ETF Edge - An inside look at the boom in -- and appetite for -- active and fixed income ETFs 8/3/26

Episode Date: August 3, 2026

Active and fixed income ETFS are increasingly taking a larger portion of flows this year as investors look to broaden out. Jennifer Grancio, TCW global head of distribution, and Todd Rosenbluth, TMX VettaFi head of research and editorial, dive into the driving forces, what role these products should have in your portfolio and other opportunities in the market. Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The ETF Edge podcast is sponsored by InvescoQQQ. Let's rethink possibility. Investco Distributors, Inc. Welcome to ETF Edge, the podcast. If you're looking to learn the latest insights on all things, exchange-traded funds, you're in the right place. Every week we're bringing you compelling interviews, thoughtful market analysis, and breaking down what it all means for investors.

I'm your host, Dominic Chu. Investors are broadening out from the magnificent seven trade and leaning into other strategies like actively managed and income ETSs. So why has the appetite changed and where do we head from here? Here is my conversation with Jennifer Grancio, TCW's Global Head of Distribution. She also runs the ETF business there. And also Todd Rosenblu, TMXVETIFI's head of research and editorial. Let's have this conversation because active ETFs have been the talk of the town for quite a few years now.

But they're getting a lot more attention over the last one or two years, we've seen a flood of new product come to market. And maybe, Jennifer, I'll start with you as somebody who heads up distribution and runs an ETF business that does a lot of active ETFs. What exactly has been the primary driver for this kind of secular force in ETFs towards active management as opposed to straight up index investing? Yeah, thank you for the question. And at TCW, the firm actually started as a fundamental equity manager, and we're known for

that fundamental. equity management, but also public and private credit. And so when we look at active ETFs on the equity side, what we've been doing at TCW for many years is looking at how do you add megathems in addition to what you might already have from an indexation perspective. And the indexes are now so tech-heavy. And maybe we can talk a little bit more about it later. But on the equity side, being able to have an active manager who can invest in

mega-themes that are cross-sector, we think is a really important opportunity. and at TCW, a powered and AI are two ETFs that people can put in the portfolio and really add the active management to outperform in these areas. Specifically, you mentioned the power and the AI. They very much go hand in hand these days because we're talking about AI being the overarching umbrella, and then we're talking about everything resource infrastructure-wise it'll take to power that AI kind of revolution. When you look at the development of active ETFs, those two are the two big ones that you have at market right now. What exactly drives somebody to put an active ETF together? How do you pick which theme to, not chase, so to speak, but to go after?

And is it straight up, say, shareholder, investor demand? Do you do focus groups? What exactly do you see in the marketplace that says, hey, we should put a product to market like this? Yeah, at TCW, we're looking for a very, very long term. structural themes. And so as you said, the demand or the short effectively we have in power and all the work going into grids and more power or power availability and all of the enablers of that and the infrastructure, that's the theme that we're going to be with for decades to come. And in our AI area, the ETF we run there is AIFD. We've been doing that as a strategy

since before active ETFs were a thing. And in that case, it's a very long track record where we actually converted a mutual fund to an ETF. And the reason that we're running these strategies as ETFs is that that's where the demand is in the market. It's really changed in the last, as you said, just the last couple of years. And so on the equity side, as an active manager, we don't have to be pigeonholed into a narrow sector.

We can be multi-sector against a huge theme. And we can talk more about fixed income. But that's what we do on the equity side. Interesting, Todd, because from a thematic standpoint, there are reasons why certain parts of the market it garner more investor attention, whether it be through news headlines, whether it be through performance chasing or returns that are getting a lot of headlines these days. What exactly, from your standpoint, is the big thing driving some of the thematically oriented, actively managed

