00:00How are we looking at for year-end right now? We're seeing a little bit of wobbles, whether it's in, you know, bond markets and crypto.
00:06Are we still set up for a year-end rally?
00:09I think I'm going to be a little bit more of a grinch on this one.
00:11It does seem like there's a little bit of rotation happening in terms of profit-taking, but, you know, most of the moves in U.S. equities have been driven by earnings growth, right?
00:20So it's not really been a valuation blowout.
00:22So I think there's a little bit of trimming happening, particularly in some of the big risk-on type of movers.
00:28And then if you look at some of the sector flows from the last month, you see a big shift in things like health care, industrials.
00:35These are historically defensive names, but these are also kind of the one-level-down AI play.
00:40So there's also that underlying theme that's still going on.
00:43But it's been a very good and unexpected year, I think.
00:47You know, if you look at the start of 2025, a lot of concerns about tariffs, inflation, rate hikes.
00:52Now it looks like the Fed's going to cut again in December.
00:54Sure, everyone feels relatively good, but I think maybe some profit-taking into end of the year.
00:59How does that set us up then going into 2026?
01:02I mean, it seems like all of those fears that we had going into 2025, maybe you could just sort of kick into next year to an extent.
01:09Yeah, well, I think that the overall theme is like set and forget doesn't work anymore.
01:13So particularly for that core U.S. equity holdings, still 70% of your underlying index.
01:19And so within that, you know, how do you play around sectors?
01:22How do you look for income to diversify?
01:25You know, I think the diversification is really going to be the main theme again into 2026.
01:29It's a little bit boring, but, you know, you have earnings growth, which have been strong, but earnings projections are coming down a little bit.
01:35And how do you diversify?
01:37You either play around in sectors or you look for things like income and dividends.
01:40And that's been a big trend over the last couple months, particularly in the active ETF space.
01:45Yeah, tell us a little more about the active ETFs, because it seems like the landscape is kind of constantly evolving, right, when it comes to what you're seeing in Asia.
01:53How does that compare to maybe passive strategies?
01:55So it's primarily being led by the U.S. at the moment.
01:59We're seeing very early signs of shifts to active ETFs in Asia.
02:04But essentially, you know, you're looking for an active type of performance without the active fees.
02:08It's basically what it boils down to.
02:10And because you have this huge dispersion in terms of earnings growth, sector performance, economic performance, the need to get active has really come to the fore for a lot of investors.
02:20And so they're using an ETF wrapper.
02:22That's all it is, really.
02:24It's a wrapper.
02:24And the big trends, as I mentioned, have been into things like income, options overlays, dividends, these kind of volatility mitigation strategies.
02:34Because, again, if you're just holding a 70 percent of your portfolio in S&P 500, the dispersion is so much and the volatility is so much.
02:42And trading around eats into your performance.
02:45So active ETFs have been 40 percent, actually, of the inflow into ETFs this year in the U.S., which is a huge number.
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