Following its recent launch of an active product, JP Morgan’s head of ETFs joined our roundtable to discuss active funds in the ETF format. The panel also discusses zero-fees and other ETF developments.
Bryon Lake (head of international ETF distribution, JP Morgan Asset Management)
Adam Laird (head of ETF strategy, Lyxor ETF)
Hortense Bioy (director of passive funds research, Morningstar)
James McManus (investment manager, head of ETF research, Nutmeg)
Tom Caddick (chief investment officer, Santander Asset Management UK)
Funds Europe – JP Morgan recently became the latest provider to launch an active ETF in Europe. Are active ETFs the solution that asset managers and clients have been looking for to resolve the active-versus-passive controversy?
Tom Caddick, Santander – In my view, there’s no magic wand that people have been waiting for - and it’s not active ETFs. However, active ETFs are a positive evolution. Some portfolio challenges relate to mark-to-market and the managing of assets that gain access to a collective investment scheme is a very useful route. Active ETFs provide a good challenge from a fee perspective, as well - but you don’t need that to challenge fees, you just need competition. Active ETFs are a welcome evolution but not a panacea.
James McManus, Nutmeg – I think it also depends on your view on active versus passive. At Nutmeg we’re not anti-active, but I think when you look at the SPIVA ‘active versus passive’ Scorecard and other analysis of active performance, it is potentially very difficult for stock-pickers to outperform - or at least to find stock-pickers who can outperform over five to ten-year market cycles.
I agree that this is not just about costs. The ETF market is popular not just because of low costs; it hasn’t been a case of investors saying, “Well I can’t afford active, so I’m going to buy passive.” It’s been about flexibility, choice and transparency. Cost is certainly an element, but it’s more about the power of ETFs within portfolio management processes.
Active ETFs enhance the toolbox available to investors, particularly like Nutmeg as we are ETF-focused. The ETF structure may actually improve the desirability of active strategies because of the secondary market. If I sell an active fund today and you buy it tomorrow, why do we need to potentially sell the underlying securities? Why can’t you have a secondary market for active mutual funds, much like there is for investment trusts or traditional ETFs? That would be an enhancement to the ecosystem.
Adam Laird, Lyxor – Lyxor is not in the business of active ETFs and this is not something I think we’re going to explore in the short run.
However, for asset managers who see the ETF market growing and who want to get into this business, they are probably not going to build another S&P 500 product. There are enough out there already with low costs and track records.
But if you’re a new provider, active does give you the ability to do a lot more without the constraints of an index. Some of the new entrants have the ability to launch strategies and exposures that clients wouldn’t get from a traditional passive vehicle. Whether that gives clients something extra depends on what a client is looking for.
There are people out there with specific needs that traditional indices won’t capture. Yet many people I talk to at the moment have relatively mainstream needs - though active ETFs could be a way to attract new investors.
Hortense Bioy, Morningstar – Distribution remains an issue for active ETFs. Who, exactly, will be buying these products? Currently, a lot of institutional investors use ETFs for tactical allocation and cash equitisation. Will they want to purchase active ETFs for these purposes?
It would be difficult for active fund managers, on the other hand, to justify using active ETFs in an active portfolio.
Those most likely to embrace active ETFs are multi-asset portfolio managers and retail investors as both often look at combining different strategies and seek different sources of return.
There is also the challenge of education. Many investors still don’t know what an ETF is. Those that have only been using traditional mutual funds will need to understand the trading and liquidity aspects of ETFs. They will need to be careful and not have the wrong expectations. The ETF wrapper won’t make the underlying strategy more liquid – the real liquidity of an ETF will always be the liquidity of the underlying. It is therefore important that fund companies advertise not only the benefits of the ETF wrapper, but also its limitations.
Bryon Lake, JP Morgan – When we launched active ETFs, it actually started from the premise of asking what’s best for the investor and what’s best for the people that manage money on their behalf. Do that first and you can then see it is necessary to have the widest range of tools to help achieve investment objectives. It’s not about active versus passive; that’s painting the world too bluntly.
For example, we think active fixed income delivered through an ETF wrapper is a really interesting proposition. One of the things that investors say to us is that they’re concerned with the way that some fixed income indexes are constructed. They think they have limitations and so there is the question of whether some of those limitations could be corrected through an active investment proposition – which we absolutely think they can be.
