Exchanging Exchanges at Exchange

et F now it's called Exchange. But as I've said many times to me, it's like the Comic Con of ETFs. It's just short of people dressing up as their favorite et F. UM. It's a big celebration of the industry that could actually happen. Honestly, it really could. I think, Um, that's something to consider for the Slanning Committee. Maybe just a big ball one night where you all you dress up as your favorite et F and there's a dance

and I don't know, just throwing out ideas. It's not the worst day, but this industry is is just sizzling with with action and innovation and excitement, and it's been that way the all twelve years. So once again this conference um delivered. I had a good time. The days fly by by nine ten pm, I am fried, and then you just get up and do it all over again and then bam, you're on your plane home and you're like, wow, that was like a trade show. So

take away from this year anything original. There are definitely some interesting takeaways. I don't want to steal the thunder of the people I interviewed, So I went around and interviewed, you know, eight to ten people about some of the takeaways in the big themes in the conference, and you know what they had to say, and um, yeah, there was It was different this year. You can tell a bear market had happened. It was a little more subdued in terms of the booths and stuff and um, but

people still excited doing things again. Some you know, soccer ball gets kicked around the field in finance, but there's always a field and this is uh E. T f s are vehicles to serve whatever you're looking for in that field. So the industry again was very happy they had a big year last year, considering the markets and looking forward to more growth this year. So that's the thing with the t F industry. There's just this feeling of you're on the right side of history. Uh, there's

a wave you're surfing. It's just a nice feeling rather than an industry that's you say, shrinking this time on Trilliance exchanges from the Exchange e t F conference. Okay, Eric, so you you brought a recorder with you. You stick the recorder in people's face, Ask him a question, get the response. Who we're gonna hear from first? First we'll go with Brian lake Um. He is heads up JP Morgan's global et F efforts, and Brian had a big year. JP Morgan crushed it. They are at a hundred billion

dollars now. I think five years ago they might have had seven billion. They had the biggest active et F in terms of flows. JEP is the ticker and it outflowed arcs best year. So JP Morgan has really cracked the code on how to come in a little late and be successful. And so Brian, who used to work at power Shares before JP Morgan, so he's like an

et F guy at art. He's the one who came on about five years ago here and said ets will hit thirty trillion by I believe that number was global so we had him on e t F i Q which shut down there, and he said, U S E t S will double to fifteen trillion in the next five years. I mean, this would take a lot there at six point seven trillion. Now he's saying fifteen in five years. But I asked him if he still thinks thirty for thirty is going to happen, which is thirty

trillion by twenty thirty years. What he says, I think we're on schedule, Eric, I mean, look, you know, we're celebrating thirty years. There's never been a rolling five year period where E t F assets haven't doubled. Two thousand seventeen to two thousand twenty two, they went from three point five to seven trillion. We think, actually they can go from seven trillion to fifteen in the next five years. A little bit of market, another DOUBLET and thirty's we're there.

We're on track. So that's pretty optimistic, I'd say, so, especially off this year that we've just had. So what the market is a big variable. If the markets are flat or go down, it makes it tougher. That means you got to get that seven trillion and just buy flows, and that would be like over a trillion a year, and ETFs have never taken in over a trillion a year.

That said, there's a big lump of money over in the act of mutual fund side, and I believe a lot of that will just sort of convert over, which technically doesn't count as flows in all cases, but I think that's what could get us there if the markets don't help. But if the markets start to return again, like five ten percent a year, the markets can really help you. And all of a sudden, those numbers are not that hard to achieve. So look, I I think

theo I think they will eclipse fifteen trillion. If I had to bet, and I did Athanasio Saraphagus on my team. He took the under, I took the over. We'll see. I think the markets. I think I'm just bullish on the US markets in general. I think they'll come back eventually, maybe after another rough year or two, and then I think you'll have a bunch of money that comes over from the mutual fund side in like sort of lump form.

