 1: do a lot of marketing. You know, we have we 332 00:17:58,800 --> 00:18:02,399 Speaker 1: have sales sales to both internals next ternals that so 333 00:18:02,440 --> 00:18:04,080 Speaker 1: it's still kind of an end goal. Like even if 334 00:18:04,080 --> 00:18:06,320 Speaker 1: you're kind of like pursuing other other kind of methods 335 00:18:06,359 --> 00:18:08,320 Speaker 1: to try and kind of like boost the assets and 336 00:18:08,359 --> 00:18:10,959 Speaker 1: the other short term there's still long term kind of 337 00:18:11,040 --> 00:18:13,680 Speaker 1: or medium term like outlook is we want to get 338 00:18:13,680 --> 00:18:18,040 Speaker 1: on the wirehouse platforms. Is that important? It's very helpful. Um, 339 00:18:18,080 --> 00:18:20,960 Speaker 1: It's not an absolute You can still be successful without 340 00:18:20,960 --> 00:18:22,560 Speaker 1: being on the wires. But if you get to a 341 00:18:22,600 --> 00:18:25,760 Speaker 1: certain scale, and if you're a firm like globle X, 342 00:18:25,800 --> 00:18:28,720 Speaker 1: where we have a decent amount of assets, UM, we 343 00:18:28,760 --> 00:18:31,800 Speaker 1: have a defined process in terms of every functional area, 344 00:18:32,400 --> 00:18:35,679 Speaker 1: it's likely we will get onto the wires at some point. 345 00:18:36,000 --> 00:18:38,280 Speaker 1: But then you have the other shops out there with 346 00:18:38,359 --> 00:18:41,639 Speaker 1: one or two ETFs. They may never get on, but 347 00:18:41,680 --> 00:18:46,199 Speaker 1: they still can achieve scale. Is it How quickly do 348 00:18:46,240 --> 00:18:49,040 Speaker 1: you feel the effects of getting on the platform? Um? 349 00:18:49,320 --> 00:18:52,359 Speaker 1: Is it very obvious that yep, that fund you know 350 00:18:52,640 --> 00:18:55,040 Speaker 1: within a year you assets double kind of thing or 351 00:18:55,240 --> 00:18:57,639 Speaker 1: not necessarily. It really depends on the exposure in the 352 00:18:57,640 --> 00:19:00,159 Speaker 1: demand and and need a perception of the needed in 353 00:19:00,200 --> 00:19:04,640 Speaker 1: the market. So it also depends on what's what's out there, 354 00:19:04,640 --> 00:19:08,320 Speaker 1: and we're you're competing against so we could be the 355 00:19:08,400 --> 00:19:13,320 Speaker 1: only e t F that the financial technology e t 356 00:19:13,520 --> 00:19:17,720 Speaker 1: F or autonomous vehicles or um robotics, well there was 357 00:19:17,800 --> 00:19:22,359 Speaker 1: a bunch of those. If you're number one, meaning the 358 00:19:22,400 --> 00:19:25,199 Speaker 1: only fund out there, certainly helpful. And if you're too 359 00:19:25,400 --> 00:19:27,720 Speaker 1: you have that great ticker and lower expenses, that's certainly 360 00:19:27,720 --> 00:19:32,280 Speaker 1: helpful as well. But bots was an interesting example. Robot 361 00:19:32,320 --> 00:19:35,520 Speaker 1: came out first, but bots passed it in assets. Was 362 00:19:35,600 --> 00:19:40,360 Speaker 1: platforms part of that? I I think platform was certainly 363 00:19:40,680 --> 00:19:43,400 Speaker 1: part of it. We dedicate a lot of time to research. 364 00:19:43,840 --> 00:19:45,960 Speaker 1: A research team headed by j Jacob said, you know, 365 00:19:45,960 --> 00:19:48,919 Speaker 1: we have four or five people working with him. So 366 00:19:49,960 --> 00:19:54,000 Speaker 1: and that particular fund is a lot more defined then 367 00:19:54,080 --> 00:19:58,560 Speaker 1: it's competitor, so that we and if we can articulate 368 00:19:58,600 --> 00:20:01,320 Speaker 1: that properly, that is helpful to the market. Maybe if 369 00:20:01,320 --> 00:20:04,840 Speaker 1: you're lucky and something happens in the news, that helps 370 00:20:04,960 --> 00:20:07,280 Speaker 1: to right. We saw that with hack, you know, back 371 00:20:07,320 --> 00:20:09,439 Speaker 1: in twelve I think you know when we saw kind 372 00:20:09,440 --> 00:20:11,680 Speaker 1: of like suddenly a really big interest in sort of 373 00:20:11,880 --> 00:20:15,760 Speaker 1: security and cybersecurity just after it had launched and