ETFs that are coming to market? I can't keep track of all of them because they're coming so quickly. But what exactly is the kind of thinking behind how you put together an actively managed product for one specific theme or element, and what exactly do you think is the long-term outlook for the many, many ETFs that are following these types of plans? So I think AI has been core for many of the thematic strategies that are out there, whether they're active or they're more research-driven index-based products. So we at VETify are an index provider in part behind the range nuclear Renaissance ETF, Nukes, which is a nuclear energy ETF. We've seen some demand for the robo-global artificial intelligence, ETF, think, THNQ, and then we've

seen even more narrow slices. So there are now photonics ETFs, and there's more to come. We think that we're going to continue to see the industry and advisors and investors adopt these products to complement the cues, which has some exposure to it, but also has exposure to broader mega-cap growth stocks. Interesting, because when we talk about the strategy, that many investment advisors and retail investors have, they typically have a core group of holdings or a core type portfolio,

and then they look to kind of bolt on or chase outperformance or alpha in some of the kind of more fringe areas that they can find that outperformance in. How much do the ETFs that we know and have known for decades that are core parts of this portfolio, how much do you think that they lose out in terms of their interest or investment? investor appetite to some of these other actively managed ETFs, say if you hold a S&P 500 index fund,

and then you try to kind of outperform by underweighting or overweighting certain key parts of the market, how much more attention do those areas and active management have Todd versus those core holdings that, again, we've come to know for the decades now at this point. So I think we're still going to see the S&P 500-based products, the NASDAQ 100-based products remain core. But what is starting to shift is whether investors overweight, towards sector products and State Street is the leader within the sector suite of products, or they use thematic ETS to get a more targeted exposure. So artificial intelligence covers more than just the technology sector.

It impacts other sectors as well. Utilities are impacted by artificial intelligence drivers as well. So we've seen some advisors use that 5% overweight instead of going into the technology sector spider. they might be looking towards a artificial intelligence ETF as an alternative. You know, Jennifer, it's an interesting point because when we talk about, say, the sector ETFs that we've kind of grown accustomed to,

industry-based ETFs, and now the rise of thematic ETFs, there's a case to be made or an argument that you could be both more narrowly and more broadly focused with a thematic product because a thematic product could span multiple industries and sectors, and some sector products might encompass certain areas of the market that other ones don't.

How exactly then do you treat thematic versus sector versus industry? These are all very specific ETFs tied to maybe more nuanced core markets, but they're not necessarily just a one-size-fits-all. They do a lot of different things. How do you have to philosophically treat those from a portfolio standpoint, knowing that they're not just say this particular thing and that it could go across many different areas of the market. I mean, I think the big question for an investor,

and at TCW, we're mostly working with financial advisors who are working on behalf of end investors and institutions. The big question is, how active are you every day on micromanaging your exposure? And at TCW, we're designing products that are broad thematics, so that for an advisor who's focused on overall return, long-term alpha in the market, they don't have to be tinkering with the portfolio every day.

the more you get into a subsector, the more you should probably be tinkering with the portfolio in terms of sector weightings. And so every firm has a different approach. And at TCW, with both powered and AIFD, we have an approach where we're very broad so that you don't have to worry about tinkering with the subsectors. You can take that 10% out of core,

put it into these two big themes, and then we're managing them across subsectors and across industries for the advisor to save them time on behalf. of the end client. Let's talk about some of the opportunities that both of you have alluded to that have been developing on the equity side and the fixed income side, because given the geopolitical environment, the macro kind of narrative that's happening right now in the markets, there's

opportunities on both sides. I mean, and you could say commodities, alts and everything else as well. Specifically with regard to equities and fixed income, let's go maybe Todd to you for this one first. Are there specific places in the market that are now presenting them as opportunities for those who want to be opportunistic about some of the more tactical, near to medium term, you know, market movements. We think about things like memory chips, right?

We've seen a huge fall percentage-wise from the recent peaks for the Round Hill Memory ETF, right? That one's a big one. We've talked about the SMH, the Savannah-Vector semiconductor ETF. Many of these things have now fallen by quite a bit, maybe creating some opportunities. Are there places that have been highlighted by your research team that have stood out to you as places we say, yes, this could be a place where we have active management that can generate some outsized returns on a relative basis? So I'm going to pivot if I can slightly. So where we've seen also besides the active management on the stock selection side or the industry perspective is using options.

