In this episode, Douglas Yones, Head of Exchange Traded Products at the New York Stock Exchange, is joined by Nate Geraci, President of the ETF Store to discuss the founding of The ETF Institute and Certified ETF Advisor designation, and to share his firm’s best practices for long-term investing utilizing ETFs. 

Douglas and Nate discuss:

• The origination of The ETF Store
• How and why The ETF Institute developed the CETF designation
• Best practices for long-term investing utilizing ETFs

Douglas Yones:

Hello and welcome to ETF Central, the podcast where we bring the latest and greatest ETF industry perspectives directly to you through in-depth conversations with key thought leaders from across the ETF ecosystem. I'm your host, Douglas Yones, the Head of Exchange Traded Products at the New York Stock Exchange, the Home of ETFs. Now, today I'm joined by Nate Geraci. He is the President of the ETF Store, which is nationally recognized as the very first investment advisor to offer only exchange traded funds. He is also the creator and host of the Weekly podcast, ETF Prime. If you're not listening, maybe you'll be a listener now. I know I'm a listener and I've participated a few times as well, Nate, which Bloomberg has called one of the most helpful plain English resources for investors who want to demystify exchange traded funds.

Nate is co-founder of the ETF Institute, which we will definitely talk about today, the first and only independent organization providing ETF industry professionals and financial advisors with certification, education, and training pertaining to ETFs. You probably see like me, Nate, across all financial news publications and hopefully you'll see him in an upcoming New York Stock Exchange ETF event. Nate, thank you so much for spending your time and being here today.

Nate Geraci:

Thank you, Doug. Pleasure to be here.

Douglas Yones:

Okay, so I know you, I'm friends with you. I like to think I'm friends with you, but maybe someone who's listening in, they don't know as much about you, your team, the ETF Store. Could you talk a little bit about all those things and where you find spending most of your time these days?

Nate Geraci:

Yeah, so let's start with the ETF Store. So the ETF Store is a registered investment advisory firm. We're based in Kansas City. We primarily work with retail clients, and we're really a full service wealth manager. So we handle everything from portfolio management to financial planning, insurance needs. We really take a full 360 degree view of a client's financial life. Now, on the portfolio management side, obviously by the name of our firm, we do focus on ETFs. So we have a range of ETF model portfolios, which we manage in-house. But at the end of the day, advisors can use whatever investment tool they believe is in the best interest of their clients. We just believe ETFs are excellent vehicles that can serve those best interests in many situations. In terms of our team, we've really built out a great core team of advisors for the size of our firm.

We have two CFAs in-house, two CFPs, soon to be a third CFP. We just have a lot of intellectual horsepower, which I'm really proud of. I'll also note we do have a separate brand called Novadius, so it's a DBA under the ETF Store, which a couple of our advisors operate under. But Doug, I'm sure like your days, my days are extremely busy. So I wear a lot of hats, everything from running the firm, so as basic as HR and payroll, doing financials, overseeing compliance, operations, so trading, those sorts of things. I also actually work directly with clients. I think it's really important that I stay engaged and connected there, so I know firsthand everything that our advisors are hearing and seeing and experiencing. That's very important to me. Then I'll just add, and you hit on these, they're at the top.

I do host the ETF Prime podcast. It's a weekly podcast where I interview experts from across the industry, typically three experts every week. Really enjoy doing that. I often say I think I've gotten more out of that podcast at times than listeners, because coming from outside the industry, which we can certainly talk about that if you want, the podcast has actually really helped me ramp up my knowledge of the investment world in ETF. So I love doing it every week. I also blog at etfeducator.com. And then as you noted, I oversee the ETF Institute as well, which is professional education and certification for ETFs.

Douglas Yones:

Yeah, it's kind of interesting to me, Nate. And we will, I want to come back to some of the career history piece, but you've got ETF Prime going and by and far, if not the largest ETF podcast out there, it's top two, but I feel like you sort of founded the world of ETF podcasts and everyone you talked to is like, oh yeah, ETF Prime. But was that the goal? How did you sort of end up in the middle of this? You're an advisor, you're helping clients, and then all of a sudden it's like, oh, but by the way, I'm running the industry's biggest ETF podcast.

