YouSaid · the spoken record

Jennifer Grancio

lines on the record: 56
first: 2023-01-13
most recent: 2023-01-13
sittings or episodes: 1
sources: podcast

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“I think it's that the overall portfolio construction matters, right? So as an investor thinking about when you build, like when we build it into number one, we build products where we put strategies out into the market, the more you can make them balanced and with some duration. So if somebody puts something in the portfolio, they sort of understand what it's going to do and what the return stream looks like and what the risk looks like as we're investing and then selling to other people. I think that ability to build products that are durable and it's clear what they do is really, really important. It lets you build your brand. It lets you build trust. The investors”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, first, I'd say those are great areas to go into. You should go into it. And definitely learn how to invest, learn how to be investor. Don't stick to one fad or one mousetrap. If you can learn how to be an investor or how investors think, that will serve you so well in our business. And I guess to new graduates, I would say don't give up hope. It's going to be a bad job market. So take those internships, be a little bit scrappy, and just learn from whatever that first job is two years in because you'll pick up a phenomenal amount of information. And if it's not what you love, great. Then go do something else after it. But it's a great place to build a career.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“So my Angelou is actually a favorite of mine. I find it relaxing and out of my, it's so different than what I do every day in kind of American and lyrical. Harry Potter, we have a younger one of our kids is younger, so working our way through Harry Potter. And then the Daniel Kahneman, thinking fast and acting slow. I read that last year. I like that a lot because you got to remember sometimes how our brains work and the fact that we rush to things and we shortcut and we group things. And so I find that helpful sometimes in just being calm about how else could we solve a problem or why is somebody reacting the way that they do?”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's funny, I don't have a lot of mentors where it was that one guiding light. I found that I picked up little bits and pieces from different people. So Kandy Rice was a provost when I was at Stanford. And so it was that inspiration that sort of sent me off down the international relations path. There was just a level of smarts and confidence that I really appreciated that I picked up from her. And then a professor in business school who said, women can definitely have it all, but you're kidding yourself if you think you can have it all at the same time. So like pace yourself. Like go after it, but pace yourself. You can't literally do it all at the same time, which is good advice. And then I think there are a lot of people for me where I learned one or two lessons from different people. And now I do a lot of mentoring of other people. And that is my overarching suggestion on this is you got to ask a lot of questions and you don't always have to have a lifetime relationship with everyone, but get any nugget you can get.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Versus a values-based conversation with the company. So our belief is proxy votes matter. We should all use our vote, but proxy voting is a tool to drive kind of long-term economic performance with companies. Sometimes there are just value-based issues that shouldn't be tackled through proxy votes.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Listen, I think companies have consumers. And so if I'm a company, if I'm Disney and I have consumers and I feel like my company needs to stand for something because it allows me to serve my consumers and my consumers to say my brand has value, that's something that Disney's going to have to push for. So I think, first of all, when it comes to public companies, some of them have one audience, some of them have another audience, and they may need to behave in ways to make their audience feel good so they can be in business and sell their product. I think separately, if we talk about proxy voting, successful proxy votes should be economic. So back to the kind of fiduciary concept we were talking about earlier. So if a proxy vote says, you know, can you please disclose more information about your workforce that's helpful to investors? Great, that often makes sense to us. If the proxy vote says, I don't like this thing you do, please don't do it, but there's no economic causality. I think it's hard for that to be a proxy voting issue.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“No, the high quality work or the high quality blue collar, if you will, workers and all these new plants, they're not going to be enough of them, and they're going to be happy the robots are there to help them.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Texts us exactly. So it's happening already. There's a huge increase in manufacturing. And then as that happens, if you build a manufacturing plant, there's a huge job multiplier. You have people come in to build the plant, then people work in the plant, then people work to move goods in and out of a plant. And we're going to see a huge growth, we believe, in railroads. So if you're going to increase manufacturing in the North America, guess what? You don't need to ship things overseas. You need better, more effective railroad continued to strengthen the lines and the movement of goods around the US and then automation. So good and bad is we have less birth rate and less people coming to the US and we're going to have a huge number of quality jobs. And so companies like Rockwell Automation, that high quality jobs in brand new factories with automation to assist in the manufacturing. It's going to be pretty awesome from an investment theme perspective.