And we've seen a growing number of asset managers bring their options expertise to be able to deliver alpha. So they're still giving you broad market exposure to the NASDAQ or the S&P 500. We've seen firms like NEOS. I have a lot of success this year with QQQI and SPYI. We've seen Goldman Sachs have success in that space. J.P. Morgan was the original firm that offered those products. And then we've even seen some of the more targeted and more sector-oriented products. So Amplify has a product N-Div, which offers some options income on top of the energy

and natural resources areas. So the active management is more in the options part of the marketplace, as opposed to trying to time the market necessarily on the security selection. We've seen Jennifer a lot of folks now turn towards the use of derivative instruments to enhance certain index or sector-based industry-based products. Is that something that you are actively engaged in or exploring more of? You mentioned AIFD and powered as two of your bigger offerings, But I'm wondering from somebody who runs distribution and an ETF business,

how exactly then do you bring product to market that you think will resonate? Where are those opportunities in your mind? And how exactly do you gauge what should be done with a certain type of actively managed product before it hits the market with a ticker so investors can get into them? Yeah, I think in general with active ETFs, it's first, you know, find the market because if you have an interesting trading idea, but nobody's going to buy it, that's not a great product strategy. idea. What we do at TCW is we're not doing derivatives or leverage. We're giving you kind of

exposure to the theme long term. And sometimes on top of that, people will use option strategies or they'll use tax management strategies. And that's in the equity part of our business. And then in fixed income, we think this is a really interesting year where we're finally seeing this huge growth in fixed income active ETFs. So maybe we could talk more about that. Yes, let's follow up with that because this is also coming at a time discussion-wise when we've seen, a sharp rise in interest rates tied in large part to maybe some of the geopolitical uncertainty happening with the Middle East. It's been volatile. We've been all headline driven right now. But overall, there is a bigger fear of an inflationary threat that could be more medium to longer

term. That's driving up arguably some of the action in terms of rates long term on the 10, the 30-year side of things. It is also now taken a big hit in terms of bond values for even investment grade issuers of corporate debt. How does that dynamic set up for actively managed ETF bond opportunities with regard to how investors can approach some of those types of the market? Yeah, I think it's a really interesting time for active fixed income management. And if you go back, I don't know, 10 years ago, we were an environment where rates were so low, people maybe were less focused on income on the bond side of the portfolio. And if you look at where we are now, this concern that inflation is not gone, maybe it's rising, certainly for a certain segment of the

population, that's a real issue. And rates are going to be higher for longer, at least that would be our view from TCW. So it then creates this opportunity to, one, be active, so manage duration, manage the enormous stresses we're having on the system from a geopolitical perspective. And at the same time, you can offer a fund, which we do, we have a multi-sector fixed income ETF, but the ticker is Flexer, FLXR, so flexible income, where in addition to just core return, we're able to look across sectors, look for sectors that are more attractive. So credit spends are very tight. Hopefully that will change at some point in time, but because they're so tight, there are opportunities in the securitized market, for example, where you can do sector selection

into securitized and then security selection within securitized. And that's led to a very attractive return, and we're also managing it with an income target. So for the population that's looking for increasing steadily, steady income as they move through time, it's a fund that gives you a strong total return, and then also has a 5.44 SEC yield, which is a very attractive income. Todd, how much of this is demographic, secular in nature, right? Because we know about the aging population. We know that there are millions of Americans every year that, are rolling into windows where they are focused a lot more on income generation, even more so now because many of the active ETFs that are out there, specifically that are income oriented,

whether they be fixed income, fixed income equities, or fixed income equities derivative-based, are all now not just doing quarterly payouts, but even monthly payouts, some even have even more frequent payouts than that. We know that people want income, and we know it's because they're approaching ages where they want to be closer to retirement and want that steadier income. How much of that ETF flow market is going to expand even more just because we have so many more people that are going to be income-oriented in the coming, say, five, 10, 15 years. So I agree. I think some of this is demographics. Some of this is just ETF adoption. So investors are increasingly turning to ETFs to get their income exposure. We're on pace to have another record year for fixed