I was gonna say lump. He feels like that it's gonna You're not gonna be able to figure out exactly what that what that number is gonna look like it's going to change every year, but maybe at the end of it there's a big momp some there. Okay, number two alright, so yes, everything is optimistic, but the vibe, as I mentioned earlier, was kind of subdued. You know. Last year, arc was the centerpiece. There was crypto everywhere. Uh E s G. There was a lot of shiny

objects all around, right, None of that. This year it was a little more. It just felt a little more accountant ish, if you will. Sober. Here's Matt Hogan, who actually was one of the people who started inside ets way back in the day, on this sort of different mood this year. Yeah, everyone got sucker punched in the gut last year with all risk assets down, and that's turned into much more subdued booths. Let's say, fewer basketball games, fewer cars for your race, car driving, no golf, uh,

much more serious, much more about product. That's probably for the best, and it's a good signal that maybe we're at the bottom and once we see car driving returned to this conference, that's the time to sell car driving. Matt Hogan with booths as e stomic signals, which is he has a point kind of reminded me the Big Short Remember when he went in and goes, there's this is the top. He just sensed it, you know, And he's right. The crazier the boost get the more you're

at a late cyclable market. And uh, this this was not This is a really stripped down There's a lot of boosts. Everybody is still there, but definitely stripped down and look a little more professional, I guess maybe. And the car driving part. Have you gone to the racetrack there. I'm usually a little too busy to partake in these booths. Sometimes if you have a really good booth like a car simulator, there's a line and I'm not going to stand in line to do it or you know. But

I do remember doing the I Shares basketball. That was fun. I would go over and shoot hoops every now and then with them, but there was no line on that one. And remember remember a couple of years back, Quincy Jones was there. Sometimes you get that like celebrity factor as well. Um, and we interviewed him and uh yeah, just a lot less of that this year. Um. That said, now, Matt is an et F guy who went to crypto there's been about seven or eight of them. A couple of

them will come back. They're coming back over. So I sort of asked, Matt, are you going to come back? Go over? How do you feel about crypto? And here's what he said. I'm more convicted about crypto now than when I moved into the industry five years ago. So the level of technological progress is amazing. I think we're in a new bowl market. I think it's the market where crypto goes mainstream. So people aren't talking about crypto

much this year. I bet it will be a bigger conversation next year, and two years from now we'll be back to crypto being a significant portion of this event mainstream. Yeah. I mean, look, here's the thing. On one hand, crypto clearly has a big black eye now, I mean, how can you think you're going to invest in maybe three Not only did it go down because it was like a high beta investment that people sold off when the market went down, but then you have a situation where

you can't get your money out. I mean, these are major, major pr issues, but it's still survives Like it's like um, a cockroach, it just comes back. It's just you cannot kill it. And I think that's where I give respected and I know Matt is a deep thinker and I would not bet again them. So, Um, you know, I'm not gonna say that what he just said is wrong. Um, I'm a little doubtful. Um, it will come back, is strong. But again we've we've seen this movie before and it

does come back. Yeah, I'm curious with the regulatory framework. Looks like in these two years that he's describing there, he would probably argue, well, that's a good thing because it will spf proof people make them feel better about going in and they'll appreciate it. But then again, if you regulate and and make crypto so normal, it almost becomes traditional finance. And then what's the point. I mean, I don't know. There's so much to unpack with this.

It's a whole, like separate episode, I think. Alright, Number four Okay, so one of the big panels was on like whether you should still invest in stocks. Remember that term, Tina, there is no alternative where there is nothing else to do but just buy stocks now, Like my boss, Gina Martin Adams has a phrase tera there is a rational alternative or reasonable alternative, and that's why we see people

moving into treasuries in different places and diversifying. But there was a debate over Tina, and Liz Young of Sophar I thought, had a very good comment about it, and we you know, asked her about Tina and why it really never goes away. Um, it might just change for him. So here she is, Yeah, Well, I don't think Tina's ever really over right. If you're investor who's trying to build wealth, you have to be in stocks in order to build long term growth. You you can't abandon equities entirely.

