Fighting Inflation With ETFs

who has a lot of ideas about that. But first, l Donna, as a preview of my craziest thing of the week, I need to ask you, what is the most you've ever spent on sneakers? Sneakers, tennis shoes, trainers, if you will, the most, the most hundred bucks? Maybe not a lot your bucks. Yeah, you can get kids for like kids, Yeah, do you actually own kids? Of course, Taylor Swift owns kids, so I must own kids. And they're only twenty bucks. I didn't even know they were

still around. I think you can get them for pretty cheap. I mean they're made of like cotton, they ripped very easily. Huh do you think I could talk my daughters and wearing kids? They if they like Taylor Swift. Yeah, I'm as you know, I'm notoriously at a cheap skate at heart, but I actually recently spent almost two bucks on a pair of running shoes. But it's the kind that comes with like you go to one of those running shoe stores and they take a video your foot. They oh,

you fell, And I'm a true believer in it. Look as you get older, your feet become a bit of a problem. You know, you got your corns and your bunians. Oh my god, my listeners don't want to know. I fell for the gimmick, and I'm a true leaver in it. I think it has helped my feet, even though I don't. I don't really run. The only time I actually run is when I'm late for the train. But I walk a lot. I walk almost like five miles a day, you know, to the train, back from the train, up

to the snack bar a hundred times. You know, I'm running away from this conversation right now. I'm going to go introduce our guests. Well, I'm so happy that we have j Jcobs. He's the US head of Thematics and Active Equity E T F said black Rock he's joining us this week. I'm thrilled to have you on. Thanks so much for joining us, Jay, that's a pleasure to be here. We won't ask you about how much you've spent on on sneakers just yet. I'm feeling better after

hearing about Mike's dollar purchase. I think I'm I'm closer to your built Anna. Oh thank god. Yeah, I'm so happy to hear that. Anyway, you recently started at black Rock. I'm I'm sort of hoping we can just start out and you can tell us a little bit about you, your path to black Rock, and then what your current role entails. Absolutely so. I've spent my entire career in the E t F industry, which, in some ways the

industry has been around for a while. It you know, got its legs in the mid nineties and now is so guests, you know, coming up on thirty years almost. But uh, just in the last ten years or so, we've seen an explosion of assets and E t F as.

People have really seen them as these efficient vehicles for getting exposure to everything from different asset classes to different geographies and maybe even most recently, different themes and looking at different structural trends that are accelerating around the world and the packet of the different baskets of companies that are participating in those themes. So I started very early in my career at the New York Stock Exchange, the

ETF listing group. There, I moved on to join what was a start up at the time at Global Acts and helped build out their business, and three and a half months ago join black Rock as a really exciting transition to join what to the great thematic platform. Here we not only have index based themes where we're tracking targeted baskets of themes like cybersecurity or merchant food and actech or robotics, but also actively managed products to where we tap into the full platform of black Rocks offering

with Fundamental Equities and black Rock Systematics. So it's a very very exciting place to be with so much depth of knowledge in the thematic area. So, Jay, what are some of the hot thematic Etcfs of the year. I have a inkling as to what they are considering everything going on in the world, but what are some of the sort of bright spots of the thematics world this year? For you? Well, Mike, I'm sorry to say, there's no sneaker e t F yet, we can work on that,

but I'm not sure. If there's we'll work on it. At two bucks. I think that's a pretty good. Uh, there's some profits out there to be had. Well, you get some My craziest thing, you're you're gonna be blown away with where the sneaker conversation goes. It's it's absolutely nuts. But you work on that, get get get an edgeword in EATSF and I think, uh, you know, the sky's the limit. But well, but our best people on it. We so within within the thematic space, it's been really interesting.

You know, over the last three or four years, a lot of leadership in the f attic space has been around disruptive technology. It's been looking at things like cloud computing. During the pandemic when we were all working from home, it was around genomics and biomedicine when we were you know, trying to figure out the vaccine situation and testing um. But now it's really pivoted, especially as we've seen broader

shifts within the market from growth to value. People are looking for more themes that are in the value space, especially themes that they think that we think are going to be more resilient amid this high inflationary environment. So we've seen a lot of interest in infrastructure as a theme. Part of that, the infrastructure investments that jobs act and

what's happening there. We've seen really an incredible amount of interest in food related themes, especially as we've seen inflation at the not maybe not so much at foot locker, but we're seeing it at at the supermarket um. And then also we've seen interest in in clean energy as a play on inflation as well as some of the most recent news out of Washington. So we're seeing again kind of this shift. It's not just about disruptive tech anymore.

