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You know them, you love them, and you probably own them—but do you understand them? By “them,” I mean exchange-traded funds, or “ETFs.”

We’re digging deep into these magical little devices (everything from fee structures, to diversification, to how “bond ETFs” might be a great replacement for your complex bond configurations). We’re joined by Samara Cohen, BlackRock's Chief Investment Officer of ETF and Index Investments—one of the largest providers of ETFs in the game—to see how she’s thinking about ETFs in 2024.

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Our show is a production of Morning Brew and is produced by Henah Velez and Katie Gatti Tassin, with our audio engineering and sound design from Nick Torres. Devin Emery is our Chief Content Officer and additional fact checking comes from Kate Brandt.

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Mentioned in the Episode

• What to Know about ETFs, per BlackRock iShares

• ETF fees

• Eugene Fama and Ken French’s Three-Factor Model

• The Case For and Against Dividend ETFs, from Of Dollars and Data

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Samara Cohen:

ETFs have been around for about 30 years now in equity markets and a little bit more than 20 years in fixed income markets. And it's not coincidental that they really came into being at the same time as the first commercial microchip because basically to make hundreds or thousands of stocks available to purchase at a single click, which is what an ETF lets you do, it lets you buy a portfolio in one transaction on exchange, you need a lot of computing power. So in the last 30 years, the reason they have taken off is really they have been a new sort of technology that allow investors to access markets, and we are really talking about all kinds of markets all around the world.

Katie:

Welcome back to The Money with Katie Show, Rich People. Today we are talking about ETFs or an investment vehicle called the “Exchange Traded Fund.” I'm joined today by Samara Cohen, the Chief Investment Officer of ETFs and Index Investments at iShares by BlackRock. Think of this episode as a timeless topical deep dive, but also a chance to check in with the experts about what they're anticipating in global markets in 2024 and beyond. But first, let's break down the ETF and how it's nestled into the broader jargon filled landscape of things like index funds and mutual funds. Do you remember those old Mac commercials from the mid-2000s?

The Mac was played by hooded zip up-wearing Justin Long, aka my husband Thomas's celebrity doppelganger, and the PC was played by boxy brown suit-wearing John Hodgman. I feel like you could recast those two for a commercial called, hi, I'm an ETF and I'm a PC. I mean, mutual fund.

Mutual funds came first. They basically described what happens when a bunch of investors pool their money and hand it over to a fund manager. This fund manager then decides which stocks and bonds (and maybe some other stuff) to buy and then passes out the capital gains or losses accordingly. They're typically actively managed. So imagine your boxy brown suit man clicking away at his PC all day, making trades, and therefore typically more expensive and less tax efficient.

ETFs and index ETFs in particular are like Justin Long, but with less boyish charm. They're tax efficient. They're typically cheap, they're light on their feet.

And index funds are, I don't know, I kind of think of them like the center of the Venn diagram. It's like that famed “every square is a rectangle, but not every rectangle is a square” analogy. Every index fund is a mutual fund, but not every mutual fund is an index fund, right? I don't know, I'm reaching the limits of the analogy, but nevertheless, she persisted.

ETFs can be actively or passively managed, but index ETFs, those that somewhat passively track an index are probably the ones you are most familiar with because they behave a little like index funds—or a lot like index funds. The key differences in this reporter's opinion are so minimal for most people that it's hardly worth knowing. Look, I'm just being honest here, but if you're curious, the index fund is only priced once per day and ETFs can be traded and therefore change price all day long. Perhaps more importantly, beginners’ index funds usually have investment minimums that range between $1,000 and $3,000, and ETFs can be purchased by the share or even fractional shares these days, which are usually in amounts at or around $100 and sometimes a lot less.

The ETF was introduced to the masses in the early 2000s, and has been rapidly gaining popularity ever since. I think of the ETF as a tool that built on the fire that the index fund started. It made it easier, cheaper, faster for regular people to invest in the stock market wisely and achieve near effortless diversification. To give you a sense of scale for just how large the ETF market is in the US today, roughly 80% of securities purchased by individual investors were ETFs in the second quarter of last year. It's estimated that up to 12.7% of total equity volume in the US comprises ETFs.

