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Speaker 1: Welcome to Trilliance. I'm Joel Weber and I'm Eric val Tunis. Eric.

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Speaker 1: I'm recording in my closet again. I'm in my home office,

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Speaker 1: so you may hear uh yeah, you could hear some

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Speaker 1: noises downstairs. Um. You know, we have a four year

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Speaker 1: old and nine year old. Every now and then they

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Speaker 1: get into it, but um, hopefully quiet. Speaking of which,

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Speaker 1: how are you holding up good? I looked like Tom

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Speaker 1: hankson cast Away rate when he discovered fire. Not quite

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Speaker 1: you know, when he's spear fishing. But halfway through next week. Yeah, yeah,

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Speaker 1: that's that's like end of April, I think. But I

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Speaker 1: feel good. I you know, we're all healthy. We're just

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Speaker 1: getting little cabin fever here that that beard looks healthy. Yeah.

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Speaker 1: We have a four year old as well, and the

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Speaker 1: four year old and the and the dog who a

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Speaker 1: puppy who's one year old, both of which are testing

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Speaker 1: our sanity. It good to see you, and um, I'm

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Speaker 1: really excited to talk to you about what's been going

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Speaker 1: on in in e t f Land of late. We'll

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Speaker 1: bring in Tom saraphagus Um also in Bloomberg Intelligence with you,

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Speaker 1: and we're gonna kind of get a rundown of what's

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Speaker 1: been going on. Yeah, so let me give you insight

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Speaker 1: into our research team. So, um, we have two continuous

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Speaker 1: chats going on. One on an IB which is the

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Speaker 1: Bloomberg terminal chat with me, Tom Morgan, and James. That's

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Speaker 1: our four person team. And then we have a chat

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Speaker 1: on Twitter in d M where we're throwing in people's

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Speaker 1: tweets saying this is interesting, should we cover it? And

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Speaker 1: I don't think both the chat rooms are as busy

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Speaker 1: as as they've ever been. Um, even though we're we're

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Speaker 1: all working from home and it's surreal and the streets

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Speaker 1: are empty, we are as busy as we've ever been

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Speaker 1: because of the sell off, because of e t s

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Speaker 1: tend to be in the middle of this. They're so visible.

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Speaker 1: Everybody talks about them. There's it just basically sell offs

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Speaker 1: or rough your portfolio. But if you're in the business

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Speaker 1: of content, they're they're actually very good because there's so

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Speaker 1: much to write about and talk about now. So we're

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Speaker 1: we're very busy and those chats are very busy. And uh,

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Speaker 1: you know, it's good to get Tom on because he

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Speaker 1: is he's been in He's a guy who's been in

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Speaker 1: the industry as an issuer and at an exchange, and

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Speaker 1: he's very good about bringing in some of that to

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Speaker 1: our discussion. And it's a perfect time because we're literally

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Speaker 1: we just saw like one of the most catastrophic quarters

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Speaker 1: in investing history and we're at the beginning of Q two.

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Speaker 1: By the way, Eric, I feel like you've been a

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Speaker 1: little tone deaf just on how bad the virus is.

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Speaker 1: Uh and uh, you know, I wanna just you know,

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Speaker 1: straight up ask you, like, do you think the return

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Speaker 1: to normal is going to happen in April? Um? Yeah,

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Speaker 1: I have on the podcast where we had the guy

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Speaker 1: from the bio thread E T f on, I think

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Speaker 1: I said my fear level was like point five out

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Speaker 1: of ten or something. Yeah, among the words yeah, you know. Um.

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Speaker 1: I even got crap from my mom. She said, you're

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Speaker 1: you sounded glit. You're not taking this seriously enough. That's

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Speaker 1: when you know you probably went too far. Um. But

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Speaker 1: at the time, I don't know, I just um, I

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Speaker 1: was kind of in the It's like when your mom

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Speaker 1: tells you you're an idiot. Yeah, I would say that

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Speaker 1: you've gone too far. But I think what really turned

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Speaker 1: me around is the obviously death there's the death rates

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Speaker 1: higher than in the flu. And also, um, you know,

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Speaker 1: when you think of elders like my mom, it really

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Speaker 1: hits home. And I think I've definitely come around that said,

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Speaker 1: I still think it's you know, May. I don't know.