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, one of the things we're excited about, I can't talk about the product because we're not through the SEC with it yet, although it's in filing. But from a theme perspective, we're super excited for the U.S. From a US competitiveness perspective. What happened during COVID is supply chains were too global, too fragile, and they broke. And so what we're already seeing, and we're going to see a lot more of this in the next few years, is we're seeing a huge resurgence of manufacturing jobs in the US, and it's going to be...”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Look for both of those kinds of diversity and boards that listen to each other have diversity and have that important diversity of capability, absolutely those are going to be the highest performing ones.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and let's talk, the board for a minute is another one that it's very hard to reduce into one stat. So if you think about all the research that's been done on boards, and at engine number one, we do a lot of work with academics. So we're always trying to look for these places where we've got data and causality, and we can link it to economic outcomes. And when it comes to boards, what a lot of the research would tell us is if a board is deeply non-diverse, the first, if you had one diverse person or thinker, they may actually have worse performance. But if a board starts to have multiple varieties of diversity and the board listens to the diverse points of view, those are the boards where we get the real outperformance. And then remember, it's a board. So it's not just diversity of thought. It has to be diversity of capability because as these companies go through change, you need other CEOs that have been successful through change. If you're an old school media company, you need people on the board that are successful with where the puck is going. So I think we have to.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“With how they perform as a stock over time. You know, there's not enough data on the social side. The research is spotty. I really hope there's better data. I hope the research gets better. I hope we have causality there. But I think as investors, we have to be careful where we're talking about if the company has less emissions, they get credit for trying to do the right thing and the stock price goes up. That's capitalism, where from a values-based perspective, we want to ask a company to do something, that's a little bit different. So I think that distinction is really important.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think we have to remember what capitalism is. And then I'm not sure what we mean by woke, which is part of the problem. So capitalism is meant to be you in public markets. put that in the private markets as well. It's meant to be you have a set of financial shareholders, you have other stakeholders, you're making money for the shareholders over time. That's the definition of capitalism. It's really hard to make money for shareholders, financial shareholders over time if you don't treat your workers well or you destroy the community in which you live. That's just kind of good business or doing business the right way. I think we sometimes get confused when we talk about values or practices and you can't link it directly back to financial returns. So listen, when it comes to climate, we feel like we can do a pretty good job with the data that's out there to link how a company handles climate and environment.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, a lot of our society right now has spin on the buzzword of the day. So I think we need to be very careful about that when it comes to investing.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“What the strategy is and what you're actually doing to the market. And if it's not a green strategy, you kind of have to say that.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I think if you could do everything from scratch, I get this a lot from people that run large asset management companies. You're like, gosh, I wish I could just start everything from scratch again in this environment. So I think the reality is if you're running a strategy and you don't care or you don't have risk metrics on, let's say, the environment in your strategy, it's very hard to fit them on top. And I think a lot of people get caught in that from a greenwashing perspective. So what we do is we start from scratch, we think about these material impact things as financial data, and it's just part of our process. And so there's no greenwashing there. But for people that were investing in something and now want to take advantage of a moment in time or people that are investing and actually don't really understand how environmental risk factor into the portfolio, I do think you just have to take a time out and go back to basics and better articulate.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Down, you know, what's Tesla's multiple? They can have the opportunity to go from where the GM multiple is today, which is very low, very depressed value stock, all the way up to what producing BEVs at scale is going to look like. And that's a huge value creation opportunity.