Moreover, because there are zillions of them, okay, maybe not zillions, but at least 8,000, there are more ETFs than individual stocks, similar to the way there are more words than letters. You can basically find a passively or actively managed low cost ETF that'll track the performance of whatever you want.

While there are your standard operators like S&P 500 or Total Stock Market ETFs, you've also got things like the Aging Population ETF (ticker: AGES) which includes companies that provide products and services to, well, an aging population, and the Clean Energy ETF (ticker: INRG), which invests in things like solar, wind, and expressly doesn't include coal weapons or other perhaps objectionable holdings. ETFs are generally pretty transparent about their underlying holdings, so if you felt like sifting through a few hundred tickers, you could.

It's also hard to talk about ETFs without talking about fees or rather the relative absence of them. Their low cost nature is partially what makes them such a practical and valuable choice for your average Jane. And while the fee is more technically known as expense ratios can be lower, they're not always lower. So it's definitely worth checking as some of the more niche thematic ETFs have quite high expense ratios that are roughly 10 times higher than regular index ETFs or index funds. We're talking in the 0.4% to 0.5% range, anecdotally speaking, as opposed to 0.04% or so. For definition sake, an expense ratio tells you how much of the fund's assets are used for administrative costs. So if a fund's expense ratio was 0.5%, that means for every $10,000 invested, you'd pay $50 in fees each year. The Money with Katie take on this is that if you're paying more than 0.5%, you're paying too much. And honestly, if you're paying anywhere close to it, you're probably paying too much.

We'll get right back to it after a quick break.

Now, we throw the word passive around a lot in the investing space, but the reality is that someone has to decide what goes into an ETF. They're not growing out of the ground. Someone has to build it. Even an index ETF introduces decisions about proportions of the underlying holdings. For example, are we cap weighting? Are we equal weighting? Are we giving big companies bigger shares? And if anything should be excluded?

Samara is responsible for all of the brainiacs who construct the ETFs at iShares, so I wanted to get the inside track from her…

So how does your team think about constructing ETFs that are going to be valuable additions to the everyday investors portfolio? I mean, I think it's so telling that there are many thousands more ETFs than individual stocks. So I'm just curious, what is BlackRock's ETF philosophy?

Samara Cohen:

Sure. So our purpose is to help more and more people achieve financial wellbeing. We always gut check with a, can this be useful in some way towards helping somebody achieve financial wellbeing in the long term? So that's test number one.

Test number two is that when you are constructing a portfolio, there's lots of different ways to do it. We don't have to put a strategy inside an ETF if we think there is a better way to deliver it to clients. So we really test ourselves. What's the value of having this be accessible on exchange? I mean, indexes were historically more accessible to sophisticated institutional investors. If you wanted to invest in an index, you were probably buying a futures contract before there were index funds and ETFs, right? You had S&P 500 contracts. Those were the means available to gain that sort of broad market exposure. And now really critically that's available to individual investors, and that's what we live to do every day. We think of what we do as just expanding access as much as we can to all different types of investment opportunities in the world.

Katie:

So this might be feeling pretty abstract so far. How do you interact with ETFs in real life? Part of what can make the financial world a little confusing is that there are a lot of different players involved, so it can be difficult to understand how they all relate to one another. So we'll try to employ some useful analogies here. Little sidebar: I was at BlackRock's headquarters last April for a lunch and learn and a tour, which is where I first met Samara and they were taking me through their museum wall of history, and I jokingly asked where they kept all the single family homes they keep buying. Turns out I had them confused with Blackstone, not rock, Blackstone, which made for a slightly awkward moment. But also, can we please stop naming investment firms after colors and rock formations? I am begging you. It is so easy to get confused.

