# Building New Financial Products with BlackRock's Stephen Cohen

An episode of [Masters in Business](https://invisiblenetwork.ai/podcast/730188152), 12 Dec 2025, 1 h 01 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/4e4cd910-40a1-4619-a5f3-ae2b0012ffff/cdff86fa-fbba-49ff-ab4e-b3b10165620a/audio.mp3?utm_source=Podcast&in_playlist=5873a3cb-298f-40bc-b71f-ae2b0013000d

Barry speaks with BlackRock’s Chief Product Officer and Head of Global Product Solutions Stephen Cohen. They discuss launching new investment products and the trajectory of ETFs. Stephen also discusses the crossover between public and private markets, cryptocurrency wrappers, and working with portfolio managers to develop new strategies and ideas. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is Masters in
[0:11] Speaker 1: Business with Barry Ritholtz on Bloomberg Radio.
[0:17] Speaker 2: This week on the podcast Another Banger. Steve Cohen is
[0:21] Speaker 2: BlackRock's Chief Product Officer and head of Product Solutions. Blackrock
[0:26] Speaker 2: runs three and a half trillion dollars of the world's
[0:28] Speaker 2: largest asset manager. Their I shares ETF division is over
[0:33] Speaker 2: five trillion dollars. There are a few people in the
[0:36] Speaker 2: world better situated to identify what is happening in the
[0:41] Speaker 2: world of asset and wealth management than Steve Cohen. Not
[0:45] Speaker 2: just fixed income, active index, bitcoin, digital assets. They're also
[0:53] Speaker 2: moving into private center alternatives, whether that's an ETF which
[0:56] Speaker 2: is part of that platform, is something else. Entirely thought
[1:00] Speaker 2: this conversation was fascinating, and I think you will also
[1:03] Speaker 2: with no further ado. BlackRock's Chief Product Officer and head
[1:08] Speaker 2: of Product Solutions, Steven Cohen.
[1:11] Speaker 3: It's great to be here.
[1:12] Speaker 2: We're going to talk a lot about what you do
[1:14] Speaker 2: at black Rock and how the company has been growing.
[1:17] Speaker 2: But I want to start with your background degree in
[1:21] Speaker 2: economics from Southampton College. Was the plan always to go
[1:25] Speaker 2: into investment strategy or what were you thinking back then.
[1:29] Speaker 3: I'm not sure I had a plan.
[1:31] Speaker 4: I studied economics at school and then at university, and
[1:37] Speaker 4: I was always I was always very interested in this
[1:40] Speaker 4: kind of concept of the markets. I didn't have any background,
[1:42] Speaker 4: no family background in markets or investing, but I always
[1:47] Speaker 4: found reading up about markets interesting. And what kind of
[1:53] Speaker 4: got me in it was a slight fluke. We were talking
[1:55] Speaker 4: about flukes before the show. One of my neighbors was
[1:59] Speaker 4: at telecoms engineer and he used to go round to
[2:02] Speaker 4: all the banks installing the dealer boards. And he one
[2:05] Speaker 4: day and I was talking to him, any one day,
[2:06] Speaker 4: it's like.
[2:07] Speaker 2: Various ATMs automatic tele machines we call them.
[2:09] Speaker 4: Here dealable the phone phone systems, the trading floors, you know,
[2:14] Speaker 4: with all the with all the.
[2:17] Speaker 2: Die balls, and I was missing.
[2:19] Speaker 3: Which maybe he installed those as well. I don't know.
[2:21] Speaker 2: Those were the big ATM manufactur.
[2:24] Speaker 4: And U and he said, so I got talking about it,
[2:26] Speaker 4: and I mentioned this interest, and he said, well, why
[2:29] Speaker 4: don't you do a day's work experience with me.
[2:30] Speaker 3: We'll go to a bank.
[2:31] Speaker 4: So we went to one of the banks, I can't
[2:32] Speaker 4: remember which one it was, and I walked onto this
[2:35] Speaker 4: trading floor and you know for someone who had no
[2:39] Speaker 4: experience or never experienced this before. It was amazing these
[2:43] Speaker 4: people shouting. There was screens and flashing numbers and stuff
[2:46] Speaker 4: like that, and I thought, you know what this this
[2:48] Speaker 4: looks pretty cool. This buzz was was the kind of
[2:51] Speaker 4: combination of an opportunity to work in something that that
[2:56] Speaker 4: took economics and markets and the world, and then this
[3:00] Speaker 4: kind of feeling of a buzzy environment that was the thing.
[3:03] Speaker 4: And so I applied to a number of banks and
[3:06] Speaker 4: at a university got an opportunity to go to UBS.
[3:08] Speaker 2: So that was your first gig right out of school.
[3:10] Speaker 2: You're working with convertibles and fixed income and something similar
[3:14] Speaker 2: at I G. Bearings. Tell us about your work at
[3:19] Speaker 2: UBS and ing what sort of job was it?
[3:22] Speaker 3: So I worked.
[3:23] Speaker 4: I originally started in fixed income and then and then
[3:27] Speaker 4: went into convertible bonds and a lot of what I
[3:30] Speaker 4: spent my time doing was kind of more market strategist
[3:33] Speaker 4: type of role, so talking to clients about what was
[3:37] Speaker 4: going on in the markets, what was going on in
[3:38] Speaker 4: the bomb markets, trade, developing trade ideas for clients, and
[3:44] Speaker 4: that's also how I got involved in spending quite a
[3:47] Speaker 4: lot of time on the Japanese markets, which I found
[3:50] Speaker 4: incredibly interesting and really got to understand the Japanese culture
[3:55] Speaker 4: and the way the way the country operated.
[4:00] Speaker 2: And is that what led you to no Mura or
[4:03] Speaker 2: did Nomura come first and then the Japanese.
[4:06] Speaker 3: Ev that kind of led? Yeah, it did.
[4:08] Speaker 4: So getting involved in Japan kind of lent me to
[4:11] Speaker 4: doing to do in combotible bonds, originally at Ing and
[4:14] Speaker 4: then with a group of US at Nomura, and and
[4:20] Speaker 4: that's where I spent a lot more time on the
[4:22] Speaker 4: Japanese markets. And I think it's all part of how
[4:25] Speaker 4: you I think back to those days. You know, Japan
[4:29] Speaker 4: was very different to what it is kind of now.
[4:30] Speaker 4: The market, definitely, the market at the time was about
[4:33] Speaker 4: nine The Nikko was about nine thousand nine to ten thousand, given.
[4:35] Speaker 2: World down from thirty.
[4:38] Speaker 4: Nine thousand and now we're back at forty six thousand,
[4:40] Speaker 4: so there was like a proper v shape of that market.
[4:42] Speaker 2: I took three and a half days.
[4:44] Speaker 4: And I took three and a half decades, and I
[4:45] Speaker 4: managed to do the middle bit, which was not necessarily
[4:47] Speaker 4: the most exciting bit. I've gotta be honest, but I think,
[4:51] Speaker 4: you know, again, it was what was interesting about it
[4:53] Speaker 4: is you learn about kind of an economy and therefore
[4:58] Speaker 4: a stock market that is in such a different place
[5:00] Speaker 4: as it was then to you know, look at the
[5:02] Speaker 4: US market or the European markets at the time.
[5:04] Speaker 2: So that raises a really interesting question. How do you think,
[5:07] Speaker 2: how do you think about the nineteen nineties, even the
[5:10] Speaker 2: two thousands, you're numuro till twenty eleven, How do you
[5:14] Speaker 2: think about those decades versus today? That world doesn't seem
[5:20] Speaker 2: like it's that long ago, but it really feels like
[5:22] Speaker 2: it was so different.
[5:23] Speaker 3: It feels incredibly different. I think for Japan it's completely different.
[5:28] Speaker 4: You know, if you go back to, as you say,
[5:30] Speaker 4: the late nineties, early two thousands, you know, the banking
[5:35] Speaker 4: crisis that was part of the bubble and the collapse
[5:38] Speaker 4: had still not been solved, and it was only really
[5:42] Speaker 4: in the early early to mid two thousands that they
[5:44] Speaker 4: finally got their arms around the banking system. And one
[5:47] Speaker 4: thing you read about history, and unless you can get
[5:49] Speaker 4: the banking system operating properly and lending, you really struggle
[5:54] Speaker 4: to get an economy going. The second thing that's really
[5:57] Speaker 4: interesting I think is so different is back then you
[6:00] Speaker 4: every six months every year that would be a government
[6:02] Speaker 4: led fiscal impulse, and you know, they used to call
[6:06] Speaker 4: it the building the roads to nowhere, paving the entire
[6:09] Speaker 4: country just got to kind of spend and spend and spend,
[6:13] Speaker 4: and the reaction of the market to that was this
[6:17] Speaker 4: is going to have no impact. The reaction now so
[6:20] Speaker 4: fiscal spending is actually, this is great. This is kind
[6:23] Speaker 4: of part of the economy the country of being back
[6:26] Speaker 4: on its feet. You're now talking about inflation being potentially
[6:29] Speaker 4: an issue in Japan, whereas there it was all about deflation.
[6:32] Speaker 4: So it's quite amazing how it has turned around, and
[6:34] Speaker 4: you're seeing that in the bomb market and just the yields.
[6:37] Speaker 2: One of the things I'm kind of fascinating about following
[6:41] Speaker 2: the Japan bubble parking in eighty nine and how long
[6:45] Speaker 2: it took to recover from that is the concept and
[6:48] Speaker 2: apologies in advance from my mispronunciation of Kiritsu, which is
[6:54] Speaker 2: the Japanese concept of these vertically integrated companies manufacturing, retail,
[6:59] Speaker 2: bank thinking like just every sector. If there's a banking problem,
[7:04] Speaker 2: the entire economy seems to run into trouble because that
[7:08] Speaker 2: whole vertical Sometimes it's Mitsubishi, sometimes it's whatever. Each of
[7:13] Speaker 2: these entities are giant, and if the bank has a problem, wow,
[7:18] Speaker 2: you're really doing some damage.