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Speaker 1: I've hear people say June. I still feel somewhat optimistic.

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Speaker 1: And I'm just gonna do my part as a citizen

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Speaker 1: and stop. I'm not commenting on it anymore. I don't

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Speaker 1: know enough. I just lay off it. I'm just gonna

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Speaker 1: do my part as a citizen and you know, uh

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Speaker 1: say six six ft away from people and watch Netflix

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Speaker 1: this time on trillions Takeaways from the Carnage, Tom, welcome

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Speaker 1: back to Trillions. How's London, man, Yeah, London is great. Um,

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Speaker 1: you know, we're obviously on lockdown like the rest of

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Speaker 1: the world, but London's going going great. It's been like

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Speaker 1: a full year I think since the last time I

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Speaker 1: was on so one thing in New York. Um, I

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Speaker 1: live in Brooklyn. I can get to go cocktails at

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Speaker 1: a couple of places. For off, can you get to

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Speaker 1: go pintes anywhere? Uh? But you can't. But luckily all

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Speaker 1: the regular bodegas here or the Superman could sell beer,

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Speaker 1: so it's really easy to be able to get uh,

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Speaker 1: and not only beer, they sell hard liquor too, so

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Speaker 1: fully stocked and I'm looking for you, so you're good.

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Speaker 1: The clubs are closed though, right, yeah, clubs are closed. Um,

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Speaker 1: they've got like a little bow speaker, So I just

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Speaker 1: recreate my own clubs here by yourself. Okay, the Tom

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Speaker 1: dance party. Okay, well maybe I'll ask to see that later, um, Eric,

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Speaker 1: But there's about five topics I want to hit on

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Speaker 1: in this episode. Number one is the FED. Yeah, so

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Speaker 1: my initial takeaway is, you know, for about a month there,

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Speaker 1: every anything was just brutal uh in the FED step.

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Speaker 1: Then a couple of times, you know, they tried a

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Speaker 1: couple of things, but we we you know, we look

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Speaker 1: at the discount of a bond ETF it's price versus

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Speaker 1: n A V as a sort of temperature gauge on

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Speaker 1: how a liquid the underlying bond market is. And for

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Speaker 1: most of the sell off that was of those discounts

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Speaker 1: were there. The FED would come in here and there

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Speaker 1: and it would close it for like a day or

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Speaker 1: even an hour. But then they go back and it

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Speaker 1: just told you that there's just weren't any buyers and

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Speaker 1: for bonds, and that was a real problem for everybody.

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Speaker 1: Then they came in UM with this sort of bazooka

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Speaker 1: approach and just said, you know, we're we're here, We're here,

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Speaker 1: We're gonna do whatever it takes. That kind of a

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Speaker 1: deal a lot of trillions being used, and that really

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Speaker 1: did change things. We saw a lot of those bond

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Speaker 1: dislocations come in UM and we also even saw some

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Speaker 1: people front run the FED, buying in e t f

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Speaker 1: s like l q D. And what was also interesting

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Speaker 1: about the FED is two things. Which is, first of all,

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Speaker 1: not just that there you know, this powerful dying force

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Speaker 1: that's sort of saying we're going to hold the aren't

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Speaker 1: the hand of the industry here UM and make sure

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Speaker 1: there's liquidity. But they're going to use e t s

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Speaker 1: for the first time ever. This is something that Bank

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Speaker 1: of Japan has done India, governments elsewhere in the world

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Speaker 1: have used the t s as part of their policies.

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Speaker 1: This is the first time the FED has done it.

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Speaker 1: I think it's somewhat of a credibility moment. I guess

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Speaker 1: that they're going to use this. They also said they're

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Speaker 1: going to hire Blackrock as an advisor and help all

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Speaker 1: of that, all of that, that's huge. Yeah. So so Tom,

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Speaker 1: when you think about the FED stepping in and using

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Speaker 1: e t f s, you know, what what do e

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Speaker 1: t f s have to show right now? Yeah? I

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Speaker 1: mean I think in in the main part, when you

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Speaker 1: look at everything that's happened, right, I think a lot

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Speaker 1: of active funds, oh thanks to e t s. And

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Speaker 1: I know that's a bold statement, but if you look

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Speaker 1: at et getting a lot of criticism about the discounts, right,

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Speaker 1: they were saying, oh x y Z, et F was

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Speaker 1: trading at a big discount. But if you actually look

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Speaker 1: what was happening with active funds, right, a lot of

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Speaker 1: their navs weren't being adjusted downward as fast as they

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Speaker 1: were on the e t F, right, which are exchange traded.

