Less Than Zero: A Look Into a Wild Two Weeks in the ETF Fee War

different was the intensity of this particular outbreak. And in fact, some people inside e t F the conference we covered a couple of months ago, they thought the e t f FE war was kind of over and rate is. I sort of heard people whispering like, ooh, it's done, it's over. Bam. Uh. There was a outbreak like I've never seen. We're talking about ten different issuers or shots fired, with about twenty different ETFs being affected. And it included

everything everything from the big guys to the indies. It's all there. It was unbelievable and you know, garnered a lot of news. It also garnered a lot of reaction. You know, I think deep down inside you've got people in the fundustry are probably scared that this is really wild and scary for everybody's livelihood. Then you had some mockery. You know, what's nucks free, steak knives, um, you know

that's always what you hear. One guy when the first shot was fired, which was a zero feetf one guy in my Twitter feed a couple of days later said how long till they pay you? And then and it turns out day later he was, you know, there there it was. So that's right, like it went not only to zero, but it went below zero. To the fact that one issue or basically started to pay you to actually hold an ETF. Yeah, this was I think a

place we all thought we were going to go. But I think most people thought pay you would be a couple of years down the road. But the fact that it came so close on the heels of the zero, I think that's what. And then in between you had Vanguard in Black Rock and State Street all do their shots. Those are more like bombs because those are going to really affect some flows. But this was, I get again, the most intense two week period of the fee war

that I've ever seen. Joining us on this episode of Trillions is Rachel Evans to help us walk through this timeline of the great fee War, this time on Trillians the Race for Zero. Rachel, always a pleasure to have you. Thanks having me. When you saw this happen and it kind of culminated in in late February, what was your take on it? Yeah, so I mean as that as that kind of said earlier, like we've been seeing this fee war developing over the last few years. In many respects,

this is really nothing new. This kind of cut and count a cup, particularly from the big three Black Rock, Vanguard and State Street, has really been taking place for a long long time. However, what struck me is kind of new this time is that really that the diversity of players that kind of like suddenly wanted to have a crack at lowering price in order to either get

attention and or lure assets. And it really seems that this has become something that is not just for a select few large issuers, but something that really everybody wants to have a go out. And I think it really speaks to exactly how important cost has become within the e t F market. You know, whether you're a retail investor putting in a few thousand here or there, or whether you're an advisor with a millions or billions to allocate cost has become something that issuers can can't afford

to ignore. They have to have something that they can show to to those investors that says, hey, you know, if you get into this fund, yes the strategy is good, Yes we have a good brand. But actually it's also not going to cost you much. But isn't this I mean, this is a huge business problem. When it's great for a consumer like great, everything's free or almost free, what does it mean for asset managers? That is the big challenge, right, I mean, if you are charging nothing for your funds,

where do you make a profit? Now? For for some companies, Banker, for example, has an interesting business model in which it isn't really working for shareholders. It's working very much for kind of I guess, the shareholders in its ETFs. Whereas you know, for other companies that are publicly listed, you know they have shareholders that they are accountable to and they do need to generate a profit. So the idea

is that if you cut two very very low. You then either kind of managed to make it up by getting lots of assets into those funds and a very very low one basis point on a billion dollars, for example, it's better than fifty basis points on no billion dollars. So in that respect, you can make it up there, or you try and potentially upsell by having other products that you know, do charge more that you can kind of move clients into once they brought those very cheap products.