We're seeing themes that are playing a little bit more in that value into the spectrum as investors look for long term structural trends. But those that can still do well in this different environment than we've been in, and those different themes Jade, they're sort of for this inflationary environment, right, So could you maybe walk us through those key themes of yours and why exactly they work in a world

like we're having today. Absolutely so, a lot of it has to do with what are the underlying companies in this theme and why do we think that it's going to benefit in an inflationary environment. So starting with infrastructure, a lot of infrastructure asset owners, you know, companies that run airports, run toll roads, run supports, or utilities companies, they literally get to change their tolls based off of cp I, So that is a natural built in business

hedge for inflation. When inflation has higher, they get to raise their rates, especially if they're regulated rates tied to c p I, and that just sort of neutralizes those businesses from an inflation perspective. I think what's also happening in that space is you have a lot of money coming into infrastructure from the infant structure investments and jobs acts.

So there's a lot of build out of infrastructure that frankly, these companies don't have to pay for or they get tax credits or other benefits to build out this infrastructure, which is helping. And then finally, when we think about the economic environment that we're in, infrastructure tends to be

very um uh non cyclical. So if we start to see a recession or if the economy slows down, people still turn on the lights, they still use their ovens, they still pay their water bills, and so not only does it have this inflation component, but there's also a defensive component within this theme, which is which is kind of giving people that sweet spot of we don't know if there's a recession, we don't know how a long inflation is going to be around, and we also want

to participate in long term structural growth. Inflation really hits on all three of those points. I think the second theme that we are um, you know, really excited about from that inflation perspective is ag tech and food innovation. And I'll be honest, this is a theme that we thought was really going to be playing out over the next twenty years. We looked at we took a step back, and we said, the world's arable land is pretty much limited.

There's a finite amount of land in the world, if anything, that has been shrinking due to you know, changes in the climate and more floods and more you know, forest fires, which is making arable land somewhat shrink. But on the demand side of the equation, we've seen a rising emerging market consumer which is spending more money on food and more complex foods like proteins and dairies. We've seen a growing global population which will reach tenderly and people by

the year tift um. And we're seeing a change in food preferences where people are increasingly demanding sustainable food. So just looking at that, we were believing that over the next several decades we were going to have this supply and demand to balance around food that would create food inflation.

Of course, that's been pulled forward twenty years earlier than we expected because of conflict in Eastern Europe, which has brought a lot of weed offline, because of general global supply chain disruptions, which has made it more difficult to ship food around the world. So, um, we're seeing food inflation,

we're seeing it in really powerful ways. But we also have these solutions that are already out there or with attact like precision farming, precision watering, reduced use of chemicals, more resilient crops, and that is getting accelerated by this environment. And then the third team is clean energy, where we've seen that a lot of the cost and clean energy is really in the initial build out. You know, you build out a solar farm, you build out a wind turbine,

That cost is mostly up front. Yes, there's some servicing that's ongoing, but a lot of those costs are basically fixed compared to you know, more traditional forms of energy production where you're constantly paying for fuels. So in an inflationary environment where you have rising commodity prices, upfront payment of a lot of those costs tends to be beneficiary. So those are the three segments where we think really are in the sweet spot of of inflation. But also

how these long term tail ones. Yeah, I wonder how often uh you're sort of studying the headlines out of Washington, uh and and trying to figure out what themes um could possibly emerge from sort of the shifting politics of the see it and really you know politics globally, you know, especially the clean energy e t f UM. You know, I'm impressed it's it's actually up here to date. So very few things are actually positive year to date, but

clean energy, uh is it? I c l n is the ticker is actually up I think three or four percent year to date. But how big of a sort of government risk do you see to the clean energy space? If you know, we get to the mid terms and there's a all of a sudden, Republicans are controlling Congress

and they're not so friendly to to clean energies. Does that, you know, sort of political risk play into you into you're thinking very much when when a deciding to to create a a thematic etf like that and and be you know, saying now it's a good time to to get into it or not. So with any theme, what we try to look for is what is going to be the catalyst that is the game changer for the theme. So you know, it takes take anything. We can take

cybersecurity for example, UM cybersecurity technology. It's a little bit better each year companies spend more money on cybersecurity. But oftentimes you see a catalyst like a major cyber attack or something that happens in the space that suddenly everyone is thinking about cybersecurity and becomes a transformational moment for the trajectory of that theme. Sometimes it can be a

technological advancement. Sometimes it can be new policy and legislation. Uh. Sometimes it can be something that's changing in society like COVID and how much that accelerated certain themes. So earlier in this year, a lot of our focus was what you know now that we're past the peak of COVID. What does this mean for things like healthcare? What does

this mean for disrupted supply chains? What does this mean for the rising consumer that has continued to become more and more powerful even amid COVID, like millennials and emerging market consumers, UM, specifically with clean energy. You know, of course, there's a lot of policy that comes into play as

a potential catalyst for this theme. Uh. You know, most recently we've seen some interesting headlines around the Inflation Reduction Act and specifically targeting about three sixty billion dollars that could go to clean energy and electric vehicles. And when you see that amount of money potentially potentially entering the space, that can be a massive catalyst for the trajectory of this theme. UM specifically because it changes the economics of

a theme. So if clean energy becomes cheaper or electric vehicles become cheaper, that accelerates the adoption and um that increases the scale of these technologies. As you see scale increase, you sent disease costs come down. That's rights law or the learning curve, and then you start to see really the acceleration of of these themes snowball from there. So UM,

