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Samara Cohen on Managing ETFs (Podcast) · Masters in Business

0:02
Speaker 1: This is mesters in Business with Very renaults on Bloomberg Radio.
0:08
Speaker 1: This weekend on the podcast, I have yet another special guest.
0:13
Speaker 1: Extra special guest, Samarica Cohne is the chief investment officer
0:18
Speaker 1: at Black Rocks, where she manages E t f s
0:21
Speaker 1: and index investing. Black Rock is ten trillion dollars their
0:26
Speaker 1: E t F businesses over three trillion their index businesses
0:31
Speaker 1: also over three trillion UH. Samara is consistently on everybody's
0:37
Speaker 1: list of most influential women in finance. But that's not
0:42
Speaker 1: why you want to listen to this. You want to
0:44
Speaker 1: listen to this because there really are very few people
0:47
Speaker 1: in the world more knowledgeable about managing e t f s,
0:52
Speaker 1: managing indexes. What passive really means, how people should be
0:57
Speaker 1: thinking about the actual engineering of products if you want
1:03
Speaker 1: to have broad market exposure or specific types of beta. Really,
1:09
Speaker 1: I'm gonna stop talking and just say, with no further ado,
1:13
Speaker 1: my conversation with Samaricane, this is mesters in Business with
1:20
Speaker 1: Very Results on Bloomberg Radio. My extra special guest this
1:25
Speaker 1: week is Samaricane. She is Black Rocks chief investment officer
1:30
Speaker 1: for E t F s and index investments. Black Rock
1:35
Speaker 1: manages about ten trillion dollars. The E t F business
1:39
Speaker 1: is about three point to seven trillion. Uh. Samaricane, Welcome
1:44
Speaker 1: to Bloomberg. Thank you so much, Barry. I'm happy to
1:47
Speaker 1: be here. I'm happy to have you here. I have
1:49
Speaker 1: so many questions to ask you, but I have to
1:52
Speaker 1: start out with your education, which we usually skimp over.
1:56
Speaker 1: So you graduated you pen with a b us in
2:00
Speaker 1: economics and finance at Wharton, but you also had a
2:05
Speaker 1: b a in theater arts. How has theater training helped
2:10
Speaker 1: in your financial career? First, Barry, when you hear theater,
2:14
Speaker 1: a lot of people might think that I was an actor,
2:17
Speaker 1: So I feel like I need to start with the
2:18
Speaker 1: fact that I was decidedly a backstage kid. My love
2:22
Speaker 1: of theater was very much on the production design, directing, uh,
2:27
Speaker 1: you know, behind the scenes side, and that has definitely
2:30
Speaker 1: helped me um across the course of my career. But
2:33
Speaker 1: I have to tell you, I came to the University
2:36
Speaker 1: of Pennsylvania to be a theater major, and I left
2:39
Speaker 1: with the dual degree in finance and theater. So finance
2:42
Speaker 1: was something I discovered because I knew I was good
2:45
Speaker 1: at math. In fact, when I started college, I didn't
2:48
Speaker 1: really need to take any math classes because I had
2:50
Speaker 1: all of this credit and I missed it, And so
2:52
Speaker 1: I discovered markets and economics and it felt like math
2:56
Speaker 1: with a purpose. So and I got to combine the
2:59
Speaker 1: fin angel degree with the theater degree, which made my
3:02
Speaker 1: parents much more comfortable with the fact that I was
3:04
Speaker 1: spending all of my summers working for regional theater companies basically,
3:09
Speaker 1: but it was a big part of learning who I
3:11
Speaker 1: am and today in my role, I often remember being
3:15
Speaker 1: told that um casting is of directing and putting the
3:20
Speaker 1: right person in the right seat is a lot about
3:22
Speaker 1: leading any business. So it definitely has played a part throughout.
3:27
Speaker 1: Really interesting, So you you end up in turning your
3:30
Speaker 1: Goldman sacks on the trading floor pretty early in your career.
3:34
Speaker 1: Tell us what that was like and how theatrical was that. Well,
3:38
Speaker 1: actually I came to Goldman out of business school. I well,
3:42
Speaker 1: my first job was actually a black Rock. That's where
3:45
Speaker 1: I came out of college. I was a black Rock
3:46
Speaker 1: for four years, went to business school, and part of
3:50
Speaker 1: why I went back to school after black Rock was
3:53
Speaker 1: in my head I thought maybe I could further combine
3:56
Speaker 1: this love of finance and love of theater and how
3:59
Speaker 1: might I do it? And I loved the idea of
4:01
Speaker 1: going back to school. I'm kind of a voracious learner
4:03
Speaker 1: and I'd worked hard, and I liked the idea of
4:06
Speaker 1: meeting other people and seeing what was out there after
4:08
Speaker 1: four years of working. And in that summer and actually
4:13
Speaker 1: in the process of figuring out where I wanted to
4:15
Speaker 1: work for the summer, I visited a trading floor and
4:18
Speaker 1: I walked onto the trading floor and I thought, this
4:21
Speaker 1: is it. It's a lot like theater. It's a lot
4:24
Speaker 1: like that, like multitasking, high energy, collaborative environment where lots
4:29
Speaker 1: of things are happening at the same time, and I
4:32
Speaker 1: thrive in that. And so actually the theater, the trading
4:36
Speaker 1: floor I found pretty theatrical and that really worked for me. Yeah,
4:40
Speaker 1: there's a there's a buzz, there's an electricity on a
4:43
Speaker 1: big trading floor, which I think is one of the
4:46
Speaker 1: things that's lost from old Wall Street. You can replace
4:50
Speaker 1: it with more efficient algorithms and technology, but man, when
4:54
Speaker 1: you walk onto a big floor, you just feel that
4:57
Speaker 1: there's nothing like that, and ever have a des ire
5:00
Speaker 1: to become a trader? Was that did that ever appealed
5:03
Speaker 1: to you until I walked onto the trading floor. Um,
5:07
Speaker 1: the idea really scared me. And you know what, I
5:09
Speaker 1: actually I don't think I've ever told anybody this. I
5:12
Speaker 1: did not proactively send my resume to the securities division.
5:17
Speaker 1: They reached out to me as part of a diversity
5:19
Speaker 1: hiring effort to get more women onto the trading floor.
5:22
Speaker 1: And the reason I didn't send my resume was it
5:24
Speaker 1: sounded really intimidating to me. And so I think that's
5:26
Speaker 1: just an important thing to note, is that sometimes if
5:30
Speaker 1: something's interesting, even if it's intimidating, it's worth checking out.
5:33
Speaker 1: Because I knew, and yes, there weren't a lot of
5:35
Speaker 1: women on the floor when I walked out there, but
5:37
Speaker 1: it was really clear to me that I would. You know,
5:40
Speaker 1: once I got my bearings and learned to speak the language.
5:43
Speaker 1: It can be an intimidating place at first, but but
5:45
Speaker 1: I knew it would be a great fit for me.
5:47
Speaker 1: So let me make sure I understand the chronology of
5:50
Speaker 1: your career. So you intern at black Rock, then you
5:53
Speaker 1: work at Goldman for like sixteen years something like that,
5:58
Speaker 1: and then you boomerang back it's a black Rock. Did
6:01
Speaker 1: I did I get that right, Yeah, pretty much. I
6:04
Speaker 1: went to black Rock out of college, and then business
6:07
Speaker 1: school from black Rock, and then Goldman from business school,
6:11
Speaker 1: and then back to black Rock. M that's really really interesting.
6:15
Speaker 1: I heard the phrase black Rock boomerangs. Is this a thing?
6:18
Speaker 1: Do people like work at black Rock leave and then
6:21
Speaker 1: you know, magnetically get drawn back? What's that about? In
6:24
Speaker 1: my case, it was definitely a thing. I don't know
6:27
Speaker 1: the like what the total stats are, but it's definitely
6:30
Speaker 1: true for other people. I mean, people's careers are marathons
6:34
Speaker 1: and and not sprints and and you know, part of
6:36
Speaker 1: my marathon, an important part of my marathon actually was
6:39
Speaker 1: that sixteen years in Goldman. I think had it not
6:42
Speaker 1: been for that, I wouldn't have the seat I currently
6:45
Speaker 1: occupy a black Rock. So I'm pretty grateful for it, um.