There are also a few ways in which you can try and make a no cost funds sort of pay for itself. They're a little bit more technical, but tend to involve, you know, securities lending, lending out the securities from within the fund for a fee, and then using that to offset the lost revenue from charging nothing. Let me jump in here, because you know, the invisible hand

behind all this is advisors. They switched to a model where they get paid as a percentage of the client's assets as opposed to getting a commission from the mutual fund. So what that did is it kind of left mutual funds out and out in the cold, because now that

you're getting a percentage of your client's assets. Of course, you want cheap stuff, right, But advisors may be creating a monster that when may come back and haunt them because if they're so cost obsessed to the point where they're going to drive the issuer's fees down to nothing, these issuers who can't sell a fund over ten basis points may start looking at their one percent fees and be like, hm, that looks like a good business to

get into. And so advisors, for the most part haven't felt anything close to what asset managers are going through with their fees. So you may find asset managers start to get closer and closer to the end customer and become advisors themselves. You've already seen it with Vanguard and Schwab black Rocks becoming like a technology provider to advisors to try to make money from them in different ways. And this is also you know when Fidelity did their

zero about a year ago. Since then, the index of asset managers is down, and this is when the S and P is up six percent, so that's under performance of stocks of asset managers. So you can see that Wall Street is really onto this, even though the revenues haven't been hurt that badly. Because of the bull market's been nice for their assets and revenue. This is sort

of them looking forward and saying these companies are in trouble. Yeah, that's gonna be really interesting, you know, when we do get a bear market, given that things are already at this point where so many fund issues have had to lower their fees towards zero, and that has been very much done on the basis that assets will continue coming into these funds and these funds will continue growing to

allow them to make a profit. If we start to see a bear market, yes, et F may well become kind of a place where people can hide out and try and kind of ride out the storm. But it does make it much harder for those asset managers to keep blowering costs and to make a profit. It could become quite nasty when we do see see that bad market. Yeah. I mean most people are calling for an intense period of consolidation, and I think a bear market may trigger that.

In my opinion, you know, I think these brave souls in the E t F Terror Dome as I call it, that are fighting vanguard and you know, losing limbs left and right. I think they will be rewarded In the long run, I think these companies, because they have organic growth, they have things people want, which is cheap ETFs um. On the other side of a bear market, they may find themselves the buyer of some of these large asset managers that have were brand names for years. So companies

like Black Rock, State Street Invest, Go Schwab. I think their names could be around in ten or twenty years. As much as the pain they're feeling now, they may be rewarded down the road in terms of growing through acquisition and getting scale that way. Okay, I want to walk through this leaderst fee war and and this two week period that we've been talking about. What was the first shot across the bow? So so the first shot

across the bow was really so far. This is the the online lender you've probably received through the mail various kind of offers to refinance your student debt. Well, these guys now have their own kind of like asset management type business where they're trying to encourage people to to let them sort of invest their money on their behalf

as well as be financing their loans. So one of the things that they're doing as part of that is that they are launching these two e t fs that are going to be zero fee or at least zero fee for a certain period in time. The way they're doing this is rather than price the product at zero basis points for for the life of the products, they're actually doing a fee waiver, so the management fee will kick in potentially in a year's time. And so this was that the kind of first real shot across the bow.

This came out in late February, and it really shows I think kind of in terms of you know, these different theater as of war, if you will, of kind of like how the this price always kind of being four. This is really that this is a new entrance that kind of needs come into the market. They need to make a splash, and this is a way to kind of like get headlines and get people interested in their products, you know, when they don't necessarily have a background in

asset management, especially when it has a younger audience. Exactly absolutely a couple of things on so far. I do think this one isn't going to become big business. I think they'll probably service their own clients with this product or these products that are zero I don't know how many outside investors they'll get a couple of reasons. One, they're not that well known. You know, they're not a brand name like black Rock or Vanguard or JP morgan UM.

The second thing is that the zero fee funds they're launching aren't pure beta or you know, it's not like the SNP or the total market. They're actually a sort of a proprietary index that has a growth tilt. I think they think the millennial clients are more aggressive, and I get that. So you know, unless you're pure beta, you're not going to get mass money. I mean you're you're obviously looking for a smaller audience, uh that way. So I don't know if that'll be big, but it's

certainly got the headlines. UM. It's something that I think will have ripple effects. And but beyond that, it is interesting that it shows that outside companies that have nothing to do with the t F s UM now have a quick way to launch a free t F to serve their existing clients, because there's been some calls that tech companies may get into this business, and so far

