Latest / Trillions / ETFs Win Triple Crown in 2025

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ETFs Win Triple Crown in 2025 · Trillions

• 0:02
  Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Hey Joel here, Before
• 0:09
  Speaker 1: we get started, Eric and I have a favorite to ask.
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  Speaker 1: com slash Bloomberg to answer. That's trillion survey dot com
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  Speaker 1: slash Bloomberg. Thanks for supporting the show. Welcome Trillions. I'm
• 0:37
  Speaker 1: Joel Webber and I'm Eric. So here we are in December,
• 0:44
  Speaker 1: and this year, if you think about ETFs, we'll go
• 0:48
  Speaker 1: down in the record books for the for pretty significant reason.
• 0:53
  Speaker 2: Yeah, that reason to say the least. So there's three
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  Speaker 2: main records, write or metro that ETFs we track all year, launches, flows,
• 1:03
  Speaker 2: and volume. Right, those are like we call it the
• 1:06
  Speaker 2: triple crown. Normally, in a good year you get flows
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  Speaker 2: and launches are up, right, everybody's happy, but volume isn't
• 1:12
  Speaker 2: high because volume tends to go up and people are
• 1:15
  Speaker 2: nervous are tweaking their portfolio. Right, So in twenty twenty two,
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  Speaker 2: when the market was down, volume was a record. So
• 1:21
  Speaker 2: the last two years it hasn't gotten to that point.
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  Speaker 2: But this year the volume broke the twenty twenty two record,
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  Speaker 2: even though it was mostly a good year. The flows
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  Speaker 2: also in record territory, and the launches, man, they've blown away.
• 1:34
  Speaker 2: They might even get close to doubling the old record.
• 1:36
  Speaker 2: So we have the real rare triple crown and each
• 1:40
  Speaker 2: of these record it's going to get broken by double
• 1:42
  Speaker 2: digit percentages. So this is like you know, every year,
• 1:46
  Speaker 2: I'm like this, this has to be as good as
• 1:48
  Speaker 2: it gets, Like this is ETFs in their prime, but
• 1:52
  Speaker 2: this has to be it. Joe, I'm saying it right now,
• 1:55
  Speaker 2: like I feel like they can't do this again. So
• 1:57
  Speaker 2: it's I think it's good to just look at what happened,
• 2:01
  Speaker 2: what's inside of those numbers, and what might happen next year.
• 2:04
  Speaker 1: Now you've a questioned, have we ever had a triple
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  Speaker 1: crown before?
• 2:07
  Speaker 2: Yes, don't laugh twenty twenty one. I know that sounds
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  Speaker 2: like it was only four years ago, but it's rare.
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  Speaker 2: It's only happened a few times in thirty years. The
• 2:15
  Speaker 2: reason twenty twenty one did it is because you didn't
• 2:18
  Speaker 2: have that twenty twenty two record of volume, so volume
• 2:21
  Speaker 2: was a little easier to get it get over. And
• 2:22
  Speaker 2: the other thing is twenty twenty one, if you remember,
• 2:25
  Speaker 2: was an awesome year for stocks, right, that was like
• 2:27
  Speaker 2: the last awesome year where I think stocks were up
• 2:30
  Speaker 2: like twenty five percent or something. Everything was going right
• 2:33
  Speaker 2: in twenty twenty one until the Fed raised rates in
• 2:35
  Speaker 2: twenty twenty two. That's why I do think this year,
• 2:38
  Speaker 2: after the tariff tantrum came and went, it has some
• 2:42
  Speaker 2: twenty twenty one vibes.
• 2:44
  Speaker 1: So joining us to talk about the Triple Crown Todd Son,
• 2:47
  Speaker 1: He's a senior ETF fund and technical strategist with Stratigis Securities.
• 2:53
  Speaker 1: And Katie Greifeld, processor reporter with Bloomberg News as well
• 2:57
  Speaker 1: as the co host of Money Stuff and I'll so
• 3:00
  Speaker 1: like a TV.
• 3:01
  Speaker 3: Phenomen the close etf IQ all of it.
• 3:04
  Speaker 1: This time on Trillions Triple Crown. Todd, Katie, welcome back
• 3:17
  Speaker 1: to Trillions.
• 3:18
  Speaker 4: This is my super Bowl. I appreciate being here.
• 3:20
  Speaker 1: Super Bowl Triple Crown. We got a lot going on.
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  Speaker 3: I am thrilled for the opportunity, though I will say
• 3:24
  Speaker 3: I thought we were going to be talking about horses,
• 3:26
  Speaker 3: so well, a little bit.
• 3:27
  Speaker 1: Of a I've getten the perfect segue. Well, hold on,
• 3:30
  Speaker 1: can we start every every triple crown has a horse's name, right,
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  Speaker 1: Like twenty twenty one would should have had a horse's name.
• 3:38
  Speaker 1: If twenty twenty five had a horse, what would you
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  Speaker 1: name it?
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  Speaker 3: Oh? My god, Joel, I need like seven seconds.
• 3:46
  Speaker 2: Of gena di Gen. The Vanguardians are always there, but
• 3:52
  Speaker 2: this year the Digen's really showed up.
• 3:54
  Speaker 1: I mean Degen, the horse.
• 3:56
  Speaker 4: I think Degen is perfect.
• 3:58
  Speaker 1: Hey, all right, By the.
• 3:59
  Speaker 2: Way, speaking of horses, can we just take one quick
• 4:02
  Speaker 2: little personal note here and talk about Katie's neck tattoo?
• 4:05
  Speaker 2: Oh my god, So she got a neck tattoo. Can
• 4:07
  Speaker 2: you tell us the story behind this? Because I am intrigued?
• 4:10
  Speaker 2: Just really, I know horses are involved.
• 4:12
  Speaker 3: Yeah, really quick. I had a pony named Batman from
• 4:17
  Speaker 3: my parents. Bought him when I was eleven, which is crazy.
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  Speaker 3: And he passed away this past May, the day before
• 4:23
  Speaker 3: my thirty second birthday. So that was a long term relationship.
• 4:26
  Speaker 3: That horse was like a brother. So I always knew
• 4:29
  Speaker 3: I was going to get the bat signal once he
• 4:32
  Speaker 3: left this earth.
