Samara Cohen on Managing ETFs (Podcast)

why you want to listen to this. You want to listen to this because there really are very few people in the world more knowledgeable about managing e t f s, managing indexes. What passive really means, how people should be thinking about the actual engineering of products if you want to have broad market exposure or specific types of beta. Really, I'm gonna stop talking and just say, with no further ado, my conversation with Samaricane, this is mesters in Business with

Very Results on Bloomberg Radio. My extra special guest this week is Samaricane. She is Black Rocks chief investment officer for E t F s and index investments. Black Rock manages about ten trillion dollars. The E t F business is about three point to seven trillion. Uh. Samaricane, Welcome to Bloomberg. Thank you so much, Barry. I'm happy to be here. I'm happy to have you here. I have so many questions to ask you, but I have to start out with your education, which we usually skimp over.

So you graduated you pen with a b us in economics and finance at Wharton, but you also had a b a in theater arts. How has theater training helped in your financial career? First, Barry, when you hear theater, a lot of people might think that I was an actor, So I feel like I need to start with the fact that I was decidedly a backstage kid. My love of theater was very much on the production design, directing, uh, you know, behind the scenes side, and that has definitely

helped me um across the course of my career. But I have to tell you, I came to the University of Pennsylvania to be a theater major, and I left with the dual degree in finance and theater. So finance was something I discovered because I knew I was good at math. In fact, when I started college, I didn't really need to take any math classes because I had all of this credit and I missed it, And so I discovered markets and economics and it felt like math

with a purpose. So and I got to combine the fin angel degree with the theater degree, which made my parents much more comfortable with the fact that I was spending all of my summers working for regional theater companies basically, but it was a big part of learning who I am and today in my role, I often remember being told that um casting is of directing and putting the right person in the right seat is a lot about leading any business. So it definitely has played a part throughout.

Really interesting, So you you end up in turning your Goldman sacks on the trading floor pretty early in your career. Tell us what that was like and how theatrical was that. Well, actually I came to Goldman out of business school. I well, my first job was actually a black Rock. That's where

I came out of college. I was a black Rock for four years, went to business school, and part of why I went back to school after black Rock was in my head I thought maybe I could further combine this love of finance and love of theater and how might I do it? And I loved the idea of going back to school. I'm kind of a voracious learner and I'd worked hard, and I liked the idea of meeting other people and seeing what was out there after

four years of working. And in that summer and actually in the process of figuring out where I wanted to work for the summer, I visited a trading floor and I walked onto the trading floor and I thought, this is it. It's a lot like theater. It's a lot like that, like multitasking, high energy, collaborative environment where lots of things are happening at the same time, and I thrive in that. And so actually the theater, the trading

floor I found pretty theatrical and that really worked for me. Yeah, there's a there's a buzz, there's an electricity on a big trading floor, which I think is one of the things that's lost from old Wall Street. You can replace it with more efficient algorithms and technology, but man, when you walk onto a big floor, you just feel that there's nothing like that, and ever have a des ire to become a trader? Was that did that ever appealed to you until I walked onto the trading floor. Um,

the idea really scared me. And you know what, I actually I don't think I've ever told anybody this. I did not proactively send my resume to the securities division. They reached out to me as part of a diversity hiring effort to get more women onto the trading floor. And the reason I didn't send my resume was it sounded really intimidating to me. And so I think that's just an important thing to note, is that sometimes if something's interesting, even if it's intimidating, it's worth checking out.

Because I knew, and yes, there weren't a lot of women on the floor when I walked out there, but it was really clear to me that I would. You know, once I got my bearings and learned to speak the language. It can be an intimidating place at first, but but I knew it would be a great fit for me. So let me make sure I understand the chronology of your career. So you intern at black Rock, then you work at Goldman for like sixteen years something like that,

and then you boomerang back it's a black Rock. Did I did I get that right, Yeah, pretty much. I went to black Rock out of college, and then business school from black Rock, and then Goldman from business school, and then back to black Rock. M that's really really interesting. I heard the phrase black Rock boomerangs. Is this a thing? Do people like work at black Rock leave and then you know, magnetically get drawn back? What's that about? In

my case, it was definitely a thing. I don't know the like what the total stats are, but it's definitely true for other people. I mean, people's careers are marathons and and not sprints and and you know, part of my marathon, an important part of my marathon actually was that sixteen years in Goldman. I think had it not been for that, I wouldn't have the seat I currently occupy a black Rock. So I'm pretty grateful for it, um.