you know. Absolutely, we look to Washington, but we also looked to Silicon Valley, and we also look to you know, general trends that are happening around society for these catalysts. So J Mike mentioned I C L N, which I guess we can pronounce. Is I clean? Yeah? Clean? Absolutely? And also you had sent us some some notes before we started the podcast about I D R V I drive. So some of these et f s in the clean energy space, and you said that the market is missing

a sea change moment. So is that the sea change moment you're referring to. Can you talk a little bit more about that when it comes to the specific you know e t f s in this space. Absolutely, So what we're seeing is really the economics of these different themes shifting because of uh, this potential policy that you

know that could be passed. Right. So if we look at electric vehicles, for example, UM, right now, your average cost of the average purchase price of electric vehicles about higher than the average purchase price of all cars in the United States. So it's about a fifth to a quarter higher. Um. But actually when you look under the hood, you see no pun intended If you actually look under the hood of these cars. Uh, the total cost of ownership over the lifespan of the car is already cheaper

for electric vehicles. That's because it's cheaper to fuel up and it's cheaper to maintain. I was just doing some back to the Napkin math. Uh, it's about ten dollars to fuel up about three miles of range an electric vehicle. It's about forty to fifty dollars nationally right now to fuel up a similar internal combustion GIN. So you can think about every time you fill it up. Is a little bit cheaper electric vehicles that help closes That helps

to close the price gap. When you add on top of that incentives from the government, which could be as high as seventy for a new electric vehicle, then the economics will really start to get more attractive to consumers and it becomes it no longer becomes a question of you know, do you like one car more than the other? Um, I think the most powerful driver and a lot of

these things is just purely economics. And if there's a cheaper car off the lot, or a similar priced car off the lot, but you're filling up for ten dollars instead of forty to fifty dollars. That's a really compelling argument for a lot of consumers. So when we see policy come through that can help change those economics to be more attractive to a specific theme, we see that as a very powerful accelerant. I'm gonna call j out on that. I think that under the hood pawn wasn't

was actually intended and I'm sorry, it was really good. Yeah, I can't let that slipt the speaking of under the hood, Jay, I was looking at some of the stocks uh in the I d r V, the self driving and e V eat t F. I'm curious how a few of these fit into the theme. I mean, obviously, Tesla is

in there, that's that's clear enough. A bunch of chip makers, Qualcom and Video Until Eating the engine maker fine, um, But Apple, Alphabet and Samsung UM, and maybe I just haven't been paying close off attention, but how did those companies fit into um a self driving theme. I'm assuming it's just they must have ambitions somewhere along the line to to somehow be involved in this space to some degree. A lot of the big tech players are investing very

heavily in autonomous vehicles, and a lot of it is that. UM. Part of this is it's a brute force equation to try to figure out autonomous vehicles. There's a lot of processing power and a lot of data that needs to be collected to be able to figure out something like a unprotected left hand turn, which sounds simple, but when you do it in a car, it's it's hard for me, and a computer has to take in a lot of

inputs to figure out how to do that safely. So who's really the best position to take in all that data, to process that data to apply artificial intelligence. Well, no surprise, it's a lot of the companies that lead in uh, data collection and artificial intelligence. So we've seen, you know, major players in in big tech coming into this space. Um, you know, maybe it's kind of pre revenue, but they are behind the scenes developing some very powerful products going forward.

I think the bigger point is when we look at thematic investing, we're really trying to understand the entire ecosystem of who benefits from this theme. So I'm sure many listeners can name a couple of car companies off the top of their head that are powerful electric vehicle companies. But looking across the ecosystem. You know, who are the companies that are building the batteries that go into those electric vehicles. Who are the companies supplying those battery manufacturers

with lithium and other critical medal metals that go into batteries. UM, Where the a V developers, Who are the parts suppliers Because the parts suppliers in the electric vehicle space are very different than internal combustion engines. There's very different parts

that are required in these two vehicles. So UM in thematic investing, A lot of the research that goes into these funds is really happening up front trying to understand what is the what is the you know, what is the state of the world, and what are the subsectors and sub industries that are really going to benefit if we see this theme really materialize. So last year was

actually already a transformational year for electric vehicles. About ten cars sold year around the world were UM, we're electric. We were a little bit further behind in the United States. UM, but we expect that gap will close UM again because of the economic argument we have, right, we have higher gas prices, UM, we have more models that are coming into this space and electric vehicles. We have prices generally following electric vehicles, and now we might have another tax

credit which makes the economics even more attractive. And Jay, when you're talking to clients and you're talking about the other two categories that you mentioned to agriculture and infrastructure, what are some of the e t F that you're focusing on when it comes to those two themes. Absolutely so in the infrastructure space, it's IFRA um. I'm a big I'm a big fan of ticket pronunciation as well, So I f r A we pronounced IFRA. It's our

US infrastructure funds. So we're looking, uh, not only at traditional infrastructure owners, the companies that kind of own and operate infrastructure around the United States, but also the companies that are building infrastructure of the future and the inputs that go into building infrastructure of the future. Part of that is due to the Infrastructure Investments on Jobs Act and at one point two trillion dollars that's going into

infrastructure around the United States. Part of that is increased investment from the private side, from states, from local municipalities. Basically, there's a lot of investment coming into infrastructure which had largely been neglected over the last several decades in this country. And you know, there's a great report that comes out every four years, the American Society of Civil Engineers, and they gave the u S a D plus on infrastructure.