went through a UM somebody else's exemptive relief. So it's almost like they took this fast track to get it done, and you may find um E t f s being issued to service small groups of clients, and that way they don't have to pay Vanguard to black Rock. I

actually think that I kind of disagree with you. I think, actually this is a really interesting strategy because you have a built in audience and you've just got them basically out of their debt, and now it's like, hey, as long as we get you out of debt, do you

wanna help make money? Yeah? But the question is, again, if you're looking at the big, gigantic sort of ocean of assets, um is an advisor in Texas gonna put their clients money in so Far and have to explain what that is rather than say black Rock or shall you know what I mean? It's maybe if so Far grows and grows. But I just think this is a product for their own audience. That's it. I actually think that's advantageous. But then the next day of February what happened.

So we we've already just heard about the new entrance. This was really a case of the old established guard kind of like coming out with with their latest round of feed cuts. This was Vanguard. Vanguard came out and cut by one or two basis points fees on about

ten ETFs. Of course, they didn't finish off that week necessarily, and sitting on that, they actually came out and then cut a few basis points off another three funds, three big funds, including their SMP five hundred funds that became the lowest cost SMP five hundred focused e t F with that fee cut. So that was kind of a really interesting example I guess of kind of how I sort of think of, like, you know, the US versus

the Soviet Union in this kind of price wall. I mean, this is kind of like where the real sort of arms races going on between Vanguard and Black Black and Vanguard. The two tend to kind of like they won't tell you necessarily that they're watching that their their rivals that closely, but they're very aware exactly. Yeah, there are some interesting

timings that on these things. Um So, Vanguard very much came out and kind of like put down a sort of market and said, you know, here, here we have the cheapest kind of S and P fivet F now out there. Um So that was kind of like an example I guess of of perhaps more of the type of feewall that we've been coming to expect rather than

the new guys. And that's interesting because Vanguard hasn't been the cheapest in the S and P five hundred, right, They've they've struggled to kind of always be lower than anybody else there. Yes, I mean it's kind of an interesting one because, like you know, you have all these broad stock market funds and Vanguard has always kind of been towards the top there. But it's very much been kind of this question of people changing positions every few months.

You know, you've got sort of Black Rock and Vanguard kind of vuying like one's one's up on the other one month, one's up on the other the next month. You've got State Street making a push to get into that space, not so much with their and P five hundred fund spy that's actually ready to be expensive, but with broad stock market funds. They have also been in

that space. And Schwab, which is a new entrant into the space, has been incredibly aggressive at launching and cutting fees to actually be in that space and very much alongside Black rocome Banguard at the top there. Yeah, this is kN Congrese Godzilla, right, So this is and this will move billions if not hundreds of billions of dollars.

This is big boy stuff here. The Vanguard case is interesting because and what Rachel just described we referred to as the core wars, because these are products that would make the core of your portfolio, which is where most of the money in America is. Right. So when they cut one bib, when i VV came out and went one bit lower than VOO back in, i VV immediately doubled its rate of flows and became the biggest flow getter, and since then and got separation from VO from twenty

billion to sixty billion. Now VO comes out cuts one bit lower than i VV two weeks ago, and since then it's had its biggest weekend flows. Ever. We can't prove that's related, but I wouldn't be surprised if you see VOO get a nice bump out of this, because we've seen the power of of one basis points one basis point in this case, especially in the SMP five hundred. But overall, the core wars are a rough, brutal place

to be. But if you just take the four corey tfs from black Rock and you compare them to the four corey ETFs of Vanguard, those eight e t f s alone have taken in the inflows in the past three years, even though they only made up eighteen percent ish of the assets at the beginning of that time. In other words, that is where a lot of the money is flowing. UM again, that this is a real assets that that you know, you see at the top

of the leaderboard year in and year out. I have said, I really liked a stat that Blamebag Intelligence had at the end of last year, which was that I think nine percent of flows into index funds when you look at ets and mutual funds have gone into products charging less than twenty basis points. I mean, that's crazy. I mean that show to you quite like quiet how imports into it is to have a cheap product. Okay, the next turn of this grew happened on March first, Eric.