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Speaker 1: So really what was happening is the e t F

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Speaker 1: was signaling potential problems in the underlying market. Right. If

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Speaker 1: you were just looking at funds, you would say, oh,

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Speaker 1: well things are down, they're not down as much. And

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Speaker 1: if you look at the e t F you're like, wow,

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Speaker 1: things are down probably a lot more than what some

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Speaker 1: of these funds are indicating. So when the FED decided

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Speaker 1: to come in and buy e t F and provide liquidity.

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Speaker 1: Who I think some of the biggest beneficiaries of that

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Speaker 1: we were mutual funds, right because they were just starting

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Speaker 1: to see their navs come down um compared to e

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Speaker 1: t F that we're settling this maybe a good week

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Speaker 1: or so before. So I think that that, you know,

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Speaker 1: active funds are a big thanks to the ETS by

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Speaker 1: being able to to signal distress a lot sooner than

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Speaker 1: they could have. Yeah, and the thing with active mutual

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Speaker 1: funds is we look at flows in e t F

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Speaker 1: s and they were actually positive in March as a whole.

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Speaker 1: But bond ETF did see I think maybe ten billion

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Speaker 1: over the month and outflows, but active on mutual funds

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Speaker 1: saw a hundred and fifty billion and that was just

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Speaker 1: through March, So they destroyed their monthly outflow record and

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Speaker 1: the flows were getting worse and worse as the days

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Speaker 1: went on, and we think, uh, you know, we we

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Speaker 1: don't know exactly what went on, but we think that's

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Speaker 1: probably something that FED was looking at because that's a

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Speaker 1: lot of money. And those active funds are now going

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Speaker 1: to they can't um, they have to sell the bonds

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Speaker 1: into a market where nobody wants them, so that actually

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Speaker 1: added to pressure, and then the e t F is

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Speaker 1: downstream from that because all that selling pressure makes it

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Speaker 1: harder to do arbitrage and the et F discount grows.

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Speaker 1: So if if this the FED UH definitely helped ETFs,

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Speaker 1: but they may have saved active mutual funds the bond side,

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Speaker 1: because think about it, if the if they get to

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Speaker 1: sell bonds where there's no buyers, they're gonna have to

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Speaker 1: take bad prices. That's going to ratch it down the

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Speaker 1: NAP further make their performance worse and probably trigger more outflows.

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Speaker 1: That creates this sort of doom loop illiquidity doom loop

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Speaker 1: that people sometimes tie with e t f s. I

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Speaker 1: think that was potentially about to happen with some mutual funds.

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Speaker 1: We saw a couple where there ana went from ten

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Speaker 1: dollars to three dollars in a matter of a couple

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Speaker 1: of days. Although those were in since some exotic stuff,

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Speaker 1: but they were kind of canaries in the coal mine.

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Speaker 1: So UM, I agree with Tom that mutual funds just

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Speaker 1: just less attention paid to them, but they're way bigger,

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Speaker 1: and I think they're the ones that really UH probably

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Speaker 1: the biggest winner from the FED bailout. And what do

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Speaker 1: you think of black Rock? I mean, this seems like

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Speaker 1: a conflict of interest, right, How how are they going

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Speaker 1: to navigate this? Look? I think, um, black Rock has

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Speaker 1: to be very careful here not to look like there's

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Speaker 1: conflict of interest. They've come out and said they're not

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Speaker 1: going they're gonna wave the fee for any FED money

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Speaker 1: that buys LQD or whatever e t f s. The

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Speaker 1: other thing is you gotta remember the FED. I mean,

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Speaker 1: how much are they putting in two trillion or something.