Nate Geraci:

Okay, so there is actually, at least I think, really interesting backstory to the podcast, and some people have heard this before, but long story short, the ETF Store we founded in 2008. And coming from outside the industry, it was challenging, Doug. I mean, we started it during the financial crisis. I think we came into the business saying, we have these all ETF portfolios. They're low cost, they're tax efficient, and I was probably overconfident. We just thought people would be tripping over themselves to hand us their money. And obviously that's not the case. That's not how it works in our world. And so fast-forward to 2011, I was actually in a Starbucks here in Kansas City, and I was just meeting with a business acquaintance and we were talking about the ETF Store business and maybe what some next steps would be.

And this individual said, "I think the issue that you have is that nobody knows what an ETF is." And I had been in the world of ETFs for a while. By that point, I was like, surely most people know what an ETF is. And I said, "Well, let's test your theory." I probably had too much coffee. So I actually got up in that Starbucks, and I'm not kidding you, I walked up to every table and just asked everybody sitting there. It was a pretty packed Starbucks, "Hey, have you heard of an ETF?" And people were looking at me like I was crazy. But the takeaway was not one person had heard of an ET Fin 2011. So I came back to the table with the individual I was meeting with, I said, "You're right." And I said, "We have a really big problem. We have an investment advisory firm branded around ETFs. Nobody knows what an ETF is. And so how do we solve that?"

And the way the podcast started was I said, "Okay, how do we get the word out to people on what ETFs are? How do we just educate people?" So not sell ETF store, just educate people on what an ETF is. And we said, "Well, why don't we try a radio show?" And so I had no background in radio, never wanted to be on radio, never planned to be on radio, but we launched a radio show here in Kansas City on a local AM station, and we were surprised. It was a half hour show originally. Those still live out on the web, you can go listen to them. They were terrible. But we started hearing from people saying, "Hey, that's interesting. I want to learn more about ETFs. Tell us more."

And so we kept doing that. And then by that point in time, I had made quite a few contacts across the industry, so I started inviting a few people on just as guests. I said, "Instead of me talking, why don't we bring on some other experts?" So we started bringing on some experts, and again, we started hearing from people, "Hey, that's really interesting. I liked hearing from that individual or that individual." And then we said, "Hey, we have something here." So I took the radio show and just put it into an MP three format, uploaded it to iTunes back at that time, so obviously anybody could access it anywhere around the world. And lo and behold, we started hearing from people across the country saying, "Hey, this is really interesting. I want to hear more."

And it really grew from there. We actually ran concurrently. We were on the radio here in Kansas City, and then I was also disseminating the podcast for, I'm going to say 5, 6, 7 years, something like that. And then we're all just podcast format now, but the podcast is downloaded in just about every country around the world, every state in the United States. And I think what it showed me is that people had a real thirst for knowledge around ETFs and something that's important to me. I think some people said, "Well, you're just doing it as a marketing endeavor for the ETF Store." That was never the goal. I really just wanted it to be an educational vehicle. I didn't want to talk about the advisory firm and just say, how can we introduce people to all of these innovative products that are out there, to the different strategies that are available to all these interesting entrepreneurs in the ETF space?

That's what I wanted it to be. And really help the end investor, an advisor, an industry practitioner will learn everything there is about ETFs. And I'll just leave you with this. I always took the tact, and I think this is important for anybody who wants to do a podcast on any topic, talk about what is interesting to you and what is your passion. Don't try to pander to the audience. I actually think if you go back to our earliest radio shows, I almost felt like I was trying to show everybody how smart I was. Like, look how much I know about investing in ETF. That's not what people want to hear. I morphed into just talking what I'm interested about and learning along with a listener. And I think that model has worked really well.

Douglas Yones:

Yeah, for sure. I mean, podcasts are clearly here to stay. And your point taken on this necessity as the mother of all inventions, right? The whole point. Here we are, we're doing ETF Central the podcast. ETF Central comes from a singular conversation, much like yours, not at a coffee shop, but similarly over a beer where a really close industry friend of mine who's so smart of investing and always seems to be in front of all the trends had said, this was years ago, "I really like semiconductors. And you're like Mr. ETF, what are all the semiconductor ETFs?" And so I'm sitting there and I'm trying to come up with every single one off the top of my head, and then I'm asking a friend, I'm texting them, "Hey, do you know of any others?" And we sort of sat there and we're like, this is a real problem.

