Fed Served With DOJ Subpoenas, Performance of ‘OTFL’ ETF | ETF IQ 1/12/2026

What is discussed, and when

1. 0:00 – 5:00: Rob Arnott
2. 10:00 – 15:00: Rob Arnott, Scarlet Fu
3. 15:00 – 20:00: Latin America, Scarlet Fu
4. 20:00 – 22:52: Latin America, Mauricio Alvarez

Notable quotes from "Fed Served With DOJ Subpoenas, Performance of ‘OTFL’ ETF | ETF IQ 1/12/2026"

• WE’LL DISCUSS THE IMPLICATIONS IN MOMENTS WITH ROB ARNOTT OF RESEARCH AFFILIATES. VAN GUARD, THE POSTER CHILD OF LOW COST A.T.F.’S HAS BEEN CHARGING HIGHER FEES RITALY.

  about Rob Arnott · at 0:37

• ASSET MANAGEMENT ON THE FIRM’S LATIN AMERICA E.T.F. NEXT.

  about Latin America · at 15:38

• SCARLET: MAURICIO, THANK YOU SORE YOUR TIME. MAURICIO ALVAREZ. ♪.

  about Mauricio Alvarez · at 22:40

Who and what is mentioned in this episode?

People

• Rob Arnott — Person · 3 mentions · first at 0:37
• Scarlet Fu — Person · 2 mentions · first at 11:41
  THIS IS BLOOMBERG ETF IQ. I’M SCARLET FU.
• Mauricio Alvarez — Person · 1 mention · first at 22:44

Concepts & topics

• Latin America — Concept · 9 mentions · first at 15:38
• ETFs — Concept · 6 mentions
• Russell 2000 — Concept · 4 mentions

Full transcript with timestamps

0:14 SCARLET: WELL COME TO BLOOMBERG "ETF IQ." LET’S GET TO THE BIGGEST STORIES RIGHT NOW IN THE NEARLY $20 TRILLION GLOBAL E.T.F. INDUSTRY. IS IT BACK TO SELL AMERICA? STOCKS POSTED EARLY LOSSES WHILE TREASURIES AND THE DOLLAR FELL AFTER THE TRUMP ADMINISTRATION ESCALATES ITS ATTACK ON THE FEDERAL RESERVE. RENEWING CONCERN ABOUT CENTRAL BANK INDEPENDENCE. WE’LL DISCUSS THE IMPLICATIONS IN MOMENTS WITH ROB ARNOTT OF RESEARCH AFFILIATES. VAN GUARD, THE POSTER CHILD OF LOW COST A.T.F.’S HAS BEEN CHARGING HIGHER FEES RITALY.

0:45 IS -- RECENTLY. IS THIS THE END OF THE FEE WAR? BLOOMBERG INTELLIGENCE IS WITH US AND HE’S GOT A CHECK ON THE LATEST FLOWS. ERIC?

0:53 THANK YOU. SO LOOK, IT’S A NEW YEAR. WE HAVE OUR FIRST WEEK IN THE BOOKS. NEW YEAR, SAME FLOWS. SAME LEADERBOARD. YOU’RE GOING TO SEE VU AT THE TOP HERE. $9 BILLION. IT BASICALLY -- I GUESS THE GREAT ONES, THEY DON’T TAKE ANY REST, RIGHT? THEY JUST KEEP GOING. VOO OBVIOUSLY BROKE THE RECORD FOR FLOWS LAST YEAR. ON PACE TO DO IT AGAIN. I.V.V., THAT’S ALSO S&P. NOW, EMERGING MARKETS, THIS IS INTERESTING. THIS IS A BIG CHUNK FOR EMERGING MARKETS. WE’RE GOING TO DISCUSS EMERGING MARKETS LATER IN THE SHOW. I THINK THERE’S A LOT GOING ON THERE. THIS IS INTERNATIONAL DEVELOPED, MORE INTERNATIONAL.

1:26 INTERNATIONAL THREE HERE. THAT’S INTERESTING. LET’S SEE IF THAT PANS OUT. V.T.I., THAT’S U.S., AND THEN THERE’S THRER TREASURIES. OUTFLOWS, YOU’LL SEE SPY. SPY TRADITIONALLY HAS HORRIBLE JANUARIES BECAUSE PEOPLE -- A LOT OF PEOPLE WILL USE IT TO DO TAX HARVESTING IN DECEMBER SO THEY PILE INTO IT AND THEY COME OUT IN JANUARY JUST AS SOON AS THEY WENT IN. YOU ALWAYS SEE A BIG HIT. $7 BILLION IS EXPECTED. BUT INTERESTING, THE E.T.F. FLOWS HAVE TOTALLY OVERWHELMED IT. OOXL, THERE’S GROWTH. SMALL CAPS, WE’LL SEE. ONE OF THESE YEARS THE SUN WILL SHINE ON SMALL CAPS BUT WHO KNOWS WHEN. ANYWAY.

