21 ETFs to Watch in '21

before times. Yeah BC. On this episode of Trillions, we're gonna go into the future. Yeah. Um, we're gonna talk about the future. Yeah. You know, last year and and every half year we coun into these outlooks, and that that term is gets. You know, it's a little beaten down and traite at this point, and we do an outlook, but we thought for this audience, given this sort of retailer ish nature, we would do what we're calling one one. So we're gonna go over t s that we're watching

in this coming year. And just to be clear, we do not give investment device. So this is not ets we think we'll go up or down. It's ones that we as analysts just keep thinking about and we're fascinated by and they kind of tap into some bigger themes

and topics and so um. So basically we had the whole team, and the team being myself at the Nazia Sera Veagus, James Staffer and Morgan Barna each pick five ETFs and then we all sort of agreed on the twenty one, which we'll go over at the end, but that that's the general idea and we'll we'll go through it during this sub podcast Best time on Brilliant. Okay, so we're going from youngest to oldest, which means James Safer is on the hot seat to go first. James,

what's your opening batch of e t F kickers? So my opening batch actually breaks the rules. It's not technically an e t F. It's GBTC. Already you're already not following instruction, years off to a terrible start, but this is something you can't leave off, especially in the environment where and it's the gray scale bitcoin trust. Um so it holds bitcoin. Uh, it's not technically an et F. It's what's known as a grant or trust. Basically, it

operates kind of like a closed and fund. It's not the most efficient vehicle in the world, but right now Bitcoin sitting near all time highs, just shy of twenty thousands. The fund itself is now has a market cap of over of around fourteen billion, which is nothing to sneeze at for sure, um, but it's it's taken in a lot of money this year, would be in the top fifty for getting flows this year in so looking to see if this continues into the other five. This that

brings up is a bitcoin ETF. This is something that's been talked about since possibly even earlier when the coballs first filed, and it's just the SEC is not letting it happen. Um. So there's kind of a disservice in my opinion, going on here with the SEC allowing this product to operate in the OTC markets where retail investors can buy it, but they can't buy a more efficient

actual et F that holds bitcoin. So you have right now this thing on Friday closed at roughly a thirty percent premium to its underlying value, So basically you're paying a thirty percent premium just to get access to this fund that holds bitcoin. UM. So there's a bunch of issues here, But this is the best product you have UM inside the current existing brokerage system. So I'm just

gonna see how this goes. And the other thing I'm watching is if a bitcoin e t F does get approved, I think there's a good chance that this product actually gets converted to an e t F, so it will open up at the door at a ten billion dollar product if it converts from a grant of trust to an e t F. Okay number two. Number two is a little more boring. UM. It's v x US, the

Vanguard Total International Stock ETF UM. If you look at like global equity land Escape and you slice it the COmON way to slice in three ways, right, so you're looking at domestic equity, international, developed, and then emerging market. If you look at the domestic equity market right now, I mean over the last ten years, domestic stocks have outperformed international stocks by with emerging markets doing slightly worse, an international developed doing slightly better. But it's been an

absolute dominant run by domestics. So one we're going I'm watching this to see if international stocks can do some catching up. The other thing I'm watching is v x U S has been around for about ten years has only they've seen three days of outflows. It's just a perpetual parade of inflows, partially because of the underperformance. So people are constantly rebalancing into this. So if that changes, I want to see if this thing starts seeing outflows.

Number three, I'm gonna go with SNPE here, which is the Extractor's SMP five E s G E T F UM. Obviously, E s G is a hot topic, it has been for a couple of years UM, which finally starting to see assets go to the space. The other thing here is I like these types of products, they find them more interesting. Um when I mean these types of products.

SMP is an exclusionary portfolio. So what it does is it gives you the SMP five hundred and basically takes out the worst actors from each sector and then a couple of other ones like tobacco and weapons. So you're getting broadly the SMP five hundred, but just kind of taking things off the edge that thinks are the worst performers. And the other thing I'm looking at here is there's

three other ETFs that track the same exact index. One on the US market, which is E five from Spider and then there's one from Investco in Europe UM which is sp X E, and one in Canada that's e s G. So all of these have about just shy of a billion dollars. So I want to see how quickly those assets grow. Because SMP is obviously pushing this as a as a product, how do they decide what gets excluded? Is it just performance? So each so that

it's it's actually a pretty complicated um methodology. Uh. Depending on the sector, it takes certain scores into more more important, so like they might take social more important in this area, or like obviously energy they take into carbon a little

more seriously. Um. So different things gets different ways. So the whole idea is just like, based on your sector, we're gonna get rid of the worst things from that sector and we're just gonna give you basic your The goal is to give a risk return characteristics similar to the SMP, which we've done tons of research. We've talked about it on this podcast. The things that are most like beta, the most like what you can put in a core portfolio, tend to get the most assets and

interests from advisors. Okay, number four, Um, so I'm gonna go with ov L which is the overlay shares Large cap Equity e t F. There's another one SPU i C from Simplify the Simplify Us Equity plus Convexity e t F. These are structured product ETFs. They have like kind of overlays and it's an interesting market for these. There's a couple of them coming to market. We've talked about the buffer products on here a bunch. We had