suddenly 374 00:20:15,800 --> 00:20:18,280 Speaker 1: asked its went skyrocketing. But I just want to circle 375 00:20:18,320 --> 00:20:20,520 Speaker 1: back to a point that that John made about a 376 00:20:20,640 --> 00:20:22,600 Speaker 1: sort of you know, et f issuers that may have 377 00:20:22,640 --> 00:20:24,480 Speaker 1: like two or three funds and may never kind of 378 00:20:24,520 --> 00:20:26,800 Speaker 1: get onto a wirehouse. UM, there's been a bit of 379 00:20:26,880 --> 00:20:30,359 Speaker 1: kind of a sort of conversation or griping depending on 380 00:20:30,359 --> 00:20:33,240 Speaker 1: on your perspective, from some of those smaller issues, and 381 00:20:33,280 --> 00:20:35,359 Speaker 1: like the SEC has actually said it will look into 382 00:20:35,720 --> 00:20:38,960 Speaker 1: kind of whether sort of investors are losing out from 383 00:20:39,040 --> 00:20:42,000 Speaker 1: smaller issuers finding it tougher in the marketplace to get 384 00:20:42,040 --> 00:20:45,560 Speaker 1: their funds distributed and to keep their funds going. Like, Marianna, 385 00:20:45,600 --> 00:20:47,520 Speaker 1: do you have any kind of sort of sympathy for 386 00:20:47,560 --> 00:20:50,440 Speaker 1: that perspective you know of of the smaller issu where 387 00:20:50,520 --> 00:20:52,920 Speaker 1: that's you know, really got a great idea but they 388 00:20:53,040 --> 00:20:56,760 Speaker 1: just can't get that distribution. Are they right to be 389 00:20:56,840 --> 00:21:01,280 Speaker 1: angry that the wirehouses won't take them? Well, I can, 390 00:21:01,359 --> 00:21:05,960 Speaker 1: I can understand, UM. But from our perspective, our clients 391 00:21:06,000 --> 00:21:09,119 Speaker 1: our highest priority, and then number two our clients, and 392 00:21:09,160 --> 00:21:12,159 Speaker 1: then number three are clients. So we're not here in 393 00:21:12,200 --> 00:21:17,600 Speaker 1: the business to support um other businesses except for our clients. 394 00:21:17,640 --> 00:21:19,960 Speaker 1: So we have to think if they have a product 395 00:21:20,000 --> 00:21:23,160 Speaker 1: that makes a lot of sense, and we think there 396 00:21:23,280 --> 00:21:26,840 Speaker 1: is a need for that. We're absolutely going to be 397 00:21:26,960 --> 00:21:30,600 Speaker 1: looking at that, um, but we have to think of 398 00:21:30,640 --> 00:21:32,879 Speaker 1: our clients. Of course, you know, you also have to 399 00:21:32,880 --> 00:21:34,200 Speaker 1: think about it. And I'm trying to put my hat 400 00:21:34,240 --> 00:21:36,720 Speaker 1: on when I did work at a wirehouse risk these 401 00:21:36,800 --> 00:21:40,199 Speaker 1: larger firms are risk is the is the first thing 402 00:21:40,240 --> 00:21:43,359 Speaker 1: they think about all the time. And you know, if 403 00:21:43,400 --> 00:21:45,719 Speaker 1: you really look at and I'm kind of dissing some 404 00:21:45,760 --> 00:21:48,600 Speaker 1: of my old portfolios and a lot of portfolios out there, 405 00:21:48,640 --> 00:21:51,879 Speaker 1: they're beta mills in a sense. Um they're looking to 406 00:21:51,960 --> 00:21:54,600 Speaker 1: track their benchmark maybe you know, with a little bit 407 00:21:54,640 --> 00:21:57,639 Speaker 1: of tracking, are like a two hund basis points. And 408 00:21:57,680 --> 00:22:00,040 Speaker 1: that's because it's being directed by the firm, because the 409 00:22:00,040 --> 00:22:01,959 Speaker 1: firm does want to take a lot of risk. And 410 00:22:02,040 --> 00:22:03,680 Speaker 1: you can kind of drill that down to almost every 411 00:22:03,720 --> 00:22:06,840 Speaker 1: business line and that yeah. They um somebody at a 412 00:22:06,880 --> 00:22:08,399 Speaker 1: conference of the day and they I think it was 413 00:22:08,440 --> 00:22:11,200 Speaker 1: because we're talking about the Goldman GSLC, which is this 414 00:22:11,320 --> 00:22:13,960 Speaker 1: smart beta fund that literally is very much like the SMP. 415 00:22:14,119 --> 00:22:16,840 Speaker 1: And he was like, it's all about don't rock the boat. 416 00:22:18,320 --> 00:22:21,000 Speaker 1: That