• 4:33
  Speaker 1: But and you actually got a neck tattoo.
• 4:35
  Speaker 3: I did, but it's hidden. You'll never see it on TV.
• 4:38
  Speaker 3: You'll only hear about it on this podcast and maybe
• 4:41
  Speaker 3: money stuff and maybe on my Twitter.
• 4:44
  Speaker 2: Where's your tattoo?
• 4:46
  Speaker 1: I'm in free? Okay? So this was the DJ far.
• 4:50
  Speaker 2: This was far I could I could see midlife crisis
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  Speaker 2: creeping up sometimes since.
• 4:56
  Speaker 1: Yeah, where's gonna like skip that one? Okay? So let's
• 5:00
  Speaker 1: start with launches. How significant you said double digits for everything?
• 5:05
  Speaker 1: Like how how many launches were there so far? Obviously
• 5:09
  Speaker 1: there could be more between it on the end of
• 5:10
  Speaker 1: the year.
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  Speaker 2: We're around nine hundred and thirty launches this year with
• 5:14
  Speaker 2: four weeks to go. Now, last year the record was
• 5:17
  Speaker 2: I think seven hundred and ten seven to twenty, but
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  Speaker 2: the record before that was like five hundred and fifty,
• 5:23
  Speaker 2: So we're probably gonna double the five fifty record, which
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  Speaker 2: was only two years ago. Whether we get to the
• 5:27
  Speaker 2: reason we could get there's an outside shot. There's a
• 5:30
  Speaker 2: bunch of three x and five xctfs that were filed,
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  Speaker 2: like I'm talking like four hundred of them, and they
• 5:35
  Speaker 2: do come due maybe in December. I don't think the
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  Speaker 2: SEC is gonna allow them, but if they did, we're
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  Speaker 2: talking like it could be a couple hundred five X. Yeah,
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  Speaker 2: I know that they're gonna they love to push the
• 5:46
  Speaker 2: envelope in this industry. They feel like they have a
• 5:48
  Speaker 2: workaround where they can use swaps plus options to kind
• 5:51
  Speaker 2: of like get around this sort of because you're not
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  Speaker 2: allowed to have three xs in a ETF. I think
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  Speaker 2: the SEC is not going to allow any of that.
• 5:59
  Speaker 2: We'll see, but if if they did, that could be
• 6:01
  Speaker 2: like dozens and dozens, if not one hundred, in short
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  Speaker 2: order because they're all in this like major competition to
• 6:06
  Speaker 2: get out because none of them. You got to be
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  Speaker 2: first to market in the leverage area to have like
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  Speaker 2: the most of the assets. The other thing is the
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  Speaker 2: ETF share class, although that's probably going to get pushed
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  Speaker 2: more into twenty twenty six. Even DFA, who I think
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  Speaker 2: will be first, is probably not going to launch this year.
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  Speaker 2: So we're looking at probably anywhere between one thousand and
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  Speaker 2: like eleven fifty I would say, when all the dust settles.
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  Speaker 2: So that's probably what a sixty seventy percent increase over
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  Speaker 2: last year's record.
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  Speaker 1: Todd How successful will those launches be, I.
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  Speaker 4: Think it depends on what you're looking at. Going back
• 6:39
  Speaker 4: to DIGEN, leverage was a huge part of this year.
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  Speaker 4: Right There's been one out of every four maybe a
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  Speaker 4: third of launches have been involved leverage, right, and part
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  Speaker 4: of this is a single stock leverage space. So this
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  Speaker 4: year you've had over two hundred of those involving single
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  Speaker 4: stock leverage. And I think the interesting part is you're
• 6:57
  Speaker 4: just we're just throwing stuff at the wall. You started
• 6:59
  Speaker 4: with blue chip companies Tesla and Video few years ago,
• 7:02
  Speaker 4: and now we're just going for anything sub ten billion
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  Speaker 4: that might catch fire. So back to your question how
• 7:09
  Speaker 4: successful they are, A lot of them are at risk
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  Speaker 4: of closure if the actual equing market does decline like
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  Speaker 4: a twenty twenty two. I think a lot of them
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  Speaker 4: are gonna close. But they have fully really contributed to that,
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  Speaker 4: to that launches aspect, and Eric mentioned the three x
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  Speaker 4: five x potential. Man, this thing's not slowing down.
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  Speaker 2: And these these two x stockyt has charge one hundred
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  Speaker 2: basis points, so all you need is like one hit
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  Speaker 2: to be set for life. And so it's almost like
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  Speaker 2: a lottery system for the issuers because they just get
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  Speaker 2: one hit, they're good. And what I found interesting is
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  Speaker 2: I get Tesla and Navidio two X being big hits. Okay, fine,
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  Speaker 2: but there's stuff that gets put out that I've never
• 7:48
  Speaker 2: heard of the stock droll. I'm like, I have to
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  Speaker 2: like google it, and I'm like, it's some random quantum
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  Speaker 2: stock that is like a small cap, and all of
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  Speaker 2: a sudden, I look up the things trading like twenty
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  Speaker 2: thirty million a day. It's got one hundred million, and
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  Speaker 2: so you even got mid range hits. I wouldn't call
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  Speaker 2: it a blockbuster, but there's a lot of appetite, and
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  Speaker 2: so the industry is feeding the digens because the digens
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  Speaker 2: are hungry.
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  Speaker 3: I will say, I mean to Todd's point, we'll see
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  Speaker 3: if this turns into closures. It's also going to be
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  Speaker 3: interesting if we do get into the really highly leveraged
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  Speaker 3: stuff three times five times, whether or not those funds
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  Speaker 3: will eventually be closed or whether they're going to implode
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  Speaker 3: in some way, because I think that was one of
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  Speaker 3: the more interesting tales of the past couple months that
• 8:34
  Speaker 3: you had that European listed three times AMD product. There
• 8:38
  Speaker 3: was a single day where AMD announced some partnership. I
• 8:41
  Speaker 3: think it was with open Ai. It feels like everything
• 8:44
  Speaker 3: is with open Ai.
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  Speaker 1: That's the circular financing.
