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- [00:00]
Carol Massar
Pinpointing the genetic changes that predispose us to disease Identifying the roots of mental illness Treating congenital anomalies even before birth. At Boston Children's Hospital, we're investing in children's health today to ensure the well being of adults tomorrow. As home to the world's largest pediatric research enterprise and more than 260 specialty programs, Boston Children's is where the world comes for answers. The learn more@bostonchildrens.org introducing the all new Adobe Acrobat Studio now with AI powered PDF spaces do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do do that with the all new Adobe Acrobat Studio. Learn more@adobe.com Dothatwith Acrobat, this holiday season.
- [01:03]
Tim Stanwick
Is likely to be a roller coaster for logistics and manufacturing, but having the right staff in place can be easy. When you choose Express employment professionals, they can handle everything. To ensure you have the right size contract workforce, go to expresspros.com solve your workforce challenges when you choose Express to support your hiring in a variety of roles and including two of our biggest areas, manufacturing and logistics, visit ExpressPros.com today. That's ExpressPros.com.
- [01:34]
Carol Massar
Bloomberg Audio Studios podcasts Radio.
- [01:38]
Tim Stanwick
News this is Bloomberg Business Week Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news at. As it happens, the Bloomberg businessweek Daily Podcast with Carol Massar and Tim Stanvak on Bloomberg Radio.
- [02:03]
Carol Massar
Hi everyone. Welcome to the Bloomberg businessweek Weekend Podcast. Our backdrop this week, highlights from the annual Future Proof Festival in Huntington Beach, California. A gathering of the wealth management ecosystem, some 3,000 financial advisors, wealth management execs and limited partners. More than 5,000 attendees in all representing an anticipated $20 trillion in assets under management. A lot of money.
- [02:27]
Tim Stanwick
All of this happening against a background of records on Wall street, tighter tariffs, geopolitical tensions, global governments undergoing leadership changes and more. Of course, investors also getting ready for this week's meeting of the Federal Reserve, an expected rate cut.
- [02:41]
Carol Massar
All right, so the next two hours are going to include our conversations from Future Proof, including one with Sarah Levy, CEO of Betterment Advisor Solutions, on serving the advisor community and kind of Tim shedding to some Extent. Just the robo advisor image.
- [02:57]
Tim Stanwick
Yeah. I was surprised to hear her say how much she's trying to move away from that because I still think of betterment as like a competitor to wealth run or their Schwab Intelligent portfolio. Those robo advisors that are like set it and forget it, they're trying to move away from that.
- [03:09]
Carol Massar
They definitely are. We also heard from JPMorgan's Priya Misra on could it be one and done for the Fed.
- [03:15]
Tim Stanwick
What was the term she used for that cut? The cautionary cut, Something like that.
- [03:20]
Carol Massar
Right. An insurance cut.
- [03:21]
Tim Stanwick
Insurance cut. That's what it is.
- [03:23]
Carol Massar
Just do it just in case things are coming undone.
- [03:25]
Tim Stanwick
We'll also hear from Masters in Business host Barry Ritholtz about Fed independence and blackrock's Jamie Margera on bringing private credit to the retirement class. Also a psychologist. Take on investing some numbers too to back it all up.
- [03:40]
Carol Massar
Gotta put emotions to the side first up. We start with the event itself and what future proof is all about. Matt Middleton is the creator and CEO. We all grew up.
- [03:49]
Matt Middleton
My personal experience into the, into the industry was conformity.
- [03:53]
Carol Massar
Right.
- [03:54]
Matt Middleton
It's, you know, talk this way, walk this way, dress like this, act that way. If you want to get in that room, this is where you have to be. And really what we're representing here is a shift, right? It's a, it's a mindset shift, it's a generational shift. And what we're seeing is that people with real buying power, real influence and assets want to actually break up of the status quo. And this is a, represent a representation of that new industry which is not just casual attire. Obviously we're here on.
- [04:20]
Carol Massar
I know we feel a little dressed up here.
- [04:22]
Tim Stanwick
Said earlier, I'm the only one here wearing a suit.
- [04:24]
Matt Middleton
I know that's first timer.
- [04:25]
Tim Stanwick
That's why you can tell who the first timers are.
- [04:29]
Matt Middleton
Yeah, but, but it is, it's mostly about the experience here and people connecting and the industry is better when we all connect versus siloing out. And so our hope is here is not just to define it as wealth management, not to define it as asset management or fintech. To bring everyone together from all job levels, across all functions and give them the tools that they have to meet a network to see how to build a better business.
- [04:52]
Tim Stanwick
One thing that I noticed about this conference that I've never seen before is for a small fee you can bring your partner, meaning your husband, your wife, your boyfriend, your girlfriend, your significant other. I've never seen that before. What's the Thinking behind this.
- [05:06]
Matt Middleton
Well, personally, obviously, I'm an entrepreneur and I always laugh when I have these conversations. Everyone's like, what's the vision? What do you do this? How do you manage it? You just acquired this business and it's like, my co founder is my wife, right? At the end of the day, it's who you have at home. The people that are on that journey with you that kind of wear all of that. And so part of that view was one, we're in this beautiful setting, right? It should feel like a destination and a vacation to some sorts. But also it's allowed to get your spouses to experience what the industry is like, meet your clients, meet your partners. And again, I think if they are more exposed to it, they'll understand it more. And that's a representation of what we're trying to do here, which is if we could get this event to a large enough scale and get national attention with the help of you all. Well, maybe some people on the, you know, the general public will start to look at it and say, oh, what is this? Right? They'll scroll through Instagram and it's like, oh, I see Coachella and my friends. And this is very. It's a cultural movement. And then the next scroll, they're scrolling and they're seeing future proof, like, oh, this is great. What is a wealth management conference? This is interesting. What is wealth management? And we could expose them to more of it. And so it's a little bit of one. We want to make it family oriented. And the other side of it is we want to change the narrative and the optics of our industry.
- [06:12]
Carol Massar
But do you also think about. I thought I read somewhere too that you want to kind of cap how many people are here? Because we've certainly been to lots of conferences where it just feels like thousands and thousands and thousands of people and tons and tons of booths. And it's almost overwhelming. I'm not quite sure what the takeaway is.
- [06:25]
Matt Middleton
Yeah, so it's two parts, right? One is, yes, that is true. When you get a large crowd, the word that always comes out is boondoggle, right? And you have no mission. People get lost. You're drinking from a fire hose. We use proprietary event technology. So breakthrough. What you see this big tent here to allow people to connect in meaningful ways. And the goal there is you go into the event. So three weeks before the event, you basically are making connections and guaranteeing certain meetings. So you have one to one meetings, you have roundtable discussions, you have all these different booth activities. These are all pre scheduled. So it's not serendipity happen. So you could create a large scale experience, multi thousand person experience and create a unique agenda and a unique networking plan for one specific role or person. And that's the benefit of what we do. The second side to that is we do want to cap this because there's a, there's a magic size here and we believe that's around 5,000 people. One, we're in four hotels in Huntington beach, we have 10 hotels in Newport beach. People staying in Irvine, there's people staying 40 minutes away. So at some point, even if we can't control it, their experience is going to be different than everyone here. And so we decided that, you know, there's, there's a limit to what we want to do here.
- [07:29]
Tim Stanwick
I did see this idea of, you know, growth and bringing people. I did notice that pretty much everything is branded. There are sponsors everywhere. From a, from the perspective of this as a business in terms of revenue, is your biggest revenue source still tickets or is it sponsorships now?
- [07:45]
Matt Middleton
It's, it's always sponsorships.
- [07:47]
Tim Stanwick
So how much bigger is that than tickets?
- [07:49]
Matt Middleton
It's probably 70, 30 ratio. We also monetize all these different connection points. So again, using the technology, right. A lot of these meetings that you see, there's some are peer to peer, others are, you know, buyer, seller. And so there's different ways to monetize events that we've kind of broken. One, it's a different format. Right. Two, it's the technology allows us to do things differently than most other events. But yeah, the, the, the idea here is like events should be about the community and shouldn't just treat the attendees as product, which is unfortunately how it typically happens when you have these booths and everyone's trying to pitch and wheel. And so you see people that you see a lot of the big brands that you see at other events, but they're showing up differently here and it's meaningful. They get better ROI and the attendees have better experiences.
- [08:32]
Tim Stanwick
Our thanks to Matt Middleton, founder and CEO of Future Proof.
- [08:35]
Carol Massar
Also joining us at Future Proof in Huntington beach this past week, Sarah Kirschbaum Levy. She's the CEO of Betterment, formerly Chief Operating officer at Nickelodeon.
- [08:45]
Tim Stanwick
We didn't talk spongebob. Maybe we will next time. But we did talk a lot. Betterment's Robo Advisor tool and how they're trying to move away from that as an image.
- [08:54]
Sarah Kirschbaum Levy
So we're now 15 years old, we have a million customers and we have 63 billion in assets. Under management. And the Advisor Solutions product is that we are a an all in one custodian for the modern ria. So what does that mean? It means we're custody, we're portfolio management and we have an integrated billing solution.
- [09:13]
Tim Stanwick
Do those things work in conflict with one another in the sense of like, okay, well you're offering this robo advisor service. People who use that wouldn't necessarily have advisors.
- [09:24]
Sarah Kirschbaum Levy
So I've tried to shed those robo roots. I think they actually are incredibly aligned. And when we first start, well, when the business first started, it predates me because I've been here about five years, but 15 years ago I think there was a fear of that from the advisor community. But the reality is what we did as a business is we use technology to at look lower the barrier to entry for young, young investors.
- [09:46]
Priya Misra
Right.
- [09:47]
Sarah Kirschbaum Levy
So clients that advisors wouldn't want to spend time with because they didn't have enough assets under management to really, you know, be worth their time, honestly, the technology could do it. And what we've done is we've basically started folks on their investing journey in, you know, started folks with good habits.