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Speaker 1: It's the amount that they could possibly uses. I think

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Speaker 1: the account they're going to use to buy bonds and

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Speaker 1: e t f s is in the billions, and I

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Speaker 1: think I think we whittled it down to it's possible

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Speaker 1: a couple billion and get used on the e t

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Speaker 1: f So we're talking, uh, speck of sand relative to

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Speaker 1: their buying power and what they might ultimately buy. I

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Speaker 1: think e t s they just wanted in the arsenal,

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Speaker 1: so something they can do, and black Rock will have

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Speaker 1: to be careful. They've done taken those steps to say,

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Speaker 1: you know, we're not going to take fees if the

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Speaker 1: FED buys our fund Um, and they'll have to make

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Speaker 1: sure they keep doing that because a lot of people are,

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Speaker 1: you know, kind of out there saying that, how could

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Speaker 1: the FED have the biggest asset manager. Uh, we're you know,

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Speaker 1: be so tied with him. And then the people point

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Speaker 1: to two thousand and eight and say this, this is

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Speaker 1: what happened back then and it worked out. So I

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Speaker 1: don't know, there's a lot of debate over the whole thing. No,

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Speaker 1: and I agree with Eric. And the other thing is

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Speaker 1: you have to be realistic. If you look at the

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Speaker 1: size of the fixed income ETF market, UM, black Rock

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Speaker 1: is half of that market right between them and Vanguard

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Speaker 1: like three quarters and the entire market. So really they

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Speaker 1: are like the biggest issue of fixed income ets. They

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Speaker 1: were the first they know that market really well. Um.

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Speaker 1: I get how it looks optically, but realistically, either of

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Speaker 1: them or Vanguard are the only ones that have products

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Speaker 1: big enough that the STEAD bought and won't have any

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Speaker 1: type of impact. Okay, topic number two, are there any

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Speaker 1: signs of normalcy returning to the market right now? It's interesting, Um,

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Speaker 1: the sell off did kind of have a break after

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Speaker 1: the FED. I think everybody exhaled. I'm not sure it's over.

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Speaker 1: Is this a as Rick Ferry put it, He's like

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Speaker 1: it's like a roller coaster, you know, there was the

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Speaker 1: first there's the the slow move up, the crazy dip down,

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Speaker 1: and he thinks we're on that that little rise before

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Speaker 1: you go down to the second little dipper. But anyway,

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Speaker 1: who knows where we are. But we will say it's

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Speaker 1: been a kind of a calmer last couple of days.

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Speaker 1: And what we've seen is some normalcy return. For example,

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Speaker 1: a five g e t F launched. That is something

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Speaker 1: that is just that was happening dime a dozen a

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Speaker 1: month ago. Right. We also saw I saw people start

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Speaker 1: to debate e S g um. That's something everybody forgot about.

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Speaker 1: Remember that was all we were talking about for a while.

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Speaker 1: Spy volume got a little lower. We also saw the

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Speaker 1: fact that ants active non transparent ETFs are going to launch.

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Speaker 1: That's now back into uh, into the debate. So there

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Speaker 1: were definitely some signs of normalcy and alb is refreshing.

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Speaker 1: To be honest, does that mean the sell us over?

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Speaker 1: I don't know, but certainly, uh the industry is trying

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Speaker 1: to sort of move on. Uh. You know, even in

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Speaker 1: the rubble tom which one stood out to you. Yeah,

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Speaker 1: I think the ants ones that Eric mentioned are interesting

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Speaker 1: because you had this like drought of not having any

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Speaker 1: products launched in March. I think only three products launched

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Speaker 1: the mark in March, so that five G one is

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Speaker 1: going to sort of break the drought. But the fact

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Speaker 1: that ants are coming into the market, now, Um, they

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Speaker 1: delayed their launch before this sell off, but apparently they're

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Speaker 1: sort of making a call, right, Um, ones are gonna

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Speaker 1: be really managed. Their performance is going to be really

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Speaker 1: important to how much money they raised, So they're probably

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Speaker 1: thinking that, hey, maybe we're going to see a little

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Speaker 1: bit of a reversal in the market. Let's ride this

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Speaker 1: wave up. So I think the fact that these active

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Speaker 1: non transparence are coming to market shows that maybe they're

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Speaker 1: thinking that there could be a little bit of reversal

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Speaker 1: in the market. But that was the one that really

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Speaker 1: stood out to me. Okay, so that's an interesting transition

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Speaker 1: to sort of like topic number three, which let's just

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Speaker 1: call it winners and losers. Do you think active non

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Speaker 1: transparent could be a potential winner in all of this? Uh? Yeah,

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Speaker 1: I do, And I think they're a winner because they

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Speaker 1: avoided what happened, right, So they were going to launch,

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Speaker 1: they were scheduled of launched in February, they would have

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Speaker 1: caught this downdraft. I think what could have happened to

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Speaker 1: them is optically they would have faced a lot of

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Speaker 1: the scrutiny that ets were getting about their discounts uh

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Speaker 1: to NAB and whatnot, um and probably getting a little

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Speaker 1: bit of criticism on how these things were going to trade.

