On this week’s episode of ETF Prime, host Nate Geraci spoke with a trio of individuals discussing several ETF-related topics. To open this week’s podcast, Geraci and VettaFi’s Brian Coco discussed the process of index construction and indexing trends. Then, Geraci brought on financial regulation expert, Sean Tuffy to talk about crypto ETFs and more. To close the podcast, Geraci spoke to CVA’s Ben Harburg about breaking down the Core Values Alpha Greater China Growth ETF (CGRO).
VettaFi’s Indexing Growth
To open this week’s podcast Geraci and VettaFi’s Head of Index Products, Brian Coco talked about the index construction process. Since it was Coco’s first time on the program Geraci had Coco share his background with the audience. The duo then dove into index construction, and how VettaFi is growing its indexing side of the business.
“We really want to be able to compete for every new index ETF that is out there,” Coco said.
Coco also shared that since he joined VettaFi the firm has nearly tripled its assets under management within its indexes. He highlighted that a lot of the growth the firm has seen on the indexing side has come from acquisitions of indexes like ROBO Global, and EQM Indexes. He also shared that each acquisition has brought a great group of individuals to the team who have helped the business grow. Coco also shared that some growth came from taking business away from its indexing competitors.
The Index Construction Process
The conversation then slightly shifted gears away from VettaFi’s indexes to looking at the index construction process as a whole. Geraci mentioned that he feels investors tend to only see the end product but don’t necessarily think about the importance of the indexing process. He then asked Coco to help the audience look behind the curtains of this process.
“The index development process is by its nature iterative. People show up with an idea and then you have to test it and you have to test it over and over again,” Coco said.
He then shared that VettaFi designed its index platform (referred to as the index factory) in a way that would set up a true partnership with the issuer to help with this iterative process. Coco also mentioned that another key factor he pays attention to is not just getting positive results, but understanding why you may have gotten those results in the first place. He then shared the importance of having solid data sets to help with the process as well.
Additionally, the duo continued to explore the index construction process and indexing trends.
Cryptocurrency ETFs
Following his conversations with Coco, Geraci spoke to financial regulation expert Sean Tuffy about a myriad of different topics. Geraci and Tuffy first dove into Tuffy’s background, which includes over 25 years in the financial regulation industry. The duo then moved on to crypto ETFs where Tuffy highlighted his overall opinion on the asset class.
“It’s sort of become a mainstream asset that’s being accessed through the most regulated vehicles imaginable,” Tuffy said.
Tuffy mentions that this is humorous because originally this asset was supposed to be one that reinvented the financial system. Geraci then shared that Tuffy’s take is a common theme he’s heard from investors.
Furthermore, Tuffy gives his perspective on how the SEC handled the regulatory process of these products. He shared that the SEC naming cryptocurrency a commodity and the Grayscale lawsuit as two events that led to the SEC approving these products. Tuffy then reiterated that in the past decade, Bitcoin has shifted from being an “outlaw asset” to extremely mainstream.
In addition, Geraci and Tuffy continued to explore the regulatory aspects of cryptocurrency ETFs, the multi-share class structure and much more.
The Core Values Alpha Greater China Growth ETF (CGRO)
To close this week’s podcast, Geraci and Core Values Alpha’s portfolio manager, Ben Harburg, discussed the Core Values Alpha Greater China Growth ETF (CGRO). He shared that CGRO is an actively managed ETF that launched in October 2023. This ETF is unique because it only invests in areas of China that do not compromise the U.S.’s national security. Geraci then asked Harburg to give his take on how he is approaching managing this fund.
“We look at the large industry trends that we think are going to shape China’s growth in the coming years,” Harburg said.
Hartburg highlighted a benefit of managing this fund is that it is actively managed. He shared that this helps to allow the firm to trade in and out of positions. He also mentioned that the firm tries to find a balance between China’s growth, and American interest. Hartburg mentioned that one of the ways that they try to do this is through trips to Washington. He believes that these trips help the firm understand what’s going on in China and how it affects the U.S. Moreover, Hartburg continued to dive into the fund and also shared why investors should look to invest in China.
Listen to the entire episode of ETF Prime Featuring Brian Coco, Sean Tuffy, and Ben Harburg:
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