My analogy here is the mobile phone. It was invented 30 years ago and transcended technology at the time. Fast-forward to today, we use our mobile phones for pretty much everything - pictures, tweeting, messaging, email, and making phone calls. That’s how the ETF wrapper could go because it’s a technology, brilliant at delivering passive investment propositions, but we’ve only scratched the surface of what can be delivered.
If we’re thinking about the investors’ portfolio, and delivering different capabilities to them through a benefit-rich vehicle, then wouldn’t it be interesting for a provider like JP Morgan to think about the entire opportunity set? So, as well as beta-builders, plain vanilla market-cap passive, strategic beta, factor and multi-factor, we also leverage some of our proprietary active capabilities which have long track records, and worked to be able to deliver those through the ETF wrapper too.
Laird – But do you think people will use active ETFs for portfolios with high active share? Half the reason in the bond market that people still use active products is because they will go substantially off benchmark and invest in illiquid assets. I’m all for diversifying away from traditional indices, but I do struggle to see this is an area that the ETF structure can provide.
Lake – If we have the flexibility to correct for some biases within portfolios, we’ve already innovated in an interesting way. There may be other outcomes that investors look for that a smart beta product could provide and I think the same is true for ETFs. Correcting for tracking error - whether it be a massive deviation from the benchmark, or a very tight deviation – is all part of the toolset. To me it’s just a different size screw to use for different challenges.
Laird – I hear what you’re saying, but I’m not sure I fully agree because we’ve had so much argument in the last couple of years about closet tracking and fees for funds that do not gain additional off-benchmark exposures.
Lake – That to me is about value for service. The industry needs to be careful to make sure we’re charging an appropriate fee for the value that we’re delivering. There are some investors that say, “Look, if you could just give me 1% above and beyond the benchmark and protect me 1% of the downside, that’s really interesting to me. I just can’t pay a disproportionate amount for it.”
And I’m not sure that performance fees are the answer, because those are clunky too. We could be creative on a number of different levels from a fee point of view, but I think that gets us into a whole different area.
Laird – I really struggle with the idea that we’re going to go back to a “two and twenty” model.
Lake – Investors need to be super-thoughtful about the fee that they pay, but that shouldn’t start with fee itself. They should say, “What am I trying to do in this portfolio? What’s my objective? What are the vehicles that are available for me to achieve that objective for a reasonable price?” If they go in that order, then they will be effective at delivering outcomes.
Bioy – The issue remains transparency around disclosure requirements. The industry hasn’t sorted that problem yet. Regulators require that ETFs disclose their portfolio holdings daily. Knowing what securities are in an ETF enables authorised participants and market makers to keep the market price of the fund in line with the value of its underlying portfolio. But many equity managers fear that if they divulge their positions, their strategies may be front-run or shadowed, diminishing any alpha they may be able to create.
Daily transparency isn’t so much of a concern for fixed income funds because it is more costly and difficult to copycat bond trades, as these take place over the counter and there are many more bond issues to choose from. Besides, some of the most successful bond active ETFs are of the very short-term variety, which also narrows the scope for opportunistic shadowing.
McManus – On the fixed income side, there is some element of intellectual property that’s already in there. What is essentially going on in fixed income is investors pick a number of factors – such as duration or credit rating - and target them. The quality of optimisation in fixed income ETFs is what matters and is what differentiates managers, even just at the traditional market-cap level.
I don’t think transparency and disclosure really remains a problem for equity. It is a challenge for the active industry to move to daily disclosure, and my honest view is I think we will at some point in the future move to a place where active ETFs have possibly bi-weekly or monthly public disclosure, while market-cap ETFs continue with daily disclosure. I think that could be a sensible way to address some of those issues. But the reality is we all know what the top ten active funds hold, we all know what 70% of their portfolio is as we get it on a two-monthly basis, if you’re a big investor they provide it on a non-disclosure agreement more often than that.
If a manager is truly, truly active – meaning very high active share and a significantly reduced correlation to the main index - giving daily transparency to market participants is even more critical because otherwise it will be impossible to price the product. From a liquidity perspective, I wouldn’t know what to pay and the market maker wouldn’t know what to charge. There has to be some level of disclosure, whether it’s on a non-disclosure basis or not.