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it's General Motors. In general motors, it's going to take some time, right? So General Motors has been in the portfolio since we launched NetZ and still is and has stayed there. And when we work with General Motors, it's a lot of our work has been about how do we accelerate the transition to battery electric vehicles for them as a manufacturer and not for an ideological reason, purely because we think the consumer demand is shifting more quickly. That's where the market is going to go. That's where the consumer demand is. Again, this is an economic argument for us and working with General Motors that the faster you get to all battery electric, which means you need to build the battery plants, you need to build them bigger, you need to build them faster, you need supply agreements locked up for the rare metals, and then you need to work on bringing the cost of batteries down because as all of that happens, GM makes eight to nine million cars a year. And so if those cars are all battery electric vehicles and the battery cost comes”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Can't divest. And we see a problem in the dominance of the current index providers is that they're big in its complicated to vote shares because you have people on different sides of every issue. So while we're at it, put a new index product out in the market.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, part of it is the data science work that we do around the sizing of emissions, comparative emissions, monetization of emissions. So we call that our total value approach to looking at the externalities of these companies. So we bring that, we've done the modeling, all the fundamental work that we do. And then this very active engagement where we want to stay engaged. And if there's something part of where the ELTS business came from, if there's something in the private markets that could work differently to help a big public company move, can we make connections? Can we help that move along? And then proxy voting is important. So most of what we do is this kind of very intense, active engagement, and we're active owners of the company, not always an activist in the traditional meaning. We also launched an index product. So our view is that you really have to hold these companies if you want to own the winners over time and if you want to drive change, you also have to hold the companies.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“And just investing, right? High quality investing means you really have to understand what a company's strategy is and what are the bottlenecks, what are the places where they may miss. If you understand those, you can make those faster, shorter, better, less risk, then that's really positive for being more sure that the company increases in value.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, we really started with Exxon effectively. And so I wouldn't say we had, it was the next day it was a sea change and a positive way, I would say it's complicated because after you've done that, the board and the CEO are a little bit worried about what our intentions are. And it takes time to build those relationships. And Chris does a lot of this work directly with the CEOs and the companies that are in the portfolios. And it takes time to build trust, but our relationship with them is basically having modeled their business ourselves and modeled all their competitor businesses and have gone a kind of up and down the supply chains. And once we get to know each other, we're giving them what they find is actually some very helpful point of view. If I look at your business, I think this consumer demand is going to flip sooner. You're going to miss it. Or how organized are you on supply chain? What are your bottlenecks? And so it's become really very constructive with a lot of the company.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“We are in the transition, absolutely. But we think that. You wanted to not use fossil or carbon intensive now, it wouldn't possibly work. We're not ready to be transitioned. We are in the transition. And so the way we think about it is we have to be very savvy about where do you have a brown business? Where can that brown business be gray? Where does it start to use green techniques? Natural gas is a great example. We need natural gas. So how do you move natural gas in a way where you're looking at methane, you don't have methane leaks, you're using green energy and electric sources to process the natural gas. There are a lot of things we can do even while we're using fossil to be cleaner and to put the people that are cleaner and doing fossil in a better position to sell versus their competitor because we are seeing these changes and we do have a lot of people looking at carbon footprint as they're buying or investing in companies.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and I think this is some extent you can't control what is the moment in time where the energy transition happens, right? However.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“To launch a green business. So some of these changes started even before the proxy vote where new directors were elected onto the board”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“They were giant, but also they were a giant in terms of the big asset managers had not been able to get them to pivot from a governance perspective. So there were known concerns about governance. A lot of the big investors take a slower approach to work with management, not cause too much change, request changes, and there just hadn't been any progress in this case. So we were able to have conversations and the team did a huge amount of work with investors and passive investors and active investors walking through our economic case. If these things happen, better governance, better economic performance. And that, we think, is what allowed us to rally support. And as we were rallying support, as you see in this situation, I'm sure Exxon was talking to some of those investors as well. And so as we went through the campaign process, we saw some of these changes on changes in capital allocation decisions and intentions.