Presented by Syntax Advisors.
Margareta Hricova: Welcome to ETF TV – your insight into the world of exchange traded funds, issuers and investments. I am Margareta Hricova and joining me today is Julian Feder, founder, and Eitan Prins-Trachtenberg, co-founder of Alkali Fintech, and Deborah Fuhr of ETFGI.
Welcome to the show.
Julian Feder: Thank you for having us.
Eitan Prins-Trachtenberg: Thank you so much for having us.
Deborah Fuhr: Thank you.
Margareta Hricova: Julian, can you tell us the backstory that drove you to set up Alkali Fintech?
Julian Feder: Sure. So we created Alkali Fintech in order to provide investment and financial, educational content for our generation. Our first product, ZGEN, which we just launched on Nasdaq, is to try and encourage our generation to start investing at a younger age, because if you look back at older generations, they didn’t start investing until they were 30, 40, 50 years old. We really want our generation investing today. As I’m 18 and Eitan is 17, we believe that as members of Generation Z, we’re highly qualified to sort of execute on that strategy. So we’re very excited to be providing an investment for our generation.
Eitan Prins-Trachtenberg: A mutual friend of Julian and I connected us because of our interest in finance and passion for investing, and we really just hit it off from the start, it was a great relationship.
And one of the things that we talked about a lot is that there’s not really a lot of financial products that align with our generation. And so we kind of went over the different ways that we could create a product that allows Generation Z that had an interest in long term investing, and we decided that an ETF was the best way to do that, and that’s what we’ve done with ZGEN.
Deborah Fuhr: Can you talk a little bit about the index and how it’s created?
Eitan Prins-Trachtenberg: The index is the 50 companies that most align with Generation Z and all of these companies must IPO after January 1st, 1997, which is the cutoff date for the start of Generation Z itself. And you know, if you look at the portfolio, as you would expect, there’s a lot of very future-focused industries. So we have blockchain and metaverse technology, sustainable tech, e-commerce, just really future-focused industries that align with Generation Z, and that’s the point of the portfolio.
Deborah Fuhr: And can you give an example of some of the top holdings?
Julian Feder: Top holdings would be Roblox, Snapchat, Coursera. We really want to try and encompass the companies that we believe Generation Z uses, but they will also be carried by the wave of Generation Z’s growth.
We’re the largest generation with 2.5 billion members, and in less than a decade we’re going to be earning $40 trillion in annual income, making us the highest earning generation. As our generation grows, they need investments that they can relate with that are future-focused and diversified.
So if you kind of break down our scoring methodology, it’s which companies just Gen Z use most? How much utilities did they gain from the companies? Does the companies’s values align with Generation Z? Is the company innovative and is it disruptive? And we believe that by investing in the companies that are most relevant to Generation Z, that’ll be a good predictor of future growth, as Generation Z has this explosion in wealth and prominence.
Margareta Hricova: Eitan, can you tell us about the target market?
Julian Feder: We really have a couple, so one of them is, you know, the most obvious; Generation Z itself. We’ve seen an increase in investing in Generation Z in recent years, but this has been in very volatile assets like meme coins and, you know, penny stocks and risky assets. And we really want to change that from a short term mindset to a long term mindset with this ETF.
The second kind of demographic that we’re targeting is older generations who might want to plant a nest egg for their kids so that when they grow up, they can have an investment that they would be proud that their parents or grandparents made for them.
Julian Feder: We’re currently trying to build our social presence. We’re providing lots of financial education, research of the markets, so it’s relatable to our generation, and we do hope eventually to start taking input into the companies, because we believe that by getting as many voices and views from our generation as possible, it’ll create the index its most reflective of them and their values.
Julian Feder: What’s fantastic about today is that we can connect with anyone around the world and ask for their input through polls, in comments sections, through Zoom calls. We really plan to utilize the technology of global interconnectedness to get input on a broad scale from Generation Z.
Deborah Fuhr: I think it’s a great initiative, and helping with financial education is something that’s really needed because it’s not taught in schools. So I really applaud both of you for pulling this off and wish you all the success. So thank you for joining us.
Julian Feder: Thank you.
Eitan Prins-Trachtenberg: Thank you so much for having us, baby.
Margareta Hricova: Can you tell us about some of the other news in the ETF industry?
Deborah Fuhr: Last week was a very active week. We had 106 new listings and 120 new cross-listings, so year to date we’re now at 1759 new listings. And in terms of closures, it’s 1056, so net, we’re up over 700 new products this year.
Last week we saw Motley Funds convert two mutual funds into ETFs, and this has been a trend. This year we saw how Dimensional Fund Advisors converted mutual funds into ETFs, and when we look at the top 20, new products this year, globally, Dimensional Fund has a number of products in that top 20 list in terms of assets raised as ETFs.
We’ve also seen a continuing trend around ESG and thematic products coming to market from a number of issuers, and then in Europe, Leverage Shares has been bringing out leverage and inverse exposure to individual securities. They listed a number of new products and they’ve also listed products that provide leverage and inverse exposure to some of the arc ETFs.
So a lot of new innovation, a lot of new products. This has been an exciting year when we look at growth in net inflows and also in assets. We’re approaching the end of the year, so it’ll be interesting to see final numbers in terms of assets, globally, as well as around the world and also net inflows globally and around the world.
Margareta Hricova: Thank you so much for the update and thank you to our sponsors, Syntax Advisors, to Julian and Eitan, and of course, to all of you for watching. To watch prior episodes and to see news from the ETF industry, visit us at ETFTV.NET. Thank you.
ETF TV News does not provide investment advice, nor recommend products.