6:48
Speaker 1: But also I think my my history with black Rock
6:51
Speaker 1: and my passion for the firm and its purpose did
6:55
Speaker 1: draw me back as well. So let's talk about that
6:58
Speaker 1: seat you have at black Rock. You recently were promoted
7:01
Speaker 1: to chief Investment Officer of E t F s and
7:05
Speaker 1: Index Investments. That sounds like a pretty serious job, especially
7:09
Speaker 1: when we consider at black Rock. You know, it's well
7:12
Speaker 1: over three trillion dollars in assets. Tell us a little
7:15
Speaker 1: bit about your new job responsibilities. I'm really excited about
7:20
Speaker 1: the new job and and even more than than me
7:23
Speaker 1: being in the job, I'm excited about the fact that
7:25
Speaker 1: we have a chief investment officer role for E t
7:29
Speaker 1: F S and index and it actually is broader than
7:31
Speaker 1: the e t F book. It's our whole indexing book
7:35
Speaker 1: and in the and what it means in short, is
7:38
Speaker 1: that I'm accountable for for investment performance in our E
7:42
Speaker 1: t F and index book, which I love telling people
7:45
Speaker 1: because sometimes they look at me and they say, well,
7:47
Speaker 1: I don't really understand that is an investment performance the
7:51
Speaker 1: out performance of the benchmark. And aren't you Smarrow at
7:54
Speaker 1: E t F and index person the benchmark? So what
7:57
Speaker 1: is investment performance? And we done a lot of work,
8:01
Speaker 1: um really in partnership with our clients and articulating what
8:05
Speaker 1: that is. And in the case of E t F
8:07
Speaker 1: S and index, it's two things. It's first what we
8:10
Speaker 1: call market quality. What do you expect in an E
8:13
Speaker 1: t F That's how it trades in the market, secondary
8:16
Speaker 1: market volumes, market quality in stressed scenarios, premium discount behavior.
8:21
Speaker 1: There's a bunch of metrics that we monitor with respect
8:24
Speaker 1: to E t F market quality. Part of my job
8:27
Speaker 1: is to be accountable for performing on those and the
8:30
Speaker 1: other part is delivering on those index outcomes, which in
8:34
Speaker 1: a world where what we can index is evolving as
8:38
Speaker 1: more markets and more strategies are indexed. UM is also
8:43
Speaker 1: important that we deliver to investors what they have signed
8:46
Speaker 1: on for with that index objective. And so that's what
8:50
Speaker 1: it means to be the CIO of an E t
8:52
Speaker 1: F and index book. So you mentioned UM market quality
8:56
Speaker 1: and performing within the market. You know, was only m
9:01
Speaker 1: less than two years ago. We had the big COVID
9:04
Speaker 1: sell off in March, and people were concerned that e
9:08
Speaker 1: t f s were not going to be able to
9:11
Speaker 1: manage the pressure. They wouldn't be able to deal with
9:14
Speaker 1: all of the stress, you know, all the usual criticisms
9:17
Speaker 1: of indexing plus additional criticisms of e t F s.
9:22
Speaker 1: How did ETFs perform during that collapse from February to April.
9:30
Speaker 1: The people who were concerned before the COVID bout of
9:34
Speaker 1: volatility had a huge and rich set of data to
9:38
Speaker 1: draw from. UH when we emerged from those volatile markets.
9:42
Speaker 1: That showed that actually ets have really supported stressed markets,
9:47
Speaker 1: added liquidity, added transparency, and that was on a full
9:52
Speaker 1: display over the COVID volatility period, particularly in the bond market,
9:56
Speaker 1: where if you think about what was happening across the world,
10:00
Speaker 1: there were traders who were, you know, setting up their
10:03
Speaker 1: their home desks there at their home, you know, uh,
10:07
Speaker 1: you know, hundreds of that one trading floor that we
10:09
Speaker 1: talked about became thousands and thousands of home office trading floors.
10:14
Speaker 1: And the bond market in particular still has largely operated
10:17
Speaker 1: in an over the counter bilateral basis, and the bond
10:20
Speaker 1: market for for that reason and a whole lot of
10:23
Speaker 1: other reasons, you know, in the treasury market in particular,
10:26
Speaker 1: became very hard to access, while e t s you
10:29
Speaker 1: could see on your phone, they were transparent, they were trading.
10:32
Speaker 1: One of the stats that I love to quote that
10:34
Speaker 1: I think is quite indicative of what was happening over
10:37
Speaker 1: that period is, you know, we had an investment grade
10:39
Speaker 1: ETF that traded on one of those volatile days in
10:43
Speaker 1: March March nine thousand times on exchange, and of course,
10:47
Speaker 1: every time something prints on an exchange is price formation.
10:50
Speaker 1: Whereas it's underlying bonds. The top holdings of that underlying
10:55
Speaker 1: bond portfolio traded on average thirty times, so N versus thirty.
11:02
Speaker 1: There just wasn't um price formation happening in the bond market,
11:06
Speaker 1: but it was happening in the E t F market
11:08
Speaker 1: with buyers and sellers meeting on exchange, which meant that
11:11
Speaker 1: there wasn't a whole lot that needed to happen in
11:13
Speaker 1: the underlying bond market to to support that. And so
11:17
Speaker 1: really uh and what's interesting is you can see a
11:20
Speaker 1: whole lot has been written by policymakers around the world
11:23
Speaker 1: about this supportive role that ets have effectively played in
11:27
Speaker 1: in stressed markets. The you know, SEC has written about it,
11:30
Speaker 1: the BOE aiasco UM. So it's been exciting to have
11:35
Speaker 1: this really rich data set to drawn looking back at
11:38
Speaker 1: that period, the bond discussion is really interesting. And I
11:42
Speaker 1: was referring to equities, but we'll circle back to that.
11:45
Speaker 1: You know a lot of people have complains that bond
11:48
Speaker 1: markets are thin. You know, you have a few thousand stocks,
11:52
Speaker 1: but there are just countless, countless numbers of bonds, many
11:56
Speaker 1: many more times of bonds, and there are stocks. It's
12:00
Speaker 1: seems like the bondy t F universe handled the crash
12:05
Speaker 1: or plunge maybe use a more accurate word because we're
12:07
Speaker 1: so short, handled it pretty well. Everybody. We saw a
12:11
Speaker 1: lot of money rotate out of stocks into bonds as
12:14
Speaker 1: a safe harbor. Didn't seem like there were a lot
12:16
Speaker 1: of dislocations or wild price anomalies or an inability to
12:21
Speaker 1: get an execution. The bondy t F universe seemed to
12:24
Speaker 1: behave really well. The bondy t F universe behaved well,
12:28
Speaker 1: and as a result, the bond market behaved better. And
12:32
Speaker 1: that's one of the things that I get really excited
12:34
Speaker 1: about because the fact is I'm really a lifelong um
12:38
Speaker 1: markets reformer. That's a passion that I have. I've spent
12:42
Speaker 1: my entire career in the markets, and and my desire
12:45
Speaker 1: at this point is to contribute to making them better,
12:48
Speaker 1: making them safer, more efficient, more transparent. And we can
12:52
Speaker 1: measure how bondy tfs actually did that in the bond market.
