Transcript: MiB: Luis Berruga, Global X ETFs
The transcript from this week’s, MiB: Luis Berruga, CEO, Global X ETFs, is below.
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ANNOUNCER: This is Masters in Business with Barry Ritholtz on Bloomberg Radio.
BARRY RITHOLTZ, HOST, MASTERS IN BUSINESS: This week on the podcast I have an extra special guest, Luis Berruga has a fascinating career as both a tech wizard and investment banker before becoming CEO of Global X ETFs. They are a $40 billion thematic ETF shop that have some of the most interesting ETFs that are out there. Sure, most of the industry are passive giant ETFs from the likes of Vanguard and BlackRock and State Street. But the space that those shops don’t play in are coming up with ideas for themes that allow investors to focus on a very specific idea within the world of investing.
And we discussed everything from their Founder-Run Companies ETF, I love the stock symbol BOSS, to Lithium, to Covered Call writing within Nasdaq and S&P Wind power, just on and on. They have Uranium, just really fascinating ideas that allow investors to express their investment themes in a very specific, fairly low cost, professionally managed ETF. I found the conversation fascinating, and I think you will also. If you’re at all interested in ETFs and thematic investing, and looking at the world through a somewhat different perspective than what we assume is standard from the giant ETF companies, I think you’ll find this to be really an intriguing conversation.
With no further ado, my interview of Global X CEO Luis Berruga.
LUIS BERRUGA, CEO, GLOBAL X ETFS: Thank you for having me, Barry.
RITHOLTZ: So let’s talk a little bit about your background. Before you joined Global X, you were an investment banker at Jefferies, you advised on M&A and divestitures and capital raises. And before that, Morgan Stanley, doing technology and operations planning for the wealth and asset management group. Discuss that background and how does that lead up to a career in ETFs?
BERRUGA: You know, great question. So, yeah, I had a career in investment banking with Jefferies, and it was a really good professional experience because I do have the opportunity to work in M&A, equity and debt financing. I had the chance to be part of some very interesting transactions in the banking space. I did in 2013 the largest banking transaction that the market had seen since the financial crisis, it was a $2.4 billion deal. And that was a very interesting experience because it really allowed me, Barry, to understand the psychology behind M&A which came in very, very handy later on in the context of Global X.
And from the standpoint of Morgan Stanley, it was the earlier part of my career and it’s a great company, great group of people. I would be forever thankful to the guys at Morgan Stanley because they gave me the first opportunity to work, to get a full-time job in the U.S. when I first moved from Spain, and I learned a lot because I spent a lot of time with financial advisors, which, as you know, is a key segment of our client base today. So a phenomenal learning experience with both Jefferies and Morgan Stanley.
RITHOLTZ: So you move here from Spain. What is the financial advice world like in Europe? What’s it like in Spain? It has to be such a different set, the retirement planning is different, the safety net is different. What’s the finance industry like in Spain?
BERRUGA: It’s fundamentally different. First of all, I think the amount of investors that participate in the financial markets is much smaller than it is in the U.S. And I think that the financial advisors are used, but not as widely used as they are in the U.S. And definitely, their retail market participation is significantly lower than you can see in the U.S. But I think it’s definitely changing, Barry, because, you know, you see more and more fintech platforms and robo-advisors that in a way, are making accessing financial markets easier for more and more investors in in Spain.
And also, I think there are a few dynamics, specifically in Spain, where people are really concerned about the sustainability of the traditional pension plans. People in Spain when I was growing up in the ‘80s and ‘90s, they expect to just retire and have the government give them like a paycheck every month. And I think people are realizing that that’s becoming more and more challenging over time. So that’s incentivizing more and more investors in Spain to participate in the financial markets, which I think is really positive.
RITHOLTZ: So you joined Global X in 2014. What led you to them from Jefferies?
BERRUGA: Great question. So I guess a couple of things. Up until that point, Barry, I had worked only for really big companies, Morgan Stanley and Jefferies. So I was definitely looking for something more entrepreneurial. One of my biggest frustrations with working at a big company is that they tend to be very bureaucratic. It takes a lot to get things done. So I was definitely looking for something more entrepreneurial, where I could see more of an impact of my contributions in the actual output of the business. So that was definitely one of the key drivers.
And then the other driver, Barry, was that I saw the potential of the ETF industry, quite frankly. I was already an investor in ETFs at that point in time. I remember telling myself, why would anyone invest in mutual funds when you can buy an ETF instead? You have the liquidity, the tax efficiency, the transparency. And I did the math, and I think at that point in time, roughly speaking, assets in ETS were roughly just 10 percent, 12 percent of assets in mutual funds and I was pretty convinced that that number was to increase significantly. So I saw the opportunity, and that’s when Global X came along.
RITHOLTZ: And where are we now? What percentage of the assets are in ETFs relative to mutual funds?
BERRUGA: Right now, I think around 33 percent or 34 percent.
RITHOLTZ: So it tripled since you joined Global X?
BERRUGA: Yeah, 100 percent.
BERRUGA: And I think that trend, quite frankly, Barry, is accelerating. And my view is that it’s going to continue to increase even faster. I think there are many catalysts, lots of mutual funds to ETFs that we’re seeing in the market. I think 401(k) plans are starting to use ETFs more broadly. And then some of the new changes around, you know, how you can do actively managed strategies in the context of an ETF, I think that’s going to accelerate the adoption of ETF significantly.
RITHOLTZ: Our mutual friend, Dave Nadig, has joked that if mutual funds came out today, they would never be approved by the SEC. What do you mean, you share capital gains with people who haven’t sold? That’s a terrible idea. And clearly, ETFs clean that up. So not only has the ETF industry been gaining momentum, but Global X has really grown. You’re now just about $40 billion in a very challenging year. Tell us what led to this growth. What’s made you guys as successful as you’ve become from a much smaller base a decade ago?
BERRUGA: Yeah. Now, I mean, it’s been a beautiful ride, to be honest. I joined Global X in 2014, and we have, if I remember correctly, approximately $1.5 billion dollars in AUM. I was employee number 10. And for all intents and purposes, Barry, we were a start-up. When I joined, I didn’t have a computer for 10 days. So you have a bit of that feeling.
So fast forward to where we are today, we have over $40 billion in assets under management. We have 200 employees, and we have a local presence in all of the major markets around the world. And to your point, I think there are two main drivers of that growth. One is our leadership in thematic investing. It’s an area we’ve been very focused on. And the second aspect of our strategy that has been very, very helpful is our global expansion. We do believe the growth of the ETF industry is not just a U.S. phenomenon, it’s a global phenomenon and we want to be able to service our clients in all regions of the world.
