Meet One of ETF’s Founding Fathers

for today's episode. Who is he? Jay Baker Um and Jay Baker And he can correct me if I'm wrong, but I would call him a founding father of the e t F world. He worked with Nate Most and Steve Bloom who were at the American Stock Exchange and

that's where the that's where the idea was formed. And it's a fascinating story because m X was the third place behind Nastacin and Nicey, and they were looking for something to get volume, and so they were like the story of UM, this sort of down and out exchange looking to get something going and UM they weren't getting good listings and so they side just create their own thing,

you know how necessity is the mother of innovation. Uh, this is a great case of that, and so J I believe, was that am X and was tasked with coming up with a marketing plan for this new thing. UM called SPIDER, which stands for S ANDP Depository receipts and today SPY. Just to bring you up to date, is three seventy two billion dollars. That's the biggest et F in the world. It also trades the most of any E t F. UM usually trades more than the next two or three stocks combined. So it is a monster.

It's like a It's created a whole ecosystem around it. Can't say enough, can't really overstate how big of a success and hit this one E t F was. And as was said in a book, I wrote that they started out making a product but ended up creating an industry. And so Jay was right there in the early days. It's gonna be fascinating to hear him kind of go

through some of those, uh early memories and moments. Also joining us for this episode Katie Greifield, reporter with Bloomberg News and a frequent guest on Trillions, as well as of course Jay Baker, who's the founding member of Exchange Treated Concepts, and he's also a founding father of the e t F. And we should also just mention that we're going to re release something that Eric and I made a number of years ago called the e t F Story, which will probably come up during the conversation today,

but it has a number of really interesting interviews with key people who helped create the e t F, that first e t F Spider Spy, as well as the industry that came about afterwards. This time on Trillions founding father J Baker, J. Katie, Welcome to Trillions, Thank you very much. Okay, Jay, let's Red and the Clock. You were at the American Stock Exchange in the late eighties for students of history about the E t F. The e t F was basically incepted in a white paper

about Black Monday that the SEC put together. UM and there were two characters that UM Eric mentioned there, Nate Most and Stephen Bloom, who basically read that report, found a passage in it and almost reversed engineered something that was requested by the SEC. So when did you first hear about what they were working on? Okay, so let me start with you had portfolio insurance that didn't work

well on on that particular day. And what that led to next that the American Stock Exchange there was a filing in for IPS Equity Index participations, and believe it or not, this product was actually launched. It was basically like the Spider, but it was based on cash. That product did gain some attention. There were people trading it, and the Chicago Mercantile sued the AMAS and they said, it's a futures contract. Now there were differences in this product.

First of all, it's traded on a stock exchange. Futures have a duration. The IPS Equity inex participations did not. You could buy it on UH margin and the margins and futures are much less. So nonetheless, the Chicago Marks sued and they won the lawsuit. So next thing you know, I was calling up firms and saying, look, the IPS are going to stop trading on such and such a day after that, and once again Nate Nate, Nate Most

and Steve Bloom were involved with that. But it's exactly what you mentioned before, Eric, that the American Stock Exchange would try to get the large listening. Starbucks and IBM went to the New York very very difficult Washington posters at the m X. There a bunch of oil and gas companies, but difficult to get listenings at them. So this really the IPPs part of this. But Spider, Steve Bloom and they Most got together and we're trying to figure out how you could create a product that was

physically backed. Couldn't do it uncashed were sued that was backed by the actual securities. So Nate Most had a background in commodity, so he was used to golden silver and the commodities being weared house in in a warehouse. So he's trying to figure out how do you wear house five hundred stocks. So they got together with State Street Bank with s l K, which was a lead market maker. UH. Katherine Moriority was part of the legal

team and the all brainstorm. And when I talked about some of the people that were involved as in Nate Most, it was Steve Bloom, no doubt about it, Jim Ross, Kathy Cucolo, Glenn Francis, all involved with the plumbing of the Spider. UH. There was a guy named Gary Eisenrachet spear leads and Kellogg. He was very instrumental and in helping out and getting the trading going. And Kathleen Moriarity seemed to be most of the time the key lawyer uh for the Spider. Now, remember it was a unit

investment trust, so it was it had no board. One of the reasons it was a unit investment trust is you have no board. If the product had failed, you didn't have to continue to pay several board members. The disadvantage of a uni investment trust is you cannot loan out any of the securities for stock loan. It's actually a more conservative structure. But that was one of the motivations for keeping it as a unit investment trust, which

