Welcome to Trains.
I'm Joel Webber and I'm Eric Belchunas.
Eric April has been a little zany markets all over the place. Before Libration Day. You went to Vegas for the Exchange conference. First time it's been there, and we do a thing every time you do a little roadshow and go to a conference like this, you speak to people, bring a mic, get the vibes of the conference. What was the high level takeaway from the industry.
Yeah, I mean, I think it was great. They did a good job. You know, it is hard to pull off these conferences. This is my fifteenth year going Joel, believe it or not, so I feel like I'm a veteran status. I know. The first year I went, it was in Hollywood, Florida, which I kind of dug. Hollywood is like a near Fort Lauderdale. It's kind of not a place you'd expect a big financial conference. And at the time, I was in data and the hedge fund analyst was going to Vegas to see salt and it's salt.
You had like these really high profile speakers like Barack Obama and Kobe Bryant and stuff. And I remember the first ETF event, I went to in Hollywood, Florida. There was a YouTube cover band in ice Cream Social and I thought, I found my people, Joel. I like that better. So over the years we went there to Hollywood maybe nine ten years. Then they moved to Miami for three four years. Now they've moved to Vegas for the first year. So at the end of the day, the ETF is
the star. The people were there. That's really ninety percent of the battle. I also like a place where you can wake up and take a jog in the morning and it's warm outside this check that box. It was a dry heat, but it got a little hot towards the afternoon, but it was fine to me. I mean, I'm not a huge gambler, so I was not really moved either way. I do remember one time I walked
out downstairs at about six thirty am on Monday. That's probably the most sober time of the week, would you agree, And you walked through the casino and there's like n and Elos Don't Bring Me Down is blasting, and I'm just like, that's like a Saturday night two in the morning song played Monday morning at six thirty am. That's the alternative universe. I got a little dose of in between working the hallways, but I give it good grades. I thought it was fine and I got a lot done.
Okay, so you brought your mic. We've got some highlights. You're gonna walk me through your time in Vegas. I am this time on Trillions Exchange. Okay, who we got first?
I figure we start on the Vegas topic, right. So here's Todd Rosenbluth, one of the organizers of the event from Vetaphi friend of the show. Here he is on Vegas.
I have not donated any money to the casino. I watched Michigan win its basketball game from the sportsbook. I might have been the only person there watching the game that didn't have anything on theline other than passion and pride, and Michigan won. They're in this Sweet sixteen.
Now, good for you.
First of all, Michigan has since lost. Yes, okay, there's that, so we can all have a nice laugh about that. But the question I asked him if he had gambled that was if you didn't catch that?
I got it curious the vetefy, I feel like this is a vetify exchange conference, right, So, so, how busy was Todd while you while you were there.
There was one time, well I was on in a podcast with him and his colleague was saying how she wanted she had to limit the number of espressos he had every day because he was started. So one time I saw him walking towards me and he was just like he was jacked wired, and I was like, no more espressos, Todd. So, yeah, he had a lot going on. I've been in that position. It's not easy. It's an unsung job because people get a complain if something goes wrong,
but if everything's fine, no one says anything. So I feel for him. He did great though. Okay, next here's Todd also on the point of the conference of what he's hoping to achieve.
The conference is going great. I mean we were talking on the first full day, but Sunday was great. We did the ETF education. Your colleague James was on with a couple other panels, a packed room of financial advisors. We did session just today on advisors sentiment, what advisors told us a vertify, and then the ETF implications. There's a lot of asset managers here, a lot of advisors here. It's a great buzz here in Vegas.
Well, here we are in Vegas for a conference, and yeah, great, great vibes, great vibes everywhere.
I mean, the heart of the conference started as a way to educate advisors on ETF's. Advisors have like forty trillion dollars. They are the biggest consumer of ETFs out there. So the goal of the conference is to get them in.
Yeah.
You know how you ever go to a bar and it's like, you know, twenty dollars cover, but like ladies get in for free.
Yeah, oh, things like college.
Yeah that was but yeah, exactly, that's what this is. Like, I think advisors it's a very minimal fee. The issuers pay more, and that's the idea. So there was a mix of advisors. James did the educational part. I usually do it. I couldn't get there on Sunday. James Safer James Safer and uh yeah, so that's the heart of the conference. Okay, Next, next we have our own Katie I Felt Oh Katielberg News all right, So here she is on what she thought was the big topic of the conference.
