And so what actually separates those companies that are creating value from AI from those that are simply investing in it? And I think the companies that are creating value are maybe some of the ones that you just alluded to, but is there some sort of commonality between those companies? Does it start with the management teams of those companies' views on how to adopt it? What are some of those common threads?

There's some great studies on this because a lot of companies are obviously looking at artificial intelligence and trying to understand how they can incorporate it into their business.

There was a great survey that showed that about forty percent of companies that are investing heavily in artificial intelligence have had basically none to actually negative impact on their business from AI adoption, meaning it might just be an expense or a distraction that's not helping their business.

Now the other sixty percent is seeing very positive gains.

So what are some of the commonalities? Well, I think the most important aspect here is a company needs to have a plan for how they're going to utilize AI and to resource that plan appropriately.

A fun and unique example here is there's a potato chip company that wanted to invest in having better potato chip manufacturing, and you'd think all potato chips kinda look the same, but in reality, there's big differences in terms of the humidity that might be present when you're on a production line, or the exact granularity of the potatoes, or the salt and the other ingredients and how they're interacting.

So what this one company did is they set up dozens of cameras along the production line.

... electricity, copper, why are these constraints becoming such an important part of the AI story?

We don't have to constantly be trying to, like, play catch-up to, to this, right? I, I would assume that last strategy is much better when you've got the resources to do it.

Yeah.

Uh, so, so we're doing that, too.

You know, we have a power ETF, POWR.

That's just looking at companies that are really trying to provide the fuels, the power generation, the power distribution that could benefit from artificial intelligence.

Uh, we have a digital infrastructure ETF, IDGT, that's looking at the real estate that is gonna benefit from more need for data centers.

So we, we do look at this at a, at a kind of a sleeve basis across the value chain, but you could always take it narrower and narrower and narrower.

How do you personally think about the market, and how much of that stuff is noise versus just like, "Whoosah," [laughs] you know, and, like, let it all happen, but he- here's kind of the, the ability to navigate this with a long-term mindset?

Is that something you see as, let's say, a bullish or positive theme to be betting on right now?

Well, it's sort of all of the above in the sense that we're seeing these constraints across so many different layers of the physical world.

Um, we could take power, for instance.

You know, in the United States for the past twenty years or so, there was very little power demand growth.

We just-- we had a growing economy, we had a growing population, but you had that offset by different factors, but sometimes just the mix of the economy moving more towards a services economy over the last twenty years meant that demand for power was relatively stagnant.

Now, if we look out through the end of the decade, we could see annualized power demand growth anywhere from three to five percent, which doesn't sound wild.

In the w- in the world of tech, where things can grow at, you know, tens of twenties or thirty percent a year, that doesn't sound huge.

Um, what are you seeing as far as demand for your Bitcoin products, given that Bitcoin has pretty much done nothing for a year?

So give us a sense of like where the industry started as far as in your career, and where you think it is right now, and where it's going.

So the reason I ended up in the ETF industry was because, uh, when I was in college, I was majoring in international studies, and I was really interested in this intersection of foreign investment.

You know, how do you invest in other countries and invest in these really quick-growing economies from the perspective of a, of a US, uh, uh, of a US-based, uh, investor? And at the time, uh, really the fastest-growing-- one of the fastest-growing product segments in ETFs were single country funds.

The ability to really isolate a country like Taiwan or Korea or Brazil, et cetera, was a really fast-growing area of this market.

And so I just found it fascinating that ETFs were providing such an efficient access vehicle for countries that I think really before the creation of ETFs probably felt really inaccessible to most investors.

Maybe the institutions had, uh, exposure, but for your everyday individual investor, for financial advisors, you know, people would buy like soft drink manufacturers because they were global companies, right? That was how you're gonna get exposure to emerging markets, was by buying like a cola, you know, distributor.

But with an ETF, you could get super prescriptive into just isolating Brazilian equities if that was the play you wanted to make.