phrase stuck with me, like, just whatever it is, 417 00:22:21,080 --> 00:22:23,560 Speaker 1: make sure it's not too doesn't deviate too much. A 418 00:22:23,560 --> 00:22:25,960 Speaker 1: lot of the newer, smaller indie ones tend to be 419 00:22:26,040 --> 00:22:28,760 Speaker 1: the more the ones that deviate more, but those tend 420 00:22:28,800 --> 00:22:31,600 Speaker 1: to pop when they work, they go up much more 421 00:22:31,720 --> 00:22:34,400 Speaker 1: than the ones that have more beta. But I could 422 00:22:34,400 --> 00:22:38,879 Speaker 1: see the platforms being again a little more conservative with those. 423 00:22:39,760 --> 00:22:42,000 Speaker 1: I would see it a little bit differently because sometimes 424 00:22:42,520 --> 00:22:45,320 Speaker 1: I see those that they pop, they do well, they 425 00:22:45,320 --> 00:22:48,240 Speaker 1: start raising assets as long as they're outperforming, but then 426 00:22:48,400 --> 00:22:52,280 Speaker 1: as soon as they start underperforming, then they start losing assets. 427 00:22:52,560 --> 00:22:56,280 Speaker 1: And in fact, I love looking at the UM Shares 428 00:22:56,320 --> 00:23:00,159 Speaker 1: Outstanding chart on Bloomberg because that strips out the the 429 00:23:00,200 --> 00:23:03,840 Speaker 1: market and you can truly see is that fund growing, 430 00:23:04,680 --> 00:23:07,879 Speaker 1: is the number of shares outstanding growing, and then you 431 00:23:07,920 --> 00:23:11,000 Speaker 1: compare that with performance or out performance underperformance, and then 432 00:23:11,040 --> 00:23:14,879 Speaker 1: you see that inflection point where it starts to underperform, 433 00:23:15,560 --> 00:23:18,400 Speaker 1: the shares outstanding starts coming down. So that's a chart 434 00:23:18,440 --> 00:23:21,760 Speaker 1: that I love seeing on Bloomberg. This is a great 435 00:23:21,800 --> 00:23:24,600 Speaker 1: point and we study this a lot. When that when 436 00:23:24,760 --> 00:23:26,840 Speaker 1: e t F has its the stars aligned and it 437 00:23:26,840 --> 00:23:29,600 Speaker 1: goes up and people buy it UM, you do tend 438 00:23:29,640 --> 00:23:31,440 Speaker 1: to see the flows will come back out, but not 439 00:23:31,480 --> 00:23:33,639 Speaker 1: all of it comes out there are definitely people who 440 00:23:33,720 --> 00:23:36,000 Speaker 1: forgot they own it, don't care, or just really into 441 00:23:36,000 --> 00:23:40,440 Speaker 1: the story. Currency HEDGDTF cybersecurity robotics is going through this now. 442 00:23:40,960 --> 00:23:44,000 Speaker 1: But if you take their assets from today versus where 443 00:23:44,000 --> 00:23:46,800 Speaker 1: they were when they first launched, they they grew. You know, 444 00:23:46,800 --> 00:23:48,680 Speaker 1: they're probably a couple of billion. And once you get 445 00:23:48,680 --> 00:23:51,000 Speaker 1: in the cauld billion, your trade, um, I don't know, 446 00:23:51,040 --> 00:23:54,080 Speaker 1: ten millions dollars worth of shares a day, you're kind 447 00:23:54,080 --> 00:23:56,800 Speaker 1: of up and going. So even though you have that 448 00:23:57,040 --> 00:24:00,720 Speaker 1: ramp up, even when you come down, you're you're full 449 00:24:00,720 --> 00:24:02,800 Speaker 1: of life. So it's not like you go out of 450 00:24:02,800 --> 00:24:05,840 Speaker 1: business after that moment. You tend to hang around and 451 00:24:05,880 --> 00:24:08,040 Speaker 1: then maybe you catch the next wave up. But that's 452 00:24:08,080 --> 00:24:11,520 Speaker 1: definitely the life of a high active share kind of 453 00:24:11,520 --> 00:24:15,200 Speaker 1: ETF which will either really crush it or really get crushed. 454 00:24:15,960 --> 00:24:18,520 Speaker 1: But do you like if you have advisors. Like one 455 00:24:18,560 --> 00:24:20,879 Speaker 1: thing I find is interesting is like take the factor world, 456 00:24:21,320 --> 00:24:23,399 Speaker 1: Like do you look at factory TF and smart data right, 457 00:24:23,440 --> 00:24:26,679 Speaker 1: you look at value and growth and stuff. If you 458 00:24:26,720 --> 00:24:28,640 Speaker 1: take some of the value et f s like there's 459 00:24:28,680 --> 00:24:30,720 Speaker 1: some that market cap weight, so they tend to be 460 00:24:30,880 --> 00:24:33,399 Speaker 1: move a lot more like the market. Then there's some 461 00:24:33,440 --> 00:24:36,119 Speaker 1: that are hardcore. You know, they're they're holding mall stocks. Right. 