There's something that you know, what's happening right now is this kind of structural shift in the market. We've got higher rates for longer, we've got inflation, we've got all kinds of stuff that hasn't been in play for the better part of the last two to four decades. So there's a rotation maybe in leadership, and you could change what you own in the equity market. So one of the things that I've been talking about lately is this old Fama French model, right, And that's if anybody doesn't

know what that is, go google it. Put yourselves to sleep. It's this very old theory that has not worked in twenty years. But basically it suggests that small caps should beat large caps, value should beat growth. And I think it's actually coming back into play because the environment has changed. But I don't think you can ever say Tina is dead. You need stocks in a portfolio to grow wealth over the long term. Oh that's spicy, it is, But it isn't like she's right. I mean, you can't not get

that equity market premium. I mean, it's what are we really doing here? And I broke this down in the Bogol book. We are trying to make money by being owners of a company, and the company makes money because they all everybody gets up, creates value, and that creates cash flow and dividends. That's what you're investing in. And so I don't know. To try to time that is difficult,

and so personally I'm sticking with stocks. Now. What she's saying, though, is maybe you take a little off large because it grew so much and you rebounce into small something like that. I get that, Like there are areas that get left behind a little bit, and I think small and Value was was one of those. So it could be an error where small and value kind of outperformed large, but you're still talking about stock and the returns they give you. Did you read the fumba French paper. I know what

it is. I didn't read it um, but yeah, it's very it's very much of a gospel in the factor world. Who's next? Next? We got Julie Kane, who is from Democracy Investments. She does something similar to what Perth told does of the Freedom Fund, which is the sort of serve up international investing, but stripped out the authoritarianism from the fund and sort of overweight the democracy. And this is a sort of I guess e s G GEO

political style. Anyway, she had sat in the interview with Ian Bremer, who runs a political risk think tank called the Eurasia Group yep uh and Katie gray felt our own Katie Greifeld interviewed him and so Julie was pumped up because Ian was kind of speaking her language. And here's what she said about international Yeah, I'm seeing renewed interest in international in general. Uh. Great talk yesterday by Ian Bremer, adjusting what he calls a guoke political recession.

He had a lot of concerning news. His one positive news was democracy and the power of institutions to come together and fight back. So that, Uh, that validated our strategy, which is to use the Economist Democracy Index to overallocate into democracies and under allocate to authoritarians. So we feel like our strategy is more timely now than ever. So how does her strategy compare with TOLLS? The big difference is TOLLS is only emerging markets, hers is all international, um.

But they have some overlap for sure, um. And it's they're trying to They're on the same frequency, if you will. And I think they have the same goals, um for sure, but they're slightly different takes. It is an interesting time to be thinking and talking about this because we've seen all these norms that have been bedrocks of sort of modern society for decades just start to get tested in ways that we haven't really seen before. And that is

a variable that investors have not had to face. Yeah, I mean there was definitely a political nature to his talk which I won't touch. But um, I definitely think international is a hot issue now. If you look at the flows merging markets, international are taking in way more money than normally do. People are definitely rotating into this trade. The Suzanne Wooly article I did on where to Invest the money, where she has five experts. Everyone recommended International.

Here's the thing, though, I've seen this movie before. International was supposed to work like ten times in the past fifteen years. So I don't know. I'm gonna just wait and see. I want to really see it take hold before I can sort of respect this as a full like a trade that is going to last a while. I think for now, I'm I'm a little skeptical, to be honest. Next al right, Next up we have Hector McNeil of Han E t F. He's a European issuere so he came all the way over here in Miami.

Why not? Why not? He's a white label issuer, sort of like remember our white label episode we did um a couple of weeks back, where these are issuers where you can come to them with an idea and they will just sort of make your et F. Are you if they like it and feel like they want to work with you, so they start by saying no, it's might might take from that episode, so I asked him about the Royal Gold ETF which he put out and that was one of our e t F to watch

in twenty three um and gold has become gotten a little more attention because crypto has been so in the doghouse. So here he is talking about this interesting et F that he put out under his white label. Yeah. So so when when we looks at the white label market, we we felt that we couldn't be the eurostops guys at two basiness points hieing the last guys or simply

whatever it is. So we would only do stuff that's gonna our value to the to the market, right because ultimately, if we're going up against the ice shares and investco is whatever you need to have something else, something in the something in the pot. And then the roleman knocked on our door and the roleman I'm I'm a big history buff. It's it's fantastic. Actually, if you ever you ever got a chance, we can take you down to the v I P tour of it, you know, fifty site.