So we knew this was coming. We knew there was going to be a need for a lot more investment. We don't just want to own the existing asset owners, but also who are building the new airports and the new seaports and the new six lane highways going through the country. And then on the on the food side of things are tickers I VE EDGE, I V E g Um, which is our emergent food and Actec Multisectory TF and that's really looking at who are the innovators within food. Um I did a kind of a fun

test within the office. Um I bought two types of strawberries, traditional strawberries and my fancy New age strawberries. And a traditional strawberry has grown about miles away from New York City, oftentimes grown in California. UM Oftentimes it can use as much as three hundred times the way to the strawberry and water. UH. It could have up to eight pesticides being used in that strawberry UH and of course it has to be transported across the country so that we

can enjoy it um. You know, in New York City. My special fancy strawberry UM that I also brought in is grown in Jersey City, so about a hundred times closer. Uh. In an indoor vertical farm. It can be grown year round,

It uses about nine less water. Oftentimes, it can use no pesticides at all because it's grown inside and there's less risk of of of pests coming in and eating the crops um and so uh and the cherry on top of this strawberry is that a robot can actually analyze the strawberry when it's growing and perfectly optimize the

time to harvet for its juiciest, most flavorful moment. So we did a little taste test in the office with these two different kinds of strawberries, and naturally, people gravitated towards our delicious hand hand robot picked indoor vertically farm strawberry. But the point is to show that ad tech can have a really powerful um implication on how we grow our crops and where we get it from and what are the inputs into those crops. And you know, going

back to inflation. We're seeing inflation, and labor costs we're seeing inflation, and chemicals we're seeing inflation and water prices. So if you get all those different inputs and you can replace them or reduce their usage through at tech, you can start to fight inflation. And so you know, right now some of these technologies are a little bit nason but as we see more adoption and more scale, we believe that will drive down costs of food going forward.

I had not heard of these fancy Jersey City shrubberries. That's pretty cool. They tasted better because they're grown in Jersey City. They actually taste like pork roll of Bildana. That's the secret. Yeah, my, my only I actually have heard of them. My only fear is that the fancy shruberries cost like forty strawberry or something. No, it's not that high, but it's it's expensive. These are when you look at the trajectory of Nassan technologies, they often start

expensive and you need to attack the early adopters. And so think about the EV industry, what was the strategy go for the fancy luxury car market. These are the people that are gonna have more disposable income to spend on a fancy ev go for tax credits lobby in Washington to get more money to bring down the costs. As you start to see that scale, then you and start building cars for the masses. And I think we're

gonna see a similar trajectory and actect. Right now, we have fancy, somewhat expensive strawberries, but as this technology scales, costs will come down and soon all of our strawberries maybe we'll be grown in Jersey City in an indoor warehouse. But Jay, I, it's a it's really a fascinating concept of thematic ETFs. And you know we're joking about you know, uh Air Jordan's sneaker ETF. But I can only imagine your team at Black Rocks sitting around and the ideas.

You know, there must be a million ideas a day about a new theme, you know, especially over the past few years. You know, we went from the trade war with China to COVID to energy inflation, you know, the food shortage. Um, you know, it's just been a battery year banner few years for potential thematic ways to invest.

So I'm just curious about the process at Black Rock, you know, am I right to think of you, you know, y'all bantering around, battering around about a hundred different ideas that every time you get together, and how do you sort of win it with down um to one that you actually want to launch? And to make this a twelve part question, you know, is there sort of a number in your mind of how many new ones per year or per quarter that you'd want to you know,

limit your launches to. And and sort of what is the process of of going from drawing word to bringing a thematic etf to to the market. It's a great question. And um, the opportunities in some sense are unlimited. As you said, you know, themes are constantly evolving. New themes are emerging from nowhere. Other themes are sunsetting, you know, as they kind of grow into maature industries, and so

it's a constantly evolving space. And UM, I think that really proved out in the last few years we saw assets and thematic ets quintuple from one as people increasingly saw these new ways of slicing and dicing the market as really trying to align their ideas with investments. Um. Again, going back to the pandemic, it wasn't enough to just look for tech sectory TF People really specifically wanted to look for where am I spending my money? I'm spending

it online, Where am I spending my time? I'm spending it on video games and knee commerce, and how am I working I'm working remotely through cloud computing. People really wanted these more refined exposures UM that got a little bit deeper than you know, more traditional sector E t f s. But when we think about the process of themes, we have to apply a rigid structure to it so we don't get lost in this UM you know, infinite