462 00:24:36,920 --> 00:24:39,800 Speaker 1: Do you look at that that active share, that aggressiveness, 463 00:24:39,800 --> 00:24:42,480 Speaker 1: the concentration of holdings, And do you ever have an 464 00:24:42,480 --> 00:24:44,960 Speaker 1: advisor who will the pure stuff is better for them? 465 00:24:45,080 --> 00:24:48,960 Speaker 1: They want hardcore value versus you. You probably need like 466 00:24:49,080 --> 00:24:53,360 Speaker 1: something more like closer to the market. Yes, And that's 467 00:24:53,359 --> 00:24:57,680 Speaker 1: why we for our financial advisors love showing them UH 468 00:24:57,840 --> 00:25:01,560 Speaker 1: weighting methodology selection methodology G because you're right, it may 469 00:25:01,560 --> 00:25:05,879 Speaker 1: be just UH selection based on value, but their market 470 00:25:05,880 --> 00:25:09,240 Speaker 1: cap weighted UH. But then you may have a different 471 00:25:09,800 --> 00:25:13,200 Speaker 1: uh waiting UH. And so you're going to get different results. 472 00:25:13,280 --> 00:25:17,040 Speaker 1: You think you're comparing to e T s that are 473 00:25:17,160 --> 00:25:20,640 Speaker 1: very very similar, but the reality is that their exposures 474 00:25:21,160 --> 00:25:23,679 Speaker 1: end up being different and therefore the performance ends up 475 00:25:23,680 --> 00:25:26,240 Speaker 1: being different. So you have to truly understand uh. And 476 00:25:26,320 --> 00:25:28,760 Speaker 1: John and I were talking about earlier today about kind 477 00:25:28,760 --> 00:25:32,560 Speaker 1: of that education, that full understanding of the exposure the 478 00:25:32,560 --> 00:25:36,040 Speaker 1: index that you're getting into. Unfortunately, too many people still 479 00:25:36,520 --> 00:25:40,520 Speaker 1: make the mistake of purely focusing on the expenses UH 480 00:25:40,520 --> 00:25:43,840 Speaker 1: and nothing else, and they don't realize that you're comparing 481 00:25:43,880 --> 00:25:47,840 Speaker 1: apples and oranges or apples and Kiwi's UH, and you think, oh, 482 00:25:47,880 --> 00:25:50,560 Speaker 1: this has a lower expense ratio, I will pick that 483 00:25:50,640 --> 00:25:54,960 Speaker 1: one when the difference in basis points in expense ratio 484 00:25:55,240 --> 00:25:57,840 Speaker 1: is very small compared to the difference in performance due 485 00:25:57,920 --> 00:26:01,200 Speaker 1: to the very difference in exposure, so that that is 486 00:26:01,280 --> 00:26:03,399 Speaker 1: very important I think to focus on. I'm curious, like 487 00:26:03,440 --> 00:26:05,720 Speaker 1: just you mentioned the differences in the index, is like, 488 00:26:05,760 --> 00:26:08,200 Speaker 1: what do you guys think of these active non transparent 489 00:26:08,400 --> 00:26:11,479 Speaker 1: products and how the gatekeepers should think about these. I'm 490 00:26:11,480 --> 00:26:14,600 Speaker 1: going to rebrand these the ants active non transparent because 491 00:26:14,600 --> 00:26:16,439 Speaker 1: I think this is going to catch on. But what 492 00:26:16,480 --> 00:26:18,480 Speaker 1: do you think of these kind of products and whether 493 00:26:18,840 --> 00:26:21,440 Speaker 1: there's something that should be getting through a kind of 494 00:26:21,480 --> 00:26:24,240 Speaker 1: the gate keeping process and how you'll think about them, 495 00:26:24,280 --> 00:26:27,919 Speaker 1: whether it be different to your current evaluation process or 496 00:26:28,000 --> 00:26:29,960 Speaker 1: kind of the same, but maybe with a few sort 497 00:26:30,000 --> 00:26:34,160 Speaker 1: of tweaks to accommodate their differences. We're certainly watching and 498 00:26:34,200 --> 00:26:39,639 Speaker 1: we're keeping track of what's happening UM at our