ETF Edge - Why “big oil”…. might not be for much longer 1/12/26

Episode Date: January 12, 2026

Venezuela and Iran stealing the energy sector headlines… but the bigger stories are unfolding in far different areas.  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. Invesco 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. Now, Venezuela and Iran headlines are vaulting the energy sector back to the front burner.

but the longer-term drivers are steadily unfolding in different places within energy. Here's my conversation with Jan Vennick, the CEO of Vennick Funs, alongside Jennifer Granzio, the global head of distribution for TCW and former CEO of Engine Number One. Thanks to both of you guys for being here with us on ETF Edge. Let's start the conversation with a broader-based look at just what's happening around the news and energy. And, Jan, for that, I will turn to you. just how important have these recent headlines involving both Venezuela and Iran been to what has been the investing landscape for energy and energy stocks going into 2026? Well, we're in Trump administration 2.0, and the president has said, I want more production, which is lower prices, or at least not rising prices.

So energy companies have this big headwind. And I think in general, if you look at Venezuela, I don't think it's the, the biggest macro event in the world. So we of Vanek have, you know, divided the energy world into miners, refiners, explorers, like nuclear, right? All different components. But I think the core old energy world is just a sideways world right now. It's hard to see. There's a lot of supply out there. There's supply of gas too. So I'd say not that exciting. So when you say old energy, That implies there's also a new energy. So when you take a look at the way that the ETF world, the investing world has shaken out, just how much more attention is there now to old energy, hydrocarbons, oil and gas,

versus some of the new energy themes we've centered around AI. And, Jan, I think you have an interesting take on this. Yeah, I mean, look, I think these companies need to lean into electricity, which is different than energy. And that's where the demand is coming from, the hypers, the AI. trade, we call it AI 2.0 trade. The ETF that we offer that's benefited the most is nuclear, a ton of performance last year, a lot of inflows. And even over the last couple of days, there's constantly announcements, because there's two components to electricity. I call it the

QR code. One is quantity. What we get, okay, we need more, we need more electricity. But the other is reliability. I don't think that R word is really understood well enough. data centers can't be down. They can't take an hour off. They need the highest level of industrial reliability that exists. That's actually true for some other customers like the military and things like that, right? You don't want to have an airspace go down for an hour. So reliability is something that's also benefiting nuclear.

Now, Jennifer, the curious part about the energy trade right now is just how much to the question I just asked Jan, is the emphasis on what is the traditional older gas players and in oil players, if you will, versus what the kind of power need and the energy need will look like in the coming years and decades. Just how much are investors in a transition phase in your mind right now with regard to kind of making some of the differentiations between the two and how is that investing landscape evolving towards a certain type of company or a certain type of investing that we haven't seen over the course of the last few decades. Yeah, I think the energy transition is going to happen over a very, very long time frame.

And as Jan just said, from a power transition perspective, that's almost how we think about it as TCW. That's essential, and that's where a lot of the activity is coming from. And so we think that we need all energy sources in order to feed the beast in terms of the demand for electricity, power for data centers, power for manufacturing and driving. the growth in this America's block from a geopolitical perspective. We think that we need all sources of power. At TCW, we invest for an active investor. We think this is a market where you want to be selective and you want active investors. And thematically, we manage an ETF that Ticker is powered. And what we do in that fund is we're very broad. So we are holding some old economy companies.

But a lot of what we're investing in is a nuclear, both larger scale nuclear, sources of nuclear energy, and then companies that help us with efficiency of power. So, for example, if you think about nuclear, that we saw the announcement from META with one of our portfolio companies, Vistra, META is contracting within the next 10 years to add as much power as New York City uses now. I mean, think about the enormity and the scale of that. And so nuclear companies like Vistra are an important part of how, as Yon said, we get that regular power without the interminacy gaps that we have on some of the newer technologies. Jennifer, just how much has TCW, the funds that you have, have they seen some of this kind of interest and, I guess, flow into these particular themes? Do you feel as though this is a ramp-up kind of strategy for you guys that has legs?

