ETF Edge - Exchange ETF Conference in Miami

Episode Date: April 11, 2022

CNBC's Bob Pisani is broadcasting from the biggest ETF conference in the world, the inaugural Exchange ETF Conference! Bob spoke with Mat Hougan, CIO of Bitwise Asset Management, Tom Lydon, ETF Trends CEO, and Michael Sonnenshein, Grayscale Investments CEO. They discussed the state of the ever-evolving ETF industry; everything from how to navigate the market turmoil on a road paved with risky variables, to the SEC's crypto conundrum and opportunities abroad. In the 'Markets 102' portion of the podcast, Bob continues the conversation with Tom Lydon from ETF Trends. Hosted by Simplecast, an AdsWizz company. See https://pcm.adswizz.com for information about our collection and use of personal data for advertising.

The ETF Edge Podcast is sponsored by InvescoQQQQ, supporting the innovators changing the world. 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 are in the right place. Every week, we're bringing you interviews, market analysis, breaking down what it all means for investors. I'm your host, Bob Pisani. And today, we're bringing you a very special show live from the biggest ETF conference in the world, the inaugural Exchange, ATF conference. This is Miami Beach, Florida, the fabulous Fountain Blue Hotel. I'm sitting on the deck right now looking out over the blue ocean. I wish you were here. We've got the top names in the business here to discuss the state of the ever-evolving ETF industry. Everything from how to navigate the market turmoil on a road paved with risky variables to the SEC's crypto conundrum and the opportunities abroad. Is China, for example? Still investable in 2022. Here's my conversation with Matt Hogan,

CIO of Bitwise Asset Management, Michael Sunnonshine, CEO of Grayscale Investments, Tom Leiden, CEO of ETF Trends, and Brendan Ahern, CIO of crane shares. Tom, you said it's good times and tough times for the ETF industry. Money continues to flow in, but advisors are worried, you're telling me, particularly about bond ETFs. What's going on? What's the big worry here? Well, we're surveying advisors all the time. And before this conference, Bob, we asked advisors what their biggest concern was. And it's inflation. And it's its rising interest rates, even more than political risk. And that geopolitical risk that's going on over in Europe surely is a concern, but more importantly,

most are convinced that the Fed is going to lean into hiking rates. That's not good for bonds. It's not good for bond ETFs. By I say, by the way, you look fabulous sitting here with the blue ocean behind you. Is my hair okay? It's very annoying, because you look better than I do. I don't need the competition. But on top of that, what we're seeing here, and what impressed me was you did a survey of investment advisors.

And you think Ukraine would be number one, concern, global uncertainty. It's not. It's taking a back seat here. Rising interest rates and inflation, 43% said it's the greatest worry, 34% geopolitical risk, 13% prolonged economic slowdown. That's the recession worries, and I bet you it's higher now. So it's very clear inflation is the number one issue. You know, you've said to me, 70-30 is the new 60-40 for a long time, that the 60-40 stock bond split is going away because it's just not going to work.

We've had bond people, stock people used to a bull market for the last 12 or 13 years. How are the, what's the conference going to tell all these RIAs to say to their clients about their bond funds? Well, that's the key. And it's important to remember, Bob, advisors are managing money for people who have real money. And if they're closer retirement or in retirement, having that balanced portfolio has always been important. But after 30 years of declining rates and now seeing rising rates again, there's a big conundrum going on. They're not as concerned about volatility in the stock market. In fact, numbers show they continue to buy on the dips. But as you point out, inflation and rising interest rates is a real worry.

And the last time we saw this was in the late 70s when you and I are running around on our sting raise, right? Yeah. Thank you for bringing that up. Hold on, I'm getting flashbacks. So what alarms me, I can't help but think it's alarming the investment advisors here, is the bond ETFs are all at new lows. I looked at it this morning. The biggest one out there, Vanguard Total Bond, New Low.