it still is uh uh to this day. So the product um also was helped a lot by State Street Bank being involved with it. There was tremendous credibility because State Street decided to be the custodian. The amics spoke with a couple of large firms and and State Street was the one that really wanted to be the custodian

for this product. So the product started trading. And I'll bring up a story where uh one of my colleagues called a block trader at a firm and said hey, listen, if you trade a bunch of spiders, I'll give you a spiders hat. And on day one, if you notice, there was a million shairs traded, So there were a couple of prints of five hundred thousand chairs UM that

were done because somebody was getting a spider hat. So after that day one was a tremendous you know, there there was there was a lot of trading on the product, but as time went on, the trading sort of got much lower and and by March April May there was one particular day where it traded seventeen thousand, five hundred shairs. And what happened was myself, UM and Steve Bloom were called to Ivers Riley. Ivers Riley was the senior executive

vice president at the American Stock Exchange. He mysteriously called us up to his office and he brought brought us in and he said, listen, I want you too to get together come up with an institutional marketing plan for the Spider, and I want you to get two million dollars in the Spider by the end of the year. This was probably in I don't know, May, late April something like that, And he said, you're gonna have a

report directly to me. I want I want you guys to come in every two weeks and uh um speak to me about about the progress that you're making. So Steve and I basically got in touch with all the block trading desks on Wall Street, Goldman, Sachs, Deutsche Bank, I think Kid or Peabody might have been around back then, City Bank. And we went to all these firms and spoke to them, and you know, there was interest. There was interest, but it was a little bit of a

shrug of the shoulders. So we kept on pursuing, going to a lot of these large UH trading firms. And at one point I called a the head the West Coast senior mutual fund sales manager about the spider and I said, uh, listen, have you heard about the spy. Later, and we had to make these calls at the American Stocks Change. Every time there's a new option, you had to call the different broker dealers. They all shrugged their shoulders,

said thanks. So I made a call this senior person at a large broker dealer and they said, look, I'm calling him about the spider. And he goes, hold on, he goes, I love the spider. I owned the spider and you were never ever, ever going to get in our office again. And by the way, I hope you failed. Huge slap in the face. This this was the Will Smith Chris Rock point in my life, you know. Just I was like, whoa, I mean, um, I've made a lot of calls on behalf of the ammys and nobody

had ever had, you know, such a violent reaction. But the fact of the matter is this particular firm had an SMP UH product that was eighty or ninety basis points set up as a mutual fund. So that was the day as far as I'm concerned. That was the turning point, the hostility of that phone call. I turned to Steve and I said, this isn't be successful because

we never get a reaction like that. It was a threatening product because many many different firms at SMP five funds internal that were much more than nine and a half basis points uh, which was where the spider was at. So, believe it or not, even though it was a slap in the face, it was a great slap in the face to me. It gave me confidence that this product

was gonna uh do do well. So then what we did was we continued going to these different firms and one of them we went to his die with Securities and the individual that we were speaking to his name Jim Phillips, and he ran a group of maybe six or seven program traders Index arbitrjurs and he was interested in in the Spider. Now, I'm I don't want to make this more complex than it should be, but there was another product out at this point. It was called

the super Trust. So the MX as super Trust had six for parts to it money market SMP with a put option covered call. But the one they did have one piece that was similar to the Spider, I would say almost identical. The price I think was much higher. It was a little bit clunky because I think to buy ten shares that was around lot. But what was happening with super Trust was the other pieces weren't going particular, weren't trading a lot, but that piece was trading well.

So as I was talking, when we spoke with Jim Phillips at DIIWA, he had a million questions for us. So Steve and I were answering all these questions about the creation, redemption process, the flow process, and at one point and the super trust UH product launched in November. The Spider launched in late January, so they had a three month head start. They had a billion dollars going into it, and subscriptions not in that product, but I think all the products, and of course the Spider. You know,

the Spider came out at party five. Because yes, the the SMP was at four fifty. The average price of a stock in the New York stock exchanged around forty dollars. They use a devisor of ten to get it to open at forty five. When the Spiders started trading on January twenty nine, there were three creation units. The creation units were fifty thousand shares and hundred and fifty thousand shairs who were created times a price of forty five. That's six point seven million dollars was in the Spider

on day one. And now you have three hundred seventy billion in the Spiders, so many creations since then. But what happened was we kept on badgering Diwa, We kept on going back and answering questions and answering questions, and one day was and this is while the volume was somewhat tepid. Remember the opening day trade was just a trade, five hundred thousand, five hundred thousands, No creations, right, you

didn't see any creations. So uh so we kept going back to Diawa, and finally one day, after we had address their questions, that two things happened. Um they mentioned to me, he mentioned that Supertrust had been in there, and then he said just very casually, you know, they couldn't answer a lot of questions, and I was like, I almost fell over. Didn't say anything, just said nothing, just nodded. So what what? What? What they did at