possibilities space, and really we're looking for a few different things. UM. First of all, we really want to develop our conviction behind the theme. So we have five different categories of megatrends within Black Rock. We're looking at breakthrough technologies. We're looking at climate change and resource scarcity, we're looking at changing demographics, we're looking at the emergent consumer, and we're

looking at urbanization. And so oftentimes we're looking within and across those buckets of where are we're seeing powerful trends, And the more a trend the lines with one of those buckets, the more conviction we have behind it. UM. But we'll dig in. We want to find out if this is a new technology, how good is this technology, are people using it? How big is the market for this technology going forward? Are there other technologies that need to emerge with this technology for it to be viable

or profitable? And so we really dig in and research this UM not just within I Share us, but within our partners across Black Rock to really understand what is the opportunity set in this theme and do we believe that this theme is going to have a powerful impact on the world around us. The second thing we have to look at tho is it also investable? Can we get good exposure to this theme? Uh in an e t F and E t S can only invest in

public equities. UM, we can invest globally, so we can look anywhere around the world, within any sector, within energy, any geography for this opportunity. But we still need to find those companies that are really leading in this space. And so some themes are interesting. They might have this, you know, incredibly large total addressable market, but if we can invest in it, we're not going to bring it out as a theme. And then really the third thing

we look at his time horizon. We want these themes not to be over tomorrow. That's going to be too fast. We don't want them to start taking off a hundred years from now because we don't we don't have the patients for that either. There's a sweet spot in thematic investing, which is that really we we anticipate that a catalyst can happen in the next three to five years, and that the expression of this theme will happen over the next decade or so. That is the sweet spot from

a time horizon perspective. So um like to some extent, you're right, we do get to sit around and think about some you know, off the wall ideas, but when we put it through this rigid process, that's what narrows it down to, you know, the handful of themes that we launch each year. So can you tell us which themes or trends are on your radar right now? And I sort of imagine you guys have a little list of things that are interesting to you or that you think will you know, check off all of the boxes

for the things you just mentioned. I remember talking to an issue or a couple of years ago who had said, you know, clean energy or sorry water water use was going to be a theme that they had been looking at. Obviously, Crypto has been a very hot or I don't even know how to describe it anymore, but um, it's caught a lot of people's attentions, a lot of issuers attention over the last couple of months. And feel free to share as much proprietary black Rock internal information as you

as you want. I was going to say, as as much as I would love to share. This is like the recipe to diet coke or something. It's under like triple secret lock a lot of these ideas, but this is your chance, this is your chance to really open up. At least give us the worst theme idea you've ever heard. Maybe it was the Air Jordan idea. I don't know. I like that theme. I um, you know, like like, let's play with that a little bit, Mike like, so underlying I'm serious, like the sneaker theme. So what is

it really representing? There is a new consumer. There's this rising millennial consumer in this rising emerging market consumer that is finding that they have more money than they've had it previously. Because they are increasingly entering the workforce, they're sizing up the ranks of their companies and they have to decide where they want to spend their money. And what's interesting about this consumer group is that they are more likely to spend money on sneakers than previous generations.

So um, you know, I don't know if a sneaker ETF is really viable, but there are megatrends within that. You know, if you broaden that out, there's a mega trend behind that, which is what is the new consumer and how are they spending their money differently from other generations and so uh. Part of that, you know, is related to blockchain. We see that there's a lot of people in the emerging markets who have been unbanked in the past and can suddenly access finance through um, through blockchain,

into centralized finance. Part of that is through food. Millennials are much more likely to prefer food from sustainable sources than other generations, and so the food that they demand is kind of it looks different than the food that previous generations have demanded. And that's why we see alternative proteins and alternative bairies showing up on you know, on all the aisles in our in our supermarkets. So um, there is a theme behind sneakers, Mike, uh and uh

and and it's a powerful one. It's one that we certain we have our eyes on. I'm not going to promise this, Nikerta, but it's but the changing consumer is a very powerful megatrend. Absolutely. And what what were some of those themes you were just about to share with us? So I thought I wiggled out of that one. You'll have to invite me back and I can share we have some we have exciting themes under development, but I'll have to come back and share them when they're ready

for the public. I uh and assume E s G must play a pretty significant uh input in how you're thinking about these, just given black Rocks sort of emphasis on e ST and and also just the investing public. You know, I'm trying to think who your your target buyer of a thematic et F would be? Is it individuals? Is it pensions you know, uh, institutions? And and how big of a sort of impetus is our E s