income flows. We're approaching that record, and we're already in August. So that's a sign that there is investor demand. There's demand for active ETFs, partially because we've got great asset managers that brought their best and their brightest into the ETF space. And also because the indexes that have long been around there, the Barclay's ag was never really created as an investable product. Debt weighting is not necessarily the right way to be classifying and constructing an index. So we've seen other index providers come out with newer strategies. VETify has one as well. But it's also great to be able to see that firms like TCW, like Fidelity, are bringing their best and their brightest within to the ETF space. Todd, where in your mind

have you seen some of the biggest activity flow-wise? What parts of the market have garnered that much more attention? We know from research that TMXVETI has done, there have been a lot of fixed income flows as a percentage of overall fund flows over the course of the past couple of years, may be in large part because of that new focus demographically on income. But how much do we expect fixed income to not dominate, but become an increasingly bigger part of the fund flow picture for these products going forward? So I think it has been. We've seen fixed income, ETF demand be quite strong.

I think that's going to continue. As we're still waiting for some clarity from the next move of the Fed, they didn't make a change at the most recent time period of meetings. And so we're seeing demand for short-term products. That's been the more popular of the products and treasuries. But we've also seen demand for CLOs. That's been popular within the marketplace. We've seen continued product innovation.

So a firm like Reckoner has brought some new products to market this year that's caught our attention. I know TCW has a CLO ETF. There's some others that are out there. It's just great to see the innovation that's happening within the fixed-income ETF marketplace. Jennifer, how much more sophisticated do your investment advisor clients and your retail-oriented clients have to be? How much more knowledgeable do they have to be about the fixed income markets?

Because it's by necessity, because there are so many new products that are coming out that are treating not just the traditional aggregate bond index, but certain key parts of the market. You mentioned CLOs, collateralized loan obligations. We can talk about certain ETFs that are geared towards private credit market. They've become opportunistic at this point, given some of the business development company issues that we've had. How much more of a learning curve is there out there for customers because now they have to understand these products even better because they are so many ETFs that they can choose from to enhance their returns or potentially enhance their returns? Yeah, there's certainly a lot to choose from out there from a selection perspective.

And I think it's our job as a manager to be out and to be educating. And it's a little bit like what we talked about on the equity side, where many advisors will use a total return type product. Increasingly, they'll add something that's income-oriented, and then they'll have a view. And so if they have a short-duration view, or a lot of people are increasingly investing in CLOs, we have an ETF-A-CLO because it's high quality, it's higher return, but it's got very short duration. And so those are examples where I think a lot of advisors are holding a core income-oriented portfolio and then dabbling. a little bit with short duration or CLO products. Now, there are other advisors that really want to get a lot more sophisticated that will do the active management on their own behalf.

And there, we and others will have individual sector products so that if they want to hold multiple sub-sectors, they can do it that way. Or if they want to just hold one or two big products, we as active managers can deliver the return, and then they don't have to worry about the Fed and the geopolitics quite as much on a daily basis. I'd like to conclude this conversation with just getting some of the views from you guys about just kind of where we're headed in your minds. Jennifer, I'll start with you.

If you look at the way that the markets are set up right now, we are, as I mentioned, dealing with many macro factors, geopolitical uncertainty. There is now a fear that maybe things could be economically, maybe a little bit less stable than they were over the course of the past couple of years. Inflation, jobs market and focus. There are a lot of things that are, I guess, at play right now. From your standpoint, is there a maybe view that you have about what the best thing to do is right now, specifically with regard to key parts of the market, whether they be in fixed income, in equities or alts of that variety? Yeah, I mean, our view as TCW is that rates will be higher for longer, and the volatility we're seeing in the equity markets will continue.