- [10:04]
Priya Misra
Right.
- [10:05]
Sarah Kirschbaum Levy
Diversification, low cost, low taxes, like that's really, really what you want to do early on, not day trading. And those folks grow into really, really great advised clients. And we have an ability to basically as they grow with us, bring them on to the advisors.
- [10:21]
Carol Massar
How is technology and changing demographics really impacting you guys?
- [10:25]
Sarah Kirschbaum Levy
Well, technology is at the heart of what we do. I think fundamentally we are a technology solution. We're a fintech company that is but.
- [10:32]
Carol Massar
Changing technology and AI and all that, like yeah, that's makes.
- [10:35]
Sarah Kirschbaum Levy
So it's interesting because AI has come on the scene faster than anything we've ever seen. We just released a survey asking advisors how they're using AI. Are they worried about AI? And there's sort of a paradox in there which is yes and yes. Which is they're all using it and they're also all terrified that their clients are going to use it and that they're going to be replaced.
- [10:56]
Carol Massar
Are they right?
- [10:57]
Sarah Kirschbaum Levy
I think they're right to some extent. We saw actually an incredible shift in, in just one year this, the source of advice that that young clients are seeking was via social media and is now AI within the course of just a year. Which is amazing. And so I think yes, they're right to be, you know, to be worried.
- [11:15]
Jamie Magera
But at the end of the day.
- [11:16]
Sarah Kirschbaum Levy
An advisor relationship is a human relationship and it's a relationship and that's the important Word. And I think technology can really supercharge that. So the smart advisors are saying, how do I embrace it and how do I have it make me me better, stronger, faster?
- [11:29]
Tim Stanwick
One other the survey is huge. And one of the result that struck me was the optimism that the RIAs right now are feeling about the economy. We've spoken about this over the last two hours here. There seems to be an optimism here. I don't know if it's the sun shining and the waves crashing right there that's leading to that and people playing pickleball and surfing over there, but there's a lot that we talk about each and every day that seems to be stressing people out, are pretty optimistic.
- [11:56]
Sarah Kirschbaum Levy
Well, I think a lot of it is time horizon. I mean when we think about, even when we look at the different groups of RIAs, when you think about the different generations, right. The younger generations have a really long time horizon and so they're thinking about retirement.
- [12:09]
Priya Misra
Right.
- [12:09]
Sarah Kirschbaum Levy
There's a lot of time to plan for your future. So some of the volatility that we're experiencing now and some of the, you know, what's going to happen in the economy in the next 24 months, these are investing journeys. And RIAs are thinking about a much longer time horizon. And so I think their clients who are most worried are the ones who are in retirement, entering retirement. You know what's going to happen to my nest egg. But a lot of the clients we serve, we're more a segmentation play for the big RIAs who put their next generation clients with us. Ones who want a more delightful experience, user experience, ones who maybe don't want to talk to the advisor quite as much. They'd like to do a little more self service. That's really the customer we serve. Ultimately.
- [12:48]
Carol Massar
What in terms of types of investments, Sarah, do you find that those on the platform are increasingly wanting to know about. I feel like for years all we talked about was crypto. I'm just curious what it is that people are like, wait, I want to be able to do this on your platform.
- [13:02]
Sarah Kirschbaum Levy
Well, so our platform started as really a great ETF solution on the theory that, you know, ETFs is where the average investor should be. And we actually attracted RIAs who were primarily building ETF portfolios. And as an RIA you can build custom portfolios on our, on our platform there's also model portfolios available. We more recently introduced mutual funds and then last up single stocks. We are actually complementing that with some self directed and advisor directed investing which is coming imminently because I think the biggest change we've seen is there used to be clients either who want to self direct or who want a set it and forget it managed portfolio. And now what we're seeing is that there's much more of a blending which is people want a little bit of agency with some part of their wealth and then they want some of it in diversified, long term globally diversified positions.
- [13:52]
Carol Massar
So wait, where does the crypto fit in?
- [13:54]
Sarah Kirschbaum Levy
Well, we, you know interestingly in 2021 we actually bought a small crypto company and we did diversified crypto portfolios. And what we found is that the advisors shied away from it on the on the advisor solutions side and on the retail side. Our audience wanted Bitcoin and Etherium but didn't want much else. A lot of it was and maybe that speaks to who our customer segment is more than anything. We're not a gamified crowd, right where we really do attract the like long term mindset investor.
- [14:20]
Tim Stanwick
That was Sarah Kirschbaum Levy, CEO of Betterment, joining us on site at Future Proof.
- [14:25]
Carol Massar
Coming up, he's an Apple bull and now he's chairing a company hoarding a Sam Altman linked cryptocurrency.
- [14:31]
Tim Stanwick
We're talking about Dan Ives. He's next. As our coverage From Future Proof 2025 in Huntington Beach, California continues. This is Bloomberg.
- [14:44]
Carol Massar
Pinpointing the genetic changes that predispose us to disease. Identifying the roots of mental illness, treating congenital anomalies even before birth. At Boston Children's Hospital we we're investing in children's health today to ensure the well being of adults tomorrow. As home to the world's largest pediatric research enterprise and more than 260 specialty programs, Boston Children's is where the world comes for answers. Learn more@bostonchildrens.org introducing the all new Adobe Acrobat Studio now with AI powered PDF spaces. Do more with PDFs than you ever thought possible. Need AI to turn 100 pages of market research into 5 insights with a click. Do that with Acrobat. Need templates for a sales proposal that'll close that deal. Do that with Acrobat. Need an AI specialist to tailor the tone of your market report to sound real smart in real time. Do that with the all new Adobe Acrobat Studio. Learn more@adobe.com do that with Acrobat. Every business has an ambition. PayPal Open is the platform designed to help you grow into yours with business loans so you can expand and access to hundreds of millions of PayPal customers. Worldwide. And your customers can pay all the ways they want with PayPal, Venmo pay later and all major cards. So you can focus on scaling up when it's time to get growing. There's one platform for all business PayPal open grow today at paypalopen.com loans subject to approval in available locations.
- [16:15]
Tim Stanwick
You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [16:29]
Carol Massar
We continue with highlights from our coverage this past week of the Future Proof Festival from Huntington Beach, California. And I got to say, I know we said it a lot on air, but man, it was so nice doing a financial conference on the beach. We could see the ocean, the wind blowing. It definitely had a different feel.
- [16:46]
Tim Stanwick
Yeah, you and I go to a lot of conferences. Most of those, if not all, are actually indoors. I mean, even something like the Milken Institute Global Conference, which is in Beverly Hills, another part of the country right there, just north of Huntington beach, that actually has perfect weather year round, so they could do it outside. But there's something unique about having a festival that is literally on a parking lot next to the beach. You're in the sand for some of it.
- [17:12]
Carol Massar
Yeah. No, you absolutely are. It was really funny cause I was walking and I was like emptying my shoes once I got home. And I'm like, oh, a little sand in there. It's a casual feel. And there's people running into each other. They're dressed casually. I mean, you even wore shorts and flip flops.
- [17:24]
Tim Stanwick
The second day. The second day.
- [17:26]
Carol Massar
The second day on air. I mean, but it's just there is. And it's about setting up meetings and conversations. I mean, there were RIAs, right, that said, listen, this is the only investment financial conference I go to. This is the one that really makes sense for me. And I thought that was really kind of telling considering there are many, many out there.
- [17:45]
Tim Stanwick
The tone also very bullish from really pretty much everyone we spoke to. And I'm wondering to what extent that's because financial advisors are inherently optimistic. They kind of need to be that way for clients who call when they're nervous and sort of calm them or if because the festival vibe was like that, or if they're actually feeling like, okay, we're not so concerned about the impact of tariffs. We think the Fed is moving in the right direction. And even though we're starting to see some cracks in the labor market and the economy, things are Pretty good.
- [18:14]
Carol Massar
Still, I think it's interesting that you said that because I did still hear the word uncertainty used an awful lot and I was kind of maybe surprised by that because there are some things that we know. We've had a massive spending and tax package passed by the President. We've had some other moves. We've seen tariffs already set for a lot of countries. So we know we're in a higher tariff environment. So I think it's kind of interesting that there are some things that have been set and yet many still said there's uncertainty out there about kind of.
- [18:43]
Tim Stanwick
What comes next and not the uncertainty around what SPF to use, 30 or, or 20 when you're out there on the beach.
- [18:49]
Carol Massar
I can't believe you went there. No, it's a really interesting environment. You're right. It's not like a lot of people were using the R word. They weren't talking about recession. But we are going in this interesting period with a Fed meeting this coming week and a Fed decision and then we're in kind of a period where we won't hear from companies in terms of earnings and that won't start till January.
- [19:08]
Tim Stanwick
Well, one company that we did hear from this past week is Apple. The company holding its biggest product launch event of the year this past week ushering in four new iPhone models including its thinnest ever iPhone, an end to end refresh of its smartwatch LineUp and updated AirPods. Someone who watches the company very closely as Wedbush's global head of technology research, Dan Ives. Dan joined us from Future Proof to talk Apple AI plus becoming chair of a crypto treasury company that had a really big day this past week. You and the team at Wedbush estimate there are 315 million folks out there who are ready to upgrade their iPhones. Is the 17 going to got him to upgrade?
- [19:46]
Dan Ives
Look, I think it's going to move the needle. I mean I think especially in China there's definitely what I tell pent up demand. I think street numbers continue to be pretty conservative to maybe low and I know that's a great setup. Look, the reality is that this is not going to be a super cycle. There's nothing here that makes you think that this is going to be the game changer that everyone's been waiting for. But I do believe given the install base, given the some of the tweaks here and ultimately on the, on sort of the second half of this upgrade cycle, you will have an AI driven ecosystem I believe will be Google Gemini. This could be a sneaky upgrade cycle that I think surprises investors on the upside.
- [20:27]
Carol Massar
What do you mean?