firm, 499 00:26:39,720 --> 00:26:43,840 Speaker 1: the Global Manager Research in the worlds FARAG Investment Institute UH. 500 00:26:44,080 --> 00:26:49,199 Speaker 1: The the coverage is separated between passive and active, and 501 00:26:49,240 --> 00:26:54,040 Speaker 1: so these actively managed nontransparent ets will be covered under 502 00:26:54,080 --> 00:26:59,399 Speaker 1: the active working groups. I I expected this question to 503 00:26:59,440 --> 00:27:02,639 Speaker 1: come up today, So for ants, I I kind of 504 00:27:04,080 --> 00:27:08,720 Speaker 1: asked around on ants, and yes, I agree with Marianna, 505 00:27:08,880 --> 00:27:11,399 Speaker 1: these are gonna be viewed more as mutual funds. But 506 00:27:11,440 --> 00:27:13,639 Speaker 1: I have a couple of comments just about the active 507 00:27:13,680 --> 00:27:18,439 Speaker 1: non transparent UM structure. The question is is it needed. 508 00:27:19,720 --> 00:27:22,520 Speaker 1: Probably not UM. You have mutual funds, you have ETFs, 509 00:27:22,680 --> 00:27:25,320 Speaker 1: well they do well. Well, it depends, I mean, it 510 00:27:25,320 --> 00:27:30,280 Speaker 1: depends if certain mutual fund assets are poured it over 511 00:27:30,520 --> 00:27:35,040 Speaker 1: into uh this particular structure. That if they can poured 512 00:27:35,080 --> 00:27:38,800 Speaker 1: over their their track record, because if they can get 513 00:27:38,840 --> 00:27:43,960 Speaker 1: some sort of scale, scale, you gets scale, and if 514 00:27:43,960 --> 00:27:46,119 Speaker 1: you start from zero, it's gonna be a lot harder. 515 00:27:46,600 --> 00:27:48,119 Speaker 1: But I think that this is gonna be a heavy 516 00:27:48,160 --> 00:27:51,880 Speaker 1: lift on the side of the industry to get this done. Well. Yeah, 517 00:27:51,880 --> 00:27:53,520 Speaker 1: I mean, if they're getting if they're being weighed against 518 00:27:53,600 --> 00:27:56,040 Speaker 1: mutual funds, if they've got the ants and the mutual 519 00:27:56,080 --> 00:27:58,000 Speaker 1: funds stacked up against each other rather than the kind 520 00:27:58,000 --> 00:27:59,760 Speaker 1: of traditional E t F s, I mean, how does 521 00:27:59,800 --> 00:28:03,000 Speaker 1: that change the criteria in terms of like what those 522 00:28:03,040 --> 00:28:05,159 Speaker 1: products will have to do in order to compete with 523 00:28:05,160 --> 00:28:08,680 Speaker 1: the mutual funds, do they automatically look better or not really? UM. 524 00:28:08,760 --> 00:28:11,159 Speaker 1: We were talking about performance earlier and I mentioned that 525 00:28:11,240 --> 00:28:14,720 Speaker 1: performance is measured in a different way for for e 526 00:28:14,800 --> 00:28:18,200 Speaker 1: t s for passively managed cts. UM. I would argue 527 00:28:18,280 --> 00:28:21,520 Speaker 1: that for these actively managed not transparent, they will be 528 00:28:21,560 --> 00:28:25,240 Speaker 1: treated more like the actively managed mutual funds. And are 529 00:28:25,320 --> 00:28:29,960 Speaker 1: they beating the benchmark? Are they are they worthwhile relative 530 00:28:30,000 --> 00:28:33,240 Speaker 1: to a passive product? So I think they will be 531 00:28:33,440 --> 00:28:39,480 Speaker 1: treated differently. One other comment on ants UH say, UM 532 00:28:40,440 --> 00:28:43,200 Speaker 1: expenses are will likely be lower, but you have to 533 00:28:43,240 --> 00:28:47,280 Speaker 1: remember many mutual funds and inaggregate they haven't been outperforming 534 00:28:47,280 --> 00:28:50,800 Speaker 1: their benchmarks, and they probably haven't been outperforming the benchmarks 535 00:28:50,880 --> 00:28:54,480 Speaker 1: because managers probably haven't been taking enough risk and there's 536 00:28:54,520 --> 00:28:56,760 Speaker 1: just a lot of smart money fighting smart money. But 537 00:28:56,840 --> 00:29:00,880 Speaker 1: if you have the dirty base points lowerings senses, that 538 00:29:00,920 --> 00:29:05,680 Speaker 1: actually could be a big help. Combined with tax efficiency. UM. 539 00:29:05,840 --> 00:29:08,120 Speaker 1: Maybe now