RITHOLTZ: So let’s talk about the thematic side of it. When it comes to passive, there are, obviously, three giants, it’s Vanguard, BlackRock and State Street, and then there’s everybody else. But the thematic side seems to be wide open. Is that the thinking? Hey, here’s some open fields. Let’s see what we can do here and just leave the behemoths to charge 4 bps on a S&P 500 or a total market fund.
BERRUGA: Yeah. I mean, that’s a great point. And I’ll give you a little bit of the history of Global X because I think it’s very relevant. Think about the two founders of Global X, Bruno and Jose, they set up Global X in 2008. And from my standpoint, you have to be a little bit crazy to start–
RITHOLTZ: In the midst of that mess, for sure.
BERRUGA: Exactly. Right.
RITHOLTZ: Oh, my goodness.
BERRUGA: You set up an ETF business. They didn’t have much capital and enter the ETF industry to compete with the largest asset managers in the world. But I think they did something very well from the very beginning. They realized that the most effective way to compete was through innovation. And that’s why very early on, they focused on thematic investing, and they launched which I believe is the first thematic ETF in the U.S., which was our Global X Lithium and Battery Technology.
RITHOLTZ: LIT, L-I-T.
RITHOLTZ: And that’s a big fun, that’s a $3 billion or $4 billion, something like that?
BERRUGA: Yeah. I mean, 12 years later. It wasn’t like that at the beginning, but 12 years later, it’s now grown to be, yeah, roughly speaking around $4 billion in assets, and a very successful strategy.
RITHOLTZ: So I told a friend I was interviewing you, he says, “Why does the world really need another ETF provider?” And my answer was, “Hey, not everybody wants to buy a passive index around the satellite of a core portfolio or even just, hey, I have an idea, I think this is going to change the world.” Is that the clients you’re aiming for? Is that who the Global X investor is?
BERRUGA: Yeah. I mean, quite frankly, we have institutional investor. We have financial advisors. We have retail clients. But I think the main reason behind the success and the growth of thematic investing, I think it’s pretty straightforward. The world, Barry, is changing at the fastest pace that we have seen at any point in history. And what I see from our investors is that they don’t think the traditional investment approach of looking at historical data to predict future returns is no longer enough. Many financial advisors and clients are telling us that an investment approach that looks into the future is needed, and that’s where thematic investing comes into play.
And I always use the exact same example, how will you invest in Google in 1998, or in Facebook in 2003? You will only invest in those companies if you are taking an investment approach that is looking into the future, because those business models, those products, those services simply didn’t exist. And I think for our standpoint, thematic investing is the approach that allows investors to do just that.
RITHOLTZ: Make sense to me.
RITHOLTZ: Let’s talk about some of your more popular ETFs. But before we drill down to some of my favorites, I have to ask where did these ideas come from? Some of these are really unusual, different innovative. How do you guys come up with a theme for a new ETF?
BERRUGA: Great Question. And I mean, I guess it comes down to our product development and our research team. Right now, we have a team, Barry, of over 30 research analysts located all over the world. And basically, all they do is looking at these trends, talking to industry consultants, industry participants and CEOs to really try to get a sense of where, like, the most relevant emerging trends are. I mean, at any point in time, we can have anywhere between 20 to 30 things that we are looking at.
And then in terms of how we decide what themes we eventually bring to market, we apply like a very simple but still robust framework that we have developed over the last 14 years. We look at three things. We look at conviction, we look at investability, and we look at time horizon. And let me explain that a little bit.
Conviction, so we look at, you know, whether or not a specific theme is something that we have a high degree of conviction that will be a trend, that will definitely have an impact in the economy over the next two or three decades. We look at–
RITHOLTZ: Decades, two or three decades.
BERRUGA: Yeah. We’re not interested in any of these kind of, like, popular for a couple of years, and I’ll get to that in just one second. We’re literally looking for structural shifts in the economy, think of robotics and artificial intelligence, cybersecurity, cloud computing. So that’s the first step that we, as a group, try to assess our level of conviction about a given theme.
And the second step, which is very important is investability. We need at least 25 to 30 companies to be able to launch an ETF.
RITHOLTZ: That’s a minimum, 30 companies?
BERRUGA: Yeah. From a diversification standpoint, I think that’s the recommended–
RITHOLTZ: Makes sense.
BERRUGA: — minimum amount of companies. And then, finally, we look at time horizon. To your earlier point, Barry, we are not interested in trends that will be popular for a couple of years. We are literally looking at disruptive and structural shifts in the economy, that in some cases can take decades to play out. That’s how we think about thematic investing.
RITHOLTZ: So one of my pet theories is that half the battle for ETFs attracting assets is the ticker. If you have a catchy ticker, you’re halfway there. Am I out by myself with that, or do you think there’s any truth to that?
BERRUGA: I mean, I would say that I partially agree with that. I think, obviously, the ticker is very important, particularly for the self-directed retail client base. A catchy ticker can definitely increase the chances of a product to be successful. But I wouldn’t discount how much work goes into the product development part of an issuer.
BERRUGA: It has to be a good product. It has to be properly designed. And there are lots of decisions that go into creating an ETF, Barry. You have to define the theme, then you have to define the different buckets within the theme, look at liquidity, you know, market cap weighting versus equal weight —
BERRUGA: — rebalancing frequency. So the product has to be very well designed to be successful. But, yes, if you, on top of that, have an attractive ticker, it can definitely increase the chances of being successful.
RITHOLTZ: So let me talk about some of my favorites of your ETFs. We already mentioned the Lithium, we’ll come back to that when we talk about some other related ETFs. I love this, Founder-Run Companies. What’s the ticker for that?
RITHOLTZ: How great is that? B-O-S-S for an ETF of companies that are still run by the founders. So the first question is, why does that matter? Why does Founder-Run Companies make a difference?
BERRUGA: I mean, I want our analysis was that companies that are run by their founders tend to make long-term investment decisions in the business versus having the pressure of having to report quarterly earnings and maybe like the earnings targets that research analysts, you know, tend to assign to every single company. So we do think these companies, over the long run, could perform better than the broader market.
And also, it’s an interesting play in the sense that a founder-run companies tend to take a more cautious approach to business than maybe other type of companies. So that was the main value proposition behind the Founder-Run Companies. And to your point that it was a very interesting ticker, our product development team has spent literally weeks to come up with that one.
RITHOLTZ: Well, it’s brilliant. Let’s do another one, the Interest Rate Hedge ETF, stock symbol RATE, that’s another great ticker. How do you hedge interest rate risk in an ETF?