Bruce Bond on UM. All of these kind of like options strategy e t f s are coming to market. It's a booming area and it's a good time for now with interest rate SOLO, there's a lot of people looking for yield replacement. There's a lot of people saying that you can't just do a sixty forty portfolio. So they're taking a little away from each side and going to these other types of products. UM. Some of them.

O VL for instance, is outperformed since it's launch, which so I'm just kind of watching to see both the performance of these things and how well they do at gathering assets. UM. So we'll see and your your fifth and final. So my fifth and final is uh is t q q q UM and also s q q q T q q Q is the triple levered long queues or NASDAQ on t f UM. This thing has shocked US this year. It is the fourth most traded e t f on US exchanges in twenty so far, which is kind of insane for me to think about

that a triple leverage product would do it. But that kind of is indicative of two things. One, Robin Hood traders will just use that term, but really retail traders on any platform have balloon or in the pandemic. And also, obviously tech has done extremely well. The cues of outperformed the SP five over a long period of time, and the cues have even outperformed by more. The t q q Q as outperformed by more because basically the way it's leverage, if it's a consistent ride up, it actually

will generate more return than the the underlying investment. So basically going to be watching to see two things. One does this outperformance continue and two does that this amount of trading. I mean, this thing trades opens four billion dollars a day um, So is that going to slow down when things start opening up? Their sports back on TV, now, more gambling, more things like that, are people going to leave the trading arena UM from their deaths at home.

So all that's gonna be interesting rots in one in my view, Hey Eric, Um, I don't know if you were listening to this, but James picked a ticker that wasn't in et F and then he picked two tickers instead of one. Um, what do we what do you have to say about m and his picks? Well, I think it's on brand. UM. I think James is like when I want to know, like the mindset of a

mall Neil day trader. I asked James, he's got Bitcoin, he's got triple leverage cues, and he's got E S G in there and in some you know, option overlay. He's Um, I think they're great. I think all of these are really interesting. I think v x US is the one that's that's a little unexpected from from his picks. UM. That said, you know, waiting for International to catch up or do you know, to have a good run has

been something that's been like a five year story. But our chief market strategist, Gina Martin Adams has talked about look out for some rotations next year and one of those is two International. So UM, I think they're great. I think they're all indicative of things that are going to play out next year. I think bitcoin et F, if you have Biden, pick somebody who is just the right person at the SEC, potentially you can see want

to prove quickly. Um, but I'm still doubtful. I'll add something and I'm the Bitcoin thing that I think is really interesting. They want to prove it. Um. Europe has a bitcoin tfs already, right and they're performing, uh pretty well. So it's interesting that you have all these approvals in Europe and there's multiple bitcoin ETFs. So I have to think that the SEC is looking over in Europe. You know,

usually it's the other way around. Europe's looking to what the U S is doing, but it seems like this time they're looking the other way. Um. So I think depending how some of these products trade, could hopefully open the door and make it a little bit easier for a bitcoin approval in the US. Yeah. And there's a lot of a lot of what aboutism with some of the stuff that Robin Hood people are doing. And then

they're like, but there still isn't a bitcoin ETF. You know, we looked a bitcoin e t F ranked by volatility would be wouldn't even be in the top fifty. Um there are there would be you know, dozens of e t A e tps that are more volatile than a bitcoin fund would be. It just has comes down to that, you know, surveillance on exchanges and the possibility of manipulation that the SECC can't seem to get over. But and look, you know over in Sweden they've got they've had they'd

launched this stuff a long time ago. There's one over there is five years old and there has not been really much problem with the premium discount. It seemed to do the job exactly as an e t P should. I'm surprised they haven't looked at that and said, okay, well it's worked there five years, let's let's give it a shot. But they're they're they're obsessed with the underlying market more than the how the product will work. And

that's the issue, all right. Second youngest analysts morgan um number six e t f I SEB t I shares Convertible bond DTF. So the convertibles market have really ballooned UM this year there was sort of a bull year. We're on track for like a hundred and seventeen billion of issuants UM. This fun tracks of Bloomberg Barkley's US Convertible Cash Pay Bond Index, which is really issuers coming to market for UM, you know, really appealing borrow rates