But it's the Britain's all this company. It's the fourth owners company in the world. It was set up in eight eight nine by offered the Great to finance the Viking walls. Right, and you can go see the coins there. Isaac Newton was a CEO there for twenty seven years.

Everything Isaac Newton's a scientist, but he had a their job, and he created the first modern noncuntterfeedable coin, and he created with serrated edges because in the past people used to chip bits off gold coins or whatever, you know, because people wuldn't know it. So there's a huge amount of history. It survived the Black Plague, it's survived Spanish flu, civil wars, two World Wars, whatever. Right, so it's you know, I've got the best credit history in the world of

financial companies. I think the only older companies are a German pub and three Samurai sword companies, believe it or not. So when they came along and said, look, we've we've got to We've got a gold each year gold offering, you know, and we said, well, this is great because it's different because you know, pretty much all the gold ea jifs in the world either keep their gold at JP Morgan or HSBC in London in New York, and

as you know, golds buyers are paranoid. So having a vault that's in the middle of the Welsh countryside more secure vault in the world. Nuclear blast Proof used to be a Ministry defense site until twenty seventeen, you know, and his out side the financial system, because that's the other thing. It always askay, we'll buy gold ETFs to head against financial systemic risk, and then they keep the golden banks. You know, it's a bit bizarre, isn't it. Really.

I want to spend some more time with Hector yea with it with it. Yeah, you know, I'd never say years there are three digits ever, but I really like this interview. This is one of the longer ones I clip because a some interesting factoids in there. I gotta say, um too, there's always stories in the smaller issues. There's always some interesting stuff to unpack. And also remember he's

not the royal mint. That's his client kind of, but he learned everything about it because he's got to sell the e t F and he's got to compete, as he said, against the black Rock and vanguards of the world, and it's tough. You have to have difference in stories.

So there are so many issuers at this event, and they have so many stories to tell, and that's I think just a great example of the kind of stuff you can hear beyond like oh, here's my large cap stock etf Also, I think he invited us on a tour. I really I had a vision in my mind of like the Welsh countryside going on this v I p towards the Royal Man. I think we should do it. I mean, I think we let's do it. Sounds pretty good, Okay. Next next up, we have the one and only Todd

rosen Bluth Vertify. So, as you know, Todd and I have a myriad of bets going on, and one of them just ended, and one of them was Capital Group. I had the under that they wouldn't get the seven billion in the first year, and they did. They did it with two weeks of spare. This breaks a streak, it does. I was, well, I lost two this year to him, so I'm three and two. Yeah, he's crawling back market. Yeah, I know, I should just think the

bullmarket bets. Yeah, anyway, here he is taking a victory lap. Alright. So Capital Group has not even hit its one year anniversary and it has passed seven billion dollars. I want to repeat seven billion dollars. I was on a Chillian's podcast a little over a year ago and joined a bet with you. Eric where it sounded so lofty, but Capital Group came through, and now as a result of it, many clients are happy. Capital Group is certainly happy, and you're gonna be buying me a stake as a result

of it. So now I'm on a winning streak in the e t F puned in bet, so I couldn't be happier for a Capital Group. He's jacked up. He is, he said he should be. It was a year long bet and get this. They were at six nine two or something like that, so they were like just about to get it. And that was the day Powell was supposed to speak, and there was a question of whether he was going to just be really hawkish to try to tell the market we're no, we're nowhere near close

to done. But he got a little dovish, so the markets rallied and it hit seven just on the ad the market appreciation. I was thinking this scenario, if Paul Powell was going to get real hawkish and the market appreciation would turn to depreciation and it would depreciate so much that the flows wouldn't off said it, and I would have won the bet. After he got a centimeter away from seven, it was going to be such a

classic moment, but wasn't meant to be. And so Todd, if you're listening, congrats, and yeah, he's gonna definitely let you know about that steak dinner. Up next on the list, you have Beth Williamson Calumus. What did she have to say? Calamos just put out on e t F that is an E s G fund that you know, the basketball player Janice, I can't really pronounce his last name, but the Greek freak, the guy on the bucks. It's an E s G fund with his last name in it.