We actually think the momentum unwind is a good thing. Prices come down a little bit. It cools off, but a lot of these companies have very strong fundamentals. So we actually think investors should just keep slowly investing and paying attention in the equity market and then take advantage of the opportunity with ETS, but also in private credit, around the rate environment. Now, Todd, is there something that you're seeing with regard to what might be the best course of action and opportunity that you're keeping the closest eye on with regard to key parts of the market and how exactly do you think things will shave up for the back half of this year? Well, I think we've seen record demand or on pace for record demand for ETFs. investors keep embracing ETFs, whether they're taking risk on or they're taking risk off. I don't have a view as to which one is the right way to do it, but there's ETFs to be able to do that.

So we've talked about active ETFs. You can use smart beta, factor-oriented ETFs that take a more rules-based approach to reduce your equity exposure or take on less risk or to take on additional risk. I'm just super excited by the growth we're seeing within the ETF marketplace. Now it's time to round out the conversation with some thoughtful analysis and perspective to help you better understand ETFs with our Markets 102 portion of the podcast. Jennifer Grancio, Global Head of Distribution at TCW continues with us now. Jennifer, it was a fascinating conversation because we hit so many different parts of the market, but one of the things that stood out to me was just how much actively managed ETFs

are getting in terms of attention these days. and it's because investors are clamoring for them more, but also because the issuers are able to bring them out to market in a relatively quick fashion, compared to what it has been over the last 10, 15 years. What exactly has stood out to you as an ETF business manager in terms of what has happened to promote active ETFs to the place that they are right now?

I think the growth has been phenomenal. I think when we look at the statistics, last year, 30% of the inflows were active versus passive. This year, we're on track for something like 40% of the flows to be active. So it's a staggering change in the market from even a couple of years ago. And in terms of why and how, what are we seeing? I think at some level, the market and the buyer has gotten used to the ETF as a vehicle. And so whatever it is you're buying, you're always looking for an ETF now.

That was different 10 years ago. But then if you look at the actual markets and what's going on in the market, the markets, there's a story there as well. On the equity side, the indexes, everybody has their index allocation, they're very heavily weighted towards tech. And so I think seeing micro strategies that people can use on the equity side in the form of active ETS, and like what we do at TCW, more macro thematic, long-term strategies where you can have an active manager invest in the power and infrastructure, have an active manager invest in AI. Now if we look over at fixed income, I think that's a fascinating development in the fixed income market as well, where traditionally it has

been more mutual funds. And now we're seeing the new flows really come in to ETFs. And from an ETF perspective, you can buy a traditional total return strategy, or you can buy a multi-sector with income, which is where a lot of the growth in the market is coming from. And then for people that are either more sophisticated or looking to be more tactical, as managers, we've also delivered all of these individual sector products. So now you can either buy the core of your portfolio in fixed income as an ETF with a fund like a TCW, FixT as our core fund or flexor is multi-sector and income. But you can also design the portfolio yourself with all the sub-sectors that the managers have made available. We've come a long way from just investing in the Vanguard total

return bond fund, right, and just saying, hey, I'm just going to allocate to that. There are so many more options right now and so many more places where investors can become not just tactical, but tactical too strategic with regard to how they construct their portfolio. Specifically within fixed income, just how much more complex do you have to treat the business? How much more nuanced do you have to be because there is such more of a demand from investors, whether they be investment advisors or retail investors, towards more specific tailored parts of the market within fixed-term. We're not just investing in the total bond market

now. Now it's like maybe that's the core holding and we are branching out percentage-wise in terms of allocations towards things like CLOs or private credit or certain sector exposures, high yield versus investment grade, mortgage backs, everything else. And there's ETS, by the way, for all of those things, right? How exactly has that bond market evolved in your mind to the point where we are so much more specialized in how we deliver potential returns to investors. I think as managers, so a manager like TCW that's been doing this for many, many decades for over 50 years, our portfolio managers have always had that level of sophistication.

And they are always, as an active manager, they're always looking at the individual sector. So credit versus securitized, for example, and they're allocating between sectors. And as active managers, they're also able to go within a sector. So let's take the example of at TCW in a total return for, you. in a total return fund or in the Flexor ETF, we're managing across sectors, which allows us the opportunity to watch the markets. And because credit continues to be so tight within that portfolio, we're going to be exposed to securitized. But for us as an active manager, our team has been managing securitized for more than 20 years. And so we know how to do that.