with an equity conversion option. So the the appreciation investors really is linked to the equity growth. But just the nature of the issuers has been super interesting this year. Entrence that were more distressed, like American Airlines were a Caribbean, but also just really fast growing companies that that are looking to you know, lowering or cossa borrowing UM companies like shop High and Novocure. So ultimately with with the conversion option, investors in this fund have seen UM really

strong growth like fifty up this year. For for investors who really want to stick to a certain bond allocation, this is kind of an interesting, uh interesting play to do it. Some of the mutual funds have have loads, So I like that the e t F is clean share class and this fund actually only charges twenty BIPs. Okay, number seven, I'm going with q Q q J, which I don't know that one. I know, I know cues, but I don't know Cukuku j Yeah, relatively new, launched

in October. It was a an extension of sort of the NASDAC brand Buy invest Go, which is really interesting. It's the next one hundred listed companies on the asset that are non financials, so in line with the QQ brand UM. Obviously, that brand has has had some pretty big strides this year just in notoriety and investors interest in in it. But this, this next one, actually we like that it overlaps with a number of sort of

hot thematic categories. Even just looking at the top three holdings, I mean five G content streaming, on demand, internet, ad tech, you know this, This is just sort of intersect with a lot of interesting themes um. So we're watching this fun. We think it's going to get more traction um the coming year. It already has three million in assets. Okay,

Number eight. I chose KMD Crane Chairs, Emerging Markets, Healthcare et F. This is a smaller fund, but we've seen as some have have described a bit of like a k recovery. I think, you know, healthcare along with biotech, but really, you know, healthcare and emerging markets has been part of the upper leg of that k UM. They're just some really interesting exposure here among some of the

more innovative emerging markets economies. Uh. This fund has a thirty percent allocation in China, twenty to South Korea, thirteen percent Hong Kong, and thirteen percent India. So really those stronger growing emerging market economies right now. Um. The structural I guess play here is that healthcare costs as a share of GDP or supposed to grow a lot faster and emerging markets than developed Um. Just the demographic tell

when they're coming along with urbanization. So the fund has seen some some really strong growing names this year, but I think it owes to the construction of it. So it's it's market cap weighted with a cap at four point five percent, and then anything over that is distributed prograd at the rest of the holding. So it does feature some some higher weightings and smaller companies. And yeah, I'm watching this one next year. I think I think

the demographic trends are going to continue to play. Um. Okay, number nine, I chose that the A T T which is amplifies lithium and battery technology. I was going to say, if this has nothing to do with battery it would be like the weirdest tiger of all time. But yeah,

glad to know it's battery. This is a battery t F Actually super Interestingly, this fund converted from an actively managed UH to an index based strategy in mid October, So that's part of why I'm watching it because I think the index based construction is really going to change the investment mandate change too. I think this fund is going to have a little bit of a different trajectory going forward. So they actually notched down their exposure to

lithium miners by ten percent. The fund added six energy storage makers and now it's including e V auto manufacturers in a meaningful way. It's going to try to contain those automakers to just the exposure and get more of the end to end battery life cycle and still keep the miners in there. Um. But know it's at a Tesla Neo like a bunch of these these EV makers. Though the EV maker has to have top line revenue

from electric vehicles. But interestingly, the other auto makers as they they you know, maybe naturally increase their e V output could be considered for this fund. So I think the construction is interesting. They even have like sort of a market cap minimum for some of the lithium miners and other metals producers, so they have to have a reasonable share of the market. I think it just tries to add really close to this the sector and the

growth in lithium ion battery demand. Okay, and your your tent my my fifth and the tent pick is UH NET and et L fundamental income net least rate e t F. This is an interesting UH sub segment of the of the single Tenant Reaped index in the US. So this is this is an index product, but it's it's sort of a sub index of only those reads that operate with triple netleases, so the managers actually have a much better path through of rental income to investors.

So these tend to be this is a higher yielding segment right now, it's around four four four percent. Just as a starting point, the BI single tenant read index has done fiftcent better than the broader UH North American read index. I think that proved some defensibility on the single tenant side, and I see that kind of content that defensibility kind of continuing next year. This being a little bit more of a shielded segment of the real

estate operators. But you know, I think there's really interesting embedded portfolio diversity. This is sort of a big range of tenant types. Um and for real estate or or a yield sleeve. This is this is an interesting strategy. Eric, what do you think about her picks? They're great. Um, They're all kind of out of the box stuff. I hadn't really thought of. The only one that I was I think where the whole team was on was q Q Q J. Think this is this product came out.