But if you use either of the financial services companies, we often talk about Betterment or M1 Finance, it's likely that all of your holdings with both firms are ETFs and likely from either Vanguard or BlackRock iShares, since they're the two largest providers of ETFs in the game by assets under management—with BlackRock, offering more than 400 and Vanguard offering a more modest 82.

So a moment to explain how these various entities are related to one another using a luxury shoe analogy: Vanguard is like Christian Louboutin. You can buy Louboutin shoes directly on christianlouboutin.com or you can go to other third-party retailers like Saks to buy them. M1 Finance and Betterment are like Saks. They don't make their own shoes, but there are people, or maybe in their case algorithms, in the shoe department that'll help you find which ETF—er, shoe—is best for you. And then BlackRock is like Chanel in the sense that you actually can't go directly to chanel.com and order their shoes online. You can look at them, but you can't buy them. You have to go to a third party retailer or have a connection though in real life, you can't go to a BlackRock store and look for your size the same way you can go hit up a Chanel store. They just have that museum wall and no single family homes apparently.

And for those in the audience without a designer shoe fetish, I sincerely apologize if that just made things way worse. I am who I am. But sometimes you have enough pairs of nice shoes, can't relate, and you don't need to keep buying more. How do we discern when we should add new exposure to our portfolio versus just rocking with what we have?

Well, we've talked about things like small cap funds and value tilts on this show before to investing approaches that draw on Eugene Fama and Ken French's Three Factor Model that says, over time, small cap stocks and value stocks should theoretically outperform their opposites, the large cap growth style holdings, because small cap value funds take on more risk that cannot be diversified away.

Emphasis on the word “theory”. Of course, there are plenty of investors who own nothing but the S&P 500 or Russell 1000 growth who have been more than pleased with their performance over the last decade.

Still building a portfolio of ETFs that align with your investor philosophy can help you hold through volatile times. Common example here is the first decade of the 21st century wherein growth stocks, which have been doing really well in the last decade, were getting pummeled. But things like emerging markets were performing well. Diversification in the types of shoes, I mean ETFs, that you're buying mean that you'll have footwear no matter the weather, rather than wearing an impractical tweed, open-toed sandal in the rain for years on end.

And as the broader economic weather changes, investors think about portfolio construction a little differently. So what's been most surprising in the opportunities that you all see on the horizon for ETF markets right now? I think I can imagine a Rich Girl listening to this going, I want to know what's on top of mind for Samara in 2024.

Samara Cohen:

Well, what's top of mind for me at this moment? And I should say we are having this conversation at the beginning of Women's History month. The two things I think that are top of mind for me right now are the role of women in shaping markets going forward and the role of individual self-directed investors. And what I mean by both of those things is we are increasingly learning, and there's a lot actually being published on this, that women have different needs than men when it comes to investing in investing for the long term, for a bunch of reasons. They live longer, they're more likely to maybe take time off of work for certain periods of time, whether it's to care for a kid or to care for an older family member. They're often paid less. That's an area where there has been progress in the world, but there's still more progress to be made.

And interestingly, and you have had conversations about this, Katie, which really landed with me because I'm guilty of this too, they tend to hold more cash than they probably should. They tend to overestimate their liquidity needs, right? Yeah. So number one, it is putting out the best kind of access means and attractive product sets to help women specifically set themselves up for financial wellbeing, whether that's in retirement or otherwise. And the things that are happening in ETFs right now that are specific to that are things like last year we launched a set of Target Date ETFs, which are really interesting because what they do is they underscore this mantra, you do not have to be an expert to be an investor. Target date investing is a method of kind of choosing your approximate retirement date and investing in an active strategy that risk reduces as that date approaches.

So we launched a set of ETFs where you could kind of pick the date and buy that one fund and the rebalancing is done for you over the course of those years. So that sort of product innovation is particularly important, I think, to women and to women investors.

