A Bunch of Really Important Questions for BlackRock

touch base with them because they are so dominant. And black Rock is you know, the king of the hill, that's right, and the others being uh, Vanguard's also very big, state streets, really big. But Eric, what what is it about black rock and their approach to the ETF business? So one time I wrote an article that never got published,

probably for the best. I sometimes write stuff that editors like, you can't put this out um where I compared every e t F fisher er to like a classic rock band, and I gave I shares to me or black rock was the Beatles, because you know how they covered every single genre. You know, they covered folk, rockabilly, they even had a little heavy metal blues. The Beatles would basically listen to anything and be able to recreate that sound

and make it great. And so they had such an eclectic sound across their ten years of existence or twelve years. To me, that's I Shares. They are trying to be everything to everybody. They have a T F S that cover just about every single thing out there. They are looking to be a completely full service, full product shop. They've got thirty eight percent market share in the U S E. T F space and Vanguard is although climbing fast,

so they're constantly battling with Vanguard. But then you take a bigger step back in black Rock is the biggest asset manager in the world with seven point four trillion. Now you said something in there that UM for the uninitiated can be a little confusing. There's black Rock and there's ICE Shares. What what the difference between those two brands? Right, So black Rock has a lot going on UM I forget the percentages, but I Shares is UM you know,

below fifty of their UM revenue and assets. But it's I believe one of the fastest growing areas. Vanguard is the same way UM E T S. If if you're successful et f ISHO are guaranteed. That's one of the fastest growing areas for assets. But black Rock is a much bigger company. They serve, they have institutional management things like separate accounts that you don't even hear of. They have mutual funds UM, they even are starting to build

up tech solutions. There are very creative, dynamic company, and what I always say about them is that they're the one company I feel that is able to go tote to tote to Vanguard, and Vanguard with that mutual innerstive structure is very difficult to compete with UM. That structure makes them lethal. But Rock, to me, has made a commitment to get into playing shape for what I call the Vanguardian future, and they've done a great job and

they're able to really hold their own against Vanguard. And of course, black Rock acquired I Shares from Barkley more than a decade ago now, and that was sort of the firm's entry into the et F space. I always thought that when black Rock bought the I Shares brand from Barkley's back then, it was like the Louisiana purchase

of asset Management. I'm still stunned that Barkley's would sell it like that, But then again, Barkley's I believe bought it back in the day for a ridiculously low amount from I think Morgan Stanley, which I believe they were called Webbs before that. And this is the early nineties, the really frontier era of e t F. So I shares has a long history going all the way back. But what made the black Rock purchase of I shares so good in my opinion, is they bought a lot

of the most liquid ETFs in every category. So black Rock has a ton of the most liquid ETFs in certain category is and that gives them huge advantage, a little pricing power, and again it makes him a formidable competitor to Vanguard or anybody else. Joining us from black Rock Armando Senra, he's the managing director of black Rock, as well as Annie Massa, who's a asset management reporter with Bloomberg. This time on Trillion, a bunch of really

important questions for black Rock. Armando, thanks so much for joining us on trillions. Great to be here. You guys are the biggest tt F fishure and I want to I want to start this going back to the month of March pre fed right when there's no bids on some treasuries. The market is completely in haywire mode. UM E t f s traded five point five trillion in March. That's normally what they trade in a quarter, right, so

they were really put through the ringer. You had some bond price, bondy t F prices eating from the navy. I could imagine that your your phone was ringing off the hook. Talk to us about what it was like in March for you as the issuer of the E t f s, a lot of which were the most traded at the time. Yeah, thank you, Right, that's a

that's a great question. It seems like March was a million years ago, but it's it's not that long ago, right that I've been in the industry for twenty six years, and I thought that I had seen a lot of different market events, but I've never seen anything like what we went through in March. And you know, beyond just what was happening in the financial markets, just the the human tragedy of everything that was happening around the world, and obviously the impact that was having on our employees,

