On this week’s episode of ETF Prime, Kirsten Chang, senior industry analyst at VettaFi, joined Nate Geraci to discuss how big names in asset management in finance are getting involved in ETFs. Afterward, Phil Bak, CEO of Armada ETFs, hopped on the podcast to explain why he supports wrapping private assets within the ETF platform.
Big Names Heading to ETFs
Geraci started off this week’s episode by listing a number of key figures in the financial world who have begun to embrace ETFs more this year. Individuals on Geraci’s list included Ray Dalio, Tom Lee, Nouriel Roubini, and Scott Bessant. Turning to Chang, Geraci asked her why she thinks these large financial experts are beginning to move toward ETFs.
“We’re entering an era where it feels a bit like ETFs themselves have gone Hollywood,” she assessed. Explaining, Chang noted that ETFs have seen record inflows this year.
With ETFs doing well in 2024, she noted it’s not simply issuers that are seeking to pivot toward ETFs; demand from clients and investors is mounting in part due to how user-friendly and tax efficient ETFs can be, according to Chang.
Tom Lee’s New Fund
Looking at some specific ETFs, Geraci cited the Fundstrat Granny Shots US Large Cap ETF (GRNY), in which Tom Lee serves as a portfolio manager. Despite only launching about a month ago, the fund is already nearly at $500 million in assets under management. Geraci asked Chang why she thinks this fund in particular has done so well so quickly.
She noted that Tom Lee’s background could certainly help drive investors to the fund. Chang added that Lee “had a rock star track record” back when he was chief equity strategist at JP Morgan. Lee is also a frequent guest at CNBC, and his market calls gave him a strong following as time progressed.
The nuts and bolts of GRNY may also be helping the fund resonate with investors, according to Chang. Using Fundstrat’s established core strategy, GRNY promotes a low-risk approach, blending a top-down fundamental look at strategic themes with a bottom-up screening process on individual assets.
Chang noted that she recently spoke to Lee about GRNY, and he told her that Fundstrat’s clients were beginning to request an ETF version of Fundstrat’s core strategy to simplify the investment process. “It’s done well against the S&P, so there’s been real momentum around it,” she added.
Nouriel Roubini Offers an Inflation Hedge
Moving on to another ETF, Geraci highlighted the Atlas America Fund (USAF). USAF is a fund from Atlas Capital, in which Nouriel Roubini works as a chief economist and is a co-founder. Geraci then asked Chang if she had any initial thoughts on USAF’s strategy.
“The fund is trying to capture growth, with the sort of ever-watchful eye on inflation,” she noted. Chang added that USAF represents the first entry in the ETF space from Atlas Capital.
Looking under the hood of the fund, Chang assessed that USAF is a multi-asset fund that focuses on gold, soft commodities, real estate, with “a sprinkling of Treasuries mixed in there.” Due to the fund’s focus on real assets, it can serve as a hedge against long-term inflation. She added that the ETF can serve as an alternative fixed income investment within an investor’s traditional 60/40 model.
Roubini recently said he believes the upcoming Trump administration could push up inflation and slow down growth. Chang noted that this, in part, is in reference to the proposed tariffs against Mexico, Canada, and China, along with tax cuts and climate policy.
“In typical somber fashion, he’s given us all a way to hedge against that long-term inflation he sees coming,” Chang noted.
Why Private Assets Could Work in ETFs
To close out this week’s edition of ETF Prime, Geraci then welcomed Phil Bak, CEO of Armada ETFs. Geraci noted that Bak has been supportive of the idea of wrapping private assets within an ETF. Noting that Bak penned a letter to the SEC in favor of the idea, Geraci asked him why he felt compelled to do so.
Bak asserted his support for the power of the public markets, referring to it as “the purest form of free market capitalism.” Making private assets available through ETFs would give the public more options and opportunity to tap into unique investment strategies.
Meanwhile, he noted that private assets, while attractive investment opportunities, struggle with liquidity and ease of transaction. As such, bringing private assets into the public market “makes all the sense in the world,” according to Bak.
“We’ve got so much capital in this incredible ecosystem — the greatest ecosystem for trading and capitalism that has ever been seen in the history of the world,” Bak added. “We just need more assets on there.”
Listen to the entire episode of ETF Prime, featuring Kirsten Chang and Phil Bak:
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