Well, it's really funny that the big story this year seems to be what was the big story last year? Multi share classes, and given the hype around it this year, and I don't know, maybe we're going to get it by the end of the third quarter or by the end of twenty twenty five. I don't know what we were so excited about this time last year. But it continues to be the hot topic. And what would it mean if a thousand or so is ETFs were introduced.
We've touched on this a couple of times, I think, but like, is it still percolating? Is it really a hot topic?
Yeah, So I would take a little issue with the second year in a row because I thought last year Crypto was probably superseded it, but it was on people's minds last year. What happened was the acting chair of the SEC before Atkins gets in, Mark Ayuda, a little while ago, said that the ETF share classes were priority. And the reason this is important is that think about all the mutual funds out there right there's like seven
hundred mutual fund companies. There's like seven thousand mutual funds, and this would allow these funds to just bolt on an ETF share class to the actual mutual fund rather than launching a different like clone that's an ETF so Vanguard has this patent right now, but it the patent was up last year, so not anybody can do it. And we have fifty one mutual funds that have filed
to do this. And at one of the of events early I mean one of the panels early on, I think it was Sunday, there was a lawyer round table and one of them said it was going to all happen by the summer. So the idea of this was supposed to be like, oh, in the next couple of years, but what we're hearing is that's going to come way sooner. So when Katie said a thousand ETF, she's not lying.
Imagine if all the mutual funds could just immediately come up with an ETF share class you're looking at, you know, just an avalanche of new ETFs.
Okay, she was right, it's going to be a thing. We'll be talking about more. Okay, who do you got next?
Katie? One more time? On Vegas. I figure you'd like to hear what she had to say about that.
It feels like there's a breach of trust here of like what happens in Vegas days in Vegas. Well, let's hear what she has to say.
She told me she won one hundred and sixty dollars and then walked out of the casino, and I'm like, man, you have no degenerate gene in you, because that's how they get you. You win early and you're like, oh, I'm good at this, and then you leave with negative six hundred like Athenasios.
Let's hear what Katie had to say.
This is not a very pedestrian friendly city, which I don't think I was quite prepared for. I'm a big runner, so I've been going out to run in the morning and it just is bleak. Man, there is nowhere to run. It's all highway. That's the big difference that I've noticed. I will say it is a little strange to come back from the run and walk through a casino like in my sweaty clothes. But other than that, I mean, I think, like the actual hotel itself, the space flows
really nicely. It's it's a little bit more cohesive.
Yeah, there's a treadmill. I think you're supposed to go run on the treadmill.
Well, apparently the gym was packed every morning, so I went outside too. Katie had discovered that UNLV is actually two blocks down and there's a nice soccer field to run around. But before she told me that, hint, I went the other way and you start running down these sidewalks and it's fine, but you come across these dudes who like look like they've just been up for a couple of weeks. Yeah, like feathery skin.
It's Vegas.
Yeah, and it's like you can see the underbelly of Vegas out he stands in the sun.
You stand inside.
That's what that's what, stay inside. Okay, next all right, Next up we have David Mann from Franklin. He oversees their ETF business and he also commented on the ETF share class, which again big topic.
Well, so it's an act of filing. So we are you know, only only so much we can say. And I think they're what fifty other fifty one now is the official number. But yeah, internally, we are doing a lot of work to get ready for it. You know. One of the challenges is we had conversions as an option, we had launch a new differentiated strategy from scratch as
an option, and now we've got door three. So we are certainly thinking through which which are the strategies we haven't done in those first two options that we might want to do in a share class. So we're having those conversations.
Now, which strategy is going to win out? Do you think, Man, it's tough.
That's a good question. And by the way that we call it, the three c's, clones, conversions or classes. Conversions have about eight hundred billion and clones probably in the same ballpark. Will the ETF share class have more than eight hundred billion? Yeah? Possibly, because if you bolt on an ETF share class and you allow investors to just move over with no tax consequences, well, whatn't you do that?
Imagine having a huge CD collection and Spotify comes in and says I can get all this onto Spotify like in Heartbeat. You know, it's basically the same concept of making this move to the more desirable format just easier and less costly. It should result in a ton of money coming over. Vanguard was the test case, and over the sort of twenty years of that patent, we've seen a lot of people move over from the mutual fund
of the ETF. So if that's you know, a precedent, look for both products and flows.
So what will mutual funds look like? After this.
