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Stephen Laipply

lines on the record: 74
first: 2025-06-20
most recent: 2025-06-20
sittings or episodes: 1
sources: podcast

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“We're building portfolios, and we see this both again on the wealth and on the institutional side, do we need to build portfolios with hundreds or thousands of bonds? Or could we take a low-cost bond ETF as sort of the core of that portfolio? Could we then use individual bonds to sort of flavor that or tilt that in different ways? And then maybe add our favorite active managers on top of that. Might that be a more efficient way to do it than just going out and buying, you know, to your point, picking up the phone and calling around and putting together hundreds or however many bonds, which might take days or weeks. And so I think there's this growing realization that, you know what? It's fine to trade in and out when things are volatile, but actually might be more efficient to use these things long term in a bond portfolio. So I think that's a huge part of the adoption too, is the recognition that this might be a smarter way to build bond portfolios in general.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“Feet to be able to do a transaction like that, and Bond ETFs allow you to do that. But I want to get back to, you know, you had asked what are sort of the long-term drivers. I think this idea of just, okay, you can trade these things when you need to, that's important. Another one would be”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“That's exactly right. And so, yes, over time, bond trading's gotten more efficient in the underlying market. You have electronic trading of treasuries and now credit. But if you go back 20 years when ETS were first new, bond ETS were first new, it was still very much a voice market. It was a very much pick up the phone exactly as you described. And even today, I think even the most sophisticated institutions still believe in the efficiency and the elegance of being able to trade a Bonnie TF on exchange. You're trading, if you just step back for a second and think about what you're actually doing, you're trading hundreds or sometimes thousands of bonds simultaneously at a penny bid ask on exchange. You actually still can't do that in the underlying market. So it doesn't matter if you're an individual. It doesn't matter if you're a large sovereign wealth fund. That's still a very impressive.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“Different verse, right? So you have markets are really, really stressed. You see a lot of dislocations. Volumes on exchange once again set new records. I think, you know, on the day of the announcements, I think we saw close to $100 billion of bond ETFs trade on exchange. Way more than the previous record during COVID. But the sort of, I think, skeptic has always said, well, you know, we haven't seen a good test yet. We haven't seen a good test yet. I think COVID was a good test. This was just a reminder, right? And so really what happens is, you know, the exchange keeps trading even if the underlying doesn't. And unlike, you know, the fears, you don't see these quote unquote forced redemptions or anything like that. Nobody's forced to redeem an ETF. It can just trade on exchange. And I think that's the elegance of it. It gets proven time and time again.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think it's a little bit of, it might be a little bit of the sour grapes. A little bit, but I think part of it too was after the crisis, there was, it felt to me like there was this search for what's the next thing. What's the next thing that could go wrong? Not quite sure why that focus shifted to ETFs, but it was ETFs in probably a number of other things. But I think the idea of a bond ETF in particular drew attention because the talk track was, well, you're taking something over the counter and you're putting inside this box and you're putting this box on exchange and that might cause some interesting things to happen. And in reality, what we've seen is just the opposite of those fears. Again, just you pointed out the tariff volatility. Same story.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“That's when we saw probably our largest wave of adoption in fixed income ETS, was during that period of time, same story, you saw things that people would just take for granted suddenly struggling in terms of bid ask and depth liquidity. But what could you trade? You could trade bond ETS, you could trade them in size. That got at that point a lot of attention because now the products have scaled to a level where even the largest investors could use them in their portfolios. And so that was interesting.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“Investors, but they became very intrigued by them. Over the ensuing years, you had to, you know, you would have occasional blips in the markets, whether it was, you know, some sort of an energy dislocation and high yield or what have you. But what we noticed was every single time you would have one of these stress markets, you'd see a huge surge in volumes in bond ETF trading on exchange. That would get the attention of larger investors. They would start adopting the products. Why? Because when you need to trade something, you were able to trade Bond ETFs, even if other things were really struggling to trade. And so every single time you'd have one of these waves of dislocation and fixed income, you started seeing more and more and more investors gravitate to bond ETFs. The big one was COVID. So for sure. February, March 2020, you know, even treasuries, high quality investment grade, you know, the whole thing, everything was seeing dislocation, right? And so.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and it's a number of things, and we've talked about these trends. So, I think you have a series of waves of adoption that happen. And it's interesting because where we tend to see the largest uptake of bond ETFs is when you have stress markets. And so I think this is, we have several, several test cases at this point. So, you know, we've had many ones since the financial crisis. So if financial crisis happened, and I think that's the first time where I personally started getting reverse inquiry from sophisticated investors asking about the bond ETFs because they noticed that even at the worst of it, let's call it September, October of 2008, they were still trading on exchange very robustly. Other markets not doing so well, right? And so that got the attention of a lot of investors at that time, products were probably too small for a lot of those.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“AUM soon. Keep plugging away. Keep plugging away. Yeah. And, you know, the industry is now, globally, the industry is approaching $3 trillion. We're at around $2.8 trillion in change. And we think that number is going to get to six by the end of the decade for the industry. And we hope.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“Notepad with the logo on it, you know, some nice pens and all that stuff. So very, very impressive how they were able to do this so cleanly and quickly.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“It was interesting, they were very much, I think, quantitative and academically oriented. And I think a little bit of the culture was okay with being somewhat under the radar because it was a very proprietary place. And so that might be some of it. But yeah, BlackRock did come in and they did that deal. It was interesting. I don't know if you remember, Barry, there were some discussions about whether it would be some sort of a private deal or what have you. And then BlackRock kind of came in and said, we'll take the whole thing. That was announced, I think, in June. So I'd only been there a very short period of time and then it closed in the fall. And I will never forget, you could tell that BlackRock was very efficient at this because the day after the merger closed, the signage was up on the building. You walked in, all the screensavers that changed overnight. You had a nice pad.