I was quite positive about what the Central Bank of Ireland said recently, because it seems they’re essentially saying they will continue to look at this issue, but for the time being, if you want to play in the ETF ecosystem, you’ve got to play by the ETF ecosystem rules. You can’t create your own rules and show up to the game, you’ve got to come in and play by the existing rules.
Caddick – I completely agree. If you don’t like it, then don’t play in this space.
Bioy – That’s why it remains to be seen if there are many active managers out there who will be willing to disclose holdings on a daily basis.
Lake – Our active equity ESG ETFs will be fully transparent. The objective of the funds is to provide about a 1% tracking error above and beyond the benchmark. So they are index-aware, but with the fundamental overlay of JP Morgan research and discretion within the portfolio achieving that objective.
These strategies have actually been available for 30 years now, so this is something that we’ve been running money against for quite some time. We got to the point where we were very comfortable playing within the ecosystem and therefore we were able to bring out these products.
There are some high-conviction strategies that we run where we feel if we provide daily transparency to the market, it could potentially impact the efficacy of the strategy and therefore we would not currently bring those out through the ETF wrapper.
Bioy – But most active funds have concentrated high-conviction strategies. And when people talk about active funds, they often mean these types of funds. And these are different investment propositions.
Lake – Yes, but we will deliver it for a really attractive price.
Bioy – How many holdings do the funds have?
Lake – It depends on whether the exposure is US, Europe or global. The US equity one will have approximately 500 securities in it. So it has a lower tracking error and disclosure won’t impact the efficacy.
Bioy – This suggests that a concentrated high-conviction portfolio would not be wrapped in an ETF.
Lake – Well, capturing some of the benefits of the ETF wrapper could mean holding back the transparency benefit in order to deliver more high conviction through the benefit-rich ETF vehicle. There would still be intra-day trading, still a leveraging of lower-cost infrastructure to bring expense ratios down, still secondary liquidity and all the efficiencies that come from that.
We keep many of the same benefits of the ETF wrapper, withholding potentially the transparency, but to the benefit of the investor who’s seeking higher tracking error and higher returns.
Caddick – A question for me is of scale. With this plethora of options that are available to us now in the ETF space, what about the scale that is needed for larger investors to take meaningful positions? This is the challenge we have in a lot of ETFs.
Laird – In the active world, I honestly don’t think a lot of these will achieve the right scale. Many of these have shut down in the US. There are a lot of products that are being launched and being wound up at the same time, and that’s true of the ETF world in general. For a new strategy, were I an investor I’d be wanting to wait three to five years before moving into it, the same as I would with any actively managed fund.
McManus – It may depend on where you expect the money to come from. Is it from passive investors moving back to active strategies in the ETF format? Or is it about active investors more generally, who recognise the benefits of the ETF structure? For me, I would expect it to be this second group. There is a huge market there. Goldman Sachs recently said 24% of global equities are held by mutual funds and 6% by ETFs. There is a huge bank of capital there that potentially could recognise the benefits of the ETF structure.
Lake – If you think about 24% of all equities being held by mutual funds, and if you could identify some of the efficiencies that the ETF brings and pass that on to investors, that would be really positive for the industry.
The point around building scale in products is an interesting one. When we look at how the US market has developed, investors are raising ETFs when they’re relatively new and small because they are becoming comfortable that the creation and redemption mechanism means they can put to work pretty significant chunks of capital and be thoughtful about their trading. Working with other participants, they can build relatively big positions and they’ll unwind relatively big positions without impact. We’ve seen institutional investors put hundreds of millions of dollars into relatively new ETFs with sub-$50 million in assets.
Laird – Yes, but a Ucits fund can’t do that due to concentration limitation rules.
Lake – Yes, that’s a legacy rule, because if I were an investor buying a small-cap UK manager, I’d know it might take them three months to unwind a position and so I’d have to be really thoughtful about how much of that portfolio I owned.
But if I’m buying an ETF with the creation/redemption mechanism behind it and which has been built with the appropriate capacity, and if I’ve done the proper due diligence and understand what the underlying holdings are, then if the underlying holdings are UK equity and the ETF is $2 million, it’s liquid!
As the ETF ecosystem here in Europe evolves, if it’s anything like what we’ve seen in the US, this will start to solve itself and investors will start to get comfortable with the concept. There was an ETF in the US recently that had $2 billion worth of redemptions in one day, but it traded fine with no issues.
