Around the World of ETFs with Bloomberg’s Eric Balchunas

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On this episode of ETF Prime, host Nate Geraci speaks with a pair of individuals discussing several different ETF-related topics. His guests include VettaFi’sZeno Mercer, who talks about artificial intelligence, and ETFs investing in AI. Geraci also speaks with Bloomberg’s Eric Balchunas, who discusses several different ETF industry stories, including the spot bitcoin saga.

Artificial Intelligence in 2023

To open the podcast this week, Geraci brings on Zeno Mercer, a senior research analyst with VettaFi, to discuss several different topics surrounding artificial intelligence. Geraci first asks Mercer to share his journey in the financial field, and how he joined the team at VettaFi. Mercer shared that his overall interest in technology is what brought him to where he is today, and mentioned he joined VettaFi earlier this year when it acquired the ROBO Global Index Suite. Geraci then shifts the conversation to how AI has been one of the biggest stories in 2023, and believes that it drove a lot of optimism in the markets overall. He then asks for Mercer’s take on the industry’s interest in AI, and its effect on the markets this year.

“There is a lot of interest in AI, and we’re seeing every organization in the Fortune 500 looking to deploy artificial intelligence,” said Mercer.

Mercer also highlighted how governments have made AI one of their top priorities, and several different security conferences are being held around the world regarding it. He also believes we will continue to see the digital and physical worlds blend, and thinks that there need to be rules to protect users and deployers of AI. The pair then dive into ChatGPT, and how it has inspired several different copycat-styled products from a plethora of different firms.

Investing in AI

The conversation then shifts gears back to an investing-centered conversation when Geraci ponders what investors should consider if they are looking to invest in this space. He believes AI is such a broad product that it can touch several different sectors and industries that it can make it difficult for investors to find a clear path to invest in it. He then asks for Mercer’s thoughts on what investors should look at if they are interested in investing in the space. Mercer highlighted that this year, if you were all in on Nvidia, you were obviously a winner. However, he believes, in the future, that there will be several different areas of focus for investors to invest in.

“We look at it as subsectors, and we have infrastructure and applications,” Mercer said.

He then shares that when investing in the space, there are several different “camps” investors can join when looking to find their desired focus within AI. When asked about areas he sees opportunities in, Mercer highlights semiconductor companies and their manufacturers. He also mentions that, moving forward, he sees an opportunity in companies that are developing the technology to aid in business process automation.

Looking Specifically at the ETF Space

Geraci then shifts the conversation to how artificial intelligence is performing and being used in the ETF landscape overall. He highlights how there are several different AI-related ETF products on the market and that each have their unique spin on the sector. Geraci then asks for Mercer’s take on what investors should look for when considering investing in ETFs that touch on the artificial intelligence sector.

“I would say, look at your existing allocations, and see where you have allocations already,” Mercer said.

He also recommends that investors look at the weightings of the ETFs and see what areas of the sector they are touching on. Mercer says there are several different areas of the market that the products can touch on, and he mentions autonomous vehicles and robotics as possible subsectors that they can invest in. Overall, Mercer believes that looking at whether a product is investing in AI as a whole or in a specific subsector of AI is a key aspect to consider when investing in the sector.

In addition, the pair dive into what the outlook for artificial intelligence is for 2024 and beyond.

The Spot Bitcoin Saga

To close the podcast, Geraci brings on Eric Balchunas, a snior ETF analyst at Bloomberg, to discuss a plethora of topics in the ETF space. The duo immediately jump into discussing the spot bitcoin saga that has taken the ETF industry by storm in 2023. Balchunas shares that the entire time he has covered the saga has made him have a whirlwind of different emotions.

“There are times when I feel like I’m losing my mind a bit. There are so many elements, and you know sort of little trap doors that you fall through,” Balchunas said.

Balchunas highlights how the entire time he has covered the saga has been extremely wild. The pair then dive into several other breaking news stories that Balchunas has recently covered in regard to cryptocurrency filings. Balchunas specifically shares a recent story he covered in the cryptocurrency space that included a phantom filing from iShares. Geraci and Balchunas also discuss the passion that supporters of cryptocurrency have.

To close their conversation, the pair dove into several other top stories in the ETF industry, and future opportunities Balchunas sees moving forward.