What happened then March first was an interesting one UM State Street. Quietly, this was in the shadow of Vanguard. I thought said they were gonna UM convert C junks, J and K, which was a crossover sort of double B bond et F they had that wasn't getting much traction because of the products had sort of done better. They're converting it to a broad high yield product. But by the way, they're going to slash the fee to

fifteen basis points. This was quiet, but in any other you know, time period, you're essentially seeing State Street a major issue or come out with the cheapest junk bond etf on the market by a good measure too. And we've seen that. Deutsche Bank, I think two years ago came out with h y LB, which was at the time undercut everybody and fees in the junk bond market because it was twenty basis points. So here comes State Street. Now as of April one is going to have a

broad high yield TF for fifteen um. I can't imagine this doesn't do well. It's a big issuer. And we've seen the power of cheap in the junk bond space. Most people who are traders are going to use H y G and J and K. They just want that liquidity. But there is a group of longer term investors who are really going to respond to those uh that those low fees, and I think H C, J and K. Let's look out for New Year to probably have a

billion dollars. I'm really curious though, to see how Deutsche Bank and black Rock potentially react to this, because there was a really entertaining, from my perspective, a little spat that kind of like flared up in this fee wall. I think it was last year, may have been the year before. Time is flying past, but basically what once h y LB came out and did kind of undercut the rest of the market. Black Rock came out with

this new broad high yield fund. I think the tackle was U s h Y. Does that sound right, Eric, Yes, that's the that's the one that's like double the securities of h YG but it's still broad and sort of

market exactly. But anyway, they came out with that, so that was that was cheaper, and then Deutsche came out and cut the fee on h y l B two it's to kind of undercut U s h Y. So I'm curious to see kind of like whether this fifteen basis point sort of shot across the bow actually prompts black Rock or Deutsche has come out and try and be the cheapest again, or whether they're prepared to, you know, take the fact that they've managed to get decent number of assets into h y l B and kind of

sit on that and assume that that money will keep coming in now that they've reached that kind of landmark. And what's interesting is what Spiders really doing here, and they've done it over and over, is in a way mirror what black Rock did, which was pretty genius. Back in the day. Black Girl was getting its lunch eaten by Vanguard, so it said, hey, let's instead of we know we've got these liquid products that traders want and they don't care what the fee is, Let's keep those

there and we'll come out with a core series. So they've come up with similar products that do similar things, but they're way cheaper. Their priced at Van Guardian level.

So Spider is keeping J and K, which I think is forty BIPs and now they've got their sort of core series version with C junk and that's what black Rock has with h Y G and U S h Y. So a lot of these issues are started getting with the program of let's keep our liquid ones at the higher fee because traders don't care what it costs, and then we'll have these lower ones for these costs obsessed advisors. And what's this done. I mean, look, we're a couple

shots into this. This full on cost cutting war here. What's the mood like by this point that you guys can kind of discern. I think people are starting to sort of quake a little bit in their boots. And when you start to see kind of like this happening across such a variety of different products, it makes you start wondering, like, you know, you start looking over your shoulder, who's next, Who's going to come up, come out, Who's

going to undercut which products? So I think there's a lot of people, you know, on the sidelines kind of talking to their their fund boards, talking to others in the market, and trying to get a sense of like where the right prices for their products at the moment. I mean, no, no an issue is ever going to tell you before that they come out and cut that they're thinking about cutting it. It doesn't have it a

good ring to it. But I think there's a lot of kind of conversations going on behind the scenes as to whether this kind of like resets the dial for what you can actually ask for these types of products, and and are people seeing any glimpses of success, because success would look like what inflow right, Well, it's it's

