Wall Street Veteran Michael Green Talks ETFs

Summary

Podcast Summary: Bloomberg Talks – Wall Street Veteran Michael Green Talks ETFs

Date: August 11, 2026
Guest: Michael Green, Senior Executive Advisor, Tier 1 Alpha Asset Management
Host(s): Bloomberg Podcast Team

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Episode Overview

This episode features a compelling conversation with Michael Green, a well-known Wall Street veteran and now Senior Executive Advisor at the newly launched Tier 1 Alpha Asset Management. The discussion centers around the evolution and impact of ETFs, the challenge of passive investing, advances in tax efficiency strategies, and Green’s latest research-driven approach to serving retail and institutional investors. Green provides candid insights on current market dynamics, the risks and realities of index investing, and what individual investors should consider in a world increasingly dominated by passive flows.

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Key Discussion Points & Insights

1. Michael Green’s Career Move and Vision for Tier 1 Alpha Asset Management

[00:38 – 01:14]

• Michael Green discusses his decision to transition from research at Tier 1 Alpha to launching a new asset management firm. The driver: turning advanced research (previously made for hedge funds) into actionable products for broader investors.
• Main goal: Convert academic/theoretical research into real investment solutions, especially given the shifting market structure due to passive investing.

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2. Separately Managed Accounts: Structure and Implications

[02:13 – 02:59]

• Green explains that separately managed accounts (SMAs) allow clients to retain custody of their assets while still getting active management—unlike hedge funds or mutual funds where assets are pooled.
• Operationally complex due to the need to execute trades for each account and avoid favoritism, but valuable for institutions managing billions.

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3. Tax-Loss Harvesting Explained – A Growth Driver for Active Management

Memorable Segment: [03:04 – 05:05]

“Tax management is really the area of growth within discretionary management. …It’s fascinating concession that the only outperformance you can really generate…is taking advantage of the inefficiencies created by Uncle Sam’s tax collections, rather than trying to outperform the market itself.”
— Michael Green, 04:37

• Green offers a clear, plain-English explanation of tax-loss harvesting: using security-level losses to offset realized gains and reduce tax liabilities.
• The “embedded capital gains” in older (“boomer”) portfolios present both a challenge (tax bills) and an opportunity (harvesting losses elsewhere).
• This strategy is now a key value proposition for active/SMAs: the value comes from “tax alpha” more than outperformance versus the market.

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4. The ETF Landscape: Risks of Passive Investing and New Solutions

[05:12 – 07:15]

“You’re not going to be protected from the risks that I foresee from the overgrowth and dominance of passive by switching to an active manager who has to hold the same underlying securities… As Chuck Prince put it, and it was often misunderstood, when the music’s playing, you gotta dance...”
— Michael Green, 05:40

• Host asks: Should investors move away from indexes to active strategies? Green says merely switching isn’t sufficient. Systemic risks from the dominance of passive investing (especially in U.S. equities) are now a marketwide issue.
• Green’s new product: a US large-cap passive-aware strategy designed to maximize exposure to passive’s impact, but with smarter index construction — “market cap weighting is reasonable, but nowhere near optimal.”
• Product is supported by live testing, not just theory, and paired with a negatively correlated managed futures overlay (hedged exposure) for retail investors.

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5. Challenges and Next Steps for Launch

[07:15 – 08:01]

• Marketing and capital raising are the next hurdles. Green likens the process to venture capital: needs acceleration and trust, as launching with only a small seed isn’t sufficient for market legitimacy.
• Transparency and continued writing are key: Green promises to continue publishing research and thought leadership to communicate with his investor base.

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Notable Quotes & Memorable Moments

• On Tax-Loss Harvesting:
  “Everybody should have that in their toolkit. And we absolutely do have that capability to do it. But at the same time, it’s a fascinating concession that the only outperformance you can really generate...is taking advantage of the inefficiencies created by Uncle Sam’s tax collections…”
  — Michael Green, 04:17

• On Risks of Passive Investing:
  “Systemic risk. It is a broad, industry-wide phenomenon. You’re not going to be protected from the risks that I foresee from the overgrowth and dominance of passive by switching to an active manager who has to hold the same underlying securities.”
  — Michael Green, 05:34

