Humanoid Robots Could Be The BIGGEST INVESTMENT OPPORTUNITY Of Our Lifetime

0:00He wants to stay up here. He left his phone. I thought maybe he wanted me to call him or something. All right. Dave, you have Roundhill Investments. You guys do thematic ETFs. You also have pioneered these weekly pays, which we'll talk about in a second. But part of being a thematic ETF issuer is that you think a lot about themes. And I think one of the big themes that you all have kind of latched on to and have been very right about is this like winner-take-all strategy that's happening across financial markets. Explain how you guys view what's happening. Yeah, so our kind of general markets thesis that most certainly plays out from a thematic point of view is that we are in an environment of a winner-take-all approach, right?

0:41I think the easiest place to think about that is in semiconductors, right? So the market latched onto NVIDIA, being able to provide sort of their high-powered chips that are needed for all these new AI applications, whether it's large language models themselves or now what we're seeing with humanoid robotics, which is something that we're excited about as well. And we're seeing this in other industries, right? And the impact in the stock market is being very clear where now, as opposed to rewarding sort of sectors or groups in unison, the winners who are able to generate revenue, generate earnings, transparency into their profitability growth are actually seeing the capital flows.

1:20and losers are in some ways left for dead because they're just not able to compete, especially with sort of the way markets themselves have changed with the growth of retail investors. Now, in this winner-take-all strategy, does it apply to every single industry, right? So, you know, you guys, and for the people that don't know about Roundtale, you all started in, I think, 2018, and it took about six years to get to a billion in assets. I think you're at seven now. We just hit seven yesterday. Okay, just hit seven billion. So you went from essentially a billion to seven billion in the last year-ish, right?

1:57Maybe 14, 15 months. So incredible growth. And one of the big funds that you guys have is the MAG7. So I think you're the only folks who have a MAG7 ETF that's out there. You buy one ticker, you get seven stocks in there. One of the questions is like, why do these seven stocks keep driving so much of the market, right? And I think this winner-take-all thing that you're talking about, but in those seven stocks, they're not all in the same industry. They're not competitive with each other in any way, right? Well, that's what I think is really unique. It's obviously seven stocks, and there's been essentially since we launched the fund in 2023.

2:33And we actually just published a piece on this where we looked at the articles written about the Magnificent Seven negatively from whether it's Bloomberg, Wall Street Journal, Barron's. kind of high quality, credible news outlets, and then looked at the subsequent return when whether they said they're overvalued, the performance could no longer continue. And guess what? Obviously, it's not always a one-way path higher, but they continue to power ahead. And the reason being is that it is seven stocks, but there's hundreds of companies within that portfolio. We think about Alphabet, right? It's not just search.

3:08It's what they're doing with Waymo, obviously YouTube and the growth there. So I think the market itself has changed from the winner-take-all environment, whether companies are almost conglomerates in different ways. And we don't always think about things that way. So that's one of the reasons why these companies can continue to power ahead. Plus, you have the fact that they have, particularly compared to the rest of the market, grown their revenues, grown their earnings, and have done so in an incredibly profitable way to an extent that other companies have not been able to do. And with that being the case, I think that's one of the reasons why they've seen outsized valuations.

3:47We could argue whether they should be rewarded for whatever particular price to sales or price to earnings multiple they're trading at. But at the end of the day, they've been generating not just sort of the power of the market, but really of the U.S. economy of late. So really what you're saying here is like these, although they are one company, they encompass so much under that one corporate brand. You mentioned Google. If you look at some others like the Amazons of the world, et cetera, they do so many different things that in a way, by putting these seven individual stocks together, you're actually getting a broad index that might actually look similar to what the S &P 500 looked like 20 years ago.

4:23It's just now you've had consolidation in these mammoth companies. Yeah, no, I think that's a great kind of a great way of thinking about it is that we were we're in an environment and we know that there's been until recently a dearth of IPOs of kind of smaller companies, exciting companies that are going public. So investors have had a hard time accessing them, which is one of the reasons why, you know, as you were talking about before, the growth of privates and the ability to access those, I think, is becoming really a paramount importance for investors to think about. And then these names have actually been able to develop, or these stocks, I should say, kind of develop their sub-brands under them, coupled with the fact that the vast majority of them are at the forefront of the AI revolution and all that is going to come from that.

5:10Now, what's interesting to me is, I was talking to Jordi Visser, I think, last week about this, is these companies are big, right? If you look at the metas of the world, if you look at, although Oracle's not one of the seven, like you look at an Oracle, these are hundreds of billions, sometimes trillion-dollar market cap companies. And they're still reporting numbers of growth, 20%, 30%, year-over-year growth in profit, right? Or in revenue. And so it just feels like these businesses are actually accelerating. You wouldn't expect a business that is a trillion dollar company to still be growing 30 % year over year and delivering these kind of bonanzas in their earnings reports.

