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I do have a bird update.

I was going to say, you texted me a picture of your bird.

Yeah.

And you just like, without any sense of irony, you're like, Fatspa's teen feathers are coming in.

So like, he's just Fatspa now, huh?

I think so.

I mean, is he Fatspa like for purposes of this podcast, or do you call him that, like, to your parents and to his face?

In the halls and and walls of the Greift house, he is

just bird.

And also, we're saying he as if he's a boy, but we don't know that.

He's friend of the show, Bill Ackman.

Yeah, to the rest of the world, he's Fatspa, friend of the show, Bill Ackman.

But I haven't explained the joke to my parents yet.

Have you explained it to the bird quietly?

I think I have said to him, Your name is Bill Ackman, but I don't think he's internalized that.

And that was the update, though, that his teenage feathers are coming in.

Good for him.

Yeah, it's super interesting.

Hopefully, I'm not the only one who thinks so.

When starlings are juveniles, when they first grow their feathers, they're super brown and kind of boring.

But in the later stages of being a juvenile, he's still not an adult, he or she, but they get this like interesting polka dot pattern on their chest.

And so it's growing in and patches the polka dots on his chest.

Yeah, he's super cute.

Yeah, so you'll know his gender because like they have different plumage when they're adults.

Yes.

So hopefully, in the next next couple months, we should know.

It'll be a gender reveal.

Are you going to have a bird gender reveal party?

I think it's more he or she is throwing the party for us.

Okay.

And the party is just very slowly over time

the feathers change.

This is making me realize I have another question, which is, what will Fatspa's romantic life be like?

You know, none?

I think right now it's none.

I would like to

have him settle down with a nice lady bird or if I swear to you.

Yeah, exactly.

You know, I don't know.

I was thinking it would be nice for Fatspa to have a friend where my parents live in New Jersey.

Unfortunately, it's not that uncommon to find stranded baby birds.

So maybe that'll happen in the next few years.

Right.

I assume there's no prospect of

visiting wild starlings, chatting with Fatspa.

Like setting him up with a wild bird.

I don't know.

You're literally horrified looking at him.

I don't know logistically how that would work.

I don't think there are like any starling stud farms either.

But hey.

He's not just gonna like roam around the backyard, right?

Like he's an indoor bird or I don't know if he would come back and I worry about him being able to feed himself.

He is.

Oh, another update.

I swear to God, this one is interesting too.

So I was talking about how he only wants to land on humans.

So because he's in this large is half outdoor, half indoor room.

And he had been in the cage and then we would let him out for free free flight.

I made the executive decision: let's just have him out all the time.

The cage doors are open.

He can go in and out as he pleases because there's a hose and a drain in the floor in that room.

So we can just clean it down whenever we need to.

I need a room like that.

With the introduction of free flight, he is much more confident about perching on things other than humans.

So very, very proud.

Yeah, yeah.

He's like flying around all day.

He needs to perch sometimes.

There's not always a human in the room with him.

So now he's more comfortable with the idea that other objects are suitable perches.

Hello, and welcome to the Money Slope Podcast, your weekly podcast where we talk about stuff related to money.

I'm Matt Levine, and I write the Money Slope column for Bloomberg Opinion.

And I'm Katie Greifold, a reporter for Bloomberg News and an anchor for Bloomberg Television.

Eventually, this is going to be all bird updates.

It's just going to be

like he's going to get a microphone.

And he just squawks.

Squawks, squawks, he does have different squawks for different things.

Like you can tell when he's talking about ETFs.

When he's talking about ETFs, you know.

Or memes, for that matter.

Yeah.

Yeah.

Starting with meme stocks.

Meme stocks are back.

We're back in 2021.

The Halcyon days.

I have to say.

Yeah.

I'm not feeling it.

Are other people feeling it?

Am I just old?

Like, are the people on the internet like, oh yeah, this is just as good as it was in 2021?

It kind of reminds me of crypto, how crypto had this resurgence and we're back at all-time highs and then some, and it just feels like way less people care.

And it feels kind of that way with the meme frenzy that we're seeing right now.

Crypto is weirder because crypto has a lot of different streams.

Like meme stocks kind of have one stream, which is people on the internet doing memes.

That's true.

It just feels like less.

Yeah.

I don't know.

Well, we've seen it before.

Have you seen it before?

It was novel the first time.

Right.

I mean, you know, the point of meme statics is like, one, people are on the internet talking about them.

