What's Behind the ETF Feeding Frenzy of 2021?

biggest outside of the big three. But they have a three hundred and sixty three billion UM and they've taken in twenty billion dollars this year, which again puts them about third or fourth in flows this year. Again, those are ridiculously big numbers for E t F s UM. You know there it's very difficult business to to get going in And they have two hundred and thirty three funds and they've taken in cash in a hundred and sixty three of them this year, which to me really

speaks at what's going on. There's a feeding frenzy in ets this year more than any other that I've ever seen, and that number to get that. You know, we know

they've taken money to the queues. I mean they're the big stud blockbuster e TF You here about that are there's you kind of know they've taken in money, but they've hundred and sixty three including some interesting areas like commodities, uh, the value, there's a there's a bunch of different things that I think would be good time to just look at, you know, what's going on this year From an issuers standpoint, they have a great uh point of view as to

who's buying them, why and what's going on. Yeah, the whole customer conversation is an interesting one, this time on trillions the E T F Feeding Frenzy with Investigo's John Hoffman. John, Welcome to Trillians. Hey Joel, Hey Eric, thanks for having me today. Okay, So when I think of Investco, I think of the cues Q q Q. You've got a ton of other E T s as Eric just mentioned, Um, two and thirty three. I think how many of those can you name off the top of your head? You

know what? Um, that's a good question. Now, two D and thirty would be challenging. The tickers for each one would certainly be challenging and help. But um, I've been here for nearly every one of these launches and so they're all my babies, um, all of our babies. And so I don't have a favorite. I don't have a least favorite. Um, but that you are right, there's quite a few and and uh and and we'll continue to expand that as we hear from more clients about how

to help them build better portfolios. Okay, so that's a lot of babies. And I'm curious, you know, being the fourth biggest issuer and you have the black Rocks and the Vanguards in the State Street and then there's a little bit of a falloff in terms of a u M before you get to investco And I'm curious, how do you guys think about eating with that big three? Yeah,

so this is a question. It's an interesting questions when we get a lot and you know, I think that we've been incredibly deliberate and intentional intentional uh as as it relates to our product design and development and who we are in the market. Um, you know, in a lot of ways, we've really carved out and built and pioneered the you know what what today is referred to

as the smart beta category. UM, we do things in beta as well, but our core competency and really what we invented and pioneered was this idea of smart beta. Again today we all call it smart beta. UM, I can tell you back in the early two thousand's when I was talking with clients, that terminology didn't even exist. And so if you go, Joe, I think all the way back to the beginning, which is, um, you know where we still are today in terms of how we

think about the business. We thought that the E t F was a tremendous you know, delivery vehicle for investment purposes for all the reasons that everybody knows today. Their low cost, they're transparent, tax efficient, These things rattle off of everybody's tongue today. Twenty years ago, you know, that was still a new idea. But our idea was, let's take that benefit rich delivery vehicle, the vehicle for delivering investment returns, and let's track in disease that are actually

built to be investable. And that was the combination that we put together, which was new at the time. Today it's it's well known and well called, you know, are documented as smart Beta, but that's what we were born on. That's what we pioneer, that's what we invented. And it's all about providing investors better ways to invest. And and and Joel, I think about you know, the first index was built in the eighteen nineties, right, I mean people are driving Model T forwards back in this time per day.

It might even be before the Model T forward fast forward to today. Um. You know, nineteen fifties you had the SMP five index. Come all the way today you have better technology, more data, more insights. And our idea was take all of that advanced technology and partner it with a benefit rich vehicle for delivery. Combine that beneficial attributes of active management and passive and deliver them in this new digital format. And that technology, um is as

relevant today as it was fifteen years ago. And that's how we've really you know, carved our our core focus, if you will, from a product development and more importantly from a client experienced perspective. Yeah, and that's UM something that we see. Uh. You know, I always say you could put Mickey Mantle Rookie cards in an e t F and it would probably be the best possible way to trade Mickey mantle rookie cards, which is why we're

very pro bitcoin ETF. We've seen everything thrown in there, China, a shares, active, just pure active smart beta themes. It really is a amazing structure now that is known. And you know et has been taking in money every year for uh two decades. So this year though, it's gotten insane. Right that ets typically take in about two billion a day. This year they've taken in four billion a day. And I guess I'm just curious, what's going on? Why is there such an uptick in money coming in this year?

