00:00So it's interesting, the chart that Eric just showed, because the narrative that, you know, the rest of the world is outperforming the U.S. or at least, you know, punching above its weight has been around for a while.
00:10But for a lot of that time, you didn't see the flows necessarily match that performance.
00:15When you take a look at your lineup, which, of course, is global in nature, what are you seeing outside of the U.S. in terms of interest?
00:23Yeah, we expect that to continue. It's a good market backdrop for emerging markets.
00:27It's obviously performed really well, you know, last year.
00:29So we expect U.S. investors in particular that have been underinvested in emerging markets to continue to diversify.
00:36Obviously, strong performance last year helps, but, you know, weaker dollar, you know, the likelihood of lower rates in the future, kind of all being favorable for emerging markets.
00:45I think there are a number of unloved kind of parts of the market that investors are looking through.
00:49I mean, surprised to know that small caps now have outperformed large caps over the last year.
00:53Some of that given the big move in performance in the first part of the year.
00:58But there's a number of areas I think investors are looking at that have been out of, you know, out of favor.
01:03So Style America was a theme briefly in April, and it didn't last.
01:08But there is a move towards diversification.
01:10You see that with the flows into EM.
01:12Has that been accompanied by more discernment into going into active strategies when it comes to EM?
01:18Or are people pretty content to stay passive?
01:20I think active.
01:22I think active, particularly, you know, what we're seeing anyway in our flows, and this is true for U.S. equity and international and emerging market,
01:31is investors, particularly in the ETF vehicle, are beginning to look more and more closely at active.
01:37You know, we made the decision, you know, 10 years ago to be exclusively focused on active in our ETF business.
01:43And as we think about, you know, where markets are moving, where opportunities are, I think, you know, I know we're talking a lot about equities,
01:50but fixed income, active fixed income, is seeing massive inflows, you know, into ETFs, particularly in, you know, in inactive.
01:59You know, 80% of the mutual fund industry is inactive.
02:02But if you look at ETFs, about 80% of the ETF industry is in passive.
02:05And to be honest, like, beating fixed income benchmarks, it's kind of no secret, is a little bit easier because the indexes are not really particularly well constructed.
02:14There's a lot of investment opportunities in those indices that are not accounted for.
02:19So, you know, fixed income is also an area that we see significant opportunity going forward.
02:24And we look at active.
02:25We did have a report out today looking at ETF revenue, which was 20 billion.
02:28That's a 28% jump.
02:30Now, normally, revenue only grows half as fast as assets because, obviously, people are picking the cheap passive.
02:36But this year, last year, they grew at the same pace.
02:39That's because active is 26% of that revenue number from 10% five years ago.
02:43You're a big part of that.
02:45But there's 60 new issuers in the last two years.
02:48It's getting crowded.
02:49Now there's more active ETFs than passive fighting over that 26%.
02:54You were a leader in there, but you've got company now.
02:56How do you deal with that?
02:57Yeah, I think this starts with how your investment philosophy and your approach to the markets.
03:04And from the very beginning, you know, we were always focused on being the best active manager in the world.
03:10You know, we have 8,500 people at J.P. Morgan Asset Management, over $4 trillion in assets, exclusively focused on active management.
03:201,300 investment professionals, over 400 research analysts.
03:24So when we wake up every day thinking about how we help investors add value, we think about deep research.
03:31We visit 5,000 companies every year, do 10,000 company meetings.
03:36So the level of resource and focus we put on active we think is a differentiator.
03:40And that's really what we're there to do.
03:42And you have a long title, and I want to talk about it a little bit, because you oversee customized solutions.
03:48That includes the ETF business.
03:50You're also global head of private markets.
03:52And the question of privates and ETFs, I mean, we've been asking it for years now.
03:57But specifically when it comes to private companies, I know that Eric has asked this question actively, especially on social media.
04:04Why not just add basically a sleeve, a little bit of private company exposure into an ETF?
04:11We've seen some issuers go this route.
04:14Ron Barron, of course, recently launched ETFs.
04:16I believe they have some exposure to some of Elon Musk's private companies.
04:19But you've also seen this in XOVR.
04:22Is this a route that J.P. Morgan is considering taking?
04:24So I think ETFs have built a reputation of being liquid, transparent, tradable, you know, daily.
04:35You can see the value.
04:36And, yes, I mean, the private markets have gotten bigger, broader, deeper.
04:41Companies are staying private for longer.
04:43There's more secondary trading than ever before.
04:46At this point, you know, we're not doing that in our ETF lineup.
04:50You know, we do own private companies and some of our mutual funds.
04:53I think over time, you know, we'll continue to look at it.
04:56I do think any time you're going to put private illiquid assets in a daily valued liquid vehicle, you have to do it really carefully.
05:06You know, we do it in our fixed income business.
05:08We've done that for many years in our mutual fund business in fixed income.
05:11As I mentioned, we've done it in equities.
05:13We don't have immediate plans to do it in ETFs.
05:15But, you know, the private space is growing.
05:17Private markets are $20 trillion.
05:19They're, you know, forecasted to be $30 trillion.
05:21Is the ETF vehicle the right vehicle for that?
05:24I'm not sure yet.
05:25I'm not sure yet.
05:25I'm not sure yet.
05:26I'm not sure yet.
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05:28I'm not sure yet.
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05:29I'm not sure yet.
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05:40I'm not sure yet.
05:41I'm not sure yet.
05:42I'm not sure yet.
05:43I'm not sure yet.
05:44I'm sure yet.
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