And then, two, they go up a lot, right?

And you really need the going up a lot to make it that fun.

And I feel like we're not quite there.

I mean, the novelty in 2021 was so, you know, like millions of people came to Wall Street that's for the first time.

Like, it was creating millions of accounts a day.

Yeah.

And that doesn't seem to be happening here because like everyone who was going to get into it got into it.

I may not have fully realized the first time.

I think I knew it, but I didn't like fully internalize it.

How much meme stocks are connected with short squeezes.

Like it's so important to every meme stock thesis.

Like, ooh, the evil shorts are getting squeezed.

Right.

Like it's, it's like such a central part of the story.

And like one thing is that there were learnings from 2021 at hedge funds.

Like don't short a ton of...

crummy consumer-focused stocks because you might get carried out.

And so if all the shorts are like less short, then uh, you know, Bern Hober was writing about this in his newsletter that the shorts are going to have smaller positions and less confidence.

So what that suggests is like, one,

it's easier to do a short squeeze.

Like you'll get kind of the meme stock pop because as soon as a stock starts meming, all the short sellers are going to cover their positions.

But then two, it's not going to be as long-lasting or as big because they'll all just cover their positions immediately and there won't be like GameStop.

There was like months where people were like, oh, it's going to be the mother of all short squeezes.

The shorts still haven't been forced out.

And like, it's just, it's instantaneous now.

Yeah.

It still does, though, seem like maybe it's not sophisticated hedge funds who are shorting these stocks.

Like, most of the ones that went crazy this week, or at least Kohl's, which kind of led the meme frenzy this specific week, I think it's 48% of its float was shorted.

Yeah.

I mean, well, I was thinking about that list that you asked ChatGBT for, or that ChatGBT produced for you.

And one of it was, you know, the company needs to be unloved or not not appreciated.

Yeah, right.

So I asked ChatGPT, like, what's the next Carvana?

What's the next hundred beggar?

And it gave me this kind of meme-y answer.

Yeah.

It was like, it needs to have a heavy short interest and be like unloved or underappreciated by the market.

And that is kind of

meme spot.

That's the whole thing.

It has to be.

Like, it felt like that was the most important thing.

Or it's a sense of resentment.

You need to be like mad at people.

You need to have a chip on your shoulder.

Yeah.

Yeah.

But that goes hand in hand with the, you know, heavy short interest.

that this isn't unsure.

You could have put them in the same line.

Yeah, yeah.

And that's like, there's like technical reasons that everyone could hate a stock and it could not be heavily shorted because it's like really hard to borrow.

But no, in general, that's those are the same thing.

Yeah.

Something that I appreciated, though, about the fact that we're having this conversation in 2025 was that it dispelled at least two myths that were part of the conversation in 2021.

The first being that

the activity that we saw back then was all fueled by stimulus checks, you know, the stimulus checks that the government had helicoptered across everyone.

Yeah, I know that totally dispels that myth, right?

I mean, like, some of the stuff I've read about this meme stock thing is like there's been enough of a stock rally to create kind of a wealth effect, and like the stimulus checks are another form of that.

But yeah, I agree.

Like,

yeah, that could have been true in any time.

Yeah, that's right.

Except for, I guess, 2022 and everyone.

But yeah, I mean.

No, you're right.

It's not the stimulus checks.

And the wealth effect, I think, has somewhat been eroded by inflation.

The fact that, okay, stocks have gone up, but so have the prices on everything else.

I was in a grocery store in Hoboken, and there were these, like, broly-looking college kids, and they were complaining about the price of, like, produce.

I was like, that's so interesting.

Like, it's just so much in.

just everyday conversations that you stumble across, people complaining about how expensive everything is.

So I think the wealth effect is out there, but I think it's less so.

The other myth that it dispelled was that

the meme mania was just a byproduct of zero interest rates.

That is very much not the case right now.

Yeah, that's fair.

Right.

Another thing that you just thought is it was like, it's not an isolated phenomenon, right?

It's not just like this happened once and then people like learned from it.

Like

I think that what people learned from it is like it works.

It's like a good game.

It is a good game.

Why not make a stock triple in, you know, the course of a few days.

Also, I know you explicitly said it's not investment advice, but I know that so many people, after reading your column, must have, for fun, gone to ChatGPT and asked what the next Carbona is.

Yeah, I mean, like, right.