G considerations when when looking at teams. Yeah, absolutely so. Um. First of all, one of our megatron pillars is climate and resource scarcity. So when we look at some of the powerful trends happening around the world today. Some of them are very much related to climate. We've already talked about it with food and you know how we're seeing

kind of shrinkage of airable land. When it comes to clean energy, we're seeing the powerful forces within policy and consumer demand that are powering greater growth in in clean energy production. So that's an entire pillar of our megatrends framework. UM. But to your question around who's the buyer of thematic,

it really runs a wide gamut. And I think part of that is that on one hand, these are very approachable ideas that people can intuitively understand, So a novice investor can wrap their head around an idea like, um, I see a lot of electric vehicles on the road. Is this a growing theme? How do I get exposure to it? Oh, there's an eye dry BTF. But on

the other hand, these are sophisticated concepts. These are providing exposures that are crossing geographies, crossing sectors, providing really unique exposures to a portfolio. And we see even institutions using them in their portfolios to get these unique cuts and these unique exposures. UM in a in a broader, more diverse five portfolio. So there's a very wide buyer base of these themes. Um, it really can't be pigeonholed to

just one type of investor. And I have one more question for you about sort of the internal dealings of how you guys come up with different funds. One thing that's super interesting to me is tickers, and we we we've mentioned a bunch of really great ones that you guys have. There's some really really catchy ones where when you see the ticker, you definitely know what you can expect from the E t F. So how important is it to have I don't know if catchy is the

best word. Maybe you have a better word to to to use in this case, But how important is it to have a very good ticker where somebody can easily find you or sort of get enticed by the ticker itself to even become interested in the E t F. I think it helps a ton. I mean, people have a strong memory for for tickers, and so I guess, backing up very early in my career, my very first job at then at the New York Soaker Change was actually reserving tickers for t f issuers. That's part of

the job. So it's kind of like being the I assume it's like being the person at the DMV that does vanity license plates, but you're only working with up to four characters. They're a little bit more limited. But I I love a great ticker. I'm I'm as much of a fan as you. Um yeah, having a good memorable ticker I think means a lot. I mean that I shares. We have a very um uh kind of common approach where we'll use IE for the eye and aishers and then we have three letters at our disposal

to do something memorable. So when we think about you know, emergent food, we have i've edge. When we think about electric vehicles, we have I drive, you know, for cybersecurity, I hack and so we try to take both that kind of familiarity of using the eye, but then also having something that really links the ticker to the theme. But I love a good ticker, and and and and are you sort of compiling lists and then going to the exchanges and reserving them just in case you want

to come up with a fund down the line? Oh no, we well, we we try to tie it to product launches specifically, so we think, you know, we we we get people in the room and think through the different ticker ideas. As we're getting ready for a product launch, s n k R is available. J. I just just throwed it out there. You know, maybe maybe I s n K I sneeze so J. How about in UM

in fixed income? I mean, I know, UH shares is obviously famous for the T L T, the H y G, you know, the big Treasury and and UH and how you'll bond e TF Is there space in thematics for fix fixed income? From your perspective, we haven't seen much of it yet, but we're seeing growing adoption of themes.

Themes are really just different ways to slice in dise the market to get exposure to forward looking ideas UM and so for the most part, we've seen a lot of that focused on the equity space because you can get really targeted exposures to equities and you can get a lot of we call it kind of theme beta. It's a little bit of a nerdy term for how much exposure are you getting to of a theme. So if robotics takes off, is our robotics and the real economy is taking off? Are we seeing you know, the

robotics stocks taking off as well. Um, you could apply that to fixed income. Uh we we we haven't done much in that space, Uh you know yet. But I think the breath of opportunity of thematic is expanding very rapidly, and I would expect to see a lot more product innovation and across assets, across themes, across geography is going forward. And Jay, obviously we've we have so many different e t F s. I forget what the number is now,

it's probably over two thousand. You you probably know the number off the top of your head, just in the A t F in the entire et F universe. I'm just wondering if you ever think about the space being overly saturated, or if we can get to a point where there's just so many options out there for people, too many. I think choices and is an incredible thing for investors because it lets people express their opinions their e t s using really re find um exposures of

the ligne with their views. So I'll give you a little bit of an example within the robotics space in the TF industry, there's about five different robotics ETFs. The average overlap between those products is less than so even though all the products are looking at robots, we're all looking at robots a little bit differently, um, whether that's black Rock Views Views on Robotics or someone else. And

so that gives investors a lot of choice. I think that gives investors also need to have a lot of trust in the issue are behind that et F of how they've designed the exposure to that specific theme. Um. But we think that choice is wonderful for investors to be able to really look again under the hood. I'm sorry for the pun. I guess that doesn't apply to robots, but look under the hood at an e V t F and understand what is the exposure and is that

really the exposure they're looking for. Yeah, I imagine there's a little bit of Darwinism at played. So you know, if the if the thing's not gathering enough assets to make it sustainable, then you you know, it goes into retirement or the et F graveyard as Baltunists would call it. Uh. But speaking about t J, I'm I'm sure you've running him at some point. He's our et F guru here. Eric Beltrino said, um at Bloomberg. He tweeted something the