But the second theme in the market, which really took place over Covid and Covid just accelerated it and now it's here to stay…it's the role in markets of individual investors, of investors who are making their own decisions, going through a digital platform, doing their own portfolio construction and looking for advice through social media, through roboadvisors and otherwise. And that's thinking about how markets need to be set up to support that sort of investing, I think is going to be the principle that drives global market structure shape over the next decade. So that is the second thing that is very top of mind for me.

Katie:

Well, on The Money with Katie Show, we always love centering women, so I'm glad that that's what you're thinking about. I think that the Target Date ETF conversation is an interesting one. If anyone listening to this isn't familiar with what a target date fund is, it kind of simplifies the process of if you know that you are going to most likely use this money at a certain point in time, the year is actually in the name of the fund. So I could say, oh, I want this money in 10 years from now roughly, so I'm going to buy a 2035 fund because that's roughly 10 years away. And then the risk adjustment and the rebalancing happens on the backend by the fund manager, so that I'm not having to go in every year and go, okay, is this allocation still appropriate for my risk tolerance or do I need to be shifting it as long as my risk tolerance is remaining the same, the fund should be reacting. Would an investor have to use fidelity to buy the target date fund ETFs or are there other platforms where they're available right now?

Samara Cohen:

You can buy at any place, you can buy a stock. That's the beauty of ETFs you can buy that you can buy through any platform. And what you said is exactly right. I think what is exciting at this moment in markets is that there's such a spectrum of how you can participate. So the single most important thing right now, and this is for men, women, really for everybody, is the need to participate and that you don't have to be an expert to do so. I think that there were some really important steps that were made over the last couple of years. Last year in particular, a lot of people moved just from their bank accounts into cash instruments, and that's a good first step, but now we know that the next fed move will be a rate cut that might happen a little later rather than sooner. But reinvestment risk matters. So thinking about a longer duration, fixed income allocation is the next step.

And I like to say we see a lot, there's so much stuff about, and it can be intimidating when you see about investors in the media, they're buying meme stocks and they're buying options. Options have been a huge story, but I actually think it is not a bad thing if maybe your first foray into markets is to just see what this is about. I think a lot of times people are savers and then maybe they become a little bit of a trader just to see how the ecosystem works before they really commit and become an investor. But it is that journey to creating more investors, bringing more people from saving all the way through to investing. That's really important right now in markets.

Katie:

We'll get back to our convo after a quick break.

So how much should you care about ETFs? Perhaps not very much. If you already own a portfolio of index funds and now you're panicking that you should be in this different hot young Justin Long instead, don't stress. It's just another option. It's one that typically works better for beginner investors for the aforementioned lower barrier to entry. When I started investing, I wanted to buy a total stock market index fund, but the minimum buy-in amount was $3,000. And I checked notes, did not have $3,000, so I bought the ETF version instead.

Though there's one arena of ETFs that sometimes generates a little extra attention, fixed income aka bond ETFs, because buying a bond directly from a government or corporation works differently than buying a bond ETF. So I asked Samara to break down the difference…

You mentioned fixed income. I think fixed income ETFs jump out at me. The bond market is in my mind, something that's more complicated than the equities market. So if you're buying a bond like you're going to treasurydirect.gov or whatever, and buying a treasury bond versus buying a bond ETF, it's my understanding that those two things generate different results because what's happening on the backend is different. Can you help our audience and me wrap our heads around how a bond ETF functions and how our investing strategy might be different as a result?

Samara Cohen:

I love talking about bond ETFs, Katie, because you are exactly right. The bond market has historically been super intimidating and inaccessible, and there's a reason for that justify order of magnitude. In the United States, there are about, let's call it 8,000 listed stocks. I have never found two people who will give me the same answer on how many bonds there are. There are probably over a million CUSIPs, oh my gosh, individual bond, and you talked about buying treasury bonds, there are corporate bonds, bonds, mortgage bonds. So even where you go to buy individual bonds is really complicated and there are lots of them.