I wrote like a reader emailed me to be like, I asked ChatGPT when the next Carbona was, and it told me Open Door, so I bought Open Door.

And look at me, right?

And I don't get the sense that what has happened in the last like week or two is mainly or like largely

AI driven.

Yeah.

But it does feel like in 2021, there was this like coordination mechanism where people who wanted to buy me stocks and like

have stocks that go up a lot like would go to

social media, Reddit mostly, right?

Wall Street Pats, and they'd like meet their friends there.

And their friends would talk about what stocks would go up.

And they'd all kind of coordinate around the stocks they wanted to go up.

And in some ways, it feels like AI, which is like trained on Reddit, you know, has found a way to abstract that.

Where now, if you want to find the next meme-y stock that will go up a lot,

your instinct might not be to go to Reddit and ask the people there.

Your instinct might be to go to ChatGPT and ask ChatGPT.

And ChatGPT might tell you, right?

It might tell you something that's kind of similar to what a Redditor would tell you.

I just think that's like an interesting new vector for meme stocks to happen.

And yeah.

It's like you don't need anyone else on Reddit pumping the stock because like

our AI tools have now been trained on that kind of meme stock thinking.

Yeah.

I hadn't heard the idea that LLMs are just a blurry JPEG of the internet until that's a Ted Chang's headline on the news.

I love that.

I love that.

I hadn't read that piece.

I will say reading your musics on that just made me more existentially worried about humanity because

I don't think that people should be taking advice from Reddit or a blurry cess thing that's produced on Reddit.

Right.

I mean, Alex Balk used to say the first rule of the internet is the things you hate about the internet are the things you hate about people.

When you say people shouldn't be taking advice from Reddit, you're saying people shouldn't be taking advice from people.

Like, AI is a distillation of

the wisdom and the foibles of people, right?

Of the masses.

Yeah.

Of something, of some subset of people.

Yeah.

The people who are on Reddit.

Not only, but also them.

Yeah.

Right.

Like, I used to write this, like, if you had asked someone a hundred years ago, what stocks should I buy, or like, how do stocks go up they would probably have said something like stocks go up because a lot of people want to buy them it's like fairly straightforward I think if you asked people 50 years ago what stocks will go up they would say things like stocks reflect the expected value of future cash flows and so true stocks that will go up are the ones that have good businesses that are undervalued by the market or something right makes sense and I think if you ask today the answer is the stocks that people want to buy are the ones that go up right yeah there is this like pseudo-science of investing based on fundamental analysis that kind of ruled for 50 or you know 75 years and that now like has receded a little bit and been replaced by ah whatever people want to do they're going to do right and like in some ways we've had like new technologies to distill and like amplify whatever people want to do they're going to do and those technologies include the internet and now ai but like in some ways it's frustrating because things don't have reasons.

But in other ways, it's like, that's how it should be.

It's just like investing is an empirical science.

Like if the stocks go up, it's because the stocks went up.

There's not like some axiomatic theory that will tell you why stocks will go up.

It's like you have to sort of know what people are thinking.

I do kind of love that every time this happens, you know, there's a set of serious people who

have to engage with it and like try to.

Am I one of them?

No.

Not really.

No, no.

I'm talking more about like.

I lost my mind the last time it happened, but now I have like Zen.

I'm talking more about like sell-side

and like, you know, single-stock analysts.

If you're a sell-side analyst, you really like live in an ecosystem of like stocks reflect the present value of their future cash flow.

Yeah, that's your buy-in.

Your whole job is predicated on that.

You have like a little fundamental model.

It's really right.

It's precious.

There was a note from Barclays talking about how to engage with it.

They said that one way you can hedge is

through a dispersion trade of sorts.

In this case, using options to bet on a basket of meme stocks that will continue to be far more volatile than the SP 500.

Those wanting to take a more directional bet on the frothiest companies, they can buy puts that would benefit if these shares reverse course, which I don't know.

I just feel like the safest thing that anyone could do is just not short things.

Right.

I mean, like, I think the idea of buying puts is like you've capped your

money.

that much money, but no more.

Your losses aren't infinite.

Right.

It's the safest way to short meme stocks.

But no, I agree with you.

Like

I would not personally wake up and see a meme stock mania and be like, oh, I gotta bet against these that's a

good you know use of my time but i'm not a professional investor and i'm not a research analyst or even before you get to that point you know if you don't want to get your face ripped off on a company that you were shorting maybe just don't short it right right right

yeah right not investment advice no i wouldn't but i you know some people

some people you know their job is to make correct market calls and other people their job

and i and i sympathize with the research analysts because other people their job is to create relevant markets markets-related content.