But also I think my my history with black Rock and my passion for the firm and its purpose did draw me back as well. So let's talk about that seat you have at black Rock. You recently were promoted to chief Investment Officer of E t F s and Index Investments. That sounds like a pretty serious job, especially when we consider at black Rock. You know, it's well over three trillion dollars in assets. Tell us a little

bit about your new job responsibilities. I'm really excited about the new job and and even more than than me being in the job, I'm excited about the fact that we have a chief investment officer role for E t F S and index and it actually is broader than

the e t F book. It's our whole indexing book and in the and what it means in short, is that I'm accountable for for investment performance in our E t F and index book, which I love telling people because sometimes they look at me and they say, well, I don't really understand that is an investment performance the out performance of the benchmark. And aren't you Smarrow at E t F and index person the benchmark? So what

is investment performance? And we done a lot of work, um really in partnership with our clients and articulating what that is. And in the case of E t F S and index, it's two things. It's first what we call market quality. What do you expect in an E t F That's how it trades in the market, secondary market volumes, market quality in stressed scenarios, premium discount behavior. There's a bunch of metrics that we monitor with respect

to E t F market quality. Part of my job is to be accountable for performing on those and the other part is delivering on those index outcomes, which in a world where what we can index is evolving as more markets and more strategies are indexed. UM is also important that we deliver to investors what they have signed on for with that index objective. And so that's what it means to be the CIO of an E t F and index book. So you mentioned UM market quality

and performing within the market. You know, was only m less than two years ago. We had the big COVID sell off in March, and people were concerned that e t f s were not going to be able to manage the pressure. They wouldn't be able to deal with all of the stress, you know, all the usual criticisms of indexing plus additional criticisms of e t F s. How did ETFs perform during that collapse from February to April.

The people who were concerned before the COVID bout of volatility had a huge and rich set of data to draw from. UH when we emerged from those volatile markets.

That showed that actually ets have really supported stressed markets, added liquidity, added transparency, and that was on a full display over the COVID volatility period, particularly in the bond market, where if you think about what was happening across the world, there were traders who were, you know, setting up their their home desks there at their home, you know, uh, you know, hundreds of that one trading floor that we

talked about became thousands and thousands of home office trading floors. And the bond market in particular still has largely operated in an over the counter bilateral basis, and the bond market for for that reason and a whole lot of other reasons, you know, in the treasury market in particular, became very hard to access, while e t s you could see on your phone, they were transparent, they were trading.

One of the stats that I love to quote that I think is quite indicative of what was happening over that period is, you know, we had an investment grade ETF that traded on one of those volatile days in March March nine thousand times on exchange, and of course, every time something prints on an exchange is price formation. Whereas it's underlying bonds. The top holdings of that underlying bond portfolio traded on average thirty times, so N versus thirty.

There just wasn't um price formation happening in the bond market, but it was happening in the E t F market with buyers and sellers meeting on exchange, which meant that there wasn't a whole lot that needed to happen in the underlying bond market to to support that. And so really uh and what's interesting is you can see a whole lot has been written by policymakers around the world about this supportive role that ets have effectively played in

in stressed markets. The you know, SEC has written about it, the BOE aiasco UM. So it's been exciting to have this really rich data set to drawn looking back at that period, the bond discussion is really interesting. And I was referring to equities, but we'll circle back to that. You know a lot of people have complains that bond markets are thin. You know, you have a few thousand stocks, but there are just countless, countless numbers of bonds, many

many more times of bonds, and there are stocks. It's seems like the bondy t F universe handled the crash or plunge maybe use a more accurate word because we're so short, handled it pretty well. Everybody. We saw a lot of money rotate out of stocks into bonds as a safe harbor. Didn't seem like there were a lot of dislocations or wild price anomalies or an inability to get an execution. The bondy t F universe seemed to behave really well. The bondy t F universe behaved well,

and as a result, the bond market behaved better. And that's one of the things that I get really excited about because the fact is I'm really a lifelong um markets reformer. That's a passion that I have. I've spent my entire career in the markets, and and my desire at this point is to contribute to making them better, making them safer, more efficient, more transparent. And we can measure how bondy tfs actually did that in the bond market.