And at first I was like, is this somebody else? And I look, don't know. He's actually partnered with Calamos to put this fund out that does E s G investing and then uses some of the proceeds to also invest back um. He apparently is looking to make a big difference and he's friends with the guy from Calamos, And so I asked Beth about the situation. John Cadoonas and uh Jana Santa to Kumpo are through mutual friends

love at basketball. I see mentioned met a couple of years ago and they worked together to conceptualized idea on how to bring impact to the finance space, and over year plus of conversation, they decided on a suite of investment products, including the Calamos Onto te Kumpo Sustainable Equity e t F that launched yesterday UM to bring financial literacy education and an investment vehicle that's going to be

available to the masses. Again, it's just a it's a someone who's not in the financial world looking to make a difference and give back. I don't see the movie Rise about him on Disney. It's really good movie. I cried half the time. Just seems like a genuine guy, any genuine genuine intentions here that said. E s G s in not doing well right now. The thing is a little in the higher cost side. But you know his name, and potentially Calamos has a lot of other

things going on. They can sort of afford to keep this in the market for a while, but could take a while because of the environment. Right now, it's gonna be a tough sell, but he certainly helps and gives it attention that other E s G funds don't have. UM So interesting and your final interview final interview was again we're sticking with basketball here. Roy Williams, who was coach of Kansas and North Carolina. I believe he won

titles with each. He's got a bunch of records. I mean, he is like legit Hall of Fame kind of college basketball coach. And he was the assistant to um Dean Smith at North Carolina and coach Jordan's. So I was like, I investco had him on a panel and they had a little party afterwards. So I went to the room and got to interview Roy Williams. Now, I don't want to take up too much of his time, and I

wasn't gonna ask him etf questions. So I asked him how to break a press, because on I coached my twelve year olds basketball team, and there's our kids are on the younger side and the smaller side, and a lot of these teams pressed the whole game, which is that's just a weird way to play. I think you press when you're down or you need it. But anyway, I was just curious what he said about breaking a press and if you had any tips on it, and then I had to ask him about Jordan's. So here

you go. Make sure you work on your dribbling and pass an he'd catchen being the biggest thing. Try to get some baskets before they get the press set up. That would be okay and greatest. You were assistant coach during the Jordan years, right, What was it? Were you stunned at how much he hate how much how much he did or could you see it back then? Well, we could see he was gonna be a great player, but I don't think anyone understood what he was going

to actually do. He was off the charts. He's still a great friend. That okay, that's cute feel, But I feel bad for your son's team. We're owen six, you know, because I drafted a lot of his friends who were eleven and there's thirteen year olds in this league. That said, he gets a lot of playing time and his friends are on his team, so they have a good time. Um, we'll have one more uh sports addition to the podcast. Because Eric lives Philadelphia, Philadelphia Eagles are about like water

to him. Maybe you haven't been watching anything, but Eagles made it to the super Bowl, did not go well in the final seconds, but Eric lost another bet. I'm sensing a theme here. I'm on, I'm on a bad run. I had I was on. I was unstoppable for a while there, Joel. Yeah, this is just like the bowl market. And then this is how they get you, Like in the casinos, you win a couple of times and all

of a sudden, like you're broke. No. Um. I had to do it because Natu Racy is a big chief fan los in Kansas City, and I'm I'm really friendly with him and I think he's a nice guy, and I thought i'd be fun to have a bet, so he announced it on his podcast et F Prime and the bet was that whoever won the other guy would send them a jersey from the NFL shop. So I get to send him to Patrick mahomes jersey, which is like a hundred fifty bucks. My wife's not loving that,

but Nate, congratulations. The Chiefs were the better team. They won the game. Patrick Mahomes is you know, Hall of Famer. You're lucky. But we'll be back. 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 Wepper Show, He's at Eric Falcuna's. This episode of Trillions was produced by Magnets Hendrick Bye