Funds Europe – How are asset managers, including the hedge funds, using ETFs as part of their wider investment strategies to gain efficiencies and increase returns?
Bioy – The advantages of ETFs – the fact that they are low-cost, transparent, flexible, and plentiful – all these advantages mean that they can be used in many different ways.
Many active managers use ETFs for cash equitisation purposes, transition management and tactical asset allocation – overweighting asset classes and markets they believe represent good value. But ETFs are also increasingly used for strategic asset allocation. We’re seeing more and more multi-asset managers using ETFs as low-cost building blocks. Robo-advisers like Nutmeg, Money Farm and Scalable exclusively use ETFs.
ETFs are also increasingly used in the institutional world as alternatives for derivatives, like futures and swaps.
Finally, liquidity issues in the bond market has led many portfolio managers to consider bond ETFs as suitable alternatives for single bonds.
McManus – ETFs are versatile as portfolio management tools, so whatever sort of exposure or problem you’re looking to solve, there’s potentially an ETF for it. There are broad exposures and narrow exposures. You can use them tactically or as a strategic holding tool to build satellite positions around.
Cash management is a growing area, particularly in fixed income. And as you mention, alternatives to derivatives. ETFs are increasingly being used instead of futures in hedge fund and asset management portfolios: there’s less operational complexity, you don’t have any of the roll costs, and ETFs can be cheaper on many occasions to implement.
I think part of what comes into that as well is an increasing regulatory burden around the derivatives market. The reality is the vast majority of ETFs don’t involve leverage, they’re delta 1 products, they’re simple to implement into an investment process, and once asset managers and hedge funds become comfortable with the trading and liquidity aspects, then you tend to see that their usage increases pretty significantly.
Caddick – For us, it just feels like the toolkit’s getting a bit bigger. Incorporating thematic and factor-based investing within our strategies has been really useful. Increasingly, we are using ETFs for certain hedging strategies. The ETF does make life easier from a management perspective, rather than having to worry about some of the complexity of the derivatives market.
The issues remain scale. For a business like ours, where we’re looking to invest significant amounts of money, ensuring that we can get scale and dilution within a particular strategy can be a challenge at times.
McManus – That said, the trend on liquidity is positive. A recent report from Jane Street found 87% of institutional investors say fixed income ETFs are more liquid than they were three years ago. That’s a pretty constructive position.
Lake – I would add that ETFs have an increased importance within asset allocation. Multi-asset solutions and discretionary portfolio management has been growing. They go hand-in-hand, but are very different parts of the investment product. As an ETF issuer, there are component parts, and then there are portfolio constructors that take those component parts and use them to thoughtfully deliver results.
We all know the statistic that 80% of your returns come from the asset allocation. That part is really important.
Caddick – From our perspective, we can see increasingly where alpha is going to come from – it’s going to be asset allocation, it’s going to be thematic, and it’s going to be factor-based. That’s where the drivers are going to be.
At the same time, we’ve got a very clear cost challenge within our own portfolios - partly as a result of the broad environment that we’re in - but partly as a result of a forward-looking, low return/low growth environment and a relatively confined inflationary backdrop that means fees are going to be a major drag on portfolios. I think that little bit of colour in the background has definitely helped the ETF and passive market.
Laird – Let’s ask instead about what ETFs are not being used for very much and I would say three or four things.
Cash management: it is growing, but there isn’t a huge amount out there because much is still done through quite traditional vehicles.
Tactical trading: everyone talks about ETFs as having short-term trading potential, but actually the stats really don’t back that up. I looked back at the mini-crash that we had in February of this year, and ETFs through that period continued to attract new flows. There wasn’t very much tactical trading. There were certain sectors of the market that saw outflows, but on the whole over that three-month period, ETFs continued to gain assets more or less consistently.
Also, small-cap exposures: I think ETFs are still pretty poor at that because of liquidity constraints. Once you are down below a certain capitalisation, there are not a lot of options out there.
The fourth one was in drawdown solutions, which are a big concern for many investors. There are a few good income products that have gained traction, but actually in the drawdown space, I don’t think it is something ETFs have really tapped into yet.
McManus – One of the interesting things we’ve found among LSE-listed ETFs when looking at turnover against asset growth is that you can start to build a picture of asset classes where investors are using ETFs more tactically. Turnover is much higher and almost keeps pace with asset growth over the long term – emerging market equities is an example of that in our analysis.