- [20:28]
Dan Ives
Because right now expectations New York City cab drivers bearish on Apple And I think that what I like about the setup is it's all about kind of left behind. Now a lot of that's been self inflicted because every Apple event feels like it's a. I feel like Michael J. Fox and Back to the Future, you know so they're, they continue to be left behind AI but now with the Google DOJ issue in the rear view they will double down ultimately that Gemini partnership. And when you look at the install base I think in that I think street is underestimating what numbers look like like for iPhone when you look at over the next six, nine 12 months. And I think in big tech I view Apple from a sentiment perspective relative to where I viewed Alphabet maybe about six months ago.
- [21:16]
Tim Stanwick
You in your note ahead of the launch called Apple's AI strategy quote invisible. You said the elephant in the room and is the black over the stock AI's invisible or Apple's invisible AI strategy? Did you get any more information today at the launch about its strategy?
- [21:35]
Dan Ives
I mean I think fundamentally it they're keeping it close to the vest. Right. Like in other words like it's continues to be that black cloud. I think they're waiting for ultimately what's going to be Gemini because I think they had a choice either go down the route with perplexity and ultimately look to acquire that or if it was a favorable ruling then the candlelight dinner with Google and Sundar could ultimately start again and then you could actually double down that partnership. And that is I believe the direction. But look Tim, they got was a black eye moment a year ago when they laid out the AI strategy 95% that had a backtrack on well now.
- [22:18]
Tim Stanwick
And now they've lost a lot of the senior executives that we're working on that to meta and we've talked about.
- [22:22]
Dan Ives
There'S a better chance of me playing Ryder Cup Beth Page than any internal AI strategy happening at Apple.
- [22:31]
Carol Massar
But is that such a bad thing? And this is one of the things that Dan, we talk a lot about that maybe Apple's just kind of watching. There's a lot of money sloshing around trying to figure out what ultimately are the standards, the methods, the companies that really dominate right in terms of AI kind of protocols. And maybe Apple's like I'll just watch and then we'll figure it out.
- [22:49]
Dan Ives
Is that bad? I think it's bad. I compare it to like Saturday Night New York City there's a restaurant where there's one person in there at 8:30 like oh they must know something everyone else does. I'd rather go to the place where people are lining up outside when it comes to ultimately AI times not on their side. Look what OpenAI look at Meta wartime CEO look at Microsoft look look what Google's done. That's why you an all time high. So I do believe cooks recognize this but the problem is is that now it's a go time moment when it comes to AI and that look we've talked about that's how you get to 325, 350, 400 stock is AI you know relative to right now Apple they're kind on the outside looking in of that AI party where it's still 10pm.
- [23:36]
Tim Stanwick
Going to 4am everyone wants to know about what the heck is going on over at eight co holdings, your chairman of this company. Now I think it took a lot of people by surprise. It's a crypto treasury firm and for those who aren't familiar with the way this works it's a Michael Saylor strategy but with a different cryptocurrency. This is world coin backed by Sam Altman. Eyeball scanning stuff. What is going on here?
- [24:00]
Dan Ives
So I wouldn't have done this as chairman of the was just a regular token DAX strategy. The reason I did this it has to do with Sam. It has to do with my view world is going to be a de facto standard for identification authentication in terms of human proof in AI world This is much more of a tech infrastructure play than what I'd say a traditional crypto play. So obviously the reason I'm so excited about it is really this is going to become I think a huge part part of the story and the narrative. It's really an intersection of AI and crypto.
- [24:35]
Carol Massar
Explain that Dan.
- [24:36]
Dan Ives
So what that means is you know as Tim it's iris scanned the orbs right Going forward in the future especially in a robotic world, bots everywhere, you're not going to be able to just identify through a blue check. It's really going to be iris scanning what They've done already 15 million humans on the platform I believe going to about 100, hundred million over the next year. That's going to be a form of identification. That's probably the most privacy lockbox out there and it's secured by a token, a world token. So my view and our view as a team, this is early days in terms of where this is all heading and that's why we want to do the strategy now.
- [25:13]
Carol Massar
What's to prevent somebody else from doing the same thing?
- [25:15]
Dan Ives
They are. They're playing a different game than they are. They're in video in 2022. In other words, relative to what Sam, Alex and the team have built out, I mean, from an infrastructure and authentication perspective, they are, I think, miles ahead. I don't see anyone that could catch them. That's why we bet on World as part of the ACRE strategy. And obviously having someone like Tom Lee and Bitminer, huge, big investor, that's another support that we're so excited to have.
- [25:41]
Tim Stanwick
You've also got an ETF that launched back in June. It's the Dan Ives Wedbush AI Revolution ETF. It's up 16% since launch. It's outperforming the S&P 500 and the NASDAQ 100. Broadcom, Google, Nvidia, TSMC, Apple, they're the top holdings. Somebody watching right now might be like, okay, he's got a clothing company, he's chairman of this crypto treasury company. He has his day job at Wedbush. How am I sure that he's going to manage this ETF and have the time and resources to manage the CTF in my interest?
- [26:14]
Dan Ives
And that's a great question. I'd say when you think about my chairman role, it's all related to AI and the infrastructure. In other words, this is interrelated to my view of where the AI revolution gets built out. And the reality is that 95% of my time is spent three and a half million air miles the last 25 years. I think what's enabled to distinguish us is feet on the ground talking, whether it's private, public partners and really, you know, I think that's how investors have grown to.
- [26:43]
Tim Stanwick
Do you add it. Do you add eight co holdings to the Ives etf?
- [26:46]
Dan Ives
No, no, that would be a totally. It's a total separate operation.
- [26:50]
Carol Massar
Firewalls between it. Yeah. Like there's going to be people who are saying, yeah, of course Dan's going to talk up that he loves Alphabet and that he looks. Loves Nvidia. I mean, he's got an etf. Like I've just. How do we.
- [27:01]
Dan Ives
Sure. On the etf. On the et. And that's.
- [27:03]
Carol Massar
We lean on you for like.
- [27:05]
Dan Ives
And remember transparent and the ETH. And part of how investors know us, the ETF is all based on our Ives AI 30. It's all based on our research. So the reality is, I think part of how we've gotten. So you know the cost. I'd say from an investor perspective, we've had massive, you know, I think reception for the ETF is because it's our 30 names that ultimately we've got views the winners and we do. And we change that every quarter. And that's. I think you do. My etf, what it's based on, it's all based on the research and got everyone here that knows Dan Ives, they know like feet on the street, not sitting there in some Peter Millar 15 four of the new York City office building. And the only time you travel is two times in San Francisco.
- [27:49]
Tim Stanwick
Now you just got back from Australia.
- [27:51]
Dan Ives
Yeah, so I literally landed here from Australia.
- [27:53]
Tim Stanwick
What were you doing there?
- [27:54]
Dan Ives
Yeah. So part part work, part pleasure. So it's fun because look, I mean, we, when we talk AI revolution, like in Sydney, in Melbourne, packed meetings. Because the reality is that this is not just us. And that's why I spend so much of my time traveling around the globe.
- [28:11]
Carol Massar
What might be the irrational exuberance part of kind of the trade today or the tech trade or the AI trade and just got about 30 seconds. There's got to be some fluff out.
- [28:21]
Dan Ives
Just because you say I 40 times in a conference call doesn't make yourself an AI name. Look, just because like Tim, he was wearing an AI shirt because he says it 15 times and says Tim on the back, AI it doesn't. My view is you have to distinguish the winners and the real ones from the fakes. And that's the reality and that's what we spend all of our time doing.
- [28:41]
Tim Stanwick
The one company you're most bullish on.
- [28:42]
Dan Ives
Right now, public company Messi of AI Palantir year. That's going to a trillion next two or three years. And I always say the haters hate it, hate it 15, despise it 80, say it's super expensive 150. They'll be seeing the same thing at a trillion.
- [28:54]
Tim Stanwick
Our thanks to Dan Ives, global head of technology research at Wedbush Securities.
- [28:58]
Carol Massar
Still ahead on Bloomberg Businessweek, JP Morgan's Priya Misra on the bond market, the upcoming Fed meeting. That is our coverage from Future Proof 2025 in Huntington Beach, California continues.
- [29:10]
Tim Stanwick
This is Bloomberg.
- [29:12]
Carol Massar
This is the Bloomberg Businessweek Daily podcast. Listen live each weekday starting at 2:00pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa.
- [29:28]
Sarah Kirschbaum Levy
Play Bloomberg 11:30.
- [29:30]
Tim Stanwick
We continue with this special edition of Bloomberg Businessweek highlighting interviews from this week's Future Proof Festival in sunny Huntington Beach, California.
- [29:38]
Carol Massar
Yeah, it's a great opportunity to talk to people, all different types of RIAs, registered investment advisors and some with specialties, whether it comes to private credit, alt assets. But we also got a lot of the, I don't know, traditional investment financial community, a lot of folks that are often on Bloomberg and you know, got to talk about the upcoming Fed meeting this week, the jobs data revisions that we got last week, you know, all of the data that was coming out and try to make some consensus about what this means for investors in terms of strategy and you know, whether it was equities we talked or often fixed income on that.
- [30:19]
Tim Stanwick
Surging debt and deficits, a relentless attack on the US Central bank and the most aggressive tariff policies in almost a century. The question a recipe for bond market chaos. One person says guess again.
- [30:31]
Carol Massar
For all the shocks US Treasuries have absorbed during the first months of President Donald Trump's tempestuous second term, the market has held up remarkably well even as government bonds from the UK to Japan have been pummeled amid heightened fiscal concerns.
- [30:45]
Tim Stanwick
We also got news this week that the core consumer price index rose as expected in August, keeping the Fed on track to cut rates next week.
- [30:52]
Carol Massar
Now, before we got any data, we caught up with Priya Misra, Core plus Bond ETF portfolio manager JP Morgan, who joined us at Future Proof.