our clients, and so many people in the globe. UM. You know, definitely that was from a market's perspective, There was a tremendous amount of activity and that included, you know, just the volumes, like the way you describe them, were off the chart. And if you just look at the equity trading volumes whereas high as for you one percent, I mean, then then they ended up normalizing back to the twenties. But that there was a tremendous amount of

outreach two clients. There was a tremendous amount of effort in within the portfolio engineering which is how we call our portfolio managers for UM, for our A t f S, really making sure that everything works and that we were able to deliver to clients the quality that they come

to expect from I Suresh. And also you know, you you started we were talking about the discounts to an ad A tremendous amount of outreached two clients, both institutional clients, wealth clients, really working with them and helping them understand exactly what it is that was happening, what they we're seeing in the screens. And I think that you referred to an event that for us it was actually proved. It was kind of like the ultimate proof point of

in this case. I think that you're probably referring to fixing committ as of the fact that fixing commydas were passing the past that we're working uh, and they were providing two investors the utility UH that that we always talked about, that we're providing liquidity that we're provided providing

transparency in pricing. So all that was happening now the experience, depending on what you were sitting, you were all of a sudden seeing a big discount to Enevy that was ultimately the result of the A t F providing a glimpse to the actual pricing of the underlying securities because the the E t F was trading a lot more than the underlying box Amonda. One thing that really helped calm the nerves fixed in kind of E t F markets in that very tribulent period was knowing that the

FED was stepping into backstop credit markets. And I wonder what do you think if you re around the clock and the FED hadn't stepped in, maybe as fast or with as much force as it did. What do you think might have happened with authorized participants and market participants? How do you think things might have gone if the

FED hadn't acted as quickly as it did. Sure, Annie, I think that Look, if I think that what is most important to me is when you think about the events in March UH and when you think about what was happening with with credit markets. Ultimately e t f s were delivering the performance, They were delivering the liquidity, and I think that that was validating the instrument as a great way to gain exposure to the bond market.

And I think that whether it's the FED, whether it's central banks in all the places around the world, whether it's institutional investors, whether it's wealth investors, I think that, you know, the performance that e t f s, that fixing committee s were delivering is what gives the ultimate validity to the instrument. So I think that we can speculate what would have happened if they fed that I don't know. What I can tell you is that it

was not. I think that e t f s were performing before the FED step in UH and I think all theo at me, Yes, the father step in, and obviously that added validity due to the instrument. But they ultimately investors, both institutional investors and wealth investors that were getting the benefit that we have been talking about for many years around fixing commuts. The mutual fund world is

was I felt wasn't covered as much. But active fixed income mutual funds it's seen ninety billion dollars and outflows

two straight weeks. Everybody thinks e t f s would will freeze up in this kind of situation, but we speculated that if these fixed income mutual funds, which are much bigger, had to sell bonds into an a liquid market and then had more outflows, it would create a downward spiral where you might actually have mutual funds freezing up, halting redemptions, and it could have just gotten really nasty

for a while before it got better. We can spend a lot of time speculating many things that could have happened on how they could have been I think ultimately, I think, look, March was a moment of like stress that we have never seen before March. Whenever I was in similar forms like this one, I was talking about what happened in December of two thousand nineteen, or we were talking about what was happening in different crisis is

in the last ten years, UH and throughout all of those. Ultimately, these instruments work and if you're an investor and you were looking for liquidity, and all of a sudden, you look at instruments like l QD was trading was changing hands ninety thousand times. On March twelve, the five top holdings inside the LQUV traded hands thirty seven times. You look at h y G, that was a hundred and sixty eight thousand times each day, uh, during the months

of March. So again you know, like you look at the utility that thep have provided to the investor and ultimately provided that liquidity when they were looking for liquidity. Now the discount to n a V. Look, if you needed the liquidity, you could have it. It was giving you the pricing that you can get at that point. It was providing pricing and it was providing liquidity. And I think, look, that's why we've seen the tremendous flows and no, Eric, you follow it closely, we've seen the

tremendous influence into fixing comedias globally. Right. So I'm not going to speculate what would have happened at this Ultimately, I leave it up to you to write that. Okay, fair Um, So one difference about sort of this crisis and and moment of stress has been black Rock has actually become very close with the FED in terms of facilitating UM some of the nuances of what's happening in