12:56
Speaker 1: And in fact, interestingly, as a result of the demand
13:00
Speaker 1: and for bondy t fs that came out of the
13:02
Speaker 1: COVID period, we have seen the bond market uh start
13:06
Speaker 1: to trade uh more electronically big pieces of the bond
13:10
Speaker 1: market portfolios. In the bond market, bond dealers have started
13:13
Speaker 1: to really invest in algorithmic pricing, which creates more transparency,
13:18
Speaker 1: more trading, and more liquidity. So we've written about and
13:22
Speaker 1: we've observed this what we call a real virtuous cycle
13:25
Speaker 1: of how e t f s have been integrated into
13:28
Speaker 1: the fabric of of capital markets across the board. And
13:31
Speaker 1: we can definitely talk about equities, but how in the
13:33
Speaker 1: bond market it has been good for bondy tfs and
13:36
Speaker 1: also good for bonds. So when we had the Great
13:39
Speaker 1: Financial Crisis into oh eight oh nine, I thought that
13:42
Speaker 1: was pretty much the end of the argument that indexing
13:46
Speaker 1: is problematic for markets or ETFs aren't going to be
13:49
Speaker 1: able to handle pressure, that that should have been the
13:51
Speaker 1: last word in that. I was kind of surprised to
13:54
Speaker 1: see those same arguments still hanging around. And then March
13:59
Speaker 1: uh the execution seemed to go off without a problem.
14:02
Speaker 1: There were a handful of individual stocks that sort of
14:05
Speaker 1: their pricing get a little wacky. But is this the
14:09
Speaker 1: end of the passive is destroying the markets and E
14:13
Speaker 1: t F or dangerous argument? Or is there are they
14:16
Speaker 1: just going to trot this out every time there's um
14:19
Speaker 1: something else to complain about. I'd love your thoughts on that,
14:23
Speaker 1: Barry Um. I would hope that it's uh, it's it's
14:26
Speaker 1: closer to the end where we where we can kind
14:29
Speaker 1: of look forward to two numerous things that can improve
14:32
Speaker 1: the markets. But look, you make an excellent point. I mean,
14:35
Speaker 1: to be fair, In two thousand and eight, I was
14:39
Speaker 1: I was on the bond trading floor actually at Goldman
14:42
Speaker 1: and I didn't know what an e t F was
14:45
Speaker 1: like in two thousand eight, you know, in the fixed
14:47
Speaker 1: income markets, you didn't you know, we weren't talking about
14:50
Speaker 1: what e t f s were. But to your point,
14:53
Speaker 1: it is true if we look back at the data
14:56
Speaker 1: during those weeks and months when what was so value
15:00
Speaker 1: by investors was transparency and it was so feared was
15:03
Speaker 1: the lack of transparency when all this information was coming
15:05
Speaker 1: out about bank balance sheets and what was on balance sheets.
15:08
Speaker 1: We did see a real pick up in volume and
15:10
Speaker 1: velocity of et F trading in two thousand and eight
15:13
Speaker 1: and in two thousand nine, and we have repeated stressed
15:16
Speaker 1: market events like the big energy sell off that happened
15:19
Speaker 1: at the end of twenty fifteen, the you know what
15:22
Speaker 1: we call the vulpocalypse that happened in February of eighteen,
15:26
Speaker 1: where we have repeatedly seen E t F performed well
15:29
Speaker 1: under pressure and actually adds support to high velocity markets.
15:34
Speaker 1: And yet this still you know, comes out from time
15:37
Speaker 1: to time, which feels like kind of the language that
15:39
Speaker 1: comes out around any sort of disruptive technology. But I
15:43
Speaker 1: do think, like we talked about, the data is pretty clear,
15:48
Speaker 1: you are definitely responsible for a lot of capital. And
15:54
Speaker 1: that leads me to a quote of yours that I
15:57
Speaker 1: need an explanation on. At Black Rocks. Is absolutely nothing
16:01
Speaker 1: passive about index investing, explain. I am on a mission
16:06
Speaker 1: Ferry to replace the word passive with the word index
16:10
Speaker 1: when people talk about E T S and index investing,
16:14
Speaker 1: because how we manage our portfolios is extremely active. And
16:19
Speaker 1: it goes back to that conversation we had about what
16:21
Speaker 1: investment performance is in the context of an E T
16:24
Speaker 1: F and index investment book, it is delivering the index outcomes,
16:30
Speaker 1: which the reason E T s and and index monthes
16:34
Speaker 1: exist is that indexes aren't often easily investible. They could
16:39
Speaker 1: have thousands and thousands of securities in them, and so
16:41
Speaker 1: depending on how much you you you know, are investing.
16:45
Speaker 1: You can't perfectly replicate the index, and so you need
16:48
Speaker 1: to optimize to deliver that index outcome with as little
16:53
Speaker 1: friction as possible. So that's delivering the index outcomes. And
16:57
Speaker 1: then there is that huge dimension of eat e F
17:00
Speaker 1: market quality ensuring that the e t f s tracked
17:03
Speaker 1: the underlying portfolios with you know, we call it premium
17:07
Speaker 1: discount behavior, ensuring that they're strong secondary market quality, transparency
17:13
Speaker 1: and liquidity in the e t F s. So we
17:15
Speaker 1: have teams of people, not robots, but actual people and
17:19
Speaker 1: a lot of them, by the way, or women around
17:21
Speaker 1: the world, who are actively managing our market quality and
17:26
Speaker 1: investment performance in our et F and index book. So
17:29
Speaker 1: that's why there is absolutely nothing passive about it. Huh.
17:33
Speaker 1: Really interesting. We've gone through these periods where there are
17:37
Speaker 1: these spasms of anti indexing um sentiment, and it goes
17:44
Speaker 1: all the way back to Jack Bogel and the early
17:47
Speaker 1: days of indexing in the nineties seventies. Indexing is an
17:52
Speaker 1: American it's we've heard people call it Marxist. It's going
17:56
Speaker 1: to lead to market crashes. Um. What what's your perspective
18:02
Speaker 1: when you hear these things crop up. By the way,
18:05
Speaker 1: the latest one is it's anti competitive and it's going
18:09
Speaker 1: to lead to price fixing and a lack of lack
18:12
Speaker 1: of competition due to all this ownership. How do you
18:15
Speaker 1: respond to those sort of backwater law review silliness? I
18:21
Speaker 1: begin with and we've written on this uh this year
18:25
Speaker 1: in in something we call the Investor Progress Report, But
18:29
Speaker 1: we estimate that there's about a hundred and twenty million
18:32
Speaker 1: people around the world who are accessing our e t
18:34
Speaker 1: F and index capabilities. UM. There are more people accessing
18:40
Speaker 1: the markets and investing in the markets and participating in
18:43
Speaker 1: economic growth on their terms than ever before in history.
18:48
Speaker 1: And from my perspective, there's really nothing that's more American
18:52
Speaker 1: than that. UM. So that's how I think about it.
18:57
Speaker 1: I think ETF spring markets. They bring market out access,
19:00
Speaker 1: they bring transparency, and increasingly they bring choice to lots
19:05
Speaker 1: of individual investors who are saving for retirement and thinking
19:10
Speaker 1: about their financial futures with the help of ets in
19:13
Speaker 1: ways that they couldn't before. And a lot of the
19:16
Speaker 1: you know, one of the pieces that we that we
19:18
Speaker 1: put out recently points out to the fact that a
19:20
Speaker 1: lot of the households who own e t s in
19:23
Speaker 1: the United States have have media and incomes of AD dollars.
19:27
Speaker 1: So you're talking about investors who simply didn't have market
19:31
Speaker 1: access before, who, as a result of e t f
19:34
Speaker 1: s and indexation can can get diversified strategies so manage
19:39
Speaker 1: their risks the way more sophisticated institutional investors have and
19:44
Speaker 1: participate in the markets. So let's talk a little bit
19:47
Speaker 1: about product engineering. What tell us a little bit about
19:50
Speaker 1: what that means. What sort of projects are these teams
19:54
Speaker 1: working on. It's one of those phrases that definitely resonates.
20:00
Speaker 1: I'm glad that it resonates. It's something that we've been
20:03
Speaker 1: using for for a few years now. And that team,
20:06
Speaker 1: which is global UM. There are product engineers in really
20:10
Speaker 1: every major region in the world, and they do two things. First,
20:15
Speaker 1: they helped design the operating models and the investment process
20:19
Speaker 1: for for new e t F s. UM how will
20:22
Speaker 1: creation redemption work, What are the characteristics of the index
20:26
Speaker 1: what you know? How will the index rebalance those types
20:30
Speaker 1: of things when it comes to new E t s.