2:07 THERE’S SOME VALUE, L.Q.D., BONDS, NOTHING TOO MUCH TO WRITE HOME ABOUT. I THINK THE BIG THING HERE IS THE FLOWS SO FAR THIS YEAR HAVE BEEN $45 BILLION. THAT IS A LOT FOR THE FIRST SIX DAYS OF JANUARY WHICH IS TYPICALLY A VERY DULL MONTH FOR E.T.F.’S. A LOW MONTH. HERE’S A HISTORY OF ALL THE JANUARIES FOR E.T.F. FLOWS HERE. LAST YEAR IS PRETTY GOOD, $88 BILLION. THIS IS THE START OF E.T.F. MAIN YEAH ARIA HERE. THIS YEAR WE’RE ON PACE FOR $158 BILLION. COMPLETELY OVERWHELMING THOSE SPY OUTFLOWS. THIS IS IT’S SPY DOES ITS THING BUT THERE ARE SO MANY MORE E.T.F.’S AND SO MUCH MORE ACTIVITY.

2:51 IT’S TOTALLY MAKING UP AND WE’RE IN A NEW NORMAL. SCARLET: THANK YOU SO MUCH. ERIC JOINING OUR CONVERSATION NOW. PLEASED TO JOIN US IS ROB ARNOTT. YOU HEARD WHAT ERIC HAD TOLD US THIS. CONTINUED INFLOW INTO U.S. STOCKS. EVEN IN JANUARY WHERE YOU TYPICALLY DON’T SEE THESE KINDS OF LEVELS. AT A TIME WHEN YOU’VE GOT OVERWHELMING CONSENSUS FOR A FOURTH STRAIGHT YEAR OF DOUBLE-DIGIT GAINS, DOES THAT CONCERN YOU? THIS IS A PRETTY AGING BULL MARKET AT THIS POINT.

3:18 IT’S AN AGING BULL MARKET. I WOULDN’T CHASE IT. I THINK THE NON-U.S. MARKETS ARE QUITE CHEAP RELATIVE TO THE U.S. MARKET. FOR GOOD REASONS. AMERICAN EXCEPTIONALISM IS VERY REAL. BUT CHEAP STOCKS AND SMALL CAP ALSO REPRESENT INTERESTING OPPORTUNITIES. ONE FUN FACTOID. IF YOU LOOK AT RUSSELL 2,000 VERSUS RUSSELL 1,000. THE 2,000 LOOKING AT PRICE EARNINGS, PRICE TO CASH FLOW, PRICE TO BOOK, PRICE TO SALES, IS TRADING AT A LITTLE LESS THAN HALF THE MULTIPLES OF THE RUSSELL 1,000. THE NARRATIVE IS THESE COMPANIES ARE A WASTE OF TIME. WHY BOTHER WITH THEM? OK.

4:02 WELL, IF THAT’S TRUE, THEN YOU SHOULD HAVE SEEN FASTER GROWTH FOR THESE THOUSAND AND FOR INTO -- 1,000 AND FOR THESE 2,000. THE GROWTH HAS BEEN FASTER FOR THE 2,000 THAN THE 1,000 IN EARNINGS AND SALES. IF THE GROWTH IS FASTER AND YOU GET IT AT OVER HALF OFF, THAT’S A PRETTY GOOD DEAL. MONEY POURING INTO THE LARGE CAP E.T.F.’S WILL CONTINUE TO DRIVE A WEDGE BETWEEN THOSE VALUATION MULTIPLES BUT IF THE GROWTH IS FASTER, THEN THESE WILL WIN IN THE LONG RUN. ERIC: IS THERE A SENSE OF AN ISSUE HERE? I THINK FOR MOST PEOPLE, THIS IS SOMETHING I’VE COME TO WHERE SMALL CAPS USED TO BE LIKE A FARM LEAGUE FOR THE RISING STARS OF TOMORROW. BUT A LOT OF THEM WAIT UNTIL THEY’RE LARGE TO I.P.O. AND THE MAG-7 SEEMS TO ACQUIRE ANY COMPANY WORTH ANYTHING. SO LIKE THEY GET PLUCKED OUT TOO EASILY. ALMOST LIKE WHEN LEBANON WENT RIGHT TO THE NBA, HE SKIPPED COLLEGE.