And if so, what is the primary reason for driving some of that investor interest and beyond that? How much more do investors have to learn about this energy transition in order to see some of those themes really take off in the coming years? Yeah, I mean, when we look at the average portfolio, people have index funds. They're relatively well covered on the biggest tech names. But when you think of the scale of all of the companies that have to provide infrastructure and software and new sources of power, either on the AI space. We also run an ETF AIF, AIF, which is the oldest broad investment in AI portfolio in the market in the form of an ETF. And then with the funds like Powered, we're investing in a way that's very broad so that as time moves forward, these themes are going to

change. The winners and losers are going to change a little bit. And so our approach is TCW is we're managing the strategy for you in a very broad way. You can invest with us. And our portfolio managers will move the portfolio around as opportunities emerge. And as we go through what we think is going to be very exciting, but there will be some volatility in how we invest in both AI and sources of power and electricity in the next couple of years. Jan, there is a case to be made right now that you can gain some of this exposure just towards traditional, maybe index-based ETFs and funds, ones that just track the overall industry, ones that you can just get some exposure to.

another case to be made that you want active management, a portfolio manager, a research team that kind of goes through and evaluates some of the pros and cons and makes a fundamental decision about these types of companies. Just what role do active ETFs and passive index tracking type instruments play with regard to kind of how you invest in this energy transition in the coming years? Yeah, I think what I think probably agree with Jennifer on a couple of different points, right, that this change is so dynamic that you want to make. of the old and the new. And so even some of our pure play ETFs like oil services, like how many companies in that portfolio are really leaning into this transition on the electricity side? Not many,

right? So the ETFs that we like actually in the space are the actively managed ETF. So we have one that has more of a crypto background, the ticker symbol is node and ODE, but half of that portfolio is now leaning into the electricity transition. About 30% is Bitcoin miners that are kind of leaning into AI transformation and doing deals with the hyperscalers. And 20% are the power producers like a Vistra. But even Vistra, which is now a large cap, it became a midcap, and now it's a large cap.

So that's in your S&P portfolio. What's interesting to me about it is sure it had a natural gas generation capability, but even in the last two years, it's leaned into. nuclear. And so nuclear just is that R and reliability that I want to stress that their customers are looking for, not that gas isn't reliable, but, you know, the old alternatives are solar and wind are really not suited to what hyperscalers are looking for. Interesting, Jennifer, there is also, I guess, a point that has to be kind of put out there, this idea that if you take a look at what's driving some of that stuff that's happening

in the marketplace right now, Jan pointed out some of the kind of cap of. revolutions, right? That Vistro kind of was like a smaller mid-cap company. Now it's certainly a very large one by comparison to where it's been. How much do you think the investing landscape right now is about trying to find some of those kind of smaller and medium-sized companies that are going to evolve sentiment-wise and fundamentally to take advantage of some of these and become medium to larger cap companies down the line? Yeah, we think that that's a huge opportunity. And so if you think about the changes we're describing. So from an energy perspective, if you go back, really even three or four years ago, we were still relying on how much regularity could we get out of wind

or could we get out of solar. That's very hard. You've had a huge shift towards nuclear. You've had all the incentives around nuclear. In the case of nuclear, you have large existing plants, but we need to service the large existing plants. We need small modular reactors. And all of that development is indeed creating new companies or smaller companies that are very quickly growing, moving up the cap table. And in some of these cases, there's one or two companies. It's almost an oligopoly or there are only a few providers. And that's something where an index is able to pick up companies as they grow as well. But as an active manager, we're trying to look for those companies that are winners as we go through the transition. And we can put them into the portfolio

when they're small or mid and hold them as they grow. Jennifer, what exactly, are those key traits, if you will, if you had to distill them to maybe just maybe a two or three kind of bigger themes or fundamental aspects of a company that would make them well positioned in your mind to be the ones that kind of lead that revolution from the small and midcap companies to larger ones down the line. Yeah, I think it's this, as we go through this transformation where we need reliable power, you need to get it to the data center. Within data centers, we need to make data centers more efficient. You're looking, for companies that are one or two in their field or the best at a certain technology, and

you're looking for companies that play in that space. I'll give you another example is VIRTIV. So VIRTIV is a company that helps on data center cooling. So that's another example of a company that's really come up the cap table over the last couple of years because they're one of the few companies that can do it. And we have that desperate need for increased efficiency in data centers. Jan, if you take a look at the way the ETF world is moving right now, there is a lot more growth in those actively managed ETS versus the passive index tracking ones.

In your mind, how much more important is it going to be for investors and the investment advisors that use ETF products to become more knowledgeable about just how this kind of power, energy, you know, evolution is going to happen? And just how much or how important it will it be for that fundamental analysis to play a part in how you select the instruments that you're putting clients into? Because not all active ETFs are managed the same way. By definition, everybody's got their own kind of secret sauce. What exactly is that for you guys and what exactly will it look like for investment advisors who are looking to use these funds? I mean, I think it is hard, to be honest, right?