If the ETF industry is going to grow the way we think it is, how do people get access to the world of ETFs that are out there? And here we are sitting at the New York Stock Exchange. We have all this data, we know everything that's happening. We're sitting in the middle, couldn't we create it. And then along the way, here comes Jean-Rene, if anyone had met him, wonderful man, no longer with us. And he and I got chatting one day about what are the problems in the industry that we think we could work on together and find a way to solve?

And that became ETF Central. It is built around the ETF screener, but it's a screener unlike anyone else out there. You just have to know roughly what you're looking for. It'll give you every US ETF that's out there and all the data. And that's where it came from. So very, very similar, but it didn't all start there. And you've mentioned this a few times, Nate, where you kind of started the ETF Store, but you came from other places. So take us through it. Is this, you're in college and you're like, "Hey, I want to manage money and I want to do it all with ETFs." I mean, where does it all begin?

Nate Geraci:

Okay, this is a long story, but I'm going to try to keep it as short as possible and I'll give you my quick career arc, which honestly Doug, I'm not sure anyone's ever asked me this publicly. So you're going to get the inside scoop firsthand here on the ETF Central podcast.

Douglas Yones:

I love it. We're back in the coffee shop.

Nate Geraci:

That's right. So, okay. I grew up in a military family, lived all over the place growing up, including in Europe. So I was in Germany from sixth grade to graduating high school. And when I graduated high school, I think like many people, I had to figure out, okay, how am I going to pay for college? I knew I was going to college. How am I going to pay for it? And long story short, just given my familiarity with the military, I ended up taking an ROTC scholarship at the University of Kansas. And for anybody familiar with an ROTC scholarship, what that means is I had some tuition and books and those sorts of things covered, but then once you graduate, you owe the Army, this was an Army ROTC scholarship, four years. Now, I'm going to rewind to when I was in high school, and I promise I'll pull this all together.

So my junior year in high school, I actually blew out my knee playing basketball, so tore my ACL. Had it repaired, everything perfectly fine, played sports my senior year in high school and into college. But when I was in college, so after your junior year when you do ROTC, you go to what's called advanced camp. So it's like basic training on steroids. And the doctors there, I've been there for about a week. They had concerns regarding my knee. And even though I hadn't had any issues with it, and to this day I still haven't had any issues with it, they weren't comfortable. And so I was medically disqualified at that point. Basically went off ROTC scholarship. That ended the possibility of going into the military for four years. And so my senior year in college, don't laugh, but I had always wanted to be a sports agent, believe it or not.

And so I decided I was going to go to law school and do a joint MBA and get a law degree, contract law. So I took the LSAT, did well on it, got accepted to law school. And late in my senior year, I said, you know what? I had to take out some student loans my senior year because I wasn't on ROTC scholarship. I thought maybe I should go get a job first before going to law school for however many years and taking on more debt. And so that's what I did. So right in the heart of the .com bubble, I went to work at a startup tech company, startup .com company. So this was in 2000. I was one of the earliest employees at a company that would end up growing to some seven, 800 employees. It was a real success story here in Kansas City, and it was a phenomenal learning experience.

I had my hands in just about everything, managed a large team, handled everything from our intellectual property to our cash management, financials, everything, you name it, on the backend. I had my hands in it. I also knocked out my MBA during that time. And on the MBA, my emphasis was in investing. And so I think this gets to the heart of your question in that as long as I can remember going back to childhood, I always had a passion around investing in personal finance. This seems really basic, but it always just amazed me that you could take money and make more money from that money by investing it, compound interest, and those sorts of things. And so that was always in the back of my mind. Around 2006, 2007, I had worked directly for the CFO at this tech company pretty much the whole time that I was there.

And we had always just had fun trading our personal stock trades and investments just on the side. Well, both of us back at that time were investing in ETFs, and we weren't hearing from anybody else about ETFs. We thought these were great vehicles, and we would trade tickers and look at how great these are. And so in early 2008, I believe it was early 2008, we were actually just, you mentioned having a beer and coming up with a podcast, that was really the inception of the ETF Store sitting in a bar and saying, you know what? We saw some real problems in the investment advisory space where we felt like there were a lot of advisors selling proprietary product just to get a commission. They weren't really looking out for client's best interest. Nobody was talking about ETFs at that time. So we thought, hey, what if we brand an investment advisory firm around what we believe is just going to be the vehicle of the future?