What's your take on that? Yeah, so again i'd widen out the lens, right. The e t F is a technology. It's a technological innovation for delivering investment returns and it's it's perfectly it's very you know, great design. Um, when you think about great design and simplicity, um, you know, think about the Google Search interface, one little bar. You know, they've done an incredible job keeping that simple. I think about the iPhone and how easy it is to use.

You know, my kids can unlock my iPhone and take pictures. Um, you know, it's just intuitive. And so this is the e t F represents a disruptive technology and innovation. I think that you know, we go back thirty years, or you think of the time horizon, it's still in its early stages when you think of this, not in time

or in assets, but in network effects. And so we think about you know, not necessarily um that the growth more recently over this long horizon ten distinct network effects that are playing out in the E t F segment. And network effects is really just a fancy way of saying, the more people that use a service, the more valuable you know, the service is. Right. I use the analogy of Uber. Right, if there's one car on the Uber network and you push the button, um, it's not very useful.

When there's ten thousand a million, when there's a car at every corner, that network is very, very useful and powerful. And what we're seeing, Eric is is this network effect play out in e t F s. We're still in some of the mid stages of these network effects, things like model portfolios, the growth of retail, you know, self directed. But it's really about this incredibly efficient technology for delivering

investment returns. That's that's powering this growth. And every time we have a disruptive event, Um, you know, think back to two thousand, two thousand and eight. Coming out of oh eight, the E t F product grew significantly. Coming out of two thousand, the product grew significantly. As we come through the pandemic. You know, money has moved out of older structures and it's coming into new and so you know, yes, it's it's a trend that I think people are looking at today. Uh. You know that the

numbers are staggering. We're on pace for a trillion dollars of inflows here in the US. But this is really just a continuation of a trend that's been in motion for quite some time. And you know, we think a lot about the big macro trends that are powering this and those haven't changed. Right when you think about the move to fiduciary, when you think about the move from active investing to passive, which again we think the words

are wrong. They're almost all investors are are active investors. Uh. You know some of these trends around regulation, um, technological innovation. This industry is going to change more in the next five years than it has in the past fifty. And it's just an acceleration of continuation of this trend around

better technology for driving investment returns. One of the lanes that we find opening up more in terms of people using e t F s is the direct do it yourself retail investor, and a strand of that is the sort of like yolo retail trader type, and where you really get to meet them is on TikTok. They make

some there's some wild videos on there. It's really if you just type in an e t F hashtag, you'll find some fun stuff on there, some more serious, some just downright and saying, um, you have an interesting story here about s pH D and the power of TikTok. Can you go over that? So we're talking about TikTok here, all right? Um, So I would start with, you know this idea that what's driving this this direct market growth.

You know, there's a huge macro factor here of of commissionless trading, commission free trading, which is reduced the frictions to to transacting and so eric to your point, we have seen really significant growth in this segment, and as we unpacked the segment and see what drives the behaviors,

we are finding some very interesting elements of influence. One of our more obscure tickers at the time had a really high ownership on robin Hood, and as we looked at the disproportionate ownership in robin Hood, what we attributed it back to. What we found was a TikTok video from an investor or a client that was putting forth a strategy to hold this particular e t f UM for a period of time, and we saw that video go from a thousand hits to five thousand to fifty.

It ultimately had over half a million views, and the correlation of account openings and transaction UH data on some of the underlying platforms was really indicative of how powerful all of these other mediums are around buying decisions and asset flows in e t FS, something that again traditionally was not our core focus, but increasingly is important to understand the drivers of flows. Let's get into some tickers here, because you know, I think they can be representative what's

going on. So in my opinion on the two to four, I get the whole transformative technology. I think that's good for two billion. I think the four is because the market has breadth this year, and by breath I mean small caps, value, international commodities, a lot of these left behind places have been working for most of the year, not the past month so much. But RSP is a great example. So this is your equal weight at e t F this year. It's your best selling e TF

better than the cues. And to me, the cues probably defined last year. RSP this year it has more value slate tilts of smaller companies, UM, and I want to ask you about RSP. It's so simply just equate the SMP. When I go to the money Show and interact with direct retail investors, it's weird. I love hearing their questions and I do get asked about equal eating a lot UM, I guess. Just talk to me about what are people buying here? What do you think of RSP? Like, how