BERRUGA: Well, in this particular case, we’re doing that through like OTC derivatives. It’s a fairly complex product. For the most part, we try to follow like a passively-managed approach to all of our ETFs. In this particular case, it was very difficult to provide that structure through like a passively-managed strategy. So we take a more tactical, an active manager approach to that particular product. And we were very lucky because we were able to secure this ticker, RATE, which is definitely a very young product. We just launched a few months ago, but we have a high degree of confidence that it will be very successful in the long run.
RITHOLTZ: The timing is pretty good. You have an interest rate hedge as rates start to spike up. You’ve literally launched within a month of the first Fed increase, so that’s pretty timely. Let’s talk about Cybersecurity, ticker BUG, B-U-G. Tell us what’s in the Cybersecurity ETF.
BERRUGA: I mean, cybersecurity is one of our highest conviction themes right now, for a number of reasons, Barry. First of all, there are 14.4 billion devices connected to the Internet right now —
BERRUGA: — which is great. But at the end of the day, you know, the more devices that you have connected to the Internet, the more points of vulnerability there are. So the need for cybersecurity is very obvious. We have seen that also in the context of the conflict between Russia and Ukraine, where like the narrative over the first few weeks was all around cybersecurity and those type of things. And the analysis that we’ve been doing in our research team, we expect global cybersecurity spending over the next five years to be around $1.5 trillion.
BERRUGA: So we have a high degree of conviction in that theme. And even in the context of a very volatile environment that we have seen over the last four quarters, we continue to see consistent inflows coming into that ETF.
RITHOLTZ: And let’s talk about what I think is your biggest fund, with about $6 billion, is the Nasdaq 100 Covered Call ETF. You also have an S&P 500 Covered Call. Why covered calls? What does that create within the ETF?
BERRUGA: We think it’s a great solution for clients that are looking for two things, either income or like a risk management tool to play the volatile environment that we have seen in the markets. Our flagship product, QYLD, which is the Nasdaq 100 Covered Call ETF, with $6.6 billion in AUM, it’s right now roughly offering a dividend yield of around 12 percent.
BERRUGA: So if you’re an income-oriented investor, particularly, Barry, in the context of right now things have changed recently, but we have been for an extended period of time, going into like a historically low interest rate environment.
BERRUGA: So many of our clients were struggling to find alternative sources of income for their portfolios. And this product, paying over a 12 percent dividend yield and monthly distributions was very, very attractive for many of our clients.
RITHOLTZ: So how do you manage the risk that, hey, if the Nasdaq starts going higher, and from the lows in October to now we’re up, I don’t know, 10 percent almost in the Nasdaq. How do you manage having the stock called away from you? When you’re writing dividends, you’re giving someone the right to purchase that stock at a higher price. If you run up to that price, how do you hedge that exposure to make sure the underlying doesn’t get called away?
BERRUGA: That’s a good question. What happens there is the volatility that you’ve seen in the market, that’s another way in which we are seeing clients using this covered call strategy is almost as a risk management tool. Because in this environment of high levels of volatility, the option premium that you get on that, when you write the option, goes up. So effectively, when there is more volatility, you get like a higher dividend yield at the end of the month. So that’s why more and more clients, in the context of the last four quarters, have been using this strategy as a way to monetize that volatility.
RITHOLTZ: So that one is your flagship at $6 billion. You have some ETFs with, you know, a handful of millions of dollars. At what point are these breakeven? What is the self-funding level for an ETF? I’ve heard some people say $25 million, $50 million, $100 million. How much assets do an ETF have to attract before you’re confident, hey, this is at least a breakeven?
BERRUGA: It can change quite a bit based on the exposure of the ETF, particularly the geographic exposure. In our case, roughly speaking, the breakeven point is anywhere between $50 million to $100 million in AUM.
RITHOLTZ: Which is really a pretty big number. It shows you how challenging it is for some of the smaller ETF companies that, you know, they have $10 million, $20 million, $30 million in an ETF. You’re suggesting that’s the money-loser for that company?
BERRUGA: Yeah. I mean, I always say it depends on the economies or the scale of the business that you are considering. But when you factor in, you know, legal costs, compliance, portfolio management, trading, there is a lot that goes into launching an ETF. So, yeah, I mean, I do think that 50 is around the sweet spot in terms of breakeven.
RITHOLTZ: So let’s talk about some more of these ETFs. But I really want to start by asking how much horsepower goes into running these funds? You know, you have a pretty sizable workforce. Is this mostly data and operations people or research or trading? What’s the underlying human resources that you have to pour into launching a new ETF?
BERRUGA: Great question. It’s a combination of both, and I like to think about it in two different ways. One is when the ETF is already in the market and it’s already trading on an exchange, then you need a fair amount of resources, you know, portfolio management, trading resources, portfolio administration, compliance, risk management, and product management people just to make sure that the product is behaving exactly how it’s supposed to behave.
And right now, we have close to 100 ETFs. So, obviously, it takes a fair amount of resources. And then before you actually launch the product to market, that’s when the work is more heavy on the product development and research part of the process. And particularly around thematic investing, Barry, I wouldn’t underestimate the amount of resources that you need to bring a thematic ETF to market. Right now, we have over 30 research analysts located all over the world. Because like I mentioned earlier, the world is changing at the fastest pace that we have ever seen, so there are trends coming up constantly.
But also, keep in mind that is innovation happening everywhere. So in many cases, some of these very disruptive companies are not in the U.S. They may be in China. They may be in Vietnam. They may be in South Korea. They may be in Japan. So it’s important that you have a very robust team of research analysts that cover all of these companies.
RITHOLTZ: All Asia, nothing in Europe where you’re from?
BERRUGA: Great question. Great question. I mean, there is definitely also interesting companies in the European market. But it is true that a lot of the new trends that we are seeing are coming from some of the largest markets in Asia.
RITHOLTZ: Interesting. When Global X creates an ETF, are you also creating the underlying index? Are you working with outside index providers? Tell us a little bit about what that process is like.
BERRUGA: It depends a little bit on the strategy. So if it’s, for example, a strategy tracking a Nasdaq Index, or an S&P, or a MSCI, typically, you leverage an index that is already available through the index providers. I mean, you make a couple of little tweaks to make it more relevant to the context of the exposure that you’re trying to achieve.