20:32
Speaker 1: And the second piece of what they do, which is
20:35
Speaker 1: actually really critical, is they continue to manage the structure
20:39
Speaker 1: of the product over its lifetime. So sometimes we will
20:43
Speaker 1: identify something in one of those market quality statistics that
20:47
Speaker 1: you know, let's say it seems to be trading a
20:50
Speaker 1: little bit wide in the secondary market, and we'll go
20:52
Speaker 1: out and we'll talk to market makers and ask what's happening,
20:54
Speaker 1: and they'll say, well, it's a little tricky to hedge
20:57
Speaker 1: because of X, Y and z. And sometimes we can
21:01
Speaker 1: change something structurally and how the market interacts with the
21:04
Speaker 1: e t F to improve its investment performance and market quality.
21:08
Speaker 1: And that's the purview of our product engineering groups. So
21:12
Speaker 1: I tell all of our teams, you know, I want
21:16
Speaker 1: all of our teams to be able to explain how
21:18
Speaker 1: they contribute to the active management of our e t
21:22
Speaker 1: F and index book. And that's how the product engineering
21:24
Speaker 1: does by by identifying the operating model and by continuously
21:29
Speaker 1: assessing and improving it. So let's talk about the rest
21:33
Speaker 1: of your team. You have portfolio engineers, risk managers, platform architects,
21:40
Speaker 1: market structure developers, and products operating model designers. That sounds
21:47
Speaker 1: like some very intriguing job descriptions. Tell us about what
21:51
Speaker 1: a market structure developer does or some of those other
21:55
Speaker 1: really interesting titles. I think they're all exciting jobs, and
22:00
Speaker 1: I do have to make a plug for for anybody
22:03
Speaker 1: who is is considering going into investing. It's never a
22:07
Speaker 1: dumb question to ask what is the job? Because there
22:10
Speaker 1: are so many different jobs. And I remember when I
22:13
Speaker 1: was in college, I was almost scared to ask that.
22:15
Speaker 1: But but as you just pointed out, and it's it's,
22:18
Speaker 1: you know, fun for me to kind of hear you
22:20
Speaker 1: walk through it. There are so many different types of
22:23
Speaker 1: ways to be an investor and to participate in an
22:27
Speaker 1: investment platform. So really we do three things. Number one,
22:31
Speaker 1: we manage day in and day out. We are responsible
22:34
Speaker 1: for the investment performance of our funds, how we're managing
22:37
Speaker 1: the portfolios through rebalances, through corporate actions UM, and how
22:42
Speaker 1: we're managing et F market quality. That's number one. Number
22:46
Speaker 1: two is we are continuously improving our platform and the
22:52
Speaker 1: Aladdin technology that we use to manage our portfolios to
22:56
Speaker 1: make things that can be lower touch, lower touch, to
22:59
Speaker 1: give us capath city to spend more time on you know,
23:02
Speaker 1: new markets and new strategies. So that platform architecture piece
23:07
Speaker 1: how we create scale. That's kind of bucket too of
23:09
Speaker 1: what we do. And the third part is ecosystem leadership,
23:13
Speaker 1: and you talked about um. You know, we talked about
23:16
Speaker 1: how we engage with liquidity providers with stock exchanges. Earlier
23:21
Speaker 1: you talked about the COVID volatility, and I think it's
23:25
Speaker 1: really important and with a really interesting case study in
23:28
Speaker 1: the US that a lot of the volatility guard rails
23:33
Speaker 1: that had been put in place by the u S
23:35
Speaker 1: stock exchanges over the five years preceding March twenty twenty,
23:39
Speaker 1: market wide circuit breakers limit up, limit down, like the
23:42
Speaker 1: whole limit up limit down framework was really only ten
23:45
Speaker 1: years old, had been tested a few times and had
23:48
Speaker 1: its biggest test in March of We engage very deeply
23:54
Speaker 1: with stock exchanges. Remember in the u S. E t
23:56
Speaker 1: f are between thirty and forty percent of daily trading
23:59
Speaker 1: ball ume. So those volatility guard rails really matter from
24:02
Speaker 1: a market quality perspective. So focusing on the external environment
24:07
Speaker 1: for our ets, that's what we mean by ecosystem developer.
24:10
Speaker 1: You mentioned Aladdin. I just finished a couple of months
24:14
Speaker 1: ago the book Trillions by Robin Wigglesworth, and he describes
24:19
Speaker 1: the Aladdin system really as the technological backbone of black
24:25
Speaker 1: Rock from the very beginning and the secret source to
24:30
Speaker 1: that successful scaling. Tell us a little bit about for
24:33
Speaker 1: for a person who maybe not familiar with Aladdin, tell
24:37
Speaker 1: us a little bit about that. Aladdin is how we
24:40
Speaker 1: we arm our investment managers, both Black Rocks investment managers
24:45
Speaker 1: and the investment managers who are who are Aladdin clients
24:48
Speaker 1: outside of Black Rock with best in class Rook management tools.
24:51
Speaker 1: And it is the DNA of the firm. And I
24:55
Speaker 1: can say that actually because as I've shared with you,
24:57
Speaker 1: I was at the firm pretty much. It's at the
24:59
Speaker 1: beginn thing black Rock was started in and I started there.
25:05
Speaker 1: And the reason black Rock was founded really was a
25:09
Speaker 1: group of UM fixed income market specifically mortgage backed security
25:14
Speaker 1: experts who said, we can take this technology that's been
25:17
Speaker 1: built on the cell side and deliver it directly to
25:20
Speaker 1: clients as a fiduciary to help them create better outcomes.
25:23
Speaker 1: So giving putting better risk management tools directly in the
25:29
Speaker 1: hands of clients was really black Rocks founding mission, and
25:33
Speaker 1: that's what Aladdin has grown in today. Black first it
25:36
Speaker 1: was the system that all of black Rocks portfolio managers used,
25:39
Speaker 1: and then it became a system that UM that other
25:42
Speaker 1: asset managers wanted to to access as well. And it
25:45
Speaker 1: is really the backbone of how we we look at
25:48
Speaker 1: risk and we run our portfolios. Really intriguing. So let's
25:52
Speaker 1: talk a little bit about E. S. G UH generally
25:56
Speaker 1: and then we'll we'll dig down a little more specifically. UM.
26:00
Speaker 1: Your boss, Larry Thing famously pens a letter each year
26:05
Speaker 1: to Corporate America's tell us a little bit about UM,
26:09
Speaker 1: why we do that and and what's the thinking behind that.
26:14
Speaker 1: Larry writes a letter to start a conversation UM, and
26:17
Speaker 1: it's really a conversation with our clients who are owners
26:22
Speaker 1: in all of these companies across Corporate America, and what
26:25
Speaker 1: we think are the top of mind themes for the
26:28
Speaker 1: year ahead. And it's a good integration of everything we've
26:32
Speaker 1: heard from clients and how we're thinking about the markets
26:35
Speaker 1: and how we're thinking about risk. And it becomes really
26:38
Speaker 1: a point of of bringing people together, us inside the
26:42
Speaker 1: firm and us with our clients to to take a
26:46
Speaker 1: look at the world and what we've learned over the
26:47
Speaker 1: past year and what we want to bring to to
26:50
Speaker 1: the year in front of us. Very interesting. Let's talk
26:54
Speaker 1: a little bit about corporate governance. How do you think
26:57
Speaker 1: about that in terms of affecting risk. The conversation about
27:03
Speaker 1: corporate governance is one we've spent a lot of time
27:06
Speaker 1: thinking about because as as you know, but it probably
27:09
Speaker 1: bears um, you know, speaking too explicitly. In a lot
27:13
Speaker 1: of cases, we vote the shares on behalf of the
27:17
Speaker 1: clients whose money we managed, and the question is, um,
27:22
Speaker 1: do those clients want to vote the shares themselves. And
27:24
Speaker 1: something we did in December and it's actually gone live
27:29
Speaker 1: this month or it went live at the beginning of
27:31
Speaker 1: two UM was work to give our institutional clients and
27:37
Speaker 1: some of our co mingled fund clients, but a good
27:41
Speaker 1: portion of our assets the option whether they want to
27:45
Speaker 1: vote their shares or not. So it's early to say
27:48
Speaker 1: are they going to take it us up on it
27:50
Speaker 1: or not, But that will be very instructive to us
27:53
Speaker 1: because our job is to help them create better financial futures,
27:59
Speaker 1: create better portfolio outcomes. In some cases they may want
28:03
Speaker 1: to participate in the corporate governance process themselves. In other
28:07
Speaker 1: cases they may want to intentionally delegate it to us.