And in fact, interestingly, as a result of the demand and for bondy t fs that came out of the COVID period, we have seen the bond market uh start to trade uh more electronically big pieces of the bond market portfolios. In the bond market, bond dealers have started to really invest in algorithmic pricing, which creates more transparency, more trading, and more liquidity. So we've written about and we've observed this what we call a real virtuous cycle of how e t f s have been integrated into

the fabric of of capital markets across the board. And we can definitely talk about equities, but how in the bond market it has been good for bondy tfs and also good for bonds. So when we had the Great Financial Crisis into oh eight oh nine, I thought that was pretty much the end of the argument that indexing is problematic for markets or ETFs aren't going to be able to handle pressure, that that should have been the last word in that. I was kind of surprised to

see those same arguments still hanging around. And then March uh the execution seemed to go off without a problem. There were a handful of individual stocks that sort of their pricing get a little wacky. But is this the end of the passive is destroying the markets and E t F or dangerous argument? Or is there are they just going to trot this out every time there's um something else to complain about. I'd love your thoughts on that,

Barry Um. I would hope that it's uh, it's it's closer to the end where we where we can kind of look forward to two numerous things that can improve the markets. But look, you make an excellent point. I mean, to be fair, In two thousand and eight, I was I was on the bond trading floor actually at Goldman and I didn't know what an e t F was like in two thousand eight, you know, in the fixed income markets, you didn't you know, we weren't talking about

what e t f s were. But to your point, it is true if we look back at the data during those weeks and months when what was so value by investors was transparency and it was so feared was the lack of transparency when all this information was coming out about bank balance sheets and what was on balance sheets.

We did see a real pick up in volume and velocity of et F trading in two thousand and eight and in two thousand nine, and we have repeated stressed market events like the big energy sell off that happened at the end of twenty fifteen, the you know what we call the vulpocalypse that happened in February of eighteen, where we have repeatedly seen E t F performed well under pressure and actually adds support to high velocity markets.

And yet this still you know, comes out from time to time, which feels like kind of the language that comes out around any sort of disruptive technology. But I do think, like we talked about, the data is pretty clear, you are definitely responsible for a lot of capital. And that leads me to a quote of yours that I need an explanation on. At Black Rocks. Is absolutely nothing

passive about index investing, explain. I am on a mission Ferry to replace the word passive with the word index when people talk about E T S and index investing, because how we manage our portfolios is extremely active. And it goes back to that conversation we had about what investment performance is in the context of an E T F and index investment book, it is delivering the index outcomes, which the reason E T s and and index monthes

exist is that indexes aren't often easily investible. They could have thousands and thousands of securities in them, and so depending on how much you you you know, are investing. You can't perfectly replicate the index, and so you need to optimize to deliver that index outcome with as little

friction as possible. So that's delivering the index outcomes. And then there is that huge dimension of eat e F market quality ensuring that the e t f s tracked the underlying portfolios with you know, we call it premium discount behavior, ensuring that they're strong secondary market quality, transparency and liquidity in the e t F s. So we have teams of people, not robots, but actual people and a lot of them, by the way, or women around

the world, who are actively managing our market quality and investment performance in our et F and index book. So that's why there is absolutely nothing passive about it. Huh. Really interesting. We've gone through these periods where there are these spasms of anti indexing um sentiment, and it goes all the way back to Jack Bogel and the early days of indexing in the nineties seventies. Indexing is an American it's we've heard people call it Marxist. It's going

to lead to market crashes. Um. What what's your perspective when you hear these things crop up. By the way, the latest one is it's anti competitive and it's going to lead to price fixing and a lack of lack of competition due to all this ownership. How do you

respond to those sort of backwater law review silliness? I begin with and we've written on this uh this year in in something we call the Investor Progress Report, But we estimate that there's about a hundred and twenty million people around the world who are accessing our e t F and index capabilities. UM. There are more people accessing the markets and investing in the markets and participating in economic growth on their terms than ever before in history.

And from my perspective, there's really nothing that's more American than that. UM. So that's how I think about it. I think ETF spring markets. They bring market out access, they bring transparency, and increasingly they bring choice to lots of individual investors who are saving for retirement and thinking about their financial futures with the help of ets in

ways that they couldn't before. And a lot of the you know, one of the pieces that we that we put out recently points out to the fact that a lot of the households who own e t s in the United States have have media and incomes of AD dollars. So you're talking about investors who simply didn't have market access before, who, as a result of e t f s and indexation can can get diversified strategies so manage their risks the way more sophisticated institutional investors have and

participate in the markets. So let's talk a little bit about product engineering. What tell us a little bit about what that means. What sort of projects are these teams working on. It's one of those phrases that definitely resonates. I'm glad that it resonates. It's something that we've been using for for a few years now. And that team, which is global UM. There are product engineers in really

every major region in the world, and they do two things. First, they helped design the operating models and the investment process for for new e t F s. UM how will creation redemption work, What are the characteristics of the index what you know? How will the index rebalance those types of things when it comes to new E t s. And the second piece of what they do, which is actually really critical, is they continue to manage the structure

of the product over its lifetime. So sometimes we will identify something in one of those market quality statistics that you know, let's say it seems to be trading a little bit wide in the secondary market, and we'll go out and we'll talk to market makers and ask what's happening, and they'll say, well, it's a little tricky to hedge because of X, Y and z. And sometimes we can change something structurally and how the market interacts with the