[7:20] Speaker 4: Yeah, because I think if you look back to the
[7:22] Speaker 4: history and again this is this is changing in the
[7:24] Speaker 4: different to the way we'd think about kind of Western
[7:27] Speaker 4: markets and companies. But Japan historically it was a bank
[7:32] Speaker 4: lending market, and you've got financing through bank lending all
[7:35] Speaker 4: the stock market and so banks were just so central
[7:38] Speaker 4: to the way the economy operated. And you see parallels
[7:41] Speaker 4: to that in Europe a little bit less here in
[7:43] Speaker 4: the US.
[7:43] Speaker 3: It's very different.
[7:44] Speaker 5: Now.
[7:45] Speaker 4: You know, there's there's the banking sector, which is obviously
[7:47] Speaker 4: very critical to the way companies are financing, but you
[7:49] Speaker 4: have this huge kind of private sector. You have private lending,
[7:53] Speaker 4: direct lending, things like that. So again it's good. I
[7:56] Speaker 4: think one things I've learned over my career and have
[7:59] Speaker 4: the opportunity to work in different markets, as you start
[8:01] Speaker 4: to see these the way these economies operated different, and
[8:04] Speaker 4: therefore the impact on the markets and therefore investors is
[8:07] Speaker 4: very very different.
[8:08] Speaker 2: So you stay at Nomura till twenty eleven, how did
[8:11] Speaker 2: you what brought you from the Mura to Blackrock?
[8:16] Speaker 4: So I had an opportunity, you know, having had a
[8:18] Speaker 4: lot of great experiences. Twenty eleven, Blackrock was probably eighteen
[8:25] Speaker 4: months into the integration of the I shares business or
[8:29] Speaker 4: the indexing business, and really focused on how do we
[8:33] Speaker 4: expand this business, particularly how do we expand icees, this
[8:37] Speaker 4: ETF business. And back in twenty eleven Europe, European ETFs
[8:43] Speaker 4: was still a very nascent industry. You know, now it's
[8:46] Speaker 4: like a two and a half trillion dollar industry. European
[8:49] Speaker 4: I shares is over a trillion dollars. Back then, it
[8:54] Speaker 4: was very much still the very early days, and you
[8:56] Speaker 4: could see what was happening in the States, and so
[8:59] Speaker 4: when I was speaking to black Rock, you could see
[9:03] Speaker 4: this really interesting opportunity to kind of take all of
[9:05] Speaker 4: what I'd done before in terms of the market's kind
[9:08] Speaker 4: of background and the breadth of experience, and then apply
[9:11] Speaker 4: it to this thing that was still pretty new. And
[9:15] Speaker 4: the kind of mission was, how do you educate people
[9:19] Speaker 4: about what an ETF is, how do you help people
[9:23] Speaker 4: start to think about how to use an ETF in
[9:25] Speaker 4: a portfolio? And by the way, also what are the
[9:28] Speaker 4: ETFs that don't exist yet that could exist? And again
[9:31] Speaker 4: you always have to. It's quite hard if you always
[9:34] Speaker 4: have to cast a barrier. You aways have to cast
[9:36] Speaker 4: your mind back to what it was then versus your
[9:38] Speaker 4: perspective of where you are today.
[9:40] Speaker 3: It was still fairly, you know, plain vanilla.
[9:43] Speaker 2: In terms of what go back to the nineteen nineties.
[9:45] Speaker 2: I'm pretty sure the cues were around then, and Spy
[9:49] Speaker 2: might have been around. This is before Really I Shares
[9:52] Speaker 2: were still part of Barclays. But no one really thought
[9:56] Speaker 2: that ETFs were a giant waiting to take place, or
[10:01] Speaker 2: I should say very few people like that. The ones
[10:04] Speaker 2: who did ended up being at the head of a
[10:07] Speaker 2: giant wave. What made you realize fifteen years ago that hey,
[10:13] Speaker 2: this I Shares thing is going to be big one day.
[10:17] Speaker 3: Honestly, it was talking to the people in I Shares.
[10:20] Speaker 4: It was having kind of been introduced to them and
[10:22] Speaker 4: having been approached to go and talk to them. It
[10:26] Speaker 4: was I learned a lot from just sitting down and
[10:28] Speaker 4: understanding this. I'd sat in banks, we traded ETFs. They were,
[10:34] Speaker 4: to be honest, a very very small component of what
[10:36] Speaker 4: we of what we did. It was only really when
[10:38] Speaker 4: I spoke to the people at I Shares and a
[10:40] Speaker 4: Black Crock and understood the history of how I Shares
[10:43] Speaker 4: had grown and where it was then, and that sense
[10:47] Speaker 4: of mission, that sense of kind of the purpose of
[10:50] Speaker 4: giving more access to investing two people, you know, and
[10:54] Speaker 4: creating more transparency that they had lived as they'd grow
[10:58] Speaker 4: in the US business and they were growing the European business,
[11:02] Speaker 4: and that kind of just captured you. And I think frankly,
[11:07] Speaker 4: in the last fifteen years I've seen that I've been
[11:09] Speaker 4: fortunately been part of kind of driving that, but it
[11:12] Speaker 4: was very clear that there was a big opportunity to
[11:14] Speaker 4: do something different in an industry, an asset, and from
[11:18] Speaker 4: an industry that hadn't really been shaken up. And I
[11:20] Speaker 4: think one thing that ETFs have done and I Shares
[11:23] Speaker 4: has lid this is really shaken up the industry on
[11:27] Speaker 4: behalf of end investors in a couple of ways.
[11:30] Speaker 2: At the very least, they're very low cost, and it's
[11:33] Speaker 2: raised questions about are do most not all, but do
[11:37] Speaker 2: most active managers actually justify their fees relative to their performance.
[11:42] Speaker 2: And then second, helping to move a lot of mom
[11:47] Speaker 2: and pop investors at least having a core as passive
[11:51] Speaker 2: indexing as opposed to an allocation that's nothing but active managers.
[11:56] Speaker 2: I mean I Shares has been the biggest driver of that.
[12:00] Speaker 2: When you started at Blackrock, what was the first job?
[12:04] Speaker 4: So I started in the I shares business and I
[12:06] Speaker 4: actually set up an investment strategy team and what we
[12:12] Speaker 4: did was go out and talk to clients about what
[12:15] Speaker 4: was going on in markets.
[12:16] Speaker 3: You know, we were part of Blackrock. Now my chairs
[12:18] Speaker 3: was part of Blackrock, and so.
[12:19] Speaker 4: There's a huge pedigree of investing and how do you
[12:23] Speaker 4: take that externally to our clients and educate them about
[12:29] Speaker 4: how ETFs could be used to implement these ideas build portfolios.
[12:35] Speaker 4: I have say in the early days, a lot of
[12:36] Speaker 4: it was just educating people on what is an ETF, like,
[12:39] Speaker 4: how does it actually work, what is a creation, what
[12:42] Speaker 4: is a redemption? And what do I need to understand
[12:45] Speaker 4: and know. Secondly, how do I then think about putting
[12:49] Speaker 4: them in a portfolio? And what's interesting I remember a
[12:54] Speaker 4: couple of years in probably probably eighteen months into my
[12:58] Speaker 4: time at Blackrock, did a big study on how do
[13:01] Speaker 4: you blend active and indexing? And we're very allergic to
[13:04] Speaker 4: the word passive. As you know, we used to go
[13:07] Speaker 4: out and say to people, which we still do. You know,
[13:09] Speaker 4: every decision you make is active, right, right?
[13:11] Speaker 2: If you be cap weighted, I mean it could. It's
[13:13] Speaker 2: a decision an equal cap totally.
[13:15] Speaker 4: You know, investing in US equities is a decision as
[13:17] Speaker 4: an active decision, then deciding to use an ETF is
[13:21] Speaker 4: an active decision. So we would, you know, we would
[13:24] Speaker 4: talk to clients about and what does it mean to
[13:26] Speaker 4: use an ETF, how does it fit with with active management,
[13:30] Speaker 4: which again go back to I think it's pretty well
[13:32] Speaker 4: accepted now. I think Black Crockers and the ETF industry
[13:35] Speaker 4: has played a big, big role in this. But the
[13:37] Speaker 4: concept of blending indexing and active managers and alpha in
[13:40] Speaker 4: one portfolios's that's kind of very accepted. People kind of
[13:44] Speaker 4: get that. It's pretty standard. It wasn't back then ten
[13:47] Speaker 4: fourteen years ago, and in some respects it was slightly
[13:50] Speaker 4: religious in terms of indexing or like you're either passive
[13:54] Speaker 4: or you're active.
[13:55] Speaker 2: I recall the phrase that was used in the two
[13:58] Speaker 2: thousand's Core and Satellite COREN Satellite, and you don't hear
[14:02] Speaker 2: that all that much anymore. Now. It's you have a
[14:06] Speaker 2: passive core and you're you're decorating it with active choices
[14:10] Speaker 2: around it.
[14:11] Speaker 4: Yeah, it's kind of how do you get the best
[14:13] Speaker 4: out of out of everything? How do you say, you
[14:17] Speaker 4: know what, Actually, here's an area where I think that
[14:21] Speaker 4: we can deliver alpha, which is really what you're when
[14:23] Speaker 4: you say active, what you're really saying is like alpha,
[14:26] Speaker 4: something beyond the index. And I come back to a
[14:29] Speaker 4: point you made earlier bout it about how the industry shifted.