PIMCO's Active Bond, B-O-N-D, new lows. The I-Shares, the Investment-Great Corporate, the Muni-Bond ETFs, new lows. What's the alternative? If you've gone to 70-30 is the new 60-40, what's the 30? Well, a lot of advisors and investors are taking. taking their marbles and going home. There's more money that's gone in commodity ETFs here to date that have gone into US fixed income ETFs year to date.

There's $5 trillion that are in money market funds. There's $15 trillion in bank passbook accounts. People and advisors especially, and they're telling us this, would rather keep it safe or very, very low duration. So there's a lot of fear out there in fixed income. You anticipate, what you're sounding like you're telling me is we're anticipating new outflows. into bond funds this year.

It's more about diversification, dividend-oriented strategies, commodities, other alternative income strategies like some of these options overlay strategies that are out there that are really important. You're seeing flows go into all these areas. Yeah. You know, like I've been saying, the advisors are used to seeing bond funds and stock funds go up for more than a decade. I'm really curious to see how they're going to sort of thread this needle.

You think it's all going to be, let's just go into cash at this point? or let's just stay in the bond into commodity funds? Well, what you're hitting on, Bob, is today there's more money in motion than we've seen in 10 years in the ETF space. That's why a lot of advisors are excited to be here because we're going to tackle those tough questions. We're going to have a lot of strategies from really important people, but most importantly, advisors are going to have a chance to get together one-on-one for the first time in a couple years. I want to just before I get to our next guest here, a lot of new people coming into the business. New Burger Berman's coming in.

Morgan Stanley. My heavens. Morgan Stanley has discovered the ETF business. Don't let this get out. They're on the cutting edge of all this. I'm kidding, folks. Capital group. Capital group is already in. We've talked to them already. Money keeps coming in and people keep changing. I'm impressed by the fact that Morgan Stanley's getting in. But a lot of active managers are converting. Well, it's all about choice. They're asking their clients, advisors, what do they want? It's not as though they're abandoning their funds, but they'd also like the choice of ETFs too, and that's what's key and critical. OK, let's switch to the other hot topic.

That's crypto. The Bitcoin conference ended on Sunday, but some people attending that, they're still here talking about ETFs. Let's bring in Michael Sonnonshine. He's the CEO of Grayscale Investments. Matt Hogan is the CIO of Bitwise Asset Management. Michael, we've got an application in front of the SEC to convert gray scale.

Bitcoin trust to an ETF. The SEC has until early July to respond to that. They've denied all the previous PurePlay Bitcoin ETFs. And you've hinted to me and to others that if they don't approve your application, you might sue them. Can you just explain why and what the grounds is for that? Well, the SEC has a tough decision in front of them. Again, there are now over 800,000 accounts in the U.S. across all 50 states that own GVTC. And what we've seen now is a changing and an evolution of how the SEC is thinking about approving these products.

When they first approved the Bitcoin Futures products, that was the first time we had a signal from them, but they began to get comfortable with Bitcoin as an asset class and giving investors access to it. But they had long said that the 40 Act had certain protections that the 33 Act and other structures might not have. And as recently as last week, we saw their thinking evolve even further, right? The 33 Act now we have a Bitcoin Futures ETF registered under the 33 Act. And so when the SEC has cited concerns, it's been about the underlying business. Bitcoin market, the potential for fraud and manipulation. And so it really is, in our opinion, a matter of when and not a matter of if.

And if the SEC can't look at two like issues, the futures ETFs and the spot ETF through the same lens, then it is in fact potentially grounds for an APA violation. I can't help but think that your shareholders are putting some pressure on you. That GBTC trades at a substantial discount right now to the market. Is that entering in to this? It's substantial fees. It's a 2% fee here. I mean, your shareholders must be putting some pressure on you.

Well, it's actually a really great point. Shareholders actually have an opportunity to be a part of this conversation. Because this filing is in front of the SEC, they're actually able to submit a comment letter directly to the SEC. We've set up a website so folks can do it. Grayscale.com slash comment. There's been over 3,000 investors who've already written into the SEC advocating for this position because they've been very patient and they feel that they deserve it.