e t F to improve its investment performance and market quality. And that's the purview of our product engineering groups. So I tell all of our teams, you know, I want all of our teams to be able to explain how they contribute to the active management of our e t F and index book. And that's how the product engineering does by by identifying the operating model and by continuously assessing and improving it. So let's talk about the rest

of your team. You have portfolio engineers, risk managers, platform architects, market structure developers, and products operating model designers. That sounds like some very intriguing job descriptions. Tell us about what a market structure developer does or some of those other really interesting titles. I think they're all exciting jobs, and I do have to make a plug for for anybody who is is considering going into investing. It's never a dumb question to ask what is the job? Because there

are so many different jobs. And I remember when I was in college, I was almost scared to ask that. But but as you just pointed out, and it's it's, you know, fun for me to kind of hear you walk through it. There are so many different types of ways to be an investor and to participate in an investment platform. So really we do three things. Number one,

we manage day in and day out. We are responsible for the investment performance of our funds, how we're managing the portfolios through rebalances, through corporate actions UM, and how we're managing et F market quality. That's number one. Number two is we are continuously improving our platform and the Aladdin technology that we use to manage our portfolios to make things that can be lower touch, lower touch, to give us capath city to spend more time on you know,

new markets and new strategies. So that platform architecture piece how we create scale. That's kind of bucket too of what we do. And the third part is ecosystem leadership, and you talked about um. You know, we talked about

how we engage with liquidity providers with stock exchanges. Earlier you talked about the COVID volatility, and I think it's really important and with a really interesting case study in the US that a lot of the volatility guard rails that had been put in place by the u S stock exchanges over the five years preceding March twenty twenty, market wide circuit breakers limit up, limit down, like the whole limit up limit down framework was really only ten

years old, had been tested a few times and had its biggest test in March of We engage very deeply with stock exchanges. Remember in the u S. E t f are between thirty and forty percent of daily trading ball ume. So those volatility guard rails really matter from a market quality perspective. So focusing on the external environment for our ets, that's what we mean by ecosystem developer.

You mentioned Aladdin. I just finished a couple of months ago the book Trillions by Robin Wigglesworth, and he describes the Aladdin system really as the technological backbone of black Rock from the very beginning and the secret source to that successful scaling. Tell us a little bit about for for a person who maybe not familiar with Aladdin, tell

us a little bit about that. Aladdin is how we we arm our investment managers, both Black Rocks investment managers and the investment managers who are who are Aladdin clients outside of Black Rock with best in class Rook management tools. And it is the DNA of the firm. And I can say that actually because as I've shared with you, I was at the firm pretty much. It's at the beginn thing black Rock was started in and I started there.

And the reason black Rock was founded really was a group of UM fixed income market specifically mortgage backed security experts who said, we can take this technology that's been built on the cell side and deliver it directly to clients as a fiduciary to help them create better outcomes. So giving putting better risk management tools directly in the hands of clients was really black Rocks founding mission, and

that's what Aladdin has grown in today. Black first it was the system that all of black Rocks portfolio managers used, and then it became a system that UM that other asset managers wanted to to access as well. And it is really the backbone of how we we look at risk and we run our portfolios. Really intriguing. So let's talk a little bit about E. S. G UH generally

and then we'll we'll dig down a little more specifically. UM. Your boss, Larry Thing famously pens a letter each year to Corporate America's tell us a little bit about UM, why we do that and and what's the thinking behind that. Larry writes a letter to start a conversation UM, and it's really a conversation with our clients who are owners in all of these companies across Corporate America, and what we think are the top of mind themes for the

year ahead. And it's a good integration of everything we've heard from clients and how we're thinking about the markets and how we're thinking about risk. And it becomes really a point of of bringing people together, us inside the firm and us with our clients to to take a look at the world and what we've learned over the past year and what we want to bring to to the year in front of us. Very interesting. Let's talk a little bit about corporate governance. How do you think

about that in terms of affecting risk. The conversation about corporate governance is one we've spent a lot of time thinking about because as as you know, but it probably bears um, you know, speaking too explicitly. In a lot of cases, we vote the shares on behalf of the clients whose money we managed, and the question is, um,

do those clients want to vote the shares themselves. And something we did in December and it's actually gone live this month or it went live at the beginning of two UM was work to give our institutional clients and some of our co mingled fund clients, but a good portion of our assets the option whether they want to