4:54 SKIP SMALL CAPS NOW SO IT’S MORE OF A DUMPING GROUND. MAYBE THE DATA DOESN’T BEAR THAT OUT BUT IS THAT MAYBE THE REASON THERE’S LIKE A PSYCHOLOGICAL REASON PEOPLE WON’T BUY SMALL CAPS?

5:04 THAT NARRATIVE IS THE REASON. AND THE QUESTION IS, IS THAT NARRATIVE GOING TO PROVE OUT TO BE TRUE? WE DON’T KNOW. SCARLET: DO YOU THINK SMALL CAPS ARE WORTHY OF THE BUY AMERICA TRADE OR IS THAT UNDER THREAT NOW, ALL OF U.S. ASSETS UNDER THREAT WITH THE PRESIDENT’S, YOU KNOW, CONTINUED ATTACKS ON FED INDEPENDENCE?

5:23 WELL, FED INDEPENDENCE I’VE ALWAYS THOUGHT WAS SWLA OF A MYTH -- SOMEWHAT OF A MYTH. THE GOVERNORS ARE APPOINTED BY THE PRESIDENT. ON A ROLLING BASIS. SO YOU GET THIS SLOW TAKEOVER OF THE FED WITH YOUR CHOSEN PEOPLE. AND SO THE FED INDEPENDENCE IS -- DISAPPEARS REASONABLY QUICKLY DURING ANY PRESIDENTIAL TERM. AND THE RESULT IS FED’S ALWAYS BEEN POLITICAL. THE NOTION OF FED INDEPENDENCE I THINK HAS ALWAYS BEEN AN OVERRATED, ALMOST A MYTH. SCARLET: BUT IN THIS ADMINISTRATION IT’S A LITTLE BIT DIFFERENT THAN WHAT WE’VE SEEN IN THE PAST.

6:02 TRUMP HAS A WAY OF CHALLENGING NORMS AND BREAKING RULES. IT’S KIND OF THE META ANALOGY OF MOVE FAST AND BREAK THINGS. ERIC: SO YOU HAVE A NEW PAPER OUT, YOU TALK ABOUT THIS CONVENTIONAL WISDOM OF MARKET CAP VOID OF E.T.F.’S. THIS IS AN AGE-OLD DEBATE BUT WITH VOO CONTINUING TO TAKE IN MONEY, THE TOP TWO ARE MARKET CAP WEIGHTED, I ALWAYS THOUGHT MARKET CAP WEIGHTING WAS THE BEST IDEAS OF ACTIVE. IF ACTIVE LIKES A STOCK, THEY BID IT UP, IT GETS A HIGHER WEIGHTING AND THE INDICES GIVE IT A HIGHER WEIGHING AND IF IT DOESN’T LIKE A STOCK, IT GETS A LOWER WEIGHTING ISN’T MARKET CAP WEIGHTING THE BEST OF ACTIVE, WHY WOULD I WANT TO NOT HOLD THAT?

6:43 WHEN WE LAUNCHED RAFI 20 YEARS AGO, WE KNEW WE WERE ON TO SOMETHING IMPORTANT. WE DIDN’T REALIZE AT THE TIME HOW IMPORTANT. THE INNOVATIONS OF RAFI, THAT’S THE FUNDAMENTAL INDEX, CHOOSE STOCKS BASED ON HOW BIG THE BUSINESS IS, WEIGHT THEM ON HOW BIG THE BUSINESS. IS WHAT DOES THAT DO? YOU TAKE COMPANIES THAT ARE TRADING AT PREMIUM MULTIPLES, YOU REWEIGHT THEM DOWN. TAKE COMPANIES THAT ARE TRADING AT DEEP DISCOUNTS, REWEIGHT THEM UP. SO YOU HAVE A VALUE TILT. BUT THE SELECTION ISSUE IS VERY INTERESTING. CONVENTIONAL KEA CAP WEIGHTED INDICES WEIGHT UNTIL A STOCK’S MARKET CAP HAS SOARED BEFORE THEY’RE ADDED.

7:20 THAT LEADS TO A LOT OF FLIP-FLOPS. COMPANIES COME IN, THEN DON’T MEASURE UP TO EXPECTATIONS AND ARE KICKED BACK OUT. OVER HALF OF ALL OF THE STOCKS KICKED OUT OF S&P OR RUSSELL ARE KICKED OUT AFTER FALLING BY MORE THAN 2/3 RELATIVE TO THE MARKET. THEY WERE FIRST ADDED AFTER RISING BY 75% RELATIVE TO THE MARKET. AND YOU MISSED THAT. YOU DIDN’T GET THAT. AND YOU DID PARTICIPATE IN LOSING 2/3. SO IF YOU CAN MITIGATE THE DAMAGE DONE -- FLIP-FLOPS HAVEN’T BEEN STUDIED. THEY’VE BEEN LARGELY DISREGARDED. BUT EVEN THOUGH IT’S ONLY 5% OF THE PORTFOLIO THAT TURNS OVER IN ANY GIVEN YEAR, THAT 5% HAS AN OUTSIZED INFLUENCE. THE INDICES LOOK NEUTRAL, LOOK LIKE THE MARKET. THE TRADING DOESN’T LOOK NEUTRAL. THE TRADING IS CHASE FROTHY GROWTH, DUMP DEEP VALUE AND IT TURNS OUT THAT OUR PAPER’S CALLED TRIFECTA. BECAUSE IF YOU CAN HAVE A BETTER GROWTH STRATEGY, A BETTER VALUE STRATEGY AND A BETTER CORE STRATEGY, YOU HAVE ACHIEVED A TRIFECTA.