METF. Matt, you and I lived through this in 2018. The SEC put out a long, long comment letter, specifically on what they did not like about Bitcoin ETFs. And they said, here is what you need to do to cure the defects. In your opinion, what kind of progress has been made to cure those defects? And respond to Michael's point here. Is there a legal ground for trying to push the SEC into approving a Bitcoin ETF? Yeah, look, I think a huge amount of progress has been made. An answer to the SEC's questions. Bitwise has an application that's due up in early July that has over 200 pages of novel academic research answering their specific questions. I think the most important thing for people to understand is that you can run a Bitcoin ETF in a safe and responsible manner. They're

doing it in Canada, they're doing it in Germany, they're doing it in Switzerland, and having a Bitcoin ETF would only lower costs and improve investor protections. Now I think we're going to get there. I think if you look at what the SEC's done recently, it's crawled, it's walked, and now they're ready to run. They approved the first futures-based ETF, then they approved a 40-act ETF, and now we're ready for what everyone actually wants, which is an ETF that holds spot Bitcoin in a safe, secure, and lower-cost manner than most investors access it today. But the cart of the objection is the fraud of manipulation problems. Have they addressed that? Do you think the industry has addressed that? Do you think that you have enough to say where the SEC can say, you know what, we're not that worried about fraud and manipulation.

That goes to the heart of what the issue is. Well, absolutely. The specific request from the SEC was to demonstrate that the regulated CME market is a market of significant size. And we've done that in our 200 pages of research. You've seen a large number of academic researchers arrive at the exact same conclusions. The fact of the matter is that Bitcoin is now an institutional market. It's a market with institutional service providers, institutional investors, a large and robust regulated futures market. You know, maybe five years ago the Bitcoin market wasn't ready for an ETF.

Now it's more than ready, and it's time for us to move forward. Tom, these two guys have obviously a horse in this race. You're a bit of dispassionate observer on this whole Bitcoin ETF issue. Handicapped this for us a little bit. Tell us a little bit about how you view this in the perspective. Well, the genie's out of the bottle, Bob. And we're surveying advisors every year. ETF trends and BitWise does a very extensive survey every year to the advisor community.

And each year the numbers continue to increase as far as the demand for these types of products that they could put on their traditional platforms, whether their Schwab account or their fidelity account. Right now, not really that many choices. So it's not going to go back. It's going to move forward. And with gentlemen like these that understand how to work with regulators, I think they're going to get it done. Something happened last week. I want you to describe Michael.

Two CREM, an organization that's futures commodity types of ETFs received an application or got an application for a Bitcoin Futures ETF. And there was something very specific about this. It was approved under the 1933 Act, the SEC Act, and not the 1940s Act, which was the act that was created for mutual funds. You think this is a very important event that's happened. Without getting too wonky, can you explain why the approval of a 1933 Act somehow it opens the door for a Bitcoin ETF over a 1940s act? Well, historically, the approval of the Bitcoin Futures ETF under the 40 Act said that, you know, from the SEC standpoint, there were several protections that 40 Act products have that 33 products don't have. And those are things like an independent board and specific. you know, accounting and custody rules. But never ever did those protections address the SEC's

concern over the underlying Bitcoin market and the potential for fraud or manipulation. So the fact that they've now evolved their thinking and approved a 33 Act product with 2CREEM as recently as last week really invalidates that argument and again talks to the linkage between the Bitcoin futures and the underlying Bitcoin spot markets that give the futures contracts their value. So your take on this? Was this a subtle but important concession that the SEC? And if so, why would they have made this concession if they still have a problem? Well, I think it's because they're getting to yes on a spot Bitcoin ETF.