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“I was really blown away by that, and I could not stop scrolling through that website and fascinated by the idea that you could take bonds and put them on exchange. Absolutely fascinated by that. And feeling a little stupid that I hadn't stumbled on it before. So the fun part about that was I helped a little bit in the interviews to be able to say, yes, I'm familiar. And by the way, yes, I'm actually a customer, albeit at a small scale, but.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“At one point, and this is a former mentor of mine, gentleman named Matt Tucker reached out to me and said, Hey, you know, this is an interesting opportunity. It's called Bond ETFs. It's a business that I've really been working hard on over here. And I'm looking for a skill set that sort of maps to that. And, you know, I kind of think that your background might be interesting for this. So, you know, let's talk about it. And then, you know, sort of the rest is history. But I was very, very excited about it. And there is a funny story to this, which is I discovered Bond ETFs on my own sort of accidentally. I was trying to buy treasuries and I was very frustrated by the commissions I was getting charged on that. A colleague actually pointed me to the iShares website and showed me that Bond ETFs actually exist and you could simply buy this on exchange without actually having to buy physical bonds and, you know.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, it was. It was interesting. You have sort of contact and networking with different folks. And I had, and it was at the time Barclay's global investors. And I did know a couple of folks over there. And we had just had casual conversations.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, it was stressful. You know, I was not involved with the particular businesses that were under stress, but it was stressful for all of us. Oh, sure. As the headlines scroll day after day after day, you know, was a front seat in history, as it turns out. And so I think, you know, hopefully a lot of lessons have been learned from that period of time. As you know, and I think you've said this many times, each crisis looks a little bit different. So hopefully we take lessons from the last one, and that starts building a knowledge base up over time. So maybe then next time we're a little bit better equipped to deal with it. But it was, yes, it was an interesting time.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“No, I think that's right. I mean, over time, you know, we've really started to see investors gravitate towards this idea of efficiency. And, you know, again, this is a theme that you really, really hammer home, which is, you know, basic sort of blocking and tackling is don't surrender a lot of your return to fees. I think everybody thinks that's incredibly important. It took a while for people to wake up to it, but I do think over time, people have really started understand fees matter, the strategy matters too, but fees matter as well. And so we have both.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“There are stories about that. So, if you look at statistics, I haven't done this in a while, by the way. So hopefully after this long period of time, maybe they've paid them off, but you can find these very high coupon mortgages that are still out there. And nobody really knows why they haven't paid them off. But it is your right, but you're not forced to pay it off. You would think you'd want to if interest rates were low enough. But that exists in different ways, just like when companies issue debt, a lot of times they'll issue callable debt. So same idea. If interest rates...”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and you see this in different ways, Barry. So, I mean, not dissimilar, right? So, as an example, again, going back to the homeowner part, if you have a mortgage, you can decide to prepay that. A lot of people don't, interestingly, there are stories that exist, and I'm sure you've heard them, where people still have 10% mortgages somewhere.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and so you just nailed almost all of it. So, depending on what it is, so when you're dealing with something like a mortgage servicing, right, that lender, you know, sells the loan off and then somebody retains that annuity that can get prepaid. So you go pay off your mortgage, I go pay off my mortgage, that annuity disappears. There's optionality there. You have to hedge that, right? So you have interest rate risk, volatility risk Things move up and down, the more likely you are to decide if rates fall to prepay. So it's all of that good stuff. And then, yes, you can have credit risk and other types of assets as well.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think that group, the idea was to work with institutional clients to really help them manage risk, right? And so it was about using derivatives in particular in a sensible way to come up with hedging strategy. So my particular focus was on the mortgage servicing community. They had a very, very complex asset. They still do. It's a little bit different now all these years later, but they had a tremendous amount of interest rate risk in those servicing right assets, right? So my job was to work with them to come up with thoughtful ways to hedge that risk. And there are, you know, some very, very vanilla ways to do it. But we wanted to really try to be more thoughtful and much more tailored. And that was what I spent a lot of time doing. I really enjoyed it.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“So I did this exercise on Bloomberg, depending on how you filter well north of a million. Well north. And you might even get multiples of that depending on how you filter. But yeah, fixed income, as you know, once you issue that, a company's going to issue debt perpetually. They're going to keep issuing new QSIPs over time. So it adds up.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“I think a couple of things. One, I really did enjoy sort of the variety of things in fixed income. You know, I mean, you know, equities can be complex in their own right, but fixed income, you can have so many different types of instruments and cash flows and structures. And it was just really interesting to me to see that variety.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. So I had a good friend who said, hey, I'm taking finance. I really like it. Maybe give it a shot. I took a finance class. Really liked it a lot. It's sort of like math with dollar signs attached to it. So that's sort of the way I view it. I really enjoyed it. And that was kind of it. I was hooked.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source
“Not quite. So I went to Miami University in Ohio actually. I grew up in a small town in Ohio. Yeah, so I went there for ultimately ended up in the business school. I did start off thinking, you know, as many people might that, oh, what should I do? Should I be a doctor or a lawyer? I decided to try doctor. I love biology. Organic chemistry not so much.”
2025-06-20 · Masters in Business · BlackRock's Global Co-Head of iShares Fixed Income ETFs Stephen Laipply · IDENTIFIED FROM THE TRANSCRIPT · source