TRANSCRIPT 🔗
00:00:02
Speaker 1: Bloomberg Audio Studios.
00:00:04
Speaker 2: Podcasts. Radio. News. Welcome to Trillions. I'm Joel Weber. Eric Balchunas is traveling. So joining me for this episode, I have Athanasios Sarifakis, an ETF analyst with Bloomberg Intelligence, as well as Isabel Lee, a markets reporter with Bloomberg TV. And we have a few themes to explore. We've got a big data point, which is In the latest chapter between Godzilla and King Kong, Vanguard, BlackRock. We also have a hot sauce shelf where some products seem to have an expiration date. And then we're going to go explore how some investors are continuing to buy the dip and where they're doing that. That's in our DGN report. And then finally, yeah or nah? We're going to explore the pre-IPO anticipation around Anthropic, which is Smells a lot like what we saw with SpaceX earlier this year. This time on Trillions, ETF grab bag. Ethan, Isabel, welcome back to Trillions.
00:01:17
Speaker 1: Excited to be here. I thought you were going to say you're stuck with us. I am.
00:01:23
Speaker 2: But I am excited to have a few themes that we get to explore together. Okay, Ethan, I'm going to put the spotlight on you for a second. Topic number one we're going to talk about, big data point of note, Vanguard and BlackRock. A couple months ago, we wrote about how Vanguard had surpassed BlackRock, and I was like, oh, game over. Turns out it wasn't totally game over. What happened?
00:01:47
Speaker 3: James Safar on our team had wrote this note about Vanguard passing BlackRock in assets. Like you mentioned, it happened a couple months ago. didn't really hold. This one looks like it might hold.
00:01:58
Speaker 2: It ended up being like neck and neck and they were tussling and it, but it seems like maybe now Vanguard has closed the door. Yeah.
00:02:05
Speaker 3: It seems like they're starting to run away with it, but this is basically like King Kong and Godzilla, like fighting, like that's the level. So they're kind of going back and forth and everyone else is just kind of fighting for what's left over. But, um, I think is, you know, we knew it was maybe going to happen eventually, but it's really just a big deal. And it actually finally happened.
00:02:23
Speaker 2: Right.
00:02:24
Speaker 3: And, um, It's interesting just because Vanguard's lineup isn't really the most exciting, right? It's just mostly the core stuff. It's cheap. And that's really what got them passed. And BlackRock, I felt like, was really trying to fend them off. They went with Bitcoin. They were launching active, right? And so they're trying to keep this lead as long as they can. But it just seemed like this inevitable move that Vanguard was going to pass them eventually.
00:02:46
Speaker 1: I agree with the Thanasis.
00:02:47
Speaker 4: This is very interesting because also since 2020, Vanguard's share of passive equity assets rose five percentage points. And when you think of the ETF growth as of late as Joel and Eric Balchunas, you guys would always talk about this, you would think it's active, active, active, but then it's still passive that's out there. Also, it's just another emblematic example of how the big is getting bigger.
00:03:07
Speaker 1: And Joel, you alluded to this, the small is just having a harder time.
00:03:11
Speaker 2: Well, there are characters other than You know, Godzilla and King Kong.
00:03:16
Speaker 1: King Kong.
00:03:17
Speaker 2: But another thing that was kind of interesting here is that if you think about U.S., that's one story. What about globally?
00:03:25
Speaker 3: Yeah, globally, it's very much iShares. They have a much stronger brand recognition, especially in Europe, because their roots are actually from Barclays. So they have a lot of like European roots there. Vanguard is definitely growing in that region, but they don't quite have the recognition that some of the other firms do. But if we sort of look at global assets, BlackRock is still larger for sure. But this is just very much on the U.S. focus. It's mostly equities for Vanguard that pulled it along. But the interesting thing is they're starting to really ramp up their bond offering because iShare still leads there. And I think that it's very rare to see Vanguard go like on the offensive. And so I think they're ramping up their bond offering to try to go after some of that bond share now that BlackRock has held on to for so long.
00:04:09
Speaker 2: Is there a number in all of this that you think people should be focusing on or thinking about?
00:04:13
Speaker 3: I don't know if an actual number, but I can already tell you where I think critics are going to come in. It's going to be about the ownership level, right? Like how much is Vanguard owning of all these stocks and put that together with BlackRock. So I think that might start to reemerge again, sort of having those conversations. So yeah, that'd be what I'd be looking out for.
00:04:32
Speaker 2: Okay, topic number two. Eric's not here. This would be his favorite thing to talk about. The hot sauce shelf where there's a lot of product innovation and excitement and all that non-core stuff, like the spicy stuff, the shiny objects, if you will. What is a story on the hot sauce shelf that has caught your attention of late?