28:10
Speaker 1: And we have a very big what we call investment
28:13
Speaker 1: stewardship function where we you know, we're very transparent. We
28:17
Speaker 1: publish the criteria in terms of what we think is
28:20
Speaker 1: important when we engage with companies. But some investors feel
28:24
Speaker 1: like well, that that engagement with companies is part of
28:28
Speaker 1: the value proposition that I hire my asset manager for.
28:32
Speaker 1: And some investors may feel Nope, I'd like them to
28:35
Speaker 1: manage my assets, but I want the votes, and we
28:37
Speaker 1: are really hopeful of increasingly being able to give those
28:42
Speaker 1: investors choice. Let's talk a little bit about E s
28:46
Speaker 1: G generally. You know, for a long time it's captured
28:49
Speaker 1: a lot of mind share. People have talked about it,
28:53
Speaker 1: especially with climate change in the focus on the environment,
28:56
Speaker 1: but it doesn't seem like E s G is captured
28:59
Speaker 1: as many inflows as it has, you know, a sort
29:04
Speaker 1: of mind share. What what are your thoughts on that.
29:08
Speaker 1: Is this going to be a persistent um gap or
29:12
Speaker 1: are we seeing more people, especially uh younger generations, more
29:17
Speaker 1: interested in E s G investing. I think flows are
29:21
Speaker 1: actually the tip of the E s G iceberg, And
29:24
Speaker 1: what you don't see below the surface is the integration
29:28
Speaker 1: and evaluation of E s G risk across portfolios, and
29:33
Speaker 1: that has captured a huge amount of time and attention
29:37
Speaker 1: from investors and and certainly from us, and it's actually
29:41
Speaker 1: really exciting from from an investor perspective. That reminds me
29:45
Speaker 1: again dating myself here, but when I started at black Rock,
29:49
Speaker 1: I uh, it was in in and I think in
29:53
Speaker 1: the five years since black Rock was founded, interest rates
29:56
Speaker 1: had dropped something like three d basis points right like
30:00
Speaker 1: late eighties, call it ten percent on the bond to
30:02
Speaker 1: seven percent. And one of the big topics of risk
30:06
Speaker 1: in the fixed income market with mortgage pre payments and
30:09
Speaker 1: so figuring out how to model that, articulate that make
30:13
Speaker 1: that transparent um better than anybody else. Again a big
30:17
Speaker 1: part of black Rocks value prop that it was bringing
30:19
Speaker 1: to investors. And we are doing the same thing today
30:23
Speaker 1: with climate risk and with E s G integration, and
30:25
Speaker 1: we have integrated E s G metrics across our portfolios
30:29
Speaker 1: and transition risk metrics, so we can assess what sort
30:34
Speaker 1: of risks are there UM. And that's the really the
30:38
Speaker 1: first step. It's measurement and transparency and then decisions around
30:43
Speaker 1: capital commitment and risk taking. So, so I want to
30:46
Speaker 1: restate a little bit of what you're saying. I've traditionally
30:51
Speaker 1: heard E s G described as I want to invest
30:55
Speaker 1: in a way that parallels my personal values. But you
30:59
Speaker 1: really describing E s G as a risk management tool
31:03
Speaker 1: as a way to screen out potentially problematic UM concerned
31:09
Speaker 1: sectors companies? Whatever? Am I? Am I overstating that? Or
31:11
Speaker 1: is that a fair translation? Both statements are actually true.
31:16
Speaker 1: It's a spectrum. So what we need to do is
31:20
Speaker 1: give our clients choice and and clarity and help them articulate,
31:25
Speaker 1: because often they're not even sure where they want to
31:28
Speaker 1: be in that spectrum. But I would say the um
31:32
Speaker 1: majority of the conversations that we have right now are
31:35
Speaker 1: much more understanding. Looking at my portfolio today, what are
31:40
Speaker 1: my E s G risks? Broadly? What are my climate risks?
31:45
Speaker 1: What are my risks to a net zero transition? And
31:49
Speaker 1: then the second question is how do I want to
31:51
Speaker 1: manage those? Really really really intriguing. Let's talk a little
31:55
Speaker 1: bit about no carbon and low carbon. That was kind
31:58
Speaker 1: of a topic a couple of years ago. I've always
32:03
Speaker 1: been a little perplexed by that because if you back
32:06
Speaker 1: out the big carbon producers in the SMP five, everybody
32:11
Speaker 1: else who's left our giant carbon consumers? Um, how should
32:16
Speaker 1: we think about something like carbon? Is that the most
32:21
Speaker 1: attractive approach to dealing with I'm concerned about climate change
32:25
Speaker 1: or or or global warming. It depends on what your
32:29
Speaker 1: goal is. And again I think a big part of
32:32
Speaker 1: what our work has been is to offer a spectrum
32:36
Speaker 1: um for investors who are trying to do different things,
32:39
Speaker 1: and even more importantly, and this has been meaningful to
32:42
Speaker 1: me as a personal investor, offer transparency around what it
32:46
Speaker 1: all means. So something we did in December is we
32:50
Speaker 1: published a metric for all of our public index and
32:54
Speaker 1: all of our ets called the I t R metric
32:57
Speaker 1: Implied Temperature Rise. And the beauty of the metric is
33:00
Speaker 1: it's really easy to understand. You can pull up anything
33:03
Speaker 1: on our website. You can see the I t R
33:05
Speaker 1: metric UM and you can see is it paris aligned
33:09
Speaker 1: or not, meaning is it you know, one point five
33:11
Speaker 1: degrees or lower or is it higher? And we show
33:14
Speaker 1: the spectrum of of bands and ranges and um and
33:18
Speaker 1: what you can see is you know, nine to your
33:19
Speaker 1: point of companies in in ms C I equally are
33:25
Speaker 1: not paras aligned. But step number one is getting transparency
33:30
Speaker 1: in terms of your book and then deciding do you
33:32
Speaker 1: want to take the first step and move to something
33:34
Speaker 1: that is a screened version of that index or go
33:39
Speaker 1: much further and take more targeted exposures. And what we
33:44
Speaker 1: hear from clients is, you know, they want different things.
33:47
Speaker 1: So putting out that spectrum and putting out those measurements really,
33:51
Speaker 1: you know, looking to be champions of transparency in this world,
33:56
Speaker 1: which as it emerges, can kind of become a tower
33:59
Speaker 1: of babble in terms of the different languages and different metrics.
34:03
Speaker 1: So arming investors, both institutional and personal investors with the
34:07
Speaker 1: tools to understand what does this mean for me um
34:11
Speaker 1: that's really been the priority. That's really interesting. The old
34:14
Speaker 1: Peter drug aligne is if you can't measure it, you
34:17
Speaker 1: can't manage it, and having metrics is sounds like a great,
34:20
Speaker 1: great start. So let's talk a little bit about what
34:23
Speaker 1: it's been like the past a couple of years with
34:26
Speaker 1: the pandemic and then last summer delta it felt like
34:29
Speaker 1: it was ending and then O Macron hit, I keep
34:32
Speaker 1: hearing all these farms are trying to get their staffers
34:34
Speaker 1: back into the office and on the trading desks. Tell
34:37
Speaker 1: us what what you guys are doing are are you
34:40
Speaker 1: gonna have everybody back in the office, You're gonna be
34:43
Speaker 1: remote you're gonna be hybrid. What what you're thinking about
34:46
Speaker 1: the world going forward. We are going to pilot a
34:50
Speaker 1: hybrid model, and we actually started piloting it in certain
34:53
Speaker 1: parts of the world, including New York City prior to
34:57
Speaker 1: oh macron. And what it was was, you are welcome
35:00
Speaker 1: to back to come back to the office for five
35:01
Speaker 1: days if you would like to take two remote days.