Die with that day? They literally put in a creation for I think about a hundred million that day, I mean went through the process of doing it, and then I think they created another hundred millions, So the Spider Trust jumped up a couple of hundred million. Then from that day on or shortly there after, Spider really never traded less than a hundred thousand shares a day. In I think the whole year they traded a hundred million shares, which is four hundred thousand shares a day. Now, the

interesting thing was why did he do this? Nobody else was seemed to be particularly interested. The reason that Die with Securities created a couple of hundred million dollars of the spiders. Is there were people that wanted to short the spider. There weren't enough spiders around to borrow them to short it. So what they did is we called it create to loan. They created two hundred million in a couple of tranches of the spider. And meanwhile, remember

their shorting SMP futures against this position. So they're long two hundred million dollars of the spider, their short two million dollars of the futures. So whether the market went up four hundred points or dropped five d their risk was ameliorated. And they kept that position on for probably nine months to ten months, and they were earning a return on it back then short term rates I think one year treasuries, two year, three something like that. So

that to me was a huge turning point. So finally I'll mention this as well that when those trades were done, what you saw was the trades were printing away from the exchange. So what people were seeing was and when I say people Morgan Stanley, JP, Morgan Goldman sects are seeing a million, then a couple of days later a million, And what happens when they see that, oh gosh, that's that's that's forty million dollars? Who is it? Do we get the call? What's going on? What's and then they

saw the creation. So what you all of suddenly was not only was somebody trading that that share amount, but you're seeing assets going into the fund. So it alerted people, hey, there's something going on. Look we have a product right now at etc. That when they come in they trade millions of shares. All of the big block traders are aware of it. All of them are interested in that

type of flower. That's great. That's the whole story. And die way, I think is is fascinating that sometimes you just need someone to believe in you, you know when when early believer, early adopter. What you're talking about reminds

me of when any new E t F launches. Sometimes, like an E t F, like jets, kind of hung in oblivion for a couple of years and then it got a couple of trades, had a nice little run in performance, and then boom, it starts trading a hundred million dollars a day, and then all of a sudden people are curious about it. So it's it's interesting that set a tone for how every launch I think goes after that. I think also what you brought up that

was interesting was the fee. I was just exploring the whole world of Vanguard in a book, and the idea of the fee being used to match Vanguards five hundred funds that way you could compete head to head with Vanguard turned out to be crucial because then obviously retail investors could use this, but at ninety bits it might not take over in the retail market. Did you, when you were selling it think of it more as a mutual fund that happens to trade, or a futures contract.

It's actually physically back with the thocks behind. No, no, no, no, we didn't sell it ever as a futures contract. As a matter of fact, Um, well, once again I'm not using names. One of my friends was telling somebody there were country baskets. I think they had some thing that was similar to an SMP five fund. It wasn't exactly, but that this individual was telling people it was a futures contract, and that was a no no. I called him up and and had some choice words with him.

Don't start this. It's not a future sy it's backed by physical stock. We always pushed the fact that it was back I love I love the futures. They it was think about this product. You had futures that traded actively, you had options on futures, and now you had this security back by the SMP five funder. They all together two plus two equal to AID. So yeah, now what you're getting at here is this is was registered and Spy took like four years to get through the SEC.

So it stat with the SEC for like four years, which is a long time. Yes, And I think that to your point, that's why I would also be like, no, this is not a derivative. This is an actual mutual fund that passed the same regulation UM as A as A as A, I don't know a t real price or a fidelity mutual fund um. And then this brings up another question. While Spy is sitting in regulatory uh with the SEC, Canada comes out and launches the TIPS.

