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You're listening to Bloomberg Business Week with Carol Masser and Tim Stenoveek on Bloomberg Radio.
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All right, everybody, we are just about eighteen minutes away from the closing bell on this Tuesday. We've mentioned how during the two o'clock hour Wall Street time we did see a leg down in terms of equities, going near our lows of the session. We've bounced back, not completely, but definitely off our lows. But as you have heard from Bill and both Charlie so down about half a percent in the S and P five hundred, NASDEK one hundred. Tim still down to also about half a percent.
I want to bring in Jennifer Grantcio. She's head of ETFs and Global head of ETFs ATTCW. She was also former a CEO of the impact investment firm Engine Number one. Remember they took on Exelon back in twenty twenty one and scored a major victory by winning three seats on the board. She's back in our Bloomberg Interactive Brokers studio usually in LA spends a lot of time on the road. We are happy to see you here in New York. How are you.
I'm great.
Well, it's good to have you with us. Carol and I were talking a little earlier about sort of the strangeness of the market since quote unquote, I guess the April eighth liberate post so called Liberation Day low. What do you make of what's happened over the last six weeks or so, because we are pretty close to all time highs on the S and P five hundred.
Yeah, I mean it's an interesting question. I think everybody wrestles with the same question from an equity perspective. You know, we actually at TCW are doing concentrated fundamental portfolios, so we're looking for opportunities high quality management teams, quality revenue growth through trends like how we use energy and electricity and supply chain. We're shoring. So they're like, we like the names we have in the portfolios. We think it's a good time for people to be investing at the
same time. You know, we're a big bond investor, and so when we are managing the core bond products, one of the ETFs there it's done very well, is flexor and when we're managing that, we're a value investor. So we took advantage of the volatility in credit spreads in particular, drove a lot of alpha for clients looking back a couple of weeks. But in the bond fund, we're still being cautionary. We want to be positioned so if the economy does slow, we're doing the right thing for investors.
What kind of visibility do you feel right now that you have on the outlook?
I think it's uncertain, yeah, and we just don't know, and we have data. We have this debate internally within TCW all the time on to what extent is it's slowing. How many rate cuts will there be this year? We do not have the answer. But in the bond part of the portfolio, we think people should be positioned with an active manager so that we're managing that for them as things unlined.
I think one thing that we've been thinking a lot about is really the and we'll talk about some of these ETFs in just a second, but from a big picture perspective, and Eric Weener from our equities team was just in here talking about how professionals that we've reported on are still kind of thinking about this other shoe that's going to drop. There's like just around the corner, there could be some sort of big risk, whether it's
trade related, whether it's related to the economy. What do you see as the risks out there right now?
I think from a tariff perspective, it's come back a lot, but tariffs that are in the low single digits, low double digits rather, I mean, that's still a big tax on the consumer. So we're watching that. It's better, they're lower, they're a little bit more reasonable, but we don't know how much of an impact that will have on the consumer. So that's probably the main thing we're watching, and we're
looking at everything. We look at employment data, we look at the earnings calls to see what consumer companies thinking.
That's funny because I thought, I mean when we were talking to Eric earlier, it was like, yeah, we were waiting for the companies reporting earnings for the most recent quarter to talk about the impact and certainly a lot of them did, but we didn't necessarily see the equity market reaction that I think people thought they would. Like the concern is, Okay, maybe it's happening now rather than in the last quarter.
Well, it does feel like if we're going to see things like the tariff impact, it's not necessarily showing up in the statistics, right, And as you said, Tim, like in the earnings reports, that's maybe a second half thing and we've got to kind of wait and see for that.
Yeah, that's right, and that's why we think we have we have to be careful from a portfolio positioning perspective.
Jennifer, I want to ask you. I know I probably do this before, but I'm always curious about flows where you see investors moving in and out of at this point, because obviously it's been an interesting what four weeks, six weeks, and I'm just curious how much movement was going on.
Yeah, I mean, I think at the at a wealth and retail level, what we've seen is a lot of money rebalancing back towards equities. So people certainly moved right back into equity, they really did, so we've seen that completely.
The money that came out.
They've taken they've taken money out of cash and other things and put it back in equity and then in our shop, a lot of what we do is are these thematic or complementary equity strategies, and so some of
them have done very well. I mean they've done great from a performance perspective in terms of beating the S and P. But from a flows perspective, we've seen money come into high quality company defensive growth grow is the ETF there, as well as into powered, which is the energy system transition product.
I mean that has been such a dominant theme. I was asking before we got going Tom if you were at Milkin, and I mean that was one of despital the uncertainty and teriff conversations. One of the things that seemed to be again beating the drum was that of the AI play and the energy that's going to be needed that build out was still happening. And is that what you're talking about?
First? For sure? And so from an from an investment perspective, the way that we're managing products that people can come into. We have an AI product we have for a very long time, as well as the powered ETF strategy, which are a way to get access to that theme, but we think don't do it in a way that is too narrow. Both trends how companies use AI, how companies get power and use electricity. We're very early innings on these mega trends.
Can I just say powered is app almost twenty percent over the past month, up about eleven percent year to date.
Jennifer, how would you characterize the flows that you've seen in the last six weeks or so? Would they be more defensive or more oriented toward growth in your view?
It's somewhere. It's somewhere in between. Just the real answer. We're seeing both. And then on the fixed income side of the business. So with Flexer, which is total return bond fund but also as a very strong income target, it's yielding around six percent. We've seen very strong flows there. So from a portfolio perspective, it certainly doesn't feel like people are doing one thing or the other. They're just topping up positions.
How's it yielding six percent?
From an SEC yield perspective, we have a target and we're managing for income while we're doing till return at the same time. Okay, So I think that's what sort of rocketed that particular fund up to the top of the category.
Yeah, this is nearly tripled since it was converted back in, showing.
Exactly you know, we introduced you and we said, you know, former CEO of Engine number one, you did take on Xon major victory three seats.
On the board.
We're now looking at an administration that seems to be rolling back perhaps on energy things. Although there was a positive for wind farms today based on Trump administration initiatives. How do you think about that? I don't knowether I should say ESG, but the alternative energy space, that kind of transitioning that we were seeing pretty aggressively, how do
you think about that? Does that continue in terms of the move away maybe from fossil fuel companies or do you think maybe this is another pivotal change that we kind of roll back a little bit.
Yeah, I mean, I think we have such a demand for energy. I think that we're going to continue to continue both so prudent, more efficient fossil fuel. But some of the companies we hold in the powered portfolio, for example, are its natural gas and other sources of non intermittent power. Data centers need those, and then the more effective we can get with wind and solar. People are still investing there. So I think it's again it's a massive trend and
we need so much energy. We'll see balanced growth across the brown and the green parts of the industry.
Where does the environment come into all of this? Just thirty seconds? Like, is there like a concern among companies? Like, I don't know if you guys are talking with investors, do they care about it? Do CEO's leaders and forgive me just got about twenty twenty five seconds.
Yeah, I think from an environmental perspective, I think both asset owners like public pension funds and sovereign wealth funds, as well as CEOs of companies care about these issues. But we're having a conversation that's based on financial metrics, yeah, and long term outcomes.
Okay, so that plays into it in a big way. So good to have you in studio, So good to see you.
Be well.
Be well, Jennifer Grencio, head of ETFs and Global head of ETFs over at TCW. Right here any