I mean, they're always going to survive.
You know.
I was just walking down you know, tenth Street in Philly on Sunday and this bookshop had like CDs for sale on the sidewalk. It'll be like that except you know, fun vehicles.
Bleak.
I mean, would you buy a mutual fund right now? I mean unless see four and K. Yeah, you're right, okay, I mean in the four yeah, four and K I would say, you know, is a place where the money will come in, probably because ETFs lose a lot of superpowers inside of four one K. But like I said, they'll exist, They'll be around. It's going to take a long time, but all of the new money, all of the new cash will likely go to the ETF format.
Okay.
Next, here's David Man of Franklin, who is the only person who has seen me play tennis. I wanted you to hear him.
Okay, talk about professional and then personal. Okay, let's hear it.
You're the only person in this whole industry who has seen me play tennis. We played against each other. You played a Columbia. You're a what if we'd call a five to zero, which is the highest ranking for I would call it like a somebody who doesn't play professionally.
Joel's listening right now.
How would you rate my game?
Okay? Lots of potential. Okay, the the the part we need to work on. So the next time you come out the backhand so still it's it's you know, as you start, because as you keep getting better, you be playing against better players, and the better players are going to identify your weakest shot and that's where they're going to pick on. So as soon as we get through your backhand cleaned up, watch out, you'll be a five to zero no time.
I don't know about no time, But if you don't have a backhand, I know where I'm handling the ball, and I have a good backhand, So let's play.
I got really good advice since I played him, which is when you do a two handed backhand, you're really it's a left handed forehand. Okay, and that really changes everything. I've gotten better already.
I'd love to play with you, but this guy, you know, the one handed backhand is way more graceful.
It is, it looks cooler, it's just harder. It's a lot more I have. You have one hander. Wow, let's play I'm down. Let's do it.
David could be on my team, and then you can find whoever else you want and we'll play doubles.
Okay, next, Okay, we have Elizabeth Kashner of fact Set, famous ETF analysts, been in the industry forever, and here she is again on the ETF shirt class. Again. I bring this up because.
There's a theme. Yeah, there's a theme.
It was the themes that.
Puts idea expands to products that are perhaps not index oriented or to shops that may not be fully ready for all of the logistics. I think we might see some bumps along the road to get there. Like we have to remember that all of the ETF record keeping happens at the brokerage level, whereas for the mutual fund
it happens at the asset manager level. Vanguard has been able to pull this off because they have a brokerage, right, but not every asset manager does, and so it can be a little bit more difficult.
This is a good point, right.
Because Vanguard really seems like they were in the driver's seat for this.
Well, yeah, they invented.
Nobody benefits as much as Vanguard does.
Right.
When I wrote my Bogel book. I went and talked to Gus Souder. He's the guy who launched VANGUARDDTF business member Bogle didn't want it, so he had to go against the founder's wishes. And while they were launching it, they thought, hey, why don't we make the ETF a share class. The reason they want to do it back then, in like the early two thousands was that this way that the buy and hold money would be protected from
the short term money. So if you wanted to come in and out of their treasury mutual fund or whatever, you could just buy the ETF. If you wanted to buy and hold, you could buy the mutual fund and just stay there. Now, over the years people found out you can actually just buy and hold an ETF, but at the time that was the goal, so they made a patent on it and it actually worked. Now, the one thing is Vanguard does have a brokerage. You need
a brokerage platform to buy an ETF. So what if you're a mutual fund company that doesn't have a platform. You're going to have to get people over to some like Schwab or something. That could be tricky. But the amount of money, the amount of lawyers, and the amount of companies involved. They're going to figure this out. There's all these problems are solvable, but they are interesting. The other thing is Vanguard is an interesting model because they
only see inflows. So Vanguard's model is when you see inflows all the time. What about a company that does this but sees outflows regularly? Will the ETF get hit with capital gains? We like, we call it tax contagion. These are some unanswered questions. So if I'm going to bet, I'd say the over undraw on us covering this in the next like eighteen months is probably like four. I think this issue is going to come up and be big and worth covering a lot.
Okay, all right, next.
Next, Okay, I would say the second biggest issue of the conference was private credit and private equity being put into.
The ETF wrapper private markets.
Let's go private assets. Yeah, and we just heard recently Larry Fink has come out and said he wants to augetize private Vanguard has met with Carlisle Group in Blackstone. This is happening, So how do you get it? What do you do? Here's Elizabeth Kashner on the ETFs holding some of this private assets.