But according to my interview with Bloom, he says that the Toronto people came down and just Nate most was just cool and shared information with them. They took the idea to Canada and just got through the regulation quicker. And now Canada goes around saying they were out first. I try to put this other side to this story out there. But what's your take on that whole thing with Canada and the US. Oh? Boy, um, I'm not I don't. I don't think I was involved with those conversations,

So I can't. I can't actually say that that that's what happened. That's a little bit unclear to me because I have heard for years that the Canadians said that, uh uh, you know that they actually came out with the idea first. And I think you're right. It was called tips um. But what I will say is one of the and I think Kathleen Moriarty one of the things she mentioned about Spider, Remember this is the first

time something like this was done. It was sort of a closed end fund, open ended fund, right, So I remember she was saying that when it went to the SEC, it it went to almost every division of the FCC, investment management, trading and markets, economic and risk analysis, and who knows, it might have even gone to enforcement. I don't know, but that was one of the reasons that it took so long. Clearly that was another reason why it took Supertrust two years to get their exemptive relief

because there's was a more complicated structure. Jay, I want to go back to your slap in the face moment that uh what is it? Will Smith Chris Rock moment, because this is something I wonder about, especially with like very popular songs like did the band did the artists know that it was going to be such a hit? And you said that you knew that it was going

to be successful. But I mean when when in those four years when you when Spy was still in development, I mean, did you have any inkling that you know, e t f s were really going to take off to the extent that they have that you know one day this would be in almost four hundred billion dollar product. Yeah, No, I don't. I don't think I had that. I I what I did know partially the reason I brought up the apps was people like the apps, and I thought,

this is interesting. They like the apps. They've got a love of the spider that's actually backed by by the physical And I thought, look, we were we were told we were ordered to get two hundred million dollars in that product. We didn't do a lot of thinking about. I mean, we came up with a marketing plan and ended up executing. When the volume let's say, averaging whatever, four dred thousand shares a day, it was crystal clear this was going to be a multibillion dollar product. How

many billions, I don't know. And look, when you think about the American Stock Exchange, they created this product. It wasn't nastic and it wasn't the New York uh State Street, of course, is the trust they want. They were on the trust. But PDR Services is a sponsor, and the AMEX was PDR Services. They were sort of the steward of the product that had the ability to hire and fire a custodian right or a distributor. So and then it passed on to the New York Stock Exchange. You

can look it up. What I think about is um the American Stock Exchange situation that as the years went by and as it was trading more and more, the AMEX market share of the volume at one point towards the end was less than one percent. You get a hundred million shares traded, they're not trading a million, they're trading four dred thousand shares. All it was trading on the different exchanges. So one of the things that I'm not we weren't. You've got to realize with the exchange,

you're thinking about trading and exchange fees. But I was speaking with somebody this morning, and what would have been interesting is if the m X could have gotten two basis points in the spider two basis points on billion dollars is seventy five million dollars based on the assets that they have. Could that have been done? How could you do it? The exchanges are self regulated, the the the the SEC. I don't think one of the American stock exchanged to be uh, they weren't really an advisor.

Could the AMEX have created a broker dealer? Could a clever of attorney come up and create a broker dealer? Maybe the AMEX is the distributor taking the creations of redemptions getting one or two basis points. And remember another thing, if you could get a couple of basis points in the Spider, maybe the other people that launched the vanguards the eye shares, maybe they would have been willing to.

But um, that's not how it worked out. And in the end, the AMEX was trading I'll say it again, less than one percent of the total volume of a superior product that they created. That that really is um fascinating and just a little tragic. I mean it's almost like, yeah, yeah, I never thought of it that way. Here's here's another thing.

I'm just praying up a couple. I know you're probably aware of this, but when the when the Union Investment Trust has a lifespan of it's either twenty or forty years. I think it's twenty years. So what people were worried about the American Stock Exchange was in twenty years, you have to roll it over to another one huge capital gain if if the SMP was out and the SMP of course was up. Remember Spider was at forty five dollars in uh January and now it's almost four hundred.