35:04
Speaker 1: Take two remote days and and we'll see how that
35:07
Speaker 1: plays out. And then omicron kron happened and we um
35:11
Speaker 1: uh kind of you know uh pulled back on the
35:15
Speaker 1: pilot and we'll put it back in hopefully in a
35:17
Speaker 1: few weeks. I'm I'm in the office right now. I
35:20
Speaker 1: like being in the office, and I think we've had
35:22
Speaker 1: a whole bunch of learnings. I mean, of course, our
35:24
Speaker 1: number one priority is making sure that people are safe
35:27
Speaker 1: and that people are healthy. Um. But healthy doesn't just
35:31
Speaker 1: mean you know, being safe from the from from the virus.
35:35
Speaker 1: It means being mentally healthy. And one of the things
35:39
Speaker 1: we've learned is is a lot of us really missed
35:42
Speaker 1: the connection with other people. So creating an environment where
35:47
Speaker 1: you can have those moments of human connection in the office.
35:50
Speaker 1: And of course there were moments of human connection that people,
35:53
Speaker 1: you know, particularly with kids of different ages, were we're
35:56
Speaker 1: having at home that they didn't have before. So trying
35:59
Speaker 1: to take the learnings from the pandemic and employ them
36:03
Speaker 1: in a way that make people healthier physically and healthier mentally.
36:07
Speaker 1: That's what the goal is. But I imagine we will
36:10
Speaker 1: be experimenting for a while, both based as conditions in
36:14
Speaker 1: the world change and uh and as we see how
36:16
Speaker 1: it works in our offices. Yeah, the the challenge has
36:20
Speaker 1: been how do you manage corporate culture over zoom or remotely,
36:25
Speaker 1: and black Rock has a very specific corporate culture. Lots
36:29
Speaker 1: of other farms are trying to maintain that. Finding that
36:32
Speaker 1: right balances seems to be a work in progress that
36:35
Speaker 1: we're all going to be dealing with over the next
36:37
Speaker 1: couple of quarters or years for all we know. Absolutely.
36:41
Speaker 1: So let's talk a little bit about the rising demand
36:45
Speaker 1: for e t F. It seems that lots of institutional
36:49
Speaker 1: traders are driving E t F demand. Can can you
36:52
Speaker 1: talk to that a little bit? I'm curious as to
36:54
Speaker 1: your perspectives. What might surprise you to hear is one
36:58
Speaker 1: of the biggest adopters of of ETS has been other
37:03
Speaker 1: asset managers, so institutional asset managers, you know, like you know,
37:08
Speaker 1: Black Rock zone asset managers outside of the index business
37:11
Speaker 1: who are integrating e t s into their own pursuit
37:16
Speaker 1: of alpha. Generally to you know, use e t s
37:19
Speaker 1: as a cash equitization tool to look at e t
37:23
Speaker 1: s alongside other sources of market data like um futures
37:28
Speaker 1: contracts or swap contracts to look at options on e
37:31
Speaker 1: t s. Often we've seen and this was actually a
37:34
Speaker 1: very interesting story going into the Brexit referendum. There weren't
37:38
Speaker 1: a lot of volatility plays out there, but there were
37:41
Speaker 1: some UK We had a UK equity market e t
37:45
Speaker 1: F and with options when options ecosystem around it and
37:49
Speaker 1: options open interest went up eighteen hundred percents into the
37:54
Speaker 1: referendum because it was a way to play volatility. And
37:57
Speaker 1: sometimes that would be an asset managers first experience ants
38:00
Speaker 1: of an e t F because they were looking for
38:02
Speaker 1: some sort of nonlinear payout, and then they would become
38:05
Speaker 1: more interested in integrating e t f s as another rapper,
38:09
Speaker 1: another tool in their overall toolkit in in making money.
38:12
Speaker 1: So that has been one of the largest sources of
38:15
Speaker 1: adoption to BTS. I have a very vivid recollection I
38:20
Speaker 1: want to say, fifteen or twenty years ago hearing certain
38:24
Speaker 1: institutions say, or institutional fund managers say, Look, we want
38:30
Speaker 1: to get exposure either to broad equity market or to
38:33
Speaker 1: this specific sector. But our due diligence and our research
38:37
Speaker 1: process takes so long that by the time we pick
38:41
Speaker 1: a particular company, a particular manager, a particular investment, the
38:46
Speaker 1: move is half over. I could just use the t
38:49
Speaker 1: F and get instant exposure to X. Do you still
38:52
Speaker 1: see that sort of behavior or am I going too
38:55
Speaker 1: far back in history? Nope, we absolutely see that behavior often.
38:59
Speaker 1: You know, people will use the e t F as
39:01
Speaker 1: a place holder um as they do that research and
39:04
Speaker 1: figure out where they want that exposure to be specifically,
39:07
Speaker 1: So sometimes they have longer term horizons, sometimes they have
39:10
Speaker 1: shorter term horizons. But again, this is actually a key
39:14
Speaker 1: reason why we see that increase in et F trading
39:18
Speaker 1: during high velocity markets is they are very convenient and
39:21
Speaker 1: transparent way to manage risk and pivot exposures during fast
39:26
Speaker 1: moving markets, so you can make quick changes to adapt
39:30
Speaker 1: your risk profile and work into what your longer term
39:34
Speaker 1: target state might be. And we do continue to see
39:37
Speaker 1: that really interesting. Let's talk about thematic ETFs. They seem
39:41
Speaker 1: to have exploded in popularity UH the past couple of years.
39:45
Speaker 1: How exciting is that for you guys to work on
39:48
Speaker 1: and what do you see coming down the pipe? What
39:50
Speaker 1: what's new and interesting? It's so exciting that we can
39:55
Speaker 1: increasingly index new types of strategies and access new type
40:00
Speaker 1: of markets and and that's really what we're about, bringing
40:04
Speaker 1: the markets to investors on their terms. And you know,
40:07
Speaker 1: one of the things that really brought it home for
40:09
Speaker 1: me with some of our climate focused e t f
40:13
Speaker 1: s was being able to find something that my kids
40:16
Speaker 1: connected to. My daughter is a big environmentalist. She's a
40:19
Speaker 1: part of her school's environmental Action committee, and I think
40:22
Speaker 1: she never thought that e t f s were or
40:24
Speaker 1: investing was particularly relevant to her, and talking to her
40:28
Speaker 1: about UH, climate focused e t s, it was a conversation.
40:33
Speaker 1: So part of how we are bringing more people into
40:36
Speaker 1: the markets is helping them connect to the themes that
40:40
Speaker 1: are important to them and then helping them use those
40:43
Speaker 1: as a way to start to construct the portfolios that
40:47
Speaker 1: will deliver the outcomes they're looking for. So one of
40:50
Speaker 1: the big things that we've seen has been the rise
40:53
Speaker 1: of direct indexing. What are your thoughts on that? Is
40:56
Speaker 1: this a challenge to E T F and we've seen
41:01
Speaker 1: a lot of big institutions by direct indexing shop, UH,
41:05
Speaker 1: tell us a little bit about your thoughts with that.
41:07
Speaker 1: Direct indexing is a is a very important part of
41:09
Speaker 1: the index and E T F ecosystem. About half of
41:13
Speaker 1: our book actually is direct indexing versus E T S. Increasingly, actually,
41:19
Speaker 1: there's also been attention to UH to smaller direct indexing
41:24
Speaker 1: opportunities more for individual investors where UM we UH we
41:29
Speaker 1: acquired a perio to offer that service as well. So
41:32
Speaker 1: I think direct indexing for individuals for institutions UM fits
41:38
Speaker 1: nicely into that overall ecosystem. When you come to those
41:41
Speaker 1: things we talked about around UH, what value the E
41:44
Speaker 1: T F rapper brings that secondary market liquidity, the transparency. UM,
41:50
Speaker 1: that's the role of the ETS play. But there's certainly
41:52
Speaker 1: a role for a very important role for direct indexing.