I think We're going to find out a lot when we get a reversal in the credit markets. Right, as long as things are calm, as long as there's not many redemptions, then you know, then the issue is primarily pricing, and can you rely on the price that you're getting on a day to day or even month to month basis. That's a question mark. Right when you have real only one bidder and that's also the entity that sold it
to you, you know there's a spread in there. You just don't really know how big it is, nor do you know how deep the market is.
She's got a lot to say. We should probably invite her on.
Yeah, she is very smart and we actually talked for about a half an hour before I even recorded her. So what she's saying is that when you have something that's like less liquid and ETF a good if the markets are fine and things are going pretty well, that's it's easy to say, Okay, I think this was a fine idea. But when there's a huge sell off, you
sort of you can see the illiquidity form. Now there's been junk bonds put in ETF's high old muni bonds really had problems in the COVID cell off, so hyd had a twenty nine percent discount on some days. I mean that is massive. So I do think there's a history of you know, experimenting, but I do think sell offs when you see some of this come to fruition. So I do think it's fine. ETF investors are used to having funds that have less liquid stuff in them,
even during selloffs. But she has a good point. This is part of the you know, debate on whether you should put something less liquid into what is a super liquid vehicle, and this debate will keep happening for ever.
I think we're all going to be watching this closely and like, you know, looking for that thing where everybody will point to it and go I told you so, or or maybe the other way too.
But okay, next, So next up, we have Tyler Williams of Nate Texas. This guy is I love this guy. Every time I bumpendo and we have a fun conversation. He kind of reminds me of Kieran Culkin the actor when you hear him. He even kind of looks like him, and he kind of sounds like him. But he's a has a lot of personality. So I thought I would ask him a little about working the booth. So here's a guy standing at a booth all day, and what's he doing? How does he get people to come over?
Here's what he had to say about that.
Yeah, well, let me start the giveaways. I guess we've got a pickleball raffle here for advisors for dropping their base cars and they win this nice in the Texas pickleball set, which is a popular sport these days. Sure, we got our cups, and we had a tide pen there for folks that maybe spill their coffee on themselves. But yeah, and then for other handaways, you got our fact sheets and our brochure.
But will say the.
Paper route hasn't you know, been maybe as popular as it once was, but we still have it here. You certain advisors need to take some literature with them. But yeah, other than that, boot duty is it's kind of a you know, it's a hit or miss. Sometimes you get some advisors interested in your products. Other advisors that haven't heard of us. You got to give them kind of the one thousand feet view of who the Texas is.
We're a bit different than some others that we are multi affiliate, so usually I'll lead with, oh yeah, we Loomis Sales is our biggest affiliate or Harri, so some education on our firm, and then advisors that know us, maybe you know some of the products and managers. Those are more of a deep dive conversations.
And if somebody's like, say, eight feet away, do you do you try to, like Jena mind track them to walking over?
Do you go?
Yeah, you go accost them?
How's that work?
So I'm lucky that I'm with some of the best wholesalers in the game. Over here, so that's kind of their forte. They'll kind of have a little eye contact move and maybe come on over here things. So you can kind of tell when someone's lingering they're looking at your sign. There may be a bit shy if you're in conversation. So I'll let these guys kind of work their work, their their magic.
When you don't flirt with them, you get them with pick a ball and tide pins. What would be if you were working the booth? What would be the shwag that you would be slinging.
I I'm a big fan of the wireless chargers because when I walk around, I love those. I also like umbrellas. They go good at home whenever I come home with gifts because you know, I've been away for a couple of days, so the gifts ease the burden of my wife having to like take care of two kids while I'm gone. But umbrellas, play well socks, and and also
the wireless chargers. I would go with those three. There was one company that gave away, you know, those sleep masks, and me and Tyler was the booth next to Tyler and we're like, what's the metaphor there? Like are you supposed to just not look at the market or fall asleep?
Like I don't know both of those.
That was a little odd.
Yeah, I like both those.
Next up we have Ron de leje of ETF Guide. Ron is an old school trade publication writer and ETF nerd from the old days, and it was good seeing him. And he has a YouTube show called ETF Battles that have been on a couple of times where they they take a area like robotics and you have two analysts basically make the case for two ETFs and then they vote to see who wins, which is kind of a cool concept.