And that's how I got started in the industry. So it is interesting because I think I found where I belonged longer term. It took a while to get there, but I always had that passion for investing. When we started the ETF Store in 2008, I actually got to manifest that passion. And I do think that I've been in the industry now for what, 15 years? I think coming from outside the industry really helped me because it gave me a unique perspective. I'm not sure that I think quite the same as the masses in the industry. And I'm not saying that's good or bad, it's just different. And I think that's maybe helped me carve out a niche and approach things again just a little bit differently.

Douglas Yones:

Yeah, I mean, the one thing that I have to ask you is clearly you're starting the ETF Store and you're saying, "Hey, look, we love ETFs. We're kind of going all in here on ETFs." And maybe you're building your own niche, and as you said, it's probably very hard days. You're in the global financial crisis, and people probably don't want to really talk much about ETFs. But the one thing that I find a little fascinating, Nate, is if I go back to that time period, there's not that many ETFs out there at that point, right? It's a little easier for me to say, hey, in 2023, you have over 3000 ETFs. I can carve up an investment strategy, and I can do some really cool unique things using ETFs today. I can give you excess income. I can reduce the beta exposure in your portfolio.

I can invest longer term, shorter term. I can play with zero date option. I can invest in electricity, I can invest in all the EV commodities that underpin the EV market. That did not exist in 2008. So here you are, to some extent, was that that really like, hey, we're going all in on ETFs because there's just enough there, or was it some challenging times in there where a customer knocks at your door and they're like, I like what you're doing, but I kind of need some really cool stuff in my portfolio and I'm not going to get it with you.

Nate Geraci:

I would say all of the above. So a couple of things that I would point out. First of all, even back in 2008, you could still build a really well diversified portfolio using just ETFs. Not quite as well as you can today, but you could still do something pretty interesting. Here was the value proposition. Back then, it was still pretty early on in RIAs in the registered investment advisory, the fee-based model as well. And I mentioned a lot of advisors were selling proprietary product and receiving a commission. So just moving from, or basically explaining to clients the value proposition of the RIA model number one really helped in how we did not receive commissions by putting them into ETFs. But even something as basic as, I won't name any firms, and a lot of these firms are still out there and still do a lot of the same things, but there are some very large firms that they're using all actively managed mutual funds.

You look at the expense ratios on those products. Back at that time, you're talking about 1.25, 1.5% all in. We could go to a prospective client and say, "Look, we have this well diversified, globally diversified, all ETF model portfolio that you can access for 15 basis points compared to what you're currently doing, which is 1.25% all in." And so just with the ETF expense ratios and our advisory fee, we were still cheaper than just what they were doing on the mutual fund side. And so just being early there, I think on that, I mean that was compelling. I think on the taxable account side, just the tax efficiency of ETFs and the lack of capital gain distributions, that made a difference for taxable investors.

But I'll also tell you, I alluded to this earlier. It was challenging, Doug. We spent a lot of time just trying to educate people on what ETFs were. And I'm sure you recall a lot of people, particularly on the mutual fund side of the ledger, were putting out a lot of disparaging comments around ETFs. There were a lot of fear. There's a lot of fearmongering around ETFs. A lot of very prominent media publications were running fearmongering articles around ETFs. We spent a lot of time just combating that. You probably remember some of the headlines. ETFs are weapons of mass destruction, ETFs are going to crash the market, ETFs are a bubble, et cetera, et cetera. And so we spent a lot of time just fighting that early on. So it's interesting.

Douglas Yones:

Yeah, people gloss over that time period. But you're absolutely right. There was academics that were writing papers against ETFs and publishing them under the guise of pure academics, but without understanding the markets at all. And I always laugh because somewhere around that timeframe, T-Mobile had a big commercial push where if you left your current company an AT&T or Verizon or what have you, and they would charge you. They would charge you an early transaction fee. They were charging you an ETF. And if you came to T-Mobile, no early transaction fees, no ETFs. And I remember my in-laws saying, "I thought you were in finance, but I'm seeing these commercials. Are you doing something with cell phones?" Because of T-Mobile selling no ETFs.