vote their shares or not. So it's early to say are they going to take it us up on it or not, But that will be very instructive to us because our job is to help them create better financial futures, create better portfolio outcomes. In some cases they may want to participate in the corporate governance process themselves. In other cases they may want to intentionally delegate it to us. And we have a very big what we call investment

stewardship function where we you know, we're very transparent. We publish the criteria in terms of what we think is important when we engage with companies. But some investors feel like well, that that engagement with companies is part of the value proposition that I hire my asset manager for. And some investors may feel Nope, I'd like them to manage my assets, but I want the votes, and we are really hopeful of increasingly being able to give those

investors choice. Let's talk a little bit about E s G generally. You know, for a long time it's captured a lot of mind share. People have talked about it, especially with climate change in the focus on the environment, but it doesn't seem like E s G is captured as many inflows as it has, you know, a sort of mind share. What what are your thoughts on that. Is this going to be a persistent um gap or are we seeing more people, especially uh younger generations, more

interested in E s G investing. I think flows are actually the tip of the E s G iceberg, And what you don't see below the surface is the integration and evaluation of E s G risk across portfolios, and that has captured a huge amount of time and attention from investors and and certainly from us, and it's actually

really exciting from from an investor perspective. That reminds me again dating myself here, but when I started at black Rock, I uh, it was in in and I think in the five years since black Rock was founded, interest rates had dropped something like three d basis points right like late eighties, call it ten percent on the bond to seven percent. And one of the big topics of risk in the fixed income market with mortgage pre payments and so figuring out how to model that, articulate that make

that transparent um better than anybody else. Again a big part of black Rocks value prop that it was bringing to investors. And we are doing the same thing today with climate risk and with E s G integration, and we have integrated E s G metrics across our portfolios and transition risk metrics, so we can assess what sort of risks are there UM. And that's the really the first step. It's measurement and transparency and then decisions around capital commitment and risk taking. So, so I want to

restate a little bit of what you're saying. I've traditionally heard E s G described as I want to invest in a way that parallels my personal values. But you really describing E s G as a risk management tool as a way to screen out potentially problematic UM concerned sectors companies? Whatever? Am I? Am I overstating that? Or is that a fair translation? Both statements are actually true.

It's a spectrum. So what we need to do is give our clients choice and and clarity and help them articulate, because often they're not even sure where they want to be in that spectrum. But I would say the um majority of the conversations that we have right now are much more understanding. Looking at my portfolio today, what are my E s G risks? Broadly? What are my climate risks? What are my risks to a net zero transition? And then the second question is how do I want to

manage those? Really really really intriguing. Let's talk a little bit about no carbon and low carbon. That was kind of a topic a couple of years ago. I've always been a little perplexed by that because if you back out the big carbon producers in the SMP five, everybody else who's left our giant carbon consumers? Um, how should we think about something like carbon? Is that the most attractive approach to dealing with I'm concerned about climate change

or or or global warming. It depends on what your goal is. And again I think a big part of what our work has been is to offer a spectrum um for investors who are trying to do different things, and even more importantly, and this has been meaningful to me as a personal investor, offer transparency around what it all means. So something we did in December is we published a metric for all of our public index and all of our ets called the I t R metric

Implied Temperature Rise. And the beauty of the metric is it's really easy to understand. You can pull up anything on our website. You can see the I t R metric UM and you can see is it paris aligned or not, meaning is it you know, one point five degrees or lower or is it higher? And we show the spectrum of of bands and ranges and um and what you can see is you know, nine to your point of companies in in ms C I equally are

not paras aligned. But step number one is getting transparency in terms of your book and then deciding do you want to take the first step and move to something that is a screened version of that index or go much further and take more targeted exposures. And what we hear from clients is, you know, they want different things.

So putting out that spectrum and putting out those measurements really, you know, looking to be champions of transparency in this world, which as it emerges, can kind of become a tower of babble in terms of the different languages and different metrics. So arming investors, both institutional and personal investors with the tools to understand what does this mean for me um

that's really been the priority. That's really interesting. The old Peter drug aligne is if you can't measure it, you can't manage it, and having metrics is sounds like a great, great start. So let's talk a little bit about what it's been like the past a couple of years with the pandemic and then last summer delta it felt like it was ending and then O Macron hit, I keep hearing all these farms are trying to get their staffers

back into the office and on the trading desks. Tell us what what you guys are doing are are you gonna have everybody back in the office, You're gonna be remote you're gonna be hybrid. What what you're thinking about the world going forward. We are going to pilot a hybrid model, and we actually started piloting it in certain parts of the world, including New York City prior to

oh macron. And what it was was, you are welcome to back to come back to the office for five days if you would like to take two remote days. Take two remote days and and we'll see how that plays out. And then omicron kron happened and we um uh kind of you know uh pulled back on the pilot and we'll put it back in hopefully in a few weeks. I'm I'm in the office right now. I like being in the office, and I think we've had

a whole bunch of learnings. I mean, of course, our number one priority is making sure that people are safe and that people are healthy. Um. But healthy doesn't just mean you know, being safe from the from from the virus. It means being mentally healthy. And one of the things we've learned is is a lot of us really missed the connection with other people. So creating an environment where you can have those moments of human connection in the office.