For me, one of my own first personal investing experiences wasn't even for myself, it was for my grandmother where I was newly in my job for a couple of years, but I come from a family of doctors and teachers. So I was the finance kid in the family, and she told me she wanted to put money into an annuity, and I looked at the economics of the annuity and I thought, I really think that there's probably a better way to do this.

So I constructed a laddered bond portfolio with her, but I had to work with basically a broker who charged huge fees. It was really hard to get the transparency on the fees and that whole portfolio construction was a difficult process, and I was nervous. I didn't want to get this wrong. This was for my grandmother.

But then I later started working on a trading floor and saw the way institutions like large, sophisticated institutions access to this market, and they did it over the phone, over email. It is a very, what we call opaque OTC, that stands for over the counter. It means “two people talking on the phone” market. That is actually only recently and because of ETFs started to electronify. So let's go back to this idea that an ETF is really a technology. It is a packaging technology that lets you take a portfolio of bonds and buy them all at once, the way you'd buy a single stock.

That's what I did for my grandmother. I wanted to get some diversification, some ladder of maturities. And so we call that kind of identifying your risk parameters in the bond market. So it's like, what's your time horizon? What are your yield requirements? How much credit risk do you want to take?

We now have ETF portfolios that all of those characteristics. So you can go ahead through the ETF market and buy a diversified bond portfolio. So the outcome isn't necessarily as different Katie as the user experiences because it's accessible through any of these digital platforms or any place that you buy stocks, just like a target date fund is. The user experience is much easier, it's much more transparent, and the strategies available to you are diversified. So you are getting that sort of portfolio diversification that historically you had to be a really sophisticated institution with access to a big Wall Street dealer in order to play in that market. That's what's changed so dramatically, and it's changed at exactly the right time because now with interest rates rising, more individuals really need diversified access to the bond market as part of their portfolio construction.

Katie:

So if you were to look at an ETF that comprises bonds, would you then expect the return to be, if I got a US Treasury Bond ETF, would I look at that and expect the returns to be the same as if I went and bought the bonds directly? Or how does that change if at all?

Samara Cohen:

Well, the biggest change is if you buy the bonds directly, they mature. So you would go and buy a 10 year treasury and in 10 years you would get your money back and you get the interest rate until then. If you buy an ETF, often you are buying an evergreen fund. So let's say you bought a 10 year treasury ETF, what that portfolio bought, and this is always very transparent. That's one of the core principles of an ETF is the index methodology. Remember we talked about taking an index and making it an investible portfolio. So let's call it a, it would be an intermediate treasury ETFA 5- to 10-year ETF would basically continuously rebalance according to the rules of the index. So it would buy 10 year treasuries when they matured such that they had less than five years, they would sell those and they would add longer duration and they would continuously rebalance so it didn't mature.

Now lately, because there is demand from investors who do want a maturity date on their ETF, there are also a whole family of ETFs that actually have maturity dates that behave like bonds. And so they will age from 10 years or 30 years down to zero if that's what you want. But you're still getting portfolio diversification.

And that's kind of what I did for my grandmother. I wanted her to get more yield than she would've gotten in treasuries. So I bought her several corporate bonds at different maturities, but intentionally knew that we wanted this to ladder down over time. So you can buy an ETF that does mature to zero, but has more diversification than if you bought a single bond.

Katie:

I see. Okay. Thank you for clarifying. That is something that I've kind of been trying to wrap my head around and Google has not been returning very helpful results.

So as we just covered, there are equity ETFs and fixed income ETFs, but there are also ETFs made of currencies, real estate, cryptocurrency, you name it. Some ETFs even track things like barrels of crude oil and they don't actually own the oil. These are known as synthetic ETFs and typically use something called derivatives or a contract related to the asset instead. For example, if you were buying an ETF that supposedly held crude oil, what it would probably actually hold would be oil futures contracts. These are far less popular and may carry more risk. And for curious minds, I don't personally f*** with derivatives or futures because my financial life is simpler than that, but live your truth.

You can also focus on ETFs that pay dividends. In regular people speak, this means the underlying holdings aka the companies are distributing their profits in the form of cash payments to shareholders.