So there were huge concerns about a rollover. So what they did was they ended up and this had been done before. What they ended up doing was getting eleven kids. I think you've probably heard this basically, we've we've written that story. Yeah, the trust, you wrote the whole start. Well, yeah, so you know they got eleven kids under two years old. And somebody came in my office one day and said, you know, how how old is your daughter? I said,

she's nine months old. Okay, she's gonna we'd like her to be in the Spider Trust. So she was born on May seventh, nine two, so she she's a Spider baby. So her name is in the legal docs. And then Cliff Webber's daughter is in there, and Claire McGrath, who was an attorney at damics her son. So that's sort of just an interesting tidbit. By the way, when when when when Bloomberg got in touch with me, they mentioned that I had totally forgotten that I signed signed my

daughter's life away on this thing. And then then the reporter came back and said, Jay, you weren't totally being upfront. What do you mean is your daughter named Julia? And I went, oh, my god, okay, she was one of the Spider babies, but I did not remembered at that time. What I'm thinking about now is is there any way that I can hire some clever lawyers and maybe get my daughter a basis point on the Spider Spider Baby. Hopefully they're listening right theoretically, yeah, I know the Spy kids.

I mean just to recab um really quickly. So originally Spy was going to what expire in twenty five years. But now it's when the last Spy kid perishes. Yeah, basically it is. I think it had ten or eleven kids, and it expires twenty years after the death sort of ghoulish after the death of the last Spider baby, which in statistically means about a hundred and ten years. That's

what it meant statistically. And by the way, according to a friend recently, they said, you could do you could get another set of kids and that is ten years do the same thing. Yeah, the second generation Spy kids. It's a little bit, it's a little bit googlish to that point. I wanted to sort of goalish thinking about it, because the tyranny of time, it's going to happen, the tyranny of year around and I'm going to write that town. I want to talk about sort of the next thirty years.

This is something Eric and I were actually chatting about this morning because in thinking about Spies thirtieth birthday, obviously it's range supreme for thirty years. What it has what over three hundred seventy billion dollars in assets, Uh so, by far and away, it's it's dominant, especially when you think about the liquidity. But the question I want to ask, because I'm a Debbie Downer, is who takes the crown away? You know what, how long can Spy remain on top

at nine basis points right now? When you have you know, competing products from black Rock, from Vanguard at three basis points. I would love to hear your thoughts on that. My thoughts are that price makes a difference, and I think at some point one of those funds could overtake it. I'm not sure that they'll overtake the trading volume because if you look at the trading volument and there's they're both millions of shares right there. There's still millions and

millions of shares. But the fact is they're both at three basis points. You've got a competing product in nine and a half basis points. Nobody should be concerned about the liquidity of the Vanguard or Ice shares. Uh Core, Yeah, you know SMP funds. So it could happen, And if you look at it, they're getting closer. I mean, I think both those products are in the one of them I think is around two billion. I don't I don't have it in front of me, but um, it's not

gonna happen on my watch. I just real quick interesting fun facts. Spy actually was the biggest ETF the whole time, except for one day. I think in August. G l D was bigger for one day, but then it changed and SPY took over one day. So I just want to talk about the folks who created the product. Jay, you know, Nate Most, Stephen Bloom being probably the most instrumental architects, and and I'm curious, I mean, since you knew them. Um, you know, Eric's interviewed Bloom before. Um,

he's pretty quiet these days. Nate Most, obviously it passed away years ago. He was pretty old when he actually helped create it, right, So I'm curious, what did it, what did it take? What was it about? Uh, those two guys and the people around them that led to this financial innovation, Well, you know they were um so Nate. I think Nate Most got his job at the NAMES when he was seventy. You know, Nate Most, I had, I got along with him. He spoke his mind. He

seventy years old, seventy one, seventy three. He did not pull punches. I wouldn't. I don't think he was particularly I don't think he was particularly political, and he spoke up. And the other thing is, and I am friendly with Steve Blohm and and he's yeah, he's um, he's still working, but not not in the securities business. And uh, Steve Bull, Steve Bloom was a bull. He was a PhD from Harvard, and they got it in in his mind to get

this thing done. And he was one of the individuals that really pushed push this thing through the sec And don't get me wrong, you know Jim Ross and Glenn Francis, Cath Cathy Cucolo, But I'm talking about those two individuals at the amics. The the idea originated at the MS and as I said, PDR was a steward of the product and was involved with getting the different service providers. But um, look, they had a dynamic chemistry. And I would say it was dynamic. It was not. Were they

all huggy wuggy? I wouldn't. I wouldn't say that. I would say that they they they they were both very Uh, both of them were strong willed people. Well think I think it's just two plus two equaled eight and getting things done. The other thing that about those two that I found interesting was as you said, most might have been seventy three ish and Bloom was twenty seven. You rarely have two people working together with that massive of an age gap, and I have to think that played