I do think it was an important step forward. Look, there's one way and there are plenty of people in the crypto industry that look at the SEC and think they're obstructing our pathway to a spot Bitcoin ETF. If you take the other view and you step back a year ago, we've made huge progress. We've gotten the Bitcoin Futures ETF under the 40 Act. We've gotten a Bitcoin futures ETF under the 33 Act. The next step is what people actually want, which is a spot Bitcoin ETF that gives pure exposure to Bitcoin. But I'm trying to get to the main point here, which is that the SEC has a problem with a pure

play Bitcoin ETF, and they have not had a problem with a futures-based ETF. And they have specifically said, we're making a distinction. You seem to be making this argument, look, you approved the futures ETF, they are linked to the underlying, therefore, apparently the SEC does not agree with this line of thinking that they're linked, therefore we must approve. And they're going to say something here. I have a hard time believing they're actually going to suddenly say, you know what, you guys have been right. They're going to say something. What are they going to say? Well, I think that's a really important point for people out there. The Bitcoin futures settle to the spot price of Bitcoin. So they literally reference the same spot prices that are products and gray scales

products would reference in their materials. So it is the same thing. Again, it's incremental steps in the right direction. Yeah. And is there something under, not to get really wonky, under the Administrative Procedure Act, where, you know, like things have to be approved that are like? I mean, I see these arguments being made. Well, with the Administrative Procedures Act, this not only applies to the SEC, but any federal regulator, for that matter. When they're looking at two like issues, they need to look at them through a like lens. And this is what we're saying in the case of the Bitcoin Futures and Bitcoin Spots. I got to move on. But if you, if you sued SEC, it's going to take years, right? They're not going to have like a 90-day thing and all of a sudden

there's going to be, you know, a court, you know, that's the Illuminati with people with cows and, you know, sitting there by candles making a decision. It's going to take potentially years. This doesn't guarantee anything even if you do sue them. We are putting the full resources of our firm behind this initiative and to advocate for our investors. So it's a matter again of when, not if. Okay. Tom, again, I'm going to turn to you and say, what's your time frame? And do you, It seems to me like the Bitcoin community is kind of fed up with this. All right, and enough with the man be pamby and the legal distinctions. And we just, we want our candy and we want it now.

But I still see a tough path. I see another 2018 paper coming from the SEC explaining why the progress that's been made and still explaining why they're not going to go ahead and prove it. So Ginsler came in, he wanted to send a message, and he did so in the way that he wanted to have the underlying and the products themselves regulated. But he's starting to have chinks in the armor. I don't think he's going to die on that hill. This is something that is widespread from a demand standpoint.

And as we said before, we're not going backward. Yeah, I think the important thing here is we're going to see progress. We're going to see the SEC make incremental. I'm telling you, there's going to be another big long paper coming out, and it's going to explain what's been done. and here's why we need still to say no to you. And that's kind of what I see coming. I want to move on here and switch to another very high profile topic,

and that's China. Now, Chinese regulatory authorities have signaled there may be a deal on allowing U.S. regulators to inspect the audits of U.S. listed China companies. But is China still investable for global investors? Joining us now. Brendan A. Heron, CIO of Crane Shares. He runs the Crane Shares-C-S-I-China Index.

China Index, K-Web, among other China ETFs. Brendan, update us on where we are on this thing. Will there be a deal with China regulators this year, and what will the deal look like? Yeah, the CSRC, which is China's financial regulator, very much similar to RSC. The last two weekends has put out statements about resolving, actually allowing the PCOB to do the audit reviews

of U.S. listed Chinese companies. That, in theory, would resolve the holding foreign companies accountable act, which could see the companies delisted in 2024. So we don't have a definitive deal, Bob, but we certainly have the verbiage, the language that it could be in the works. Now, how much will that improve the overall environment? Will that go a long way towards dealing with a portion of the investor's reluctance to get involved with China at this point? Oh, I think 100 percent, if you say to investors that these companies might, be delisted where you have no recourse, you have a zero. That people are going to take a very conservative path. And so I think it's certainly weighed on the space in a very significant manner over the course of the last year.