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  Speaker 2: It's very circular.
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  Speaker 3: Yeah, but it was an inverse AMD fund right, and
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  Speaker 3: it AMD surge double digits and this fund had to close,
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  Speaker 3: so that's certainly going to be fun to watch. The
• 8:58
  Speaker 3: other thing I would add to this conversation is, you know,
• 9:00
  Speaker 3: there's a lot of these single stock funds that are launching.
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  Speaker 3: That probably explains the high number of new funds coming
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  Speaker 3: to market. There's also a lot of new issuers who
• 9:09
  Speaker 3: are coming to market as well, who are behind these funds.
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  Speaker 3: I know there's a Bloomberg Intelligence stat that I think
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  Speaker 3: there's sixty new ETF firms that have entered the industry
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  Speaker 3: over the past two years, which is also pretty stunning.
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  Speaker 2: Yeah, and now there's I think there's three hundred total
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  Speaker 2: firms and six hundred brands. One quick thing on the
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  Speaker 2: on the leverage Ethnosius to this study on my team
• 9:29
  Speaker 2: that found that if they put the three X and
• 9:32
  Speaker 2: forget forget five x, just three x. If they do
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  Speaker 2: all these stocks and three x, there is going to
• 9:38
  Speaker 2: be an implosion like every other week, because a lot
• 9:41
  Speaker 2: of them go up thirty three percent or down thirty
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  Speaker 2: three percent pretty regularly. What's also interesting about the negative
• 9:47
  Speaker 2: three x AMD in Europe is almost all of these
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  Speaker 2: leverage ETFs are launching are long like It's almost like
• 9:54
  Speaker 2: a nine to one or ten to one long to short. However,
• 9:57
  Speaker 2: in that little pullback we had like two or three
• 9:59
  Speaker 2: weeks ago, everybody freaked out about it was like four
• 10:01
  Speaker 2: percent from all time highs, and people are ready to like,
• 10:03
  Speaker 2: you know it, call it the years over. They saw
• 10:08
  Speaker 2: some launches of inverse of these quantum because people are like,
• 10:11
  Speaker 2: oh wait, we forgot things can go down. So some
• 10:14
  Speaker 2: of these launches, they're probably gonna put the inverse out
• 10:16
  Speaker 2: so you can bet the other way. Now there's inverse
• 10:19
  Speaker 2: and long. I think that does increase the likelihood of
• 10:22
  Speaker 2: a couple of terminations. However, I Ehan and I talk
• 10:24
  Speaker 2: about this all the time. We're like, we don't think
• 10:26
  Speaker 2: the degends care. You know that scene in Mad Max
• 10:28
  Speaker 2: Fury Road. They're just like cruising along and like one
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  Speaker 2: of the cars just wipes out, and nobody they just
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  Speaker 2: look behind them and they just keep going like nobody
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  Speaker 2: really cares. They just keep driving. That to me is
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  Speaker 2: what I think this will feel like. If we have
• 10:41
  Speaker 2: an implosion, like if the Granite Chair is something has
• 10:43
  Speaker 2: to close, they'll just go, oh, that's a shame, and
• 10:45
  Speaker 2: they'll just keep degending as we go forward.
• 10:48
  Speaker 4: It's a big portion of the numbers.
• 10:50
  Speaker 2: The media will be like, oh my god, you know, implosion,
• 10:53
  Speaker 2: I get, but I don't think the users care. They're
• 10:55
  Speaker 2: just like whatever, onto the next one. Classic media, Well,
• 11:01
  Speaker 2: come on, termination, implosions pretty good. Yeah, I know all these.
• 11:06
  Speaker 3: Fun words, we don't usually get to use them.
• 11:15
  Speaker 1: By the way, just to bring it back to ponies, Yeah,
• 11:18
  Speaker 1: to be a triple Crown you gotta to be a
• 11:21
  Speaker 1: triple crown winner. You gotta win a the Kentucky Derby,
• 11:25
  Speaker 1: be the Preakness, and see the Belmont, which is launches.
• 11:30
  Speaker 1: Is that the Derby?
• 11:32
  Speaker 2: To me, the Kentucky Derby would be flows. That's the
• 11:34
  Speaker 2: most important because that's that is net new cash coming in.
• 11:38
  Speaker 2: That's that's votes.
• 11:40
  Speaker 1: Okay, so we've messed up our order already, but let's
• 11:42
  Speaker 1: go ahead. Let's start talking about flows.
• 11:45
  Speaker 2: The flows this year droll one point two four trillion
• 11:49
  Speaker 2: with a T and there're still a month ago and
• 11:52
  Speaker 2: podcast about this. I think they'll see sixty billion in December.
• 11:56
  Speaker 2: That's about the monthly haul lately, and so I think
• 11:59
  Speaker 2: we're gonna end it one point three trillion. Now, that'll
• 12:01
  Speaker 2: be two hundred billion over the record. The record last
• 12:04
  Speaker 2: year is one point one trillion, and again that was
• 12:06
  Speaker 2: that was the record, Like it's just record after record.
• 12:09
  Speaker 2: When we look at that number, it's enormous. If I
• 12:14
  Speaker 2: take you over to mutual funds collectively, I think they're
• 12:19
  Speaker 2: around negative seven hundred billion in outflows. So there's like
• 12:23
  Speaker 2: more money going to ETFs than leaving mutual funds. All
• 12:25
  Speaker 2: the equity side is worse. And if we look at
• 12:28
  Speaker 2: the number of ETFs that are taken in flows, we
• 12:30
  Speaker 2: are at three thousand, three hundred and seventy nine of
• 12:34
  Speaker 2: four thousand, seven hundred and sixty nine. So that's I mean,
• 12:38
  Speaker 2: the getting is good. I mean, everybody's getting bites. If
• 12:41
  Speaker 2: you're in that, if you're in that one thousand, that's
• 12:43
  Speaker 2: not you should probably just pack it up. I mean,
• 12:45
  Speaker 2: because if you can't catch fish in this environment, like
• 12:48
  Speaker 2: you are using the wrong bait, you're a bad fisherman.