you have to think about the total cost 540 00:29:08,160 --> 00:29:11,360 Speaker 1: of ownership, not just the expensure because the biggest spreads 541 00:29:11,400 --> 00:29:15,520 Speaker 1: are probably gonna be wider than very liquid passively managed TTF, 542 00:29:15,720 --> 00:29:18,200 Speaker 1: but even beyond that, and even the licensing fees if 543 00:29:18,320 --> 00:29:21,200 Speaker 1: if you need to pay extra even beyond that, what's 544 00:29:21,240 --> 00:29:24,160 Speaker 1: in it stockpicking? Nobody wants that right now. That's the 545 00:29:24,200 --> 00:29:26,520 Speaker 1: bigger problem. Somebody had said the other day, if you 546 00:29:26,600 --> 00:29:29,360 Speaker 1: have a bad show and it's on cable and you 547 00:29:29,440 --> 00:29:32,320 Speaker 1: move it to Netflix, um, it doesn't make the show better. 548 00:29:32,480 --> 00:29:34,240 Speaker 1: And I think that's the bigger problem. I'm sorry to 549 00:29:34,280 --> 00:29:36,600 Speaker 1: be cruel. I'm just looking at the data and I 550 00:29:36,800 --> 00:29:39,760 Speaker 1: talked to people out there and I just embarished unless 551 00:29:39,800 --> 00:29:42,160 Speaker 1: people like like you said, move money over. But by 552 00:29:42,200 --> 00:29:44,360 Speaker 1: the way, just people listening if you are interested in 553 00:29:44,480 --> 00:29:47,440 Speaker 1: this AUNT concept. We had a good episode with Dan 554 00:29:47,560 --> 00:29:51,160 Speaker 1: McCabe from Proceeding about three episodes ago. Um, and we 555 00:29:51,520 --> 00:29:54,120 Speaker 1: threw everything at him, all these objections, and he was 556 00:29:54,120 --> 00:29:56,120 Speaker 1: pretty good. He had he has a plan. I'm not 557 00:29:56,200 --> 00:29:59,120 Speaker 1: sure it'll work, but um, we'll know next year. These 558 00:29:59,160 --> 00:30:01,800 Speaker 1: are going to come out in like in mass starting 559 00:30:02,360 --> 00:30:04,800 Speaker 1: in Q one, I think. So. We mean, we've talked 560 00:30:04,800 --> 00:30:06,520 Speaker 1: about kind of what it takes to sort of get 561 00:30:06,560 --> 00:30:10,120 Speaker 1: on a platform and kind of like how you guys 562 00:30:10,160 --> 00:30:12,040 Speaker 1: are thinking about it in terms of which funds make 563 00:30:12,120 --> 00:30:13,680 Speaker 1: it on and which don't, and then how to kind 564 00:30:13,720 --> 00:30:16,440 Speaker 1: of go about getting those kind of funds on for 565 00:30:17,040 --> 00:30:20,600 Speaker 1: issues like a global expert. Others as well, like what 566 00:30:20,680 --> 00:30:23,640 Speaker 1: a kind of like the top tips of how to 567 00:30:23,760 --> 00:30:25,840 Speaker 1: kind of get onto a fun platform? Is it just 568 00:30:25,920 --> 00:30:29,400 Speaker 1: a question of patients and hard lobbying or other some 569 00:30:29,560 --> 00:30:31,960 Speaker 1: things that you can do to sort of stand out? Well, 570 00:30:32,080 --> 00:30:38,120 Speaker 1: I mean it's patience and persistence certainly helps, UH and 571 00:30:38,280 --> 00:30:42,320 Speaker 1: exposures and making sure that your funds are competitive relative 572 00:30:42,320 --> 00:30:45,440 Speaker 1: to the peers out there. But if the firm isn't 573 00:30:45,440 --> 00:30:50,040 Speaker 1: constructed in a way that is positively perceived by a gatekeeper, 574 00:30:50,720 --> 00:30:53,640 Speaker 1: you can have a really hard time getting on a platform. 575 00:30:53,880 --> 00:30:55,720 Speaker 1: We don't have a hard time getting on platforms. Do 576 00:30:55,840 --> 00:30:57,680 Speaker 1: we have one or two funds here and there? We 577 00:30:57,760 --> 00:31:01,360 Speaker 1: have more tyfficult time, sure, but inaggregate you know of 578 00:31:01,440 --> 00:31:04,880 Speaker 1: our seventy three funds. No, we're on all the platforms 579 00:31:04,920 --> 00:31:07,760 Speaker 1: we need to be on. You used to be on 580 00:31:07,880 --> 00:31:11,040 Speaker 1: the on the one side, probably getting pitched and lobbied 581 00:31:11,080 --> 00:31:13,760 Speaker 1: and wind and dined constantly. Then you moved to the 582 00:31:13,880 --> 