• On Launching His Strategies:
  “We are actually in the process of negotiations for a strategic investor that would be able to accelerate the growth of the platform. It’s much more like venture capital…”
  — Michael Green, 07:28

• On Continuing to Publish:
  “I am going to keep writing. I’m really excited to keep writing. It’s always been a mechanism of organizing my thoughts and communicating with my listeners if they’ll have me.”
  — Michael Green, 08:04

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Timestamps for Key Segments

• [01:14] — Michael Green describes the purpose behind launching Tier 1 Alpha Asset Management
• [02:20] — Breakdown of separately managed accounts (SMAs)
• [03:27] — Clear, practical explanation of tax-loss harvesting
• [05:18] — The risk landscape of passive investing & Green’s “passive-aware” large-cap strategy
• [07:26] — Discussing capital raising and the business challenge of launching new asset management products
• [08:04] — Green’s commitment to continued research and writing

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Takeaways for Listeners

• The ETF and passive-investing boom has fundamentally changed market structure; risks are now systemic and not easily avoided through simple manager switches.
• Tax management (specifically tax-loss harvesting) has become the most reliable source of outperformance—so-called “tax alpha.”
• Michael Green’s new asset management venture is built around research-driven, passive-aware strategies and transparent communication.
• Innovation is bubbling in how products are structured (optimized passive exposure + dynamic hedging) and in how asset managers must market and grow (akin to tech startup models instead of “old” Wall Street).

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Recommended for:
Investors curious about the latest ETFs/wealth management innovations, professionals interested in the mechanics and risks of passive investing, and anyone following industry thought leaders like Michael Green.

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For more details or in-depth discussion, listeners are encouraged to check out the full episode.

Transcript

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[Podcast Host/Announcer]

Bloomberg Audio Studios Podcasts Radio News Michael

[Interviewer/Podcast Host]

Green with us right now with a huge impact in the American debate here. About six months ago, I'll say over, you know, the measurement of poverty, huge response to him saying, look, if you got to write the tuition check for your kid, if you got to do camps, whatever, when you take it down on a monthly basis, it gets expensive rapidly. It was just, just really constructive debate on all sides now. Senior executive adviser, Tier 1 Alpha Asset Management this morning you're doing a career change. I think a lot of global Wall Street's like, wait, Michael Green can write his own ticket. What's the why here? What are we doing?

[Michael Green]

That's exactly why. So actually Tier one Alpha Research, which I'm a special executive advisor, is the research firm that I spun up when I started simplifying. The objective there was to run the research program that I knew needed to be run. We had to create a self funding organization so that research is currently distributed primarily to hedge funds. Most of the large hedge funds are recipients of it. But we needed to do that so that we could fund the research. Because there are no expenses available for funding significant research at the ETF space. Given the compression in fees, we've now actually taken that research. We've gotten to the point that we can turn it into implementable products. And so I am launching a new firm, Tier 1 Alpha Asset Management, that is targeted at converting that insight and that research body into implementable products. That answer the question that everybody's always asked, what should the retailer, what should the individual investor do? Given your view that passive is changing market structure and actually creating the conditions under which active management will underperform.

[Interviewer/Co-host]

So talk to us about separately managed accounts. We've been talking about that this morning with another guest. How do you guys think about them?

[Michael Green]

Well, separately managed accounts are really just the equivalent of hiring a private wealth manager to manage your actual account so you don't have to worry about about the custody components. It's not like you are sending your money to Mike Green and saying please invest this for me as you do in a commingled account like a hedge fund or even a mutual fund, you retain control of that. Now there are expenses associated with that. That means that you have to do the trading on each account in different manners. You have to make sure that you're managing that process so that you're not favoring one client versus another. And so there's some operational complexity that is there. But particularly within the institutional space where allocations can run in the billions of dollars, which would be the size of an entire hed, you ultimately gain value in allowing them to retain custody of their underlying assets.

[Interviewer/Podcast Host]

We talked about a new concept which I think people can tell by the sound of my voice. I'm a little skeptical on the concept that I'm seeing is everywhere, not just Casey or wonderful guests from Texas, Mr. Jones, Mr. Casey's husband, get her tickets to Ohio State, Texas, please. Michael Green Tax Loss Harvesting. What in God's name is this concept?