[14:32] Speaker 4: I think what ETFs did is they shone a light
[14:35] Speaker 4: on what is what is performance? And you know, if
[14:40] Speaker 4: you can get the index through an ETF, it's very efficient,
[14:45] Speaker 4: then as an active manager, you've got to deliver something more,
[14:47] Speaker 4: and many, many active managers a black rock do deliver more.
[14:50] Speaker 4: But I think that that element of the more became
[14:53] Speaker 4: a very important component of the industry and component of
[14:56] Speaker 4: how for many investors they could then blend these these
[15:00] Speaker 4: different tools together to create better portfolios. And I think
[15:04] Speaker 4: that's the journey to me in the last kind of
[15:06] Speaker 4: twelve fourteen years has been so exciting.
[15:09] Speaker 2: You said when you began, you went out and spoke
[15:11] Speaker 2: to a variety of black rock clients. Were these mom
[15:15] Speaker 2: and pop investors, were these institutional clients. Were they brokers
[15:19] Speaker 2: and rias that are investing in ETFs on beha for
[15:23] Speaker 2: their clients, who were the folks that you first reached
[15:25] Speaker 2: out to.
[15:26] Speaker 4: It was pretty broad actually, it tended to be wealth managers,
[15:30] Speaker 4: and it tended to be institutional investors, which would be
[15:33] Speaker 4: you know, primarily compension funds. But what's interesting is how
[15:38] Speaker 4: that has, how that's expanded over the last again, in
[15:44] Speaker 4: the last kind of decade. You know, if I look
[15:46] Speaker 4: at if I look at the breadth of users now,
[15:50] Speaker 4: is anything from central banks through to you know, entrytail
[15:53] Speaker 4: investors in four oh one K plans or the equivalent
[15:56] Speaker 4: in Europe. And I think that's been one of the
[15:59] Speaker 4: secrets to why ETFs have grown so quickly is that
[16:03] Speaker 4: they actually are very much a product or a tool
[16:09] Speaker 4: for anybody and everybody. So it started very much with
[16:13] Speaker 4: I would say, kind of wealth manager and PNCH funds,
[16:15] Speaker 4: but it grew out and out and out, and frankly,
[16:17] Speaker 4: in Europe we learned a lot from the way the
[16:19] Speaker 4: US industry had grown. We talk all the time about
[16:23] Speaker 4: how the European ETF industry is probably about ten years
[16:26] Speaker 4: behind the US, and so there's a bit of a
[16:29] Speaker 4: roadmap there and I think we're seeing that happen in
[16:33] Speaker 4: Real Time.
[16:34] Speaker 2: Coming up, we continue our conversation with Steve Cohen, black
[16:37] Speaker 2: Rock's Chief Product Officer and head of Global Product Solutions,
[16:41] Speaker 2: discussing the idea of private market assets in an etf rapper.
[16:47] Speaker 2: I'm Barry Rittaults. You're listening to Masters in Business.
[16:50] Speaker 3: On Bloomberg Radio.
[17:05] Speaker 2: I'm Barry Ridults. You're listening to Masters in Business on
[17:08] Speaker 2: Bloomberg Radio. My extra special guest this week is Steve Cohen.
[17:12] Speaker 2: He's black Rocks Chief Product Officer and head of Global
[17:16] Speaker 2: Product Solutions. He also sits on black Rocks Global Executive Committee.
[17:22] Speaker 2: When I look over at Europe and especially the UK,
[17:26] Speaker 2: it seems like index adoption has been very slow. People
[17:32] Speaker 2: haven't quite bought into the concept of hey, before you
[17:35] Speaker 2: go after alpha, at least start with beta. That hasn't
[17:39] Speaker 2: really found a lot of traction there yet or are
[17:44] Speaker 2: you seeing that start to change in Europe.
[17:45] Speaker 3: We've seen that change.
[17:47] Speaker 4: It's definitely behind the US, but it is definitely happening,
[17:52] Speaker 4: and I think the same forces and drivers that we've
[17:55] Speaker 4: seen in the US are very much applicable to Europe
[17:58] Speaker 4: and ultimately will be to Asia as well, which I
[18:00] Speaker 4: think will go on that kind of same journey. So
[18:03] Speaker 4: I think it's just more of a matter of time
[18:05] Speaker 4: or timing as to where we are now.
[18:10] Speaker 3: Versus the US.
[18:11] Speaker 4: And there are different country dynamics that everywhere in the
[18:13] Speaker 4: world play into why different parts of the industry move
[18:18] Speaker 4: quicker or slower.
[18:20] Speaker 3: But I think the direction is definitely the same.
[18:21] Speaker 2: Different regulatory regimes, tax treatment, technology. Is the technology really
[18:28] Speaker 2: all that different? You would think that adoption maybe some
[18:31] Speaker 2: countries not a lag, but not ten years.
[18:35] Speaker 4: Yeah, I think it's just so I think the last
[18:37] Speaker 4: ten years in the US, if we are today in
[18:41] Speaker 4: somewhere like Europe in the ETF industry where the US
[18:44] Speaker 4: was ten years ago, I think the next ten years
[18:46] Speaker 4: in Europe will be faster than the last ten years
[18:48] Speaker 4: in the US. Makes sense, Yeah, it's because I think
[18:50] Speaker 4: that partly because there is a roadmap that the US
[18:54] Speaker 4: has created. It's different because of regulation, all the things
[18:58] Speaker 4: that you mentioned. But I think that everything is happening
[19:02] Speaker 4: so much faster now, and you've seen that in ETFs,
[19:05] Speaker 4: You've seen that in other parts of the industry as well.
[19:08] Speaker 2: So let's talk a little bit about what you've been
[19:11] Speaker 2: doing at black Rock for almost the past fifteen years.
[19:15] Speaker 2: You begin in twenty eleven. The growth must have been explosive.
[19:19] Speaker 2: What was that like watching this rocket ship take off?
[19:24] Speaker 3: It's been fantastic. It's been an amazing experience.
[19:27] Speaker 4: You know, the firm has grown so quickly in the
[19:30] Speaker 4: last ten to fifteen years, and not just grown in
[19:34] Speaker 4: terms of assets, which is obviously one way to measure growth,
[19:37] Speaker 4: but also just the breadth of what Blackrock does for
[19:42] Speaker 4: our clients and the breadth of the number of clients
[19:45] Speaker 4: that we talk to. What's I think so for someone
[19:48] Speaker 4: like me, what's been so great is the ability to
[19:54] Speaker 4: be involved in lots of different parts of the firm,
[19:57] Speaker 4: and you know, whether that was again growing the European
[20:00] Speaker 4: I shares business, whether that was running fixed income I shares,
[20:04] Speaker 4: which was a fantastic opportunity and time or moment in time,
[20:09] Speaker 4: I should say, in terms of really not just growing
[20:13] Speaker 4: fixing commtfs, but changing the bomb market and the impact
[20:16] Speaker 4: we've had there to now where again the breadth of
[20:18] Speaker 4: the company with private markets and things like that. So
[20:21] Speaker 4: it has been a great journey to be on personally,
[20:24] Speaker 4: but also to see it from the inside.
[20:27] Speaker 2: Can you explain what a chief product officer does at
[20:30] Speaker 2: a large asset manager. It's sort of an unusual title
[20:34] Speaker 2: in the world of investing.
[20:36] Speaker 4: Yeah, So there are a number of things that I
[20:38] Speaker 4: look at and my team look at. One is, how
[20:42] Speaker 4: do we continue to make sure that our product range
[20:46] Speaker 4: is at the forefront of innovation in terms of where
[20:50] Speaker 4: the industry is going. How do we make sure that
[20:52] Speaker 4: what our clients are looking for with delivering in whatever
[20:56] Speaker 4: format they're looking at. And I think one of the
[20:58] Speaker 4: biggest shifts that we've seen in the industry we talk
[21:01] Speaker 4: before about kind of how you blend active at indexing
[21:04] Speaker 4: kind of together, how that's become more commonplace and kind
[21:07] Speaker 4: of more more accepted. I think the other thing that
[21:10] Speaker 4: is happening is that the way all of our clients
[21:14] Speaker 4: are consuming investments or accessing markets is also shifting. So
[21:19] Speaker 4: this concept that you know, pretty much for the whole
[21:22] Speaker 4: time that we were growing the I shares business, when
[21:25] Speaker 4: we talked about growing ETFs, we were really talking about
[21:28] Speaker 4: were also talking about growing indexing.
[21:29] Speaker 3: That was very synonymous.
[21:31] Speaker 4: Right when you talk about growing ETFs, now you're not
[21:34] Speaker 4: just talking about growing indexing, You're talking about lots of
[21:36] Speaker 4: different things, active, ETFs, digital assets. And so I think
[21:41] Speaker 4: this concept of how we ensure that as we look
[21:44] Speaker 4: across all of the investment capabilities we have as a
[21:47] Speaker 4: firm that we want to bring to our clients, that
[21:49] Speaker 4: we're delivering them in a way that works for our clients,
[21:52] Speaker 4: that requires us to think a little bit differently to
[21:55] Speaker 4: the way we've had too in the past, and the
[21:57] Speaker 4: way I think the way the industry has And so
[21:59] Speaker 4: that's we've brought all this together into my role and
[22:02] Speaker 4: my group, and that includes driving the I shares business
[22:06] Speaker 4: and the growth of ETFs, making ETFs more central to
[22:10] Speaker 4: what we do in the firm, but also looking across
[22:13] Speaker 4: all of our liquid active business, our private markets businesses,
[22:17] Speaker 4: with our investment teams and those business leads to ensure
[22:21] Speaker 4: that our product range works for our clients, and then
[22:24] Speaker 4: helping them, helping our clients actually get the best out
[22:28] Speaker 4: of what we have.
[22:31] Speaker 3: I started an investment strategy.