00:04:54
Speaker 3: Let's start with closures in Trader. They closed these SK Hynix levered.
00:04:59
Speaker 2: That's an issuer, Trader.
00:05:00
Speaker 3: Yeah.
00:05:01
Speaker 2: Take away the E, though.
00:05:02
Speaker 3: Yeah, drop the E, so it's T-R-A-D-R. Sounds like a rapper name. Trader.
00:05:09
Speaker 2: Trader.
00:05:10
Speaker 3: They closed these SK Hynix ETFs.
00:05:15
Speaker 2: One was a long and one was a short.
00:05:16
Speaker 3: Yep, long and a short. They launched it during the whole craze with all that stuff going up. But that's kind of the danger of it, right? Timing with some of these products matters. And if you really don't have this big jump out of the gate, you're kind
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of fighting this uphill battle. And that's what they had to do. And so they're shutting these down.
00:05:33
Speaker 2: Isabel, the fever has subsided on SK Hynix. What catches your attention with this hot sauce conversation?
00:05:43
Speaker 1: For me, I.
00:05:44
Speaker 4: I'm just still so shocked that in South Korea, the presidential chief of staff offered to resign, and I guess resigned a few months back, I think in September.
00:05:52
Speaker 1: Because of all of this leverage ETFs. It's just so interesting. I mean, in the US, we talk about it a lot, but outside of the U.S., it actually reached politics.
00:06:02
Speaker 4: I mean, it's a bipartisan topic that they are talking about. I had to reread the headline twice. I think they've really talked about it in Congress. Can you imagine the president of a country talking about leveraged ETFs? That's how you know you've made it.
00:06:14
Speaker 2: I mean, I can kind of see Trump doing that, to be honest with you. Like, maybe?
00:06:20
Speaker 1: Yeah, fine.
00:06:21
Speaker 4: That is true. But yes, I still can't get over this story. And we write the ETF newsletter every week called... ETF IQ. And we've tackled this South Korean leverage ETF phenomenon for a few times because it's just so fascinating. It took the market by storm. And then when they tried to ban it, you saw volume actually collapse.
00:06:42
Speaker 1: So I guess regulation works.
00:06:44
Speaker 2: The president used to be a day trader before he was president. Okay, next topic, the DGN report. I know the Bloomberg Intelligence ETF analysts like to talk about what the degenerates are doing. What's the chatter of note of late?
00:07:00
Speaker 3: Well, looking at flows, it's definitely semiconductors. They have had a pretty rough run.
00:07:07
Speaker 2: So the flows are in their favor or not right now?
00:07:09
Speaker 3: People are buying the dip pretty aggressively. So if we look at from October, they're down about maybe 17% from their highs there. Then there's been this massive rush of buying some of these ETFs. And not only just like the regular ones, the levered ones. SOXL, which is like the 3X long.
00:07:27
Speaker 2: That's S-O-X-L.
00:07:29
Speaker 3: 3X long direction. Okay. I think that's a record month for it, full of Ys. 3X long. Yeah. So, and it's, you know, usually what's, the reason why this reflex is so strong, because it's always been rewarded, right? It's like really anytime you've bought these dips, they have tended to come back. So that reflex still hasn't been kicked yet. I think if maybe markets continue to go down, people will be a little bit more weary about this strategy, but at least right now, it is still very much like buying any kind of dip in AI-related stocks, semiconductor stocks.
00:08:00
Speaker 2: Isabel, how do you feel about 3X semiconductors right now?
00:08:05
Speaker 1: We love anything 3X. That's the hottest, hot, hot sauce. But I would like to note that so far this year, the fund has seen outflows of like $ 3.
00:08:12
Speaker 3: 85 billion.
00:08:12
Speaker 1: But A part of me thinks, why should we care?
00:08:16
Speaker 4: This is supposed to be a daily trade anyway, so maybe we shouldn't be looking at it here today.
00:08:20
Speaker 1: What do you think, Athanasios? Do we look to the analysts?
00:08:22
Speaker 3: No, that's great. I think this is more short-term, but I think when you look at price drawdowns, I'm curious to see if flows come in. And that seems to be happening right now. And it's a few names. It's not just the Direction one. There's an iShares one. There's VanEck, all taking in money recently. So that reflex is still very much alive.
00:08:43
Speaker 2: Ethan, you've got a little bit of a reputation on the team at Bloomberg Intelligence for maybe not being always excited about things. Like, yeah or nah.
00:08:53
Speaker 3: Yeah, nah.