8:33 NOW, WHEN IT COMES TO CORE, ALL WE DO -- WE CAP WEIGHT. ALL WE DO IS WE ADD STOCKS WHEN THE BUSINESS HAS RATIFIED OR VALIDATED AN EARLIER SURGE IN PRICE. DON’T NECESSARILY PAY MORE FOR IT. YOU DO COME IN LATER. SO WE’D BE A LITTLE LATE TO THE TABLE FOR THE NEXT NVIDIA BUT WE’LL MISS THE NEXT OTHER. ERIC: SO RAUS IS YOUR TICKER. YOU’VE BEEN IN THE INDUSTRY FOREVER. I HAVE TO GET YOUR TAKE ON SOMETHING I SAW A COUPLE OF DAYS AGO. SOMEBODY TAGGED ME, I WENT BACK AND WATCHED AN EPISODE OF "JEOPARDY!," RIGHT, THERE WAS A QUESTION FOR ALL THREE CONTESTANTS ABOUT WHAT IS AN E.T.F. AND I WAS WATCHING THE FIVE MINUTES BEFORE, THEY GOT EVERYTHING RIGHT INCLUDING NEUTRAL FUND BY THE WAY. NOBODY KNEW WHAT AN E.T.F.

9:16 STOOD FOR. AND ALL THESE FLOWS ARE COMING IN. SO LET’S PLAY THE CLIP AND I WANT TO GET YOUR TAKE ON LIKE WHAT INNING WE’RE IN HERE. BECAUSE -- SCARLET: IT’S SOBERING. ERIC: YEAH.

9:26 E.T.F. STANDS FOR THIS KIND OF TRADED FUND FOR THE TYPE OF MARKETPLACE IN WHICH THEY CAN BE BOUGHT AND SOLD.

9:35 WHAT IS ELECTRONIC? NO. HARVEY OR JASON? IT’S AN EXCHANGE TRADED FUND. ERIC: THERE WAS ANOTHER QUESTION ON LIKE WHAT WAS RADIOHEAD’S ALBUM IN YEAR 2000, THEY KNEW THAT. THEY KNEW ALL KINDS OF 18TH CENTURY RANDOM POETRY AND COULDN’T GET THIS. WHAT DO YOU MAKE OF THAT AND ARE WE STILL EARLY?

9:57 UM, I WOULDN’T SAY WE’RE EARLY. I MEAN, THIS IS A BIG BUSINESS. I WOULD SAY THAT E.T.F.’S ARE THE WAVE OF THE INVESTING FUTURE. ESPECIALLY IN THE U.S. WHERE THEY HAVE THAT SPECIAL TAX TREATMENT. THEY ARE TAX ADVANTAGED. THEY ARE POWERFUL INNOVATION. AND THIS IS AN INDUSTRY THAT LOVES TO INNOVATE. THE INDEXING WORLD MAY HAVE -- MAY SOMETIMES SEEM RATHER BORING. AND REVOLUTIONS ARE GOING TO BE SLOW, TAKE THEIR TIME. BUT THERE’S STILL REVOLUTIONS. S&P LAUNCHED THE FIRST BROAD MARKET INDEX IN 1957 AND THEY’VE BEEN ENHANCING IT EVER SINCE. MSCI LAUNCHED THE FIRST INTERNATIONAL INDICES IN 1970, THEY’VE BEEN ENHANCING IT EVER SINCE. IT’S A VERY COOL INDUSTRY.