And of course there were moments of human connection that people, you know, particularly with kids of different ages, were we're having at home that they didn't have before. So trying to take the learnings from the pandemic and employ them in a way that make people healthier physically and healthier mentally. That's what the goal is. But I imagine we will be experimenting for a while, both based as conditions in the world change and uh and as we see how

it works in our offices. Yeah, the the challenge has been how do you manage corporate culture over zoom or remotely, and black Rock has a very specific corporate culture. Lots of other farms are trying to maintain that. Finding that right balances seems to be a work in progress that we're all going to be dealing with over the next couple of quarters or years for all we know. Absolutely. So let's talk a little bit about the rising demand for e t F. It seems that lots of institutional

traders are driving E t F demand. Can can you talk to that a little bit? I'm curious as to your perspectives. What might surprise you to hear is one of the biggest adopters of of ETS has been other asset managers, so institutional asset managers, you know, like you know, Black Rock zone asset managers outside of the index business who are integrating e t s into their own pursuit

of alpha. Generally to you know, use e t s as a cash equitization tool to look at e t s alongside other sources of market data like um futures contracts or swap contracts to look at options on e t s. Often we've seen and this was actually a

very interesting story going into the Brexit referendum. There weren't a lot of volatility plays out there, but there were some UK We had a UK equity market e t F and with options when options ecosystem around it and options open interest went up eighteen hundred percents into the

referendum because it was a way to play volatility. And sometimes that would be an asset managers first experience ants of an e t F because they were looking for some sort of nonlinear payout, and then they would become more interested in integrating e t f s as another rapper, another tool in their overall toolkit in in making money. So that has been one of the largest sources of

adoption to BTS. I have a very vivid recollection I want to say, fifteen or twenty years ago hearing certain institutions say, or institutional fund managers say, Look, we want to get exposure either to broad equity market or to this specific sector. But our due diligence and our research process takes so long that by the time we pick a particular company, a particular manager, a particular investment, the

move is half over. I could just use the t F and get instant exposure to X. Do you still see that sort of behavior or am I going too far back in history? Nope, we absolutely see that behavior often. You know, people will use the e t F as a place holder um as they do that research and figure out where they want that exposure to be specifically, So sometimes they have longer term horizons, sometimes they have

shorter term horizons. But again, this is actually a key reason why we see that increase in et F trading during high velocity markets is they are very convenient and transparent way to manage risk and pivot exposures during fast moving markets, so you can make quick changes to adapt your risk profile and work into what your longer term target state might be. And we do continue to see

that really interesting. Let's talk about thematic ETFs. They seem to have exploded in popularity UH the past couple of years. How exciting is that for you guys to work on and what do you see coming down the pipe? What what's new and interesting? It's so exciting that we can increasingly index new types of strategies and access new type of markets and and that's really what we're about, bringing

the markets to investors on their terms. And you know, one of the things that really brought it home for me with some of our climate focused e t f s was being able to find something that my kids connected to. My daughter is a big environmentalist. She's a part of her school's environmental Action committee, and I think she never thought that e t f s were or investing was particularly relevant to her, and talking to her about UH, climate focused e t s, it was a conversation.

So part of how we are bringing more people into the markets is helping them connect to the themes that are important to them and then helping them use those as a way to start to construct the portfolios that will deliver the outcomes they're looking for. So one of the big things that we've seen has been the rise

of direct indexing. What are your thoughts on that? Is this a challenge to E T F and we've seen a lot of big institutions by direct indexing shop, UH, tell us a little bit about your thoughts with that. Direct indexing is a is a very important part of the index and E T F ecosystem. About half of our book actually is direct indexing versus E T S. Increasingly, actually, there's also been attention to UH to smaller direct indexing opportunities more for individual investors where UM we UH we

acquired a perio to offer that service as well. So I think direct indexing for individuals for institutions UM fits nicely into that overall ecosystem. When you come to those things we talked about around UH, what value the E T F rapper brings that secondary market liquidity, the transparency. UM, that's the role of the ETS play. But there's certainly a role for a very important role for direct indexing.