[Michael Green]

Well, this has been powering a lot of the growth in the industry for actively managed accounts. And in the simplest form, it takes advantage of the fact that on a tax basis you want to tax the individual security transaction. So if I bought Microsoft at, you know, let's say $2 a share in 1987 and it's currently trading wherever it is, I don't know, 500, 500. There we go. The tax implications of me selling out of that position are a $498 capital gain right now. It is long term and so it is favorable, but it is still a significant hit. And so if you say, hey, I think Microsoft's going to fall 30%, that's roughly the equivalent of just selling them. Well, you're going to take that tax hit when you sell anyway, so you might as well not actually sell it. And those embedded capital gains that have built up over an extraordinary run mostly in boomer portfolios that are now taxable on the actual sale of those assets, have created the opportunity for people to manage those individual tax lot exposures and create positions that offset many of those gains with short term losses which are taxed more favorably. In other words, they create more credits. That tax management is really the area of growth within discretionary management. Candidly, I look at it and say it is absolutely incredible value added and everybody should have that in their toolkit. And we absolutely do have that capability to do it. But at the same time, it's fascinating concession that the only outperformance you can really generate for investors at this point is taking advantage of the inefficiencies created by Uncle Sam's tax collections, rather than trying to outperform the market itself, brands it.

[Interviewer/Podcast Host]

Folks, you just heard the clearest explanation of this out there. Paul Sweeney with Michael Green, Tier 1

[Interviewer/Co-host]

Alpha Asset Management ETFs House how are ETFs going to play for you going forward?

[Michael Green]

Well, ETFs represent a critical avenue into the retail population and ultimately this has been an area of frustration for me. You've heard it on your program. I spoke it very clearly on Barry Ritholtz, his Master's in Business podcast.

[Interviewer/Podcast Host]

It's okay.

[Michael Green]

What would you. It's okay. What would you advise somebody to do should they move away from index investing and switch to active management? And the reality is, what I've been highlighting for people is what's called a systemic risk. It is a broad, industry wide phenomenon. You're not going to be protected from the risk risks that I foresee from the overgrowth and dominance of passive. By switching to an active manager who has to hold the same underlying securities, you ultimately have to basically play along with the crowd. As Chuck Prince put it, and it was often misunderstood, when the music's playing, you got to dance if you're going to hold asset allocations to the US equity markets. The S and P has really been the place to be for such an extended period of time that people have largely stopped caring. I now think I have the answer to that. What could you do instead of the S and P? And so the first product, as I mentioned, is basically a US Large cap passive aware strategy in which we are maximizing exposure to the impact of passive. It turns out that market cap weighting is a reasonable proxy, but nowhere near close to an optimal proxy based on the environment that we're in. And so by isolating that and weighting the index on that basis, we're able to generate outperformance in our testing. And I have been running this live in a variety of forms for several months. But the reality is this is a theoretical framework. We fed it with the data, we now actually have the results associated with it. Like an academic paper. The second thing that we're doing is we're combining that product with a negatively correlated managed futures strategy to create a hedged exposure that ultimately I hope retail investors will take a look at and recognize that this is a way to protect against some downside in the market. That's really the product I want to see retail step into.

[Interviewer/Co-host]

So how do you market this? How do you get this off the ground? Is it a capital raising situation? Is it to go out and market it to RIAs? What's kind of the next steps for you guys?

[Michael Green]

Well, the quick answer is, obviously I'm going to market it badly, as evidenced by my rambling on in very technical fashion. We are actually in the process of negotiations for a strategic investor that would be able to accelerate the growth of the platform. It's much more like venture capital where you're talking about acceleration, investment as compared to simply putting money in the business of asset management is a costly startup. That is not the hurdle. The hurdle is the reality that you launch with $2 million in a seed. Nobody can allocate it to it because they just aren't going to trust 30 seconds.

[Interviewer/Podcast Host]

You're going to keep writing. That's what people want to do.

[Michael Green]

I am going to keep writing. I'm really excited to keep writing. It's always been a mechanism of organizing my thoughts and communicating with my listeners if they'll have me.

[Interviewer/Podcast Host]

Michael Green, thank you so much. Love to have you back here with Tier 1 Alpha Asset Management. Can't say enough about a societal impact on America. Six, seven, eight months ago Trying to describe people living paycheck to paycheck.

[Podcast Host/Announcer]

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