41:54
Speaker 1: To really intriguing your bio mentions that you're an ad
42:00
Speaker 1: a kid for employee networks, can you speak a little
42:02
Speaker 1: bit towards that. I know this is like a total
42:05
Speaker 1: subject change, but I don't want to not get to
42:09
Speaker 1: this question. Tell us a little bit about employee networks
42:12
Speaker 1: and what are they and what role do you play
42:16
Speaker 1: with those. I've been a big beneficiary over the course
42:20
Speaker 1: of my career of the networking and visibility that comes
42:24
Speaker 1: from being part of, you know, in my case, women's networks.
42:28
Speaker 1: It's an opportunity to meet and connect with people you
42:31
Speaker 1: wouldn't otherwise know, um and an opportunity to to think
42:35
Speaker 1: more intentionally and strategically about your career and maybe expand
42:40
Speaker 1: your universe of role models. So that's how I've participated
42:43
Speaker 1: in employee networks and a black rock. One of the
42:46
Speaker 1: things I love about being a senior advocate for for
42:49
Speaker 1: many of the networks is I really believe that you
42:52
Speaker 1: can't do your best work unless you can talk about
42:56
Speaker 1: your challenges, both inside and outside the office. And a
43:00
Speaker 1: lot of times these networks create safe spaces for people
43:04
Speaker 1: to talk about what they've struggled with, how they've overcomed it,
43:08
Speaker 1: and and and I find that really inspiring um and
43:14
Speaker 1: and it helps me recruit great people. So so it's
43:17
Speaker 1: something that's very important to me. So let's stay with
43:19
Speaker 1: that topic. Finances notorious for not having a lot of
43:23
Speaker 1: diversity or inclusion. I know Black Rock has a couple
43:28
Speaker 1: of initiatives in that space. UM, tell us about them.
43:32
Speaker 1: I've spent my career, uh, you know, being asked the
43:35
Speaker 1: question of of, well, what's it like being a woman
43:38
Speaker 1: in finance, and and we could talk about this for
43:40
Speaker 1: for a really long time. What's it like being a woman,
43:43
Speaker 1: what's it like being a mother, what's it like being
43:45
Speaker 1: a parent? Um? And and it's always hard when you
43:50
Speaker 1: feel different, no matter what, UM, no matter what the
43:52
Speaker 1: source of the difference is. I think it can be
43:54
Speaker 1: very hard to to feel safe and to feel secure
43:58
Speaker 1: um amid differences. And that is what we try to
44:01
Speaker 1: sell for whether it's with employee networks, whether it's you know,
44:05
Speaker 1: creating mentorships and role models. Although I'll have to say
44:09
Speaker 1: a lot of my my most memorable mentors weren't necessarily women.
44:13
Speaker 1: But again, thinking about those challenges which are different for
44:16
Speaker 1: for different people, UM, talking about them and making people
44:21
Speaker 1: feel safe in raising what they are. UM, that's what
44:25
Speaker 1: we tried to focus on the most, and and probably
44:28
Speaker 1: I think that's what's changed the most over the course
44:31
Speaker 1: of my career. I think early in my career, I
44:34
Speaker 1: felt the imperative was too you know, not not address
44:39
Speaker 1: the fact that there were differences and just get out
44:41
Speaker 1: there and and try to act like everybody else. And
44:44
Speaker 1: and that didn't necessarily work for me, but you know,
44:47
Speaker 1: it was sometimes hard to talk about that, and so
44:49
Speaker 1: talking about it, um uh like and having transparency to
44:53
Speaker 1: those things is you know, has really been the first
44:56
Speaker 1: step and and one that we have to take again
44:59
Speaker 1: and again. I think it's, uh, it's not an old conversation,
45:03
Speaker 1: it's not a dated conversation. I am incredibly proud Berry
45:07
Speaker 1: that the leadership team of the E T F and
45:10
Speaker 1: Index platform is majority female. UM and we talk all
45:14
Speaker 1: the time about how to increase our diversity, diversity of thought,
45:18
Speaker 1: recial diversity, geographic diversity, because we think if we bring
45:24
Speaker 1: our differences to the table, we'll perform better. So let
45:29
Speaker 1: me throw you a curve ball. You're sort of bicoastal
45:33
Speaker 1: New York and Boca. How do you split your time?
45:36
Speaker 1: And given what we've learned about working from home, can
45:41
Speaker 1: you operate from anywhere you have an Internet connection? I
45:45
Speaker 1: I live in New York, Berry, I live in New York.
45:47
Speaker 1: I'm in the New York City office right now. I
45:50
Speaker 1: have a home in Florida, and I'll tell you a
45:52
Speaker 1: funny story. My my husband loves Florida, so we've always
45:55
Speaker 1: we've had a home in Florida for a while. He Um,
45:58
Speaker 1: he's a he's a an investment manager, a triathlete, he
46:02
Speaker 1: cycles a lot, he plays a lot of golf. He
46:04
Speaker 1: uh you know, does some work from down there. But
46:06
Speaker 1: I was always in Florida for vacations and weekends until
46:09
Speaker 1: the pandemic when during that spring lockdown, I spent about
46:13
Speaker 1: six weeks there and and liked it more than than
46:15
Speaker 1: than I had uh So, but now Florida is uh
46:19
Speaker 1: is really weekends and vacations for me. But last night,
46:22
Speaker 1: you like the story, my daughter texted my husband and said, Hey, Dad,
46:26
Speaker 1: I'm wondering are you coming home tonight or are you
46:30
Speaker 1: going to be in New York City? And by the way,
46:32
Speaker 1: my husband and I were at a restaurant in New
46:33
Speaker 1: York City. So the kids like to joke that my
46:35
Speaker 1: husband lives in Florida, but um, but actually we are.
46:39
Speaker 1: I am mostly here and between May and November, he
46:43
Speaker 1: is mostly in New York City as well. Really really interesting, um,
46:49
Speaker 1: So I know I only have you for so much time.
46:52
Speaker 1: Let me jump to my favorite questions that we ask
46:55
Speaker 1: all of our guests, starting with tell us what your
46:59
Speaker 1: stream in these days? What have been keeping you entertained
47:03
Speaker 1: when everybody has been stuck at home? I have three
47:06
Speaker 1: categories of of things I stream, and I'm sure you've
47:09
Speaker 1: heard this before, Barry. The things I watched with my husband,
47:12
Speaker 1: the things I get my kids to sit down and
47:14
Speaker 1: watch with me, and UH, and the stuff I watched
47:17
Speaker 1: for myself. So so in each category, my husband and
47:20
Speaker 1: I we loved ted Lasso, um that was one of
47:23
Speaker 1: our favorite things of the pandemic. And we also loved Yellowstone. Um. My,
47:28
Speaker 1: my kids will not sit down to watch the same
47:30
Speaker 1: shows together no matter how much I try. So with
47:34
Speaker 1: my son, we're watching Boba Fette and The Mandalorian with
47:37
Speaker 1: my daughter. It's been Emily in Paris. They are fifteen
47:40
Speaker 1: and thirteen. And you know, I'll tell you from myself.