Rarely a product gets launched and you're like, God, that makes so much sense, Like, I'm surprised they didn't do that one sooner. You know, the next one in the cues. I suppose that the cues were so on fire this year that it just the idea was more natural than the years past. But that's a good one. I like. I like the e M themes are analysts were off

for b I, who covers all the emerging markets. He's written naturally about themes, even though E t f s are not his coverage, and they naturally connect with some of the things the issuers have been doing with try to unbundle em a little bit, to try to capture the more growthy areas and cut out the stuff that doesn't grow that fast. And then the battery you know, lithium has l I T the competing one has one point three billion, which is way more than I thought

it did. And then the driver the electric driving car e t F there's like three of them now they also have about half a billion, so there's clearly interest in that one. So I also thought that was good. And also I see I V C T I rarely and think about convertibles, and it's the best performing fixed income et F of the year, which again was a shocker. So UM, I like, I enjoy being surprised by the picks,

and I was surprised by like four of these five. Yeah, I mean the the I C v T pick is the one that jumped out at me, just because when she said it and I looked it up, I was like, that chart is impressive to look at, UM, And it's definitely a unique way that she mentioned to get like your your fixed income exposure. I talked about using those overlay structured products strategies as kind of like a way

to change your sixty forty portfolio. Maybe you take a little from me to put in those and I think I c VT also kind of fits into that theme because you get a little more of the equity upside, but there's a little more principal protection on the downside theoretically because it is it does have a fixed income floor. UM. So I think I c BT also fits into that theme that I spoke about, UM pretty well. I like the q q J pick as well, UM, and I

like it from the angle that it's a MidCap focus. Um. You know, NBUI, which is the mid cap ETF, is one of the best performing ETFs of all time, and it's traditionally been an area that Nastac just frankly hasn't focused on. So they they it's pretty interesting that they found that gap and now they're able to compete in the MidCap space as well. Terific If keep the mic, let's hear what you got alright. UM, My picks aren't as hardcore millennial because I grew up in the analog

world two a little bit, so I've seen them both. Um. But the first one I'll start with is a SPG p UM. It's the Investo SMP five D GARB e t f UM GARB standing for growth at a Reasonable Price, But the way I explain this one, it's like it's like growth light. You're seeing this transition over to value. Now, value has been doing really well. You've seen it come up more and more. But if there's one thing that history has taught us, it's that anyone who keeps allocating

the value gets burned. Um. What GARB does is it it still doesn't allow you to let go of these growth companies, but it down shifts a little bit. So if I was to run a chart between growth, value and are fall somewhere in the middle. So why I like this one is that it's still playing on this transition out of growth into value, but it's not fully moving over. Sometimes you see this binary move, people will move out of growth right into value. This one just

sort of downshifts a little bit. Um. It's it's a really small product. It's not that well known. But the other thing I found interesting is that the issue where actually changed their strategy. It used to be like a full on growth strategy and they change it to GARB. So even themselves are inherently making a market call, and you know they're being a little bit more water down growth. So I think this is a really interesting one to

watch for next year. Number twelve. Number twelve is I Buy, which is the Amplifi Online Retail et F. No, I don't need to sell you on the story of online retail and how well that's doing, but why I like this one and I call it sort of the non Amazon e t F. So when you look at a lot of these uh consumer discretionary or online retail product they are dominated by Amazon. Usually anyway from fifteen of the product is Amazon. This only has a two percent

way to Amazon because it's equal weighted. And even with that, the ETF is up over a hundred percent this year, which is like the fifth best performing ETF out there. UM. And I'm really I like this product because it comes from a smaller issue from Amplified. Um It's it's capitalizing on the online retail trend, but it's not Amazon. UM. So there's all these other names there, so much happening

in the ecosystem outside of them Amazon. A otther of people forget that, and this, this product brings all these smaller companies to light. And as you can see, they're all performing really well because, um, most of the performance has been outside of the the Amazon story. What are some other whole things that you like in there. Yeah, So like Roku is a big one that comes up garment. So there's all these other companies that are still capitalizing

office online retail trend. But Amazon like the twenty or something or so biggest holding. So that's why I really like it. It really takes the focus off of Amazon. Okay, number thirteen, This is my millennial pick. It's the Spack e t F to definance the next gen SPAC derived e t F. Now this one is still really small to when you got a few million in it and it just launched, But this one seems to check a lot of the boxes for these thematic ETFs that do

really well. Um, it had interest right out of the gate. It started trading very heavily. Um you know, it's it's capitalizing on this robin hood uh investor base that's looking more and more. Thematic spacts obviously have had a fantastic year. There's something seventy billion or so raised through spacts this year, which is a record. So, um, this SPAC one, it checks all the boxes that should do well. I'm actually a little bit surprised that it's smaller than it really is.