Nate Geraci:

I remember that. The funny thing is, how many times do you think we've been called the EFT store in our history? It's unbelievable. Yeah, there's a lot of confusion. But you're right. A lot of academics were out there writing these research papers talking about how ETFs were going to blow up the market. It really wasn't until I feel like maybe three or four years ago, or maybe it was even following the COVID crash that everybody finally realized, hey, this ETF structure is resilient, and it can handle any market environment.

Douglas Yones:

Yeah. Somewhere along the lines, someone forgot to call me, but ETFs went from being a headwind to a tailwind to the point where now everybody seems to want to know why they're not entirely in ETFs all the time, which they can be obviously if they're with the ETF Store. Okay, so let's talk a little bit about, okay, Nate, you're running a business. You've got the ETF Store, you're running radio shows, podcasts, you're a family guy, you're involved in the neighborhood, you're sourcing the best barbecue in Kansas City. And then you say, you know what? I'm not busy enough. I'm going to go build the ETF Institute. What happens there?

Nate Geraci:

First of all, my wife, I hear from her all the time about my robust work schedule. So I've got to make sure I'm balancing things there to keep her happy. But being involved with ETFs firsthand, I learned pretty quickly how complicated they can be. And obviously there are very many straightforward and simple ETFs, but there are also a lot of complexities out there when you start talking about futures based ETFs and contango and backwardation, and you talk about leveraged ETFs and decay and the different ETF structures that are out there. And even when you think about some of the ETF basics, I think things that you and I just take for granted, so the creation redemption process and why ETFs are tax efficient, those sorts of concepts, they're not always intuitive to end investors and advisors. And so I just knew firsthand there was a need for education.

But I think what took that thought in my mind to then actually starting up in an organization focused on ETF education was that I kept hearing at ETF conferences and various ETF events and in the media as well, how the industry needs to do a much better job around education. I kept hearing that, but nobody was doing anything about it, and I wasn't seeing any solutions. And I'll get into that piece in a minute, but if you think about the types of ETF education materials that have been available, there's no one stop shop, right? You can go to an ETF issuer's website and a lot of them, they have some very good white papers and some other pieces on ETFs, especially if the topic is relevant to their product suite. But this material is highly fragmented, and I think sometimes it comes across as salesy, which may turn off the end reader who's trying to get educated.

And I'm not saying that material is bad, it's just it's not a curriculum. You have to piecemeal everything together. And to do that, you have to know where to find that material. That always isn't very easy. So again, there wasn't a one-stop shop, and I thought, well, why don't we simplify this? The other thing that I saw was, while there are a lot of excellent independent ETF websites out there who do a phenomenal job of covering ETFs, right, daily articles, they're on top of everything that occurs within the industry. The fact is they're still not education focused in that you can certainly read a lot or learn a lot by reading the articles and using their tools, but it's not a learning curriculum.

And so to put this all together, the idea was with the ETF Institute was to solve for those issues and really formalize the ETF education process. We wanted to bring everything in one place, have a full curriculum where anybody who's an industry practitioner, an advisor, somebody operating in the ETF ecosystem, whatever the case may be, they could come to one place and learn all of the foundational knowledge that they need to be conversant and competent around ETFs. That was really the nexus of it.

Douglas Yones:

And the end result, by the way, is when you finish that curriculum, you take a final exam. If you pass the final exam, you become certified, you get a CETF designation. I want to talk about that in a moment.

It's a FINRA designation. So I kind of liken it to back in the day of the CMA license or the earliest of CFP CFA type of licenses. We bumped into each other a long time ago, and we loved this. I've been a part of a lot of different organizations and every ETF issuer we talk about, last year we launched over 50 brand new asset managers to the ETF space. This year we're tracking to launch more than that number. So we've more than doubled at the halfway point of where we were last year. So the amount of new issuers coming in, and everyone asks the same question, how do I train my team? How do I get trained? How do I learn more? And then young people coming up through school, where do I go? How do I get my curriculum?

And the answer is always word of mouth, side by side, read this like you said, an article, grab this book, grab this. And it's all in one place. We've partnered up with you. You can go to ETF Central, click on ETF Institute, and go through the curriculum. Me, my whole team, we're all now certified ETF advisors, and I want to talk about that designation a little bit. So maybe let's just do that now. Why should an advisor, or frankly even an industry practitioner consider obtaining that designation? Why is it important? Why can't they just read the basics? I get it. There's ETFs, and I go on with my business.