5:49Do you all see changes in capital flows into, let's say, the MAG7 ETF or anything else as these companies start reporting and it looks like they're actually accelerating rather than slowing down? Yeah. So it's interesting. Maybe I'll take a quick step back. One of the reasons why ETFs have seen$800 billion of inflows year-to-date in 2025, I'm talking about the whole industry, stocks, fixed income, crypto, asset allocation ETFs, covered call ETFs, what have you, is because it allows people to do one of two things to fit their objectives, sort of like John was talking about. If you are a long-term investor, you can use an ETF to build a portfolio with an average cost of three basis points.

6:31Or if you are more of an active trader, that doesn't necessarily mean that you're trading even intraday, you can actually use ETFs to get that kind of instant diversification with one trade and position for earnings. So when it comes to what we've seen with our MAGS ETF, we see exactly that. So actually, when we saw sort of the market crash related to the kerfuffle around tariffs in April, we actually saw investors allocate toward max. You would think they would have sold it, but they use that actually as a buying the dip opportunity, which has paid off. And then yes, around earnings season, we tend to see really a spike in activity in the fund.

7:12And then particularly a spike in the options activity of the fund as people use that tool to kind of express a view. In some cases, it could be a hedging view. In other cases, it could be an outright bullish expression. When you look at these ETFs and this kind of very low cost exposure, one of the stats I saw that absolutely blew my mind was BlackRock created the Bitcoin ETF. The Bitcoin ETF is now their most profitable profit. Yeah. Right? Now, part of that is there's been this massive inflow into Bitcoin ETFs as an example. but also they charge, I think it's 20 or 25 basis points and the S &P is like eight basis points.

7:48And so how do you see the fee structures and maybe for the retail investor, how should they think about fee structures when evaluating various ETFs and strategies? Is there like, Hey, there's certain areas where you should expect and be okay with higher fees because they're more complex strategies versus maybe others where you should actually run away from high fees or, or just talk to me like the fee structure and how to evaluate that as an investor. Yeah, so there's kind of two things here, and there's actually a lot to unpack. So if I'm thinking about fees for kind of broad-based market indices, S &P 500, MSCI World, if we want a global portfolio, the Barclays aggregate and fixed income, I probably would, particularly if I'm using that for a long -term view, kind of 99 times of 100, probably pick the lowest cost solution.

8:36assuming it has liquidity and the size. And generally, these funds do now. Because that provides me the fee budget to use in other areas. So if I can save cost, use ultra-low-cost ETFs to build that kind of part of the long-term portfolio, then I free up my fee budget to use for either actively managed ETFs or other areas that will be more costly. And this is what's interesting is that even when I started in ETFs 15 years ago, it was just a passive story. It was all about indexification. We know that active managers had had, you know, many had challenges for years consistently beating benchmarks.

9:17And there was a wave of money going into indexing, going into ETFs. In the last two years, that's really all changed. Some of it is a change in the regulatory environment, whether that's the allowing of things like crypto ETFs. But it's also that now investors can access active management in ETFs. And it's not just when we think about kind of traditional stock picking. Active management in ETFs could mean the use of leverage. It could mean options overriding. It just means so many different things that it didn't before. And active ETFs have really been the biggest growth area, which is why ETFs in aggregate had over a trillion dollars of inflows this year.

9:58And as I mentioned, we're on pace to actually beat that in 2025. Now, you mentioned these kind of option-based active funds. In a way, it's active because there is this option component, but it's not necessarily taking directional bets, if you will, right? An explosion. You guys have been one of the big leaders in this space. There's many others. And I think one of the innovations that you all have had is you have used the rise of zero-day options to be able to create the ability to pay weekly dividends on these ETFs. And so for those that are unaware of these funds, I don't know how much money has gone into these across all the issuers, but there's an enormous amount of money where you basically buy an ETF and you can get these dividends.

10:41and there's trade-offs in terms of how people use these in their portfolios, et cetera. But talk a little bit as to like, what goes into creating these funds? And if you're a retail investor trying to evaluate them, how to think through, okay, I can go buy the underlying stock. I can buy these dividend, you know, things on single name stocks or on buckets. Um, or maybe I can just go and buy a fixed income, you know, ETF that somebody may offer. Like, how do you through the evaluation? Yeah. So when I think about sort of launching a new ETF or what could make the potential for a good ETF, it's a combination of three things.