To really intriguing your bio mentions that you're an ad a kid for employee networks, can you speak a little bit towards that. I know this is like a total subject change, but I don't want to not get to this question. Tell us a little bit about employee networks and what are they and what role do you play with those. I've been a big beneficiary over the course of my career of the networking and visibility that comes from being part of, you know, in my case, women's networks.

It's an opportunity to meet and connect with people you wouldn't otherwise know, um and an opportunity to to think more intentionally and strategically about your career and maybe expand your universe of role models. So that's how I've participated in employee networks and a black rock. One of the things I love about being a senior advocate for for many of the networks is I really believe that you can't do your best work unless you can talk about

your challenges, both inside and outside the office. And a lot of times these networks create safe spaces for people to talk about what they've struggled with, how they've overcomed it, and and and I find that really inspiring um and and it helps me recruit great people. So so it's something that's very important to me. So let's stay with that topic. Finances notorious for not having a lot of diversity or inclusion. I know Black Rock has a couple

of initiatives in that space. UM, tell us about them. I've spent my career, uh, you know, being asked the question of of, well, what's it like being a woman in finance, and and we could talk about this for for a really long time. What's it like being a woman, what's it like being a mother, what's it like being a parent? Um? And and it's always hard when you feel different, no matter what, UM, no matter what the

source of the difference is. I think it can be very hard to to feel safe and to feel secure um amid differences. And that is what we try to sell for whether it's with employee networks, whether it's you know, creating mentorships and role models. Although I'll have to say a lot of my my most memorable mentors weren't necessarily women. But again, thinking about those challenges which are different for for different people, UM, talking about them and making people

feel safe in raising what they are. UM, that's what we tried to focus on the most, and and probably I think that's what's changed the most over the course of my career. I think early in my career, I felt the imperative was too you know, not not address the fact that there were differences and just get out

there and and try to act like everybody else. And and that didn't necessarily work for me, but you know, it was sometimes hard to talk about that, and so talking about it, um uh like and having transparency to those things is you know, has really been the first step and and one that we have to take again and again. I think it's, uh, it's not an old conversation, it's not a dated conversation. I am incredibly proud Berry that the leadership team of the E T F and

Index platform is majority female. UM and we talk all the time about how to increase our diversity, diversity of thought, recial diversity, geographic diversity, because we think if we bring our differences to the table, we'll perform better. So let me throw you a curve ball. You're sort of bicoastal New York and Boca. How do you split your time? And given what we've learned about working from home, can

you operate from anywhere you have an Internet connection? I I live in New York, Berry, I live in New York. I'm in the New York City office right now. I have a home in Florida, and I'll tell you a funny story. My my husband loves Florida, so we've always we've had a home in Florida for a while. He Um, he's a he's a an investment manager, a triathlete, he cycles a lot, he plays a lot of golf. He

uh you know, does some work from down there. But I was always in Florida for vacations and weekends until the pandemic when during that spring lockdown, I spent about six weeks there and and liked it more than than than I had uh So, but now Florida is uh is really weekends and vacations for me. But last night, you like the story, my daughter texted my husband and said, Hey, Dad, I'm wondering are you coming home tonight or are you

going to be in New York City? And by the way, my husband and I were at a restaurant in New York City. So the kids like to joke that my husband lives in Florida, but um, but actually we are. I am mostly here and between May and November, he is mostly in New York City as well. Really really interesting, um, So I know I only have you for so much time. Let me jump to my favorite questions that we ask all of our guests, starting with tell us what your

stream in these days? What have been keeping you entertained when everybody has been stuck at home? I have three categories of of things I stream, and I'm sure you've heard this before, Barry. The things I watched with my husband, the things I get my kids to sit down and watch with me, and UH, and the stuff I watched for myself. So so in each category, my husband and I we loved ted Lasso, um that was one of

our favorite things of the pandemic. And we also loved Yellowstone. Um. My, my kids will not sit down to watch the same shows together no matter how much I try. So with my son, we're watching Boba Fette and The Mandalorian with my daughter. It's been Emily in Paris. They are fifteen and thirteen. And you know, I'll tell you from myself. I finished the UH, the sequel to Sex in the City, and just like that, and I loved it. It was, you know, women around my age talking about dealing with

their teenage kids and finding meaning in their lives. And I know the reviews were any mixed, but I really loved it. We talked briefly, but you didn't give us any names about some of the mentors who helped shape your career. Tell us about those folks. I have had great mentors and sponsors, and I think it's important to talk about both. I don't think until more recently in my career I understood what a sponsor was. A sponsor being somebody who will actually work intentionally to to move

your career forward. But the uh Um Goldman facts. I had the privilege of working with John Rodgers who asked me to testify to Congress in front of the House Banking Committee on to represent Goldman, which was the scariest thing I had ever done. And what John told me, which I will never forget, it's it's the scariest things that once you do, you are the proudest of of