For example, if I own a hundred dollars’ worth of an ETF that pays a 2% dividend, I would get $2 in yield each year. Now, keep in mind, this is a relatively tax inefficient way to do this in a taxable account because as we know, dividends are subject to taxation annually because they are income. But some people prefer dividends over price movement, aka the value of that stock or share going up because they like the predictability of a dividend yield. They like knowing they're going to get some percentage yield each year rather than the question mark of risking the price movement that could go up or down.

Dividend payments are a way for companies to return value to their shareholders. So imagine you own stock in MWK, hey, and I pay you a 2% dividend. I'm paying you that dividend instead of reinvesting that money to make MWK grow more.

But as Nick Maggiulli pointed out in a recent piece on his blog, Of Dollars and Data, the SEC adopted a rule in 1982 that made stock buybacks easier. And I know—just stay with me here. By the turn of the century, stock buybacks—not dividend payments—were company's preferred method of returning value to their shareholders and pissing off the general public in the process.

So how does this work? The company's figure: Stock buybacks typically raise the price of the stock a price movement. So it technically provides value to shareholders by making the stock worth more. But it also lines the pockets of executives who have shamelessly enormous stock compensation and does little to materially improve anything in the business, which is why they are politically fraught a stock buyback functions to manipulate the share price because they basically lower the number of shares of a company in circulation.

As in, if I was doing an MWK stock buyback, in this example, I'd be using my MWK revenue not on R&D, that'll help the company grow in the future or paying dividends out to shareholders, but on actually buying back shares of my own company, MWK, which pushes up a metric known as earnings per share, which can juice the stock price. You're basically manipulating a fraction.

So to return to our earlier example, it might make the ETF that was worth $100 now worth $105 through little more than using company profits to buy back shares. The end result for the individual who owns the ETF is an increase in value. All that to say investing for dividends specifically is a bit controversial because theoretically, you're just opting to be paid in a way that might be psychologically satisfying because you're getting cash distributions but less tax efficient. Overall, though the creation and mass adoption of the ETF has made it a lot easier for individual investors to make smart money choices. Samara had another theory to help close us out: One of the things that was top of mind for you was the individual investor being more of a major player or maybe this monolith of individual investors and that you believe that trading volume of ETFs has increased in part due to financial education on social media and this information becoming more commonplace, we'll say, online. So I'm curious, not as Samara the person who's running ETFs at iShares, but as Samara the human being, what have you observed in your own life maybe with your own kids, even as far as how financial education has changed?

Samara Cohen:

There's so much more information available to individual investors and also importantly, there's so much more empowerment I think, of people feeling like they can go out and find that information. Now, my kids are 15 and 17 and I will say it's a constant struggle in terms of discussing with them what makes good information versus what makes bad information online. But they do know how to go and search for information. And I think that that is incredibly important and incredibly powerful, and that has made all of the difference in terms of people feeling equipped to go out and participate in markets.

Now, specifically with my kids, I will say it is very hard to be the child of somebody who works in my business because there's a lot of compliance restrictions to go through. So I tried to set up, I did set up an investment account for my son when he got interested, but my husband is also in finance, so I have to go through a whole pre-trade compliance process for everything the poor kid wants to do. But to his credit, he understands and he calls me and we talk about it. But my kids do their research in really different ways than I do the research.

And I should say too, Katie, even how I do my own research is profoundly changing right now during this time of Gen AI, the tools and access we have to kind of search for information more effectively. I think these next few years are going to be really transformative in how people can find things online and increasingly attribute back to the source what they find so they can verify the utility of it or not.

But I think for younger, and let's call them digital native investors, they really learn in a totally new format. I spent years trying to explain to my kids what an ETF was, and then BlackRock started a TikTok account, and one of the very first TikTok videos was like a 60-second video.