are how are they using it? Are they replacing like a voo or is this like a trade when I say who, I mean, like a Vanguard five hundred or is this like a trade where you add a little RSP on top of your portfolio for a little juice and then you trade out of it. So, Eric, I think this gets right to the core of who we are right and first off, we we believe in long term investing. UM. And when you think about that, construct our idea of providing you know, better return patterns and

and creating methodology that's more efficient. Let's take RSP as the example or what is this? Is it a trade? Is a short term? What are we looking at? So it is simple. It equally waits the security, incredibly simple. All five securities the SMP five received the same way. What does it do? What it does is it provide a more balanced exposure to the SMP five hundred. And why have we seen it this year? Accelerate the SMP

five hundred. The top ten names right now have nearly a thirty percent concentration, so you're getting, you know, a very concentrated exposure to some large cap names um which again a lot of the return is going to be driven by those big, big stocks, right, those big companies. What RSP does is provides you a little bit more exposure to the size premium in the market. So it's tilting a little bit more towards small cap right, which

again is a differentiated and rewarded return pattern. It's also taking advantage of the value factor, so it's going to tip a little bit more towards the value spectrum and so we don't look at this over you know, a day or a week or a month. We believe that RSP can provide a very efficient core US equity exposure.

And to the tickers that you've referenced, that that broader SMP five hundred exposures, you know, those are nearly a trillion dollars in a u M when you add them up right, And what we're finding is that clients are looking to um ultimately balance their concentration a bit more in the index, diversify a little bit differently. And that's why this year, you know, we've seen significant flows there and now I think RSP is the largest smart beta

e t F in the US market. You know, another theme from this year that I'm really interested in talking with you about has been the commodities boom. And you all have a huge foothold in commodities, but specifically sort of in commodity futures, and so I'm wondering how you approached that because outside of basically the g l D s of the world, you guys are basically the biggest name name there. But but why focus on futures instead of more of an equity play. Sure, so when we

entered the commodity space in the mid two thousand's. We looked at what was already in the market, and you know, there were some some great physical based capability and what we saw was an opportunity to pioneer the future segment UM and what I mean by that is, you know, there were other futures products in the market, you know,

et f s buying futures. What we did was we went back to our core DNA, which is about building enhanced you know, strategies, and so we applied We partnered with Deutsche Bank in this lineup in the mid two thousand's, and we actually utilize an intelligent index. So the index looks at the shape of the futures curve and identifies where to roll futures kind of like a manager would, uh, you know, and in a more active fund, identifying the most opportune place to roll forward those futures. And so

DBC was our flagship product there broad commodity exposure. We then expanded on that and got to the individual sectors d B A and agriculture d B O and oil UM And as we continued to iterate and work with clients, one of the opportunities we found was a way to deliver this without a K one, and so we created p DBC, which is a very similar product to DBC holding futures, but it had a structure that enables us to pass through a TONE nine instead of a K one. Again,

there's tradeoffs and benefits of each of these structures. In this instance, that's what we were solving for. And now that's a uh, you know, a six billion dollar fund um providing you know, a broad exposure to commodities, which you know Joel. In this idea of long term investing, what we see is model portfolio builders you know, attracted to the correlation properties of commodities and so you know, Eric would probably ask is this a short term trade?

I would argue that a well constructed portfolio is going to find you know, value in a correlation pattern that's different than stocks and bonds. Uh. And so we think that in many ways this is an allocation in a

long term asset allocation. Yeah, certainly. And I think the one thing with these commodity futures et s and we have a traffic light system and we do give them a red light although the system and saying it's good or bad it's it's most like movie ratings, like, hey, this is this is kind of like a rated R E T F. And the reason we say that simply

is because of rolling futures. When you roll futures, you tend to pay more for the next month than the month you just sold because people know that you don't want to get delivery of oil to your health. So the storage costs are kind of baked into this roll cost. So I'm not saying you could do it any better if you trade the futures on your own, but there

is it's not really seeing the expense ratio. Do you try to like warn clients of this or how do you explain canentango and this idea of rolling futures because in some of them, like oil in particular, it can be a pretty hefty cost over the years. Now it could go opposite and actually benefit you when there's a rush for commodities. I get that that's more like a full moon I think normal circumstances, though, is you do