• 12:51
  Speaker 1: You gotta go what jumps out to you in that category,
• 12:55
  Speaker 1: just the flows.
• 12:56
  Speaker 2: Yeah, I mean, first of all, vou one hundred and
• 12:58
  Speaker 2: twenty four billion, it has a real shot to get
• 13:01
  Speaker 2: to one forty one fifty that's also a record so
• 13:04
  Speaker 2: for a single year, and then IVV is right behind it.
• 13:09
  Speaker 2: I would say if anything was kind of shocking this
• 13:12
  Speaker 2: year would be the cash like ETFs did better ask
• 13:14
  Speaker 2: GOV the treasuries and gold GLD at nineteen billion, that
• 13:18
  Speaker 2: old dog, there's cheaper gold ETFs. So for that old warhorse,
• 13:23
  Speaker 2: to you know, I'm sticking with the horse teams.
• 13:26
  Speaker 3: I love this.
• 13:26
  Speaker 2: Yeah that for that to finish in eighth place is
• 13:29
  Speaker 2: pretty is pretty compelling this year. But to me, the
• 13:32
  Speaker 2: flows were summarized this year as Okay, i am not
• 13:36
  Speaker 2: going to try to time the market, so I'm going
• 13:38
  Speaker 2: to buy equities and I'm not going to let anything
• 13:40
  Speaker 2: scare me. Even during the tariff tantrum, the investors were
• 13:42
  Speaker 2: not scared. They're like, I'm buying equities. However, they did
• 13:46
  Speaker 2: want to get some protection on the side, so they
• 13:48
  Speaker 2: bought gold and treasuries, So we saw some safety dance
• 13:51
  Speaker 2: going on with those plus the equities, which for ETFs
• 13:54
  Speaker 2: is good because that means just they're buying everything pretty.
• 13:56
  Speaker 4: Much beta with the side of beltunas there we go.
• 14:00
  Speaker 2: Well, no, that would be like two x crypto, which
• 14:04
  Speaker 2: is also what was going on.
• 14:05
  Speaker 4: The One of the area that does stand out in
• 14:08
  Speaker 4: terms of inflows is a revival and thematic funds too, right,
• 14:12
  Speaker 4: nuclear power generation, I guess ai, if you want to
• 14:16
  Speaker 4: call it that without data centers, data, yeah, I guess
• 14:20
  Speaker 4: data centers too, without without really a massive participation from
• 14:23
  Speaker 4: from the ARC Funds.
• 14:24
  Speaker 3: Right.
• 14:24
  Speaker 4: I think back to twenty twenty one, the prior record
• 14:27
  Speaker 4: that was led by thematic funds. ARC did big business then,
• 14:32
  Speaker 4: and now you've owned it, owned the air, Yeah, they were.
• 14:35
  Speaker 4: They were the thematic player. Now that's really spread out across.
• 14:37
  Speaker 4: So Thematic Funds are back, I think as a compliment
• 14:41
  Speaker 4: to the voo the ivvs of the world too. So
• 14:44
  Speaker 4: that's pretty interesting to me. And then on the names
• 14:47
  Speaker 4: that haven't participated two areas. Maybe this is a twenty
• 14:50
  Speaker 4: twenty six story small caps, right, people gave up on
• 14:53
  Speaker 4: small caps.
• 14:55
  Speaker 2: Let's unpack that.
• 14:56
  Speaker 1: Hold on what's the other one?
• 14:57
  Speaker 4: Low volatility?
• 14:58
  Speaker 1: Okay, oh, okay factor.
• 15:02
  Speaker 2: I don't even know what to attack first, small caps.
• 15:05
  Speaker 2: I'm gonna tell I'm gonna give you the counter. Yeah,
• 15:08
  Speaker 2: these mag seven stocks and others. Anytime a company is
• 15:12
  Speaker 2: worth anything, now it just gets bought. It's like the
• 15:15
  Speaker 2: Lakers taking all the good players before they even go
• 15:17
  Speaker 2: to college, you know what I mean? So small caps
• 15:20
  Speaker 2: used to be a prospect area of like good companies
• 15:23
  Speaker 2: that just iPod and like they're rising stars. Well they
• 15:27
  Speaker 2: wait later to IPO until they're large caps. They skip
• 15:29
  Speaker 2: that area, and if they're worth anything, they get bought
• 15:32
  Speaker 2: by these big companies who the mag seven has acquired
• 15:34
  Speaker 2: almost nine hundred different companies. So isn't small caps really
• 15:38
  Speaker 2: just a dumping ground now instead of like a farm system.
• 15:40
  Speaker 4: They have a structural problem, right, these companies, as you said,
• 15:43
  Speaker 4: they either get acquired or once they IPO they're already
• 15:46
  Speaker 4: a large cap. It's interesting though, they've had a good
• 15:49
  Speaker 4: run here last eight months, probably because of the quantum
• 15:51
  Speaker 4: stuff and the Meme esque type funds which are basically
• 15:54
  Speaker 4: the top of the Russell two thousands, So maybe the
• 15:57
  Speaker 4: tune is changing.
• 15:58
  Speaker 1: Do midcaps even exist anymore? I just look in most
• 16:02
  Speaker 1: small caps.
• 16:02
  Speaker 3: Yeah, they definitely do. Though I hear so many beautiful
• 16:06
  Speaker 3: bowl cases built around small caps and also mid caps,
• 16:09
  Speaker 3: and I mean, to Eric's point, it seems like there's
• 16:12
  Speaker 3: been so many false dons. The supply problem though, that
• 16:15
  Speaker 3: you guys are talking about is really interesting that you
• 16:17
  Speaker 3: don't have these smaller companies coming to market, and it
• 16:19
  Speaker 3: feels like tech companies are the last true conglomerates in
• 16:23
  Speaker 3: terms of just buying everything up that looks promising.
• 16:26
  Speaker 2: If you aren't going to enforce antitrust laws, then there's
• 16:29
  Speaker 2: a secular change going on. Because I looked, you know,
• 16:33
  Speaker 2: GE was the last mega company to like run the
• 16:35
  Speaker 2: S and P five hundred, Like back in the two thousands,
• 16:38
  Speaker 2: Ge was like the biggest thought member the.