Eric's point. I mean like Voo which did cut. That's the the SMP five D product that Vanguard runs, and that had a four billion dollar plus week, and last week was a bit of an odd week for for flows. It's what we call quadruple witching, which has a very nice ring to it, but basically just means that there's an awful lot of futures contracts and an options contracts

expiring around the same time. It can fuel some flows and some index rebalance things that happened then too, So there's a little hard to kind of like disaggregate the flows from from all of that kind of activity. However, the fact that this was a record week for for the fund and it came, you know, just a couple of weeks after that FEKA does certainly suggest that they are seeing some early success there. Okay, we're in early March,

March fifth, March seventh. What happens, So this is kind of like where things start to get a bit thematic. So we're kind of talking so BEFO, I've been talking about kind of these broad exposures, so broad equity exposure or broad kind of like debt high yield exposure. This is where the fee will starts to kind of like really sort of drill down into some of these more nuanced,

niche kind of products. So Defiance, which is a relatively new issue, it comes out with a five G focused ETF, so this is looking kind of the next generation of smartphones and of communications. They're charging thirty basis points for that, which in the thematic spaces is pretty down low. The theme space is interesting. Thirty BIPs, you know, that's like coming out with a broad based ETF at like four. I mean, that is extremely low. The average thematic et

F fee is sixty two basis points. But even when you asset weighted, typically you get to a number half that. But the asset weighted average is sixty. So a thematic ETF doesn't really need to go that hardcore. The problem is once of THETF hits and if you charge like say sixties seventy, black Rock, Goldman and these other big issues are going to smell some money, They're gonna come

in and undercut you. So I think this is Defiance his way of spraying black rock repellent on the e t F. And just I've seen this before a lot of issues just look into the future and they'll go you know, what the hell with it, Let's just go to where we're never'll be gonna go anyway, and this way we can save ourselves all the trouble. So to me, that is a just as interesting a shot in the few war as any other ones, even though thirty doesn't

seem nearly as low as the other ones. Relatively speaking, that's low, and especially low for such a specific thematic e t F. It's an interesting one as well, because, I mean you do have very much that kind of like you know, breathing on the back of your neck from Black Rock and State Street and Goldman. I mean,

they've all launched thematic products over the last year. So if you are a niche issue where that focuses on thematic, you are very aware of those kind of goliaths in the room that kind of like a looking to step once your turf. At the same time, you're one of the reasons that they're looking to step onto that turf is that they are able to charge higher fees for those products. It's it's something that helps offset from a

revenue perspective, the fact that they're cutting costs elsewhere. So there's this interesting dynamic whereby on the one hand, you know you need to kind of like go low because it does act as black clock repellent is. To the other hand, black bocks coming into that space because they do want to be able to charge your fee. And when you look at the ETFs, you know that they are cheap, and this one is a good example. It

charges thirty basis points. But we have this new score we're running uh in BI, which we call the thematic capture score, which looks at how much of the stocks actually get the revenue from the theme. And this one's very low, thirty six. We've got other ones that are nine, so this is on the low side. So in a way, again, this is a good reason to look beyond the fee sometimes because if you're looking for five G direct direct revenue,

you're only getting a slice of it here. And the other thing is it also shows that what I used to call vf z s Vanguard free zones where you could make a little money and you know, buy some food and stuff, those are gone, um Vanguard free zones. Other people are now taking a page from Vanguard's book and coming in low. Goldman did it in smart Bet a couple of years ago with GSLC, and so the vanguard free zone is almost the thing in the past.

The only place left where none of this is really happening is in these high octane leverage gts which charged No one's really messed with those. Outside of that, I mean, it's pretty much fee war on. So maybe there is black Rock repellent spray. But on the seventh of March, black Rock also launched a cheap e t F specifically on Japan. Yeah, necessary Japan e t F. They've they've had e w J for a long long time. It's pretty expensive. It charges forty seven basis points as expense

ratio for that. They came out with a couple of Japan products that charge fifteen basis points, so they are undercutting themselves. Now, these products are slightly different um one of them is equal weighted, for example, so it's taking a more kind of smart beta appro to to the country specific space. But it's interesting that in this war they are even prepared to undercut themselves if it means trying to kind of get some market share. Interesting to me.