Now, there's a crowd, folks, that has been saying that China is becoming uninvestable because the political and the regulatory risk is now much higher than was perceived before. And yet, when you look at this, I see value players out there who don't seem to be very concerned about this. For example, I see Charlie Munger buying Alibama. Alibaba. So some of this gets caught up in issues that are now really about investing or regulatory risks. They're not about that. It's really about investing as a political stance, right? I mean, China is what, 18% of global GDP right now. $400 billion in U.S. companies are investing, get revenues from China. It seems like, like, how do you thread this needle?

How do you decide China is uninvestable because of true regulatory and political risk that I as investor have versus we're Americans we shouldn't be investing in China because they don't support the world? And yet Charlie Munger, I just mentioned folks, just turn around and start buying Alibaba. Yeah. Well, and then the U.S. investors are heavily invested in the U.S. multinationals that are doing a huge amount of business in China. So you're already in China. And I think more important is just in general, over the last decade, the broad emerging market index, broad China, really 50% of the sector exposure 10 years ago was in financials energy materials. And so some of the underperformance we've seen by emerging markets is China is simply the sector exposure, the value orientation.

And that's led to this vast underperformance. And I think these U.S. listed Chinese ADRs that we holding. K-Web really are the growth engine within the EM. So, Tom, thread this needle for us. I see this split so clear in the investment community. There's people who think there's three groups. People who think China might be uninvestable for legitimate political regulatory risk issues.

There's a second group, the value guys, who don't care at all about this. If China trades for 14 times forward earnings or below, they buy. Charlie Munch, you're buying Alibaba. There's a value. call. The third group is the political people and say, you know, guys, we should not be investing in China because they don't support any kind of values that we have. So there's kind of three different groups that are involved here. How do you thread this needle? So a couple things. First of all,

this situation didn't happen overnight. This has been signaled for a while. Oh, yeah, yeah. Right? And however, the market reacted as though it was brand new news, right? Number one. Number two, talk a little bit about what you did in advance of this news because already you've done a good job of repositioning your holdings from U.S. listed exchanges to Hong Kong exchanges where you still own the same underlying, correct? Yeah, yeah, Tom, I mean, we're fiduciaries, we're stewards of our investors' capital. We've taken this law, HFCAA, very seriously. So we've moved K-Web a year ago. It was about 25 percent in Hong Kong, 75 percent. U.S. US ADRs, today it's the opposite. So we've moved our Alibaba, Badu, J.D., Nettys, Billy, Billy,

completely out of the U.S. share class. It's a tax-free conversion. It can be done overnight. And we feel like just to make sure that in case the two sides do or don't come to solving, which we think is very solvable issue, we've protected our shareholders and we're continuing to monitor this on a daily basis. So if it works out great, you can continue to listen to the U.S. If it doesn't work out, you're fine with Hong Kong. And back to Bob's point here, the underlying value in the meantime, these stocks have dropped dramatically in price. The valuations have been so much better. And they are, in fact, the same company. The China economy is stronger as it's ever been. Yeah, we've had, I mean, really indiscriminate sellers for the political reasons, Bob pointed out,

for the holding foreign companies accountable. And that's led to this huge dispersion between the fundamentals and the price action. And it's not just Charlie Munger going in and buying. Alibaba just upped their buyback program from $15 billion to $25 billion. We have companies like $0.10. The last nine trading days, been buying almost a million shares a day. So the companies themselves seal a lot of value in the shares, and we definitely agree with that assessment. Tom, you've got to admit, between Russia and China, it sort of rocked the global investing world. Look, four years ago, you and I were all talking about.

okay, we have to have asset allocation based on share of global market capitalization. China is, what, 18% of global GDP? And we should have asset allocations based on that. So you have a certain amount in global funds or emerging markets, and it's based on market capitalization. And now, in the last year, we have had this whole debate about maybe we shouldn't be strictly looking at things just on market capitalization. Maybe we have to understand risk on a clearer.