the et F marketplace. You know, any wrote about that for for us at Business weekn We actually created a piece of art that looks like a government seal, excepted it as Department of black Rock on it. And I'm curious, Armando, like, what do you guys think of that? Look. I think that you know as Matt about the FED program as I do. I think that you know very well that our financial markets advisory group in within black Rock is

a completely independent group separated. They have their own traders, their own portfolio managers, is completely independent from from the rest of black Rocks. So I mean, like, I know as much about it as you do. I think that ultimately, when you look at the flows, I think that sometimes that gets lost. Uh. They have been obviously, you know, there's a FED purchase program. Uh some of the dfs

that they have thought have been black Rock UM. But ultimately that's just a small piece compared to the overall flow that we have seen coming in into fixing communts. Yeah, and you know it's interesting. I look at the FEDS E t F portfolio and to me, it looks like an E t F strategists portfolio, not what you typically

see from a large institution. So there's an E t F no how because you've got like twelve thirteen ETFs in here, including stuff like U, S, H, y A, n g L, stuff that's deeper in the toolbox that we we like, but like a Yale universe, so you would never go that deep. So it's interesting to see the FED do this, and they they didn't really create any disruptions in trading, so I thought it was pretty much Scalpel level precision in how they did this. I'll

pass it off to Annie to talk for flows. Yeah, unflows, Armando, So I think that, Um, I'm sure GTFS took in about fifty one billion UM in that flows last quarter. What was driving that? Like underneath that broader figure, what kinds of products were driving those? Yeah? I mean, look, it's um the last couple of months, it's been great to see the flows back. I mean now you're to date were close to sixty UM. Just the last month, it's been close to twenty billion in flows. Uh. If

if you see the beginning of the year. Obviously there was well, the beginning of the year started as what could have been a record year of flows, and then obviously you know, market events derail that, especially you know like market driven instruments, right, the type of instruments that when investors are trying to take risk of the table they use and you know, we have the breadth of our product really provides the utility to investors. I think

that you've seen tremendous growth in fixing committeeps. That is we already talk a lot about it, but that that has been one of the the key areas of flows. You've seen tremendous growth, also sustainable just in the in the first quarter more than the whole year of last year, and we are in record flows. Our Factors franchise was pretty stable given the the outlaws that we saw overall

in Factors. So I would say when when you think of the strategic segments, that that what we call is to the segments of black Rock, a lot of strength beginning with fixing committees. Since then is beginning to change, right, You're beginning to see more equity flows, You're beginning to see what would be the beginning of flows back into international markets, primarily developed markets, Like you're beginning to see

investors putting money back on international um. You know, specific countries at times, like you're beginning to see how investors are more some of the flows are more specific as to the country that they are going in as supposed to broad UH international exposure, Like we had significant flows into Germany our Black Rock Investment Institute UH started turning positive to UH to Europe on the back of a better response from COVID and the beginning of restarting of

the economy. So you're beginning to see those flows coming in in the last few weeks as well. So Armando, UM, I want to ask a little bit about competition. UM. You know, I Shares such a story brand in the e t F space, but not the only one UM. And you know Vanguard in particular has become Between I Shares and Vanguard. That's something like Eric says, seventy two percent of e t F flows in the past three years. You guys have really just become these these behemoths really

in the space. And I'm wondering who's King Kong and Who's Godzilla. That's up to you to decide. There there there. They're both big, So what's the difference. Look, I mean I think that our we have a very differentiated business model. I mean I think that I'll go back to what I said at the beginning. You know, I shares is not one thing ultimately. Uh. You know, when you look at how we think of product segments, we have breath of product, different uses for different investors. We have a

very strong institutional um client base. Uh, and doesn't take difference. And you know, you clearly see that volatility when you have moments where is a risk on or risk off. But again, you know, like I think that is our differentiative business model to provide a breath of product across different investors and different uses. Uh. That's that's what we do.