• 16:40
  Speaker 4: Jack Welsh It was fifty percent of the industrial sector.
• 16:42
  Speaker 2: Yeah, I mean it was. It was the Mag seven
• 16:44
  Speaker 2: of its day, right. It acquired seventy companies, which is
• 16:48
  Speaker 2: a lot. Google has acquired two fifty, Microsoft two fifty,
• 16:53
  Speaker 2: like these are another level and some of the companies
• 16:56
  Speaker 2: that are acquired are would be top fifty names otherwise.
• 17:01
  Speaker 2: So I think until they break up these companies, That's
• 17:05
  Speaker 2: why I'm like, if you don't own the Mag seven,
• 17:09
  Speaker 2: it's almost like you don't own small caps too in
• 17:12
  Speaker 2: a way, if you think about it from a certain
• 17:14
  Speaker 2: point of view. That's why this whole idea of like
• 17:17
  Speaker 2: cfaing the market, I just think it's bad news. You
• 17:19
  Speaker 2: got to think a little more like a degeneral momentum
• 17:22
  Speaker 2: trader and just ride it because it's not the same
• 17:25
  Speaker 2: as it was I don't And I know that's like
• 17:27
  Speaker 2: famous last words. Things do revert, but especially.
• 17:31
  Speaker 3: If we're comparing this to twenty twenty one and twenty
• 17:33
  Speaker 3: twenty two, we all remember was a very dark year.
• 17:37
  Speaker 2: However, in twenty twenty two the FED raise rates and
• 17:40
  Speaker 2: like that that was like crack. That was like the
• 17:42
  Speaker 2: cop showing up at the party. It's over right, take
• 17:44
  Speaker 2: away the punch bowl.
• 17:45
  Speaker 3: Now we're all drinking age.
• 17:47
  Speaker 2: Is gonna it's gonna nominate some Yes, man, we could
• 17:50
  Speaker 2: have negative rates this time next year. I mean remember
• 17:53
  Speaker 2: that they might. They might give you money. So it's
• 17:57
  Speaker 2: a it's not twenty twenty two next year. Unless there's
• 17:59
  Speaker 2: some swan we're not envisioning.
• 18:01
  Speaker 1: We'll see though. Yeah, do you want to take a
• 18:02
  Speaker 1: flamethrower to the lowvall category? Yeah?
• 18:05
  Speaker 2: So Athanasios wrote this great note that buffer ETFs killed
• 18:10
  Speaker 2: the LOWVALL star.
• 18:11
  Speaker 4: I agree with that totally. Okay, So they have a
• 18:14
  Speaker 4: proliferation of other options problem and you just haven't needed
• 18:18
  Speaker 4: them either. Right outside of April, there's been no reason
• 18:22
  Speaker 4: to own low voll defensive type strategies.
• 18:25
  Speaker 2: I mean, I just think buffers are more guaranteed. It's
• 18:28
  Speaker 2: not guessing. It's like you know when you do that
• 18:32
  Speaker 2: machine where you get the football helmet or the piece
• 18:35
  Speaker 2: of candy from the from the quarter machine. Remember back
• 18:38
  Speaker 2: in the day, You're like, I don't know what I'm
• 18:40
  Speaker 2: gonna get. Yeah, that's more like lowvall. It'll probably go
• 18:42
  Speaker 2: down somewhat less. Whereas the buffers they lock in your performance.
• 18:47
  Speaker 2: And I think if you're older with a lot of
• 18:49
  Speaker 2: money on the line, you'd rather have that guarantee than
• 18:52
  Speaker 2: just like wing it with lowvall.
• 18:53
  Speaker 3: A defined outcome if you will exactly.
• 18:56
  Speaker 4: And keep in mind you get three and a half
• 18:58
  Speaker 4: to four percent on treasury bills ETFs. Right, why am
• 19:02
  Speaker 4: I going to own a low VOLLEYTF that I'm yielding
• 19:05
  Speaker 4: less and I'm also taking equity risk.
• 19:08
  Speaker 2: They're in a bad spot.
• 19:09
  Speaker 4: Yeah, I just think it's interesting that they them and
• 19:11
  Speaker 4: small kins have just entirely left, you know, left for dead.
• 19:14
  Speaker 2: Well when you're in those are the reasons, though, I
• 19:16
  Speaker 2: mean there are good reasons. They're not market reasons. They're
• 19:18
  Speaker 2: more structural in it in a way.
• 19:20
  Speaker 4: Right, I'd like to.
• 19:29
  Speaker 1: Bring it back to ponies again, Yeah, thank you, which
• 19:31
  Speaker 1: is if you've won the derby and you've won the Preakness.
• 19:36
  Speaker 1: What is the Belmont volume? So let's talk about.
• 19:39
  Speaker 2: Yeah, ETFs are going to trade. ETFs are going to
• 19:43
  Speaker 2: trade in the neighborhood of sixty trillion dollars worth of
• 19:46
  Speaker 2: shares this year.
• 19:47
  Speaker 1: Yeah.
• 19:47
  Speaker 2: Right now they're at fifty three point five. The old
• 19:50
  Speaker 2: record was in twenty twenty two, right when hell was
• 19:53
  Speaker 2: breaking loose, at forty seven trillion, so third more. Yeah,
• 19:57
  Speaker 2: and every category is up, like fixed income, equity, come,
• 20:02
  Speaker 2: I mean, everything is way higher than it was. So
• 20:06
  Speaker 2: it's not just like one thing. I will say the
• 20:08
  Speaker 2: degend factor. All those two xttfs they're they're they're like
• 20:12
  Speaker 2: born to trade, so like they definitely had a little kick.