Well, just trying to get the sense and I Paul, say what's happening in the industry and meet fellow colleagues to innovation in the ETF industry is pretty well known.
But actually see people in the rush.
I mean that there's no substitute for that.
You can't do that with social media.
So I asked him why he would still show up after all these years. I mean, he knows everybody, and he'd make a good point, you know, and this is why you should go one of these years, Like, you know, nothing beats the physical human contact.
Yeah, we can do it.
People ask about you, and I'm like, well, it's almost almost enigma. Well I almost like say that it's half a maneuver to keep the show the way it is, because you don't want Joel going full ETF Like, it's better that he's protected from the nerdery so that the show has general semblance.
Yes, of safety, Yeah, but I like that.
Obviously post pandemic people are back into seeing people, and it's nice.
We should do ETF battles together. That'd be a fun one.
Sure.
Extending the invite here to ron On behalf of both of us.
Okay, next next up we have Todd Aiken, who I'm not sure. If you remember he was on this show. Before he was, Bloomberg wrote an article about who is using all of these sort of like hot sauce products, and they found Todd a YouTuber and they interviewed him and he basically was like, I love these things, yield max, the double leverage, like this is the retail investor. I think it's good to actually find the face behind the flows.
And so he was a source for this big article and we had him on and he was great, and he said anitier invited him to the conference. But when I saw him, I was like, I did a double take. I'm like, is that you? Because you don't normally get direct retail investors there, it's rare. So here's what he had to say.
By the way, if you're interested in that episode, it was October tenth, twenty twenty four, and the title was the Rise of the Quick buck etf.
Well, I'm just trying to, I guess, expand the reach of my channel. I got invited by some other fund managers, you know, and so I'm just here to, I guess, bring awareness to my channel and see if there are any more ETFs and different funds that we can buy for my following. That would be safe that you know that they can invest in that would anchor their orfolio
mostly with indexes and things like that. Maybe there's some some newer ETF issues here that have some index funds with dividends, you know, and you know, I'm after the dividends.
Dividends that it was his dividends, especially when they're extra dividends like the yield max variety.
Yeah, he's been busy then.
Yeah, no, he's nice guy. Really was nice to see a retail investor there.
Amazing that he's turned a YouTube channel into a business. Cool to see. Okay, last one, bring it home.
Okay. Sue Chang from CF Benchmarks actually saw this guy at the end when everybody was breaking stuff down. So it's gonna sound a little noisy in the background, like like there's construction going on. CF Benchmarks if you don't know, Joel, they actually do the pricing for most of the bitcoin ETFs, and they're gonna do them for Ether and so they're crypto kind of behind the scenes, a crucial part of
behind the scenes of cryptos. So I thought we get a little crypto representation in these interviews.
This is actually the fourth consecutive year we've good hit Oh wow, okay, say, there's been a huge sea change in the attitude to krypton bitcoin. We always whenever we said, whenever I told people what we did at some of the social events or hear at our booth, I would always get a good portion of people give what I call the look, a sort of a look that says, oh my word, these people are mad and I don't
want anything to do with them. Over the years, the proportion of people who give me the look has dropped, and I would say this year was the first time no one gave me the look. Now, not everyone is allocated to bitcoin yet, and there's all kinds of reasons why, but they don't think I'm crazy anymore.
The look no looks, Joel. What a difference Larry think makes.
Yeah, you no longer get the look. You mean it means you've been legitimized. You can show up, yeah, and shut the conference down at the end.
Yeah.
And some people were like, isn't it a little noisy in here? You want to go someplace. I'm like, no, it's real. I was like, I like the outer noise. You feel like you're there. Some of these booths are so big they literally had like ten people swarming to undo them and like banging all I mean, one of the booths had a Formula one race car. One booth was in fact a state street did it was a
we would have loved this. It was like six baskets real basketballs and then a Connect four underneath, so if the ball went in, it was one of the Connect four. So you whoever won, had to make shots and be strategic, and then if you beat the next guy, your name went in a raffle for Magic Johnson Basketball, which I did beat my guy, but I didn't win the ball.
Love that all right. Thanks for taking that mic, and thanks for all the guests that joined us from Vegas. Thanks for listening to Trillions until next time. You can find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify, or wherever else you'd like to listen. We'd love to hear from you. We're on Twitter, I'm at Joel Webbers Show, He's at Eric Baltuna's. This episode of Trillions was produced by Magnus and Rickson. Bye