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Speaker 1: Last month, TCW this was big news. It announced it

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Speaker 1: it's buying Engine Number one's ETF business. That's a deal

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Speaker 1: we expect to be completed in the third corner. And

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Speaker 1: it was interesting for a lot of reasons, Matt number one.

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Speaker 1: This is how TCW is going to enter the ETF

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Speaker 1: industry versus through launching its own ETFs, if you will.

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Speaker 1: And it was also interesting because if you think about

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Speaker 1: Engine number one, you probably know them as an activist investor,

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Speaker 1: probably for supply chain on showing. They have three US

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Speaker 1: equity ETFs with about six hundred million dollars in assets.

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Speaker 1: And I'm really excited to talk to our guests about

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Speaker 1: how this is going to go, whether we're going to

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Speaker 1: see Engine number one continue down this path of activist investing,

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Speaker 1: if you will, or whether they plan to launch maybe

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Speaker 1: some of those core portfolio products.

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Speaker 2: I am interested in that as well. Unfortunately, Jennifer Grantcio

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Speaker 2: is here, the CEO of Engine number one. Jennifer, thanks

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Speaker 2: so much for coming to the studio. Really appreciate you

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Speaker 2: joining us. What does this deal mean for your activism?

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Speaker 1: To me?

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Speaker 2: I think of the board seats that you got on

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Speaker 2: Exon Mobile in that battle how does that translate now

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Speaker 2: that TCW is buying the ETF business.

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Speaker 3: So we built end to number one to help investors

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Speaker 3: take advantage of these megathines and transformations. And so we

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Speaker 3: think you're missing something if your only index for your

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Speaker 3: only growth. We had an opportunity with Exon to use

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Speaker 3: the tool of activism, if you will, But everything we

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Speaker 3: do is about active investing and delivering alpha for people,

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Speaker 3: and so we haven't done an activist campaign since Exxon,

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Speaker 3: but we work very closely with a lot of the

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Speaker 3: companies in the portfolios were a concentrated active investor and

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Speaker 3: TCW is as well. So TCW is a terrific platform

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Speaker 3: and they manage assets in an active and also a

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Speaker 3: concentrated active way. And so we actually think this is

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Speaker 3: really exciting and a great fit for the current shareholders

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Speaker 3: and a great way to grow within TCW's What about the.

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Speaker 2: On shoring trend that we've seen, especially since the supply

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Speaker 2: chain disrupts of the pandemic. Do you continue to play that?

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Speaker 2: Is it a mega theme that's going to keep happening,

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Speaker 2: or do we revert back to the mean at some point?

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Speaker 3: Yeah, I mean, we think these trends have a long

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Speaker 3: way to go, and so mega theme is exactly how

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Speaker 3: we think about it. They're complicated systems and if you

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Speaker 3: look at restoring of supply chains back to the US,

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Speaker 3: we're just at the beginning of that. And if you

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Speaker 3: look at I think last year we saw almost four

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Speaker 3: hundred thousand jobs come back as part of this restoring

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Speaker 3: of supply chains, huge megaprojects, and so if you think

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Speaker 3: about that, these mega projects across the different industries or

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Speaker 3: sectors in the US, we're building factories. The factories need

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Speaker 3: to be smarter, they need factory automation. And then from

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Speaker 3: a transportation perspective, we're seeing railways, for example, are going

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Speaker 3: to have a huge opportunity to create value because we're

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Speaker 3: now working within one geographical area. So it's a time

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Speaker 3: to get into supply chain in our opinion. But we

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Speaker 3: think it's a theme that continues and persists for many years.

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Speaker 1: And in addition to that theme, let's also talk about

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Speaker 1: engine number one under TCWW, because as you mentioned, of

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Speaker 1: course TCW known as an active investor. I think of them,

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Speaker 1: of course as a bond shop. Putting that together, is

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Speaker 1: it in the future that you're going to be looking

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Speaker 1: to launch active products in more traditional bond spaces.

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Speaker 3: Well, if you think about what Engine Number one does today,

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Speaker 3: we're in the active equity space, and so from a

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Speaker 3: TCW perspective, TCW isn't just a bond and fixed income shop,

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Speaker 3: although they're excellent and they're well known for its showing

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Speaker 3: my bias, and so I think you'll continue to see

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Speaker 3: more active equity products. And there's also an opportunity for

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Speaker 3: sure to look at the income side.

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Speaker 1: So it sounds like we should be on the lookout

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Speaker 1: for some filings.

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Speaker 3: I would say definitely watch the space. Will continue when

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Speaker 3: the deal closes at TCW on the Energy transition. Net

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Speaker 3: Z is the ticker there and supply chain stuff is

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Speaker 3: a ticker there. But definitely watch the space.