• 20:15
  Speaker 2: But I just think the reason this number is higher
• 20:17
  Speaker 2: is because of the flows, which attract more issuers as
• 20:21
  Speaker 2: Katie mentioned. And if you just have more products and
• 20:24
  Speaker 2: more volume and more like big legacy firms trying to
• 20:26
  Speaker 2: push through ETFs, you just have a bigger tent and
• 20:30
  Speaker 2: it's more popular. So some of this is just the
• 20:32
  Speaker 2: expansion of ETFs. I think the degend bit helps a
• 20:35
  Speaker 2: little bit because people love trading. And I also think
• 20:37
  Speaker 2: that honestly, fifty three trillion isn't what it used to be. Droll,
• 20:41
  Speaker 2: you know, so yeah, I mean the fifty three trillion
• 20:46
  Speaker 2: today is like ten billion ten years ago. Just kidding,
• 20:50
  Speaker 2: it's not that crazy. But like you ever noticed, like
• 20:52
  Speaker 2: numbers are just like they're just like this brings it
• 20:54
  Speaker 2: back to like.
• 20:55
  Speaker 1: Could you draw a direct line between the number of
• 20:58
  Speaker 1: leverage gtfs and that volume? Is that? Yeah? I mean
• 21:01
  Speaker 1: I had all these leverage dtfs come out.
• 21:02
  Speaker 4: That's the trajectory of levered volume, which is either single
• 21:06
  Speaker 4: stock or the index based ones, is slowly been climbing. Yeah,
• 21:10
  Speaker 4: and that's just because you're in a bull market, and
• 21:12
  Speaker 4: so people like to add on leverage, and whenever there's
• 21:14
  Speaker 4: a down draft, you see the inverse volume spike. But
• 21:18
  Speaker 4: that usage rate has definitely climbed. You think about you know,
• 21:22
  Speaker 4: Eric and I we always talk sports. It's a player
• 21:26
  Speaker 4: that's being constantly more involved. You can stick with the
• 21:28
  Speaker 4: horse metaphor or a horse jockey, jockey jockey. He's using
• 21:34
  Speaker 4: all different horses.
• 21:35
  Speaker 2: So I can tell you five trillion, So ten percent
• 21:39
  Speaker 2: of the volume is leverage, which is a lot because
• 21:41
  Speaker 2: they don't make up leverage makes up one percent of
• 21:43
  Speaker 2: the assets, ten percent of the volume, which is good
• 21:46
  Speaker 2: because you don't want people holding the stuff, you want
• 21:48
  Speaker 2: them to trade it.
• 21:49
  Speaker 4: The other interesting aspect is there's other corners that will
• 21:53
  Speaker 4: pop up every now and then outside of equity and leverage,
• 21:56
  Speaker 4: like gold. Remember gold, probably six seven weeks ago, gld
• 21:59
  Speaker 4: was doing massive volume and GLDM silver the whole precious
• 22:04
  Speaker 4: metal spectrum that also contributes to that tally. So what's
• 22:08
  Speaker 4: happening is when someone needs exposure, whether it's long, short
• 22:12
  Speaker 4: or an adjustment, you're seeing them go to ETFs more
• 22:14
  Speaker 4: and more and more, which I think is great for
• 22:16
  Speaker 4: the industry. But every now and then you see an
• 22:18
  Speaker 4: ETF that a random one pop up in the top
• 22:20
  Speaker 4: five to ten most traded.
• 22:22
  Speaker 2: The other thing is a lot of this volumes coming
• 22:24
  Speaker 2: from overseas. I just traveled the world this year pretty much,
• 22:26
  Speaker 2: and the volume isn't growing as fast as you think
• 22:29
  Speaker 2: it would overseas. If you are a pension fund in Japan,
• 22:33
  Speaker 2: let's say you might use EWJ over your own homegrown
• 22:37
  Speaker 2: Japan ETF, which is weird, right, But these institutions, the
• 22:41
  Speaker 2: bigger you are, the more you require deep liquidity. So
• 22:45
  Speaker 2: the US is kind of like a vampire sucking liquidity
• 22:48
  Speaker 2: from all over the world, and it's unfortunate, and there's
• 22:52
  Speaker 2: certain ways these countries are trying to fight back, but
• 22:54
  Speaker 2: it's hard because it's just tough. You put out of
• 22:56
  Speaker 2: like a gold ETF in your country and then this
• 22:59
  Speaker 2: institution is like, well, GLD trays like four billion a day,
• 23:01
  Speaker 2: you trade like ten million a day if that, Yeah,
• 23:05
  Speaker 2: and they don't want to they're gonna be. They're gonna
• 23:07
  Speaker 2: they're gonna put a forty million position on They're obviously
• 23:09
  Speaker 2: going to go to the more liquid one.
• 23:11
  Speaker 3: You're seeing that in listings overall when it comes to
• 23:14
  Speaker 3: companies as well, that people are listing their companies in
• 23:17
  Speaker 3: the US because that's where the liquidity is, that's where
• 23:19
  Speaker 3: the depth of capital markets is. And I feel like,
• 23:22
  Speaker 3: you know, this is a tentacle of that that you're
• 23:25
  Speaker 3: seeing the US becoming a vampire of sorts when it
• 23:28
  Speaker 3: comes to ETFs as well. But I do think that
• 23:30
  Speaker 3: Toddy make a good point that like the muscle memory
• 23:33
  Speaker 3: is just there now, especially in a time of crisis.
• 23:36
  Speaker 3: That's when you see spy volume spike. For example, people
• 23:39
  Speaker 3: have that blueprint down that the market is in turmoil.
• 23:42
  Speaker 3: I'm going to go to ETFs because I know I'm
• 23:44
  Speaker 3: going to get that exposure and it's probably going to
• 23:46
  Speaker 3: be fairly liquid, at least relative to my other options.
• 23:49
  Speaker 4: Absolutely, I mean the one inme we didn't talk about.
• 23:51
  Speaker 4: We's talking about leverage, but the growth of volume and
• 23:54
  Speaker 4: launches in other option related categories, drivetive categories, right, optioning,
• 23:58
  Speaker 4: come FX hedging, all that stuff too, that's definitely contributing
• 24:03
  Speaker 4: as well. I mean, the options market in terms of
• 24:04
  Speaker 4: activity is also exploded.
• 24:06
  Speaker 1: This has been a big year for options, Katie bring
• 24:09
  Speaker 1: us home, Yeah, home stretch of the triple crown. What
• 24:15
  Speaker 1: do you make of all this and what do you
• 24:16
  Speaker 1: think twenty twenty six is going to look like?