pay for the role? Yeah, Eric, You're spot on, And that's actually what the product is designed to do is optimize is that role. So it has rules built into the index to look at the shape, so to get very granular and specific, it looks at the particular curves. So let's say we're in oil and we're going to roll a contract. It's going to calculate the implied roll yield on the next thirteen months, and then it's going to select the place on the curve that would be

the most optimal to roll um. And if you think about the first generation of futures based commodity products, they did exactly what you said. They statically rolled every month front month, you know, regardless of the shape of the curve. And what we did was we said, hey, hold on a second, there might be a more intelligent way to do this by using a basic algorithm that calculates roll yield um and identifies the place to to to roll onto the curve. And eric, that's what we've been doing

in all of our products. It's you know, it's not about um. You know, the each one has its own design um to take a little bit of intelligence. Will be an index, right, it's passively managed index based rules methodology, but put a little bit of intelligence into the product to create a better outcome in again, you know, will these outperform in every market? Absolutely? Not right. There will

be periods of underperformance. But what we're hired to do is provide the return pattern to clients for that particular index. And that's what we do, you know, really really well. CUT is your is your wood E t F right, which you know is much more friendly. Let's call it UM since it's it's a PG rated UM et F and in the stop light system. So how do you how do you think about being such a big name in commodities but then basically having different tools for different people.

I guess yeah, I would draw the parallel to you know, microprocessors in a computer, right, we create these microprocessors that provide return patterns to clients. CUT is providing the return pattern of the equities UM in the timber market. If you want to buy timber directly, UM, you know, there's ETFs that hold those futures. If you want to get closer to the eggs and and the underlying UM you know, grains and metals, we can provide that exposure as well.

So CUT is a basket of securities that are focused in that particular market. It's the equity exposure, uh, you know, not necessarily the futures exposure and so again, Joel, I think it's about providing more return patterns to clients. You know, we get this question, is there the rise of the thematics? Right? I think that this is really about UM, you know, or the rise of smart beta or some iteration of that.

This is really about the evolution of technology. The reason why the Dow Jones Industrial Average is price weighted is because that was the only way you could calculate it every day in nineteen hundred. Right today, we can calculate things more efficiently with technology, and it's enabled us to carve all the return patterns more precisely. And that's really what we're focused on, is precision over return patterns UM

using modern technology wrapped inside of a very efficient delivery mechanism. Yeah. Actually, it's funny you say the rise of thematics. We've tried. We've really distilled this down into into two buckets, cheap beta or dirt cheap and shiny objects UM, and I would put thematics are commodities things that are just happening UM, but not happening a little, not like outperforming the SMP by one percent like the old days, but literally crushing

it UM or providing something very unique. And that leads me to another area that I want to ask you about, which is crypto. And look, there's now fifteen issuers that have filed for crypto, including some big, bigger names like van Neck, your competitor, Fidelity. Are you guys considering getting getting involved in this, because if you're a leader in commodities, you know, outside of g l D and i AU,

you're right there. I would think this would make sense given that people want to use it for similar purposes, non correlated returns shiny objects seems right up your alley. How come you haven't filed yet? So we recently files this as a public filing for again the equities capability UM in both the blockchain. Yeah okay, I know, so you okay, the blockchain etf that hold stocks. That makes sense, Um, okay, great, But I'm talking about the real deal. Sure, so let's

get to it. So look, this blockchain, digital assets, cryptocurrency again a substantial technological innovation. We are paying attention to what we're doing, a tremendous amount of research and development in the space. And I can tell you, having been in these two worlds for a while, there's incredible parallels between the e t F market and the digital asset cryptocurrency market. I could extend you know that discussion if if you want. We're spending a tremendous amount of energy