But I'd be on the lookout next year, um, because it's the only e t F I'll do to play SPACs in any way, unless you're buying the specific spacts themselves. So um, this one's more of my shocking pick that I thought this one would be a lot bigger. And also just given how strong thematics have been this year, pretty much any thematic ETF has come to the market has done really well. They share very early on. So I'm a little bit surprised that there's not more bites

on this back et F yet. Okay, fourteen fourteen is a classic. It's us m V which is the I S share is minvol et F. And why I brought this one back in is because if you look at flows this year, it's the first year ever that low vall is going to have outflows. Um, And I think it's it's more of this foamo right. Low vall tends to do well and down markets, uh and tends the

lag on the way up. And what I thought it was interesting because given how volable the market was this year, supposed to be in March, these tend to take in assets, but they've really been bleeding pretty significantly. And if you had bought Loval this shure you're actually lagging SNP by which I think is a really significant a significant amount

to get this on people's radar. So, given what we've seen with the FED jumping in and really having the markets back, UM, I don't see a lot of interest in the U S n B. I think a lot of people want to go into the high beta stuff. So you're seeing investors move out of low vall and it's UM. It's interesting because it's every year it's it's been taking in money. It's been good for a couple

billion every year for some of these issues. But this year has been a complete reversal of historically we've seen with Manvall okay and your final Okay. The last one is a active, non transparent ETF or ANTS as we're coining it UM the tickers F d G, which is the American Century Focused Dynamic Growth ETF. It's so it's a long name, but this one is really my bell weather for ants and how well ants are going to do. UM.

They're really new, right, UM. And the whole point of ANTS was that these active funds cannot launch and not have to show their holdings daily. UM. So the holdings are a little bit lagged, but the performance of this has been really good. It's already beating the its benchmark by it only launched this year. It has about two million dollars in assets. Now we debate this on the team that's you know when somewhere more bullish on ants

than others. But I think this one is if there's one that has chance of the group, this is going to be the best one. I think. I think it's the most interesting strategy that holds names like tesla Um. This one is really going to be I think my bell Weather to see how well people are are are accepting of these new and e t f s. Hey, Morgan, how come you didn't pick his spack pick? What why did you pass on that? You know? I like the pick.

I think it's I think it's really interesting. Um, we'll have to see, I mean, based on sort of the market cap waiting in these like you know, how they really play out. Um, this is kind of the second go I think spac's got a bad name early on, but I think you know, the diversity of of UH managers, you know, listing and the expediency to which they can they can bring things publicum, this is this might be

a better round on the first. So yeah, and the Spack e t F. The the one thing that I that you have to point out is that it's only pre I p O SPACs. Those are where you get the big pop is after the I p O and it's lagging the market this year. It's new, but this is one of those E t F that has to have some shiny object performance I think, and then people will go, oh, yeah, of course this would go up. This is like the new I p O market, but

it needs that performance first. I think that's why I think it hasn't really found a lot of It hasn't found a big audience yet. Yeah, and this year, I mean no road shows. It's kind of interesting that after I p O ing, they still didn't get marketed that aggressively before I p O. So you know, structurally they may they may still get that distribution benefits spread out over a bit of time. Comment on Spack real quick.

It s p a C special purpose acquisition company. The e t F is actually s p a K. If anyone out there is trying to look up the C t F and learn about it, which every time I got to look at it. I type in s P A C and it goes to a delisted company. Um. Yeah. I like the guard PTF, mostly because I genuinely didn't even know it existed until eight and brought it up when we had our pre talk meeting about this. So uh.

And I love the idea of growth light, just kind of looking at and seeing both the performance and whether or not advisors retail investors put their money there. Um, it'll be interesting to watch and there's not many others that that go after this GARB type strategy. I also thought it was interesting that he picked us m V. That's one that we've been talking about for years. It's a beast what is it thirty billion dollars at this point. Um, it's such an easy E t F to sell, right.