- [31:01]
Priya Misra
There's a lot going on if you think about everything we've had to deal with this year. You know, tariffs, Fed independence, the deficit, it's just and then you look at equities at the highs and now bonds doing well. So what's going on? So our view is everything is actually consistent with a soft landing. What I actually think equity people call soft landing and bond people love yeah, the growth in the 1 to 2% range. Inflation's a problem. It's not a 2% but it's not as high as people feared when we first heard tariffs. So it's allowing the Fed to start to cut rates and then you've had this slowdown in the labour market. I think the hope is it stops right here. There's low fire, low, higher. We don't quite make it to the high fire world that the Fed can cut just enough in terms of time as well as how much they cut to get the economy to stay in the soft landing mode. I think that's the hope.
- [31:53]
Tim Stanwick
Why are you so confident that the tariff induced inflation that we've seen has not been as prominent as people initially thought it would be? We just had Barry Riddle on he said hey, a lot of people did pull, A lot of people pulled forward, A lot of companies pulled forward. So the tariffs hadn't hit them yet.
- [32:12]
Priya Misra
Right. And so I think that is the risk scenario. But I'll get to your question. Why have. So it hasn't happened yet. Now again we're looking at the, at the future and maybe it can happen because I was using inventory and now when I'm paying more as a company I can can pass it on. Here's the issue. Companies are realizing that consumers are cost conscious and passing on price increases entirely runs the risk of consumers stopping buying or reducing the amount that they're buying. So I think that's why companies might be taking some of the tariffs in their margins. Margins are high so they can afford to take some of the cost in the margins. Some of it, the currencies work. Some of it may be the foreign producer is taking some of that hit. So I think that through the value chain is being absorbed at different spots. But the other part is look at the rest of inflation. So maybe goods inflation does pick up because companies have to pass on at least some of it. And Governor Waller thinks about half of it will be passed. Some people argue one third, some part is going to be look at I mean the US consumer basket is really 75% services. So we're looking at service inflation, wages, rent inflation x rent, core services that it's not coming down but it's not going back up. In fact wages we're seeing signs that wages are starting to slow down. So our thought is even if you get the goods related price increases services will likely offset it. And that's why chair Powell something he said in Jackson Hole, which I thought was the first time I've heard it in a while that it could be short lived meaning that they can look through any tariff related increases. Now it has to be tariff related. So let's see we get a CPI report later this week. Our view is services is going to not be as troublesome. Goods might look troublesome but they can put it down as one off.
- [33:55]
Carol Massar
It sounds like if things aren't so bad in terms of inflationary pressures and if you as you kind of laid out in terms of the jobs report, maybe it was just that one month, you know that we're not going to continue to see losses. Why do we need to cut rates? Is it just. I keep hearing, I should say keep but the idea of an insurance cut just in case is that what this is all about?
- [34:17]
Priya Misra
So I think the starting point is where I, I focus on the starting point. We're in restrictive territory. If we were at neutral level even.
- [34:25]
Carol Massar
Though financial conditions are really loose like you.
- [34:27]
Priya Misra
Yeah. But interest sensitive sectors look at housing, look at consumer durables. So sectors of the economy that are sort of levered to interest rates are in a weak spot. So that's why that restrictive level of interest rates matter.
- [34:41]
Carol Massar
And if the Fed, it's not the Fed mandate.
- [34:44]
Jamie Magera
Right.
- [34:44]
Carol Massar
Like I think about when I think about interest rates to help the housing market, all I can think about is the financial crisis. And I realize there are a lot of things going on at that point, Priya, but I do wonder is that what the Fed needs to be concerned about?
- [34:55]
Priya Misra
So I think they've got other tools for it. Whether it's regulation or making sure that, that you know, banks are not lending to remember the NINJA loans back then.
- [35:03]
Tim Stanwick
The knowing no job.
- [35:05]
Sarah Kirschbaum Levy
Right assets.
- [35:06]
Priya Misra
That was what the A was.
- [35:07]
Carol Massar
Right.
- [35:08]
Priya Misra
And people were getting loans. So I think there's other ways to ensure that there's not excesses. But when you look at the one tool that they have, interest rates, we're in restrictive territory. Inflation slowly heading down, which is impressive given the extent of tariffs. Average effective tariff rate is 15% and yet inflation not accelerating and the job market is slowing. I think why Jay Powell was a little maybe hesitant in July was, wasn't sure is it demand or supply? And it's both factors are impacting the labour market. But there's clear evidence, I think that the demand side is their demand is slowing. You're seeing it in college age. You know, the unemployment rate for young people. You're seeing it in hiring.
- [35:46]
Tim Stanwick
That was, that was pretty dark on Friday. We talked about that. The, the numbers that we got for young people. I mean anybody can speak anecdotally about this who has young graduates from college or young people in their household. It's not pretty out there.
- [36:00]
Priya Misra
It's. And that's why it's hard to put that on immigration. There's absolutely an immigration impact on, on the labor market, but not when you look at the young people who are not getting jobs straight out of college. So I think there's a demand aspect now. Is it AI, is it tariffs? Is it uncertain uncertainty, hard to disentangle what's driving it. But there is a demand aspect. And so I think the Fed is looking at that and saying well let's reduce some of that restrictiveness. I think talk of 50 basis points cut next week might, that might be a little aggressive because I think that is in case you see signs that layoffs have really picked up, we do have an initial claims report, one report that really spikes. I think we can talk back about 50. They don't have to get aggressive. But to start that process and remain data dependent.
- [36:44]
Carol Massar
What do you think the revisions on the labour data tomorrow? I mean we've been so focused on that. What do you think that's going to show?
- [36:49]
Priya Misra
It's going to be between 800,000 and a million. So it's going to be a big number down. I don't think it should be a big surprise. The labor market was the outperformer when we looked at everything else. So I think the fact that these revisions will actually bring the labor market in line with gdp, in line with consumer spending. And so, you know, and is it. I don't think it's political. I think it's just data collection has been an issue really since the pandemic and globally, you look at response rates globally, it's something we should all think about. How do we get more accurate data? And I think this is maybe revisions is the way to do it.
- [37:24]
Carol Massar
Well, Mike McKee was talking about this and he says, you know, people are responding, they're just, it's the responses are slower and so that the revisions finally take all of that into account. So how do we get people to respond more quickly? Right. So that the data is more relevant in a timely manner.
- [37:37]
Priya Misra
Yeah, maybe you're supposed to spend more money, figure out some modern way of asking people.
- [37:42]
Carol Massar
Technology maybe.
- [37:44]
Tim Stanwick
Hey, speaking of that, I'm curious about the immigration side of things and the way you're looking at immigration from your perspective as somebody who invests in fixed income, recommends fixed income and thinks about strategy because we're seeing a real crackdown obviously here in the US and that has implications for labor to market, also has implications for demand. Augustus Arrival, who writes for our Economy team, had this really interesting piece out over the weekend about Hispanic consumers hitting the brakes as US firms warn of a pullback. So now we're starting to hear US firms talk about this segment of the population spending less as a result of an immigration crackdown. How are you looking at that?
- [38:22]
Priya Misra
Yeah, it was a great article. I read it and it sort of hit a note nerve because a lot has been talked about immigration and impact on the labor market. What about immigration and growth? It's a source of demand, housing consumption in general and this idea that our star. So I'm going to take it down to I'm a bond pm so I live in the but what is neutral interest rate? And there's been this argument that actually neutral rate is maybe it's three and a half, maybe it's four. You know, you didn't ask me, but there are people who tell me where I'd neutral stock market's high, we're at neutral. Fed doesn't need to cut rates. And then I say look at the interest sensitive sectors. They're all kind of frozen, slowing. So, so it's, it is restrictive. But what is that neutral rate? I think immigration was a big part of why that neutral rate has gone up. Like in, you know, 2010 to 2008 to 2020, we argued the neutral rate was two, two and a half. Now people are saying maybe it's three, three and a half. How much of that is immigration? And so if immigration is heading low and this is a structural trend, then I would argue maybe that neutral rate is low. And so where should the ten year be in equilibrium, three and a half to four seems fine. In a recession, it's going well below three and a half. But we're not pricing in a recession. So I don't see a disconnect between bonds and stocks. They're both, or spreads for that matter. They're all telling you an okay economy. Fed cutting just enough and hopefully we just stay here. But if things slow down more, well then the Fed's going to cut a lot more than that. Ten years, getting much lower. So I bring it to whether it's consumption or the labor market that immigration impacts that neutral rate lower.
- [39:58]
Carol Massar
Priya just got about 30, 40 seconds here. So you add all this up. There's your macro. What does it mean for investors in the fixed income world? Where should they be allocating assets?
- [40:06]
Priya Misra
So fixed income should give you income and diversification. It's giving you both right now in income in real terms, the 10 years giving you 2%, real rates, 30 years giving you even more. So I would say own fixed income for yield and then you have to go out the curve. Diversification is where that curve comes in. You need a little bit of duration. I don't know anybody who's long the tenure. Well, I know myself. We're long a little bit of the tenure. A lot of people are nervous about the deficit.
- [40:30]
Carol Massar
Right?
- [40:31]
Priya Misra
The deficit is better today because of tariff rate revenues. So I think it's priced in. You're getting paid to extend, take a little bit of credit risk, own some duration. The economy is okay. So you can look at fixed income for that income. And if you've got what, what, what role does fixed income play in a portfolio? If you've got risk assets you want to hedge those risk assets own a little bit of 5, 10 year duration. Don't have to go further out, but that's where you'll get that diversification benefit.
- [40:57]
Tim Stanwick
Our thanks to Priya Misra, Core plus Bond ETF Portfolio Manager at JP Morgan.
- [41:02]
Carol Massar
And that wraps up our first hour of the weekend edition of Bloomberg Businessweek from Bloomberg Radio. Coming up in the next 60 minutes, much more from Future Proof 2025.