UM on this space. We've been engaged here for an extended period of time, but we're seeing changes in the market now that are increasing our focus in this segment. And so UM again, it's a technology is really you know, an investment in blockchain, investment in digital assets and cryptocurrency is an investment in technology. And as you pointed out, we have often pioneered new ways to gain exposure to asset classes. So you think back to our build out

of bank loans, UH fixed income. There's a lot of questions that need to be solved in this blockchain UH more specifically bitcoin UH space. I would argue that the first bitcoin et F is not the ending place. There is going to be theoretically a whole series of return patterns in this market, in this new asset class, and it's something that we are again spending a lot of energy on. Again, I think about its twelve year old technology now, but where are we in the network effects

of this market? And Eric rest assured we are continuing to drive innovation, thoughtful innovation, and this is a space that you know, we're we are continuing to to put energy against. So another product that we are really interested in is um sp l V, which is this low volatility ETF that had been really popular and then sort of um, you know, everybody left, it seemed, but now

it's actually starting to perform. So just just wondering, like when you have a product like that that maybe is you know, potential to have a moment, yet like, how do you how do you like get people re excited about it? Can I just actually add that because what Droll talks about is something we have found, which is you know, we call it do you get a second bite at the Apple currency? Hedging ets just went through this. They crushed it, Everybody rushed and it was like a craze.

Then they started underperforming the non hedged index. Everybody left, they come back, they perform great over another year or two. Nobody cares do you think that's going to happen to lovall? So we we've been getting a lot of questions on lovall in particular recently. It's been a big part of our client discussions, and i'd widen the lenser, and go back to when we launched LOVAL. The same day we launched it, we launched high Beta. So kind of the Yin and the Yang. And now we've got ten years

of history on these two products. Again, lo vall a lot of attention there. I can tell you. When we're developing these products, you know, we had discussions interning which one is going to be more implemented. And I can tell you that, um, there was a thinking that Hi beta was gonna be the revolutionary product because it's going to provide this this new return pattern, and much too many people's surprise, lo Val took off SPLV for its

different return pattern. Now we're ten years later, we can look at these two and see how they performed, how they gathered assets. Um, you know, they're kind of again the Yin and the Yang. One holds the lowest volatility stocks of the s MP five, the other one holds the highest beta securities. And again CAPM would tell us that high beta should beat low volatility. You're rewarded for the risk you're taking. There, And ten years later, high

Beta SpHb has performed better than sp lv. Uh, but ironically sp LV has you know, significantly larger assets, and so these are capabilities and return patterns that we don't look at eric. You know, in in isolation, there's low volatility, there's high beta, there's momentum, there's quality. We offer those as well, and we do see some rotation through the different factors based on where we are in market cycles.

But our role is to provide the return pattern. And you know what we're seeing in the more much shorter time horizon here is that you know, there is starting to be a return to quality, a return sent to low volatility UM. And again you look at the pandemic period, I would point out that low volatility underperformed during that period of period where it should have you know, done well. Um. Having said that, you know, we've looked back on this

through different times and we've seen the strategy underperform. But the behavioral finance element of this index, you know, people will will ultimately um sell at the wrong time, is certainly evident in this and we think that the anomaly of low volatility is still as relevant today as it was in prior markets. One of the things you bring up is the idea that smart beta takes the emotion out of active management, because you are have a system,

there's criteria, it rebounces in a schedule. It's almost like R two D two. It's a droid. No matter what happens, the thing just does what it is programmed to do. This really came up. I'm sure you're gonna love this story because it's favorab alters towards your e t F. But it could have gone the other way, which is p e J, which is the Dynamic Leisure e t F, which you know, it's one of these ETF that holds a lot of the stocks that benefit from the reopening trade.

So it and JETS were used quite a bit. Now it's interesting, is it bought um a m C, the movie theater chain, and then a MC gets hijacked by the Wall Street bets and Reddit crowd goes up like I don't know, something ridiculous. And then p e J sells a m C the next quarter and it's perfectly timed. It. I gotta be honest, this was like a trade that no human could do because once the stock is that good,

it's almost hard to let go like that. But you did it, and I guess I just want to talk about the concept of rebalancing luck or how people who are et F investors should think about balancing. Should they look at how often it does? Um? What would you recommend on that front? Yeah, so you hit on a

lot of topics. Are the first one I go back to is you know PEJ was launched in the early two thousands, sat in fifty million dollars in a u M kind of did Joel's comments earlier, and then had its day in the sun and went from fifty million to four billion, mostly about this reopening trade. And Eric, as you point out, the securities in the portfolio, Uh, you know provided a targeted exposure to the reopening trade

and so we saw significant inflows there. Rebalancing is key to good portfolio management, and so smart beta codes that into it, right, and so this particular e t F rebalances and reconstitutes four times a year unemotionally predefined. Um. Just as you pointed out, Um, you know does things systematically, and it's that systematic nature that is important to the return pattern. And to your point, you know, as you as you mentioned, you know, this was a very well

timed re balance with a MC. So let me let me unpack that for for a quick second. The index looks at price, momentum, earnings momentum, quality, management, action, and value and it rates them every quarter on that and then it takes the thirty names that are you know, scoring the best on those attributes, which again they're just common sense attributes that a manager would would use. That's what it holds in the portfolio. In this instance, it actually um you know, on on on the May rebalance um.