But in thematic investing, and for the most part of the intellectual property that goes into developing the index, we do internally with our own research and product development team. Because the reality, you know, I will tell you like a quick anecdote, in 2010, when we wanted to launch the first ETF, the Global X Lithium and Battery Tech ETF, we actually went through the process of calling all of the index providers to see if they wanted to work with us on the development of this idea. And pretty much they laughed at us, like, “What are you guys trying to do? Like a lithium ETF? What is that?”
RITHOLTZ: Who cares?
BERRUGA: So because of that, we actually had to pretty much do a lot of that heavy lifting in-house, which back in the day, we saw as a challenge, but quite frankly, was the best thing that ever happened to us because it forced us to develop our own product and research capabilities that right now we’re still benefiting from 14 years later.
RITHOLTZ: All right. So you mentioned Lithium and Battery Tech, which is about $4 billion, symbol LIT. Let’s talk about two others that are sort of sustainable investing related. Again, back to the ticker, Clean Water, AQWA, A-Q-W-A, obviously, coming from Spain, agua is the– is that? I think a lot of Americans might not have thought that up on themselves. How was the Clean Water ETF doing? And what sort of companies do you hold in in a Clean Water ETF?
BERRUGA: I think it’s one of our newer themes and what we’re seeing, particularly with, you know, clean water or think about clean tech, renewable energy producers, there is a significant shift towards a more sustainable world. And I think many of these things are benefiting from that transition. And clean water definitely is one–
RITHOLTZ: And we’ve seen massive water supply issues in the United States, not just having available water, California is going through a drought, a lot of the West is. But when you look at what took place in Flint, Michigan and a whole bunch of other cities whose water infrastructure has fallen apart, there has to be an immense demand for clean water going forward.
BERRUGA: Yeah, a 100 percent. And we have seen already some policy coming from the White House in the last, you know, quarter, where we do think many of these companies are basically dedicated to, like, you know, process water in more effective ways are definitely going to be benefiting from this trend.
RITHOLTZ: And how about Wind Energy or WNDY, W-N-D-Y, what sort of companies do you hold in that sort of EFT?
BERRUGA: All companies that are basically involved in the production of wind energy.
RITHOLTZ: Are there that many public companies in that space? I know GE used to do stuff. Like, I’d be hard pressed to name 40 companies in that space.
BERRUGA: I mean, obviously, it goes back to the process that I mentioned before of like looking at conviction, looking at, you know, investability —
BERRUGA: — and time horizon. That second component is extremely important. I guess a good reminder there, Barry, is that when we think about our thematic ETFs like some of the names that we just discussed, like clean water or wind energy, our thematic ETFs are global in nature. So we are not just looking at U.S. companies, we’re looking at the entire world. So from that standpoint, there are actually many more companies that you may think initially.
RITHOLTZ: So I know there are some British companies in wind energy. There are some Dutch and Norwegian companies. So this is a global ETF and it’s filled with anybody in that space that you think is investing.
BERRUGA: Correct. And you were talking about it before, for example, there’s a good a Spanish company called ACCIONA, also part of that index. And you know, when you speak in this energy transition component, Barry, it’s becoming more and more popular in many of the conversations that we are having more recently. One of the ETFs that we’re having lots of conversations about is our Uranium ETF, which is also one of our largest —
RITHOLTZ: What’s the symbol?
RITHOLTZ: Uranium. Right.
BERRUGA: And it has become extremely a top of mind for many of our clients, not just in the U.S., but quite frankly, all over the world. And because of the energy crisis that we are seeing in Europe as a direct result of the conflict between Ukraine and Russia, I think more and more investors, and more and more of market participants are realizing that there is a very significant need for greater energy diversification. And nuclear energy is becoming, you know, widely considered as a very viable solution in that space because of the lower costs and the reliability, and quite frankly, because it’s clean from a greenhouse emissions standpoint.
BERRUGA: That’s why it’s no surprise there are, like, right now, over 50 nuclear plants being built in 19 different countries.
BERRUGA: I know, France gets more than half of their electrical power from nukes and U.S. used to be 10 percent or 15 percent, but a lot of those have been mothballed. Are we going to see a surge of new nuclear powered electrical generation over the next decade?
BERRUGA: In my opinion, yes, absolutely. So many of these nuclear plants that are being built right now are mostly in emerging markets, you can think of South Korea, India, China. But we are seeing that shift already in other markets, specifically, Europe that was kind of like shifting away from nuclear energy for many years. I think right now, they are rethinking their approach to their energy mix, again, as a direct consequence of some of the challenges they are facing with the conflict between Russia and Ukraine.
RITHOLTZ: Right. When your biggest supplier of natural gas suddenly becomes hostile, you start looking at other energy sources. Again, when I think of nuclear power, I think of traditional fission plants. But I know there’s been three big innovations recently. One has been the micro plants, instead of having a giant plant, you can have a small plant. The second are things like thorium-powered plants, and then there are the fusion plants. What sort of innovation are we seeing in nuclear power production? You just don’t read about it or hear about it in very many places.
BERRUGA: I think the number one that comes up, quite frankly, is safety. The technology around making these nuclear plants a lot safer than maybe was the case in the past. But I think like the nuclear energy and uranium has historically had a bad reputation because some of the accidents.
RITHOLTZ: You’ve had accidents. You have storage issues. You have waste disposal issues. How do you deal with that today?
BERRUGA: But based on, you know, the conversation that we’re having with research analysts and practitioners in this space, the technology around the development of nuclear energy is a lot safer than it’s ever been. So that’s why we expect more and more countries adopting nuclear energy as a primary source of energy.
RITHOLTZ: I recall post Fukushima, there was a company that I think Lux Capital was the VC behind it, that came up with a way to take nuclear waste and embedded in certain types of glass or plastic rods, and you just didn’t have the same radioactivity. So that was the way they dealt with it. Anyway, it’s fascinating that that is such under the radar fast-growing space that I think the average investor is wholly unaware of.
BERRUGA: You know, I mean, the data that I think we’ve seen in that fund, I mean, speaking from memory, Barry, but I think it’s roughly $600 million in new assets this year in that ETF alone.
RITHOLTZ: Quite fascinating.
RITHOLTZ: So let’s talk a little bit about some of the opportunistic thematic ETFs we’ve seen in the recent environment. We’ve seen inflation hedges, inverse funds, interest rate funds. What are the challenges for being opportunistic when, as you said, you’re looking out a decade or two on some of these ideas?
BERRUGA: I mean, one of the challenges, I guess, points of clarification when we talk around thematic investing is that in a way, Barry, thematic has almost become a catch-all category. So when market participants or investors don’t know exactly how to categorize an ETF, they automatically refer to ETF as a thematic ETF. But we do think thematic investing is a very robust investment approach that consists two very simple but powerful steps.