And you can ask bangor about what they do, but that's at the core of what we're intending to do is really facilitate better portfolio construction through our thrower outprea. I call the E T F industry the terro dome. It is not for the faint of heart. And you know, this year, Vanguard has a little bit of a lead and flows although they've been doing some shifting from their mutual fund to their e t F, So I'd say maybe thirty billion ish might be that maneuver the rest natural.

But anyway, you guys are always neck and neck, right, Um you cut the fee in I VV which is your smp f F I think a month ago to three basis points to tayvoo, I guess just talk a little bit about what's behind that, and just more generally the idea of competing against the vanguard or competing against you guys and getting into this playing shape where you have to sort of cannibalize yourself to survive, and how useful that might be in ten years when you know,

post a bear market where a lot of consolidation, Do you look at it that way? Do you look at it is like getting yourself into the best possible shape for a rougher future for asset management. When you think about our pricing, we've been really consistent. We have been very vocal around we're going to invest in pricing somewhere around one and a half to two and a half

per center of revenue. But we invest for growth. So when we invest in pricing is for the potential of growth more than will overcome the loss of revenue of the cat so when you look at what we did in IVV a few years ago, we tripled the size of the fund since then. When you look at what we are doing in IVV now, again, we're doing it because we want as UM the IVV a spl if I founder the exposure to be the largest one in

the world. So we do it for growth. UM. So I think that every you know, ultimately, when you look at the industry is extremely competitive, all IPPs. When you look at the alternatives in the active world, epps are extremely competitive. So again, you know, I think that you've gotta be thinking about our pricing right now. Whenever we

cat is because we want to grow. Over the last few years, we have returned back to the investors somewhere around six d million dollars in UM and fed cats in voluntary ficcats that we have introduced, and every single one of those moves was intended to grow our asset

dates and our revenue base. Armando. One thing that has been highlighted in the past couple of quarters are flows into E S G E T s and in particular in the sustainable suite of products at black Rock, and it's something where I think mentioned in his letter at the top of the year about wanting to double the number of I shares M E s G, E T S.

So what do you think is behind those flows? Is there anything more than meets the I with just customer preferences shifting and then as you think about what to develop and what hasn't already been picked over as far as new products in the sustainable space, you know where is your head up sustainable and E s G we're extremely excited about at the firm and also in within ashres um. You mentioned flows. I think that this year

alone as it flows were around eleven billion. If you look at the whole year of two thousand and nineteen were around five billion for the full year UH. And we already thought that Lazio was an inflection point and all the point that that I think it's interesting is when you look at this year, Europe was heading flows into sustainable investing overall, not just TPFs UH. This year actually in within a hears we're seeing more flows coming into E s G from US investors. Why is that happening?

I think that they change in the narrative and they've been more clear around investing and sustainable investing in E s G is not about values. Uh about value, is about the recognition that ultimately E s G related risks in a portfolio will have a significant impact in asset pricing in capital ocasions. I think that it's also interesting some of the things that we've seen this year. There was a lot of emphasis on on the E on climate.

I think that this year that has also expanded to more focused from investors, both institutional and wealth investors on the S and the G, society and governance, and especially on the back of some of the events that you've seen this year, how companies treat their employees, the composition of their of their boards, the diversity in the firm. I think that there's these are factors that more and more investors will focused on. Okay, Ormando, I am the

s G skeptic. The three things I would push back on s G in general are with the flows. I think the media characterizes it as like millennials have E s G fever, But half of the flows are our model portfolios, which they still count. But it's one hand moving the money there, and the institutional seating again still counts. Everything counts in the terra dome, but half his grassroots organic, and that's not a ton given the hype. Second point, E s G largely is a bet on tech and

against the energy. So it's almost like the mouth of an alligator. If energy has a supply shock, E s G could be heard and will people be disappointed by that? And then the third issue is E s G U, which is the biggest one, that's your I think it's like seven billion at this point. Um you know it owns Facebook and Exon. It's sort of like diet E s G, which is makes sense because you might not want to have too much tracking, or at least advisors

are tend to not go for that. But then do people who want E s G really want to own Facebook and Xon? Let me just begin at the beginning. So model portfolios, Yes, I mean I think that and it goes back to what I said earlier. I think that is about how do you think of E s G risks have your building a portfolio? And this is why you see E s G now being part of model profolires. And this is not only whether it's our black Rock model proferlires. These our third party model porfolios.