• 24:18
  Speaker 3: I do think it's interesting that we haven't talked about
• 24:20
  Speaker 3: active really at all. I mean, sort of through talking
• 24:24
  Speaker 3: about all of these options based ETFs, these single stock ETFs,
• 24:28
  Speaker 3: those count as active in terms of classification, but they
• 24:32
  Speaker 3: aren't traditional stock picking. But it feels like that was
• 24:35
  Speaker 3: another big story in twenty twenty five, It was the
• 24:37
  Speaker 3: story in twenty twenty four, and I have to imagine
• 24:41
  Speaker 3: it'll be a big part of the story in twenty
• 24:43
  Speaker 3: twenty six as well.
• 24:44
  Speaker 1: Well. And when you think about that, what was it sixty?
• 24:47
  Speaker 1: Was it sixty? New issuers? Like, where's the white space here?
• 24:49
  Speaker 1: It's got to be mostly active.
• 24:51
  Speaker 3: Yeah, especially when you think of share classes actually arriving
• 24:55
  Speaker 3: in twenty twenty six. I think that a lot of
• 24:58
  Speaker 3: your traditional mutual function with their mutual fund lineups, probably
• 25:03
  Speaker 3: a portion of which is active or going to try
• 25:05
  Speaker 3: to grab that ETF lifeline.
• 25:08
  Speaker 4: Don I think if there are more cuts to interest rates,
• 25:12
  Speaker 4: perhaps there are down the line. I would keep an
• 25:14
  Speaker 4: eye on the seven trillion in money market assets, not
• 25:16
  Speaker 4: that those are gonna go to stocks, but as Katie mentioned,
• 25:19
  Speaker 4: active and an active fixed income because you're gonn want
• 25:22
  Speaker 4: to get yield somewhere if you're not getting in from
• 25:24
  Speaker 4: money market funds, and ETFs are the next best way
• 25:26
  Speaker 4: to play that.
• 25:27
  Speaker 2: Also, the ETF share class, if that comes out again,
• 25:31
  Speaker 2: you're inviting the fox into the henhouse because these clients
• 25:35
  Speaker 2: who are sitting in this mutual fund, which again it's
• 25:37
  Speaker 2: like owning a compact disc in terms of technology, they're
• 25:42
  Speaker 2: gonna want to transfer over to the ETF class. And
• 25:44
  Speaker 2: now if they can do it with no text consequence,
• 25:47
  Speaker 2: this could be a real boon for ETF flows. This
• 25:51
  Speaker 2: isn't the same as organic sentiment. When you see real
• 25:54
  Speaker 2: true organic sentiment like a GLD this year, or you know,
• 25:58
  Speaker 2: like VOU, it's interesting. Some of this BYOA sentiment where
• 26:02
  Speaker 2: it comes over isn't quite as interesting. But to nerds
• 26:05
  Speaker 2: and like people follow in the industry, it's it's very important.
• 26:08
  Speaker 2: So there could be this drainage from mutual funds into
• 26:11
  Speaker 2: ETFs that simply are the legacy managers sort of like
• 26:14
  Speaker 2: slowly moving their clients over taking the little bit of
• 26:16
  Speaker 2: cannibalism hit because the ETFs won't charge quite as much
• 26:19
  Speaker 2: as they used to make, but it helps them like
• 26:22
  Speaker 2: be where the fish are biting now and like fight
• 26:24
  Speaker 2: another day. And this is something that I think will
• 26:28
  Speaker 2: drive flows and something that Katie wrote about with Capitol Group.
• 26:31
  Speaker 2: If you look at some of these legacy stock picking
• 26:34
  Speaker 2: firms from like that were really big in the nineties,
• 26:36
  Speaker 2: t ROW, Capitol Group, DFA, if you look at their
• 26:39
  Speaker 2: mutual funds, they see outflows. You look at their ETFs,
• 26:41
  Speaker 2: they all see inflows. Now, we can't do one for
• 26:44
  Speaker 2: one there, but clearly there's some cannibalization going on there,
• 26:48
  Speaker 2: and that I don't know is that active working or
• 26:51
  Speaker 2: is that just like the current clients of this active
• 26:53
  Speaker 2: shop are finally moving over to the new format that's
• 26:56
  Speaker 2: different than getting fresh bites. That's why a jetpyr or JPST.
• 27:02
  Speaker 2: When something is an organic hit, or even the bitcoin ETFs,
• 27:06
  Speaker 2: that's why it's so exciting, and we like grab it
• 27:08
  Speaker 2: like a dog on a bone because I'm like, it's
• 27:10
  Speaker 2: hard to do this. And by the way, can we
• 27:12
  Speaker 2: just I want to cover one of the speaking of
• 27:14
  Speaker 2: organic hits, this guy Bruce Bond. This this billionaire now
• 27:20
  Speaker 2: I guess he is.
• 27:21
  Speaker 4: He's a billionaire.
• 27:22
  Speaker 2: This guy he built up power shares sold to Investco
• 27:25
  Speaker 2: and instead of just like going to retire in an island,
• 27:28
  Speaker 2: he grew another firm called Innovator, which made the Buffer
• 27:30
  Speaker 2: ETFs just sold it. Katie reported that he sold it
• 27:34
  Speaker 2: for two billion dollars. Can you tell us about this deal,
• 27:38
  Speaker 2: because to me, that's another organic hit that is hard. Yeah.
• 27:44
  Speaker 3: Well, it sort of loops back to what we were
• 27:46
  Speaker 3: talking about. With all these upstarts entering the industry, I
• 27:48
  Speaker 3: have to imagine the Bruce Bond model is kind of inspiring.
• 27:53
  Speaker 3: How you would want your career to play out if
• 27:55
  Speaker 3: you're one of these people with an ETF startup. The
• 27:58
  Speaker 3: fact that he built power shares, he sold that he
• 28:01
  Speaker 3: built Innovator just sold to Goldman for two billion dollars,
• 28:04
  Speaker 3: just identifying a need that people were going to desire
• 28:09
  Speaker 3: seeing what wasn't yet in the ETF wrapper. I mean,
• 28:12
  Speaker 3: structured products have been around for a long time, but
• 28:16
  Speaker 3: Innovator was one of the first to put that into
• 28:18
  Speaker 3: the ETF wrapper in a way that could be packaged
• 28:20
  Speaker 3: and sold and pitched to people. And it's interesting that
• 28:25
  Speaker 3: Goldman decided to buy Innovator versus try to build it
• 28:30
  Speaker 3: in house. They do have buffer ETFs, they have three,
• 28:34
  Speaker 3: i believe, with thirty million in assets, but opted instead
• 28:40
  Speaker 3: to buy Innovator, which is really an interesting move.