- [41:10]
Tim Stanwick
We hear from masters and business host Barry Ritholtz to get his opinion of fed independence. Plus BlackRock's Jamie Matiera on bringing private credit to the retirement class.
- [41:19]
Carol Massar
Also a psychologist's take on investing. And well, I gotta say he also added added some numbers to to back it all up in terms of his thinking. This is Bloomberg Business Week. I'm Carol Massar.
- [41:29]
Tim Stanwick
And I'm Tim Stanwick. Stay with us. More from Bloomberg businessweek Daily coming up after this.
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Carol Massar
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Tim Stanwick
So have you heard the story about the prescription plan? With savings automatically built in, it's where a family of any size can feel confident the cost of their medication won't hold them back. Go to CMK Co Stories to learn how CBS Caremark helps members save just by being members. That's CMK Co Stories. You're listening to the Bloomberg Business Week Daily podcast. Catch us live weekday afternoons from 2 to 5pm Eastern. Listen on 8 Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
- [43:18]
Carol Massar
Plenty ahead in our second hour of the weekend edition of Bloomberg Businessweek, highlighting our conversation from this past week's Future Proof festival held in Huntington Beach, California. I should say, lovely. Huntington Beach, California. It was pretty sweet.
- [43:32]
Tim Stanwick
Are you. You sound like you still want to be there.
- [43:34]
Carol Massar
Well, you know, I'm a happy girl on a Monroe beach.
- [43:36]
Tim Stanwick
You really are. I will say. I didn't know you could be so productive. Carol Massar, lying in the sand just with your iPhone working on the show. Because that's pretty cool.
- [43:48]
Carol Massar
I did do it.
- [43:49]
Tim Stanwick
You did. Hey, plenty more, including a conversation with the host of the Masters in Business podcast. Yeah, Barry Ritholtz. You all know him. Plus a chief behavioral officer on how psychology and behavioral finance are coming to the forefront of wealth management. Carol, I didn't even know this job existed.
- [44:05]
Carol Massar
Exactly. That's a fascinating conversation. You know, the other interesting conversations and a major theme of Future Proof was AI. No surprise, right? But everybody trying to figure out how to use AI when it comes to investment management, what does it mean going forward?
- [44:20]
Tim Stanwick
I don't know. I don't think anybody knows.
- [44:22]
Carol Massar
I don't think so either.
- [44:23]
Tim Stanwick
And I, and I think the question a lot of people have is, okay, am I still going to take on the same role in the world of AI moving forward? Will I still need the same number of employees? What's it going to do for my business? But also equally important, what's it going to do for the non AI companies that we invest in? When are we going to see that result of increased productivity?
- [44:44]
Carol Massar
Yeah, exactly. I think that's the stage we're moving into when it comes to AI in a big way. All right, first up this hour though, there is a trend picking up momentum as the big US Banks partner up with asset managers. Just about a week ago, Bloomberg reported that citigroup is entrusting BlackRock with tens of billions of dollars of clients investments in a move that will close the bank's only remaining in house ass manager and outsource more of its wealth units offerings.
- [45:11]
Tim Stanwick
In a new partnership, BlackRock will manage the assets of thousands of the bank's wealthiest clients who currently have accounts with Citi Investment Management. Our next guest involved in all of this, Jamie Mad was named head of US Wealth Advisory in July. Her job also includes heading up retirement at BlackRock. It's the world's largest asset manager, which notched a record $12.5 trillion in assets as of the company's most recent quarterly update. She joined us from Future Proof, how are you?
- [45:38]
Jamie Magera
I'm great. I mean, we're at the Future Proof festival. Like it doesn't get better than this. This is beautiful.
- [45:42]
Carol Massar
It's pretty amazing, right, to talk about kind of what's going on in the markets against this backdrop. I want to ask you though, about the news last week. You were definitely quoted in one of the Bloomberg stories. It was exclusive. You said this is a sector defining moment. How come?
- [45:56]
Jamie Magera
Well, you know, the thing that I find so interesting about the wealth market is that as firms are getting larger, right, as wealth management firms, as banks, they're getting larger and they're looking to really lean in on what they do best, which is serving their clients, expanding their relationships with their clients. And as they do that, they need to work with partners. Partners who can be their outsource provider, who can take on the investment management, who can build custom solutions for them. And so this is just one example of a varied location, large Global bank asking BlackRock selecting BlackRock to be their outsourced provider. But we're seeing this every single day from financial advisors all around the country. They're looking to work with firms like BlackRock so that we can customize solutions for them and take on the investment management so they can do what they do best, serve their clients, expand their.
- [46:42]
Carol Massar
So this is just the beginning of.
- [46:43]
Jamie Magera
A lot more to come.
- [46:45]
Tim Stanwick
I was just going to ask, should, should we, should investors expect more of these partnerships to be announced?
- [46:50]
Jamie Magera
Absolutely, absolutely. And by the way, today BlackRock has over 30,000 financial advisors just in the US who are already relying on us to be their outsourced provider. Then you enter a firm like Citi, a massive global bank. There will be more for more firms coming who are going to come to blackrock and ask for this type of partnership.
- [47:09]
Carol Massar
So you guys see a lot. How would you describe the investment environment? We were reminded, we just talked about Middleton who puts on this event and said last year it was all about the upcoming U.S. elections. They, they've happened, right? We have a president who's very active on things that really impact the investment environment. How would you describe the environment today?
- [47:27]
Jamie Magera
Look, I think a lot of people, with reason, of course, have uncertainty around economics, uncertainty around tariffs, uncertainty around everything and what that means for their portfolio. What I find most positive and exciting is the fact of all of these people who are thinking about what does this mean to my savings? What does this mean to my ability to retire? What does this mean to my ability to send my children to school? Well, they're working with professionals like Financial advisors, like so many of the advisors that are here. And the job of the advisor is to help them navigate that uncertainty and help them focus on the long term.
- [48:00]
Carol Massar
Right.
- [48:00]
Jamie Magera
It's about time in the market, not timing the market. And that's something that we believe very strongly.
- [48:05]
Tim Stanwick
What are the questions that they're asking right now? Especially the one, wealthier clients. What, what do they want to know? What do they want to invest in? What opportunities do they want you to provide?
- [48:12]
Jamie Magera
Yeah, there's, there's two massive things. One is taxes. Help me better manage my taxes. I can control for that. I can't control markets. Help me better manage.
- [48:21]
Carol Massar
It's so funny that you say that. I feel like all of a sudden we've noticed too, I think in conversations that it's yes, about returns, but it is about tax. Tax advantages. Yes, exact, exactly.
- [48:31]
Jamie Magera
Tax alpha.
- [48:32]
Carol Massar
So go, go, go ahead.
- [48:34]
Jamie Magera
But, but, but you're right, that is the, that is top of mind for high net worth, ultra high net worth investors because one, they can control it too. There's actually a pretty significant implication on their portfolios when you think about taxes. And so it's exactly why a few years ago BlackRock acquired a company called Appirio. Appirio was a direct indexing company, a platform that had best in class capabilities to help end investors, investors customize portfolios, right? Single security portfolios maybe for their values, their beliefs, most importantly their taxes. And today that's one of our largest growing platforms, Appirio Direct Indexing. Also Spider Rock where you can do custom overlay, custom options overlay. Think about that Apple executive that worked at Apple for years and years and years and has all of this Apple stock. That's emotional for them. They want to hold on to that. There's a lot of tax implications but at the same time they can hedge against that, they can run options on top of that. And that is top of mind.
- [49:29]
Tim Stanwick
Okay, so taxes is one thing, what's the other one?
- [49:31]
Jamie Magera
Private markets.
- [49:32]
Tim Stanwick
Yeah, I knew you were going to say that.
- [49:33]
Jamie Magera
Of course you did. Private markets, every headline.
- [49:35]
Tim Stanwick
What part of that specifically when you, when you think of alternatives, when you think of private markets, where.
- [49:40]
Carol Massar
Yes.
- [49:40]
Jamie Magera
So let me take a step back and say one of the things we believe very, very, very strongly at blackrock is our job is to help make it easier for investors to access the full power of the capital markets. Now previously capital markets meant public markets. We know the opportunities that exist beyond the public markets in the realm of private companies. And so it's why last year we acquired Prequen from a data perspective, we inquired gips because we feel so strongly.
- [50:09]
Carol Massar
Quinn being I know for those of us in the journalism world, I mean that's where we go in terms of data on the private market.
- [50:16]
Jamie Magera
Every slide, every chart, you see source preqin and it is really the only source of truth on private markets. And so if we, if we have that in addition to all of these capabilities that help us build products that allow people to more efficiently access the private markets, then we can better serve our clients in the wealth market, not just institutions any longer. And also in retirement.
- [50:37]
Carol Massar
We're talking Jamie Madira, Managing director, head of U.S. wealth Advisory and head of retirement retirement at BlackRock here at Future Proof in Huntington Beach. We reported too that I think Larry Fink, your CEO has talked about in your CFO about offering target date retirement funds that include private assets next year. I mean it meshes kind of with a survey that you guys put out today that talks about 24% of retirement plans are considering adding alt assets over the next year private equity, credit and other investments. Investments. Is that still on track? Give us, can you give us an update?
- [51:10]
Jamie Magera
Yeah, absolutely. So yes, it is still on track. Look, I think there's been a lot of headlines from a lot of different firms about people coming to market with ideas of how to incorporate private markets safely.
- [51:20]
Carol Massar
Right. Because we have to remind everybody they're not as liquid as a lot of investments that normally your retirement funds go into.
- [51:26]
Jamie Magera
Yeah. There are many considerations that plan sponsors and investors need to think about to make sure it's right for them. Our viewers is that if we can do this thoughtfully, strategically integrating private markets, private assets into a target date fund alongside of public markets and manage that glide path so it's appropriate for people at different stages of their life, then we can actually deliver them 15% more returns over a 40 year or 15% more retirement assets, say over a 40 year time horizon. That's a long time and that's a lot more, a lot more retirement savings. And so we believe so strongly in that we are on track. We actually are already in market as well in the smaller and mid century mid sized retirement space. So we partnered with a company called Great Gray and we're powering their glide path so they can incorporate public and private markets into one target date solution.