It was a woman holding a bunch of papers and she threw them up in the air and she said, what even is an ETF? And her friend comes in holding a box of crayons and says, this is basically an ETF. You can buy the whole box of crayons where you thought before you only needed to buy one or you had to buy. I mean, I can't even say what it was, but all of a sudden, after all my years of trying, my kids understood, my daughter announced at the dinner table, I know what an ETF is now. So whatever I was getting wrong, that 60-second TikTok video got right. But it is an important reminder if you're somebody like me and you're thinking about how are people consuming information and self-educating, given that more and more of them are participating in markets with their savings.

Katie:

Mmhmm. Are those friendship bracelets on your wrist that I see?

Samara Cohen:

They are. They're Little Words Project bracelets. So they are, although my daughter is a huge Taylor Swift fan, I wear these two, these are my twin mantras that somebody gave them to me, and I wear them every day. They're “progress and purpose.”

Katie:

Oh my gosh, I love that.

Samara Cohen:

Yeah, there are words that mean a lot to me, both personally, but also as an investor. I like to say we come in every single day in building ETFs and building access for investors that were champions of progress for investors. And that's kind of a rallying cry for us to hear. And I told you what BlackRock's purpose is too, but just in my own career, I think one of the things I've learned is it was awesome when I graduated from college making money and being able to pay my rent.

Katie:

It’s fun, right?

Samara Cohen:

It's so fun, and that's a great goal, and that was totally my goal. But after I had been doing this for a long time, and especially once I became a mother and was saving for my kids, I really wanted to feel when I came to work every day that I was doing something important and something that in my own way could change the world and make it better. And my nexus and my passion is markets. So that purpose around making markets better has really in this leader part of my career, been my driving force.

Katie:

I don't know about you, but I wasn't exactly expecting the Chief Investment Officer of one of the largest asset managers in the world to be wearing Swifty-style friendship bracelets. I kind of honed in on it immediately, and her story is pretty cool too.

Samara Cohen:

I did seem different from their standard job applicant for a couple of reasons. The first, Katie, is that I was a theater major, which they didn't see, although I was also a finance major. So truth be told, I went to college, really passionate about theater, and I wasn't an actor, I wasn't a performer. I was totally a backstage kid, stage management, production, directing design, lighting design. I loved being in the room and making it happen. And I was really passionate about live theater in particular. That was my passion, but I was also always a math person. And so I found when I got to college that I actually kind of missed math. So I heard about a great econ professor, so I started taking economics and I loved it. I got really interested in markets. It felt like math with a purpose in a sense.

And then it also had the effect of making my parents much more chillaxed about all of the summers I was spending in regional theater making no money. And so I had these two degrees. And then when I was graduating, I did really want to be financially independent. My financial engineering degree was from the business school. I heard what my business school classmates were looking at. But to be honest, I mean I had no idea what I was doing. I sent my resume to the places that I thought were the hot firms that other people were doing, and then I tried to research them on the backend when I went in.

So I was a theater major and I was also a woman, which this was the ‘90s, and there weren't that many women looking in finance. And as it turned out, it was an unconventional path, but I stood out, and so I had that going for me. And the tagline that I used was that I used both sides of my brain, that I had kind of the art side and the math side. Once I could explain why I was there and why I was interested in markets, the fact that I had the unconventional path actually kind of helped.

Katie:

It's so funny that you mentioned that you are the behind the scenes, because I am just reflecting on my own days of having big theater kid energy, and I was definitely the one who wanted to be front and center on the stage and wanted all the attention. And it's just fitting that now you actually build ETFs. And I have a podcast where we talk about ETFs. We've both landed in the right place. Oh my goodness. Thank you so much for being here today.

Samara Cohen:

Thank you for having me.

Katie:

That is all for this week. I will see you next week, same time, same place on The Money with Katie Show. Our show is a production of Morning Brew and is produced by Henah Velez and me, Katie Gatti Tassin with our audio engineering and sound design from Nick Torres. Devin Emery is our Chief Content Officer, and additional fact checking comes from Kate Brandt.