way and we have to rate political regulatory risk on a much higher scale, which might create underweights or in some cases no weights at all. My point is the conversation's changed a little bit over the last year. I'm trying to figure out what's the right way to explain that to people and present it. So Brendan's had a good job of explaining what's happened in China as far as geopolitical risk and economic things that have happened over periods of time. And it seems kind of like every year something goes on which pulls it back. Again, Russia aside, I think it's apples and oranges, Russia has market cap is the size of Texas, right? So, however, we can't discount China. It's going to be something that we're going to continue to deal with with our lifetimes into the future. But boy, how many times you get an opportunity to buy such good companies at discounted prices? I think this is just something to talk about. Yeah. I noted, you and I were talking earlier, what's astonished me about your, with KWeb last year, was the sudden onrush of assets into your fund. So the fund was cratering because people were selling it like crazy. Then all of a sudden, it just turned around.

You went from, I don't know, 50 million shares. How many? You quadrupled your shares outstanding. Basically, a huge number came in to buy the fund, created new shares. Can you explain how that happened? Was that people who wanted to short your fund who were creating new shares? or were there new investors? How did you suddenly, your assets went through the roof? Yeah, it's mainly new investors. I think a lot of financial advisors, a lot of RIAs, financial professionals, they either aren't allowed to hold a Hong Kong share class or they don't want to. And so they're almost hiring K-Web to make that conversion for them,

as well as to keep monitoring this situation where it's obviously very fluid. And we've tried to be over-communicate with our investors about how seriously we've taken this law and the ways, things we've done to protect our investors. Yeah, yeah. I think it's a fascinating question because it's the overlap with politics, with value plays, and with how we should be looking at the world as global investors. This is why I love the ETF community. It's made possible that global investment outlook, which we couldn't do even 10 years ago.

So many more choices, yeah. Yes, but also a lot of responsibility. Right. We get emails. We have people on our air who say, you know, you guys, it's not just a bunch of, you know, value guys. You got to have a little, you know, you have to have a moral overlay. We get emails about this from people. So the conversation has shifted a little bit. At any rate, it's going to be great watching all of this, guys. Thank you very much for joining us. Now it's time to round out the conversation with some analysis and perspective to help you better understand ETS. This is the market's 102 portion of the podcast. straight from the exchange, ETF Conference, on the patio of the Fountain Blue Hotel in Miami, will be continuing the conversation with Tom Leiden from ETF Trends. Sitting out here basking in this glorious sunshine and waiting for the Pinocolas to come.

It's tough duty, isn't it? I know. Thank you for inviting me to the conference. I wanted to just push the conversation forward about the ETF business, because my theme here this week has been enormous growth. Good times. We're going to hit $8 trillion in assets under management. ETF assets keep going up. Mutual funds keep going down. Even through the pandemic, raking in money. And yet, it seems to be a little bit of a perilous time.

These advisors here are worried about the bond funds. So can you push this forward a little bit for me? Where are we going to be further on in the year? Do you anticipate still seeing outflows from bond funds? Are we going to six months from now? It's hard to put on that hat because we don't know about inflation, I guess. You don't, Bob. And like you said, yeah, the last couple of years have been challenging for everybody. However, it's great to be back together. What we're hearing from advisors, even though a lot of money has gone into ETFs in the last two years.

Two years ago, we were $5 trillion now. We're at $7, as you said. However, there's more money that went into commodity ETFs so far in the first quarter than's gone into fixed income U.S. ETFs. So there's a concern. You pointed out the ag last year was down. It's down year to day. date. Investors are concerned about rising interest rates. They're concerned about inflation, even more concerned than geopolitical risk. So what do you do? What's interesting to me is products, what I love about the ETF industry, it's so diverse that there are products that were hitherto rather obscure that are suddenly hot. So Investco has a few products, you know, that are out there, PDBC, which is commodity futures. Very hot product. A lot of inflows into that. low volatility, high dividend products are hot.