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so from a team perspective, we've started by making an economic case. So we did the work on here's what we would do differently, here's how we think the value of the business would be higher if we did this. And these suggestions on what we would do differently included disclosure of emissions. It included better capital allocation decisions between this sort of short-term energy transition period. And we don't know when it's going to be, thanks to Putin and the Ukraine longer than we thought a year ago. some point we're going to start to really pivot into an energy transition and so what's your best thinking exxx as a company on what your business looks like and your capability at a board level to extend the duration of the business do things that may be renewable or whatever they may be what is it that you can do that's in that area and so those were the things that we requested”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Not at all. Yeah, we look at the usual things, and that's maybe our main point, which is people get in our industry in particular. They get stuck in old frameworks, right? And ETF is an index fund. An activist is somebody that comes in short term and fires a CEO. So I think we need to be careful of those sort of short ways and shorthand ways of thinking in investments. Our point of view is that There's a lot of data available now. We have a huge amount of data. Take the climate and environmental related issues. We have a lot of data on carbon, and we can estimate carbon prices. And so in a basic fundamental financial model, you can start with your old traditional financial model, but you can add in. We do this. And then as you build out your financial model, you can”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Twitter because of Twitter. So if you think about the way that we manage that portfolio, basically what NetZ is, is you're holding some of the biggest emitters and you're holding this 1.8 metric tons of emissions a year. So not low carbon, high carbon. And then what we expect is that those companies are going to take that number down to less than half within a decade. And so if you care about impact or sustainability, yeah, that's great. That's a huge win. You're holding the companies, watching them. They're taking emissions down. But if you want to make money, you're holding the companies that are providing energy but doing it in a way that they have a social license to operate. And then so to come back to your Tesla example, all of this starts with governance. And so if a public company is going to make money over years and years, it's all about governance. And do you understand your markets? Do you understand how things change? And so if you're running Tesla and you have a huge job to do in terms of scaling that business, but you're also doing other things at the same time.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“General Motors is a net Z. Ford has been. It goes in and out of the portfolio based on how they're doing managing some of their supply chain constraint issues. And then Tesla's in the portfolio. But GM's at a much larger weight than Tesla. And then Tesla went out of the portfolio for governance reasons.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right That's right. And that's right. And that's some of the active ownership work we did in that portfolio where Kinoko and Devon are companies that we worked with to join the methane third-party verification partnership this past summer. And that's when we talk about engine number one as active owners. It's not always the black hat activist. We actually haven't done that other than Exxon. But the ability to really understand their business and go in and work with them on actually having them methane verified is a big deal because then people understand what you're doing in that part of the business and it gives you license to operate because we need that energy source.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“They have a range of things that they do in that space, but think of it as committing early to find ways to make money, having people on staff on the board that know how to run green businesses. And then from an emissions perspective, also they were very early on. Telling us being very transparent on scope one and two and agreeing to oil, gas, methane partnership emissions, third-party monitoring of emissions, which we think is critical because, again, a methane emissions leaking, that's probably the biggest thing.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and so one of the names we had in the portfolio, which is actually so highly valued, it goes in and out depending on if it's overvalued, it's an active fund, is Occidental and Oxy. And that's an example of they were really the leader in the space. So they had started to develop greener businesses so that as fossil use comes down, they have another business in their competitive. That's great for long-term value of the company. What”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“We believe that the companies in the portfolio are the companies that have the right strategy to, if I'm an energy company, I'm producing energy, there's demand for energy, that's what I do. But I'll tell you my emissions. I'll do methane third-party monitoring. I'll do all the right things so that from a social license to operate perspective, I'm at the top of my peer group. And in all cases, they have a strategy where as fossil fuel demand declines, not today, but in seven, ten years, they have a strategy to actually make money and still have value. So we're picking the top best performing energy companies. We're not saying energy is bad. Energy is essential, and we need that energy in the transition. And the portfolio then also holds the car companies that we think win.