- [52:13]
Tim Stanwick
Do you know when we think about target date solutions now what we know and what we've experienced is like the asset allocation between equities and fixed income. Do we get to a point point where that's not Even a choice anymore. It's like equities, fixed income and privates.
- [52:30]
Jamie Magera
It's interesting. I think for so long people have thought about the 6040 portfolio. Equity is fixed income. Some people may be as old we are to say 50, 30, 20. That 20% might be 10% private equity, 10% private credit, different diversified assets in there. But absolutely, I think the new portfolio, the portfolio of the future, to fund these longer lives has to incorporate private assets.
- [52:54]
Carol Massar
You know, one of the things out of your survey that I thought was really interesting. Interesting was guaranteed income is now a top priority. 86% of workplace savers want it for the first time. 100% of employers say they feel responsible for helping participants generate income in retirement. I keep thinking about my father who had a pension and VA benefits and investments and not a lot of people are doing pensions right or anything anymore. And so I am curious about how employers are thinking about this. That struck me.
- [53:21]
Jamie Magera
Yeah, so it's so interesting because you raised such a good point. So employers used to have pension plans, right? And then the conversion to defined contribution. Well, we're now seeing pensionization of defined contribution. Think about private assets have been available in pensions for decades. Well, now they'll be available in 401k plans, retirement plans, same thing with guaranteed income. That's what the benefit of a pension was. But there's no flexibility around that. So BlackRock has created a solution. It's a target date fund solution. It's called life path paycheck. And what it does is it actually delivers you the option, the choice to have guaranteed income. You can choose to take that or not. But it's giving savers and employers the option to have their employees have more security, have more simple simplicity, have more confidence in their retirement income. One of the things I'll just add is that I found so interesting in our survey. When you look at retirees, 27% of retirees, only 27% are confident in their ability to live through retirement on their savings.
- [54:23]
Carol Massar
Well, that's discouraging.
- [54:24]
Jamie Magera
Discouraging.
- [54:24]
Tim Stanwick
Well, so, so what's the implication of that just in the last minute that we have with you? Because that has implications beyond our own portfolios. That has real societal implications.
- [54:31]
Jamie Magera
It has societal implications in that there is going to be this whole group of Americans who are trying to live through retirement. Maybe they do another job, maybe they spend differently. That shouldn't be the case. Longer lives should be a blessing. They shouldn't be a challenge. And that's where guaranteed income comes in. That's where the modernization of 401k plans to include private assets comes in. And that's where more advice comes in, which is why we are here at Future Proof Festival. Advisors play a massive role in this.
- [54:55]
Tim Stanwick
Our thanks to Jamie Magera, head of U.S. wealth advisory and retirement at BlackRock.
- [55:00]
Carol Massar
You're listening to a special edition of Bloomberg Businessweek featuring our favorite conversations from the Future Proof Festival.
- [55:05]
Tim Stanwick
Next up, a familiar voice to the Bloomberg audience, Barry Ritholtz, the host of Masters in Business and at the Money.
- [55:11]
Carol Massar
We talk interest rates and Fed independence and a whole lot more with him.
- [55:15]
Tim Stanwick
That's next. This is Bloomberg. This is the Bloomberg Business Week daily podcast. Listen live each weekday starting at 2pm Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg 11:30.
- [55:37]
Carol Massar
As you know, we are highlighting our coverage of the Future Proof Festival that was held early in the week in Huntington Beach, California. Now the event brings together financial advisors, wealth managers and company execs, all involved in the wealth ecosystem to talk about the future of the business and the factors impacting investor money.
- [55:54]
Tim Stanwick
With us at Future Proof, a man quite familiar to our audience, Barry Ritholtz. He's host of the Bloomberg Podcast and broadcast Masters in Business. And at the Money, he's also Chairman and CIO of Ritholtz Wealth Management, which is a close partner with the event.
- [56:08]
Barry Ritholtz
We also know that sometimes you got to scratch a client's itch to prevent them from engaging in worse behavior. I like to say you can't get alpha if you don't at least lock in beta. So think of your portfolio. It's I know it's sunny and hard to talk about Christmas trees, but if you're the core of your portfolio is a broad, passive index. That's the tree. Hey, what's the garland? What's the ornaments you want to put on that? If you want to say, hey, I want a broad value index to accentuate all the gains I've already seen in technology. And by the way, the same thing is taking place overseas. You have 15 years of US outperformance. Maybe it's time to think about broader exposure overseas. International and international value. That's how you'll if you can't pick who's the big winner from AI, pick all the secondary winners that are going to be able to be more productive, more profitable.
- [57:09]
Carol Massar
So I love talking with you. I'm amazed that we haven't talked politics at all, especially like if you think about last. Was it last week, the big dinner of the big tech CEOs all in D.C. surrounding the president. I was a big part of, you know, they were kind of thanking him for what he's doing in terms of the world of AI. Where does politics. What did Joe have to say about politics? Did it even enter into the conversation?
- [57:33]
Barry Ritholtz
So I tried to push that question a little bit. And the consensus I've gotten, and I want to put words into his mouth, but the consensus I've gotten from economists on both the left and the right have been, hey, this was a very robust economy heading into 2025. It's starting to slow. That doesn't mean we're going into a recession, but it's starting to look more and more like growth is going to not be 3%.
- [58:02]
Jennifer Grancio
Yeah.
- [58:02]
Barry Ritholtz
Probably isn't going to be 2%. And the consensus seems to be that this is an unforced error, that this is between the craziness of the DOGE layoffs and just generally the mayhem, not just the tariffs themselves. Hey, if I said we're going to pass a consumer VAT tax, you would think that's bearish for consumer spending and bearish for the economy. The someone like Joe says it's we look at tariffs as a tax on the consumer. So far, the pass through hasn't showed up yet because first of all, a lot of companies ordered and this is me speaking, not him, there was a lot of inventory build in advance of the tariffs and then tariffs were on, tariffs pulled forward. Right, so. So it's taken a while to work its way through the system. It seems that it's just starting to show up both in hiring and in inflation.
- [58:55]
Tim Stanwick
We got a minute left. Barry, I promised we'd talk about the Fed with you because it doesn't seem like the bond market is taking seriously the threat to Fed independence. Why do you think that is?
- [59:03]
Barry Ritholtz
I honestly don't know. To me, I'm a stock guy as much as I own fixed income on on munis and tips and things like that. It seems like James Carville was right in the 1990s. But in the 2000s, the stock market is the most feared index, most feared asset class because it was the stock market.
- [59:23]
Tim Stanwick
It's not sending a message that the FedEx is threatened.
- [59:26]
Barry Ritholtz
Well, I think the market is pragmatic and cares less about academic discussions of independence and loves lower rates. Now, maybe it's inflationary down the road, but the difference between stocks and bonds is bonds about are about a return of capital which means you're waiting five or 10 years. Stocks are about the next quarter at least when you look at, you know, in the short run it's a voting machine. In the long run it's a weighing machine. I think in the short run it's a probability machine. And the stock market is saying fed independence is a concern, but give us some of those delicious low rates. We will, we will. Let us show you what we can do. If you take 75, 100 basis points off, everybody's going to party. And that's what the market is looking at one to two quarters out.
- [60:15]
Carol Massar
As long as you're not worried that those low rates mean that everything's coming undone and the economy's falling apart.
- [60:20]
Barry Ritholtz
I mean, the, the odds.
- [60:21]
Carol Massar
If you just quickly.
- [60:23]
Barry Ritholtz
Torsten Slok said there was a zero percent chance of a recession in January. Yeah, he moderated that. I would have said 10% in January. Now we're 45, 55%.
- [60:33]
Tim Stanwick
Does it change your view as chief investment officer at Reitholtz Wealth Management on what your clients should be doing? Because you have a whole part of your book dedicated to buying the entire haystack. Go look for the needle. Just buy the haystacks. Do that at Ritholtz.
- [60:45]
Barry Ritholtz
So yeah, we very much do that. But we also know that sometimes you got to scratch a client's itch to prevent them from engaging in worse behavior. I like to say you can't get alpha if you don't at least lock in beta. So think of your portfolio. I know it's sunny and 80 hard to talk about Christmas trees, but if you're the core of your portfolio is a broad Passive Inc. That's the tree. Hey, what's the garland? What's the ornaments you want to put on that? If you want to say, hey, I want a broad value index to accentuate all the gains I've already seen in technology. And by the way, the same thing is taking place overseas. You have 15 years of US outperformance. Maybe it's time to think about broader exposure overseas. International and international value. That's how you'll if you can't pick who's the big winner from AI, pick all the secondary winners that are going to be able to be more productive, more, more profitable.
- [61:48]
Tim Stanwick
We're speaking with Barry Ritholtz. He's the host of the Masters in Business podcast on Bloomberg radio and radio show. He's founder, chairman and chief investment officer of Ritholtz Wealth Management. He's also the author of how not to Invest the idea, ideas, numbers and behaviors that destroy wealth and how to avoid them. So, Barry, if you were to add a new chapter to your book that came out earlier this year was published. It came, it came out a few.
- [62:10]
Barry Ritholtz
Months ago, March 18th.
- [62:11]
Tim Stanwick
So a lot has happened between now and then. What would it be on?