You see a lot more activity and this is why we are also accelerating the development of new products. And like I think any mentioned, we committed it to triple our product base in e s G because we need to create more building blocks so portfolio model portfolio builders can have the building tools to increase their sustainable allocations in their proferlio. So, yes, you see that, and that's a good thing, by the way. The second one in terms of the the the client base, I've never been

a believer in thinking that it is just millennials. I think that there is a higher awareness of e s G and importance to society. But again, this is not about values. I think that there's a play there. I think that there are some people that are going to want to invest according to their values, and we want to provide that choice. But again I would fall back to UH. What I would say is a less polarizing conversation, which is this is about returns. This is about e

SD related risks. This is about how climate change will have an impact on the performance of companies that may be issuing mortgages in areas that may be flooded, or if you are a company that is highly reliant on water supplies, a better use and more efficient use of your water of how you use water UM, you know you will be a more efficient and more profitable company that will do better. Companies that are able to attract and retain the best talent because of their practices will

do better. So again this you know, if you go back to the narrative around not values, but really investment risk and investment returns, I think that that, yes, millennials have been coming in, but you've also seen institutional investors. Some of the largest investors that we've had in the last year have intention plans. You're beginning to see asset owners across the blow beginning to change their benchmark to increase allocations to E s g UM. Then the final one is is one that we have to do a

better job Eric, and I agree with you. I mean I think that them and we are trying, and we're putting a lot of energy in education to really help investors understand, you know, how do you build a portfolio with sustainable, how do you investment sustainable? And the range of sustainable offering that we have, how does it work.

So we have a range of products that we're launching call Advance that's kind of like the most pure form of E s G investing where you're gonna have extensive screen up screens, UM, you're gonna have UM eliminate the entire value chain of certain industries and certain types of investments. Then you have another range of products that we have called aware, where you're being aware of sustainable metrics, but you're still investing close to the benchmark, so less tracking area.

So the offering that you refer to is an offering that you kiptin into sustainable, but you want to still have uh the same similar returns to the benchmark. So armando UM for all your efforts and and the you know, the good intentions behind where you're trying to go with this, you know, a crisis hits and everybody turns into uh robin Hood day traders, it seems, and you know, we we actually pulled some of the numbers and we were

kind of shocked. Um, but according to these numbers that we saw, I Shares is not in the top twenty of of e t f s that are being traded on robin Hood. And was curious if there was one product you could get into that top twenty, what would it be. The last thing that I think that we would want is to promote day trading. I think that if you look at the DNA of black Rock, our company, I mean, how many letters have you seen from Larry about long term missive uh and the importance of staying invested,

the importance of portfolio construction. I mean, I think that talking about their trading will be going back, going back to Jurassic Park. I mean, it's like everything that we're talking to investors about is laun terminism, stay invested. I mean, like even the offering when we build that we're offering, Like if you think about our thematics offering, the megatrends offering, one of the things that we're thinking around that is

how do we keep people invested? So through those teams, Uh, one of the main benefits is that hopefully through the lens of understanding the team and having kind of like a connection. If you like self driving cars, h, if you like autonomous vehicles and and electric vehicles, this is one thing that you can invest in and you can stay invested because we believe by staying invested people will have better returns. The rest is just gambling. So we're

not gonna get into that. And let me um talk a little bit about the the bigger picture here, which is what we had Martin Small, who it's your predecessor, right, and we asked him what's the breakdown of E t F users by assets? So in other words, institution advisor and do it yourself retail. And I believe, don't quote me, it was in the ballpark of you know, advisors of the bulk institutions, a small slice and then do it yourself retail. I think he said it was like Robin Hood.