00:31:17,959 Speaker 1: issuer side. How is your life changed? Nobody calls me anymore, 583 00:31:18,280 --> 00:31:21,560 Speaker 1: nobody looks like the weirdest think we can always talk. 584 00:31:23,000 --> 00:31:24,600 Speaker 1: So you know, do you miss it? Do you miss 585 00:31:24,640 --> 00:31:27,400 Speaker 1: the attention? Because I imagine you were swarmed at inside 586 00:31:27,440 --> 00:31:30,920 Speaker 1: et F s and these conferences by UM issuers. Well, 587 00:31:31,040 --> 00:31:34,320 Speaker 1: I complained about the attention. When I got the attention, 588 00:31:34,720 --> 00:31:38,440 Speaker 1: I missed the attention. But here's like a celebrity. Here's 589 00:31:38,600 --> 00:31:41,040 Speaker 1: a quick little story. So three years ago I went 590 00:31:41,120 --> 00:31:45,000 Speaker 1: to the Inside ETFs conference in Hollywood, Florida, and we 591 00:31:45,160 --> 00:31:48,240 Speaker 1: had just we were just about to do a very 592 00:31:48,320 --> 00:31:50,280 Speaker 1: large trade, probably the biggest trade of my career. I 593 00:31:50,320 --> 00:31:52,640 Speaker 1: think it was between five and six billion dollars and 594 00:31:52,760 --> 00:31:56,640 Speaker 1: a lot of household names like Emerging Markets and UH Developed, 595 00:31:56,720 --> 00:32:01,040 Speaker 1: Developed Markets International, and a bunch of sector funds UM. 596 00:32:01,720 --> 00:32:03,800 Speaker 1: Some of our traders at Merrill Lynch had to cancel 597 00:32:03,880 --> 00:32:06,479 Speaker 1: the trip because this trade was so huge. Remember when 598 00:32:06,520 --> 00:32:09,200 Speaker 1: I left, there was about fifty billion dollars in the 599 00:32:09,280 --> 00:32:12,360 Speaker 1: twenty portfolios that I rant. It's probably like eighty million, 600 00:32:12,560 --> 00:32:15,440 Speaker 1: eight billion at this point. Anyway, got to the conference, 601 00:32:15,960 --> 00:32:19,720 Speaker 1: literally I was rushed by issuers, by market makers like 602 00:32:19,960 --> 00:32:22,200 Speaker 1: was that you guys, Like, what what's going on? Can 603 00:32:22,240 --> 00:32:23,640 Speaker 1: you tell me? We're about the trade. I'm like, what 604 00:32:23,720 --> 00:32:25,800 Speaker 1: are you talking about? But I'm not sure we're talking 605 00:32:25,800 --> 00:32:29,000 Speaker 1: about I mean obviously they knew I knew, and now 606 00:32:29,040 --> 00:32:33,440 Speaker 1: we walk around in obscurity, Marianna, do you get do 607 00:32:33,480 --> 00:32:35,120 Speaker 1: you get a lot of attention when you go to 608 00:32:35,160 --> 00:32:37,040 Speaker 1: the conferences? And is it annoying or you like it? 609 00:32:37,960 --> 00:32:39,960 Speaker 1: We do get a good lot of calls, We do 610 00:32:40,160 --> 00:32:43,600 Speaker 1: get a lot of lunches, um. But I really appreciate 611 00:32:43,680 --> 00:32:46,800 Speaker 1: that because we learned a lot, and we always want 612 00:32:46,800 --> 00:32:50,320 Speaker 1: to be listening to stories because we may be missing 613 00:32:50,400 --> 00:32:53,960 Speaker 1: something and we may learn something. I I'm constantly learning 614 00:32:54,080 --> 00:32:56,680 Speaker 1: something new. And the more we dig, the more we 615 00:32:56,760 --> 00:33:00,280 Speaker 1: ask questions, the more I realized, Oh, there's a little, 616 00:33:00,360 --> 00:33:03,880 Speaker 1: so much more to learn. So we truly appreciate the 617 00:33:04,200 --> 00:33:08,880 Speaker 1: patients and the willingness to tell our story. Uh, tell 618 00:33:09,320 --> 00:33:12,600 Speaker 1: their story, and hopefully they are patient, and hopefully they 619 00:33:12,680 --> 00:33:15,440 Speaker 1: have a very good story to tell. Uh, and hopefully 620 00:33:15,480 --> 00:33:20,400 Speaker 1: their fact sheets are chock full of great insight. UM. 621 00:33:20,720 --> 00:33:23,800 Speaker 1: It is sometimes disappointing when we see a fact sheet 622 00:33:23,880 --> 00:33:26,320 Speaker 1: and we feel that it's missing kind of some of 623 00:33:26,360 --> 00:33:29,360 Speaker 1: the key information that should be there. And UH, we'll 624 