- [62:15]
Barry Ritholtz
So there's a chapter in the book called Love Trump, hate Trump. That's no way to invest. And after the election in November, I heard from a number of people, clients, friends, family members, oh, this guy got elected again. I'm selling my house, I'm selling my stocks. And I said to them, hey, when he was elected in 2016, had you done that, look at all the money you would have left on the table. And by the way, the same is true for Joe Biden in 2020 and for Barack Obama in 0, 8 and 12. Your job as an investor, as a mom and pop long term investor, is to not interfere with the market market's ability to compound your portfolio. Gains on top of gains on top of gains, dividends reinvested. If you look at the history of one of Democrats in the White House, when Republicans in the White House, it's a fraction of just keeping invested the entire time. Especially, you know, we see the Gen Z and the millennials significantly underinvested compared to the Gen X and the boomer. And it's like you guys have a 30, 40 year investment horizon. What happens in any random Tuesday or any random year shouldn't matter. You have 40 years to let it compound. Hey, if you're a boomer and you're retiring in two years, you want to throttle back your risk. That has nothing to do with the president, tariffs, markets, it just has to do with, hey, we understand the sequence of returns problem. You don't want to retire into a big down year. So maybe 100% equities isn't right. Maybe you should be closer to 6040 and slide that down as you go. But the chapter I would write is about, here's what everybody said about tariffs in April and here's how this is going to be the end of Pax Americana, the end of the US Dollar, the US Mark, equity markets going to hell. By the way, we're up 11 12% for the year. If you ignore 30% from April, from the lows. Had you, you listen to, had you ignored that noise, then you're doing great. Had you gotten nervous and tapped out, you're pulling your hair out, you don't know when to get back in. And it's, it's a problem. So the noise, the, the fear mongering, just the easy temptation to give into your limbic system. In the book I wrote, we are not wired for this and the Bill Bernstein, the neurologist investor said investors have to learn to learn to control their limbic system. People who fail to do that are going to die poor. And it's really true.
- [64:45]
Carol Massar
We're going to talk like the importance of psychology a little bit later on with Dan Crosby. He's chief behavioral officer of Orion Advisor Solutions. So we're looking forward to that. Two things I really want to ask you though. So many people talking about the importance of private markets, it makes me think my whole career in business news, which is a few decades, has all been about the public markets. And increasingly everybody's saying it's all about private markets. And I wonder, is there going to be a world at some point where private markets are more dominant in somebody's portfolio and rightfully so, than public markets? Do we really see that kind of a shift?
- [65:20]
Barry Ritholtz
I'm not so sure. I mean, here's the thing about every financial product that's ever come along since the beginning of time. Stocks, mutual funds, SPACs, trust, whatever it is, 90% of them are junk and the top 10% are spectacular. So if you can get into the best, fill in the blank. Mutual fund, etf, venture capital fund, private credit, private equity, private real estate, private debt. Fantastic. But just be aware, there's a land rush. The best companies are going to deliver the best risk adjusted returns relative to the fees. The bottom, I don't know, 50, 60, 70%, they're in there. They're not contributing to your portfolio. The way the top tier is that Sturgeon's Law, 90% of everything is crap.
- [66:12]
Tim Stanwick
Well, that just seems to be concerned about why people are concerned about privates going into 401ks and retirement account accounts. Because you're not going to get the best of the best is the argument.
- [66:22]
Barry Ritholtz
It depends on who's doing it. If you take, and I won't name names or embarrass anybody now, but there are a number of shops that are multitrillion dollar companies that have been doing this for decades. They have a deep research process and they are fiduciaries and very customer focused. I'm comfortable that 5%, 10%, 15%. I'm not quite at the 50, 30, 20 level yet.
- [66:49]
Jennifer Grancio
Right.
- [66:49]
Barry Ritholtz
But if you can be with a shop that can get you access to the best of the best, having a few percentage of it is not going to hurt. Just remember the fees are higher, the lockup periods are longer. If you need liquidity, maybe not for you. It's amazing how often I have conversations with people who are so enthusiastic about privates and then you show that this is what's going to cost. Here's the lockup. Oh, not so much. It kind of scares them. So hey, if you're 25, 30 years old and you got a 30, 40 year investment horizon and you want, you don't care about the lockup. You want to have 10, 15% of your portfolio in that. Knock yourself out. Just be really selective. It doesn't matter. SPACs, mutual funds, ETF.
- [67:31]
Carol Massar
So public markets are not going away?
- [67:34]
Barry Ritholtz
I don't think so. And in fact, because it feels really interesting, the shift so so you know, there was a really fascinating study done that looked at the concentration in the Mag 7 and it's really misleading because the Max 7 have made 859acquisitions over the past 20 years. So the Max 7 is really almost the Mag 750.
- [67:56]
Tim Stanwick
That was Barry Ritholtz, host of the Bloomberg Masters in Business podcast. And at the Money Barry, also chairman, Chairman and CIO of Ritholtz Wealth Management.
- [68:03]
Carol Massar
Still ahead on Bloomberg Businessweek, how psychology and behavioral finance are coming to the forefront of wealth management.
- [68:10]
Tim Stanwick
That's next. This is Bloomberg.
- [68:16]
Carol Massar
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- [69:17]
Tim Stanwick
So have you heard the story about the prescription plan? With savings automatically built in, it's where a family of any size can feel confident the cost of their medication won't hold them back. Go to CMK Co Stories to learn how CVS Caremark helps members save just by being members. That's CMK Co Stories.
- [69:42]
Carol Massar
You're listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on on Apple CarPlay and Android.
- [69:51]
Sarah Kirschbaum Levy
Auto with the Bloomberg Business app or.
- [69:53]
Carol Massar
Watch us live on YouTube.
- [69:56]
Tim Stanwick
We continue now with a special edition of Bloomberg Businessweek where we bring you highlights from our coverage of the Future Proof Festival in Huntington Beach, California.
- [70:04]
Carol Massar
Now, before we wrap up our coverage, we wanted to share a chat from the event on the cross between behavioral economics and psychology taking an outsized role in recent years on Wall street and in investing.
- [70:16]
Tim Stanwick
On that we were joined by Dr. Daniel Crosby, Chief Behavioral Officer at Orion Advisor Solutions. The firm, in its own words, supports $5.2 trillion in assets under administration across 25,000 advisory firms in the U.S. it also manages more than $100 billion in wealth assets for advisors.
- [70:34]
Carol Massar
We should note Dr. Crosby's first book, Personal Integrating Behavioral Finance and Investment Management, was a New York Times bestseller.
- [70:42]
Tim Stanwick
What is a Chief Behavioral Officer?
- [70:44]
Dr. Daniel Crosby
Yes, it's a great question. My mom would like to know as well. A Chief Behavioral Officer. The role of the advisors that we serve is more and more about helping people avoid the very worst of human behavior. And if you look at the research on how advisors add dollars and cents value to their clients lives, a meta analysis of this shows that they add about seven times as much by keeping people out out of their own way as they do even something like asset management. So it's an incredible value. And I think in the age of AI it's just going to be an even bigger value.
- [71:15]
Carol Massar
So how do they read through the behavioral cues? Because I'm just thinking, Daniel, that there are people who are overly confident, like I know exactly what I'm doing and then there are people who are really, really nervous. And I'm just trying to figure out how do you kind of read through all of those cues if you're sitting down with a client?
- [71:30]
Dr. Daniel Crosby
Well, what's cool is now we can use technology to do that, and in a very short order through two different ways. We have a variety of assessments that will get at someone's sort of financial personality, but also through what psychologists call revealed preferences. By looking at what they do, people tend to be pretty poor descriptors of their own behavior. We don't have to ask them what they're like. We can look at how they act and we can infer from their behavior. That's one of the great things about working.
- [71:55]
Carol Massar
What? Give us an example. Oh, just blowing my mind.
- [71:58]
Dr. Daniel Crosby
You know, instead of asking someone how, how overconfident are you? You look at things that are descriptive of overconfidence over trading. You know, failure to use an advisor, jumping in and out of positions, being skittish. Things like this would be representative of fear or overconfidence. So there are trading behaviors that are emblematic of the different sorts of things that Dr. Thaler studied.
- [72:22]
Tim Stanwick
Is it the right answer to everything just do nothing thing, like don't follow your urges? Well, you know, in, in the. I, I'll give you an example. I have a friend, he's was freaking out during the tariff, you know, so called liberation day. And he, he sold a bunch of equities and he's like, this is, everything is different. We're in a different world. He's not an investment manager, he's in medicine. He is, you know, he has an advisor, but he told his advisor to sell. His advisor told him not to, but he did it anyway. And he's convinced that this is a different world that we're living in. Pre and post tariffs.
- [72:54]
Dr. Daniel Crosby
Well, one of the tricky things is that you definitely should do less than you think you should. And being good at investing requires a different set of understanding and a different set of skills than just about anything else in life. If you want to get stronger, you lift more weights. If you want to get wiser, you read more books. If you want to make more money, you tend to do less. And in fact, this has been studied in 19 different countries. In every country where it's ever been studied, the more people trade, the worst they tend to do. That is a very consistent finding. It's monotonic, it's step wise. Right. The more you trade, the worse you tend to do. So maybe not do nothing, but definitely do less than you think you should.
- [73:31]
Carol Massar
So set it and forget it.
- [73:33]
Dr. Daniel Crosby
More or less. I mean, you could do a lot worse than set it and forget it.
- [73:36]
Carol Massar
Yeah. So how do you do something? Like, you come to an event like this, you go to a lot of other financial conferences, you go to Milken on the west side coast in the spring and everybody's talking about private markets. And so you're like, oh my gosh, maybe I need to be in this more aggressively. Like, how do you like kind of weave that into maybe your strategy or how do you, or should you ignore it? Like, how do you, I don't know, deal with new trends? AI the exuberance that we're seeing over that.
- [74:01]
Dr. Daniel Crosby
Yeah, yeah, yeah. One of the things is that, that we understand is that the best portfolio for you is going to look a little different than it is for me. So, so something like AI stock, something like private markets may have a place depending on who you are and what you value. I'm also a big proponent of, you know, sinning a little. Right. There's something like I'll encourage people sinning a little. Sinning a little. Like, you know, going like having a 3, 3 to 5% of your wealth in sort of a fun account where you get to take big risks because you, you like being involved in, in markets.