47:44
Speaker 1: I finished the UH, the sequel to Sex in the City,
47:47
Speaker 1: and just like that, and I loved it. It was,
47:51
Speaker 1: you know, women around my age talking about dealing with
47:54
Speaker 1: their teenage kids and finding meaning in their lives. And
47:58
Speaker 1: I know the reviews were any mixed, but I really
48:01
Speaker 1: loved it. We talked briefly, but you didn't give us
48:04
Speaker 1: any names about some of the mentors who helped shape
48:07
Speaker 1: your career. Tell us about those folks. I have had
48:11
Speaker 1: great mentors and sponsors, and I think it's important to
48:14
Speaker 1: talk about both. I don't think until more recently in
48:17
Speaker 1: my career I understood what a sponsor was. A sponsor
48:20
Speaker 1: being somebody who will actually work intentionally to to move
48:24
Speaker 1: your career forward. But the uh Um Goldman facts. I
48:28
Speaker 1: had the privilege of working with John Rodgers who asked
48:34
Speaker 1: me to testify to Congress in front of the House
48:37
Speaker 1: Banking Committee on to represent Goldman, which was the scariest
48:41
Speaker 1: thing I had ever done. And what John told me,
48:43
Speaker 1: which I will never forget, it's it's the scariest things
48:46
Speaker 1: that once you do, you are the proudest of of
48:49
Speaker 1: having done. Um. Marty Chavez, who I also worked for
48:52
Speaker 1: a Goldman, was a tremendous mentor, and I think importantly,
48:56
Speaker 1: as I said, I've had I've had some great female
48:58
Speaker 1: role models, but I've had some awesome male mentors. UM.
49:02
Speaker 1: I think my high school calculus teacher, Judy Konan, probably
49:06
Speaker 1: changed the course of my career. So those three are
49:09
Speaker 1: my biggest mentors at Black Rock. My uh my boss
49:13
Speaker 1: Selim rom G are ahead of hr Minish Meta, who
49:17
Speaker 1: was the you know, had this job before me. They've
49:20
Speaker 1: been great sponsors, and I think being intentional about providing
49:24
Speaker 1: sponsorship as well as mentorship is something we think about
49:26
Speaker 1: a lot. Really interesting. I know you read a lot.
49:31
Speaker 1: Tell us some of your favorite books, and what are
49:33
Speaker 1: you reading right now? I am. I'm sure uh you
49:39
Speaker 1: are as well. I'm a voracious reader and I'm usually
49:41
Speaker 1: reading multiple books at the time, So the two I
49:44
Speaker 1: am reading right now, I kind of usually have something fiction,
49:47
Speaker 1: something nonfiction. The nonfiction book I'm reading is Digital Body Language,
49:52
Speaker 1: which in the you know, uh situation that we're in
49:55
Speaker 1: right now, it's fascinating how how how we create a
49:58
Speaker 1: digital body language, how people respond to it, and what
50:01
Speaker 1: you need to think about it. That's my nonfiction book
50:04
Speaker 1: right now, and my fiction book I'm I'm a few
50:07
Speaker 1: chapters in and I'm loving it. It's called um The
50:10
Speaker 1: Louding Voice, and it's about a young woman, a young
50:14
Speaker 1: teenager in a rural Nigerian village who gets married very
50:18
Speaker 1: young um and and is thirsting for an education because
50:22
Speaker 1: she wants to find her louding voice. And that's probably
50:25
Speaker 1: a theme and everything I read about women people in general,
50:29
Speaker 1: but often women finding their voices and using them. And
50:33
Speaker 1: one of the books I read recently that that had
50:35
Speaker 1: a big impact on the colleague of mine actually gave
50:38
Speaker 1: it to me when I was promoted to ce I. Oh.
50:40
Speaker 1: It was um uh intronewees memoir My Life in Full
50:46
Speaker 1: and I absolutely loved that book. She started out by saying,
50:49
Speaker 1: I intended to write a book about my career as
50:52
Speaker 1: CEO of PepsiCo and not write about my life as
50:55
Speaker 1: a mother and a wife. I didn't want to write
50:57
Speaker 1: that book. And what I ended up writing is exactly
51:00
Speaker 1: that book, because when you're a mom or a parent
51:03
Speaker 1: and a wife, and and how you show up with
51:06
Speaker 1: that to the office, you know, as a CEO. Weaving
51:10
Speaker 1: all of that together, she did brilliantly and it was
51:12
Speaker 1: really moving, really interesting. I have a book recommendation for
51:17
Speaker 1: your daughter. There's a fascinating book called Windfall, The Booming
51:23
Speaker 1: Business of Global Warming by Mackenzie Funk that describe since
51:29
Speaker 1: your daughter is interested in E. S. G. And it
51:32
Speaker 1: describes how the entire world of finance slowly started recognizing
51:40
Speaker 1: investment opportunities both at you know, the individual company level,
51:45
Speaker 1: the s G level, but also at the venture capital
51:48
Speaker 1: and startup level. And how Wall Street has arms into
51:53
Speaker 1: all these industries that are working on either climate change
51:57
Speaker 1: or you know, electric cars, and and and that book
52:00
Speaker 1: is already about five years old, so when they talk
52:03
Speaker 1: about firms like Tesla, they're still fairly nascent. Maybe it's
52:08
Speaker 1: seven years old. But if she's interested in that, it's
52:12
Speaker 1: a really well written book, and it's really fascinating, she
52:15
Speaker 1: may really, uh, really enjoy it. Let's go on to
52:18
Speaker 1: our next question, speaking of um, younger people, what sort
52:23
Speaker 1: of advice would you give to a recent college grad
52:26
Speaker 1: who was interested in a career in either finance or
52:30
Speaker 1: investment management. Ask all of your questions, find people, ask
52:35
Speaker 1: your questions. There are no dumb questions, and uh and
52:39
Speaker 1: if it sounds interesting to you, it's worth having a
52:42
Speaker 1: conversation about it. I wish I had done that more.
52:44
Speaker 1: In a lot of ways, I feel like I I
52:46
Speaker 1: got lucky. I I told you I was the product
52:49
Speaker 1: of actually a diversity recruiting effort that led me to
52:51
Speaker 1: the to the trading floric Goldman. But if it sounds interesting. Um,
52:56
Speaker 1: it's worth doing the exploration and networking and finding friends
53:00
Speaker 1: and just saying hey, can I spend ten minutes and
53:02
Speaker 1: ask you about your job? Doing that a lot, I
53:05
Speaker 1: think is an awesome idea, really interesting. In our final question,
53:10
Speaker 1: what do you know about the world of investing today?
53:12
Speaker 1: You wish you knew years ago when you were first
53:16
Speaker 1: getting started. If you asked me thirty years ago what
53:20
Speaker 1: I thought about the world of investing, I probably would
53:23
Speaker 1: have said, Gordon Gecko. I mean I was really thinking
53:26
Speaker 1: Wall Street and even you know, when I was in college,
53:30
Speaker 1: that was the that was the vision that I had.
53:31
Speaker 1: That's what you had to look like to be to
53:33
Speaker 1: be an investor. Uh. Now what I know is excellence
53:37
Speaker 1: looks like uh, lots of different things in the world
53:40
Speaker 1: of investing. And you know, if you're a woman, if
53:43
Speaker 1: you're a person of color, it's uh, you can be excellent.
53:47
Speaker 1: And in fact, if you're a theater major, you can
53:50
Speaker 1: find a path. I think there is a superpower in
53:54
Speaker 1: being different. Um, and my mother always suggested that to
53:58
Speaker 1: me thirty years ago. So so maybe I should say
54:00
Speaker 1: that's what I wish i'd believed thirty years ago when
54:03
Speaker 1: I was told, um, now I know it's true. Really interesting, Samara,
54:07
Speaker 1: thank you for being so generous with your time. We
54:11
Speaker 1: have been speaking with Samaricane. She is the chief investment
54:15
Speaker 1: officer for E T F s and Index Investments at
54:18
Speaker 1: black Rock. If you enjoy this conversation, be sure and
54:21
Speaker 1: check out any of the previous several hundred we've done
54:24
Speaker 1: over the past eight years. You can find that at iTunes, Spotify, Google, Bloomberg,
54:29
Speaker 1: wherever you feed your podcast fix. Check out my daily
54:34
Speaker 1: reads at Ridalts dot com. Follow me on Twitter at
54:37
Speaker 1: rid Halts. I would be remiss if I did not
54:40
Speaker 1: thank that crack staff that helps put these conversations together
54:43
Speaker 1: each week. Marx and Ascalchi is my audio engineer. Paris
54:48
Speaker 1: Wald is my producer. Sean Russo is my researcher. Artika
54:54
Speaker 1: val Brunn is our project manager. I'm Barry Hults. You've
54:58
Speaker 1: been listening to Masters in Business on Bloomberg Radio.