Because a shifting portfolio means advisors don't necessarily know what exposures, they're getting to. I mean, you can articulate a theme, but the market's constantly evolving. So I think it's going to be a mix of old school ETFs, to be honest, like something like our nuclear ETF, it's diversified between the miners, the producers, sorry, the utilities and some of the new tech companies like ACLO. So that's very clear, I think, in investors' mind, but that's why we have to do a lot of education around Node, which is our actively managed one. That is a mix, just to follow up on your question. Jennifer, we've got some small caps.

The Bitcoin miners are small, you know, financially weak companies that are very leveraged into this electricity, hyperscaler trade, but that also means you get a lot of volatility along the way. I think that's kind of clear in the crypto space. Like, no one's surprised you get a 50% drawdown in an ETF. But, you know, I think that those risk expectations need to be clearly communicated as well.

Jennifer, another point for you, just kind of before we kind of wrap up this conversation, if you look at the way that things maybe are being scrutinized with regard to how much investing attention is being paid to some of these types of products, is there a case to be made in the future that these power energy, AI-related ETFs are going to then start to kind of bleed, if you will, stylistically with some other key parts of the market here. And then how exactly do investors in your mind who have a plethora of options at their disposal start to really formulate their investment plans and theses around some of these bigger themes? Just how much do ETFs have to be scrutinized for their kind of subtlety and nuance as opposed to maybe having all of these investments go to one place and then having maybe an overweighing in certain places that you didn't think you were going to have? Yeah, I mean, I think that's always a good question is markets grow and change.

is, you know, what did you buy, what are you holding, and how does it all work together in the portfolio? And the way we think about it at TCW is that there are some end investors who are working with financial advisor, they're working with an institutional consultant, and so it falls on those groups to make the more tactical decisions. There are other people that are very direct, active investors who may constantly be watching all the names

that we're talking about. So at TCW, the way that we build AFID or Power, the two AI and the power ETF, ETF. The way that we build them is very broad so that in an overall portfolio allocation, you could take 10% out of large and mid-cap, and you could put that 10% empowered in AI to kind of take advantage of these big themes, but rely on what our portfolio managers are doing in terms of understanding risk, constantly doing fundamental analysis, looking at valuation. And so our approach to that is TCW is to give you broad exposure to the themes so that

you can stay invested through time, and you don't, as an investor, have to do the micromanagement of overlap of what would naturally be in a power versus an AI versus the core index product. All right. And Jan, yes. Just to follow up to that, I think that's a phenomenal question. Portfolio construction and the trend towards model portfolios, I think is really important. Because even these themes, first of all, you don't want to overweight them in your portfolio, but also you can, if you have a good model manager, you can harvest profits. So our nuclear ETF was what I called at nosebleed levels coming into the fourth quarter and they're corrected substantially and now we think it's much more attractive.

But how is someone going to operationalize that? That's where I think model providers and gatekeepers play a big role. 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 Granccio, the Global Head of Distribution for TCW, continues with us now. Jennifer, thanks for sticking around for the podcast on this. I mean, this conversation around the evolution of energy towards power and everything else that's going to power everything AI data centers related

has been a big investing theme for at least the last few years. But I wonder in this conversation, because you have such expertise on the perspective of big oil and gas, integrated oil and gas, and just what they are looking to do in the coming years, my kickoff question to you is along the lines of just how much many of these major energy companies around the globe, not just the chevrons and exons here in the U.S., but around the world, are probably thinking about evolving their businesses in the coming years and decades. Well, thank you, Dominic. Yeah, it's a fascinating topic. And I think we think everything happens quickly, but it does. It takes years. These things take a very long time. And from a backdrop perspective, if we go back a few years, geopolitics were very different. Really in the last two years, we're moving to separate blocks. Europe needs to work together to get energy to Europe. America's, in this administration is becoming more of an America's block. And so if you think about that, it means on the one hand in order to power your country,

if you're in Germany or if you're in Europe, you need energy, any form of energy you can get that can come in and power your economy. And so I think we've realized we need some of the older energy sources as well because they exist and they're abundant. And there are certain applications of data centers need regular power in places that don't have good wind or good sunlight and solar.

It's been very hard to use newer technology. quickly to fill the gap. And so I think that background is important as well, that we know we need a wide variety of energy sources. And so if you think about traditional, traditional oil and gas companies, they have two things going for them. One, they have control of these traditional sources of energy

that we can then convert into power. And second, they're some of the best engineering talent in the world. And so if I come back to think about, let's take a US, example where we're building all of these data centers. We need a huge, huge demand for electricity. In order to deliver that, you need power that's reliable. You need power that's not intermittent. And you want to be efficient in how you get power out of the ground.