One is we look at very powerful, disruptive macro level trends that we think will shape the economy over the coming decades. And two, we look at the companies that stand to benefit from the materialization of those strengths. And that’s not a very, very clear definition. So many of these ideas like inflation hedge or interest rate hedge, they couldn’t really fall within our definition of thematic investing because they are cyclical in nature. They will be like reversal to them. And I think it’s very, very important that we think of thematic investing as a forward-looking investment approach, and I think there is some confusion in the marketplace from that standpoint.
But going back to your point about like kind of being opportunistic and being able to react to market conditions, typically, you can expect for an ETF issuer to take anywhere between six to nine months to launch a new ETF to market.
RITHOLTZ: Six to nine months. Wow. That’s actually faster than I thought. Go back a couple of years, you want to create a mutual fund, it used to take a year or two to get everything had to be approved. And now, as long as you have everything lined up, the process seems to be pretty streamlined.
BERRUGA: Yeah, I think so. I mean, I think if you start from scratch, then you have to set up your own trust and look for a new independent board and apply to the SEC for the proper approvals, then it may take a little bit longer than that. But for a business that is already up and running, where you already have your trust, you already have your registered investment advisor, you have your board, it’s a much more streamlined process than maybe it was a few years ago.
RITHOLTZ: You know, a lot of the thematics we’ve seen, they run 75, 85, even 100 basis points. Global X averages between 50 and 60. How have you managed to keep your fees competitive versus some of the other thematic ETF funds?
BERRUGA: I think it’s all relative. I don’t think fees are high or low in absolute terms. It’s a function of the complexity of the product and the value that you get from the ETF sponsor. In our case, for example, like, think about S&P 500 ETF for —
RITHOLTZ: Right, 3 or 4 basis points for a free practical–
BERRUGA: Exactly. Because in that particular case, you know, developing an index, like, that is pretty straightforward. You can pull some data from your Bloomberg terminal, and then you are pretty much good to go. But when you think of thematic ETFs, for example, it’s a much more complicated process because you have to make lots of decisions. You know, developing a thematic ETFs is a pretty complex process. You have to first identify the theme, then you have to identify the different categories within that theme, and make important decisions around liquidity, market cap weighting versus equal weight, liquidity filters.
And remember for thematic investing, our approach is global. So we’ll look at any company in the world that could have exposure to cybersecurity, for example, or cloud computing, and that requires a fair amount of manpower to bring that product to market. And on top of that, we use our research, our ETF model portfolio business to really explain to our clients how to invest in those ETFs. I think the value that we provide to our clients is very significant.
RITHOLTZ: So you mentioned market cap weighting versus ETF weighting. Tell us about the thought process. How do you decide one way or another, what is Global X’s preference?
BERRUGA: In most cases, we follow what we call a modified market cap weighting approach. Particularly around thematic investing, we do think that’s the optimal approach for a couple of reasons. So, first, from our standpoint, these thematic ETFs, these are younger industries where you still don’t really know who the winners and losers will be, right? So you want to have as much exposure to the theme as a whole rather than trying to pick the winners or the losers. And we do think, like, a modified market cap approach is the most relevant.
RITHOLTZ: When you say modified, so it’s not straight market cap, there are probably ceilings and floors, is that how that works?
BERRUGA: Exactly. So basically, bigger companies are a bigger part of the index. But we have caps of, like, 8 percent, 10 percent, or 12 percent of the company based on the index. And the classical example here, Barry, is, for example, our E-commerce ETF, we follow like a market cap approach, but you don’t want to be in a situation in which Amazon becomes 45 percent of the index. That’s why we cap the weight of each company anywhere between 8 percent to 12 percent as a way to mitigate that idiosyncratic risk.
RITHOLTZ: What are your thoughts on some of the inverse funds that are out there? Last year, we saw the introduction of the Inverse ARKK. This year, we saw the Inverse Cramer. There are some really wacky ETF ideas. Do you guys ever consider that, or do you just look at those as, you know, novelties?
BERRUGA: Not really. That’s not part of our business, Barry. I think, like, the large majority of our clients are long term-oriented investors, and that’s what we typically try to focus on. I mean, I do think there is a market for leverage and inverse ETFs out there. But from our standpoint, we try to stay away from those type of strategies because we don’t think they incentivize the right type of investor behavior.
RITHOLTZ: It’s more speculative than it is investment?
BERRUGA: Yeah, I think, obviously, there are some sophisticated institutional clients that they really know what they are doing. I mean, they use those ETFs as very useful trading tools. But I think anything that can potentially be accessible by retail clients, I think we have a responsibility as an industry to be very careful about.
RITHOLTZ: That makes a lot of sense. So let’s talk about managing through volatility. 2020 was a huge year. We were up 18 percent and I think it was like up 68 percent from the pandemic lows. ’21, were up 28 percent. Then this year, where everything falls out of bed, market down 25 percent, bonds down 15 percent. How do you manage through volatility like we’ve seen in 2022?
BERRUGA: Yeah. No, great question. I mean, without a doubt, it’s been a very challenging market environment. We’ve had geopolitical issues, the highest level of inflation that we have seen in the U.S. in 40 years, and there’s still supply chain issues due to COVID-19. So it’s been a very challenging year. But, you know, our business continues to do well. I mean, we’ve seen this year, roughly between $3 billion and $4 billion in new assets. And we’re having very good conversations with clients that I think, at current valuation levels, they remain, you know, very interested in the market and they see some opportunities.
But to be honest with you, Barry, from our standpoint, we don’t really make any material changes in how we think about the business because of the market environment. You know, we had a really good 2020. We had really good 2021 in terms of inflows. This year has not been as good in terms of inflows. But from my standpoint, it’s been a phenomenal year because we continue to execute on our strategy. We continue to launch interesting products. We continue to take care of our clients. And I think over the long run, that’s what really matters.
RITHOLTZ: If you can execute and attract clients, and keep clients in a year like this, you’re doing great. It’s hard to argue with this sort of baptism of fire. I think a lot of people were genuinely surprised by 2022. Wait, markets go down? I thought they only went up. It’s been eye-opening for a lot of the younger traders, younger investors who I know you go back to since 2009, they’ve only seen up markets.
BERRUGA: A 100 percent, and I actually do have that very conversation with the junior members of our team. Because if you’re just starting the industry four or five years ago, you think markets only go up, right? And I think when you’ve gone through the financial crisis in 2008, when I was working with Morgan Stanley, or even laid it on, you know, December of 2018–
RITHOLTZ: The fourth quarter was down 20 percent. It was a big drop.