other day that I found pretty interesting. UM shouldn't be that surprising, I guess. But it was basically a bar chart of assets in UH E t F sorted by what their UH expense ratios are, you know, and and obviously the lower the expense ratio, the higher the assets UM And I wonder how you think about that. In thematics, it's you know, I'm looking at, say, for example, the the I d r V expense ratio of forty seven

basis points, which is not a huge expense ratio. But when you compared to say, you know, uh NZAQUE or an SMP, one of those really competitive spaces for index ETFs UM, they get down into these minuscule expense ratios. So how hard is it to to cut those expenses on a thematic even if it's not an active one, I mean even a past someone. There's this whole process

and research that goes into it. How big of a deal is the expense ratio and thematics UM and and you think, you know, I'm assuming there's always an effort to bring it down. Uh, you know, how do you go about that process? Yeah? So a lot of it

comes down to portfolio construction. So you know, many investors will do more of a core satellite approach where they will have the lion share of their assets in very you know, low cost diversified core products and you know, get the SMP five hundred tracking and their fixed income and really cover you know, wide spots on the market

with that low cost exposure. And then they'll supplement that with smaller satellite positions that can give them more growth or give them more income, or give them more risk management and um. And that's where it's going to be kind of smaller allocations but really help them to achieve their outcomes. So oftentimes we'll see you know, three or four thematic ETFs put into the satellite portion of one's portfolio. Maybe it's tent of their portfolio, but it's giving them

that growth opportunity that is enhanced above the core. Because that tends to be a smaller allocation. You know, the funds are going to be smaller in size than core funds. You know, we haven't seen a thematic et F each hundrebillion in assets. Yeah, they often tend to be smaller than that, and that you know, sort of justifies the fees and in terms of scale. But oftentimes you can still achieve a very low cost, diversified portfolio with thematic

with all in fees that are very low. So we think that we're continuing to provide a lot of value to investors with with the pricing of of both our themes and the core. Yeah, what is the big or the clean energy ones like five billion or something that is. Yep, that's one of the biggest on our platform. Absolutely ja good stuff. Um, we gotta send Veldona over to get some of those Jersey City strawberries that tastes like pork roll. I would love I would love to try park roll.

It tastes like delicious strawberries. All right, Well, that's that's indoor Jersey City strawberries. That's that's less exciting. That's less innovative than that I was hoping for in these Jersey City strawberries. But as the garden state, I'm sure they're good. But I think it's that time, Vildonna, do you know what time it is? Well, the strawberry thing is pretty crazy, but I think it's time for us to also play craziest thing we saw in markets. Okay, whereest thing, craziest thing,

crazy whatever we call it? Still crazy, still craziest thing after all these years, you go first. I've got high hopes for your crazy thing this week. Mine is so good. But it's so good that you actually might have heard of it already. And it made me a little bit queasy, which is why I'm going with it. Queezy queazy. You'll see worse than the how many rats can be found in a dollar store warehouse? You tell me all right.

Fancy Feast is opening a pop up Italian restaurant in New York City with quote upscale dishes that are inspired by its canned cat food. It's launching this month in downtown New York City. I actually think it starts next week. I would love to actually just maybe go and scope

this out. So it's branded Gotto Bianco, which means white cat, and they're going to be serving dishes like salmon calm parton palmer rodini not pronouncing this very well, but salmon with cherry tomatoes and brassado dimonzo, which is beef short ribs in red wine. And you can have lemon pancotta for dessert. I mean, it actually sounds delicious. I don't know why they felt inclined to make the connection to cat food in this Uh you know, I don't know. Can you bring your cat to the I don't think so.

I mean with cats are antisocial, they don't want to be going out for dinner. But um, it doesn't make you queasy. Well when you uh say the names of the dishes, it makes me very hungry. But when I think fancy fees, I do get a little queasy. I wonder you're a cat person. Is this like something cat people will embrace? No, no way, dog lovers are going nowhere near this place. I'll tell you that. You know, I don't know who's going near this place. I would

love to, honestly just see what it looks like. But when I feed my cat and I open it and a little bit of the stuff gets on my hand, I literally it's like it's like a nuclear waste touching my skin. The last thing you're thinking is good, will give you some of that I want to place? Yeah, exactly, that's pretty good. I did see that one, but I will I'll give you mad respect, as the kids say, for it's a good one. How about you, Jay? You see anything crazy in the markets recently. I'm gonna stick

with the with strawberries over cat food. I just want to make that clear. I know I'm all for food innovation, but that that's a step too far for me. Um. Yeah, I'll stick with the food theme. I think this is this is crazy as far as as as finance nerds get. But I was looking into inflation a bit. The cost of a dozen eggs has gone up sixty in the

last year. It took twenty years to have the same amount of inflation and eggs um before that, So from two thousand to two thousand, twenty was the same increase. I think that's crazy, and that you know a lot of what we've talked about today with food inflation, and you know the bill when you leave the supermarket and some of the sticker shock on that. Um, it's pretty wild to see that amount of that amount of increase in such a short time. Yeah. Absolutely, I wonder is it?