And so to take a company like the US names we would think about in that space, they've gotten a lot more efficient in the past few years on how do they get resources out of the Permian Basin? How do they provide natural gas? how do they electrify and be more efficient as they're converting energy into power? And so these companies, I think, have come a long way in understanding how to be in the business of efficiently turning energy into power versus just the raw oil supply. Jennifer, you have a lot of experience across this entire industry.

But your time at Engine Number One, a lot of folks remember the work that you did with regard to a a kind of more active campaign with regard to getting board members to ExxonMobil. That's probably the name that people most closely associate with U.S. energy dominance. I wonder if in your mind you could take us through a little bit about what you've learned during your time working with ExxonMobil and the kind of investments that they have put together. And maybe what you think energy majors like, hypothetically, an ExxonMobil or a Chevron, are going to have to look like, or what do they have to evolve into in the next maybe five to 10 years? Well, some of the work that Engine Number One did with Exxon, and frankly, work a lot of investors have done with a lot of these companies,

if you go back five years and look at what's happened in the last five years, is being more efficient with capital allocation. So working with these companies to really understand, again, supply of oil is one thing, but being able to convert and turn that energy into power and the engineering capability to use electricity, storage of natural gas, and finding ways that the company can help as the industry grows and changes, and also transmission of electricity and power.

So these companies have invested a tremendous amount in sort of storing hydrocarbons and helping clean what has been, considered a dirty industry, so they've made a lot of progress there. But they've made a big investments in transmission. So being more efficient and actually converting and transmitting power oil supply, for example, into electricity, getting it to the places we need it, getting it to the places where we're building these hyperscale centers. And these companies have made a lot of progress and are some of the best in the world at how you actually turn

that energy into power. Now, Jennifer, there's also a big question about, you mentioned during the show that we just kind of did for ETF Edge, this idea that we need all different kinds of sources in terms of power and energy, and how this could be a years and years and years long transition phase from traditional oil and gas towards kind of like these newer energy type sources. I wonder from a portfolio perspective, for an investor perspective, just how much runway are you willing to give as an investor to kind of see how this transition phase takes hold and just how long it will be? In other words, does this transition actually produce a chance for investors to be able to capitalize on that longer term transition in oil and gas towards other types of power and energy, the more reliable kind of. as you point out, that will be needed for that next generation of technology and evolution here in the United States and around the world. Yeah, absolutely. This is a very exciting time for people to be investing in this space.

And it's going to take a long time to work through the transition. And we have to remind ourselves, well, why? Why do we need all this energy and power? And if you just think about the amount of money that's being invested, going back a couple years, it was almost $2 trillion a year that was being invested in this transaction. transformation we get power. The forecast now is a couple of years from now. It'll be $5 trillion every single year that's being invested in how do we transform and get power to where we need it, as in create electricity, things like that. And that's huge. At that scale, there are places

where companies are doing it today and there'll be a smaller provider in the future. And we have those in our active portfolio. But places where companies are getting new technologies to scale, doing big deals and contracts with the data centers. These are places where there will be a couple of winners. And so if you have those in the portfolio today with an active manager like TCW, we're going to manage that exposure so that as this march unfolds, and as we figure out what are the best sources of power, what companies are best suited to do it, we will pick those companies, will hold them for you as they grow and as they scale. And I think that's a really excellent way to participate in a transition like this. Again, some people may

be day traders on power stocks, which is great, but for other people that are looking to just really understand and participate in this huge transition, which is a transition of many decades ahead. We think an active strategy like Power, where we're very broad and we're watching these companies and we're helping find the winners for you is a great strategy and a great way for people to participate in this really exciting trend. And Jennifer, before we let you go, we've narrowed our focus over the course of the ETF Edge show just now in this podcast towards energy, power, the evolution, you know, natural gas, oil, nuclear and everything else.

Those are all great. I wonder from a broader perspective, I'll end with this question. What has you the most excited for what investing themes are going to look like over the next say 12 to 24 months? I think from a scale and an economy perspective, it really is how we use power. And the companies that are part of the AI revolution that's happening that are in addition to the large names that are already in your portfolio. So I think that AI very broadly defined, the enablers, the companies that make it happen,

and then all of this breadth and broadening we're seeing in terms of investing in power. at TCW, you can invest in those themes through AIFD on the AI side and PWRD on the power side. But those broad themes, those are the ones we think people should make sure they're participating in as we look at the year ahead. All right. Jennifer Grancio, TCW, thank you so much for joining us here on the ETF Edge podcast. We appreciate it. Thank you. All right. Thanks for listening and 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.

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