Oh hey, it's the market but with a little less you know, volatility or a little less edge, and that's always good. It's like diet coke and it's it's basically flow off the shelves. But the problem is it's trailing the market badly this year, and it shows that some of the people in there are fickle. Here's my question for both us m V and f d G which is a theme I'm gonna look into a lot more next year, which is do you get a second bite

at the apple? Remember currency hedge ttfs, like, really, we're on fire. For a couple of years they took in I don't know what their peak asset was, maybe sixty billion, but then they started underperforming and a large chunk of the people left. The assets went down because the market was down too, and they were a fraction of their old selves. Then they started out performing again and nobody cared. Well, U SMV get a second look. If it starts out performing,

we'll see f DG is in the same boat. You've got all these ants. They all have names that you remember from the nineties, and it be curious to see if somebody goes, Wow, this American Century Fund is really doing well, or if they go, yeah, no, I've been there, done that. I'm gonna look elsewhere to the next thing, you know, maybe like the new Goldman Smart Beta, Like I just don't I'm a little hesitant that you get a second bite of the apple, and so I'm I'm

a little bearish in the last two. But they're still interesting to watch. That has nothing to do with why they are good or bad picks. It's more just my take on on their potential for assets in the future. All right, let's uh, here are you're five? Bring us home. My first pick is the one that I'm the most excited to watch all next year, which is the d f AU. It's the Dimensional US Core Equity Market et F. This is the dimensional is a three D and seventy

billion dollar active manager. It's our One of our themes next year is big Active, sort of like big Pharma. It's all these big active shops are finally coming in full fullheartedly in the next couple of years. And we just talked about ants. D f A is taking a different approach. They're gonna put their et F out with with transparent so they're not doing the ANT approach. They're just gonna let you see the holdings every day and it's gonna it's an act of strategy. So they're gonna,

you know, pick stocks. Although it's based on systemic quant methods that they do um and this is a firm seeing a lot of outflows, so you know, can they turn it around? And now, to me, this e t F is like custom made for the advisor's brain. It's transparent, it's dirt cheap. At twelve basis points, you've got a brand name like d f A, but at Vanguard fees it's got low tracking. The top holdings are basically Apple, Microsoft, Amazon, Amazon only market share. To me, they took the page

out of Goldman's playbook when Goldman launched g SLC. And remember we did the episode with Colfinberg. This is similar to that and that worked. That has ten billion dollars. And the beauty of these strategies is they're kind of performance proof because the advisor is so scared of getting fired that they just want to pick stuff that has a good story but won't underperform. And this looks like it will not because it's so close to the SMP.

And I think that's something you should see. Also, d f A is going to convert a bunch of mutual funds that equal twenty billion in assets. So and that's also something that Wall Street banks like JP Morgan and Goldman did when they entered. They did a lot of B Y O A and they look for opportunities to grow their assets quickly. So Golden JP Morgan skipped a lot of the sort of oblivion stage of a lot of legacy companies coming in late where they just hanging oblivion.

So they finally do something different and they just ripped the band aid off and that's what d f A did and I have I'm more bullish on them than the ants in terms of big active but we'll see. Um the next one, speaking of active, Yeah, next one, uh, speaking of active arc a r KK. We don't even need to spend that much time to describing this. This is Cathy Woods. You know super you know lud chrous mode. Yeah, she's in luded, like she's gone plaid. That's a deep

Spaceballs reference. But yeah, she's on another level. I mean a r k K. Let me give you the numbers up inception and a hundred and thirty three percent this year. That's triple the cues, eight times the SMP and two times the Fidelity Growth Fund. Now that Fidelity Growth manager is tasked with the same thing to pick road stocks, so she's doubling a growth manager. That is how on fire she is. And she's inspired like about thirty copycat funds.

So this will be one we watch for a long time. Um. Here's the thing though, as you all know, here I'm working on this book about Bogel. So I've been reading

a bunch of his books and it's hard. You know, when you read his books, he goes over the go go eras from the sixties and the seventies that they happened like once every fifteen years, or uh, sell off happens once every fifteen years, and you realize there's funds like this in every era, and they end up getting a lot of assets, people say their geniuses, and then a crash hits or a correction, and they usually go down more than than the market and people leave and

then what they get back going again, but nobody cares or they can never get back to that again. It's the second bite of the apple. Is she a star here to stay? Or more like a comment? And that's something that we're going to find out. UM s val this is the it's opposite of Cathy Wood. This is the small cap value e t F from I Shares. UH. It's you know, it's a small cat value stocks. It's got a quant screen for liquidity, um volatility, leverage, and

an analyst sentiments. It's got a smart cap smart beta kind of filter, and then it ranks this highest scoring stocks. UM the top two fifth. Now, I like that it's concentrated to fifty means you're gonna rip when it works, and that's what happened when you look at the small

cap value run. That happened from basically since the vaccine from Feiser was was that news broke for about three weeks, there was a huge rotation the quote reopening trade and this thing was up twenty m one per cent during that time, more than the other small cap value et f s, which hold more stocks, so they're gonna be