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Speaker 1: But then also they missed this huge downdraft of performance.

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Speaker 1: And um, you know timing is important as well. There

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Speaker 1: was just one e t F that launched right in February.

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Speaker 1: It was probably the worst type of If they could

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Speaker 1: have launched as a travel one and the ticker was

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Speaker 1: away out of the gig, I think potentially ants could

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Speaker 1: have the benefit of having really strong performance out of

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Speaker 1: the gate. So I think that you potentially could be

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Speaker 1: away ner I'm coming out of this. Who else strikes

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Speaker 1: you as a winner and all of this, Um, you

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Speaker 1: know that when I look at the league table of issuers,

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Speaker 1: I see Vanguard, and I see these issuers of leverage products.

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Speaker 1: It's interesting total bar belt, right, and we see this

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Speaker 1: in if you break down flows by expense ratio buckets,

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Speaker 1: all the money is going to stuff below twenty basis

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Speaker 1: points as usual, or stuff over eight basis points, which

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Speaker 1: is the trading tool, stuff like the you know, double

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Speaker 1: leveraged to accuse and all this. UM. This kind of

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Speaker 1: a sell off is great for those companies because the

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Speaker 1: swoons up and down are where the adrenaline gets better

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Speaker 1: for traders, so they tend to attract more money. UM.

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Speaker 1: People love to play the swing back, and so this

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Speaker 1: has been been like like a roller coaster is what

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Speaker 1: they're looking for. Most investors don't want that Vanguard that

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Speaker 1: it's just it's amazing what they do. We looked at

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Speaker 1: Q one flows. I think ETS took in about six

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Speaker 1: the six billion Vanguard took in se of that net number.

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Speaker 1: That is a ridiculous amount. Normally they take in maybe UM.

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Speaker 1: So Vanguard typically is always the big winner in bear

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Speaker 1: markets and sell offs because everybody else is gets more

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Speaker 1: hurt than they do, and they tend to just keep

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Speaker 1: doing their thing so relatively, so their normal thing becomes

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Speaker 1: strong when everyone else is suffering. That sort of signal

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Speaker 1: that retail hasn't really freaked out that much on all

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Speaker 1: of this. So that's a great question. I think it

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Speaker 1: depends Uh. If you look at mutual funds again, the

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Speaker 1: two billion out of mutual funds, uh this year so

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Speaker 1: far active mutual funds, that's retail, That would tell you.

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Speaker 1: But I find that active mutual funds have less loyalty

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Speaker 1: then e T. People who buy Vanguards seek Vanguard out.

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Speaker 1: They're not really like sold Vanguard. They seek it out.

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Speaker 1: So when you seek it out and you know you

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Speaker 1: want cheap, you're usually kind of investor who understands behavior

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Speaker 1: and like not panicking and long term. So I just

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Speaker 1: think Vanguard happens just attracts those types. So I would

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Speaker 1: say the vanguard type retail investor not panicking. I would say,

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Speaker 1: you know, the baby boomer who's close to retirement with

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Speaker 1: some active mutual funds. We are seeing some signs that

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Speaker 1: they are. Because the two billion out of active mutual

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Speaker 1: funds is a ton. I mean, even in their worst

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Speaker 1: year two eighteen, they saw just over double that. But

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Speaker 1: that wasn't a year. This isn't a month, um, So

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Speaker 1: I'm sorry, this is two billion years to date. Sorry,

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Speaker 1: so in a quarter. Either way, it's a gigantic number,

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Speaker 1: and I think it does show some some retails, you know,

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Speaker 1: crackage and Tom who strikes you as a as a loser?