Nate Geraci:

And I want to go back to something you were hitting on earlier just in terms of the curriculum. I just want to make the point, this is obviously all online. There are 10 modules. I mentioned things earlier like the creation redemption process and futures based ETFs and contango and leverage ETFs and decay. We cover all of those concepts and topics in great detail. But in terms of the designation, Doug, I think it's clear. I know you do as well. ETFs, they're the investment vehicle for the future for investors even still. And I think clearly they're in the investment vehicle of the present, but they're not going anywhere. And I think for anyone who operates in the industry, whether you work for an ETF issuer, so as you mentioned, there are very smart people coming into the ETF space, but maybe they don't have a background in ETFs.

The ETF Institute can very quickly get them up to speed on all of the building blocks that they need to know around ETFs. But anybody involved in the ETF ecosystem, financial advisors who are obviously using ETFs in portfolios or want to use ETFs in a portfolio, I think it's obviously extremely important to understand the ins and outs of any investment vehicle that you're going to put clients in. And we can talk more about ETF innovation if you want, but think about how fast this space is moving. It is evolving so quickly, and I just think that makes education around ETFs even more important. And I always say that ETF innovation is a double-edged sword, right? It's tremendous for investors. I think it's tremendous for the industry, but it's also added a lot more complexity. And I just believe that any industry practitioner, they need to constantly hone their craft.

You can't just stand pat. Anybody who's operating in any industry should always be looking to continually improve. And that's what we built with the ETF Institute. We have that curriculum. We're continuing to refine and enhance that curriculum, build upon that curriculum. But I think at the end of the day, any industry practitioner needs to ask themselves where the puck is heading, and any data point that you look at, we can look at flows and product launches, any ETF data point you want to look at, it shows that the future is with ETFs. So why would you not want to be fully educated in this area? I think it really just comes down to that.

Douglas Yones:

Yeah, and you hinted on something really important. So if someone's listening in, they said, oh, I got it. I got it three months ago. Good for you. Because guess what? The curriculum is adjusting, changing, and growing. We just went through a massive refinement and hey, spoiler alert, Nate and I and our whole teams are fully embedded in this. We believe in it, we see the future, and the ETF industry is growing and evolving, which means the material needs to grow and evolve. So I'm telling you, the material will be more than double. If I go a year or so out, the material that's there now will probably double, maybe triple. This will become a bigger and more difficult license to get. So if you haven't done it yet and you're like, oh, I'll wait a year. I'm just telling you now, save yourself a lot of time and energy, get in early, but we'll have continuing education, so you're not going to miss out.

As we add that material, that'll be available for all the licensees to continue to grow themselves, and we're going to continue to engage. So more to come there. I don't want to give it all away, but we're pretty excited about the work we're doing together. So again, all available at ETF Central. Just go to the ETF Institute or you can go directly to the ETF Institute. You'll find out about the designation. Nate, you've seen the future a little bit in your magical crystal ball a few times where you've seen, as you said, where the puck is heading. When you look at the ETF landscape now, where's the future headed? How do you see all this evolving?

Nate Geraci:

It's an excellent question. I just continue to be amazed at how the industry innovates. You can see an idea being debated on Twitter or wherever, and then actually have that idea investible in an ETF wrapper three to six months later. It's remarkable. I think there's a clear reason why ETFs have been called the Silicon Valley of Asset Management. You and I see that every day. In terms of future innovation. Look, we're going to continue to see the proliferation of active strategies and an ETF wrapper. That's been a big topic over the past several years. That's not going to change. I find that really interesting because as you know, ETF's roots are really on the passive side. That's where they got started. That's what really attracted a lot of the assets, and a lot of flows are still going into passive products, but now we're seeing active managers and active brands of all stripes get involved with ETFs.

I think that's exciting. I know when people see my name and maybe think about what I do, the topic of Bitcoin ETFs comes up, and I won't go down that rabbit hole. But I will say I do think digital assets in an ETF wrapper are really interesting, and I can just tell you firsthand, it's something that investors want. We hear it from our clients. They're very interested in this space, and the ETF wrapper can make digital assets very easily accessible. So I think that's interesting. Doug, I can go on. But I think the way that I view the future of ETFs, I'll pick up with what I just said on digital assets. What the ETF wrapper does is it makes asset classes and investment strategies very accessible, and that's what we're going to continue to see. When you have a wrapper that's as flexible as the ETF, and you have the benefits, which we talk about all the time in terms of the cost structure and the tax efficiency and the transparency, the intraday tradeability, et cetera, et cetera.