And

when there's a meme stock wave, you're like, well, what meme stock content am I going to produce?

And

I know that difficulty well.

And I sympathize with anyone else who has to create meme stock-related content.

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I want everyone to know that this was your idea.

I know.

I keep pushing ETFs.

I know, and I keep saying.

So to sick of ETFs.

I don't know if anyone wants to listen to it.

This was Matt's idea.

I love these ETFs.

Yeah.

351.

351.

351.

I was going to say.

351 ETFs.

No, 351s.

Yeah.

So one

way to understand exchange-traded funds is that they're exchange-traded funds and they have nice liquidity properties.

The real way to understand ETFs is that they are tax dodges.

Yes.

And in particular, I learned that if you buy a mutual fund, you annually pay capital gains taxes on the fund's trading activities, whereas if you buy an ETF, you do not, because

ETFs have found a way to make all of their trading, both to meet redemptions and to change their positions, they've found a way to make all of their trading not a tax realization event.

And this involves like

in-count creations and redemptions.

It involves doing big heartbeat trades with authorized participants.

It's a whole ecosystem.

But the way it works is the result of it is that you don't pay taxes.

Well,

you get to decide when you want to take the taxes.

Yeah, yeah.

If you buy an ETF, this is not 100% true, but this is largely true, directional.

If you buy an ETF, you do not pay any taxes until you sell the ETF, which is not true of mutual funds.

Mutual funds, you pay taxes every year and you hold it forever.

But with an ETF, you don't pay taxes until you sell the ETF shares and then gets wrapped up in the ecosystem of like you buy an asset, you defer taxes forever, you borrow against the asset if you need to, eventually you die, your heirs get stepped up basis and like no one ever pays the tax.

But at least you defer the tax.

Even if you might have to, if you sell the thing eventually, you pay taxes.

And so that's really good.

And it's like, you know, if you own like an S ⁇ P 500 ETF, it's a little bit more tax efficient than if you own an S ⁇ P 500 mutual fund because they're trading redemptions or whatever.

But like,

whatever.

It's not a huge impact on your life to pay those capital gains taxes.

Where it's really interesting is if you can use that to wrap other stuff.

And so I think...

And so we're talking about like Bloomberg's just tend to leave.

He wrote a big article about these, these 351 ETFs.

But like

directionally, the idea is you worked at like a tech company.

You got a lot of stock early on.

And so your stock has a basis of roughly zero and it's now worth roughly $100 million.

It does seem like some of these trades are for like $100 million.

And so you have a lot of this stock.

And if you sell it, you'll have tens of millions of dollars of capital gains taxes.

And

what you do is someone comes to you and is like, I will build an ETF for you.

And you plop your stock into this ETF that is custom built for you.

And then the ETF does trades to

get rid of that stock and replace it with like, you know, the S ⁇ P 500.

And then you are left with S ⁇ P 500

and you don't pay any taxes.

Yes.

You defer taxes.

You have zero basis in the S ⁇ P 500, but you've deferred taxes.

You've sold out of your giant concentrated position in your employer's stock and replaced it with like a nice diversified index fund without paying taxes, which is a really neat trick.

Yes.

I'm like oversimplifying.

There's actually like rules about the original contribution has to be kind of diversified.

So you can't just literally plop all of your employer stock and nothing else into it, but like, yeah, you can still do it.

We've talked about swap funds on this.

This is a swap fund.

This is a swap fund.

No, this is like a better swap fund.

You don't need other people.

You can just do it with your stuff.

Historically, a swap fund was like 10 people get together and they plop their stock in and then like

a diversified pool of like each other's stocks.

This is like we just boop, boop, you're into the SP 500.

So much cleaner.

It is like a swap fund.

It's a similar idea.

So this kind of blows myself.

People do swap funds in ETF form because

you get the ability to diversify by doing heartbeats.

In the article, someone calls it a black hole for capital gains.

That's a perfect

description.

It's just like a solution.

You don't have to pay for it.

And it's legal.

It's legal.

It's legal.

And

I think it was a lawyer that Justina interviewed for the piece who said that he's worked on hundreds of these or something of that magnitude.

Right.

And like it's hundreds, it's not millions.