[22:32] Speaker 4: We spent a lot of time talking to clients about
[22:34] Speaker 4: what's going on in markets, how to build better portfolios,
[22:38] Speaker 4: how to get the best out of the tools that
[22:40] Speaker 4: they have that we need to build, and then what's next,
[22:44] Speaker 4: what's the next trend or theme that's on people's minds.
[22:47] Speaker 2: So I'm hearing two approaches. One is a top down here,
[22:52] Speaker 2: what's going on in the world, what's out there that's
[22:55] Speaker 2: interesting that perhaps we're not addressing, and a bottoms up
[22:58] Speaker 2: what our clients askoking for? What do they think they want?
[23:03] Speaker 2: What do we think they need? What? What's the key
[23:06] Speaker 2: driver of new offerings. We could talk a little bit
[23:10] Speaker 2: about ibit, which is a unicorn, the the Bitcoin ETF
[23:17] Speaker 2: approaching one hundred billion dollars in assets. I think it
[23:20] Speaker 2: could be the fastest ETF to one hundred billion dollars.
[23:24] Speaker 2: I don't even know what's close. Maybe GLD, but that
[23:29] Speaker 2: that was a long time ago. How do you think
[23:33] Speaker 2: about coming up with new products? How much of it
[23:35] Speaker 2: is driven by client demand and how much of it
[23:39] Speaker 2: is driven by just looking from the top down and saying,
[23:42] Speaker 2: here's a hole that we really should fill.
[23:45] Speaker 4: It's a real mixture, it is. You know, we'll have
[23:49] Speaker 4: a lot of ideas. We'll have a lot of ideas
[23:53] Speaker 4: that are driven by investment views we have as a firm,
[23:57] Speaker 4: by our investment teams, by working with other people in
[24:01] Speaker 4: the industry, and we will combine that with what we're
[24:07] Speaker 4: hearing from clients and where clients are. You know, we're
[24:09] Speaker 4: engaging with clients all the time around you know their
[24:12] Speaker 4: portfolios and seeing where are their kind of gaps in
[24:16] Speaker 4: a portfolio or where are there sometimes it's sometimes there
[24:20] Speaker 4: are investment opportunities, but there isn't a way to get
[24:24] Speaker 4: to it. Again, come back to what ETFs have done,
[24:27] Speaker 4: like how do you give that access to to something
[24:30] Speaker 4: that was new? If you think about ibit, you know,
[24:32] Speaker 4: bitcoin obviously had grown already to a pretty sizable kind
[24:36] Speaker 4: of industry.
[24:37] Speaker 2: I think when ibit launched, bitcoin was a little over
[24:40] Speaker 2: a trillion dollar or something.
[24:42] Speaker 3: Like roughly that.
[24:42] Speaker 4: Yeah, and so there was a sizeable kind of industry
[24:47] Speaker 4: already out there. But for many clients or many potential investors,
[24:52] Speaker 4: the ease, the comfort, the knowledge understanding of an ETF
[24:57] Speaker 4: rapper was a great.
[24:59] Speaker 3: Way of allowing them.
[25:01] Speaker 4: To buy into crypto bitcoin in this case, and make
[25:06] Speaker 4: it potentially a bigger part of the portfolio. What's interesting
[25:10] Speaker 4: is the number of you know, in that explosive growth
[25:13] Speaker 4: that ibit has had, the number of buyers investors of
[25:20] Speaker 4: ibit who are already holders of bitcoin in other forms
[25:24] Speaker 4: was quite notable, and so I think it kind of
[25:27] Speaker 4: tests to this idea of actually, how do you access
[25:31] Speaker 4: different markets, sometimes in quite traditional ways, and how do
[25:34] Speaker 4: you bridge between this kind of traditional world and this
[25:37] Speaker 4: decentralized world. And you're seeing the same thing with Ether
[25:40] Speaker 4: as well with our Ether fund.
[25:42] Speaker 2: So you know, the classic bitcoin issue is, wait, I
[25:46] Speaker 2: have to make sure that this drive doesn't get damaged.
[25:48] Speaker 2: I have to keep in the safe. What's my password? Hey,
[25:51] Speaker 2: this is a lot of money and it's a bigger
[25:53] Speaker 2: pain in the neck to keep track of than the
[25:56] Speaker 2: rest of my assets. I can own this in ETF
[26:00] Speaker 2: Why do I ever want to own bitcoins directly? He
[26:04] Speaker 2: seems to be what a lot of people are saying.
[26:06] Speaker 4: That, and that's what we heard over and over again,
[26:09] Speaker 4: both again from people who had held or hold bitcoin
[26:12] Speaker 4: in digital wallets and felt that this was kind of
[26:15] Speaker 4: an easier, better way to hold.
[26:17] Speaker 2: It, especially when you read the numbers. Twenty five percent
[26:22] Speaker 2: of all coins. Ever, mind it might even be thirty
[26:24] Speaker 2: percent have been lost either the price were damaged or
[26:28] Speaker 2: the passwords were lost.
[26:29] Speaker 3: Which is there's some great stories out there.
[26:31] Speaker 2: Crazy guy who went out and bought a landfill because.
[26:33] Speaker 3: He's because he was trying to find the two.
[26:36] Speaker 2: Hundred million dollars worth of bitcoin on the drive, that
[26:38] Speaker 2: was accidentally thrown away.
[26:40] Speaker 4: I mean, so you know, putting in a nice are
[26:42] Speaker 4: probably would have been at least an easier way of
[26:48] Speaker 4: owning a landfill.
[26:49] Speaker 2: It's but it's kind of amazing. But it raises a
[26:54] Speaker 2: question that I've been thinking about for a while. Alternatives
[26:59] Speaker 2: and private whether it's private equity, private debt, private infrastructure,
[27:03] Speaker 2: and real assets are probably the fastest growing segment of
[27:08] Speaker 2: the market. Are we ever going to see something like
[27:11] Speaker 2: that in an ETF wrapper and illiquid art in an ETF.
[27:17] Speaker 3: Possibly.
[27:19] Speaker 4: Look, it's definitely something that a lot of people are
[27:21] Speaker 4: looking at, including ourselves, But there are a lot of
[27:24] Speaker 4: ways to I think the biggest story, I think people
[27:26] Speaker 4: jump towards the kind of private markets in ETFs, and
[27:29] Speaker 4: the real story is how do you open up access
[27:32] Speaker 4: appropriately for more people to access private markets as part
[27:36] Speaker 4: of the portfolio. So, if we think about a world
[27:38] Speaker 4: which we believe in which you're kind of moving from
[27:40] Speaker 4: called it sixty forty, you know, the traditional portfolio to
[27:43] Speaker 4: more of a fifty to thirty twenty where twenty is
[27:45] Speaker 4: private markets. And that's applicable to somebody who owns a
[27:49] Speaker 4: defined benefit scheme. In fact, they've got that already probably
[27:52] Speaker 4: more through the way the scheme's managed. But actually if
[27:55] Speaker 4: you then apply that to, say to other pension types
[27:58] Speaker 4: like a defined contribution SCI or a wealth investor, that
[28:02] Speaker 4: kind of journey towards incorporating more private markets into a
[28:05] Speaker 4: portfolio for all of the diversification reasons that we've talked
[28:09] Speaker 4: about a lot that how that happens is the real work,
[28:17] Speaker 4: and that may end up requiring an ETF, but I
[28:21] Speaker 4: think there are a lot of other ways that could
[28:23] Speaker 4: open up the door to private markets being a bigger part,
[28:27] Speaker 4: either either a completely new part or a bigger part
[28:29] Speaker 4: of a portfolio for you know, an individual retiree or
[28:34] Speaker 4: an individual investor. Again comes back to what we were
[28:36] Speaker 4: saying earlier on about rather than thinking about different product
[28:41] Speaker 4: types an ETF or a mutual fund being associated with
[28:44] Speaker 4: one type of strategy, it's actually saying.
[28:48] Speaker 3: What are the strategies that we believe would help a
[28:52] Speaker 3: client an investor have a better portfolio for whatever their
[28:55] Speaker 3: goals are, and then how do you best put that together?
[28:58] Speaker 2: So it's it's less about the product, more about the
[29:01] Speaker 2: solution to those To.
[29:02] Speaker 3: Me, it's about the portfolio. Yeah, what's the solution exactly?
[29:05] Speaker 4: What are you trying to achieve, you know, and if
[29:07] Speaker 4: it's long term retirement or retirement income, whatever it is,
[29:11] Speaker 4: And then what does the portfolio need to look like
[29:13] Speaker 4: or should look like, and how does it evolve over time?
[29:15] Speaker 3: And then how do you do it right?
[29:17] Speaker 4: And what are the kind of mixture of tools that
[29:19] Speaker 4: are most appropriate to get you there?
[29:22] Speaker 2: So that's the shift in thinking. So let's dive into
[29:25] Speaker 2: that a little bit. You know, the advantage of stocks, bonds, convertibles.
[29:30] Speaker 2: They all come with AQSIP number. It's pretty standard in
[29:33] Speaker 2: terms of the custodian ship where it's held. What sort
[29:39] Speaker 2: of public information is about available, the due diligence you
[29:42] Speaker 2: can do about it, how to get liquid when you
[29:45] Speaker 2: want to get liquid? All those stocks, bonds and put
[29:49] Speaker 2: convertibles as sort of a hybrid. Everybody knows how to
[29:53] Speaker 2: operate around that. It seems like when we look at privates,
[29:58] Speaker 2: they're all one offs. The custodianship are all a single thing.
[30:02] Speaker 2: Doing the due diligence is time consuming and expensive. The
[30:07] Speaker 2: hope is they're they're not correlated and you're giving up
[30:11] Speaker 2: liquidly in exchange for the liquidity premium. Can that ever
[30:16] Speaker 2: be standardized? Enough that as a wealth manager, I could say, Hey, Steven,
[30:23] Speaker 2: I want to move ten twenty percent of these clients'
[30:26] Speaker 2: assets to a diversified set of equity, debt, and real assets,
[30:32] Speaker 2: and I want some liquidly Like is this a pipe dream? Oh?
