Ideas on Market Volatility, a New Electric Vehicles ETFs, and Not Running Out of Money in Your Old Age
Ric: I'm very happy to welcome on to the program Anna Paglia. She is Managing Director of Global Head of ETFs and Index Strategies at Invesco. And it's so good to have you on the program.
Anna Paglia: Thank you, Ric. It's so great to be here with you today.
Ric: One of the reasons I wanted to chat with you is because we have a radically changing set of demographics here in the United States. The fastest growing age group are those over age 85. And by 2030, the end of the decade, 20% of the US population is going to be over 65. Longevity is obviously a really big deal and not just for us individually dealing with healthcare and family and such, but for our investments. So I want to ask you, Anna, what can investors do to gain the peace of mind they need that they're not going to run out of money in old age?
Anna: Well, Ric, this is a very good question, especially if you look at the markets today or where the markets have been in the last few weeks. Volatility is certainly a concern, and the ETFs are a great way to manage volatility. You can use ETFs in a way that is incredibly strategic. We have seen in the middle of the pandemic how, for example, fixed income ETFs have become more and more popular amongst investors.
Ric: There are now thousands of exchange traded funds from hundreds of ETF providers. How does any one ETF provider, any one fund company that makes ETFs, how do how do they set themselves apart from the competition?
Anna: I can tell you how we do it, which is remain focused and always know what your value proposition is, always know what you can offer to clients and how you differentiate yourself. Because the big challenge in this market is around trying to be everything to everyone or chase the shiny object. At Invesco, we think that if we remain focused and know our value in the market, that we are always going to be differentiated.
Ric: You know, I think that's a really important point that you're raising, Anna, that it's impossible for everybody to be perfect at everything. So you've got to pick and choose what your expertise is, where your focus is going to be. I think that's one of the reasons that Invesco has proven to be one of the largest and most successful ETF providers, because you don't try to be everything to everybody. You know what you do really well, and you focus on it very intently, and the results are that you're managing massive amounts of money today. The hottest topic, of course, are digital assets. The market is now multi-trillion dollars. What do you see for the future of digital assets, especially given the volatility that we've experienced over the past six months in that field?
Anna: Right. Somehow digital assets can be a very polarizing topic because I have yet to meet somebody who feels so-so about digital assets, because everybody I talk to, they either love it or they are super concerned about it. Whether you love it or hate it, you cannot ignore it because it's not (going back to the shiny objects), it's not just a shiny object. It Is an evolution of our technology that is here to stay. So we will see digital assets become very important in our clients portfolio, but we also have to pay attention and be thoughtful about it because digital assets are not...I mean, whenever you say digital assets, people think Bitcoin, right? People are saying cryptocurrencies. But that umbrella covers much more than that. You know, we are talking about decentralized finance or blockchain technology, so we believe that there is a big future for digital assets.
We have built two funds that provide exposure to crypto and blockchain technology to our investors. There are people who don't believe this is a new asset class, but I would say Ric, words for me are important, English being my second language. Look at the definition of asset class in a dictionary and you will see that digital assets fall into that.
Innovation By Tapping Into Relevant Investing Trends
Ric: Well, you know, it's fascinating that you say this because it would be easy for a big, huge established company like Invesco, which has been around for decades and decades, to pooh pooh this, to ignore it, to say that, oh, it is just a shiny new coin and doesn't deserve attention. The fact that Invesco is acknowledging that this is a very important new technological trend and cannot be ignored, really does say something about Invesco's willingness to remain cutting edge, to acknowledge that we can't rest on our past and to pay attention to where the industry is moving. So I think that that really does speak very well of Invesco and why I'm such a big fan of the organization. In fact, over the past two years, Invesco has launched a whole bunch of new ETFs, not just in digital assets, but also the Invesco Russell 1000® Dynamic Multifactor ETF (OMFL)
and most recently, a new ETF for electric vehicles, the Electric Vehicle Metals Commodity Strategy No K-1 ETF. The ticker is EVMT. How do you decide what kind of ETF to launch?
Anna: I will say two things. One is we always have a high conviction in what trends are relevant in the marketplace and what trends will continue to be relevant tomorrow, not just today. We have seen phenomenal growth in commodity products and thematic products has also been incredibly successful over the last couple of years. So if you keep building on something that is working well and your clients like, ultimately this is what innovation is all about. And we want to pioneer that innovation because it's part of our fabric.
Ric: It's really wonderful to hear you referring to the commitment that Invesco has to developing the kind of investment opportunities that investors need and are seeking. We have to acknowledge over the past two years, it's been really, really challenging. It began with COVID. Now we're dealing with the war in Ukraine. We've got massively rising inflation, rising interest rates, a bear market in stocks and bonds and crypto. It's really very ugly. And more than ever, investors are confused and a lot of them are scared. ETFs invest the money you give them, but should investors expect anything more from their ETF providers than just investing their money?
Anna: Absolutely. Clients don't come to us just because we have phenomenal ETFs on our shelf. Part of the process is servicing our clients. As a matter of fact, Ric, I remember the best conversations we had with our clients during the height of the pandemic were conversations where we never mentioned any of our products. Clients come to us because they need data. What is changing in the marketplace? So the products are just the one tool in our toolkit. But without the services and how we support the rest of the ecosystem, we would not be able to grow our business.
Ric: So I think you're raising something that's really, really important. And over the past decade, it was kind of easy to be cavalier because pretty much anything you bought was going to rise in value. And you didn't have to be terribly demanding of your advisor or of your fund company. But over the past six months, I think we're all realizing managing money is hard. Investing successfully isn't easy when you've got so many headwinds that you're facing. So I think you're raising a really important point, Anna, about the fact that you should be getting more from your advisor and more from your fund provider than just the investment management itself. So I really appreciate your raising that point.
Anna: Yeah. And Ric, you know, as I as I heard you talking, one thing that came to mind was somebody said, 'if you don't like change, you are going to like irrelevance even less'. So change as being the constant of the last couple of years and being in front of change and knowing how to help your clients, being able to anticipate what they need before they need it, that's much more valuable than just generating and producing products.
Ric: That's Anna Paglia, who is the Managing Director and Global Head of ETFs at Invesco. Anna, thank you so much for joining us on the show today. I really appreciate it.
Anna Paglia: Thank you for having me, Ric. That was great to talk to you.
Ric Edelman: If you would like to learn more about Invesco, you can do so at Invesco or talk with your financial advisor. Anna and I actually spoke for almost 20 minutes. If you'd like to watch, listen or read the entire conversation, just visit us at TheTruthAYF.com.