00:00I want to talk timing here. Why is this the right time to launch a multi-asset ETF?
00:07Yeah, so I know that we've been in a deep bear market for several months, what we call a crypto
00:12winter. From a portfolio management perspective, that's sort of the best time to launch a multi-token
00:20ETF. We're really excited about where the space is going. There are a lot of key thematic drivers.
00:30We have the regulatory pieces falling into place, sort of one after another, which has been
00:34terrific. And I think that we continue to be really excited about adoption on multiple fronts,
00:40including tokenization and what that means for crypto assets.
00:44So, Blue, I guess one question that always comes to mind when I hear T. Rowe Price,
00:48it's been a firm that's been fairly cautious on crypto for years. What's changed and when did
00:53that change begin? Yeah, I understand. I think a lot of people were sort of surprised.
01:00with T. Rowe Price coming into the space. But for us, we've actually been building in the space
01:04since 2022. And we've been trading a multi-token portfolio internally since 2023. So, we are
01:12waiting for one, regulatory clarity and a sufficient sort of regulatory construct for a true multi-token
01:21product. And the main thing is that we're active managers, right? So, we believe in fundamental,
01:26research-driven, active management. And that was what we've been building towards for several years.
01:33And so, we're excited to be bringing something to market.
01:37The multi-token part of this really piques our interest. And I'm curious, in a market where Bitcoin
01:41has just outperformed nearly every other digital asset and diversified crypto basket over a multi-year
01:48period, how do you make the case for diversification across nine different tokens and why that's better
01:53for just holding Bitcoin? Yeah, I think from an investment perspective, we look at Bitcoin as a
02:03very different sort of unique macro asset. And when we look at the rest of the tokens and the chains
02:08that are in our investable universe, those are really disruptive technologies. And people want exposure
02:14to these disruptive technologies. When we think about multi-trillion dollar asset managers,
02:21large-sized, globally important banks, all-embracing tokenization, NYSE, NASDAQ,
02:28DTCC, moving in that direction. If we're going to tokenize, this stuff's going to be built on public
02:35chains and that disruptive technology. And that translates to value for token holders.
02:39You stressed active management here. And in equities, that's got a 70-year track record,
02:45a lot of data, a lot of historical data. But active management in crypto basically has none
02:50in comparison. What does your research process look like when the oldest asset in your portfolio
02:55in this particular fund here has 16 years of history and the youngest, Hyperliquid,
03:00launched at the end of 2024?
03:03No, that's a great question. So we have a three-pillar investment process. And crypto is
03:09unique. It's an emerging asset class. And so sort of very in line with our DNA, the core foundation
03:16is fundamental, right? We look at the technology. We look at the economics. The technology tells us
03:21if the chain can win. The economics or the tokenomics tells us if, how and when token holders
03:29and investors are going to participate in that success. And then we look at things like drivers
03:34of growth. That's ecosystem partnerships. It's addressable market. It is whether this is a good
03:40product market fit for a given chain in a given sector. And then it's crypto. So the third piece
03:46is you absolutely have to look at momentum and trend and themes. You need to sort of understand where
03:53the market is, where things are moving. It's a market that trades 168 hours a week. You can be
04:01right on the fundamentals and still get run over by somebody on Twitter. So it's a complex and it's a
04:07very different process than many types of equity or fixed income investing.
04:12Blue Scarlet had this great question about T. Rowe being fairly cautious on crypto for years and what's
04:18changed. And just to follow on that, given the reputation of T. Rowe, two-thirds of, it's close
04:24to $2 trillion in assets are in retirement accounts. I mean, you think about the typical client. It's a
04:31401k retirement saver. TKNZ, it's not registered under the Investment Company Act of 1940. It doesn't
04:37have the same investor protections as your equity and bond funds. I'm just curious about the discussions
04:43that maybe happened internally as this went to market. And you talked about this, about
04:46reputational risk. If a crypto product loses 50 percent of its assets or performance declines
04:54by 50 percent in a downturn, the headline reads, T. Rowe Price Retirement Giants Crypto Fund
04:58is cut in half. How do you put that alongside sort of the DNA of the firm?
05:04Yeah. So I think that the first thing is, one of the sort of core conversations we had all along
05:10is we really believe that more so in crypto than most other asset classes, active management and
05:18good judgment are really key. And like everything that we do, we put our clients first. And it's one
05:26of the reasons that we have been cautious. It's one of the reasons that we've been very thoughtful in
05:31how we put this together. And then it becomes a question that investors need to have with their
05:37financial advisors. And it depends on those types of individual profiles. It's not going to be for
05:43everyone. And we recognize that. But we think it is a really exciting space. We think it's a growing
05:49space. And we see the value of active management there. And that's a great opportunity for us.
05:55Blue, before we let you go, I co-host ETF IQ. So I have an ETF type of question to
06:00ask you about
06:01when it comes to fees for TKNZ. You're charging 75 basis points. And after a fee waiver, that's going
06:09to 90 basis points in May of 2027. You look at IBIT, which is the most popular passive Bitcoin,
06:16spot Bitcoin ETF, that charges 25 basis points. So this feels like it's expensive. It's three times
06:22that fee. Is the implicit bet here that active token selection adds enough alpha to justify three times
06:29the cost of a passive single token ETF? The first thing is that if you have a passive single token
06:36ETF, it's 100 percent allocated to one single name all of the time. This is a market that trades 168
06:43hours a week. And I think it's really important to be able to move with the market to be able
06:48to do
06:49that research and be able to construct a portfolio that is nimble and agile, particularly in such a
06:55volatile market. The second piece is that sort of the most commoditized end of the single name ETFs
07:02are sort of in that fee range. Once you start to look at even single name altcoins, ETFs, single name
07:10altcoins with staking and sort of the very small number of passive multi-token, I think that we're
07:18actually priced really competitively given the additional alpha that we're going to bring for that market.
07:23for this section.
07:23toys
07:23toys
07:23let's
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