We know how to make decisions where we're buying very high quality securities. We've done the research on it. And we feel good about the quality. of the holding. And because it's securitized instead of credit, we're able to get much higher spreads. And so as an active manager, we're bringing that to you. We're doing all the allocation. We're giving you that extra alpha. We also are going to be launching a securitized ETF later in the year. Can't quite talk about it yet. But that's an example of we'll also just give the sector tool to the market so that if somebody wants to just overweight securitize, they also have a way to do that. Is that also partly because you are seeing more demand for that or potential more demand,

potentially more demand coming for that part of the market? If you are looking for people who are, I mean, chasing yield is not maybe the right way to say this, but you are looking at a customer base that is increasingly turning towards finding income-oriented products. And securitized is one of those ways that they can get something incrementally better than say your standard treasury or total bond market return, but take on a little bit more risk on the other end of it. Are people willing to take on that risk to get that additional return? And is that the reason why we are seeing folks like you and others bringing different types of products to market that aren't just traditional bond total market type products? Absolutely. And people want to be able to drive

more return out of the fixed income part of the portfolio. And so ways to do that, maybe we can come on to this later, but ways to do that are within the public markets, high-quality securitized is a great way to do that. And then at some point you can also get into the private markets. The other thing that we've seen in terms of where more products are being launched and where there's tactical interest is a lot of advisors and investors are looking for high-quality options that are better than cash.

And so the other thing that we see are short-duration products, and then CLO products and CLOs at a AAA high-quality level can be managed. Again, we're an active manager, we manage many billions of dollars in CLOs, so we know what we're doing in that space, and we're able to do security selection and understand the actual underlying CLOs so we can put a product together, that then if you're a buyer and you're looking for something that's better than cash, it's a little bit more risky, it's not the same as cash, but you're picking up quite, a bit of return and it's short duration. So in that case, we're seeing people use the triple A CLOs,

like our product is A CLO. We're seeing people use those products to be short duration, but increase yield. Do you feel as though there's going to be a continued focus on short duration and more floating rate type products because of the environment that we're in right now? Because there is such an uncertain outlook for interest rates that maybe some investors want some of that kind of more shorter reset or variability in interest rates because things could move in either direction, but they don't want to be locked in to some kind of duration exposure long term. Is that something that you think is going to be a bigger trend going forward, that kind of focus on the shorter end of the spectrum?

I think both the short end right now, because people are concerned about the direction of movement in rates or the rates being sticky at a higher level. And then absolutely floating rate is attractive. So in an environment where you don't know what the base rate is, a floating rate, where you know you're getting return on top of a base rate, that's very attractive to people. And so what we hear from our clients are both of those things are driving the interest in high-quality COOs, for example. You had alluded to before talking a little bit about some of the opportunistic parts of the market

that you're gravitating a little bit more towards. You mentioned a handful of them right now. Where else are you looking? We've heard some guests come on here talking about emerging market debt. We've heard others talking about some of the opportunities in places like high yield and not just high grade high yield, but even some parts down the credit risk spectrum. I think from your standpoint, where exactly then would you find some of those other places that are starting to peak your interest?

So securitized is one across the whole spectrum. And in securitized, we also step into private securitized. So we don't do that in an ETF. today. We think that once it's private, it has liquidity, but it does not have perfect liquidity. So as TCW, we do that as an interval fund. So it's securitized all the way into privates, we think is very attractive diversifier of corporate risk. And then within the public markets, we've been in emerging markets investor in emerging markets debt for many, many years. And within our total return funds, within Flexor, we are also holding emerging markets exposure. So that's another

example of where we can pick up yield and return as an active manager because people do want the highest return they can get at a certain level of risk. And so we like emerging market income right now as well as securitized. One of the other things that I'd love to get your take on because it's a treat to have somebody who's kind of seen a good amount of evolution in the, not just the markets, but the ETF business overall as well. You at one point helped start the I shares business at Black Rock. You then moved over to engine number one and was one of the founding members there, and now you're at TCW. So you've kind of seen this evolution over the past 20 years plus years of how the markets have developed and how they've kind of adjusted to ETF's growing presence within them.