That makes it very intriguing for anybody to put a unique strategy in that wrapper or put a unique asset class in that wrapper. And so I just continue to be amazed doing the podcast for as long as I have. I really try to cover a lot of the entrepreneurial upstart issuers, and every week, I'm amazed at the innovation that we're seeing these unique products that somebody has thought of and put into an ETF wrapper. So I guess I'll just stay high level. I mentioned digital assets and active management, but I just think we're going to continue. I don't know what's around the corner, but whatever's around the corner can be put into the ETF wrapper. I'll say that.

Douglas Yones:

Yeah, and you're spot on with respect to the actively managed side of our industry. I mean a year to date, 70% plus of all ETF launches are in active management. If anyone out there is interested in tracking the active ETF industry, we have a newsletter. It's fortnightly, it's free. You can get it@homeofetfs.com. We show everything going on in the active industry, and I mean, the compound annual growth rate of assets in active has been pushing 50% for three years, five years. This year, we're seeing active share of growth of cashflow at about a third. So the active industry is clearly finally starting to see its day and is here to stay. But you're right, I mean, boy, everything coming out today are just, frankly, they're just exciting ETFs. And I can say it because one, we're recording now, and this will come out in a few days and second, I actually just saw a note go off this morning.

We're about to launch the first suite of target date ETFs ever, which most people probably would sit back and say, oh my God, target date funds, they've been around. I don't know the better part of over a decade, so popular. Really, there's no target date ETFs? The answer is yes. By the time you're listening to this, there'll be target date ETFs. So, so much innovation that continues to happen here in ETFs. And so if you're not tracking that, you can find that out on any of our newsletters by listening to Nate and the ETF Store on his podcast. Follow us on social media, and of course, go to ETFcentral.com. Nate, do you look back either maybe all the people at your firm that you're advising assets, look back in time with nostalgia? Do you have favorite ETFs or do you have your favorite suite of ETFs?

Nate Geraci:

Okay, that's a good question. Obviously I run an RIA that's under the purview of the SEC, so I have to be careful with any specific ETFs that I qualify.

Douglas Yones:

These are not recommendations. Is that where you want to start?

Nate Geraci:

You know what I'll say, I think you'll find this interesting. So I'm pretty boring when it comes to portfolio construction, but I have a caveat. So I love low cost index-based ETFs on both the equity and fixed income side. But it's funny, I actually get needled by my team all the time because they hear me talking about all of these interesting ETFs on the podcast, and I love covering them. But if you look at my portfolio allocation viewpoint, it would probably put a lot of people to sleep how boring it is. That said, I think there's a place for some of the more unique holdings that are out there around the edges of a portfolio. So I always use the example of thematic ETFs, so I'll pull that thread which is that I have found, and our firm has found that thematic ETFs can actually help investors from a behavioral perspective.

And here's why. Let's say you have a portfolio that's 95% allocated to broad based, globally diversified ETFs, right? Great portfolio. What we have found is if you take that other 5% and say, allocate it. Let's go with a thematic ETF in the blockchain space. Maybe you have a client that has a passion around digital assets and what's going on in blockchain. So maybe you take a three to 5% allocation in a blockchain ETF. What we have found is that that actually helps keep the investor invested in the other 95% of the portfolio. And the reason why is that most investors have some semblance of a gambler inside of them. Most people, they want to have some fun. They want to have something to talk about at the cocktail party, or they have an itch to scratch on a certain particular segment of the market.

Thematic ETFs are excellent tools to allow them to do that, and they have the potential upside potential, certainly in the ETF, but it also just really helps from a behavioral perspective. But there's been so many great ETFs that have come out over the years, I'd hate to pick just one or two or a suite to single out. I will say I'm partial to the smaller independent issuers. I love the work that those smaller upstart issuers do because as an entrepreneur myself, I know the blood, sweat and tears that goes into starting a business. And so anytime I see a new issuer come out with an innovative product, I cheer for them. And it's tough. This is a very, very tough industry, the ETF industry to be successful, right? It's called the terror dome for a reason. And so I have a tremendous amount of respect for all of the ETF entrepreneurs out there. It is not easy. Taking your idea, putting it into an ETF wrapper, and then ultimately getting assets into that ETF, it's tough.

