Samara Cohen on Global Markets Insights With BlackRock
Apr 11, 2024
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Samara Cohen, Senior managing director at BlackRock Inc. and chief investment officer, discusses the rise of ETFs, index investing, active strategies, Bitcoin ETFs, and BlackRock's potential dominance in the market. The conversation also touches on personal interests in streaming, sci-fi, and reflections on uniqueness in a financial crisis.
ETFs offer diverse strategies beyond cap-weighted approaches, integrating index and active management trends.
ETFs enhance market transparency in bonds, provide real-time price formation, and drive algorithmic pricing adoption.
Investor demand drives the evolution of ETFs towards Bitcoin inclusion for regulated exposure to emerging assets.
Deep dives
Evolution of ETFs and Index Investing
ETFs and index investing have evolved over the years, offering a diverse range of strategies beyond traditional cap-weighted approaches. The shift towards self-directed investors and the convergence between index and active management have been key trends. Active ETFs have gained traction, with 25% of new money going into active ETFs in the US. The ETF space continues to innovate to provide more choices and flexibility for investors.
Transparency and Resilience in Markets
ETFs have significantly enhanced market transparency and resilience, particularly in the bond market. The ability to trade ETFs on exchange throughout the day provides real-time price formation, even when underlying markets are closed. ETFs have raised the bar for transparency and liquidity in the bond market, leading to the adoption of algorithmic pricing and increasing market electrification.
Bitcoin ETF Journey and Investor Demand
The journey towards introducing a Bitcoin ETF reflects investor demand for access to emerging asset classes like Bitcoin. Despite initial skepticism, the value proposition of a Bitcoin ETF became clear as investors sought convenient and regulated exposure to cryptocurrencies. The evolution of ETFs to include alternative assets mirrors the changing landscape of investor preferences and the industry's response to market demands.
Investors' Demand for ETFs and Bitcoin Accessibility
Investors expressed a strong desire for ETFs due to the ease of access they provide compared to buying actual Bitcoin, which involves complex infrastructure and custody issues. The ETF was seen as a natural marriage for investors seeking whole portfolio solutions and better access to Bitcoin. Regulatory evolution and growing investor narratives were key factors delaying ETF approval, but ultimately, investor demand for accessible paths led to the ETF's success.
Impact of Bitcoin ETF Launch and Future Prospects
The launch of the iBit ETF by BlackRock quickly accumulated over $5 billion in assets, showcasing investor interest and quick adoption. The ETF's appeal lies in institutional-grade custody and a holistic approach to total cost of ownership, not just focused on fees. While the success of the iBit ETF has been notable, the long-term scalability and potential for other coins like Ethereum remain uncertain, signaling a dynamic market landscape awaiting further regulatory developments and investor responses.
Bloomberg Radio host Barry Ritholtz speaks to Samara Cohen, senior managing director at BlackRock Inc. and chief investment officer of the firm's ETF & Index Investments. She is also a member of BlackRock's Global Executive Committee and its investment and talent subcommittees. Cohen is also the Global Executive Committee's sponsor for BlackRock’s Women’s Initiative & Allies Network and a member of the Global Diversity, Equity and Inclusion Steering Committee. She was previously a managing director in the securities division of Goldman Sachs Group Inc., where she built and led the global market transition team following the 2008 global financial crisis.