From your standpoint, do you feel as though the markets today are relatively well-equipped and more stable to accommodate the kind of product innovation that we're seeing right now. Regulations have been loosened is maybe not the right term, but they've been relaxed a little bit to allow more product innovation to come to light. I wonder if in your mind you think that the markets are on a good trajectory vis-a-vis the developments that have happened along the way. And I guess how do you look back on your, say, early days at iShares versus what you're looking at now with regard to how that product has changed? It's been a phenomenal change over the last couple of decades. And I think that the ETF industry really started with index funds and even, I would even say with equity

index funds. And that was the first 10 years. Maybe that next 10 years, you started to see fixed income ETFs, but a lot of them were passive. And then as we've gone up and down with different regimes from a regulatory perspective, I think there was an appropriate amount of concern going back 10 or 20 years ago that making sure people understood what they were buying. So from a disclosure perspective, if you're a retail investor and you're buying extremely leveraged products, for example, as long as you understand what you're buying and what the product does, that's fine. But those products have huge volatility and you in many cases actually have to understand how the trading and hedging works when you're buying leveraged or option products. So I think that market is

much bigger today than it was in the early days. And that can be a healthy, set of tools for investors as long as the investor-advisor really understands it. And then to come on to the growth inactive, when we started engine number one, we were doing all active management, and we chose to do ETFs as the vehicle because we were looking forward and we thought, if you look back six or seven years ago now, that the market would develop to where it is today where people have embraced the vehicle. And also the change from a very low interest rate after a global financial crisis, to a much higher interest rate really creates the ability for companies to have dispersion. And if you have to borrow money at a much higher real interest rate,

then two companies in the same business, if one is a little bit more successful, that company can really win. So that was our logic at Enten Number One on why we built the equity funds as active and as ETS. And we've really seen that come together in the last number of years where these big, complicated themes. It's a great opportunity for active managers. And maybe the last thing is indexes. So it used to be there were one or two indexes, right? And now people will do self-indexing, or basically come up with a way to do an index methodology to give exposure to something narrow. So I think this is very healthy development for the market. There's a lot of product out there. So I appreciate that makes it challenging for the average advisor to try to make sense of all of this.

But I think a lot of the wealth firms we work with have great research teams, and the research teams will help decide what products to approve. They'll provide education. As a manager, we provide a lot of education to help people understand based on how they're running their portfolio, what products are actually the best fit. And one final point before we let you go. The ETF wrapper has become much more desirable in this day and age. for many reasons, the intraday liquidity, you know, in some ways, tighter spreads in terms of being

able to trade those things versus other products in the market. And one of them is the tax efficiency, right? There's a little bit of that kind of nuance in there as well. As we see a demographic development towards more people retiring, more people heading towards tax advantage type products, do you feel as though the ETF market is still the right vehicle versus the traditional mutual fund product towards a part of the population that is going to not necessarily require

some of the liquidity, intradate tradeability, and tax efficiency of ETFs versus, say, a traditional mutual fund that cannot pay taxes on its own and has to distribute them to their customers. I mean, I actually think there's not a downside to a retiree holding an ETF instead of a mutual fund. So if you think about it that way,

there's nothing the ETF vehicle does that makes it worse to hold the ETF. But the ETF vehicle does create a structure where the average vehicle run by an excellent manager will have lower taxes than the mutual fund. So there's still a benefit to that on your way into retirement. All right. Jennifer Grancio at TCW, thank you so much for the conversation. Please come back and see us again soon. Thank you. All right. That does it for the ETF Edge podcast. Thanks for listening. Join us again next week or just head over to etfedge.c.com. Over the last few decades, technology has transformed our world in amazing ways. Through it all, InvescoQQQETF has connected investors to the forefront of innovation. Access the future today with InvescoQQQ. Let's rethink possibility.

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