a little more anchored. UM. So I think if you have a regime change, we're small cap value or value or small caps just you know, has a five or ten year run, this thing probably will be at the top of the list performance wise because of that concentration. It's also very cheap for a potential shiny object type ETF at twenty bits. Normally you only step pricing for the ones that are sort of more disguise beta. UM. The other final note on this is, I don't know

what's going to happen. We could have, like the Queues have another amazing decade, But I just want to remind people that in the two thousands that's a decade before this last one. If you look at the return, small cap value return returns seven point five percent annually that decade. The SMP returned nothing, and so in the twenty years since then, small cat values still beating the SMP. That's how bad corrections are for the SMP UM. And it

also just shows you that things do change. So again I'm sort of looking forward to if and when there could be a regime change, look for s vl UM. My other one is another one is m s o S. This is the advisor Shares Pure Cannabis etf UM. I work with Ken scha or cannabis analyst a lot and he has some great data showing that like legal cannabis sales in the US may hit sixteen billion this year

versus only two point eight billion for Canada. Yet most of the exposure in the potty tfs is in Canadian companies. The reason for that is because UM, you're not really allowed to invest directly and what's called multi state operators in the US. So this e t F uses swaps to sort of cleverly sidestep that rule. Long story or it's basically a US exposure UM with that going to the M S O S. So that's the way more than any others. So these are companies like Green Thumb,

truely pure Leaf. They're all significantly up. And if you look at M S O S versus MJ, it's up since versus so again, not having those Canadian companies could really help this thing in the future. UM. And then my final pick is boring but beautiful b t I. This is the Vanguard total market. To me, this is the perfect e t F. It's pretty much flawless. I have My opinion is this is the most likely to take over. Spy is the biggest d t F UM in the next five or ten years, even though i

VV has more. This is the third biggest currently. But here's here's why I gotta watch out for this one. The test less situation with the SNP. To me, I think it may have hurt the SMP brand. I don't know. It's an amazing brand, it's rock star. Maybe it's just beyond that kind of stuff. But the idea that that SMP the s is gonna lag beta e t F such as the Russell one thousand or the Bloomberg five hundred,

I don't know. It could it could irk people um that Tesla not having it costed about one percent this year. Now v t I invested in everything. So v t I has had Tesla for ten years basically, and TESS has contributed to two point seven percent or one percent of its total return of two um. So you don't have to worry about whether you know the new stock is in it or not because it tracks small caps. I also like the fact that it's regime change proof.

So we talked about small value. What a small value has like a ten year run and the SNP lags, it won't really matter too much with v t I. You're gonna have those stocks in there anyway. Um. So to me, vt I reminds me of that line in the movie Almost Famous. Remember when the young journalist the Rolling Stone Journalists talks to the sort of grizzled old like rock critic played by Philip symour Hoffman and he says, yeah,

my kids are in the high school. Don't like me, and he goes, don't worry, you'll you'll see them all again in a long road to the middle. And I just think v t I is the long road to the middle. Whether it's value growth, small, large, these things have their day and then they have they're in the doghouse. V T I generally is gonna be where they all

end up, you know, over thirty forty years. So to me, this is just like the sort of like the the ultimate play on the market and something I'm watching next year and every year after. James, what do you make of that marijuana pick? So I I like I I like ms os just because of basically what Eric said. I mean, if if there's anything happening with US legalization, whether it's federally or more states, those are the stocks

that are going to benefit the most. I actually did some research on this and created like an index of just ms like multi state operators, some that are included in that ets, some that aren't. And I mean just since March that thing, it's the market cap of all those companies is up three hundred and thirty five So we're talking like massive growth. A lot of that's on the referendum from the election in November to states past

legalization in different matters. But if you're looking for legalization in the US and you're buying MJ I mean it's just too exposed to Canada to who truly benefit. And one could argue that even legalization the US might even be a bad thing for some of those Canadian companies, which we saw some of those Canadian pot companies or marijuana companies actually saw a negative impact. So definitely something to be watching going forward, especially at the US political landscape.

And Morgan, what about what about ARC? Yeah? That was like a no brainer, right, Yeah, pretty classic pick. But I mean I think it would be crazy to say we're not watching it next year. You know, I think they they are high conviction shop and they are full transparencies. We actually get to see what their high conviction choices are here. But you know, they're trying to blend in this fund. They're sort of including all their innovation platforms um and so you really get a taste of kind

of full range here. So always interesting to watch and see where their high conviction is. Sarah Vegas, what do you make of the busses pick? Yeah, the d f AU one is interesting. Well, I don't think the product itself is that interesting. It's the it's d f A pick. I like, um, you know, they launched these few ETFs, then they did this massive conversion right behind it, so they're coming into the industry with a bullet, they're now going to be like the eleventh biggest issue where in

the market. So they came in very very aggressively. So and what we've seen is firms that have done this, the ones that really take it seriously and come come in very aggressively are the ones that do tend to do a little bit better. So, UM, that's that's a really good pick. I think to judge how d f A and frankly, how other active managers are going to follow.