Nobody cared about that two years ago, and suddenly, low volatility, everybody wants to own consumer staples like Pepsi and General Mills that still pay dividends. Well, you bring up PDBC and you bring up the concern. Advisors two years ago were concerned. In fact, even though the Fed was signaling its transitory, we're not concerned about inflation. they were wrong, and they were wrong in a big way. Advisors were right, and we started to see more money go into commodity-related ETFs like PDBC. But last year, we actually saw very little on a net-net basis go into commodity ETFs, and it's because there was net redemptions in GLD, because, as you know, gold was the

worst-performing commodity last year, and that actually brought the overall flows down. So areas like energy, agriculture, in a big, big way, continue to move up in price. And it doesn't seem like that's going to pull back anytime soon. Gold's been a disappointment this year for the inflation crowd. I mean, how many years? 30 years I've been doing this. I keep hearing gold's a hedge against inflation.

Didn't do so well as a hedge. Is that because there are other alternatives still that are out there? Is the Bitcoin crowd sort of overshadowing gold a little bit? I think there are multiple reasons. I think you're right. I think cryptocurrency provides another alternative that doesn't correlate highly with commodities, so that's something different. But also choice.

You think about the last time gold really had a run. There weren't as many choices on the ETF side where you can be really specific if you want to go into agriculture and even types of agriculture versus types of energy and that type of thing. So they're starting to see attention to. This strikes me as a very perilous time because there's a lot of people who haven't seen this, not since the great financial crisis. We have been used to bonds up, stocks up for 12 years now.

Yeah. The SEP 500 has been up 15% on average in those 12 years. The average, as you know, the SEP normally go up 9% or 10% in year. So obviously, a good part of this outperformer has to do with the Fed pumping liquidity. So how do you deal with an advisor community that hasn't seen a stock or a bond downturn in 12 or 13 years? It's going to be very jarring to help to explain this. to their investors. Well, I'll tell you what advisors think, because we shared this advisor survey that they were more

concerned about inflation and rising rates. And second, was geopolitical risk? One month ago, they were more concerned about geopolitical risk than they were about inflation and rising rates. So what does that tell us? It tells us that even though we still have a lot of trouble and we're concerned about what's going on in Eastern Europe, there's a little bit of a lag going on, and now there's more of home country bias as advisors and investors are thinking about how it affects their wallet,

even though, yes, we have a lot of concern and our hearts go out to what's going on over there. Ultimately, people are coming home, and that's what the Bain issue is. Yeah, I think that's going to be a tough situation for everyone. They're just going to have to understand, you know, they're going to have some losses in their bond funds. That's what's going to happen. Or you sell them. Or you go to cash, or you go to short duration, or you go to an alternative. or many are going to equity-based products. Like you mentioned low-duration dividend where you can actually get a bit of a yield.

But remember, if you were long-term and you're not worried about this year and you're going to be sitting on these for 10, 20 years, the prices are going to be coming down. You're going to be owning, you know, higher yielding products eventually. Well, the question is, what if we're about to go back to,

what it was like in the late 70s. Not to say is dramatic, but if we have sustainable rising rates for years and higher commodity prices and higher inflation, there's some concerns out there because those of us that are managing money weren't managing money back then. Many that are managing money weren't even alive during that period of time. So there's a bit of an unknown.

Yeah, yeah. I could smell that right here at the conference. Well, we've got to get back to the conference. It's just starting today, folks. Tom is one of the organizers. and Tom is always a pleasure to be with you. Thank you for being on. Thanks so much for being here. Appreciate it.

Enjoyed it very much. Tom Lighten is the CEO of ETF Trends. Everybody, thank you for joining us on the ETF Edge podcast. Inves QQQQ believes new innovations create new opportunities. Become an agent of innovation. InvestcoQQQQQ, Invesco Distributors, Inc.