a part in that. I guess Bloom Moore book smart at that point, and but most had a lot of life experienced worked on submarines, I mean, worked at the Pacific all that. I feel as though when someone has that much experience, they're able to like pull from that and use and find templates. And then Bloom probably had some of the um I guess the youth that's like we can do this, like he doesn't know what can't be done. And I think that age gap is really

just unusual. That is unusual. And what I would say about Bloom is he's an executioner. He knows how to execute. When he gets in his mind he's going to execute, he's he is not going to give up. He's an executioner. What do you think the e t F has yet to accomplish that? It still needs to So I think last year there was six and seven billion dollars that came in slightly lower than the year before. I think

it was it was seven hundred fifty billion. So what we're saying is um at a t s. We're saying a lot of interest from mutual funds that want to do versions right for for tax efficiency. And it's tricky

because if you think about the mutual funds. One of my friends was telling me, one of the reasons that clients, you know, stay in mutual funds is and and and not get out and just you know, by by a spider or something like that is huge capital gains they've they've they've had, you know, they've owned the mutual fund forever. So if you can convert a mutual fund in a tax free manner, you still have your low cost basis, but you're not getting hit with a sale. I think

that's a huge, huge advantage. And we're seeing more mutual funds doing this the same thing with separately managed accounts. Their firms out there with large and small separately managed accounts that have started to convert their separately managed accounts into e t f because the t f is is a more tax efficient structure. I think we're at just the beginning of that, and this could be billions and billions of dollars because generally, if you think about the

mutual funds are to do it. They're probably larger ones, you know, mutual funds that have you know, hundreds of millions of dollars. You could do it for a small one as well. But we're getting the phone calls on this. Lots of people are getting the phone calls and were ready to do it, and um, I think that that's gonna be a huge part of the growth. What I will say is it's harder to do the thematic. When you look at the thematic products, a lot of them

went up, they went down. It's harder to do with thematic. You have to have something very very interesting and unusual. And one of my favorite et F and Eric you brought up was the jets. I've been watching that for years and uh, quite frankly, he's the only one that has it. It's was sort of dormant for six or seven years, and exactly what you said, pandemic came. The airlines were super volatile. That thing started. That thing had forty million and popped up to six billion with millions

of shares traded. But not every E t F does it that that. Luckily for the individual running he kept it open and for eight years, it didn't do a lot, got up to a hundred, dropped to forty. But um,

the pandemic ignited. That was that was like a stick of dynamite for for the airline, that air airline et F well, another stick of dining in my I'm not sure how exactly I want to phrase the metaphor here, but when you think about the pandemic and what it meant for e t f s, I mean it's hard not to have a conversation about fixed income e t f s for example, like the FED actually stepping in buying credit e t f s. I feel like that

was a big, um, you know, point of legitimization. Is that a word, jol, You're you're the you're the editor here, Um, but I kind of and I mean we're talking about sector e t f s. We talked just brought up fixed income et fs. Do I want to get your thoughts on whether we're like reaching the existential limits of what an e t F is because one of the big innovations in two was single stock e t f s for example. So again, just in reflecting on the past thirty years, going from just a passive UH index

tracking exchange traded fund, which was extremely revolutionary. Here we are, uh, you know, talking about single stock ETFs, all flavors of leverage gtfs. We still don't have a bitcoin ETF, but what more white spaces there? Yeah, So what I think is, I I still think that there's a lot of room for fixed income ETFs. And there are a couple of new companies there that have launched, like twenty five Bond Blocks is one, and I think they've got a lot

of people there, They've got a good infrastructure. I think they're they're gonna get there. Look, the single stock ETFs, the only one that's got any assets is really the Tesla. I think it's up to a hundred million. The rest of them really haven't done well. Uh you're gonna You're always gonna have and I'm not I'm not against this, you know, but I never really thought that the single

stock ETFs would do that well. Um, I understand people you know, trying to you know, you know, strike eening again, but um, you know, the markets sort of said that there's not that much interest in those particular products. Yet I would say, you know, a set of twenty five new, very low priced, different fixed income products. I think I think that will work. I think that there will continue to be new and clever e t F s. The single stock. I shrugged my shoulders about not against them

if they take off, go go go. But yeah, you know, a lot of the remember interviewing some other of the founding father types, and I think a lot of them were just like, it's hard to believe what they've put into et s over the years, but they were just thinking of equities at the time. But yeah, it's a great technology. Um. I compare it to the MP three in that it's it's something. It's not an asset class,

it's not a sector, it's a vehicle. It is something that has made the consumption or the people getting exposure cheaper, easier, more flexible, more liquid. So you're gonna see a lot of people try lot of stuff, I think in the E t F rapper over the years, but most of the flows are probably are going to go to play vanilla stuff. And the conversions are interesting because that's instant flow.