I wonder if it's the input costs the chicken feed. Literally that's uh, that's done. It probably right? That that is nuts? All right? I promised to something related to sneakers, uh and are probague. Miss Lorena had a really amazing story, Um, Vildana you probably read it, but it's about an air Jordan's ponzi scheme. I believe that the first of its kind, and it's all goes back to this stock X. I think this was one of my crazy things from a

few years ago. But there's this exchange basically for sneakers, um, mainly Air Jordan's, but I guess you know, plenty of others trade on it took kids. I don't know about kids. I don't know. I'm kidding. I gotta I'm gonna talk to my kids into getting kids. Um. But this story is nuts because the details of this ponzi scheme. Basically, the this couple was promising rare Air Jordan's at you know,

way below what the market price was. But as a ponzi, the people would send them their money, they wouldn't get the sneakers. Maybe they'd complain and he'd send them some money back. But uh, you know, there were some fraudulent bank loans involved. It's a big mess. But a got me poking around on the site of stock X, and believe it or not, they stock X has Air Jordan's indexes. Uh, there's an Air Jordan four. I guess the fourth version of the Air Jordan was a very popular one. And

there's a Nike air Max one index. They also have have you ever heard of cause either when you hear of K A W. S figurines, I've never heard of this. It's some graffiti artist, um who started making these little funny figurines, and they're a hot thing now among collectors, I guess um. And also a basketball Trading cards index. Basketball cards are a big thing. So I found this report on their website and they track the appreciation of each of these indexes from uh the beginning of sold

the end of April. So that is the the golden era of crazy market action right there, beginning of to April and of April. So, uh J, I regret to inform you you are now contestant on the price. What did we decide? The name of the show was the price is correct? The price the prices cracked? Yes, we can't call it prices right. Yes, we do not want to get correct suitor or punched by Bob Barker like Happy Gilbert, the prices accurately. No, I like the prices correct.

The prices correct, all right, So beginning of to the end of April, we're gonna chart the Air Jordan four index, the Nike air Max one Index, the Cause Figurine Index, the Baseball basketball pardon me, Trading Card Index, and a quaint little index known as the SMP five. What do you think performed the best and what was return? I'm gonna go with this Air Jordan's four index and I'll say it was up twelve. Okay, all right, I'm gonna

keep my poker face on. As a reminder, j We've got the Air Jordan four Index, the Nike Airmax one Index, the Cause Figures, and the Basketball Trading Cards Index, and the SMP five. What do you think performed the best from the beginning of till the end of April? And that's the time frame in their report. That's the only reason I don't have the actual data to play around with. They have never heard of cause I'm gonna go with

basketball cards. I think basketball has really entered the zekegeist and people are tracking it really closely, and I'm I'm gonna go with basketball cards. I'm gonna say a ten x two thousand percent. Okay, they'll do it once again. I regret to inform you you've you've lost the prices accurate this week. I'm shocked. I'm shocked, considering all my deep knowledge of weird sneakers. J J got it on

the head. The basketball trading card index little frothy on your on your returns there was it was uh return uh but still pretty good. I mean for basketball cards who knew Uh. The SMP for comparisons only up about over that time Eric Jordan's four index up a hundred, uh caused cause beat the like their maximus. Cause still beat the SMP over that period, for whatever the heck they are. Naturally, that's the world we live in in

that some stupid thing none of us have even heard of. Uh, some silly little toys beat the SMP over that period, thankfully, J. I don't know. Have the markets come back to earth? Are they saying again do you think or how are you thinking? Overall about that sort of the insanity of the markets? Uh? Now, compared to what we saw the previous two years, I think we found our footing. There's

been a bit of a shakeout. I think the shift from growth to value has helped people recalibrate their portfolios. They think they're still going to be more volatility. We're still trying to digest what you know, living with inflation looks like for the longer period of time what shortages mean in the economy as well. But it seems like the markets have found their footing a bit so, a little bit more driven by fundamentals than maybe it was a couple of years ago. Yeah, that's that sounds that

sounds about right to me. And just for your own notes, Uh, j cause Kaws that tookers available to you know, it's just just throwing it out there. We'll take a look into it. Yeah, I cause it's for good cause cows. Maybe it's cows. I don't know. Move. What's the movie e TF there's a movie cash Cow, Cash, Cash cass damn though it has nothing to do with good I

love it anyway. With that said, Jay, fascinating conversation. We really appreciate your time, and I hope we can have you back again to uh to hear what's new with the mad except black Rock in the future. Absolutely, thanks for having me, Thank you, Jake, what goes up? We'll be back next week and so then you can find us on the Bloomberg Terminal website and app or wherever

you get your podcasts. We love it if you took the time to rate and review the show on Apple Podcasts, so more listeners can find us, and you can find us on Twitter. Follow me at reag Anonymous Bildanna Hirach is at Bildanna Hirach. You can also follow Bloomberg Podcasts at Podcasts. What Goes Up is produced by Stacy Wong. Thanks for listening. To see you next time, Oh,