Then there are asset classes where you see more of a buy-and-hold pattern; for example corporate credit, where in fact you’d expect there to be a higher level of turnover and tactical trading from how they are often described.
People talk about the ETF market being tactical, meaning volatility will cause investors to rush to the door, but in Europe we also know that the vast majority of the market is made up of institutional investors. In fact we talk over and over again about the struggle to get retail investors involved in the ETF market. So I don’t think there is any real reason to believe that the ETF market is going to witness a huge amount of turnover on a tactical basis in volatility events in Europe, because the vast majority of investors are institutional, and there are signs that they using ETFs as buy-and-hold strategies, too.
Caddick – Some people might link the mark-to-market advantage of ETFs with high turnover in tactical trading. But that would be confusing the issue. Mark-to-market gives us an ability to match cash flows with timing so we can maintain market exposure. It’s got nothing to do with turning over a portfolio or short-term positioning.
The reality is that the portion of the market out there looking for high tactical allocations is relatively small and playing at the edges.
There are certain ETFs which possibly have almost been constructed to be of a shorter-term play, particularly around the more thematic or factor-based products which might be investing for the short term in what could be called a sub-business cycle. We’re not talking weeks here, rather months and perhaps up to a year.
McManus – There are also points in a cycle where product use will become more tactical. Over the last five years there have been points where there was a lot more turnover in a European banks ETF than normal, or a lot more turnover in a FTSE MIB ETF than usual, but that’s to do with what’s going on in the market at the time.
Lake – That’s how we define tactical as well. You may have a negative outlook on EM, but it doesn’t mean you completely pull out of it. You may just lighten the position.
One of the things that I hear frequently is that ETFs have benefited from a ten-year bull market but, being beta products, this may change if the markets turn downwards. But history shows that market downturns caused the best years for ETFs. In 2008 and 2000, flows not only persisted, they continued in the years afterwards.
There are a lot of reasons for this. One is that investors are willing to consider something different in those market environments. Secondly, potentially embedded gains that were in a different position are now not as painful to change, so investors can rotate out.
And thirdly is the different strategies delivered through the ETF wrapper. It’s not just passive, it’s not just equity. The ETF is a technology. You can get exposure to US equities just as easily as you can US treasuries. Even if the market’s turning downwards, you can still adopt the ETF wrapper.
Funds Europe – In August, Fidelity Investments in the US launched the first ‘no-fee’ index funds; although not ETFs, to what extent does this development increase competition in the ETF market?
Laird – Deutsche Bank had a 0% fee ETF in Europe in 2011 offering European exposure. A free ETF would normally look for revenues from securities lending, but Deutsche found regulations didn’t allow this, as revenue from securities lending must go back to the client. Also, the concept didn’t take off with investors and it was scrapped. Consequently, I don’t think zero-fee will happen in Europe. Regulations don’t allow it any more, it just couldn’t happen.
Also, if there’s one thing that has been made clear this side of the Atlantic, it is that investors do not want ‘backhanded’ cash flows. I think they’d much rather pay a fee and have one number to work with.
If you want really cheap ETFs, you can get really cheap ETFs. Price competition is roaring. There’s a lot of pressure on providers to make sure we get the right fees. If we go and launch a product and it’s the wrong cost, someone else is going to eat our lunch for us.
Bioy – I think it’s just a matter of time before we see zero-fee passive funds in Europe. What Fidelity did in the US was just a marketing coup, with not much financial significance. The difference between 0 and 1, 2 or 3 basis points is minimal and whoever decides to bring a fund’s fees to zero will be making money elsewhere, if not in securities lending.
Caddick – But that gets into the territory of one client subsidising another.
McManus – Low-priced products only make sense if they’re good quality and sustainable. As a buyer of ETF products, Nutmeg looks at the commercial aspect of a fund as well, to ensure that a product we buy is sustainable and has an economic incentive for somebody to manage it. With the Fidelity product in the US, this is a good example of it not being clear to investors on how it will be sustainable and what commercial incentive it provides. How are they actually making money? I think you have to do a lot of digging before you figure out that perhaps it’s a loss leader and maybe making money from securities lending.
The reality is, as a buyer I want to know how a product will stand up on its own and be sustainable. Securities lending is fine, but lending is a cyclical market, meaning you can’t rely on securities lending revenue forever more.