BERRUGA: Yeah. When we’ve had just been acquired by Mirae Asset and it was sort of like eyes [ph] in the performance of our business and it was a challenging quarter or March of 2020 with the COVID-19. But I think when you’ve done this long enough, quite frankly, that doesn’t really matter in the long term. So I always tell the team, let’s do the right things with the right theme at the right time, and let’s focus on the long term. And if we do that, we’ll just be fine.
RITHOLTZ: You know, I haven’t asked you about China. You have a handful of smaller funds that have been China-focused. What’s it like investing there, especially with the local versus overseas investors? It seems like they’ve been in unusually challenging region to put money to work in.
BERRUGA: I mean, of course, we’ve seen a lot of volatility coming out of China, but, Barry, we have a ton of experience dealing with China. I mean, one of our first ETF was our China Consumer ETF that we launched in 2009.
BERRUGA: In December of 2018, we launched our full suite of China sector ETFs, tracking MSCI indices, and it was a direct reaction to client demand. I think, at the end of the day, it’s the second largest economy in the world and it’s an increasingly diversified economy. So we were getting questions from clients that they wanted to play in China, but they didn’t want to just buy the China large cap product, they wanted to invest in China healthcare, or China technology, or China energy. So we came to market with what I think is the only family of China’s sector ETF that offers all of the ETFs.
And it’s been challenging at times, Barry. But going back to the point of product development, if you are following a robust product development process, you should not experience any challenges in dealing with these markets for a number of reasons, because it’s part of the index methodology that you are accounting for some of these potential challenges. For example, you include filters around average daily trading volume —
RITHOLTZ: For liquidity.
BERRUGA: — for liquidity, or, for example, you don’t include companies that have less than $100 million in market cap.
BERRUGA: So if a company drops below that level, it’s automatically removed from the index at the next rebalance. And by doing so, you eliminate the challenge of having to trade in some of those illiquid names. And again, we’ve been trading our China Consumer ETF for almost 13 years and we haven’t faced any significant challenges because our portfolio management team and our product team have plenty of experience dealing with these markets.
RITHOLTZ: So how much marketing goes into rolling out a new ETF? You know, we see every day, I see a list of new ETFs that come out, or every week and some of them always kind of surprise me. I don’t understand why anybody is rolling that out. And every now and then something will come out and like, oh, clean water, of course, that makes perfect sense. How do you market this to the advisor community? How do you market this to the investing public?
BERRUGA: Great question. I mean, I think without a doubt, in the ETF industry, I think marketing is extremely important as well for a company like Global X that is still like an upcoming ETF player because it’s important. Brand awareness is critical. I mean, people will not come to buy our ETFs if they don’t know that Global X ETFs exist. So we have been investing in marketing for several years, purely from a brand awareness standpoint.
But that aside, the way we actually market our ETFs for retail clients and financial advisors is mostly through our research, right. I think ever since we started the business because we were very, very small, we realized that we needed to give ourselves the credibility in the space that we didn’t have because of our size, and we did that through research. So we have what, in my opinion, of course, Barry, I’m biased, but I think we have the most robust research platform in the ETF industry. And I think our clients appreciate that because when they invest in a Global X ETF, they are not just buying an ETF product, they are they have access to our research analysts. They can come to our website. And pretty much on a daily basis, we are providing content to our clients, so they can really understand the dynamics behind the products in which they are investing. And that’s very powerful.
RITHOLTZ: So I know you obviously think thematics have a lot of room to grow. What sort of directions do you think thematic ETFs are going to head into? What’s next for the ETF space?
BERRUGA: I mean, I think going back to the comment I made earlier, Barry, innovation is just happening anywhere in the world, in the fastest pace that we have ever seen in history. So you will be surprised how, you know, we have right now 36 thematic ideas, where there is no shortage of ideas. There are lots of different areas in which we’re looking at things like quantum computing. There is a lot of activity in the digital assets space. Right now, there is a lot of like noise in the market around that particular theme. But we continue to see plenty of opportunity.
And again, it’s not just a U.S. phenomenon. We’ve seen this growth in other markets around the world. I mean, just in the U.S., if you look at assets in thematic ETFs five years ago, the number was roughly $5 billion. And at the end of 2021, we’re talking about $120 billion —
BERRUGA: — in AUM. Very significant pattern out of Europe as well.
RITHOLTZ: So take us through the process. One of the researchers comes to you, Luis, I have this great idea for a thematic investment, it’s X. What is the process like from turning that idea into an actual ETF?
BERRUGA: So the first thing is we challenge ourselves, does that idea make sense? So let me use an example. Let’s say electric vehicles, which obviously is an ETF that we already have, but let’s say —
RITHOLTZ: What’s the symbol on that?
BERRUGA: DRIV. Hopefully, you like that ticker, too.
RITHOLTZ: Yeah. No. It’s great.
BERRUGA: I picked that one, so that’s why I’m particularly proud. So this idea comes in from one of our research or product analysts, and we have our product development committee meeting in which someone suggests electric vehicles. So of course, they put forward a very robust analysis, where they look at target addressable market, penetration rate, and the more like industry dynamics. And in this particular case, it’s very obvious, there is a significant shift towards a more sustainable world, right?
You have lots of catalysts towards more adoption of electric vehicles, government support incentivizing clients to buy electric vehicles. The cost of electric batteries has gone down significantly because of the cost of lithium batteries coming down significantly. And even the charging infrastructure behind the adoption of electric vehicles is getting better and better. And on top of that, it is still very early because electric vehicles sales doubled into 2021, and that is still 9 percent of total sales. So the potential is very, very significant. So we look at all of these data and we make the assessment that is a thing that could be very powerful over the coming decades.
So the next step is we look at, okay, are there enough public companies whose products and services are dedicated to provide exposure to electric vehicles? And that’s when our research and product teams working closely with index providers, come up with companies that typically get at least 50 percent of their revenues from electric vehicles space. And then once we have like a universe of, like, 40, 50 companies, that’s when we start refining that process. We have our portfolio management team, our portfolio administration team, just to make sure in terms of liquidity capacity of the strategy make sense. And once we have a preliminary index, that’s when we started the process of bringing that ETF to market.
RITHOLTZ: So I could see clearly, Tesla, Lucid, Rivian, some clear pure ETFs. You have the battery companies, which is Panasonic to everybody else. There’s Electrify America. There are all these network charging. What do you do with companies like Ford, for example, which has been very aggressive in rolling out ETFs? Clearly, it’s not half of their business, but they’re moving in that direction. We look at Volkswagen, Audi, Porsche, just a huge run of ETFs. And then we see the Korean companies, Hyundai, Kia also very aggressively pushing in ETFs. At what point do the legacy automakers become electrified enough that you would think about putting them into that ETF?