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, that's right. I mean, and we think from an investment perspective, if you want to solve this problem on how do you take emissions down, we think that problem can be solved and you can make money by owning the people that are going to win. So you asked before, like, what do we do? What strategies do we run? In the ETF business, our active team, it's effectively hedge fund investors. So they're very concentrated portfolios. We believe we're right. It's a handful of names, like under 30 names today in the portfolio. Ticker's NetZ, so climate, transform, climate, net z. And what that portfolio holds is it holds companies that have emissions.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I think that's the right question. And we focus on both. And so let's take for a minute the energy industry and then the transportation or auto industry. That's an example of that kind of handshake or handlock, right? So in the case of the car companies, that's consumption. So if we're consumers and we're driving cars, which we still do and people are planning to do in the future, the car company can switch from encouraging the behavior of driving.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“To make sure that their most material impacts, that's financial data, right? That's risk data if you don't manage your emissions as an oil and gas company. And so let's build that into just investing to make returns as opposed to the special class, which devalues base and ESG tends to kind of infer value over performance. Or divesting from companies that you don't like. And that's, we don't think that's a great way to invest.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I guess our view on that would be you can always express values in a portfolio, but if you're going to express values in a portfolio, say that I am expressing my values in the portfolio, which is different than the core concept of managing money over time is generally for the person that's doing the managing is to be a fiduciary and drive good outcomes and strong returns. And for in general, for the investor is to drive returns over time. And so the way we think about it is really you can do that. any business that is going to survive over time has to be sustainable, has to address or basically cover their impacts, right? After the cost of capital so that they can be profitable over time. So instead of thinking ESG means its values-based, I don't like the company. They're bad. I'm going to screen them out of my portfolio. We don't think that's a great way to manage your core portfolio over time. We think the better way is you simply have to engage with the company.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, we think the way people use that label is a little bit problematic. So people often use that label looking backwards.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“In these sectors that are in transition, let's take energy, for example. If you're an oil and gas company and you don't account for the emissions that you're dealing with and you don't decrease them over time, you're going to have a problem. And we saw this when we started building the business that a lot of these companies were heading towards zero terminal value. So let's take Exxon, for example, where if you take Exxon and Exxon keeps doing long dated fossil fuel projects and has no plan to reduce emissions at any point in time and has no plans to develop a green business, well, that's not very good for Exxon stock when we get to seven or ten years out. And so we see a lot of these opportunities where like it's just math. The capitalist system is supposed to have the company govern itself so that it's making money through time. It has a longer duration of business and it has a higher value. And that's the kind of the way that we work in everything that we do.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, as a business, we run an alts business, and then we run the ETF platform. So if you think about it very simply, these huge ideas about transition and transformation and how to make money are very common across what we do, but we have two businesses. And the big ideas are these transitions and transformations and how do you take advantage. And so when we look at public companies, we look at every single company and we look at what their path is through time. So we think this is one of the problems with a lot of investment strategies right now as they're looking to short term. And then we build the impact or externality data. We just build it into the financial model, right? Because the data is out there, particularly on governance, particularly on environmental issues. And when we do that,”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“The first firehouse in San Francisco is actually a couple of blocks from our office. And in talking about what we were trying to do, which is maybe it's grandiose, but if you think about it, like capitalism works and what we were agitated about is we saw the market, you have ESG over here, very small. We think old school ESG does not work. We have a strong view on that. We can come back to that. Indexing, too many shares are locked up and indexes. Index don't vote their shares. And then maybe most important of all, we're going to need a general motors and a Ford to actually be able to do this huge transition from internal combustion to battery electric vehicles. And so, you know, actually the firehouse is the center of the community, right? And if you think about how a community survives, the firehouse is the center the community takes care of itself, a well-run business really should be as simple as sort of taking care of the environment it's in being aware of it.