10:46 SCARLET: I’M SURPRISED THAT TWO OF THEM DIDN’T EVEN ATTEMPT TO GUESS. THAT’S WHAT GOT ME. AFTER ELECTRONIC AND THEN IT WAS JUST BLANK. ERIC: I KNOW. THE ANSWER WAS IN THE QUESTION OR VICE VERSA. BUT YEAH. LIKE I SAID, THAT HAPPENS AT THANKSGIVING DINNER. ONLY LIKE TWO OF MY RELATIVES WILL EVEN KNOW --

11:01 IF YOU’D TOLD ME THAT TAPE WAS FROM 2005 INSTEAD OF TWIESK, I WOULD HAVE BELIEVED YOU. IN 2025 IT’S ASTONISHING. ERIC: IT IS, RIGHT? SCARLET: THE E.T.F. INDUSTRY HAS MORE WORK TO DO WHEN IT COMES TO EDUCATING THE PUBLIC. ROB, THANK YOU SO MUCH. ROB ARNOTT OF RESEARCH AFFILIATES. COMING UP ON "ETF IQ," EXCHANGE TRADED FUND I CAN, THE FEE WAR -- FUND I.Q., THE FEE WAR. THIS IS "ETF IQ."

11:41 WELCOMEBACK EIQ" I’M SCARLET FU. WE HIGHLIGHT THE STORIES AND TRENDS THAT CAUGHT MY HIGH. THE S.E.C. NEEDS TO MAKE A DECISION ON A VENEZUELA EXPOSURE E.T.F. THEY FILED THE APPLICATION LAST WEEK AFTER THE U.S. OUSTER OF VENEZUELA’S LEADER LEFT INVESTORS EAGER TO CAPITALIZE ON NEW INVESTMENT OPPORTUNITIES IN THAT COUNTRY. IT WOULD TRACK AN INDEX OF VENEZUELA-BASED COMPANIES AND FIRMS THAT GET THE MAJORITY OF THEIR REVENUE FROM THAT COUNTRY. TURNS OUT E.T.F. ADOPTION IN CANADA NOW RIVALS THE U.S. CANADIAN E.T.F.’S PULLED IN ABOUT $110 BILLION IN 2025. THE FUNDS ACCOUNT FOR ABOUT 27% OF ALL CANADIAN FUNDED ASSETS, A LEVEL THAT IS ON PAR WITH THE U.S. AND A CLEAR SIGN THAT THE WRAPPER IS FULLY MAINSTREAM.

12:29 E.T.F.’S HAVE GROUND TO MAKE UP IN EUROPE AND ASIA. 10% IN EUROPE AND ASIA WITH ADOPTION CLOSER TO 20%. AND YOU REMEMBER THE E.T.F. FEE WAR WHERE ISSUERS, USUALLY LED BY VAN GUARD, UNDERCUT EACH OTHER BY LOWERING THE EXPENSE RATIO IN ORDER TO WIN MARKET SHARE? THAT ERA MAY BE OVER WITH THE AVERAGE E.T.F. FEE STEADILY RISING OVER THE PAST FIVE YEARS. IN FACT, THE BOTTOM WAS NINE YEARS AGO IN 2017. SO LET’S TALK ABOUT THIS WITH BLOOMBERG INTELLIGENCE WHO HAS BEEN WRITING ABOUT IT. I WANT TO BRING UP VAN GUARD BECAUSE IT’S USUAL THE CATALYST FOR FUND ISSUERS CUTTING FEES BUT YOU POINT OUT THAT VAN GUARD IS QUIETLY RAISING FEES ON ITS NEW FUNDS.

13:11 THEY ARE. TO BE FAIR, THEY’RE ALSO GOING INTO OTHER AREAS BESIDES JUST CORE BETA SO THAT IS COMMANDING A HIGHER FEE. BUT I THINK SYMBOLICALLY THAT’S REALLY IMPORTANT. THAT THEY’VE BEEN SO UNDER THIS COST PRESSURE FOR SO MUCH, THEY DRAGGED DOWN ALL THE INDUSTRY. NOW THEY’RE SAYING, OK, WE CAN START TO ROLL OUT PRODUCTS, MAYBE CHARGE A LITTLE BIT MORE, YOU KNOW, THE PENDULUM’S JUST SWINGING COMPLETELY THE OTHER WAY BUT COSTS STILL MATTER. MOST OF THE FLOWS ARE STILL GOING TO BE CHEAP STUFF BUT ON THE MARGIN IT’S STARTING TO CHANGE A LITTLE BIT. ERIC: MY READ ON THAT CHART OF THE AVERAGE FEE GOING UP IS THAT THERE’S JUST NO SENSE IN LAUNCHING A, LIKE, CHEAP U.S.

13:45 EQUITY E.T.F. TO COMPETE WITH VAN GUARD OR BLACKROCK SO PEOPLE JUST FORGET THAT. SO THEY LAUNCH WILD AND CRAZY. THEY’RE TRYING TO FEE THE GENS WHICH ARE LESS FEE SENSITIVE SO THE COSTS THAT COME OUT ARE MAJORITY HIGHER COST AND THAT’S MAKING THE NUMBER GO UP. IS THE ASSET WEIGHTED FEE ALSO GOING UP?