We've seen a couple of products kind of just skip the advisor and just be hits on Robin Hood. Um, do you see that channel growing? We're more and more people just do it themselves. Do you see that ten

eating into one of the other two areas? Those those percentages that Marktin talked to you about haven't really changed that much because you know, ultimately, yes, the direct has been increasing, but we've seen tremendous growth in the institutional space, like even this year for instance, from a flow perspective, we've seen great growth because now we have more asset managers and massive downers utilizing fixing comediev's to replace their individual holdings or bombs. I think we have a very

strong commitment to advisors. It has worked incredibly well for us. I think direct will continue to increase, but overall the percentages haven't really changed. At the beginning of this year, I went to an e t F conference and everyone was like, oh, you know, it's January. They're like, oh, this is the year of like the active non transparent ETS and like it turns out is a year of a lot of different stuff. But nevertheless, you guys are

pursuing UM active non transparence of your own. I wonder if you could talk to us a little bit about UM where you see those kinds of products going. What you know, you're in a quiet period for the ones that you filed for, but how big of an opportunity do you see it actually being? And like, has this space already been picked over by smart data already? This

MELDA ETS and active management. No. I mean, look, we're super excited about our factors offering and that has been a tremendous franchise of growth for us separately from separate from that, UH in the active space, and and I

think that we have been really clear around UM. You know, wherever we see an opportunity to bring two clients performance through an investment strategy that will benefit from the idea of structure UM, we will bring it to market and that's that's you've seen an acceleration of our offering UM in the active space primarily transparent. And if you look at our filing has been transfer has been mostly transparent,

and most of the growth has been through transparency. Now, are there strategies that at times would benefit from some sort of non transparent or semi transparent structure because you're trying to protect the holdings that you are, the investments that protfolio manager are making. Yeah, there's going to be times that that happens, and then we have the option to do that type of portfolio as well. I think ultimately we don't think in terms of transparency and non transparency.

We think of what can we bring to investors that is new, that brings innovation, that brings performance. What's the best rapper to bring it in? As the secondary decision, I have a bet with my esteem colleague Todd Rosenbluth, the infamous UM. We're betting whether active non transparent ets will have ten billion by April first next year. I am the under, he's the over, and a big reason I'm the under is smart beta. I think if smart beta didn't exist, active non transparence would have a lot

of real estate to try to capture. But the fact is you can get active strategies served up rules based in smart beta. For example, your U S, m V or mt um momentum and minimumal or even multi factor which combines them all for you know under twenty basis points. How does an active human, especially in the large cap space, dislodge something so cheap um which advisor's love right now? And do you think I will win my bet with Todd?

Um So, I think that this will uh make Todd not so happy, But I think I would put my money with you, um Man, alright, Smart, I think that I may change my answer if I'm talking to him, But um I think that, look, there's an opportunity in the active offering. I agree with you in terms of the potential for factors, and our factor offering has proven that.

And I think that the transparency that they bring the rules based approach, I mean a lot of that is a tremendous benefit and has proven in the performance right, And I think that we're still in the early days of the growth of factors. Um there's there's a space for certain strategies and that's what we're doing. There's certain strategies that are incredibly attractive, and obviously I cannot talk

about them right now because of the quiet period. But you know, there's some active strategies that it will be great to have a monunity of form. I just think that they grow. It's going to be different, Eric, how much did you wager on that bet? By the way, Um, it's a state dinner, but I can go crazy with the side dishes when we get some cream spinach. Um, definitely a couple of drinks. I'm gonna lap it up because it's a year long bet, so might as well indulge.

I'm one for one with my bets with Todd, So otherwise it's hopefully yeah dinner. God. I hope we it's we can do it in real life, hope. Eric. Um. I have a question about I Shares versus black Rock branding. You guys have started to use the black Rock name on certain ETFs Um. Why is that? We just want to make it easier for clients to understand what it

is that they're buying. Uh. And I think that when it comes to active we are going to name them black Rock, just to make it easier to understand that if you're blind a black rock EPF, that means it's an active ETF. And if you're in and I CPF, you're buying on index bace CPS. So it's just it's just, you know, trying to make it easier for clients to understand exactly what they have and what he means. Let's shift gears a little bit here, and you know we