But, like, how, how do you guys think about it, um, you know, within, you know, what's worked, what has actually started to kind of from, um, you know, a, a fever sorta standpoint, you know, maybe kinda the fever has broken in certain sort of, uh, ways to express, you know, investing themes within, uh, the AI trade? What are some other things that you guys are launching or thinking about ways that investors can kinda diversify in the AI theme?

Can you explain it?

Well, there, there's a lot of plumbing happening behind the scenes, but at the end of the day, ETFs are tremendously efficient vehicles for people to express a view on a specific asset or asset class or even as, as narrow as a specific sub-sector.

So what we often see is even in times of higher volatility in the markets, ETFs have been a great vehicle for people trying to discover price on something like fixed income or even in Bitcoin or even in individual securities, uh, because there's a lot of, um, there's a lot of liquidity around ETFs and a lot of people with a lot of different opinions.

Is that something we actually have to worry about, the create and redeem process for leveraged ETFs when everyone's running for the door hypothetically at the same time and risk management becomes under stress?

So I, I would separate the create and redeem process, which is something that is, uh, highly used across ETFs for a variety of different reasons.

When you look at the markets today, there's a lot of ways that people can deliver leverage, whether it's through a lever ETF, whether it's through margin accounts, whether it's through using derivatives directly.

And yes, in moments like we've seen in the middle of June and July, there was a lot of leverage in the markets, which contributed to some of the volatility.

I think for our core investor base, we are focused on making the highest quality products for long-term investors, not around volatility maximizing products.

Um, what is a value proposition here? Is it just it's a lower cost ETF? I mean, how do you get some of that money?

There's a couple of pieces here.

I think one is we really thought about this in terms of accessibility.

Can we bring more investors into the, into the, into the NASDAQ ecosystem? And so part of that is launching at a low share price.

Right now we're around $24 a share.

Another way is thinking about it through long-term investments and the compounding benefit of low fee.

We're 12 basis points, way down to 10 for the next year.

For the more nuanced ETFs out there, is it primarily retail interest, or is there also institutional money going into an infrastructure basket or a chip basket?

Mm-hmm.

So it's been a tremendous ride for investors, frankly, just doing kind of the most basic form of investing, which is just getting exposure to a broad asset class like US, uh, US stocks.

Um, but a lot has changed, uh, over the last 10 years.

Um, in fact, one, one of the things I think has changed the most is how we think about resilience in the markets.

So historically, if you wanted to build a diversified portfolio, you'd buy some stocks and you'd buy some bonds, and usually those two things kind of move in opposite directions, which gives you good diversification.

But we've seen over the last couple of years that stocks and bonds are moving together.

So it's really hard to get a more diversified portfolio to weather the storm of the sell-offs that we've seen here and there over the last couple of years.

I, I wonder a- as you're watching it from, you know, your perspective, what, what are some of the themes that you're seeing? The younger investors moving to ETFs? Are p- are options tra- Like what, what are some of the themes that you're seeing from, from your side?

Mm-hmm.

So it's been a tremendous ride for investors, frankly, just doing kind of the most basic form of investing, which is just getting exposure to a broad asset class like US, uh, US stocks.

Um, but a lot has changed, uh, over the last 10 years.

Um, in fact, one, one of the things I think has changed the most is how we think about resilience in the markets.

So historically, if you wanted to build a diversified portfolio, you'd buy some stocks and you'd buy some bonds, and usually those two things kind of move in opposite directions, which gives you good diversification.

But we've seen over the last couple of years that stocks and bonds are moving together, so it's really hard to get a more diversified portfolio to weather the storm of the sell-offs that we've seen here and there over the last couple of years.

On top of that, um, we've seen bouts of volatility, whether it's because of, you know, trade relationships, whether it's because of AI, whether it's because of economic doubts, so people have been trying to navigate that.

Mm

Um, and it's not a one-to-one comparison either, but I'm curious what structural protections, say, prevent AI infrastructure from suffering, um, dangers of overcapacity crashes we have seen with past build-outs.