14:07 NO, THAT’S STILL GOING DOWN. WHICH IS GOOD. BUT ON THE MARGIN IT’S STARTING TO FLAT LINE A LITTLE BIT. RIGHT? IN THAT, YOU KNOW, EVERYONE’S -- ONLY ABOUT HALF THE FLOWS WENT INTO PRODUCTS THAT ARE 10 BASIS POINTS OR LESS. THAT’S STILL A LOT. THAT’S HALF THE MONEY. BUT IT USED TO BE 65, 70% OF THE MONEY. BUT I THINK TO YOUR POINT, IT’S -- YOU’RE JUST LEARNING TO LIVE ALONGSIDE VAN GUARD. I DON’T WANT -- I CAN’T BEAT THEM SO I NEED TO JUST -- BUT THE GOOD NEWS IS YOU DON’T NEED THAT MUCH AS ETS AT A 75 BASIS POINT FEE TO BE A PROFITABLE FIRM. I THINK THERE’S A LOT OF INTERESTING PROFITABILITY POTENTIAL FOR SOME OF THESE NEW ISSUERS. SCARLET: YOU LOOK AT VOO AND THE THE EXPENSE RATIO IS THREE BASIS POINTS.

14:47 WHAT’S THE LINE BETWEEN WHAT’S CHEAP AND EXPENSIVE? THAT’S A GOOD QUESTION. I FEEL LIKE 25 IS A NUMBER THAT STICKS IN MY HEAD BUT NOW WE’RE AT LIKE 65 BASIS POINTS FOR LIKE AN AVERAGE FEE. ERIC: I WOULD SAY 25 FOR ACTIVE. FOR BETA, IF YOU JUST WANT -- FIVE. I THINK IT DEPENDS ON T THE CATEGORY.

15:10 SINGLE STOCK E.T.F.’S ARE ALMOST 100 BASIS POINTS. IT DEPENDS WHAT YOU’RE OFFERING BUT BETA, YOU CAN’T -- BETA SHOULD BE FREE REALLY. THREE’S PRETTY GOOD LEVEL FOR IT. ERIC: BETA IS A HUMAN RIGHT. SCARLET: ALL RIGHT. THAT SHUBT TITLE OF YOUR NEXT DECK.

15:30 IT SHOULD BE. SCARLET: THANKS. BLOOMBERG INTELLIGENCE. BETA SHOULD BE A HUMAN RIGHT. STUL AHEAD, WE SPEAK TO O.T.P. ASSET MANAGEMENT ON THE FIRM’S LATIN AMERICA E.T.F. NEXT. IT’S BEEN MAKING SOME INTERESTING MOVES. THIS IS "ETF IQ" ON BLOOMBERG.

15:57 THIS IS BLOOMBERG "ETF IQ." I’M SCARLET FU. ERIC IS BACK WITH US. WHAT DO YOU HAVE? ERIC: TODAY WE HAVE A LESSER KNOWN E.T.F. I DISCOVERED THIS ONE BECAUSE I WAS SEARCHING FOR A LATIN AMERICAN E.T.F. THAT WAS DIFFERENT THAN I.L.F. HAD AND HAD MORE WEIGHTING TO CAPITOL HILLE. I FOUND -- CHILE. I FOUND THIS AND PUT IT TO WATCH FOR 2026 WHICH IS OUR GROUP’S REPORT. THIS IS ONE OF MY PICKS. IT’S A LATIN AMERICA E.T.F. IT’S ACTIVELY MANAGED SO THIS IS SWUB ON THE GROUND THERE PICKING STOCKS IN LATIN AMERICA. 23 MILLION SO NOT THAT BIG. AND IT’S ABOUT, YOU KNOW, FIVE YEARS OLD. 95 BIPS, A LITTLE PRIZEY BUT IF YOU HIT IT BIG HERE, YOU CAN -- THE RETURNS CAN BE PRETTY BIG.

16:41 SO LET’S LOOK AT THE CROSS-SECTION OF THE HOLDINGS. I’LL SHOW YOU THE COUNTRY BREAKDOWN. BRAZIL IS BIG. OBVIOUSLY. BRAZIL HAS AN ELECTION COMING UP. THERE’S THIS WHOLE WAVE POLITICALLY SWEEPING OVER LATIN AMERICA. MORE PRO-BUSINESS LEADERS AND THAT USUALLY IS GOOD FOR STOCKS. YOU GOT MEXICO, CHILE, THAT’S WHY I SAY 11%, THAT’S HIGH COMPARED TO OTHER E.T.F.’S. THAT’S WHY I PICKED THIS ONE. LET’S LOOK AT THE PERFORMANCE OF THIS VERSUS I.L.F. WHICH IS THE ISHARE’S LATIN AMERICA, THE BIGGER ONE. AND EVERYBODY KNOWS E.M.