BERRUGA: That’s a great question, Barry. And it’s a very, very important part of our product development process. And that’s when we’ve been very careful over the years because at the end of the day, when a client buys one of our thematic ETFs, we want to make sure they get the exposure that they are looking for. And to your point, do you want to include a company like Ford in an electric vehicles ETF if maybe like 5 percent of their revenues is coming from electric vehicles, but is that really the exposure that our clients are looking for? Probably not.
So it may change on the product or the theme. But typically, we apply our 50 percent revenue threshold for inclusion in the theme. In this particular case for car companies, it’s relatively straightforward. That may be a little bit more challenging in other areas like genomics and biotechnology because many of these companies don’t have revenue to begin with —
BERRUGA: — so it’s challenging. But they will look at things like research and development, the type of products that they offer to really make sure that we, as a group, as our product development team feels strongly that that company should be included in the theme that we are trying to provide exposure to.
RITHOLTZ: So it will be interesting to see how long it will be before Mercedes, BMW, Ford, even GM hit that 50 percent number because I don’t think that’s 20 or 10 years off in the future. That could be five years off in the future, Ford is 50 percent electric or electric hybrid.
BERRUGA: Yeah. I mean, from the information that we are right now reviewing, all of these companies have a very aggressive strategy towards the production of electric vehicles or hybrids, but they are all actively looking to the space because they can clearly see the trend. If anything, quite frankly, governments around the world and this focus towards a more sustainable economy is very, very clear. So I think many of these car manufacturers can see the writing on the wall.
RITHOLTZ: So let me throw you a curveball before we get to our favorite questions, and that’s how often you get back to Spain. Every time I’ve been to Spain, I’ve left just delighted and I’m looking forward to going back. When was the last time you went back?
BERRUGA: I guess the answer is I don’t go back enough, to be honest with you. But I usually go there every single Christmas because my family — I mean, I’ve been now in the U.S. for 20 years and I have my own family here in New York, in Brooklyn. But the rest of my family is still in Spain. So 100 percent I go there always for Christmas because it’s a very special part of the year for the Spanish people and our culture.
RITHOLTZ: Where in Spain?
BERRUGA: It’s a very small town called La Rado, Albacete. I would be very surprised if you know about it, because even people from Spain don’t know about. If you go from Madrid towards Valencia, it’s approximately right in the middle, like two hours away.
RITHOLTZ: So parts of Spain that I’m familiar with, Bilbao where the Guggenheim Museum is, which is lovely; San Sebastian, which is one of the most lovely spots in the world, and then of course, Barcelona. The last time I was in Barcelona was in the midst of the Catalonian uprising. So everything was closed, a million people marching in the streets. It was very peaceful and well organized. But when you see literally a million people marching past the police headquarters, which is across the street from our hotel, I’ve never experienced anything like that in my life. It was amazing.
RITHOLTZ: Yeah, it’s definitely been a very, very big part of the political conversation in Spain now for many years. And unfortunately, for the last five or six years, those type of conversations around the independence of Catalonia from Spain seem to escalate. But unfortunately, the conversation seems to have wound down a little bit, which I think is good.
RITHOLTZ: You see, I think there were more Michelin star-rated restaurants in Barcelona than I think in Paris, I think than any other city. You Google Michelin star-rated restaurants and up comes a list of like 40 places. It’s an amazing city. It’s beautiful. The one thing that whenever I visit Europe and I come back home is, wow, those folks really know how to kick back, relax a little bit and enjoy life. It feels like in New York, it’s just go, go, go, work, work, work. The Europeans have a much more chill approach to dealing with life. Do you miss that at all here in New York?
BERRUGA: Yeah, I certainly do. You got a different pace to life when you go to Europe, particularly in Spain. I mean, if you go to Southern Europe, it’s even more different, you know, with respect to, for example, New York. And I definitely miss that. I think one of the biggest benefits of a country like Spain is that you can live very comfortably with not a lot of money. And I think quality of life is overall, like, better than what you can see in, for example, New York.
RITHOLTZ: It’s less stressful to say the very least. They know how to eat, they know how to drink wine, they know how to just kick back and relax. I think we can we all learn a little bit. At least, I feel like I would like to learn how to throttle back a little bit. Every time I’m there, I’m like, God, it’s beautiful. Everybody seems to be very happy and chill. It’s really a wonderful part of the world.
BERRUGA: You know, things have definitely changed. But, I mean, growing up, Barry, I mean, my parents, my mom and my dad, they were both teachers, like middle school teachers, and we used to go to school in the morning and then go back home. We will have lunch as a family. We would take a nap and then we will go back to school. So it was definitely a different pace. And even today, like, I’m, you know, texting with my friends and they’re getting ready for the holidays, and they are having dinner at, you know, 9:00, 10:00, 11:00 p.m. So it’s definitely a different pace and I think it goes both ways. For example, I’m so used now to the New York lifestyle that when I —
RITHOLTZ: The speed.
BERRUGA: Yeah, speed. That when I go back to Spain, and I have to go to the bank to do some sort of transaction, it takes forever, I do get very frustrated. This is like a double-edged sword.
RITHOLTZ: You have to learn how to leave the New Yorker behind. Like, when I go on vacation, it’s 24 hours before my walking pace begins the slow down. Although I can tell you I can very much embrace the idea of midday siesta. If I could work that into my routine, I think my level of chill will be much better than it is currently. It’s something that we very much can learn here from Europe.
BERRUGA: Absolutely. I think that you should definitely look into that.
RITHOLTZ: So let’s jump to my favorite questions that I ask all of my guests, starting with what kept you entertained during the lockdown in Brooklyn? What were you watching or listening to?
BERRUGA: I mean, honestly, I don’t watch a ton of TV. I think I mentioned earlier, I have like a four-and-a-half-year-old that keeps me really entertain. And between that and Global X, I don’t have a ton of time. So I really try to watch documentaries because they are definitely shorter in nature, so I don’t have to watch three seasons to, you know, finish the story.
BERRUGA: So I’ve been really into business documentaries lately. I watch HBO documentary on Warren Buffett, which is one that I deeply admire. I was also watching recently a documentary on Enron, which I didn’t know the story.
RITHOLTZ: It’s a hell of a story.
BERRUGA: It’s a hell of a story. I mean, I knew a little bit, but I —
RITHOLTZ: And now, we’re living through it all over again.