having done. Um. Marty Chavez, who I also worked for a Goldman, was a tremendous mentor, and I think importantly, as I said, I've had I've had some great female role models, but I've had some awesome male mentors. UM. I think my high school calculus teacher, Judy Konan, probably changed the course of my career. So those three are my biggest mentors at Black Rock. My uh my boss Selim rom G are ahead of hr Minish Meta, who

was the you know, had this job before me. They've been great sponsors, and I think being intentional about providing sponsorship as well as mentorship is something we think about a lot. Really interesting. I know you read a lot. Tell us some of your favorite books, and what are you reading right now? I am. I'm sure uh you are as well. I'm a voracious reader and I'm usually reading multiple books at the time, So the two I am reading right now, I kind of usually have something fiction,

something nonfiction. The nonfiction book I'm reading is Digital Body Language, which in the you know, uh situation that we're in right now, it's fascinating how how how we create a digital body language, how people respond to it, and what you need to think about it. That's my nonfiction book right now, and my fiction book I'm I'm a few

chapters in and I'm loving it. It's called um The Louding Voice, and it's about a young woman, a young teenager in a rural Nigerian village who gets married very young um and and is thirsting for an education because she wants to find her louding voice. And that's probably a theme and everything I read about women people in general,

but often women finding their voices and using them. And one of the books I read recently that that had a big impact on the colleague of mine actually gave it to me when I was promoted to ce I. Oh. It was um uh intronewees memoir My Life in Full and I absolutely loved that book. She started out by saying, I intended to write a book about my career as CEO of PepsiCo and not write about my life as a mother and a wife. I didn't want to write

that book. And what I ended up writing is exactly that book, because when you're a mom or a parent and a wife, and and how you show up with that to the office, you know, as a CEO. Weaving all of that together, she did brilliantly and it was really moving, really interesting. I have a book recommendation for

your daughter. There's a fascinating book called Windfall, The Booming Business of Global Warming by Mackenzie Funk that describe since your daughter is interested in E. S. G. And it describes how the entire world of finance slowly started recognizing investment opportunities both at you know, the individual company level, the s G level, but also at the venture capital

and startup level. And how Wall Street has arms into all these industries that are working on either climate change or you know, electric cars, and and and that book is already about five years old, so when they talk about firms like Tesla, they're still fairly nascent. Maybe it's seven years old. But if she's interested in that, it's a really well written book, and it's really fascinating, she

may really, uh, really enjoy it. Let's go on to our next question, speaking of um, younger people, what sort of advice would you give to a recent college grad who was interested in a career in either finance or investment management. Ask all of your questions, find people, ask your questions. There are no dumb questions, and uh and if it sounds interesting to you, it's worth having a conversation about it. I wish I had done that more. In a lot of ways, I feel like I I

got lucky. I I told you I was the product of actually a diversity recruiting effort that led me to the to the trading floric Goldman. But if it sounds interesting. Um, it's worth doing the exploration and networking and finding friends and just saying hey, can I spend ten minutes and ask you about your job? Doing that a lot, I think is an awesome idea, really interesting. In our final question, what do you know about the world of investing today? You wish you knew years ago when you were first

getting started. If you asked me thirty years ago what I thought about the world of investing, I probably would have said, Gordon Gecko. I mean I was really thinking Wall Street and even you know, when I was in college, that was the that was the vision that I had. That's what you had to look like to be to be an investor. Uh. Now what I know is excellence looks like uh, lots of different things in the world

of investing. And you know, if you're a woman, if you're a person of color, it's uh, you can be excellent. And in fact, if you're a theater major, you can find a path. I think there is a superpower in being different. Um, and my mother always suggested that to me thirty years ago. So so maybe I should say that's what I wish i'd believed thirty years ago when I was told, um, now I know it's true. Really interesting, Samara, thank you for being so generous with your time. We

have been speaking with Samaricane. She is the chief investment officer for E T F s and Index Investments at black Rock. If you enjoy this conversation, be sure and check out any of the previous several hundred we've done over the past eight years. You can find that at iTunes, Spotify, Google, Bloomberg, wherever you feed your podcast fix. Check out my daily reads at Ridalts dot com. Follow me on Twitter at

rid Halts. I would be remiss if I did not thank that crack staff that helps put these conversations together each week. Marx and Ascalchi is my audio engineer. Paris Wald is my producer. Sean Russo is my researcher. Artika val Brunn is our project manager. I'm Barry Hults. You've been listening to Masters in Business on Bloomberg Radio.