Right before the rebalance, AMC was at twenty six dollars a share. The calendar turned, we rebalance on the first day of June, and it actually sold AMC at sixty two dollars a share much as you pointed out, you know, a trade that would have been hard to do if

it wasn't systematic. But I point back to, really, you know that the idea that rebalancing is important in portfolio construction, and as you ask, it's important for investors to understand how does their fund rebalance, how frequently, how does it

select securities. That's a key element to understand in e t F And my favorite story is our fundamentally weighted e t F PRF, which is a you know, a one thousand security portfolio in the thick of the financial crisis back in in in March of oh nine, it was going through its annual reconstitution and it was looking at the banking sector and saying, how big is the banks?

Are the banks from a sales, cash flow book value, dividends and it so these are still very important entities, and it upweighted it's exposure to financials, you know, in a very significant way. Um I remember the calls we were getting from clients. You're buying financials right now? How could this fund possibly be doing that? But when you're looking at five year trailing on sales, cash flow book

value and dividend, city groups still a big organization. These banks that were very small in size at that point got upweighted in the index and that drove tremendous outperformance from that rebalance forward, which again to your point, these things can be timed well, but the important aspect is continuing to rebalance, John, I just want to stay with this, the rebalanced thing for a second longer because it's such

an important part of smart data. Right. It's like you've got a robot basically that's gonna like do what it does when you say it, when you tell it to do what it does right. But within that, I'm even wondering, like, do you all have a ranking system of like the robots who like surprise you and do a really good job and others that are like meet a little bit more improvement on on the rebalancing abilities? How do you

guys evaluate that internally? So we're constantly looking at the methodologies of the underlying indices and and and making sure that they're providing the return pattern that we've stated UM as the objective. Uh, and we've done enhancements and you know, evolved in disease and changed indicase through time to ensure that we're providing clients with with you know, the best

way of accessing that particular return. And I can tell you again back in in in the early days of e t F, says, we talked to clients about UM, you know this this rebalance frequency UM. The initial reaction from from traditional you know thinking was well, you're gonna have you know, high turnover is going to you know, is ultimately a negative attribute of of you know, what

we've been trained on in asset management. But the reality is that turnover is what drives some of the tax efficiency of the e t F. And so again, our our core elements and focus has been about challenging convention, you know, in the pursuit of innovation and rebalance. Frequency is now something that everybody understands. UM. You know, drives efficiency from a tax perspective. UH. And the ability to to um make a potentially taxable gains at the fund level. UM.

Let me Uh. I kind of want to end the conversation here talking a little business. UM. Two things I want to ask about. They're both kind of related. Which is just your your strategy for growth? UM? You know it's tough. I mean, if Vanguard and black Rock are going to take in se of the money that leaves about for about a hundred firms, you guys are taking a nice chunk of that. But people wonder how how can you make it? How are what? How are you

going to grow? You guys acquired Guggenheim, you acquired Oppenheimer. Some people will equate you with acquisitions, so I'm curious if you have any there. And then the other thing is this move with q q Q you come up with q q q M, which essentially is the same thing, but it's in a different type of structure. It's not a unit investment trust, which means that you get to actually make some money on it because the cues has

the kind of um uh structure. I'll let you a explain it, but I guess why launch q q M and who are you going to acquire next? Just break the news here, yes, yeah, yeah, And I know this is run on a delay, so that'll be interesting now I'm not kidding. So the uh, the launch of q q q M and and q q q J. You know, we look back at it now we're a year past

that launch. Um q q q J you know, was awarded the most innovative et F of opened up this new segment of the queues, if you will, the next one innovators looks so obvious today, right of course we're gonna do q q q J. Q q q M is now bigger than q q q j um at one point three billion. It's accelerating. We're seeing clients that preference you know fee um you know, moving to to q q q M. It has a lower management fee. But again it's really about providing clients more ways to

access you know, this incredibly important capability. This index, the Nasdaq one hundred UM with different attributes again I gave the example with DBC and p DBC K one and no K one. Q q q M and q q q provide very similar exposures but are structured differently depending on a client's preference. And so you know, where there's high priority for liquidity trading volume, q q Q, you know, is one of the most traded securities in the world.