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Speaker 1: I want to say State Street, But the thing is

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Speaker 1: most of it is Spy, right, um, But Spy is

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Speaker 1: so big and the sheer size of its flows go

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Speaker 1: up and down. So like for example, in February UH

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Speaker 1: it was the flow laggard and this list month it

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Speaker 1: was a flow leader. But what tends to happen with

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Speaker 1: State Street is a lot of their products are used

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Speaker 1: for trade, but they slowly bleed assets. So, um, I

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Speaker 1: think what ends up had happening Ultimately when the market

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Speaker 1: sort of calms down and that trading advantage goes away

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Speaker 1: for State Street, they sort of tend to lose assets

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Speaker 1: a little bit, so they slowly bleed off some of

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Speaker 1: the assets. Um when mark when assets sort of come

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Speaker 1: back after these sharp sell offs. Interesting about State Street

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Speaker 1: is if you look at the UH flows during the

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Speaker 1: worst of the sell off, the number one flow getter

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Speaker 1: was built, which is there one to three year month treasury,

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Speaker 1: which is basically cash. Big surprise cashes the top of

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Speaker 1: the list, but normally you'd see s h V or

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Speaker 1: s h Y the I shares short term treasuries up there.

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Speaker 1: The fact that Bill was able to outflow. Um I

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Speaker 1: shares products. I thought was an interesting maneuver, and I

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Speaker 1: think State Street was number one in March flows. So

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Speaker 1: they've done better, I thought, than in past times when

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Speaker 1: spy drags them down and they're negative. They've definitely sort

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Speaker 1: of I think saw some reading on the wall a

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Speaker 1: couple of years ago. They have cheap, dirt, cheap products

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Speaker 1: now for the core and they're like really pushing some

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Speaker 1: of the things, and um, it's it's working. I think

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Speaker 1: they're less in the basement in the sell off thing

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Speaker 1: they normally are. Okay, Topic number four Smart Beta. Okay, Tom,

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Speaker 1: I really want to pick your brain about this because

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Speaker 1: during the financial crisis, there was this moment called the

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Speaker 1: immaculate rebalance, and here we are just at the end

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Speaker 1: of Q one going into Q two. Smart beta basically

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Speaker 1: is this robot that hits a reset button at moments

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Speaker 1: like this. It just strikes me as this opportunity, like

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Speaker 1: what can we learn from smart beta right now? Yeah,

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Speaker 1: So you bring up an example in two thousand and

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Speaker 1: eight where some of these smart beta funds bought financials

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Speaker 1: right Worth. At the time, everyone was really afraid of

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Speaker 1: owning those stocks. And I think we're seeing a similar

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Speaker 1: parallel with some of the energy companies and especially some

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Speaker 1: of the airlines. Right you sort of seeing people on

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Speaker 1: Twitter just asking, oh, should I buy airlines? Is a

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Speaker 1: good time. But because smart beta is emotionless and it's

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Speaker 1: just rules based, what I think you're going to see

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Speaker 1: potentially some of these value ets to some of these

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Speaker 1: multi factor et take positions and somebody's really beaten down

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Speaker 1: sectors like airlines, Um, maybe some energy. So if airlines

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Speaker 1: do come back and you see these funds that had

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Speaker 1: been rebalancing to them, I think potentially it could be

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Speaker 1: a really good trade, just like it was in two

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Speaker 1: thousand eight that ended up benefiting a lot of these

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Speaker 1: multi factor funds that bought financials. The only caveat to

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Speaker 1: that I would argue is that in two thousand and nine,

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Speaker 1: I just remember literally everybody hated banks. They were scared

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Speaker 1: of them. I don't know if people are scared of

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Speaker 1: airlines that I did a poll yesterday asking people what

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Speaker 1: what they thought the twelve month return of jets would be.

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Speaker 1: You know, uh, and the majority picked over there was

396
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Speaker 1: still half picked flat or negative. But um, a lot

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Speaker 1: of people have optimism there. I think, Um, this is

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Speaker 1: slightly different in that regard in terms of people's view

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Speaker 1: on airlines versus banks. In two thousand nine that said,

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Speaker 1: smart Beta, this is when they should shine because they're

401
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Speaker 1: going to just do things based done the robotic nature

402
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Speaker 1: of the programming of the rules and not on emotion.