Yeah.

Because like you need a certain amount of money to make this work.

This is not free.

You need some advisor to do it.

You need an ETF issuer to do a white label ETF for you.

So it's expensive.

If you have $100 million of zero basis stock in your employer, it's worth it because you're saving $20 million of capital gains taxes.

If you have like...

You know, you bought some Tesla a few years ago and now you have a million dollar Tesla position with like a basis of like $500,000,

you're probably not going to do this.

But one thing that I have talked about on this podcast is I think.

Have I also talked about it?

I mean, we've talked about it.

Right, for sure.

I have like advocated that like eventually everything will be an ETF.

Like

every product will be ETFized.

And like one thing that means is like

there will be automation and costs will come down so that if you're just like, I want to do an ETF of this thing, you'll push a button and it'll charge you like $95 and you'll get the ETF.

And like when that happens, no one will ever have to pay capital gains taxes on their stock because everyone will be able to do this.

And then we'll find out some way that this is illegal.

It'll become the legal.

Yeah, eventually someone will be like, well, we should stop that.

It's not like obvious that this should work, right?

I mean,

so the trade that they do is called a heartbeat, right?

Like the idea is that you're an ETF, you own some concentrated stock.

You don't pay taxes on in-kind creations and redemptions.

So if someone brings you a basket of your stock, If they bring you a basket of the underlying shares and you give them ETF shares, that's not a taxable transaction or vice versa.

And so, what they do is they have special baskets where basically, you know, a Jane Street or a bank or somebody will go to an ETF, they'll bring in the stuff the ETF wants, they'll give them the SP 500, they'll get back ETF shares, they'll wait like a day, and then the next day they'll hand back the ETF shares and take out whatever the ETF doesn't want.

So, it's like these are not taxable transactions,

but they're weird transactions.

They're not in the full underlying basket of the ETF.

They're in like the specific stuff the ETF does or doesn't want.

And And they're not done because

the

counterparty wants to be an investor in the ETF.

They're done because the ETF is adjusting its trading.

I first learned about this in 2019 when Bloomberg had a big article about heartbeats.

A seminal piece.

A seminal piece.

And they were sort of like, should this really be legal?

And

my view was like, sure, it should be legal.

ETFs don't pay taxes.

But now it's like people have learned from this mechanism that they can just get rid of all taxes.

And then it's like, it's a little, you know, someone might look at this and say, hey, we should close that loophole.

Trevor Burrus, Jr.: That's the thing.

The notion of a heartbeat is pretty well socialized at this point, but like these individualized heartbeat ETFs, the fact that these ETFs only exist to do this, because you see heartbeat trades once a quarter in some of the biggest ETFs out there.

Right, because they're index funds, the index changes, and so they have to get rid of some stocks and get new stocks.

And you heartbeat that away, so you don't pay taxes.

It's not obvious that ETF holders shouldn't have to pay taxes on their index rebalancing, but like everyone's fine with it.

It's fine.

Yeah.

But

this is the only purpose

of this ETF.

I mean, no, who can say what the only purpose?

Who can say?

So this leading anecdote that Justina opened with was talking about the Twin Oak Active Opportunities ETF.

And

the thing about ETF, so this one has nearly $450 million in assets.

That could theoretically be all one person.

It could.

My impression was that it was like a bunch of like S ⁇ P and stuff, but then it was like three sort of nearly $100 million positions in like three tech stocks.

Snowflake, Datadog.

Suggests it was roughly three people who, like, this is pure speculation, but like it could have been three people who were early employees at those companies or were like venture capital investors in those companies and who have like very low basis stock in those companies.

Aaron Powell, Jr.: Well, theoretically, if they are still

holding onto the CTF and investing in the CTF in some way and they're big enough, we should be able in like 45 days or something to see who they are.

Sure.

Which is interesting to me.

So you lose

listener with the judge of that.

It's like sometimes you don't know, right?

I don't know.

You lose the anonymity that you would get in a traditional swap fund.

Yeah.

The other thing that was interesting in the article is like, you lose anonymity.

You're in a more regulated, more public vehicle.

One thing about it is it's an ETF.

So it trades on the exchange.

So anyone can buy it.

That's the other thing.

No one would.

They don't market it.

And it's not even clear that anyone could because you might own all of it and just not sell it.

But in theory,

but they can buy from authorized participants.

In theory, someone could buy the ETF.

And so you have these weird obligations.