talked about your UM, your massive flow intake earlier. There's a steady stream of worries on how you and Vanguard in particular Impassive, which is ultimately you guys are continuing to become bigger and bigger owners of America's corporations. There's two concerns. One is proxy voting. Will you vote politically like with E. S G all the time? Or you got you have customers in every state, so how do

you vote and balance all those needs? And number two is do you think that if Passive becomes a bigger, bigger owner corporations will somehow be less motivated to actually engage in capitalism and we become like somehow it's more like lazy UM. I mean look, the its economy UH is large, diverse and vibrant, and I mean, ultimately, when you look at what we're trying to do, what we are about is we have a FIDU shared responsibility to our clients. It's not our money, it's our clients money.

And what we are trying to achieve is the best to media objectives of the clients. Depending on the portfolio that that we manage on behalf of that. You know, when when you look at that discussion, I mean sometimes we forget that we have a tremendous we have billions of dollars in active management UH and there are individually

selecting securities. So index is one part of our of black Rock, and then we have our active book and ultimately both decisions have to be driven by the FIDU shary of responsibility that we have to deliver the first the best performance to clients. So again, you know, like we you know, there's been a lot of discussion around that.

We don't believe that that's an issue. We don't believe that the size of index, even when you look now the size of freight with the investments as a percentage of the with the market, the size of fixing come investments is a percentage of the bond market. Um, that's we don't believe that that's an issue that we should be concerned about. The other thing that I hear a lot, and I just like to get your take on this the indies, right, these are small independent issuers. They're great

about you guys a lot. You know, you get into themes and like maybe the more hardcore area of the factor space. What do you say to them, thinking like, hey, come on, can't you just like let us own this area? Why does black Rock have to go into everything? And also I think that one thing that they one complaint they often have is like if they have a good idea, black Rock can easily just take it. I think there's plenty of I I believe that the more etf issuers,

the better it is for the overall industry. The better is for the market, the better it is for clients. And I think that, you know, the only thing my only comment here that I would bring is that what we need to see is real innovation coming from different issuers. You know. I think that if you're just trying to replicate, uh, you know, and you've seen that over and over again, you know, someone comes with a new version of the SMP five hundred, a cup weighted generic index at a

lower price. I just don't think that that game will work. I think that if you bring real innovation that delivers value to clients, I think that you have h then the opportunity to grow and be successful. But overall, I think that the more competition that we have, the better we get. We're not gonna stop. So we're very competitive. We want to stay competitive. We want to uh continue to innovate, uh and you see that in some of the offering that that we're creating in the last few years.

But I think that there's an opportunity for real innovation to come in. But if you just introduce something at a lower price, I think that the idea that just costs is what it's going to drive success. I think that that's wrong. That will fail. Okay, it seems like everybody at Black Rock is musically inclined. Martin Smalls has a gigantic guitar collection. I'm curious, you know what, what kind of what kind of instruments you play? Well, I tell you what. Maybe we can talk better about things

that I would like to play. I would love to play, to play the electric guitar like Martin, that would be I would love that. I'm a huge rock fan, would love that. I have absolutely no musical talent whatsoever, but I would love to play the electric guitar. You could do the cow bell in the in the black Rock band, I could do that, you know block because andrew A is the synthesizer guy. My colleague over there, Kate Bernhardt

is an excellent singer. I was wondering if do they ask you to name three guitar chords in the interview and when you file for a job. I saw him play they play uh or black Rock last year. That was the first time that I saw them live, and I was humbled by the amount of talent on stage because I couldn't I really couldn't play anything. So they were incredible. They did an amazing job and they actually placed all of the songs that I really loved, so

it was great. Armando, thanks so much again for joining us on Trillions. No, thanks for having me here. It's been a pleasure. Thanks for listening to Trillions until next time. You can find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify and wherever else you like to listen. We'd love to hear from you. We're on Twitter, I'm at Joel Webber Show, He's at Eric call Tunis and you can find any at Antonia b Massa. This episode

of Trillions was produced by Magnus Hendrickson. Francesca Levy is the head of Bloomberg Podcast. Bye.