- [74:34]
Tim Stanwick
Eric Baltrinus, our colleague at Bloomberg Intelligence calls this the hot sauce.
- [74:37]
Jennifer Grancio
Yeah.
- [74:38]
Tim Stanwick
Where you know, people throw something into ark or crypto or something.
- [74:41]
Carol Massar
Sure.
- [74:41]
Dr. Daniel Crosby
Right. It's a, it's a cheap and it.
- [74:43]
Tim Stanwick
Sort of scratches that itch. It's like, okay, you can, you can mess around with that money, just don't touch everything else.
- [74:48]
Dr. Daniel Crosby
That's exactly right. So it's an imperfect decision that keeps you from a much larger, larger sort of life altering bad decision. And I'm happy with that tradeoff.
- [74:58]
Carol Massar
I don't know. Piece of, of advice to investors then in thinking about psychology and behavioral economics or behavioral investment thinking. Yeah.
- [75:06]
Dr. Daniel Crosby
If you want to change your behavior, there's really three things you need. Three E's, Right. The first is the right education. You need to know a little bit about markets. They need to listen to you. All right. The next is an environment. The environment is very predictive of how you do. Are you getting the right inputs? Right. Are you listening to the right sources? Are you listening to the right voices? And the last one's encouragement. People who work with a professional do a lot better than people who don't. And it's largely because they have that person in their corner.
- [75:32]
Carol Massar
And this applies whether it's a global pandemic and a shutdown of the economy, whether it's the global financial crisis or a president that some say is erratic and policies can change a lot.
- [75:43]
Dr. Daniel Crosby
Yeah, I think that's right. The flavor of the disruption will vary from moment to moment, but the fundamentals of what we should do beneath that, very rarely we do well.
- [75:51]
Carol Massar
Come back. We would love to continue this conversation this fun. Daniel Crosby, he's Chief Behavioral Officer at Orion Advisor Solutions, joining us here at Future Proof.
- [76:01]
Tim Stanwick
Future Proof, Bloomberg businessweek live at Future Proof in Huntington Beach. Today's show is sponsored by Vaneck, marking its 70th anniversary this year with a legacy defined by forward thinking strategies, resilience through market cycles and an enduring commitment to clients.
- [76:15]
Carol Massar
Jennifer Grandc I was back with US global head of ETFs over at TCW. They've got more than 200 billion across investment solutions as as of the mid of this year. Midpoint ETF platforms have more than 4 billion a lot under management. They see a lot of flows. We want to remind everybody to Jennifer, the former CEO of the impact investment firm Engine number one, which took on Exxon. You're going to be iconic forever. This is going to go with you wherever you go because it was really significant.
- [76:43]
Tim Stanwick
I think also, I think also you joined us at Milken during that time when you guys were in the midst of that and that's where sort of like I still know you from but I think people still know you from that, as Carol mentioned.
- [76:54]
Jennifer Grancio
Yeah, I mean engine number one was a moment in time where I think we had just started to think about energy transition at a very big level. It's not just green, it's brown. And that it was going to require so much to move the world towards better sources of energy. Electrification, all the power we need for restoring in the US So yeah, that was, it was a great moment in time and then we folded in a lot of the work we had done there into tcw.
- [77:19]
Carol Massar
We'll talk about what you are doing because energy is a big theme in terms of investing here for you guys for sure.
- [77:25]
Jennifer Grancio
So if you think about the world today, as much as it's volatile and we're never sure exactly what's going to happen or how things are going to play out. If you think about tcw, we started as an equity firm and then we've got a great public private credit business. And so on the equity side a lot of what we do is fundamental concentrated portfolios that help you diversify from the index fund and the direct indexing you have at the core because the market is broadening and we have a huge opportunity as investors to actually take advantage of. How do you profit from the fact that we're seeing different sources of energy and we have a huge demand for energy, for AI and data centers, but also for the reshoring of manufacturing.
- [78:05]
Tim Stanwick
How do you do that in an environment where the administration depending on who's in the White House changes their view on the future of energy like does a 180. I mean you have the president wanting to actually doing it, trying to cancel offshore wind projects and really anything that isn't oil. It seems like he's not interested in say for nuclear, but that's a bigger time time horizon time.
- [78:25]
Jennifer Grancio
Yeah, but that's how we think about it. So from a TCW perspective we've been investing in the energy and power transition. We do that through the ETF powered PR pwrd. Pardon me, but when we think about that that's a very long trend. So that's over decades and decades. And so the way we think about it is we as managers want to invest for you so that we're paying attention to one administration to the other and what happens and there will be some changes but if you think about the changes in the traditional brown so that they can electrify and be more productive in a market like the Permian on oil that's really important. Nuclear is incredibly important. And then what Trump said on actually supporting more nuclear. Yeah it's a long run game but that's great intermittent power. So we like to think about it very broadly and it transcends administrations but.
- [79:11]
Tim Stanwick
Doesn'T mean you ignore wind and solar.
- [79:13]
Jennifer Grancio
That's part, that could be part of our portfolio as well. We're looking at things that from a very long term perspective will make sense.
- [79:19]
Tim Stanwick
And you say think even though wind is under so much pressure right now in a different administration it could come back.
- [79:24]
Jennifer Grancio
It will be part of the solution. It's not the lead place to make money in the next couple of years and we're active managers so we can take that into account in terms of the way we manage the portfolio.
- [79:33]
Carol Massar
Where is money going across your platforms? Where are the flows going in? Where the flows coming out?
- [79:38]
Jennifer Grancio
We would see if I, if I, if I answer it maybe at an industry question and then I can talk about tcw. We see active active equity is tough. So in active equity investments are very selective. So what we're doing in active equity products like powered or for AI if they're selective they're meant to be complementing to big index holdings. And on fixed income like a lot of money continues to come in to fixed income and continues to come into active fixed income. We're also big in private credit not in the ETF space and products that are appropriate there. But both fixed income and private credit are probably the places we see the most money coming in.
- [80:15]
Carol Massar
Really not surprising. It feels like everything is private credit. I mean I don't like how does.
- [80:23]
Jennifer Grancio
It does but on the other hand it's early. So if you think about, if you think about the portfolio and you think about it biggest institutions in the world they're invested in some kinds of private credit but they're looking to get into private ABF because it's diverse, diversifying. But in wealth portfolios, if you think about the average investor or registered investment advisors, they're looking at how to take advantage of returns that can be like our, our, our core plus income ETF flexor. You know, that's returning almost 7% with over 5% annual yield. That's very attractive. When you move into safe, controlled, careful private credit, you're still picking up multiple percentage points a year. So people should do it carefully. It's a big opportunity.
- [81:05]
Tim Stanwick
Do you see that opportunity continuing to grow in a weakening environment?
- [81:09]
Jennifer Grancio
We do. It's if you can, if you go out and you survey. There's a McKinsey report that just came out surveying institutions and wealth and private credit by far is the place that people are most interested in most increasing allocations.
- [81:21]
Carol Massar
In what confidence do you have that we have the right regulatory oversight on this? In a world where private credit still there is a lack of transparency and people don't, maybe not all investors understand that it's not liquid like a lot of other investments.
- [81:37]
Jennifer Grancio
It's the right question which is from a responsibility perspective. As asset managers or for wealth managers, we should always be in a dialogue with clients on do they understand illiquids. When you do a semi liquid product, for example, for us we have things that have many, many or five plus year drawdowns. That's not a liquid product. We wouldn't tell clients that that's a liquid product. In the asset backed finance space we have an interval fund, but the loans there are getting kind of turning over within two to four years. So there's a little bit more liquidity there. So I think we'll watch the regulatory space but investor education and responsibility by the managers, it's critical.
- [82:12]
Carol Massar
So when it comes to private credit, you're looking for things where it is two to four years that they're turning over. It's a little bit more liquid, that's.
- [82:18]
Jennifer Grancio
A little bit more, more liquid. And if you think about private credit in the private securitized or asset backed finance space, the loans are self amortizing in two to four years. That space we think an interval fund makes sense. We manage an interval fund there. There are other places where it's just not that liquid and that should be a private market product.
- [82:35]
Tim Stanwick
Still a lot of interest in AI and the fund that tracks that, a.
- [82:40]
Jennifer Grancio
Huge amount of interest in AI And I think everybody's interested in one what's happening with AI, who wins, what happens. But people are also looking at how to invest in it. So at tcw, we manage an etf, AI fd, which is investing very broadly in AI. And that's an opportunity to take advantage of, yes, it holds Nvidia, but it also holds Broadcom and other companies that are benefiting and early winners in the trade.
- [83:04]
Carol Massar
When you come to an event like this, I mean, is there a narrative you're picking up on that might be surprising? I'm just curious. Just got about 3:30 seconds here, I.
- [83:11]
Jennifer Grancio
Think from a, from this, this conference, which is full of wealth advisors, they are trying to figure out how does artificial intelligence affect their business, how do they get smarter about it, and how can they adopt new outsourcing and new technologies so that they can spend more time actually serving their clients.
- [83:28]
Tim Stanwick
Our thanks to Jennifer Grancio, global head of ETFs at TCW.
- [83:31]
Carol Massar
And that wraps up the weekend edition of Bloomberg BusinessWOMK radio at the Future Proof Festival in Huntington Beach, California this past week. You can catch all the conversations from the event on the Bloomberg and@Bloomberg.com Thank you so much for joining us.
- [83:45]
Tim Stanwick
I'm Tim Stennebeck.
- [83:46]
Carol Massar
And I'm Carol Massar. Have a good and safe weekend, everyone.
- [83:49]
Tim Stanwick
This is the Bloomberg Business Week daily podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on bloomberg. Com, the iHeartRadio app, TuneIn and the Bloomberg Business App. You can also watch us live Every weekday on YouTube and always on the Bloomberg Terminal.