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“And so, really, the idea of the firm is to be able to look forward, find mispricing, and make money as we go through these huge changes”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“We launched it together, but Chris is going back before we started the firm. So Chris, James, is our founder at engine number one, and Chris's background is hedge fund and private fund investments. And what he's really known for is he's known for taking an extremely long view on something and doing the work to say, where's the opportunity as you go through a huge transformation or transition? So Chris was hard at work on this and wanted to reach into the wealth space. So rather than just doing products that were private and you could help institutions invest, what could we do that was broad and into the wealth space? So I joined him to collaborate given my background on that side of the business. And the idea of engine number one is just to help people benefit from these huge transitions and transformations that are very much not the backwards looking, look, Google and Amazon, great. You know, our portfolios have a lot of growth in tech. Great. There's a lot of money to be made in the energy transition, transportation, agriculture.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I left BlackRocks very large. I wanted to do a little bit more innovation, and I think sometimes the biggest firms are great, but they can always lead from an innovation or change perspective. So I spent a couple of years. I built an advisory firm and took a couple of years to decide, you know, what was the next move? And I had some great work with a number of large wealth and RA firms that were going through an M&A or selling themselves process, did some work on impact investing, actually led me to ethic and joined the mankind board, but decided I was definitely going to be a builder, that there was this opportunity.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“No, I mean, I would say if we go back and we look at the history of ETFs and how they've developed, we see State Street, Vanguard, and BlackRock, BlackRock iShares as very dominant, and they're going to continue to be dominant and passive, period. They're there, they're big, they're so big now. And we'll come back to this later. I personally think there's some problems with how big they are. But from an ease of buying decision-making perspective, they're big, they're dominant. The brokerages were late to get in the game. So Fidelity and Schwab got in much later. They don't charge fees for those products. And so it makes it harder for them as a kind of a corporate organism to have that be a big part of their business. And then what we're very excited about at number one and what you're seeing with the mutual fund conversions, the big ones at DFA, at Franklin Templeton, the list goes on. There are many, is that we're now ready to move active funds into the ETF structure. And that, I think, is very...”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, the role of brand is pretty critical. And if you think about it in the index business, if you're managing it well, there's not a lot of performance. It's are you tracking the index yes or no? And so that power of the brand is massive. And my observation in this space is that the average investor, the average retail person that's going out and investing or talking to an advisor, they don't necessarily know one product provider or investor versus another, but they definitely know who they do business with or who they buy from. So that retail brokerage brand, their advisory brand has a huge impact on them. So to your question on Vanguard, like Vanguard's a brokerage firm. So you kind of know Vanguard. Vanguard's in your 41k. You've heard of Vanguard. And so for other people that enter the industry, and this is certainly what we did in the iShares business or what we do now at engine number one, is you really have to be clear on who are you and what is your story because that brand matters a lot.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. It doesn't make any sense. It doesn't make sense. I mean, as somebody that's been doing ETFs for a long time, I say it doesn't make any sense whatsoever because there's another way to do it. And we're finally seeing that now. We're finally seeing a lot of the big mutual fund companies start converting into ETS.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“And then ETF as a rapper, it's just a great way to get the price at the moment if you're buying into the public markets, number one. And number two, it's a great way to manage tax where if you buy something now and you sell it in 20 years and the market's gone up, guess what? We all have to pay tax on that. But the kind of annual capital gains gift you get from a lot of mutual funds, it can be managed very astutely in the ETF wrapper. And that's great. That's great for all investors.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think when the industry first started, so going back, you know, 20 years now, the two things were synonymous. But let's take those one at a time. So from a passive perspective, the argument we made as an industry selling passive ETFs was you really had to take a look at what the portfolio was doing over time, total cost, total risk exposure. And when you did that, you often found that there was a way to get better long-term performance and cheaper by having some index in a portfolio. So that was a story on indexing, and then we kind of kept driving that into this idea of models. So now there's a model, a huge amount of money. Trillions of dollars sit in models in US wealth. What does that mean? It means a big wirehouse or brokerage puts a model together this much Europe, this much US, this much small cap. And then you can use index products to fill all those allocations. And so that was kind of the 20-year build of how to passive get so big.”
2023-01-13 · Masters in Business · Jennifer Grancio on Passive Index Funds and ETFs · IDENTIFIED FROM THE TRANSCRIPT · source