Frankly, I think a lot of this build-out is just a lot less speculative because so much of this compute that is being built out is almost instantaneously being monetized because of AI demand.

Uh, you know, what we show in the report is that token consumption last year grew seventeen times, uh, not seventeen percent, which I think most people would view as a pretty good growth company, seventeen times growth of token consumption.

And essentially, as much money as the major large language model providers are plowing into capital expenditures, they can't keep up with AI demand.

So even just in the last several months, I think the narrative has shifted in the market from that of, are we worried companies are over-investing in CapEx to what if companies are actually under-investing in CapEx? Could we start to see bottlenecks in artificial intelligence? Or some of the most powerful models, frankly, have to be throttled because there's so much demand to use them versus the compute that's actually available across the economy.

So, um, yes, the CapEx is accelerating.

The numbers are quite staggering of what we see being invested each year.

So what parts of the tech stack can capture this exponential surge in data processing? Where, uh, you know, where are the beneficiaries and, and what can retail investors take away from that?

How come? How does that work?

That's exactly right.

So I think the benefit of these all-in-one funds is, is one, it's sort of the easy button for allocating in a globally diversified portfolio.

It can change that allocation over time with different inputs, whether you're aging and your risk tolerance is changing, or capital markets expectations are changing, or even the research behind these funds is changing.

But the third piece that you hit on, [clears throat] I think is a critical piece as well, which is the tax efficiency of rebalancing.

So in a short period of time, someone might just wanna rebalance quarterly or annually to get back to their intended weights between stocks and bonds.

That means often selling winners, buying losers, and that can incur capital gains 'cause you're selling a position that went up to fund your buying of, of the position that went down.

This question is from Kevin Dawson from Bogleheads Facebook, and he asks about what is the decision process that goes into designing a glide path, moving from stocks to bonds as you approach that retirement date.

What should they do? You have an AI innovation tech fund, right? Tell us about that.

So we have one of the largest AI ETFs in the market, BAI.

It's actively managed.

So the portfolio manager, Tony Kim, is really looking across the AI value chain for what some of the best opportunities are.

We continue to see a lot of investor interest in that.

But we did do a survey of financial advisors around the United States and asked them, what themes are you looking forward to in 2026? And the most common response was to diversify within AI.

So they still believe in the AI trade, but they want to look beyond the MAG7, looking at things like digital infrastructure, looking at things like power infrastructure, areas that are maybe tangential to AI, but not necessarily double dipping in the MAG7.

Tell me about that.

Given what you've seen in the news flow this weekend and what you expect in the coming weeks, what do you think are going to be the playbook elements for ETF investors in 2026? Well,

I think there's three things that investors are always looking for.

The first is what are the growth opportunities in the market? What are some of the big themes where people can capture major upside? I think the second, especially as we continue to see the wave of retirements amongst the baby boomers, is where can I get income, particularly in an environment where we might see rates coming down this year? And the third, if we see more volatility, how do I get better diversification in my portfolio?

So what exactly do you see as options for those investors targeting those types of themes?

Yeah, well, the three big ones.

In the growth category, it's all about artificial intelligence.

We see a lot of focus on the leaders in AI, like our BAI ETF, which is picking winners and losers within AI.

The second, in our income category, a lot of people are looking at covered call strategies, how you can get exposure to the upside while generating more income through option strategies within an ETF.

Tell me about some of the AI trade and the thoughts behind that, the strategy behind AI, because you believe the revolution is still underway or in the beginning?

We're still so early in artificial intelligence.

We're still in this build phase where you're seeing hundreds of billions of dollars being spent to build out the digital infrastructure underlying artificial intelligence.

So I think there's so many different ways to play this.

One is just getting broad market exposure to the AI value chain.

That's a ticker like ARTY, A-R-T-Y.

For someone who wants an active portfolio manager that's going to be trying to pick winners within the AI space and shift across that value chain from digital infrastructure to the large language models and data companies to the application developers, that's where a fund like BAI can come into play for that more active approach.

What's your market outlook and the ETF outlook?