[30:36] Speaker 2: And I don't want any k ones because they're a
[30:38] Speaker 2: disaster to deal with. Like, if that were something that
[30:43] Speaker 2: was turnkeen available, I would think that every wealth manager
[30:48] Speaker 2: in America would rush in that direction. How long might
[30:51] Speaker 2: it be before privates look something like public markets, or
[30:59] Speaker 2: at least the pain points are are reduced to something tolerable.
[31:04] Speaker 4: I think we're we're on a journey, and I think
[31:07] Speaker 4: that that is about, first of all, developing investment strategies
[31:12] Speaker 4: and therefore and being able to put them in products
[31:15] Speaker 4: that work for a wealth manager. Secondly, there's a big
[31:18] Speaker 4: you know, the operational lift, right the technology development that
[31:22] Speaker 4: is happening, and.
[31:22] Speaker 3: We're working We're working with a number of.
[31:26] Speaker 4: Firms around how can we make sure that, for example,
[31:28] Speaker 4: model portfolios can incorporate private markets in a more efficient
[31:32] Speaker 4: kind of easier to use way. It's going to be
[31:36] Speaker 4: different to public markets. It should be different to public
[31:38] Speaker 4: markets because I think the role of an infrastructure, for example,
[31:41] Speaker 4: in a in a in a portfolio is different to
[31:44] Speaker 4: the role of owning stocks or owning bonds, and I
[31:46] Speaker 4: think that part of you know, part of the way
[31:50] Speaker 4: we've always thought about the role of stocks and bonds
[31:52] Speaker 4: has been different as well. You know, bonds is a
[31:54] Speaker 4: ballast to a portfolio stocks as a growth driver.
[31:56] Speaker 3: For example. I think you think.
[31:58] Speaker 2: About when barns we generated attractive.
[32:02] Speaker 4: Yields, Maybe that'll come back, you know, we might need
[32:05] Speaker 4: a bit of inflation, but yeah, one day, one day,
[32:09] Speaker 4: so we be back on the podcast to cover that off.
[32:12] Speaker 4: But I think that different role is very important. But
[32:14] Speaker 4: there's a lot of development that is happening to be
[32:18] Speaker 4: able to make that more efficient than it has been historically.
[32:23] Speaker 4: And I think that's I think we will see a
[32:26] Speaker 4: lot of change in the next couple of years.
[32:27] Speaker 2: You mentioned technology. Let's let's dive a little deeper into that.
[32:31] Speaker 2: Black Rock acquired Prequin and acquired e front and I'm
[32:36] Speaker 2: read about some integration into your Aladdin platform. How significant
[32:41] Speaker 2: are those tools when it comes to offering private market
[32:46] Speaker 2: investments to the public.
[32:49] Speaker 3: Incredibly important.
[32:50] Speaker 4: I think that you know, for anybody who is for
[32:54] Speaker 4: a wealth manager who is running a portfolio for a client.
[32:59] Speaker 4: The it's not just as you know, it's not just
[33:01] Speaker 4: about buying the different products or doing the asset allocation.
[33:04] Speaker 4: It's also about the risk management of what does that
[33:06] Speaker 4: portfolio look like. And that's really what a laddin is about.
[33:11] Speaker 4: And as more and more investors, whether that is a
[33:16] Speaker 4: retail investor or wealth wealth investor, or whether it's a
[33:19] Speaker 4: big pension fund, incorporate private markets into portfolios and blend
[33:24] Speaker 4: private and public. And I think again, if you go
[33:27] Speaker 4: back over that ten to fifteen year journey, we started
[33:29] Speaker 4: with indexing on one side of the floor and active
[33:34] Speaker 4: on the other side, and we gradually brought those together
[33:36] Speaker 4: and that became commonplace to blend. And I think we're
[33:38] Speaker 4: now in that world of starting to blend public markets
[33:41] Speaker 4: and private markets, which historically were completely distinct, and were
[33:45] Speaker 4: starting to kind of blend those because the industries are
[33:49] Speaker 4: crossing over, more companies are staying private for longer, et cetera,
[33:52] Speaker 4: et cetera. So as we bring those together, the need
[33:56] Speaker 4: to be able to risk manage and understand those portfolios,
[34:00] Speaker 4: those in different scenarios is incredibly important. That's what a
[34:03] Speaker 4: laddin is about.
[34:05] Speaker 3: With prequel.
[34:06] Speaker 4: What is so exciting is that I think over time
[34:10] Speaker 4: the private markets will become more transparent, there will be
[34:13] Speaker 4: more data available and around, and very similar to what
[34:17] Speaker 4: a Laddin and Blackrock did with public markets will happen
[34:20] Speaker 4: in the private markets as well, and that I think
[34:22] Speaker 4: will help more and more investors access private markets in
[34:26] Speaker 4: the way and understand what it is that they have.
[34:29] Speaker 4: Partly of which is again understanding the different liquidity and
[34:33] Speaker 4: being comfortable that they're different for a reason. And you're
[34:36] Speaker 4: not trying to create a one size fit fit's all.
[34:38] Speaker 4: You're trying to create a portfolio that delivers the right outcomes. Aladdin,
[34:43] Speaker 4: I think is going to be critical for that.
[34:45] Speaker 2: So let's talk a little bit about product development just
[34:48] Speaker 2: in the ETF space. This year, over a thousand new
[34:52] Speaker 2: ETFs have come out, or at least we're on pace
[34:55] Speaker 2: to do that by the end of this year. This
[34:58] Speaker 2: sort of hybrid development of ETF, so everything we've talked
[35:03] Speaker 2: about seems to be very thoughtful and very measured with
[35:07] Speaker 2: a really specific approach. Kind of feels like the rest
[35:11] Speaker 2: of the industry is just throwing stuff up against the
[35:13] Speaker 2: wall to see what sticks. How do you look at.
[35:16] Speaker 3: This we can only focus on what we do, so.
[35:20] Speaker 2: But you have to be aware of what. But you
[35:22] Speaker 2: are all aware of what's going on three x inverse bitcoin,
[35:26] Speaker 2: like what and why do I want that? Or why
[35:29] Speaker 2: does anyone want that?
[35:31] Speaker 3: Yeah, you'll have to ask them.
[35:33] Speaker 2: I mean, I guess it's they want to give people
[35:35] Speaker 2: an opportunity to make any type of trade and every
[35:39] Speaker 2: type of trade. I'm assuming that's not your approach.
[35:43] Speaker 4: I think there is a lot out there of throwing
[35:45] Speaker 4: things outlet sticks. Our approach is very much where do
[35:49] Speaker 4: we believe that we can develop products, strategies, exposures that
[35:55] Speaker 4: are going to help create better portfolios. Right, And if
[35:59] Speaker 4: you look at the solution of the ETF industry and
[36:01] Speaker 4: what's happened, is it started, you know, go back thirty
[36:05] Speaker 4: thirty plus years ago. It started very much with how
[36:08] Speaker 4: do you give access to kind of broad in disease,
[36:11] Speaker 4: And then it was how do you inequities? Then how
[36:13] Speaker 4: do you give access to more granular exposure like sectors
[36:16] Speaker 4: or different countries. Then it was how do you move
[36:19] Speaker 4: into different asset classes like fixed income for example, And
[36:22] Speaker 4: then more recently it's been something like kind of digital
[36:24] Speaker 4: assets with ibit and that's really been the journey of IAS, right,
[36:29] Speaker 4: and I think that's been therefore the journey of the
[36:32] Speaker 4: industry as as we've led it that it remains very
[36:37] Speaker 4: much of you how we think about continuing to expand
[36:40] Speaker 4: the ICES platform, and that includes now using the ETF
[36:44] Speaker 4: technology we've built to take things like active funds and
[36:47] Speaker 4: wrap them into an ETF, because the ETF is a
[36:50] Speaker 4: more efficient way for many investors to actually own those
[36:55] Speaker 4: different strategies.
[36:56] Speaker 3: But again, it starts with the strategy, and I think.
[36:59] Speaker 4: That for us, it's about how do you what is
[37:03] Speaker 4: it that you're developing in terms of an exposure or
[37:06] Speaker 4: a strategy, why how does it fit with the world
[37:09] Speaker 4: that we see today in terms of where we think
[37:11] Speaker 4: the world is going from a market standpoint and a
[37:13] Speaker 4: macro standpoint, How does it fit in terms of kind
[37:16] Speaker 4: of a portfolio construction standpoint. You're going to have waves
[37:19] Speaker 4: of innovation right now, we're having a huge wave of
[37:22] Speaker 4: ETF launches, and in particular the last two three years,
[37:25] Speaker 4: you know, the ETF is it's it's gone from being
[37:28] Speaker 4: kind of very much on the side of the industry
[37:29] Speaker 4: to being very central. We're excited about that, you know,
[37:32] Speaker 4: that's what we were, what's what we've built at black
[37:34] Speaker 4: Rock and I Shares. But it's also meant that ETFs
[37:38] Speaker 4: are very much kind of being used more broadly, and
[37:40] Speaker 4: you know that's going to be I think, part of
[37:42] Speaker 4: how the industry evolves and then it kind of matures.
[37:45] Speaker 2: Especially on the active side, where you get all the
[37:48] Speaker 2: benefits of mutual ownership without the capital gains penalty that
[37:55] Speaker 2: you get in mutual funds. So it makes sense that
[37:59] Speaker 2: a lot of act of ETFs would develop where they
[38:03] Speaker 2: might have been active mutual funds.
[38:05] Speaker 3: YEA.
[38:06] Speaker 2: What else do you see as changing or in the
[38:09] Speaker 2: midst of transforming? Is it by asset class, is it
[38:14] Speaker 2: by you mentioned geography or a sector? What is really
[38:18] Speaker 2: in flux these days?