They are not, however, the cheapest funds in the Japan space. There are other products that are out there that are nine basis points, which does mean that potentially those are the ones that are kind of like vying for that

that you know, very very free conscious investor. But it is interesting that they are trying to I guess, similar to what they did with these core products and a while back, they are trying to create a product that is cheaper and potentially appeals to the free conscious investor, whilst keeping the products that has a lot of assets already and can afford to charge forty seven pips. This was also I don't know if a response to JP

Morgan JP. Morgan had come out with a cheap Japan e t F b b JP at nineteen basis points, undercutting e w J, and a lot of its own advisors moved from e w J to b b JP, which brought up concerns of conflict of interest, pushing that aside for a seconds, a whole other conversation. Um, this is kind of a shot fired back, although it's equal weighted, so you are going to get a little more risk. It's not maybe for the same audience, but I guess black Rock can now roll into a meeting and say, yeah,

we have cheap Japan too. They weren't the only ones to do something. On March seventh, DWS did something in the E s G space. So this is the asset management arm of Deutsche Um that they rebranded, but it's always good to remember as Deutsche Um. So they launched an E s G fund U s s G that came in at ten basis points, undercutting all the other E s G funds out there. And they did this because they had the help of a finished pension funds.

So they already have eight hundred million of assets under management, which is very very good for for a new fund that often kind of daudals that around three million UM. But basically are they are charging the least um for an E s G E T F in in the U S And it really shows, I think of how you're not just in the thematic space, not just in the in the country space, but even within areas like

environmental social governance social responsibility fee is important. That potentially is an area where you could see invest is more willing to pay up if they actually think that a fund represents their values or think that a fund is kind of you know, sort of doing the right thing in terms of how it how it measures those criteria, but this is still an area where we are seeing that kind of fear reduction come through, and I think it just shows you how extensive this people already is.

And also E s G had been the one space where we weren't sure back in the day whether people just didn't like E s G in reality or they just wanted it cheap. Now I think we're starting to see they do want E s G. They just waiting for cheap products. Because Vanguard came up with a product for twelve basis points in the s G space that's already up to million. That's that's not bad for less than a year old um, and then you have US SG.

So if you look at it, most of the flows now we're going to E s G products less than twenty bits, which sticks to that whole of the money likes to go into that space. So in a way, it's probably a good sign for E s G people, because I think there was some I mean, I was definitely thinking that s G was maybe more of a myth because had all this great suppress, all these surveys,

and the assets weren't coming. But now we're seeing that maybe they just wanted it a little cheaper because we are seeing decent flows now into them if they're low cost. So this part of this two week moment was all about sort of thematic E t s and then things got crazy. What happened the next week because Swab, JP Morrigan, and then the harbinger of of crazy craziness the negative fee e t F what happened with sub and JP Morgan. So this week really encapsulated pretty much everything that we've

kind of been seeing. So JP Morgan, it's a relatively new entrant into the e t F space. It comes out with a two basis point a fee on its products. Some have speculated that it could have been zero. We were slightly disappointed in that, but two basis points still the cheapest e t F out in the market if you exclude those that are offering fee waivers. Interesting because JP Morgan, as his new entrant, has actually managed to double its assets over the last year it so this

is something that has definitely worked for them. They have been able to undercut their competitors and game market share. But that wasn't gonna stand in the headlines for long. We had Schwab coming out and reducing small cap MidCap and dividend e t F by one basis point at piece shows you exactly how much these little margins go. And then we had Self Financial, a name that I don't think many people in the industry had come across before.