• 28:43
  Speaker 2: It is and Joel, ten years ago, if I had
• 28:46
  Speaker 2: told you an active manager is going to come out
• 28:49
  Speaker 2: with products to charge ninety basis points and they're going
• 28:52
  Speaker 2: to make a killing and they're going to see quarterly
• 28:54
  Speaker 2: flows break records every other year, I'm like, that's impossible.
• 28:57
  Speaker 2: We're in the Vanguardian era. It's impossible. But that's what
• 29:00
  Speaker 2: he did, and he did it by curing anxiety because
• 29:05
  Speaker 2: these boomers are all nervous as well. Because they made
• 29:08
  Speaker 2: a ton of money and they don't want to lose
• 29:10
  Speaker 2: at all.
• 29:11
  Speaker 1: It's not quite Dejon though, is it.
• 29:12
  Speaker 2: No? No opposite. This is if djens are looking for
• 29:16
  Speaker 2: like adrenaline, these boomers are looking to sleep at night. Yeah,
• 29:20
  Speaker 2: so they're like, I'll give you a bunch. I'll give
• 29:22
  Speaker 2: up a lot of upside if you cure my downside.
• 29:25
  Speaker 2: So I don't feel like worry about it. So Bruce
• 29:27
  Speaker 2: Bond these if you own the stock market and the
• 29:31
  Speaker 2: money market fund, some people say like it's is as
• 29:34
  Speaker 2: good as owning this long term. But the guarantee is powerful,
• 29:38
  Speaker 2: and I think the emotions and psychology of investors are
• 29:41
  Speaker 2: underlooked here. The other thing I will say is Goldman
• 29:43
  Speaker 2: has been pretty quiet since Brian Lake joined. Now, Brian
• 29:46
  Speaker 2: Lake is the driver of JEPY. I mean, he came
• 29:49
  Speaker 2: out with the two biggest active funds on the planet
• 29:51
  Speaker 2: and he went to Goldman and he like disappeared. Hadn't
• 29:54
  Speaker 2: heard from him in a while. This is interesting. I
• 29:58
  Speaker 2: feel we'll have some other big news from Goldman. But
• 30:00
  Speaker 2: get this, even with this acquisition, twenty eight billion dollar firm,
• 30:03
  Speaker 2: Goldman moved from seventeenth place to fifteenth place. Think about it.
• 30:07
  Speaker 2: You're Goldman Sachs, one of the biggest brands in the world.
• 30:10
  Speaker 2: You've been in the ETF market fifteen years. You just
• 30:12
  Speaker 2: bought a firm for two billion dollars and you still
• 30:15
  Speaker 2: a point five percent market share. That's how brutal this
• 30:19
  Speaker 2: industry is. Droll, and that's how big Vanguard and black
• 30:21
  Speaker 2: Rock are, by the way, I mean, it's just the
• 30:24
  Speaker 2: numbers are staggering. It's like when you look at like
• 30:27
  Speaker 2: the planets and you see like Earth and Neptune. They
• 30:29
  Speaker 2: put Jupiter on there and you're like, oh my god.
• 30:31
  Speaker 2: Like it's just another level of these big firms, and
• 30:35
  Speaker 2: it just shows you how tough this industry is. But
• 30:38
  Speaker 2: the reason it's so tough is because the products are
• 30:41
  Speaker 2: also good, are pretty competitive, and the investors like it.
• 30:44
  Speaker 2: So it's hell for issuers, heaven for investors.
• 30:48
  Speaker 4: Final thought, I mean, good job of you on that reporting, Katie.
• 30:51
  Speaker 4: It was a team effort and with Emily two right,
• 30:53
  Speaker 4: it was.
• 30:54
  Speaker 3: Me, Emily GRIFFEO and Todd Gillespie.
• 30:57
  Speaker 4: I think this is very bullish ETFs the go along
• 31:00
  Speaker 4: with the triple Crown. I'm very curious to see now
• 31:02
  Speaker 4: do other asset managers start looking to that mid to
• 31:05
  Speaker 4: lower tier for interesting issuers out there.
• 31:09
  Speaker 1: I think so Tony she's from.
• 31:10
  Speaker 2: I mean, we've long felt that the asset management industry
• 31:14
  Speaker 2: in ten twenty years from now will look like the airlines.
• 31:17
  Speaker 2: There'll be three gigantic brands owning seventy five percent of
• 31:20
  Speaker 2: all the assets, basically black Rock, Vanguard and State Street
• 31:23
  Speaker 2: plus like ten of the isshoers. And then they'll be
• 31:26
  Speaker 2: like real specialty niche like Alaska Air or like Costa
• 31:29
  Speaker 2: Rica Air.
• 31:30
  Speaker 1: Sounds like a bunch of large caps and small caps.
• 31:33
  Speaker 1: Oh see what I did there?
• 31:36
  Speaker 2: I don't know. I don't know if that was a zinger.
• 31:38
  Speaker 2: I'm not sure what that was all right, But all
• 31:41
  Speaker 2: I do know is consolidation is coming.
• 31:43
  Speaker 1: It has to, yep, exactly, Todd Katie, thanks for joining
• 31:47
  Speaker 1: us in Tricks.
• 31:48
  Speaker 4: Thanks thanks a lot, great to pet with the guys.
• 31:56
  Speaker 1: Thanks for listening to Tricks until next time. You can
• 31:58
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• 32:03
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• 32:08
  Speaker 1: produced by Magnus Hendrickson and Ryan Kessler. Amy Keane is
• 32:12
  Speaker 1: our executive producer. Sage Bauman is the head of Bloomberg Podcasts.
• 32:17
  Speaker 1: O Bye Boom Boo