00:33:29,400 --> 00:33:32,760 Speaker 1: give them feedback and we'll suggest you know what. I 625 00:33:32,920 --> 00:33:37,240 Speaker 1: remember several years ago it was an emerging market fund 626 00:33:37,280 --> 00:33:39,720 Speaker 1: and they did not even have a country breakdown. And 627 00:33:39,840 --> 00:33:43,160 Speaker 1: we still see sometimes those kinds of cases. So being 628 00:33:43,240 --> 00:33:46,640 Speaker 1: on the issuer side and to leverage off. Marianna just said, 629 00:33:46,840 --> 00:33:48,880 Speaker 1: we have to be on points. We have to really 630 00:33:48,960 --> 00:33:52,560 Speaker 1: get our story out. And while I was joking that 631 00:33:52,680 --> 00:33:54,280 Speaker 1: we don't get a lot of phone calls, but we 632 00:33:54,480 --> 00:33:56,360 Speaker 1: make a lot of outgoing calls and we have to 633 00:33:57,240 --> 00:33:59,400 Speaker 1: articulate our message very well because we don't get too 634 00:33:59,440 --> 00:34:02,280 Speaker 1: many opportun unities to get in front of people. We 635 00:34:02,440 --> 00:34:09,960 Speaker 1: articulate the message well, hopefully we'll get storytellers research based. 636 00:34:10,280 --> 00:34:13,040 Speaker 1: So we fight. We fight for every issue. Told me 637 00:34:13,080 --> 00:34:16,480 Speaker 1: the other day that that's that's called conversation alpha. We 638 00:34:16,600 --> 00:34:21,200 Speaker 1: just trademarks, did you we trademark conversational alpha. Expect my 639 00:34:21,280 --> 00:34:23,920 Speaker 1: blog post any day now. It's basically like the idea 640 00:34:24,040 --> 00:34:26,839 Speaker 1: that an advisor can have a conversation with the client 641 00:34:26,920 --> 00:34:29,239 Speaker 1: and that creates value about this theme or story. And 642 00:34:29,320 --> 00:34:32,560 Speaker 1: that's so that's the pitch from theme ETFs is it'll 643 00:34:32,600 --> 00:34:37,600 Speaker 1: give you a conversation alpha. No, we actually just trademarked it. 644 00:34:40,080 --> 00:34:42,560 Speaker 1: Thank you both very much. This is fun. This is 645 00:34:42,600 --> 00:34:50,840 Speaker 1: a lot of thanks very much for inviting, thank you 646 00:34:50,960 --> 00:34:53,800 Speaker 1: for listening to trillions um for more. What am I 647 00:34:53,840 --> 00:34:56,960 Speaker 1: saying I forget what I say. You can find us 648 00:34:59,280 --> 00:35:04,759 Speaker 1: find the one. You can thank me as well stepping in. 649 00:35:05,040 --> 00:35:09,880 Speaker 1: I am, I am alright, So thank you very much 650 00:35:09,920 --> 00:35:12,279 Speaker 1: for tuning into Trillions this week. Um and I want 651 00:35:12,320 --> 00:35:16,920 Speaker 1: to thank Rachel Evans for filling in for Joel Clutch something. Yeah, 652 00:35:16,960 --> 00:35:21,680 Speaker 1: this is amazing never leaving. Uh So we have some 653 00:35:21,800 --> 00:35:24,320 Speaker 1: handles here for Twitter if you want to follow. Rachel 654 00:35:24,440 --> 00:35:29,080 Speaker 1: is at Rachel Evans Underscore New York and why oh 655 00:35:29,160 --> 00:35:33,280 Speaker 1: and why Sorry New York's too. Rachel is at Rachel 656 00:35:33,320 --> 00:35:38,839 Speaker 1: Evans Underscore n Why Um John is at John D. Mayor. 657 00:35:39,000 --> 00:35:43,760 Speaker 1: That's m a I e er different than the musician 658 00:35:44,640 --> 00:35:49,080 Speaker 1: and Marianna, who doesn't do Twitter. Um Is would like 659 00:35:49,200 --> 00:35:53,160 Speaker 1: you to follow at WF Investing. Trillions can be found 660 00:35:53,200 --> 00:35:59,719 Speaker 1: on iTunes or anywhere they have podcasts. Isn't that what 661 00:35:59,840 --> 00:36:04,600 Speaker 1: he's says? It just sounds so much better. Okay, I 662 00:36:04,719 --> 00:36:06,600 Speaker 1: feel like I'm just like just not giving it the 663 00:36:07,120 --> 00:36:10,880 Speaker 1: classiness of needs all right. Trillions is produced by Magnus 664 00:36:10,960 --> 00:36:14,640 Speaker 1: Hendrickson and Francesco levia Is, the head of Bloomberg Podcasts. 665 00:36:15,200 --> 00:36:20,760 Speaker 1: Goodbye It was awful. Look, I like the conversation