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Speaker 2: More to come.

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Speaker 3: ETFs are a great wrapper, as you well know, and

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Speaker 3: so I think there are a lot of great strategies

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Speaker 3: that either exists at TCW now or could in the

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Speaker 3: future that can take advantage of the tax and transparency

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Speaker 3: benefits of the wrapper.

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Speaker 2: What are the other mega themes that you're focused on.

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Speaker 2: I mean, you mentioned the energy transition, and I was

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Speaker 2: talking with Cloudy Assam earlier about the fact that the

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Speaker 2: incredible heat we've been experiencing is actually reducing the productivity

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Speaker 2: in this country and globally. What else are you watching?

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Speaker 3: Yeah, so energy transition is definitely one. It's huge, and

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Speaker 3: the part of the energy transformation that happens at scale

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Speaker 3: affects all kinds of transportation, energy and all the materials

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Speaker 3: and technologies that go into it. And that's why we

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Speaker 3: manage it as an active fund because it is a

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Speaker 3: big broad change. We don't think picking by yourself micro

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Speaker 3: themes is the best way to do it. So energy

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Speaker 3: transformation is big. We've talked about restoring of supply chain.

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Speaker 3: Another one that's filed with the SEC and we haven't

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Speaker 3: launched yet is around scarcity. So from a resource perspective,

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Speaker 3: we're both short some of the minerals and materials we

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Speaker 3: need for restoring and for the sort of electrification of everything.

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Speaker 3: And then there also will be companies that win, companies

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Speaker 3: that cool data centers because AI is GREATAI is a

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Speaker 3: huge rain on electricity, and so scarcity is another theme

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Speaker 3: that will be launching.

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Speaker 1: And when you talk about scarcity again, I'm thinking to

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Speaker 1: your lineup right now, your equity ETF so is the

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Speaker 1: mo they are really to invest in the companies that

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Speaker 1: are sort of taking advantage of that scarcity versus the

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Speaker 1: actual materials.

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Speaker 3: So we haven't launched that product yet, but when we do,

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Speaker 3: and what's in the perspective is that we'll take advantage

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Speaker 3: both of places where we're short a material and maybe

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Speaker 3: we need to mine more copper or lithium because we're

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Speaker 3: short in natural resource, as well as technologies that are

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Speaker 3: more efficient. So because we're in a scarcity environment, the

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Speaker 3: companies that figure out how to maximize efficiency of water use,

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Speaker 3: for example, are also going to be winners. And these

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Speaker 3: products are meant to be ways to add alpha to

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Speaker 3: the portfolio. And so your core, your growth, your large

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Speaker 3: cap index great, but don't miss this opportunity in these

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Speaker 3: huge transfer areas.

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Speaker 2: How about the shift in yields. We've been talking about

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Speaker 2: four thirty four on the tenure at the highest level

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Speaker 2: today since two thousand and seven, and that's kind of

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Speaker 2: a mega theme as well. I guess you could see

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Speaker 2: it as that if you don't think they'll revert to

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Speaker 2: the mean, we're in a new era.

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Speaker 3: We're in a new era. And the kind of no

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Speaker 3: comment on fixed income ETFs at this point in time,

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Speaker 3: but from a portfolio construction perspective. I do think active

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Speaker 3: has a big role to play in the next couple

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Speaker 3: of years because because the cost of capital is higher,

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Speaker 3: there will be more stock dispersion and there is an

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Speaker 3: opportunity to pick winners.

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Speaker 1: And Jennifer, we're up against the clock here, But I

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Speaker 1: am really curious to get your thoughts on something we

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Speaker 1: were talking about at the intro of the fact that

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Speaker 1: this is a really tough market environment. This is a

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Speaker 1: very saturated market. If you're trying to break round in

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Speaker 1: the ETF industry, it's really difficult right now. TCW obviously

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Speaker 1: going the acquisition route, but you just lived that life

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Speaker 1: at engine number one. How difficult is it to be

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Speaker 1: a first time issueer in this mart?

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Speaker 3: I think it's difficult, But I also think there's an

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Speaker 3: opportunity to combine like terrific active investors in active track

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Speaker 3: record this environment where we think just stock dispersion is rewarded.

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Speaker 3: So if you've got great active managers and you've got

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Speaker 3: real no how on the ETF side, I think you

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Speaker 3: have a better chance than most at building. But it

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Speaker 3: certainly takes some work to build new ETFs and to

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Speaker 3: build them to success.

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Speaker 1: All Right, Jennifer, this is great, great to have some

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Speaker 1: time with you. That is Jennifer gran Cio. She is

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Speaker 1: CEO of Engine number one