17:08 LOOK AT HOW GOOD THESE GUYS ARE DOING THE PAST COUPLE OF YEARS VERSUS THE REST OF THEIR EMERGING MARKET PEERS. 50-50, RIGHT? NOW, OTGL WILL HAVE TO BE BETTER THAN I.M.F. TO GET BETTER ASSETS BUT THEY’RE BOTH LOOKING VERY GOOD VERSUS E.E.M. IT WILL BE INTERESTING TO SEE IF LATIN AMERICA EMERGES OUT OF THE E.E.M. THING AND GETS FLOWS ON ITS OWN. SCARLET: GOOD STUFF. JOINING NEWS TO TO TALK ABOUT THIS FUND IS MAURICIO A ALVAREZ. WHAT IS THE CASE FOR INVESTING IN LATIN AMERICA IN 2026 WHEN IT’S ALREADY SEEN THE BULK OF THESE GAINS IN THE LAST FEW YEARS?

17:45 SURE. THANK YOU FOR HAVING ME. IT’S A REAL PLEASURE TO BE ON YOUR SHOW. I BELIEVE LAST YEAR WAS A GREAT YEAR FOR THE REGION. AS YOU CAN SEE AS ERIC MENTIONED. BUT STILL I THINK THERE’S MORE POTENTIAL. VALUATIONS ARE STILL CHEAP IN THE REGION. IF YOU COMPARE TO OTHER REGIONS, THE LATIN AMERICA ARE AROUND 10 OR 11 TIMES EARNINGS. WHEREAS THE U.S. IS AROUND 24, CHINA IS 23. ONE OF THE KEY FACTORS WILL BE VALUATIONS. OR STILL VERY COMPELLING TO INVEST IN THE REGION. AND ANOTHER ASPECT THAT LATIN AMERICA IS GOING TOWARDS IS THE POLITICAL CYCLE.

18:27 THERE WERE SOME COUNTRIES WHO WERE TURNING FROM LEFT TO THE RIGHT WING OR MORE CONSERVATIVE WING LIKE CHILE, ARGENTINA, ECUADOR, EVEN BOLIVIA AS WELL. AND THAT’S ANOTHER ASPECT THAT CAN BE VERY IMPORTANT FOR THE FUTURE IN INVESTMENTS. BECAUSE THERE’S GOING TO BE MORE PRO-MARKET POLICIES, MORE CONSERVATIVE POLICIES, AND THAT’S ALWAYS GOOD FOR MARKETS. ERIC: LET ME ASK YOU THIS. I GET THE POLITICAL ANGLE. YOU’RE LOOKING FOR THESE SORT OF MORE CONSERVATIVE PRO-BUSINESS CANDIDATES, THE MARKETS HAVE A LONG HISTORY OF GOING UP WHETHER THEY GET ELECTED.

19:06 ARE THERE OTHER THINGS YOU LOOK FOR AS AN ACTIVE MANAGER WITHIN THOSE COUNTRIES IN TERMS OF VALUATIONS, OR ANY SORT OF INNOVATION IN COMPANIES THERE?

19:15 SURE. THERE’S A LOT OF MISPRICED EQUITIES IN THE REGION. IT’S ALWAYS BEEN LIKE THAT. THE ASSEMTRY OF INFORMATION IS HUGE IN LATIN AMERICA. ONE OF THE THINGS WE DO ON THE E.T.F. IS TO FOCUS ON LOCAL COMPANIES BECAUSE MOST OF THE INVESTORS THINK THAT WHEN YOU INVEST IN LATIN AMERICA, IT’S JUST BRAZIL AND MEXICO. SO ON OUR E.T.F., WE THINK THAT THERE’S MORE TO OFFER. SO WE INVEST IN THE INDIAN REGION, LIKE COUNTRIES LIKE CHILE, PERU, COLOMBIA, WHERE YOU ALSO CAN FIND GREAT OPPORTUNITIES. IT’S NOT THE TYPICAL 80 HOURS. SO THE FACT THAT WE ARE ON THE GROUND, THAT’S WITH O.T.G. STANDS FOR, ALLOWS US TO TRAVEL TO DIFFERENT COUNTRIES, WE VISIT THE COMPANIES WHERE WE INVEST IN. SO I THINK THAT’S THE OUTPUT THAT WE GENERATE. INVESTING IN THESE COMPANIES ARE NOT IN THE RADAR OF EVERYONE ELSE.