I mean, that's that's probably money that would eventually have left the mutual fund structure and gone to the et F anyway slowly in a migration. So the fund company is smart, in my opinion, just to move them right over and not lose those people. I think that makes a lot of sense. And so we're very bullish conversions as you are. And yeah, I think right now E T s account for the assets mutual funds have, but I do see that number eclipsing maybe even over the

next thirty years. Um, I think mutual funds in four one ks probably are gonna that's their alamo. I don't. I think they'll be there a long time. E T f s don't really they don't like have a lot of advantages inside of four one K versus outside. They really do. So I agree with all this. I think it's just it's fascinating that you that you're still in the industry and that you're like helping future spies if

you will launch every day. There's only a few of you, probably kind of on one hand, that have been there since basically day one and are still doing their thing in the industry. Yeah. No, I don't know that's good or bad, but no, I I still I still enjoy it. And uh, you know, I'm still with with E T C. I mean we're up to you know. I don't know, five and a half billion, So we do hear a lot of interesting ideas. And remember another thing, the marketplace

sorts out these products too. Somebody comes up with something that that's clever and and good, it will draw assets. And you know, on the flip side, I still think you need a lot of marketing when when when you're launching these problems. Well just real quick on this. This is something people missed it like, oh, et F so much marketing, and that was both one of Bogel's complaints. I get it. But here's the thing. Mutual funds literally paid off a broker, and the broker would put the client.

By the way, the payoff came from the end client. So the whole mutual fund industry was largely built on kickbacks, and so E T s or a meritocracy. Well, when you have a meritocracy, you gotta market more. You've got to try to get your voice out there because you can't pay someone off. So I think the marketing isn't is a is a way to kind of replace the kickbacks.

And so I understand why there's marketing and there and there should be I don't I don't find it to be I'm not I don't demonize it as much because to me, it's better to have more marketing than a system of kickbacks where you're putting where you're consciously putting a retail investor money in something you know. Isn't that good? Yeah? What I You know, it's interesting because we've got UM a couple of our clients, Robo and E m q Q. One of the things that they do and I think

they've done this successfully. You need to tell a story, as one of them says. But what they do is UM they do webinars, but they do them themselves. So if they're let's say, uh in a big broker dealer, they'll send out an invitation to the broker's financial consultants that are in Florida thirty minute webinar and remember, if they can speak to one law one one financial consultant for an hour, they will do that. If they get

thirty financial consultants, people say that's terrible. It's not terrible because there's no continuing in the way these individuals do it. And you've got thirty people speak with one of them for an hour, to speak with thirty for an hour, and it cost you five or six hundred dollars well worth it. Both of those firms employ that, and both of them I think that's helped get the mass US. Now once again, you have to have something interesting, you have to know how to tell a story, and you

have to keep their their interests. But but I do think that is important and it's hard work. You know. I call it the E t F terror Dome for a reason. A lot of the people who use the E t f s are smart. It's after tax money. It's picky, and they got Vanguard in there, and they're they're they're spoiled. These investors are spoiled, so you really have to find something of value for them. And the good news is I think all the investors demand creates

an industry that has really had to hustle. Not everybody makes it, but anybody can make it. Okay, j Last question I gotta ask you. You've been around, You've seen a few tickers. What is your favorite ticker other than any that you've helped launch? Uh Um, you know, I I am. I am fond of jets. I will say that. Okay, good, simple, but I I think about it more than I should. Yeah, okay, God, I mean you guys launched robo. I think that's what's

a top twentier. But uh yeah, jets is right up there, Virgin, Now listen. Of course I would have mentioned our own products, but I helped launch that. Yeah, right, that, That's what I'm saying. So, but I don't I think robot was brought up once as a favorite ticker. J Baker, thanks for joining us on Trillions. All right, Thanks for listening to Trillions until next time. You can find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcast, Spotify, and

wherever else you like to listen. We'd love to hear from you. We're on Twitter. I'm at Joel webbershow he's at Eric Faltinus. This episode of Trillions was produced by Magnet Henderson, but