You have fiduciary duties to run the ETF in the right way.

Well, going back to the name, the Twin Oak Active Opportunities ETF, which bills itself is seeking long-term capital appreciation.

I could be poking around at my brokerage account, somehow come across that and be like, yeah.

Yeah, you you could click buy.

I want to see capital appreciate.

That sounds good, yeah.

So that's cool, too.

Right.

It's a like weird family office trade that, in theory, anyone could free ride on, but

but like

the whole juice in the trade is in the first like three days.

So you're not like getting the super exciting product if you just buy it on the exchange because like the whole point of it was to save these people taxes.

Sometimes I wonder/slash worry about what's going to happen to the ETF industry.

As a reporter, I don't have any feelings, but it feels like every ETF, I track ETF filings very closely, but every ETF filing nowadays is like triple leveraged quantum computing stock with an income strategy overlay.

It's just crazy.

It's like all of this like spaghetti sauce that's being thrown at the wall.

And then maybe these will become more popular.

And then what does the industry turn into?

I don't know.

It's just like.

It turns into everything.

So I've written about like tokenization.

And I think of like tokenization of securities as being largely like people trying to find sneaky ways around securities laws and like pretend that it's about technology.

But someone asked me, like, what do you think is like the good case?

Like, what are the useful things that can be done with tokenization?

And I look at this stuff and I'm like, this is going to be tokenized.

Like, this is like.

a whole product set that will be turned into APIs that will be turned into like, if you want an ETF, there will be like a series of buttons you can push and the ETF will come out and it'll be like exactly the ETF you want and it will just exist as an ETF and you won't have to like sit at a meeting with a wealth manager or like go to a white label ETF firm.

You'll just like, the computer will give you the ETF that you want and it'll heartbeat away, whatever you don't want.

I feel like that is the shift.

Exchange traded everything.

Yeah, yeah.

Not just funds.

Any portfolio, any trade, any like combination of trades.

ETF, if I'm yeah, any desire that I might feel

about to hold yeah, yeah, right, for sure.

Yeah, but yeah, any desire.

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We have to talk about Invesco.

Do we?

Yes.

That's your idea.

Okay, go ahead.

Okay.

Also in ETF LAN.

This one actually was my idea, but

really interesting filing last week.

I'll be the judge of that.

I should stop saying interesting.

Let me just state a fact.

There was a filing last week from Invesco.

Always a promising start.

Here's something that not a lot of people know or care about.

I'm going to step out of the room.

You have fun.

The Q's.

The Q's.

The Qs.

It's an ETF that tracks the NASDAQ 100, so it's

pretty huge.

$350, $360 billion, depending on the day.

Started in the 90s, really from the dawn of the ETF, one of the oldest still existing ETFs.

It's actually a unit investment trust.

And that's interesting.

My mind is blown.

Because Invesco doesn't make any money off of the Qs.

The way that the fee breakdown, as it stands right now, they charge 20 basis points.

A bunch goes to NASDAQ from which they license the index.

A bunch goes to BNY because they're the trustee.

That does leave some for Invesco, but it is written into the Q's prospectus that Invesco has to spend that on marketing, which is why the Qs are like the official ETF of the NCAA

and why every-

Exactly, but it's an enormous marketing budget.

But I wrote about this in August 2023 because it's one of my favorite quirks in just the investing landscape that the Qs are the most profitable ETF because you're charging 20 basis points on $350 billion of assets.

That spins off over $700 million of fee revenue a year.

And Invesco,

it's just this piggy bank that they can't break.

But they're now trying to convert the Qs into an open-ended ETF from a unit investment trust.

But to do that, they need shareholders to approve it.

They need holders of the Q's to approve it, which is a gargantuan task because they need 50% quorum on this vote.

And there's tens of thousands of Qs holders at this point.

So it's like the ultimate exercise in herding cats.

And I'm I'm really fascinated to see how this goes.

Wait, let me ask you this question.

Can they use their enormous marketing budget to like send personal mailings to each shareholder and like

knock on their door and be like, please vote?

I don't think so.

It's marketing.

I mean, in a sense, it's not just like marketing the product to buy the product, though.

It's like trying to rally shareholders for this specific purpose.

Please buy cues

to vote to change it into an ETF.

Well, they are offering a carrot of sorts.

They will lower the fee to 18 basis points.

So 18 basis points for an index ETF seems

extraordinarily high.

