Jay Jacobs

token consumption last year grew 17 times.

Not 17%, which I think most people would view as a pretty good growth company, 17 times growth of token consumption.

Essentially, as much money as the major large language model providers are plowing into capital expenditures, they can't keep up with AI demand.

So even just in the last several months, I think the narrative has shifted in the market from that of

Are we worried companies are over-investing in capex, to what if companies are actually under-investing in capex?

Thanks for having me on.

Well, I think it's important to recognize portfolio management techniques have always been evolving as the world has evolved, as data and software has evolved to make portfolios be able to be managed in different ways and assess risk and opportunities in different ways.

So you go back to some of the factor research in the 1970s, the introduction of the style box in the early 90s, the GIC sector classifications that divvied up the world into different sectors in the late 90s.

There's been a constant evolution of portfolio management.

And what we're seeing is one of the latest evolutions is really increasingly investors are looking at the world through a thematic lens.

They see the rise of artificial intelligence, the changing demographics, the changing energy needs, the future of finance, as well as geopolitical fragmentation all being major forces that are reshaping how they can think about risks and opportunities in their portfolio.

And as they assess those risks, they increasingly see how valuable thematic ETFs can be for fine-tuning their exposure to these themes in their portfolios.

I would say there is an under allocation or the way that people are getting exposure to these growth opportunities is through not always the most precise tools.

I do think a lot of people out there think they're getting exposure to AI by allocating to the technology sector.

And in some ways you are.

Yes, the technology sector has exposure to names that are building large language models or building some of the important hardware that goes into data centers.

But as we've also seen this year, the tech sector also has exposure to software names that have been disproportionately hurt by the rise of artificial intelligence and the risk that that presents to SaaS business models.

So I think what many people are learning in real time is just there's a difference between sector investing and thematic investing.

And for some of these really disruptive themes, it takes a dedicated thematic ETF to be able to target them appropriately.

We are seeing a gradual shift of more adoption of thematic ETFs amongst advisors.