20:15 SO BEING ON THE GROUND, BEING ON THE REGION, THE WHOLE MANAGEMENT TEAM IS FROM SOUTH AMERICA. I THINK THAT GIVES US AN EDGE COMPARING TO OTHER MANAGERS WHO MANAGE LATIN AMERICA. SCARLET: O.T.G. OR ON THE GROUND. LOVE THAT. IT MAKES IT VERY CLEAR. SO TELL US WHAT YOU SEE FROM WHERE YOU SIT IN BOLIVIA ABOUT WHAT’S HAPPENING IN VENEZUELA. WE’VE TOLD YOU ABOUT HOW TRADE SOMETHING FILING AN APPLICATION FOR A VENEZUELA EXPOSURE E.T.F. IS THERE A WAY TO INVEST IN VENEZUELAN-BASED COMPANIES OR COMPANIES WITH EXPOSURE TO REVENUE GENERATED IN VENEZUELA RIGHT NOW?

20:49 RIGHT NOW I WILL SAY ONE OF THE COMPANIES THAT HAS EXPOSURE IS -- [INDISCERNIBLE] -- I THINK WE HAVE TO SEE WHAT’S GOING ON IN VENEZUELA GOING FORWARD. THERE WAS A BIG STEP WITH WHAP HAD -- WITH WHAT HAPPENED. I GUESS IT’S GOING TO BE ONE OF THE MARKETS HAS TO HAVE A LOT OF FUTURE. BUT THEY HAVE TO PUT THE HOUSE IN ORDER. WE DON’T KNOW HOW LONG IT’S GOING TO TAKE. THIS IS NEW FOR EVERYBODY. SO I THINK IT’S A GREAT OPPORTUNITY BUT WE HAVE TO SEE HOW THESE THINGS WILL CHANGE GOING FORWARD. BECAUSE IT WASN’T AN EASY MOVE, I SAID.

21:24 BUT IT WAS A VERY IMPORTANT MOVE AND IT WAS A VERY IMPORTANT SIGNAL THROUGH THE WHOLE REGION. SO I BELIEVE EVERYONE WHO WILL STAY IN POWER FOREVER WILL THINK TWICE. SO THAT’S GOOD. THAT’S ALWAYS GOOD. AND THAT’S A GOOD SIGN FOR THE ENTIRE REGION. ERIC: ABOUT 30 SECONDS LEFT, JUST REAL QUICK, I TALKED EARLIER, EVERYBODY IN THE U.S. TENDS TO JUST BUY LIKE AN EMERGING MARKETS FUND. AND THEY JUST FORGET ABOUT IT. HOW DO YOU SELL A LATIN AMERICA-SPECIFIC FUND AGAINST THAT SORT OF TYPICAL MOVE WHERE YOU JUST BUY E.M. OR E.E.M.

21:56 OR SOMETHING LIKE THAT AND YOU’RE DONE WITH YOUR EMERGING MARKETS ALLOCATION? I GUESS THE LATIN AMERICA, IT’S AN UNDISCOVERABLE OPPORTUNITY FOR ANY INVESTOR. THE REGION HAS A LOT TO OFFER. THERE’S A LOT OF OPPORTUNITIES. WE BLEAIVE THAT ALL THE MISPRICED SECURITIES ARE PART OF IT. BUT WE DO THINK THAT LATIN AMERICA HAS A LOT OF OPPORTUNITIES. THERE’S A MIDDLE CLASS THAT’S GROWING A LOT. THERE’S A LOT OF LACK OF DIGITAL, ON THE BANKING SERVICES AS WELL. SO I THINK LATIN AMERICA WILL HAVE A LOT TO OFFER GOING FORWARD FOR ALL THOSE CHANGES. IT’S A GREAT DIVERSIFICATION.

22:40 SCARLET: MAURICIO, THANK YOU SORE YOUR TIME. MAURICIO ALVAREZ. ♪

Questions about this episode

What is discussed in "Fed Served With DOJ Subpoenas, Performance of ‘OTFL’ ETF | ETF IQ 1/12/2026"?

In order: 0:00 Rob Arnott; 10:00 Rob Arnott, Scarlet Fu; 15:00 Latin America, Scarlet Fu; 20:00 Latin America, Mauricio Alvarez.

What is mentioned in this Bloomberg Television episode?

6 people, works and ideas are mentioned, including Latin America, ETFs, Russell 2000, Rob Arnott, Scarlet Fu, Mauricio Alvarez. Each one on this page links to its own page with every episode that mentions it.

How long is "Fed Served With DOJ Subpoenas, Performance of ‘OTFL’ ETF | ETF IQ 1/12/2026"?

The episode runs 23 min; the transcript is about 3,676 words in 41 timestamped sections.

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