Douglas Yones:

Yeah, it's a long, hard road. Worth it. Worth it from both the investor side as well as the asset manager, because over time, the rewards are there. But I agree with you. I think it's phenomenal that this is still like an entrepreneurial playground. And when we look at market share growth this year, it's really leveling out. Year over year, it continues to level out. So it's a good news story in ETFs, the odds of being successful go up year over year, not down, which I think is pretty interesting.

Nate Geraci:

And the cost of launching an ETF have come down pretty significantly too. So I think that the odds of success have gone up and the costs of entering the space have gone down. So that's a good recipe.

Douglas Yones:

Yeah, agreed. And I'll get in trouble because I'll miss someone, but if you're out there and you have an idea and you need support, and you want help from any of the platforms, white label firms, whatever we want to call them, those firms, their costs have become super reasonable. There's lots of them out there. Someone will match your personality, your style, your plans, and they will find a way to help you be successful. They're amazing. They're amazing partners. Feel free to reach out to me or my team will connect you with all of them. They are helping people become successful each and every day.

And what we're starting to see, which I think is so neat, is people who have done it, they've been successful building franchises, are now sliding into the roles that these firms saying, "Hey, I'll now be your career coach guide and help concierge you into the ETF business." Nate, for those listening in, whether it's let's say a retail investor who's looking for support, firms that are out there that want to get to know you, the ETF Institute, how should they be engaging with you? What do you normally tell people when they're listening into your podcast and saying, we want to talk?

Nate Geraci:

Yeah, I'm pretty easy to find overall. So I'm out on Twitter quite a bit. So at Nate Geraci, you can go to etfstore.com. There's a contact us button or page there. You can go to ETF prime.com for the podcast. There's a way to submit comments and questions there. As I mentioned, I also have a weekly blog atetfeducator.com, so you can sign up for the weekly email there, and my contact information is available at that website. And then with the ETF Institute, I do want to just make a quick comment on that. I'm extremely excited for what we're building there. And one of the things that I really want to focus on with ETF Institute, and I know you share this goal, Doug, is really building out a community of CETFs. We've done a lot of the initial heavy lifting in terms of putting an excellent curriculum together.

We're going to continue to put a ton of effort, as you mentioned, into enhancing and building upon that curriculum and offering really interesting and value added continuing education opportunities and those sorts of things. But it's really important to me to focus on building a community of CETFs that can share ideas and share business practices and help elevate the designation, really help make it the industry gold standard. Now, I'm biased, but I truly believe the CETF is already the gold standard for ETF education, but I want to build on that. And anybody who knows me, it's never going to be good enough for me. And I just think building the community around that is extremely important. That's going to help elevate it. And so I just want to make that point in terms of reaching out or contacting me, I'd love to connect with anybody who wants to talk about the ETF Institute and the CETF and how we can help build that community of people who have that designation.

Douglas Yones:

Yeah, couldn't agree more. We are completely all in here at the New York Stock Exchange. I mean, no better way to engage the industry than through education and making sure people are well-connected and well-educated. So please reach out to Nate. He mentioned up a lot of places. Listen, if you missed all that and you don't feel like we rewinding, just send an email. Send an email to etf@nyse.com. It's easy to remember. I will connect you directly with Nate and his team, and we'll get it done. That is a wrap on this edition of ETF Central's the podcast. As a reminder, you can find this episode as well as many other episodes, and you can spend time utilizing that free ETF screener on our website, etfcentral.com. Just go to etfcentral.com, hit the screener bar, type in anything you're looking for, and you will find it. And please explore ETF University, the place for educated investors to increase their knowledge when it comes to investing in ETFs.

And hey, join me and Nate and become a certified ETF advisor, CETF. It's a great designation to have on your LinkedIn profile. Thank you again, Nate, for being here to share your insights. Stay tuned for upcoming episodes featuring thought leaders from across the ETF ecosystem. I'm Douglas Yones, Head of Exchange Traded Funds at the New York Stock Exchange, the Home of ETFs.