[38:19] Speaker 3: So I think that.
[38:22] Speaker 4: You know, when you look at I'll give you a
[38:23] Speaker 4: couple of good examples. So digital assets, I think it's
[38:29] Speaker 4: kind of fairly early days. Ibit is incredibly fast growing.
[38:33] Speaker 4: It was the fastest to twenty to thirty, to forty
[38:35] Speaker 4: to fifty and now hopefully to one hundred billion as
[38:37] Speaker 4: an ETF, and we you know, we have an ethereum METF.
[38:40] Speaker 4: I think there will be more product development in something
[38:42] Speaker 4: like that and again for us, that's about bridging this
[38:45] Speaker 4: kind of defile world with the traditional kind of finance world.
[38:50] Speaker 4: That's one area. The second area is take something like
[38:54] Speaker 4: fixed income. You know, we've been building out fixed INCOMEMTF
[38:58] Speaker 4: industry for twenty years. The industry is now two and
[39:02] Speaker 4: a half ish trillion dollars. We think it's going to
[39:05] Speaker 4: be six trillion by kind of twenty thirty. The growth
[39:08] Speaker 4: is huge. Less than two percent of bombs in the
[39:12] Speaker 4: world are in an ETF.
[39:14] Speaker 2: Wow.
[39:14] Speaker 4: So it feels and having been I can tell you,
[39:17] Speaker 4: having been on the journey and been out there, you know,
[39:20] Speaker 4: kind of pounding the streets on the value of fixed
[39:22] Speaker 4: income ETFs over the years, it feels like this has
[39:26] Speaker 4: become really really big, and it has. And yet when
[39:28] Speaker 4: you think it in the context of the one hundred
[39:30] Speaker 4: and forty trillion dollars of fixed income out there, you know,
[39:34] Speaker 4: ETFs are still a pretty tiny part of the market
[39:37] Speaker 4: in terms of how people own bonds.
[39:39] Speaker 2: It's relatively large compared to it was, but an absolute term.
[39:43] Speaker 4: And in absolute terms, I still you know, we're still
[39:45] Speaker 4: to using out the sports terminology of've given it to
[39:49] Speaker 4: the World Series, you know, the first inning maybe the
[39:52] Speaker 4: second inning. And then even if you look at what's
[39:55] Speaker 4: really fascinating is you if you look at and we
[39:58] Speaker 4: talked about active activity, and again that's still very early stagment.
[40:02] Speaker 2: I'm fixed income. They actually seem to do very like
[40:05] Speaker 2: the broad the Bloomberg ag includes everything good, bed and different.
[40:10] Speaker 2: It seems like it's relatively easy to capture a little
[40:15] Speaker 2: bit of fixed income alpha with a handful of screens.
[40:18] Speaker 2: You're taking out the lowest credit quality, or you're taking
[40:22] Speaker 2: out the riskiest credit that you're not getting compensated for.
[40:26] Speaker 2: Why does fixed income active seem like it's a better
[40:31] Speaker 2: bet or a higher probability bet than active equity.
[40:37] Speaker 4: I think the historically fixed income, and I go back
[40:39] Speaker 4: to when I started, was very much a world of
[40:44] Speaker 4: limited transparency and kind of understanding. Frankly, I think the
[40:48] Speaker 4: understanding for most investors of fixed income relative to I
[40:51] Speaker 4: don't mean I don't mean investors who are doing fixed
[40:53] Speaker 4: income all every day, but for most retail investors in particular,
[40:58] Speaker 4: I think people have a much more from affinity to
[41:01] Speaker 4: stocks than they do for bonds in terms of kind
[41:03] Speaker 4: of the understanding. Bonds feel complicated at times, it feels
[41:07] Speaker 4: like an it's a world we don't quite understand, whereas
[41:10] Speaker 4: equities you kind of you know, you know, Google or
[41:13] Speaker 4: whatever it is. And so I think there's always been
[41:16] Speaker 4: a sense of kind of outsourcing those decisions kind of
[41:19] Speaker 4: more so. The other thing is that the the indexing
[41:24] Speaker 4: market in fixed income has been slower to evolve. So
[41:28] Speaker 4: you mentioned the AG, and people tend to when they
[41:31] Speaker 4: think about fixed and indexing, they automatically go to the AG. Sure,
[41:34] Speaker 4: the AG is one index, and it's a very specific
[41:36] Speaker 4: index in terms of what it is. It doesn't have
[41:39] Speaker 4: a huge amount of credit in it, for example, But
[41:42] Speaker 4: there are other indices with Blueberg for which we have
[41:47] Speaker 4: products like Universal that actually are much more representative of
[41:50] Speaker 4: fixed income. So part of it also is you know,
[41:53] Speaker 4: what are you benchmarking yourself against? And I think we
[41:55] Speaker 4: went through that experience with equities, and we are going
[41:59] Speaker 4: to go through that or going through that experience with
[42:01] Speaker 4: fixed income. And the other thing we're seeing with fixed
[42:03] Speaker 4: income is that we're developing and building the more granular
[42:08] Speaker 4: strategies in fixed income. So we're carving up the market
[42:11] Speaker 4: in fixed income the way we did inequities through ETF.
[42:14] Speaker 4: So if you want to own zero to three year
[42:17] Speaker 4: government bonds, own SCALF, if you want to own long
[42:19] Speaker 4: term trgies, own TLT, if you want to earn bits
[42:22] Speaker 4: of the different types of credit crossover, you can now
[42:26] Speaker 4: do that through ETFs. So you know, it is an
[42:28] Speaker 4: amazing tool. And what's fascinating about fixing btfs is that
[42:32] Speaker 4: some of the fastest growing users are asset managers, so
[42:36] Speaker 4: fixed income managers using ETFs as a way to be
[42:39] Speaker 4: better at their job. And I think again that's that
[42:42] Speaker 4: blending of indexing. But even in the equity world, you know,
[42:46] Speaker 4: equity indices are revolving. We were saying, if you look
[42:50] Speaker 4: back to two thousand, you know, the top seven, you know,
[42:53] Speaker 4: the whole kind of SMP was worth the equivalent to
[42:55] Speaker 4: what the top seven stocks were worth, you know, six
[42:57] Speaker 4: months ago. And so you mentioned earlier in the program
[43:00] Speaker 4: equal weight SMP. We're seeing a lot of demand right
[43:04] Speaker 4: now for things like equal weight or capped indices. We
[43:09] Speaker 4: launched a top twenty fund top TI. We did the
[43:12] Speaker 4: same thing with NASTAC. You know, even the S and
[43:15] Speaker 4: P five hundred. Owning the top twenty stocks versus owning
[43:19] Speaker 4: the five hundred stocks is a very, very very different game.
[43:23] Speaker 4: And so even something like large cap US equities, which
[43:28] Speaker 4: you would have thought there was nothing else to innovate in.
[43:31] Speaker 4: Even that has been the area where we've probably done
[43:33] Speaker 4: more in the last six months than many other areas
[43:35] Speaker 4: because the dynamics of the US equity market have shifted
[43:39] Speaker 4: so much in the last couple of years and investors
[43:41] Speaker 4: are looking for different things.
[43:43] Speaker 3: Come me up.
[43:43] Speaker 2: We continue our conversation with Steve Cohen, black Rock's Chief
[43:47] Speaker 2: Product Officer and head of Global Product Solutions, discussing what
[43:52] Speaker 2: goes into product development in finance. I'm very ritt alts.
[43:56] Speaker 2: You're listening to Masters in Business on Bloomberg Radio. I'm
[44:13] Speaker 2: Barry Ridults. You're listening to Masters in Business on Bloomberg Radio.
[44:18] Speaker 2: My extra special guest this week is Steve Cohen. He's
[44:21] Speaker 2: black Rocks Chief Product Officer and head of Global Product Solutions.
[44:26] Speaker 2: He also sits on black Rocks Global Executive Committee. Since
[44:31] Speaker 2: we've been talking about technology and you mentioned the top seven,
[44:35] Speaker 2: I'm legally obligated to ask a question about artificial intelligence
[44:40] Speaker 2: and AI. What is AI doing to your business of
[44:45] Speaker 2: developing new products? How we thinking about either AI as
[44:49] Speaker 2: an asset class or actually deploying AI to help build
[44:54] Speaker 2: new products.
[44:55] Speaker 4: I think we're seeing AI in probably three areas. The
[44:59] Speaker 4: first one is, obviously, AI is an investment theme, which
[45:02] Speaker 4: is very well publicized, et cetera. And we're seeing that
[45:06] Speaker 4: through things like data centers, obviously, stocks, credit, et cetera.
[45:14] Speaker 4: The second one is AI in terms of investment strategy.
[45:19] Speaker 4: For example, Blackrock were very fortunate to have a systematic
[45:24] Speaker 4: group investment group that has a forty year track record
[45:28] Speaker 4: and history of delivering really great performance. And you know,
[45:32] Speaker 4: they would argue they were doing AI well before it
[45:35] Speaker 4: was called AI, when it was called machine learning or
[45:37] Speaker 4: whatever it was called before Black around.
[45:39] Speaker 2: Most people think it's a new thing. You know, Watson
[45:43] Speaker 2: played Jeopardy and I forgot the one was a deep
[45:46] Speaker 2: blue played.
[45:47] Speaker 3: Chess and go.
[45:48] Speaker 2: Those were thirty years ago.
[45:50] Speaker 4: Yeah, so you know, it's gone through its iterations and
[45:54] Speaker 4: so you know, and they've got some fantastic examples of
[45:58] Speaker 4: the way they've used machine learning stroke now AI to
[46:03] Speaker 4: really understand you know, every single day they will pass
[46:08] Speaker 4: thousands of reports, earnings calls, et cetera.
[46:12] Speaker 3: Transcript for.