BERRUGA: I know. It’s actually very, very relevant. And I guess the last couple of days I’ve been watching a documentary about FIFA and the World Cup.
RITHOLTZ: You know, it’s funny because I was a World Cup fan like 20 years ago, and I just fell in love with the pace of the game. And this year, it just seems like it’s become so politicized in Qatar and the no beer, and it’s kind of crazy. But I watched the U.S.-Wales match. I’ve never seen a draw that felt like a loss. You know, it was like, wait, spoiler alert, I hope everybody has already watched that. But it’s a lot of fun to watch, isn’t it?
BERRUGA: I love it. And then, quite frankly, I mean, when I grew up, playing sports is a big part of who I am, and I just love watching the World Cup. It is true that these year’s World Cup feels, for whatever reason, a little bit different. But I will tell you, I mean, when I first moved to Chicago from Spain, it was 2003, which is crazy, it’s like already 20 years ago.
BERRUGA: If I wanted to go to a restaurant or a bar to watch the game, it was really difficult to find a restaurant or a bar.
BERRUGA: This is 2003. Like, literally, four years later, definitely, I think because of the women’s soccer team and how they are —
RITHOLTZ: They did so well in the Olympics. Yeah.
BERRUGA: — there was definitely a lot more attention towards the sport, because really in the four years, you were able to watch games everywhere. But there was definitely, like, a big transition there.
RITHOLTZ: I found World Cup because around the same time, ’02, ’03, my wife and I are on a cruise, and you run around all day and then you come back to the room about 3:00 in the afternoon and just take a nap before dinner. And I would flip it on the TV and there was World Cup, or I would go to one of the bars and the whole staff is watching World Cup. And it was really fascinating. You have to give it a little time to get into the ebb and flow of the game. And suddenly, you find it’s so different than football or baseball. It just has these natural waves. It was a lot of fun and I look forward to it every couple of years. It’s really a blast.
BERRUGA: I mean, a 100 percent. I mean, when I was in Chicago, one of my best experiences in Chicago was when Spain won the World Cup in 2010. I was working with Morgan Stanley at that time, all of my friends and I went to like a bar by the Chicago River. And you know, we won, of course, they were very happy for me. And then it was a long, long day for all of us.
RITHOLTZ: I’m sure. Let’s talk about some of your mentors who helped shape your career.
BERRUGA: I mean, of course, there are lots of people that have helped my career over the years and people that have been very helpful, so these may come across as maybe a little bit too touchy feely. But I will actually say my mom and my dad, Barry, because at the end of the day, they’ve worked very hard. They work very hard when I was growing up to give me like a really good education. And that’s something that I’m very, very thankful for because they were teachers, so they don’t have many resources and they work very, very hard.
And quite frankly, because of the values that, you know, over the years, they kind of made me, I mean, because there are things like, you know, being thoughtful, being kind, work ethic, positivity, I think you learn that at home. And you know, whether you realize it or not, I think every single decision that you make in life is made through the lens of your values. And that’s why thing it’s so important, and I’m very thankful to my parents for that.
RITHOLTZ: Good answer. You’re not the only person who have brought up their parents or their father as a key mentor. I hear it pretty regularly. Let’s talk about books. What are some of your favorites and what are you reading right now?
BERRUGA: One of my favorite books is “Man’s Search for Meaning” by Viktor Frankl.
BERRUGA: It’s about the experiences of a prisoner in a Nazi concentration camp and it goes through like, you know, some of the challenges. It’s about, you know, inner strength, positivity, resilience. And it’s a book that I always find extremely useful, particularly when you are going through a rough time in life, which obviously, it can happen to all of us. I always find myself going back to that book because it really helps me put things in perspective.
BERRUGA: Everything is relative. And no matter how bad your day is, it ain’t that bad, relatively speaking.
BERRUGA: A 100 percent. So I’ve always found myself going back to that book. And then now more recently, definitely, like more of an easy read, I’m reading a book called “Atomic Habits” by James Clear. I mean, the value proposition is very simple. It’s about how little adjustments in your life can lead to really remarkable outcomes. I mean, it’s a very easy read, but very interesting takeaways.
RITHOLTZ: I’m trying to remember who said the quote, “You build your habits, and then your habits build you.” And I have that book at home in my queue. I haven’t gotten to it. But I’ve heard really good things about it.
BERRUGA: I just want to recommend because, first of all, it highlights the importance of having good habits, but it goes beyond that. It’s actually giving you some practical examples on how you can create habits in a much easier way. So very, very powerful.
RITHOLTZ: What sort of advice would you give to a recent college graduate who is interested in a career in either investing or ETFs, or working thematically?
BERRUGA: I think it would be to just try to talk to as many people in the industry as you can. You know, particularly in our case of the ETF industry and asset management, talk to portfolio management managers, product development teams, research analysts to really get a good sense of what our industry is about. If you do that consistently, I think a few things will happen.
One is that you will learn a lot about the industry. Two, whenever you make the final decision of entering the industry, that decision will be a much more informed decision than if you had not gone through this process. And finally, quite frankly, I would not be surprised if you end up working for one of the people that you actually interviewed over that kind of networking process.
RITHOLTZ: Really interesting. And our final question, what do you know about the world of thematic ETFs investing, and just exchange traded funds today, you wish you knew 25 years or so ago when you first began your career?
BERRUGA: Probably the biggest lesson is that the investment management industry is a marathon, it’s not a sprint. I think patience is probably one of the most underestimated skills in our industry, and I think it’s incredibly important. And I was definitely very impatient in my early 20s, but I think, I want to think at least, that over the years, I’ve become much more patient and I take my time to make some of the more important decisions, and I definitely think more with that long-term horizon in mind.
RITHOLTZ: Right. Get rich slowly is always good advice.
BERRUGA: A 100 percent.
RITHOLTZ: Luis, this has been absolutely fascinating. Thank you for being so generous with your time. We have been speaking with Luis Berruga. He is CEO of Global X ETFs. If you enjoy this conversation, well, be sure and check out any of our previous 450 discussions we’ve had over the previous eight or nine years. You can find those at iTunes, Spotify, YouTube, or wherever you get your podcasts.
We love your comments, feedback and suggestions. Write to us at email@example.com. I would be remiss if I did not thank the crack team that helps us put these conversations together each week. Bob Bragg is my audio engineer. Atika Valbrun is my project manager. Paris Wald is our producer. Sean Russo is my head of Research.
I’m Barry Ritholtz. You’ve been listening to Masters in Business on Bloomberg Radio.