They only had one et F out there, coming out with something totally changed the game, offering fifty cents for every one thousand invested for the first year if you buy their e t F and so just quick clime at Schwab always response. We were waiting for them, and just on que they responded, they're famous for that and they're all cheap. So not a shocker there, JP Morgan a little bit of a shocker. I thought that would

be zero. It was two. I don't know if we'll move the needle that much because if you get if you can get that kind of exposure total market for three um and its liquid, that's a tough cell. But we'll see. And then the negative fee one got a lot of eye rolling, lot of skepticism. I think it was this really taps into the plight of the small issuer. They're what they're really doing is saying, and it's not a bad product, it's a low ball product. That charges

twenty nine basis points. That's fine, that's that's reasonable. They're just waiving it and giving you five bits to help bring you in because not many people want to be the first investor in a new e t F. So we'll pay you for that concern, and we're going to cover the wide spreads that a new e t F has. So I don't know, it's sort of representative of the hurdles that a new indie e t F has, and

they're just addressing that in a common sense way. But it got you know, people just I don't know, they their intuitions start to smell like some sort of a gimmick. But if you dig in, I didn't think it was that irrational. It's a gimmick, but it might be one that we see again because again, the the that moment that somebody launches the problem is they don't have assets. So how do you get assets? Like give them, incentivize them. Yeah, exactly.

I think I would say that the one caveat to all this kind of like fee cutting that we're seeing is that if you are already invested in one of these funds, there needs to be a reason. Potentially that reason is cost, but they need to see a good reason to kind of shift from one to another. And when you sell a fund, you are obviously incurring various trading costs. You also may be incurring a tax bill if that fund has gone up over the past year.

So when thinking about switching from something that maybe charges twenty basis points something that charges ten basis points, you need to kind of be aware of that it may be worth it, particularly if you're going to be holding something for for the long haul and you don't want to be paying that that annual fee. But it's something

to consider. By the way, just as we end this, uh, just this morning, black Rock announced it was cutting the fee on its SMP five hundred index mutual fund to point oh one to five, which would undercut fidelity by seventy five dred of a basis point. So now that's the cheapest points. Yeah, that cheap so uh. And then there was some fee uh some really low cost ets being launched in Europe in the middle of all this

as well. So this isn't really just relegated to e t F, so it's actually spreading to other fun types other countries. Um, this thing is not going away anytime soon. Okay, we'll step back for a second and let's let's put a bull on this. What is the in game gonna look like? Here resounding silence. I mean, I think the endgame looks something kind of like where we're actually at. I don't think that this is going to be a case where all funds end up cutting to zero or

below in order to be successful. I mean, if you look at kind of the larger asset managers, you know they have position in the market already. They do already have assets, and they're going to look to defend this. There's no interest necessarily for them in cutting all of their products to zero. If they're doing well and gathering assets with something that charges ten basis points, they're gonna

keep something kind of around ten basis points. But for newer issuers that do want to make a splash, I think we will see a succession of those come out with zero or below zero kind of incentives to try and get those headlines. After a while, though, you know, people like anybody, kind of gets bored of this sort of things until once it starts being kind of a commonplace, then people will need to think about something else that makes them stand out. I agree with all that, I

would maybe out also. Sometimes when I see the vision of all this, I see it looking like the airline industry, where you have three big carriers basically competing on cost every day, giving you routes everywhere, and they control the market. I see a lot of consolidation. You have three companies which basically give you these core portfolios for nothing or

two basis points. And then on the outskirts you have these sort of niche airlines like you know, Alaska Air or private jets, and those would be like alternatives hedge funds, themes innovative products that do certain specialized things, and those will be sort of sprinkled on the outside of the portfolio and people will pay up a little more for those, at least for a while. Some of that will probably come down to but um, I don't see anything stopping

that future scenario. But the catalyst would have to be a bear market. A bear market would be what starts to reshape this, and that the basically the ramifications of all this organic growth going to stuff that doesn't charge anything, we'll start to show itself in the market. Rachel Evans and Bloomberg News as always Thank you so much for joining us on Tryans. Thanks for listening to Trillions until

next time. You can find us on the Bloomberg terminals, 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 Faltunas, and he can find Rachel at Rachel Evans. Underscore in Why Trillions is produced by Magnus Hendrickson. Francesca Levy is the head of Bloomberg Podcast. Bye.