Going back to ARC specifically, everyone likes to talk about ARC, and Cathy would, but she has another product this year that's beating ARC a r k K and everyone likes to talk about ARC as a bubble bubble product. It's getting all of its benett from Tesla, but air KG doesn't hold Tesla's that you know, bout revolution et F, which is another example of just how on fire Cathy

would has been. Um. The other thing is Tesla. It's it's a big it's the largest contributor to a r k K, but it's only contributed sevent of those returns or since its inception, so it's not like it's solely a test of fund. They're making a lot of other high concentration bets, doing a lot of trading around their portfolio. Um,

that's generating alpha for them. So you hear a lot of like financial media and Twitter talking about how bad these products are, but when you dive in, it's not really as um concentrated or solely due to one or two stocks. It's a very They're getting a lot of breath from their performance. Okay, hey, Eric, I want to ask you at at Business Week, we do this thing called the Jealousy List every year, which is we ask a ton of the editors and writers, photo design, et cetera.

What was the one story that you were most jealous of that we did not publish? And I want to ask you, of all your team's picks, whose pick are you most jealous of that wasn't your own. I'll go with I c VT Morgan's pick. Um actually just forgot it existed. I mean every other one that was picked I pretty I mean at least I knew about um.

This is just one. You know, when it comes to like prefers and convertibles and some of the stuff that's sort of a little on the more wonky side, these are ones that you sometimes forget about when you're constantly looking at say the aggregate bond ETFs or uh, you know, the high yield um and I like it, and it's I looked at it's it's over a billion dollars, so it's a you know, study t F. It's twenty BIPs and yeah, I think it's great. And the returns were shocking.

If you had asked me how much this was up this year, I would have been way off. So I just like that. I was completely surprised by it. And I honestly just you know, one of those ones you just don't even realize is there, to be honest, which at a billion dollars is probably not a good thing to say about myself as an analyst. I mean, I should probably have had that one in my mind, but

I just didn't. All Right, So I'm no math wizard, but I do have a kindergardener that you know is doing zoom kindergarten, and we're doing a lot of math together. There's four of you. You each had five picks. That brings us to twenty. How do we get to so? Um? We were thinking about that and as we looked at our list, two things. One we felt we had undersold fixed income a little bit, but then too, one of our big themes this year is in our outlook is fixed income. So we decided to pick l q D

as one that we're watching next house. Pick Team, Pick, Team Pick. This is the cherry on top of what's already a large cake. Yeah, and what is it again? It's it's a I shares investment gray bondy TF. It's it's sort of become, as James put in his notes, sort of the new bond dealer, as there's less inventory at at traditional bond dealers. People use this thing all the time for many different purposes, like a giant hotel with all kinds of people coming in and out of it.

And this this mart sell off. Um. It's volume exploded um, and people leaned on it and it worked. And then the FED said they're going to buy E T f S and the one they own the most of is l q D. Was it was a wonderful endorsement for E T S, I think and the assets and this thing doubled from the March low of twenty eight billion, they're now at fifty seven billion dollars. It's rare to get a asset growth in an e t F that's already massive, and so we're gonna see what happens next year.

This thing will be interesting. Will the Fed potentially look to equity e t f s, Will they start unloading their bond ETFs? Either way, we're very bullish fixed income. This is one of those things where the Fed putting

its money behind. And one it was a lot of people trying to front run, but also it's kind of ended up like a snowball as more trading happens, as more money comes into it, more and more people are going to start using it kind of as a bond dealer as you mentioned, and the other it's just becomes more liquid and more institutional attention, and that all of that kind of snowballs onto each other. UM. So this is something we're watching to see how long that snowball

can go on, um and will it continue. James Morgan, Tom, thank you so much for joining us on Trillions. Thank you, thanks for having us, Thanks for listening to Trillions until next time. You can find us on the Bloomberg terminal, Bloomberg dot com, Apple Podcasts, Spotify, and where else you'd like to listen. We'd love to hear from you. We're on Twitter. I'm at Joel Webber Show. He's at Eric Falcinos. You can find Morgan at M Barnes six, James at

J SEF, and Athanacios at Ta Sara Phagas. As always, good luck spelling that one. This episode of Trillions was produced by Magnus Hendrickson. Francesca Levie is the head of Bloomberg Podcast. Bye.