It is very high.

You're right about that.

But, I mean, a lot of these holders are locked in.

They've been holding this forever, and they don't want to take the capital gains hit by selling.

But if they are able to convert it, they'll theoretically be able to change the revenue breakdown.

So even by lowering the fee, they're still making so much more money than they were before.

Aaron Trevor Bowie, they won't have to pay NASDAQ and pony as much.

So, because that's a natural question posed by my editors, who loses out here?

And it seems like who loses out

are the advertisers.

You mean the recipients of the advertising?

Yes, exactly.

So

the thinking seems to be that NASDAQ will still get their eight basis points.

Okay.

Their eight basis points of flesh.

Eight basis points for an index.

Yeah.

Because like you get SP index funds for I believe it's exclusive, though.

Like, I don't think anyone.

That's cool.

Yeah, I know.

Yeah.

Okay, that makes sense.

So, Nasdaq will still get paid a licensing fee, which is pretty hefty.

Boney will have some sort of role, not trustee.

I believe that Invesco is asking shareholders to improve Invesco to be the trustee as well.

Bloomberg Intelligence estimates that right now Invesco spends eight basis points on marketing, which is so much money.

Invesco estimates that'll be reduced to two to three, two to three basis points to start, which translates into something like $150 million in annual revenue that Invesco would unlock with pretty much no incremental spend to get it.

So you've seen Investco shares go absolutely bananas.

Okay.

I mean, it still needs to be approved.

The vote is on October 24th, and it's just going to be so hard to get all those people.

I know.

I love the difficulty of getting retail investors to it or anything.

Like, it comes up occasionally in corporate land, although not that much because corporates usually have mostly institutional shareholders,

unless when they're meme stocks.

But yeah, in ETF land, it seems hard.

It does seem hard.

I think that's interesting.

I hope that listeners agree.

And please tell me if you don't, the other part of the story that I'll tell you about.

The only other unit investment trust of really meaningful size out there is SPY, SPY,

which is also from the 90s.

Sure.

Born in 1993, so it's just myself.

Sure.

And also famously has, there's like some other children born around that time who are named in the prospectus.

Yeah, exactly.

Like all of these really old ETFs have these funky prospectuses.

Yeah, they have rule against perpetuity problems where like

they're trusts and so they can't last past

you know, 75 years past the life of some living person.

And so they name a bunch of babies as like the reference lives for their rule against perpetuities.

If you're ever really bored, it's worth poking around in the prospectus of ETFs that were born in the 90s.

I have.

I hope you.

I was going to say I've never been that bored.

I'm pretty sure I've looked at the SPY prospectus, so I have been that bored.

I asked Anna Poglia of State Street Investment Management on Monday whether or not State Street was going to try something similar with SPY.

And she said, That filing to us is interesting.

We are going to learn from it.

And never say never.

Dot, dot, dot.

You know, if we learn something that we like from this proxy, we will think about it.

Which I heard as: if Invesco is able to pull this off, maybe we'll do it with SPY.

Does SPY have the same economic structure?

Yes.

Do they not make money from SPY?

So some money stays in the door because State Street is currently the trustee on SPY, but they also have to spend a boatload of money on marketing as mandated by the prospectus.

Okay.

How much do they charge for SPY?

I think SPY is nine basis points.

Pretty high.

I know.

Well, they can't lower it that much because they have to

give money to

their index.

They have to give money to the trustee, which is them.

And then they have to spend money on marketing.

But the index, like, I'm aware of S ⁇ P funds that charge

two or fewer basis points.

Yeah.

The index can't be that expensive.

Definitely less so when it comes to the S ⁇ P 500.

Sorry for all the ETF talk, but half of it was Matt's idea.

The other half.

That was all me.

Please write in and let us know.

Please don't.

No, I always want to hear.

I read every comment, so keep them coming.

Please don't hurt my feelings.

Go ahead and hurt my feelings.

And that was the Money Stuff Podcast.

I'm Matt Levine.

And I'm Katie Greifeld.

You can find my work by subscribing to the Money Stuff newsletter on bloomberg.com.

And you can find me on Bloomberg TV every day on Open Interest between 9 to 11 a.m.

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You can send an email to moneypod at bloomberg.net.

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The Money Stuff Podcast is produced by Anna Mazarakis and Moses Andan.

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Thanks for listening to the Money Stuff Podcast.

I'll be back next week with more stuff.

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