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Luis Berruga

lines on the record: 83
first: 2022-12-02
most recent: 2022-12-02
sittings or episodes: 1
sources: podcast

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“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 a long-term horizon in mind.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it would be to just try to talk to as many people in the industry as you can. Part of our case of the ETF industry and asset management, talk to portfolio management managers, pro development teams, research analysts to try to really get a good sense of what our industry is about. And if you do that consistently, I think a few things will happen. One is that you will learn a lot about the industry. Whenever you make the final decision of entering the industry, that decision will be a much more informed decision that 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.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I strongly recommend because it gives you, first of all, it highlights the importance of having good habits, but it goes beyond that. It's actually giving you some practical examples of how you can create habits in a much easier way. So very, very powerful.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“100%. So I always find myself going back to that book. And then now more recently, definitely a different, more of an easy read. I'm reading a book called Atomic Habits by James Cle I mean, the value proposition is very simple, it's about how little adjustments in your life can lead to really remarkable outcomes. And in finding it's a very easy read, but very interesting takeaways.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“One of my favorite books is a man's search for meaning. By Victor Franco. 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 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. Right.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, this may sound, 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 this may come across as maybe a little bit too touchy, but I would actually say my mom and my dad barry because at the end of the day, they've worked very hard 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 over the years, they kind of made me aware of because at the end of the day, things like being thoughtful, being kind, work, ethic, positivity. I think you learned that at home and 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 I think it's so important and I'm very thankful to my parents for”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, 100%, when I was in Chicago, I mean, one of the probably my best experiences in Chicago was when Spain won the World Cup in 2010. All of my friends I was working with Morgan Stanley at that time. All of my friends and I went to a bar by the Chicago River and we won, of course, they were very happy for me and then it was a long, long day for all of us, I'm sure.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Well in the Olympics. There was definitely a lot more attention towards this sport because in lieu of four years you were able to watch games everywhere. But there was definitely like a big transition there.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I love it, and I'm quite frankly playing sports, it's a big part of who I am, and I just love watching the World Cup. It is true that this 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, this was 2003, which is crazy. It's been like already 20 years ago. 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. This is 2003. Like literally four years later, definitely, I think because of the women's soccer team and how did...”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“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.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“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 entertained. And between that and Global Axe, I don't have a ton of time. So I really try to watch documentaries. Because there are definitely shorter in nature, so I don't have to watch three seasons to finish the story. So I really, I've been really into business documentaries lately. I watch HBO documentary on Warren Buffett, which is the one that I... Deeply admired. I was also watching recently a documentary around Enron, which I didn't know the story”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, and 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 would have lunch as a family. We would take a nap, and then we would go back to school. So it was definitely a different pace. And even today, like I'm texting with my friends and they are getting ready for the holidays and they are having dinner at 9, 10, 11 p.m. So it's definitely like a different pace. I think that is, or it goes both ways. For example, when I'm so used now to the New York lifestyle, 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. I guess it's like a double-edged sword.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“In New York? I certainly do. There is definitely a different pace to life when you go to Europe, Portugal, in Spain. I mean, if you go to Southern Europe, it's even more different from, 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 better than what you can see in, in, for example, New York.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“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 won down a little bit, which I think is good.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“There's a very small town called La Roda, Albacete. I would be very surprised if you know about it, because even people from Spain don't know about it. It's two hours. If you go from Madrid towards Valencia, it's approximately right in the middle, like two hours away.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“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 US 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%, I go there always for Christmas because it's a very special part of the year for Spanish people and our culture.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“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 into 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.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“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 thing that we are trying to provide exposure to.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a great question, Barry, and it's a very, very important part of our proud development process. And that's something that 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 vehicle, CTF, if maybe like 5% of the revenues is coming from electric vehicles? Then is that really the exposure our clients are looking for? Probably not. So it may change on the product or the theme, but typically we apply a 50% revenue threshold for inclusion in the theme. In this particular case, for card 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, so it's challenging. But then we look at things like”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Companies that typically get at least 50% of their revenues from the electric vehicles space. And then once we have like a universe of like 40, 50 companies, that's when we start refining that process with our portfolio management team, our portfolio administration team, just to make sure that in terms of liquidity, capacity of the strategy makes sense. And once we have a preliminary index, that's when we start the process of bringing that ETF to market.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“That is still very early because electric vehicles cells. Double in 2021, and that is still 9% of total car sales. So the potential is very, very significant. So we look at all of this data and we make the assessment that is a theme 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”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“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 a product development committee meeting in which someone suggests electric vehicles. And of course, they put forward a very robust analysis where they look at target addressable market, penetration rate, and they're more like industry dynamics. And in this particular case, it's very obvious that it's 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”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“The first thing is we challenge ourselves. Does this 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 that”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, I think in terms of going back to the comment I made earlier, very innovation is just happening anywhere in the world and at the fastest speed that we have ever seen in history. So you would be surprised how we have right now 36 thematic ETS, but there is no shortage of ideas. There are lots of different areas in which we are looking at, you can think things like quantum computing. There is a lot of activity in the digital assets space, even though right now there is a lot of noise in the market around that particular thing, but we continue to see plenty of opportunity. And again, it's not just a US phenomenon. We've seen this growth in other markets around the world. I mean, just in the US, if you look at assets in thematic ETFs five years ago, the number was roughly 5 billion dollars. And at the end of 2021, we're talking about $120 billion.