I’m not sure a zero fee makes the market any more competitive in core products - not when you can already buy products such as a global aggregated bond strategy with exposure to 22,000 bonds for 10 basis points! The market is already pretty competitive – but where it isn’t as competitive is for periphery products, for example where you’re still paying 60 basis points for some developed market small-caps. That’s where investors could benefit from more price competition.
Lake – The zero-fee model undermines the value that asset managers give to clients and consumers. If we were to say that everything we do should be done as cheaply as possible, it under-appreciates the value that we bring. We have thousands of analysts that produce immense amounts of research on individual securities and economics; that is value-added information we put out into the market for free to help investors make decisions about their portfolios.
Some of our very senior people go into the media to provide insight into what’s happening in the world, and that helps to build brand value for distributors whose customers will be familiar and comfortable with JP Morgan products because they know who we are.
Also, if we think about the control environment, it’s very infrequent in life where buying the cheapest thing is the right choice. You want to make sure that, particularly when it comes to investing, you have some robust infrastructure in there. You don’t want us skimping on portfolio management, or on technology and operations. Our position is to orientate ourselves around what a customer is trying to achieve and ask which products we can provide for that purpose - and then charge a reasonable price. We are very thoughtful about fees and would be doing ourselves a disservice if we got too bogged down in the fee conversation because the fee doesn’t fully articulate the value proposition that asset management brings, which is to help investors achieve their financial outcomes.
Funds Europe – What defines ETF product development and new launches at present in terms of asset classes, demand, or strategies such as active and factor investing?
Bioy – Thematic ETFs have grown in popularity in the last two years. This is occurring as investors look for new and differentiated sources of returns. Thematic funds like robotics, AI, e-commerce and ageing population offer investors a more granular approach to sectors. They provide access to companies that are expected to benefit from a specific theme or global megatrend. ESG is also another area of growth as more investors are looking to align their investments with their values and make an impact. Specifically, we expect to see more ETFs that invest in themes derived from the United Nations’ Sustainable Development Goals. Climate-related themes in particular, like low-carbon, will continue to grow.
Additionally, we expect to see new products that track smarter market cap-weighted indices. You may want to call these ‘smarter’ beta! As more money follows the same indices, like the S&P 500, the trading that occurs during reconstitution periods becomes an issue. Passive fund providers are increasingly working with index providers to mitigate that impact. Solutions include keeping index turnover low, lengthening the rebalancing period or even setting a date for rebalancing that is different from that of other index providers. Vanguard has lengthened the rebalancing period for some of its US passive funds.
We will also see more asset managers self-index or go to cheaper index providers, like Lyxor has done with Morningstar and L&G with Solactive.
Caddick – I expect thought leadership and innovation to continue, such as we’ve seen on investment factors, and this includes ETF providers working in partnerships with the buy-side.
McManus – Yes, we spend a lot of time talking to ETF providers about the products they’re developing.
I think the challenge for the industry now is product standards. How do we make sure that only really high-quality products with assets that are appropriate for ETF structures get launched? Cryptocurrency for example, is something that I don’t think is appropriate yet for an ETF structure. It’s important that the industry collectively has a high-quality set of product standards when it comes to new launches.
Laird – Most of the product development activity for us lately has been about going back through our product range and making changes and updates to things that perhaps made sense when we launched it back in 2001, but don’t so much now. We look to see if an index still works for us and if it delivers what people expect. We ask ourselves if fees are at the right level, and whether stock lending is appropriate for a fund. We’ve removed stock lending, and switched some funds to physical replication. This kind of day-to-day maintenance is something that I think gets overlooked quite often.
Lake – I estimate the ETF industry will reach $30 trillion by the year 2030 based on it doubling in size every five years, which it has done consistently. So, we think there is a lot that is still to happen.
Fixed income, for example, has not adopted the ETF wrapper nearly as much as it will. The mutual fund industry in Europe is 56% fixed income; the ETF industry is 15% fixed income. Our European investors tend to have about 50% of their portfolio in fixed income, so that will be one of the engines powering the market forward.
But I also have to say that active delivered through the ETF wrapper is also an innovation that will help power the industry onwards. Active is around 24% of mutual funds. There’s something that’s working there and if we can take the good bits and reposition them in the efficiency-rich ETF vehicle, that will turbo-charge this industry’s growth.
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