[46:15] Speaker 4: Sentiment and you know, and the result, the investment results
[46:19] Speaker 4: of those of those signals that they create are really
[46:23] Speaker 4: quite quite fascinating and very lucrative in terms of investment alpha.
[46:28] Speaker 4: And so we're really seeing a huge demand right now
[46:31] Speaker 4: for systematic investing. And this is something that historically people
[46:36] Speaker 4: were nervous was because it was a black box and
[46:38] Speaker 4: they didn't understand it. And now people are using things
[46:41] Speaker 4: like chat, GPT, et cetera, which is a black box,
[46:44] Speaker 4: but they're seeing the value they're getting. And so what's
[46:45] Speaker 4: interesting is is a psychological shift and a greater acceptance
[46:49] Speaker 4: of saying, actually systematic investing using AI. That's really interesting
[46:54] Speaker 4: and exciting. And so I think the second thing is
[46:57] Speaker 4: we're seeing it through using AI to be better investors.
[47:01] Speaker 4: And then the third one is product development, and so
[47:04] Speaker 4: how can we use the data that we are able
[47:07] Speaker 4: to collect and effectively deploy big data and the AI
[47:14] Speaker 4: that we've developed in house that sits on that to
[47:17] Speaker 4: identify what are some of those themes that are coming up,
[47:20] Speaker 4: what are some of the things that clients are talking
[47:22] Speaker 4: about or being picked up in the news or whatever
[47:25] Speaker 4: it is, and be more kind of systematic, I would say,
[47:29] Speaker 4: in being able to see what those are. And also
[47:32] Speaker 4: we are able to use it to test and stress
[47:34] Speaker 4: test strategies that are new in different market environments. So
[47:37] Speaker 4: it's a really again, it's a really exciting time for
[47:41] Speaker 4: product development because it's giving us new tools that we
[47:43] Speaker 4: didn't have before.
[47:45] Speaker 2: So Blackrock tends to come out with these very well
[47:49] Speaker 2: thought out, very rational products. And the question that I've
[47:53] Speaker 2: been thinking about when I first started doing my homework
[47:57] Speaker 2: for this is what are some of the crazy years
[48:00] Speaker 2: that you looked at and said, yeah, no, that's just
[48:03] Speaker 2: a bridge too far, Like what hasn't come out because
[48:06] Speaker 2: it was just too either not solving a problem or
[48:10] Speaker 2: just too wild and reckless.
[48:13] Speaker 4: Oh, there's a whole treasure shove of Yeah, we could
[48:15] Speaker 4: do another podcast, I'm sure. But you know, typically what's
[48:18] Speaker 4: interesting about it is there are two reasons why you
[48:23] Speaker 4: might end up like that. One is it's it's a
[48:26] Speaker 4: crazy idea, but there's just really no demand for.
[48:29] Speaker 2: It, and well that's an easy business which is an
[48:34] Speaker 2: easy business decision.
[48:35] Speaker 3: The second time often is you're just too early, uh huh.
[48:38] Speaker 3: And you know, I.
[48:39] Speaker 2: Mean there could have been an ETF for eth and
[48:43] Speaker 2: bitcoin ten years ago if the SEC would have allowed it.
[48:46] Speaker 4: If they were allowed it, yeah, yeah, So sometimes it's
[48:48] Speaker 4: the regulatory Yeah, it could be. It could be that
[48:51] Speaker 4: the industry, the industry in the broad sense of the word,
[48:54] Speaker 4: regulators or whatever, aren't quite ready. You're not you're not
[48:57] Speaker 4: able to actually build the thing that you've got an
[48:59] Speaker 4: idea for. It could be that the market is not
[49:01] Speaker 4: quite ready. Fixed income ETFs is a good example. We
[49:04] Speaker 4: looked at things ten years ago and decided that actually
[49:08] Speaker 4: the fixed income market wasn't ready. We weren't quite ready
[49:12] Speaker 4: to be able to do that in an ETF A
[49:15] Speaker 4: decade on, and by the way, we launched a bunch
[49:18] Speaker 4: of those as well, knowing that it would take a
[49:21] Speaker 4: long time. We didn't expect to launch it it would
[49:24] Speaker 4: take off straight away, knowing that it would take time
[49:26] Speaker 4: for the kind of market to get there, but we
[49:28] Speaker 4: were comfortable we could manage that fund. And so often
[49:32] Speaker 4: you end up in a situation where you're kind of
[49:34] Speaker 4: waiting for maybe the liquidity of the market to be
[49:38] Speaker 4: broad enough that an ETF works. So you know it's
[49:41] Speaker 4: going to work in the future, it's just a little
[49:43] Speaker 4: bit early now. So it a couple of different reasons
[49:45] Speaker 4: why that may be the case.
[49:46] Speaker 2: So that raises a question what's next on the product roadmap?
[49:50] Speaker 2: So We've talked about digital and crypto, we've talked about
[49:54] Speaker 2: fixed income, and we've also talked about privates. What are
[49:58] Speaker 2: you seeing as the next ten years.
[50:01] Speaker 3: It's really across the whole waterfront of what you just said.
[50:04] Speaker 4: I mean, obviously with HPS and GIP, with our new partners,
[50:09] Speaker 4: there's a lot of opportunity we believe to develop in
[50:12] Speaker 4: the private credit and the infrastructure space, and also the
[50:14] Speaker 4: crossover of those kind of areas. I think, this crossover
[50:20] Speaker 4: of public and private markets and what does that look
[50:22] Speaker 4: like in portfolios, whether that's within a fund or in
[50:24] Speaker 4: a portfolio, I think is going to be a big
[50:28] Speaker 4: and very interesting theme. And the third area I think
[50:31] Speaker 4: is we you know, we constantly obviously we're always working
[50:35] Speaker 4: with our active portfolio managers to develop better strategies and
[50:40] Speaker 4: new ideas they have, but we are always always looking
[50:44] Speaker 4: back as well, because I think you can fall into
[50:47] Speaker 4: the trap of thinking you've done it. And I mentioned
[50:49] Speaker 4: the example of you know, US large cap equities and indexing,
[50:52] Speaker 4: and why would you ever look at that as an
[50:55] Speaker 4: innovation area because these markets keep changing and I think
[50:58] Speaker 4: the world where the world we're in right now, and
[51:01] Speaker 4: a good example of the last six months, the number
[51:03] Speaker 4: of clients around the world, particularly outside the US, who
[51:06] Speaker 4: are questioning their US dollar exposure is pretty significant. And
[51:10] Speaker 4: what does that mean for time? Look at the move
[51:12] Speaker 4: in gold suddenly that is you know the thing visual
[51:15] Speaker 4: and so you know, you see you have to I
[51:18] Speaker 4: think you have to be willing to question the environment,
[51:21] Speaker 4: the macro, the market environment and say, actually, what does
[51:24] Speaker 4: that mean for.
[51:27] Speaker 3: Things that we kind of thought we'd done?
[51:30] Speaker 4: And I think that creates a lot of opportunity for
[51:31] Speaker 4: our clients to reinnovate things.
[51:34] Speaker 2: So before I get to my favorite questions, I have
[51:37] Speaker 2: one last broad question for you. What do you think
[51:41] Speaker 2: investors and clients are not thinking about talking about overlooking
[51:47] Speaker 2: but perhaps should be aware of it? Could be an
[51:50] Speaker 2: asset of geography, a data point of policy. What is
[51:55] Speaker 2: below the radar that really should be front and center.
[52:00] Speaker 4: I think there are things that are kind of half
[52:02] Speaker 4: on and half off the radar, are like, you know,
[52:04] Speaker 4: the impact of what's happening in demographics and immigration and
[52:08] Speaker 4: changes like that, and what does that mean for inflation
[52:13] Speaker 4: for the different types of income streams that people are
[52:16] Speaker 4: going to need is something that's it's kind of talked about,
[52:20] Speaker 4: but always slightly in the background. I think that's going
[52:22] Speaker 4: to come more and more to the form it ties
[52:25] Speaker 4: into the fiscal policy kind of which is very much
[52:27] Speaker 4: kind of talked about. I think that's one thing. I
[52:30] Speaker 4: think the second thing is we're still we're still living
[52:32] Speaker 4: through a lot of the post COVID impact. And you know,
[52:35] Speaker 4: we COVID is kind of done and it feels like
[52:39] Speaker 4: it was many, many years ago, but there are a
[52:41] Speaker 4: lot of industries, and luxury is a good example, which
[52:43] Speaker 4: is still being impacted by what happened then, both in
[52:46] Speaker 4: terms of the lockdown and then the immediate kind of
[52:49] Speaker 4: boom that happened afterwards. There are still a lot of
[52:51] Speaker 4: things that are still trying to work their way through
[52:53] Speaker 4: the through the system, as it were, and that tends
[52:56] Speaker 4: to be something I think people have kind of forgotten,
[52:58] Speaker 4: but from an investing standpoint, is actually pretty important.
[53:03] Speaker 2: I completely agree with you. It's funny. We were just
[53:05] Speaker 2: having a conversation the other day about housing and someone
[53:09] Speaker 2: asked why we have such a shortfall of single family
[53:13] Speaker 2: homes in the United States, not even talking about affordability
[53:16] Speaker 2: of homes, just sheer number. And the answer was, that's
[53:21] Speaker 2: a hangover from the financial crisis fifteen sixteen years ago.
[53:26] Speaker 2: Following that boom and bust, a lot of builders shifted over,
[53:30] Speaker 2: pivoted over to multi family houses and apartment buildings, not
[53:34] Speaker 2: single fans. So it's fifteen years ago and we're still
[53:37] Speaker 2: still suffering the effects of it. It's amazing how long
[53:42] Speaker 2: a tail some of these things happen. All Right, tom
[53:44] Speaker 2: I don't have you all day. I know you have
[53:46] Speaker 2: a flight to catch tomorrow, so I have to get
[53:49] Speaker 2: you out here at a decent hour. Let's run through
[53:52] Speaker 2: some of our favorite questions, starting with tell us about
[53:55] Speaker 2: your mentors who helped shape your career.