Where there's fee sensitivity, we're seeing clients implement q q q M as it relates to to growth. UM. You know, we have really continued to center our focus, UM, you know, on on client outcomes, which which I think everybody would

talk about in this market. One of the things that we think about within E t FS is, you know, the client experience can only be, you know, at the at the highest level equal to our our our employee experience, and so we're spending a lot of time UM on our employee morale culture people, knowing that if we get the best people from an E t F perspective, UM, we're going to continue to drive innovation and that's going to extend beyond just product development, but really about again

that full ecosystem of how a client interfaces with E t S And I know Eric, we talked about, UM, the opportunity with direct indexing to create personalization. We think that, you know, as a bit of a teaser here, there's things that can be done around the client experience that drive personalization in this traditional forty act rapper, and we're spending more and more time around that full client experience

and that's what's going to drive our girl. My colleague Ethnosios Sara Vegas really laid out a nice case for why you guys should buy State Streets e t F business. UM, it really emerged as well. And then one of your ex colleagues, then Fulton, wrote about that also in E t F dot Com, saying this would make a lot of sense. So any any thoughts on that or you just want to I'm gonna guess you're gonna pass. Look, I would say, as you pointed out, historically we've grown

organically and inorganically. UM. You know you mentioned in the US, you know, we we acquired the power shares business, Googgenheim's ETF business. In Europe, we acquired the source business. Most recently, you know, we we combined with the Oppenheimer Funds capability here in the US. So we've grown both organically and inorganically. And I think it all comes down to the client experience and what makes most sense, and that's ultimately what our north star is. And so I wouldn't comment on

one particular name. You know, there's there's there's news every day and speculation every day on on all of these things. But at the end of the day, you know, our north star is about client and client experience, um, and

that's what's going to drive our decisions going forward. Okay, I'm gonna try and get you say something about a single name, but it'll be a little bit different, which is we've talked about a lot of of Invesco's ETFs here out of two and thirty three, is there anyone that we didn't talk about that you have a special affinity for. I know it's gonna say, go ahead, a bullet chairs, that's my guess, but go ahead. You know what I think? Um, Look, I I don't there's not

one of the Invesco loves bullet chairs. I would too, They're great products. I'm just no, I look, I think Look it's it's there's a technology associated with bullet chairs that is innovative. It makes an et F feel like a big bond, certainly an interesting capability and something that

we saw in the acquisition of Goggenheim. Having said that, um, you know that there's not a particular product that I would jump off the page, you know, in terms of newness, maybe possibly Joel, if I had to answer it and go somewhere. Um you know, our senior loan e t F is one that um you know, a number of teams across the organization worked on to Pioneer. We had so many questions at the time of how to bring this O t c UH structure on exchange something that

settles UH in much longer cycles and prices differently. And today b k l N is one of the largest loan funds in the world, and it was about opening exposure, opening access to that return pattern, so one that we're seeing more and more interested recently. But um, of the as I said on the front end, you know I

love all two and five of our kids the same. Okay, So let me also ask you a question that we ask everyone at the end of Trilliance, which is favorite et F ticker that is not your own favorite et F ticker that's not my own. I'm gonna go with MoU m Oo, just because that was one of the early ones that um, you know, really created brand recognition on its own, uh you know, early in the days there, and and certainly a memorable one. That's a that's a

popular one. Yeah. John Hoppin thinks so much for joining us on, Trillian, Joel, Eric, thank you so much for the opportunity as a pleasure. Thanks for listening to Trillions until next time. You can find us on the Bloomberg terminal, Bloomberg dot com, Apple Podcasts, Spotify, and wherever else you like to listen. We'd love to hear from you. We're on Twitter, I'm at Joel Webber Show. He's at Eric Baltunas. You can find Investco at investo Us. This episode of

Trillions was produced by Magnus Hendrickson. Francesica Levie is the head of Bloomberg Podcast. Bye.