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Platform in the ETF industry. And I think our clients appreciate that because when they invest in a global XETF, they are not just buying an ETF product. 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.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Great question. I mean, I think without a doubt in the ETF industry, I think marketing is extremely important, particularly for a company like GlobalX that is still like an up-and-coming ETF player because it's important. Brand awareness is critical. People will not come to buy our ETFs if they don't know that GlobalX ETFs exist. So we have been investing in marketing for several years, purely from a brand awareness standpoint. That aside, the way we actually market our ETS 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, very, I'm biased, but I think we have the most robust research.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Liquidity, or for example, you don't include companies that have less than $100 million in market cap. 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 again, our portfolio management team and our product team have plenty of experience dealing with these markets.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“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 ETS was our China consumer ETF that we launched in 2009. And then we launched in December of 2018, we launched a 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 line. 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.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“And it was a challenging quarter or March of 2020 with COVID-19. But I think when you've done this long enough, quite frankly, that doesn't really matter in the long term. I always tell the team, let's do the right things with the right team at the right time and let's focus on the long term. And if we do that, we'll just be fine.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“100%, and I think, and I actually do have that very conversation with the junior members of our team, because if you just start in the industry four or five years ago, you think markets only go up, right? And I think it's when you've gone through the financial crisis in 2008 when I was working with Morgan Stanley or even later on, you know, December of 2018, March.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“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.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, great question. I mean, without a doubt, it's been a very challenging market environment. We have geopolitical issues, the highest level of inflation that we have seen in the US in 40 years, still supply chain issues due to COVID-19. So it's been a very challenging year, but our business continues to do well. I mean, we've seen this year roughly between three and four billion dollars in new assets, and we are having very good conversations with clients that I think at current valuation levels, they remain very interesting in the market and they see some opportunities. But to be honest with you, vary from our standpoint, we don't really make any material changes in how we think about the business because of the market environment. We had a really good 2020, we had a really good 20.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think it's like obviously very semi sophisticated institutional clients that they really know what they are doing and may use those ETFs as very useful trading tools. But I think anything that can potentially can be accessible by retail clients. I think we have a responsibility as an industry to be very careful about”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Not really, that's not part of our business very. I think 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.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“How that works? Exactly. So basically, bigger companies are a bigger part of the index, but we have caps of like 8%, 10% or 12% of the company based on the index. The classical example here, Berry, 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% of the index. That's why we have the weight of each company anywhere between 8% to 12% as a way to mitigate that idiosyncratic risk.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“In most cases, we follow what we call a modified market cap wearing approach, particularly around thematic investing. We do think that's the optimal approach for a couple of reasons. So first, from our standpoint, for this 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.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Research, our ETF model portfolio business to really explain to our clients how to invest in those ETFs. So I think the value that we provide to our clients is very significant.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“For free practice. Exactly. Because in that particular case, 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 ETS, 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 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 a”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's all relative. I don't think fees are high or low in absolute terms is relative, right? 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, think about S&P 500.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think so. I mean, I think if you start from a scratch and 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.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“Couldn't really fall within our definition of thematic investing because they are cyclical in nature. They will be like a reversal to the minimum. 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 kind of being opportunistic and 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”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, one of the challenges, I guess, points of clarification when we talk around thematic investing is that in a way very 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 the ETF as a thematic ETF. But we do think thematic investing is a very robust investment approach that consists on 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 trends. And that's a very, very clear definition. So many of these ideas like inflation hedge or interest rate hedge.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, the dead is dead. I think we've seen in that fund, I'm speaking from memory very, but I think it's roughly $600 million in any new assets this year in that ETF alone.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“But based on the conversation that we're having with research analysts and practitioners in the 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.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“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. Because I think like a nuclear energy and uranium has historically had a bad reputation because some of the accidents.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“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 that they are facing with the conflict between Russia and Ukraine.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“And he's become extremely top of mind for many of our clients, not just in the US, but quite frankly all over the world 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 market participants are realizing that there is a very significant need for greater energy diversification and nuclear energy is becoming widely considered as a very viable solution in that space because of the lower cost, the reliability and quite frankly because it's clean from a greenhouse emissions. There's no surprise there are like right now over 50 nuclear plants being built in 19 different countries”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“And you were talking about Europe before, for example, there is a good Spanish company called Actiona, it's also part of that index. And generally speaking, this energy transition component, Bear is becoming more and more popular in many of the conversations that we are having more recently. One of the ETS that we're having lots of conversations about is our uranium ETF, which is also one of our largest”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, obviously it goes back to the process that I mentioned before of looking at conviction, looking at investability and time horizon. That second component is extremely important. The thing is, 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 US companies.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source
“100%, and we have seen already some policy coming from the White House in the last quarter. We do think many of these companies are basically dedicated to a process in more effective ways are definitely going to be benefiting from this trend.”
2022-12-02 · Masters in Business · Luis Berruga on ETF Investments · IDENTIFIED FROM THE TRANSCRIPT · source