00:08:55
Speaker 2: I'm curious. Now that we're on the other side of the Anthropic S1, which people have just been on the edge of their seat about for weeks, we get to compare it with this SpaceX IPO that happened earlier. What's your temp about ETFs and Anthropic?
00:09:13
Speaker 3: I don't know, I can't say lukewarm, right? It's not in the middle, it's here, man.
00:09:16
Speaker 2: But the SpaceX one, I mean, it was the most.
00:09:18
Speaker 3: Heavily traded IPO ever, right, on day one. So that's obviously a really tall bar to cross for Anthropic. It's going to be really close. And it's the same playbook. There are ETFs that are waiting for them to go public, levered ETFs. Any ETF that's holding even any type of exposure in Anthropic, no matter which way, is seeing demand. So it's very, very similar to what was happening with SpaceX. But once SpaceX went public, all these ETFs saw outflows and everyone just shifted over to the actual stock.
00:09:48
Speaker 2: Because you can get the actual thing.
00:09:49
Speaker 3: Now you get the real thing. So I think we'll probably see that again with Anthropic. The other thing is, I feel like space was so unique.
00:09:56
Speaker 4: Right?
00:09:56
Speaker 3: It was like really hard to kind of get exposure. Versus AI, I think there's a lot of ETFs out there already. So I don't know if people are sort of already just getting a flavor for it through other AI ETFs. If I had to guess, I don't think it'll pass the SpaceX like level day one, but it'll probably be really close.
00:10:12
Speaker 2: Because there's the Elon thing, right? Like you're taking on Elon. Like that's different.
00:10:17
Speaker 3: Totally, totally. But that said, it probably would still be like a massive IPO. It could be maybe even number two. But just the SpaceX hype was so strong. So it'll be really interesting to see.
00:10:28
Speaker 2: Isabel, could you tell me which ETF has the most exposure to Anthropic pre-IPO? Do you know?
00:10:36
Speaker 4: No.
00:10:36
Speaker 2: I just happened to like look up Ethan's note to figure it out. Yeah, there you go. She figured it out. Yeah, there you go. Which was also in the SpaceX conversation.
00:10:46
Speaker 1: It's BAI, that's iShares, as we've talked about. But I don't know. I mean, this is what, when we were.
00:10:53
Speaker 4: Reporting this, a lot of the ETFs wanted to hold one piece of SpaceX before SpaceX went public, whether through CapTable or SPV.
00:11:01
Speaker 1: And then when SpaceX went public, they weren't so unique anymore.
00:11:04
Speaker 4: So you would think that an anthropic-like ETFs like this wouldn't crop up, but then no, you've seen filings dating back as early as March and really just several single stock ETFs already in registration.
00:11:16
Speaker 3: So I don't know.
00:11:17
Speaker 1: Maybe they just... Any win is a win, even if it's short-term, I guess.
00:11:22
Speaker 2: I also just think this moment of private markets and ETFs. We've now had SpaceX. We're going to have... Like, where do you go from there? Like, open AI, I guess. But like, who knows when that happens? It's just this private market moment. It feels like a 2026 story to me.
00:11:39
Speaker 3: Yeah, definitely. Yeah, I don't know how much bigger there is, right, than this.
00:11:43
Speaker 4: And even if I agree that maybe Anthropic doesn't have the narrative of SpaceX in relation to Musk, but it is trying to become even bigger than SpaceX when it comes to its IPO.
00:11:55
Speaker 1: Some figures put it at $ 2 trillion.
00:11:57
Speaker 4: That is....
00:11:59
Speaker 1: Gigantic. So maybe there is that.
00:12:02
Speaker 2: Fireworks. We'll be, we'll have you back on for them and then you can give us a, yeah, now about the fireworks.
00:12:07
Speaker 3: I'll be complaining about something else.
00:12:09
Speaker 4: Okay.
00:12:10
Speaker 2: All right. Isabel, Ethan, thanks for joining us on Trillions.
00:12:14
Speaker 3: Yeah, thanks for having me on.
00:12:15
Speaker 1: Thank you, Joel. Always fun.
00:12:23
Speaker 2: Thanks for listening to Trillions. Until next time, you can find us on the Bloomberg terminal, Bloomberg.com, Apple Podcasts, Spotify, or wherever else you like to listen. We'd love to hear from you.
00:12:33
Speaker 3: Hit us up.
00:12:34
Speaker 2: Trillions is produced by Magnus Henriksen and Keshav Pandya. Amy Keene is our executive producer. Cheryl Brumley is the head of Bloomberg Podcasts.
00:12:45
Speaker 3: Bye.