403
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Speaker 1: And we'll see if that works again this time. Look,

404
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Speaker 1: there's gonna be a couple that are like that that

405
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Speaker 1: really shine out of this. Uh. And we don't know

406
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Speaker 1: who they are going to be yet, but this is

407
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Speaker 1: the kind of environment that makes future winners, uh in

408
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Speaker 1: you know, in terms of helping them out perform. Okay,

409
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Speaker 1: you said it the future. That's the last thing I

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Speaker 1: want to talk about. What do you? What do you?

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Speaker 1: Let's make some bold predictions here, Tom, let's go first. Yeah. Sure,

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Speaker 1: I'll keep on the mold on the smart Beata topic.

413
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Speaker 1: But really I was looking at multi factor and why

414
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Speaker 1: this is so interesting is I looked at GSLC, which

415
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Speaker 1: is a big golden multi factor fund. It hasn't had

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Speaker 1: any outflows during this entire period, which I think is

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Speaker 1: really interesting, and given all the outflows that have been

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Speaker 1: coming out of active equity, I think when money gets

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Speaker 1: to redeployed back into the market. It's going to come

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Speaker 1: in through these multi factor um ets. So I don't

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Speaker 1: see why this is not gonna be the fastest growing

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Speaker 1: smart BEATA category and why sets can't double in the

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Speaker 1: next couple of years. Eric, you've got a bold prediction

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Speaker 1: for me. Yeah, I'll go with um You know, again,

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Speaker 1: as NTF analysts, most people won't be shocked by this,

426
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Speaker 1: but I will say that in this environment, it's pretty shocking.

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Speaker 1: I'll say, bond ETFs double their assets in three years.

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Speaker 1: Right now they have like eight and fifty billion. I

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Speaker 1: see that getting to aout one point five trillion. And

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Speaker 1: the reason I say that is because even though pundits

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Speaker 1: and some critics are looking at these discounts as black

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Speaker 1: eyes quote unquote, the volume in them has been more

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Speaker 1: than double the old record. Uh. They've traded about seven billion,

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Speaker 1: and that's as much as they trade in a quarter.

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Speaker 1: So all of them are being used more and more

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Speaker 1: in these crisis situations. If if the if the actual

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Speaker 1: users of them thought these discounts were somehow a bad deal,

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Speaker 1: they would stop using them. The volume would plummet. They

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Speaker 1: go look to do something else. So volume to me

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Speaker 1: is a foreshadow of future assets, and in every sell

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Speaker 1: off two thousand bond ETFs have uh gotten more investors

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Speaker 1: you using them. People love low spreads, they love the liquidity.

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Speaker 1: Plus you throw in the low cost, there's still much

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Speaker 1: cheaper than an active mutual fund, and that's what the

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Speaker 1: advisors like. So liquidity and low costs are to me

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Speaker 1: are still the two big advantages of ETFs in general,

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Speaker 1: especially bondy tfs. And they're still intact, so I think

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Speaker 1: they overcome any sort of perceived black eyes um and

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Speaker 1: you know, continue taking in assets. But uh, you know,

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Speaker 1: we'll see. We're watching them, you know, to see if

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Speaker 1: anything in this sell off has turned anybody off. But

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Speaker 1: so far I don't think it has. And that's all

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Speaker 1: for Trillions tom As always, thanks for joining us on Trillians,

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Speaker 1: Stay safe in London, Thanks for having me, Eric, keep

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Speaker 1: it real and Philly, thanks for listening to Trillions until

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Speaker 1: next time. You can find us on the Bloomberg Terminal,

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00:22:48,320 --> 00:22:52,440
Speaker 1: Bloomberg dot com, Apple Podcasts, Spotify and where brails you'd

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00:22:52,440 --> 00:22:54,520
Speaker 1: like to listen. We'd love to hear from you. We're

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Speaker 1: on Twitter, I'm at Joel Webber Show, He's at Eric

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Speaker 1: Faltunist and you can find tom at Tea, Sarah Fagus,

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00:23:02,000 --> 00:23:05,159
Speaker 1: good Luck Spell on it. This episode of Trillions was

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Speaker 1: produced by Magnus Hendrickson. Francesca Levey is the head of

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Speaker 1: Bloomberg Podcast, but