Edelman: The Truth About Your Future

April 13, 2017

ETF.com: The book really supports the thesis of the iShares Exponential Technologies ETF (XT). How linked are the two?

Edelman: The book really is a walkabout that explains the journey that led to the inspiration for XT. As the answers emerged, I realized that, from an investment management perspective, going back to that question of “how do I need to change the advice for my clients,” what emerged was that we needed to invest a portion of our clients’ assets into companies emphasizing exponential technologies.

My research made me realize that no such investment vehicle, no mutual fund, no ETF existed with an emphasis on exponential technologies. Despite the fact there were over 400 technology funds, none of them emphasized exponential tech.

They all do the same thing: They all invest in the usual suspects, IBM, Motorola, Intel, Microsoft, Dell, Oracle. None of them was focusing—they were just tech funds. That’s not what I was looking for. I was looking for companies that are exploiting exponential technologies for the growth and development of their companies.

So I went to BlackRock, and that led to the creation of XT, which launched just over two years ago—one of the most successful ETF launches in history.

ETF.com: Your firm represents something like three-quarters of the assets in the fund at this point, and XT is almost at $1 billion in assets.

Edelman: When it launched, we were 100% of it, so the fact that we’re only three-quarters demonstrates that others are beginning to recognize the value of this investment.

ETF.com: Do you think there's a learning curve there?

Edelman: Very much so. BlackRock created the fund at my request. Edelman Financial doesn’t earn any money from the fund. There's no financial transaction between us and BlackRock or Morningstar. I simply wanted the fund to exist so that we could provide it to our clients.

BlackRock accommodated us, but I don’t know that many are even aware of its existence. That’s No. 1. No. 2, it’s a complicated, complex conversation. It’s not about tech. You mention “tech” to people, and they think Microsoft, maybe Google. Of you talk to advisors in the field or experts in technology, experts in the field, they're talking about the latest financial planning software, or the hot new rebalancing product. They're not talking about exponential technologies, which is an entirely different conversation.

So most people are unaware of the field of exponential technologies, and have no knowledge that this ETF exists, or why it’s different from all the others. I think for both of those reasons, it’s not on the radar of many in the industry.

 

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