[54:00] Speaker 3: So I've I think I've been very lucky.
[54:02] Speaker 4: I've in each stage of my career, I've always had
[54:05] Speaker 4: I think somebody who has been whether a manager or
[54:10] Speaker 4: a mentor, but really helped me think through and frankally
[54:15] Speaker 4: just supported me in my career. I think, to particularly
[54:18] Speaker 4: jump out one is the person who actually took me
[54:23] Speaker 4: to eye Injie Bearings and who I first worked with there,
[54:27] Speaker 4: who sadly is no longer with us, but was just
[54:30] Speaker 4: an incredible friend and in quite a pivotal time in
[54:34] Speaker 4: my career, really helped me think through what do I
[54:38] Speaker 4: want to do next and kind of set me on
[54:40] Speaker 4: that next kind of journey. And then the other one,
[54:43] Speaker 4: I have to say a shout out to someone who
[54:46] Speaker 4: was very early in my career, who I worked with,
[54:48] Speaker 4: who I kind of looked up to in terms of
[54:50] Speaker 4: their success, who became my wife.
[54:52] Speaker 3: So that became a kind of a good men.
[54:54] Speaker 4: She continues to mentor me in slightly you know, different
[54:57] Speaker 4: more direct ways.
[54:58] Speaker 2: That's a nice a couple of mentors. Let's let's talk
[55:01] Speaker 2: about books. What are some of your favorites. What are
[55:03] Speaker 2: you reading recently?
[55:05] Speaker 3: A big fan arm of people like Ian McEwen.
[55:10] Speaker 4: I know the names, Martin Amos, They're just great, great authors.
[55:15] Speaker 2: Give us some titles, Martin Amis and Ian and.
[55:19] Speaker 4: Yeah, there's a great book Ian McEwen called Sweet Tooth,
[55:22] Speaker 4: which is all about it's got a great twist which
[55:24] Speaker 4: I won't go into, but it's nineteen fifties, nineteen sixties
[55:27] Speaker 4: kind of spies in the in the UK. And there's
[55:31] Speaker 4: a book by Martin Amos.
[55:33] Speaker 3: Which is the first I can't remember the full title.
[55:38] Speaker 3: It's Time something, but it's written backwards.
[55:41] Speaker 2: I kind of remember my wife reading something like that
[55:44] Speaker 2: from Martin A MSA, I don't remember the title.
[55:46] Speaker 4: Fast it's fascinating. He writes it backwards, so everything happens backwards.
[55:50] Speaker 4: So the day starts with the character going to bed,
[55:55] Speaker 4: and it's the it's written in the as the consciousness
[55:59] Speaker 4: of the man, and so it's brilliant.
[56:03] Speaker 3: It's just I'll dig up the very cleverly written sound.
[56:08] Speaker 4: A good story, not quite inception, but it's in that
[56:13] Speaker 4: guise of trying to think about how time works. And yeah,
[56:20] Speaker 4: I won't spoil it for you, right right, but it's
[56:22] Speaker 4: the kind of book where even the most simple paragraph
[56:25] Speaker 4: you kind of reread it because you're trying to get
[56:27] Speaker 4: your head around the fact that it's being written backwards.
[56:29] Speaker 2: Huh. Speaking of Inception, what's keeping you entertained these days?
[56:34] Speaker 2: What are you streaming, either watching or listening to?
[56:38] Speaker 3: So we've been on a bit of a marathon recently.
[56:40] Speaker 4: We've done Yellowstone eighteen eighty three, nineteen twenty three, and
[56:43] Speaker 4: land Man.
[56:43] Speaker 2: That is all on my in my queue and I
[56:46] Speaker 2: haven't started. I saw the first Yellowstone on a plane
[56:49] Speaker 2: and I'm like, oh, I got to drag my wife
[56:51] Speaker 2: into this.
[56:51] Speaker 3: Well it's good, you need to commit, but it's well
[56:56] Speaker 3: worth it very very yeah, very gripping, all very different
[56:59] Speaker 3: as well.
[57:00] Speaker 2: So you're you're a brit giving me an American Western recommendation.
[57:07] Speaker 2: Let's let this New Yorker give you an m I
[57:10] Speaker 2: five London recommendation. Have you seen the film Black Bag?
[57:15] Speaker 3: I have you have?
[57:17] Speaker 4: I saw it on a plane. I spent a lot
[57:18] Speaker 4: of time on plane. Okay, I actually saw it on
[57:20] Speaker 4: a plane. It was very good, very.
[57:22] Speaker 2: Cool, upside surprise hopect very good.
[57:24] Speaker 3: I never heard of it. And then I assume you
[57:26] Speaker 3: watch Slow Horses.
[57:27] Speaker 2: That's where I was about to go. Is so I
[57:30] Speaker 2: I had my wife watching through the second season and
[57:34] Speaker 2: she kind of tapped out. I'm trying to bring her
[57:36] Speaker 2: in for the most recent season you've.
[57:37] Speaker 4: Got again in We're very much the We won't watch
[57:40] Speaker 4: it until it's all out.
[57:42] Speaker 2: We we've made that mistake not doing that with certain things.
[57:47] Speaker 2: It's it's incredibly big, Like what is this watching one
[57:51] Speaker 2: show a week? What are we living in the nineties?
[57:53] Speaker 3: I called.
[57:57] Speaker 2: It really is? Final two questions, What sort of advice
[58:00] Speaker 2: would you give to a recent college grad interested in
[58:04] Speaker 2: a career in fill in the blanks? Investing ETFs, financial product,
[58:09] Speaker 2: developing fixed income what's your advice for that person?
[58:15] Speaker 1: Go for it.
[58:16] Speaker 4: I think that I really think this industry is changing
[58:19] Speaker 4: so quickly. I think it's changing faster than i've in
[58:23] Speaker 4: my kind of career in terms of what is happening,
[58:26] Speaker 4: which I think creates a lot of opportunity for somebody
[58:30] Speaker 4: starting out. My advice I always give to all of
[58:33] Speaker 4: our analysts who are starting out, in fact that I
[58:36] Speaker 4: give it to pretty much all of our team is.
[58:38] Speaker 3: You've got to keep learning.
[58:40] Speaker 4: This is constantly changing, and you've got to just you've
[58:45] Speaker 4: always got to be on that kind of learning curve,
[58:48] Speaker 4: and that's how you get better. It's also where the
[58:50] Speaker 4: opportunities come from a career standpoint.
[58:52] Speaker 2: Makes a lot of sense. Our final question, what do
[58:55] Speaker 2: you know about the world of investing product development ETFs
[58:59] Speaker 2: today would and helpful back in the nineteen nineties when
[59:03] Speaker 2: you were first getting started.
[59:05] Speaker 4: Well, if I've known that bitcoorin was going to be
[59:07] Speaker 4: one hundred and twenty thousand, I probably would have.
[59:08] Speaker 5: Done that's done something different, say that you know everything
[59:12] Speaker 5: right back up the truck on Amazon in two thousand
[59:14] Speaker 5: and two or ninety eight, or a Microsoft from the IPL.
[59:19] Speaker 4: I think one thing it does lend itself to And
[59:21] Speaker 4: it sounds a bit strange for somebody who started out,
[59:23] Speaker 4: you know, on a bond trading floor doing bond maths.
[59:28] Speaker 4: Is you realize over time only when you look back
[59:30] Speaker 4: the power of compounding. I know everyone writes about compounding,
[59:33] Speaker 4: and you learn about it obviously, but it's only when
[59:36] Speaker 4: you have been around for a while and you look
[59:38] Speaker 4: back at what compounding actually means as both an investor,
[59:42] Speaker 4: you know, you know, managing your own kind of future
[59:45] Speaker 4: retirement and wealth, and then or as or as somebody
[59:49] Speaker 4: who works with clients about managing portfolios or compounding actually
[59:55] Speaker 4: does imply. And I was thinking about that the other day.
[59:59] Speaker 2: Actually, it's very counterintuitive. There's nothing in the natural world,
[1:00:05] Speaker 2: in your ordinary experience as a mammal, that would give
[1:00:10] Speaker 2: you any insight into just exactly how exponential it is. Yes,
[1:00:15] Speaker 2: it's really fascinating. Well, thank you, Stephen for being so
[1:00:19] Speaker 2: generous with your time. We have been speaking with Stephen Cohen.
[1:00:22] Speaker 2: He is BlackRock's chief product officer and head of Global Solutions.
[1:00:27] Speaker 2: If you enjoy this conversation, check out any of the
[1:00:30] Speaker 2: five hundred and eighty six we've done over the prior
[1:00:34] Speaker 2: dozen years. You can find those at iTunes, Spotify, Bloomberg YouTube,
[1:00:39] Speaker 2: wherever you find your favorite podcast. Be sure and check
[1:00:42] Speaker 2: out my new book, How Not to Invest The ideas, numbers,
[1:00:46] Speaker 2: and behavior that destroys wealth and How to Avoid them
[1:00:50] Speaker 2: at your favorite bookstore. Now, I would be remiss if
[1:00:53] Speaker 2: I did not thank the correct team that helps put
[1:00:55] Speaker 2: these conversations together each week. Alexis Noriega is my radio producer.
[1:01:00] Speaker 2: Anna Luke is my podcast producer. Sage Bauman is the
[1:01:05] Speaker 2: head of Podcasts at Bloomberg. Sean Russo is my researcher.
[1:01:10] Speaker 2: I'm Barry Rudolts. This has been Masters and Business on
[1:01:13] Speaker 2: Bloomberg Radio.

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