11:15One is kind of the commercial viability, right? Is there an interest, whether it's with institutional investors or retail investors for this particular strategy, this particular approach? So that's step one. And then the two kind of critical components are how do you structure it, right? So what exactly is the investment strategy going to be? How are we going to run it? And then importantly, particularly when we're talking about new instruments like zero DTE options or other areas, it's what is the operational component? I think what's the great part about ETFs, and they've democratized investing in a wide range of asset classes, is that we take for granted that you still need to trade them every day, build the baskets, work with market makers and that community to allow people to buy it on exchange.

12:05And if you can accomplish those three things, then it likely puts you in the potential to have that commercially viable ETF. Yeah. Now, if we go back to Mag7 for a second, you guys had some very unique point of view on what you expect the Mag7 to do over the next year or two. Revenue growth, free cash flow, their investment in AI. Just talk through what does the outlook look like for these seven companies in particular? Yeah. So we continue to be sort of very favorable on the Magnificent Seven. Now, the return path, I think, as we've seen in 2025, is not likely going to be as sort of up and to the right as we saw in 2023, 2024.

12:47But again, as I mentioned earlier, one of the reasons being is that these are the companies that are powering revenue and earnings growth. If we particularly think about sort of where the world is going, we remain in the early stages of the AI revolution. And these seven companies, all sort of to a different extent, and we know that obviously the marketplace has picked on Apple and their AI investment most recently, will continue to propel ahead. And I think what we're seeing with capital flows is that while there has been some broadening in the market, which is healthy, small caps have kind of come alive again.

13:28It's still at the end of the day when we take a step back, these are the companies that are likely going to continue to be able to grow because they're not just seven companies. There's hundreds of companies under the hood. Now, one of the things that I've heard you talk about is how to put the exposure on. So if you have a MAG-7 bias, you want to go put that in your portfolio, you can go buy the seven individual stocks. You can buy the MAG-7 ETF. But you also have this concept of the MAG-7s plus the next seven. So talk through kind of like what is the next seven and how do you look at the relationship between the next seven and the MAG-7?

14:01Yeah. So I think obviously we saw outsized returns from a company like Oracle. But the Magnificent Seven was, you know, it's debated whether Kramer actually coined it or did he, you know, rip it off from a B of A analyst. But we'll leave that conversation for. Depends who you ask. Yeah, exactly. It depends. We'll leave that conversation for another day. I'm sure there's someone who can really enjoy talking about that. But essentially, you know, it was a collection of stocks that all had similar attributes from their size and scale. and at the time their outsized revenue and earnings growth. They have continued to do so.

14:38If we go back, people were talking about the FAANG stocks or the FAANG stocks with an M in there as sort of reflective of that. We're now at a point where we're seeing this sort of next seven, and that's companies like Broadcom, Oracle, and others that I think are beginning to sort of, again, when we think about that winner takes all, begin to be that next slave of winners. You know, Broadcom is a$2 trillion company. It doesn't get nearly, you know, nearly the attention as a company like NVIDIA, but I think that's changing. And Oracle, I mean, pretty crazy what happened there, right? I mean, maybe just like once in a lifetime, you know, type thing.

15:20I think Larry Elson made$100 billion in a day, right? If you're a Michigan fan, you should ask him to try to spend more of that at Michigan. You know, you know that story? He got the number one recruit in the country to flip because he gave$1 million. So having the richest guy in the world as a fan is pretty profitable. A lot of retail investors now are also starting to think through, okay, I hear that it's frothy. I hear that people are getting worried. Buying is actually not the hard part. Selling is very difficult. And I think there's a lot of investors that I've talked with that are trying to think through, okay, I can sell, go to cash, I can sell, I can reinvest the capital, et cetera.

16:02Are there anything that you've seen in the ETF world where there's very kind of tax efficient ways to sell or do anything that investors should be aware of? Yeah. So one of the benefits of ETFs is that they are a very tax efficient vehicle by their nature. That doesn't necessarily change the potential for capital gains, which is what you may be getting at, but removing the potential for sort of inherent capital gains that can come on a yearly basis, as opposed to you deciding when to sell and when to perhaps incur that gain. But actually, there's a lot of innovations that have been happening around tax efficiency when it comes to packaging in ETFs.

16:48We are not the only ones who are pioneering this, but we are at the forefront with other folks. So we actually recently launched, and this is, again, we have sexy funds like General AI ETF, CHAT, the Magnificent Seven. There's a series of weekly pay options income funds. But we actually launched an ETF called XDIV. And this is, I think, one of my favorite ETFs that we've ever launched. But it's the S &P 500 no dividend ETF. So we just talked about the sort of demand for income. And it's in some ways insatiable where people want to have the ability to have high, frequent distributions so they can use that cash flow to do other things, augment their income or invest in other areas, whatever they may want to do.

17:38But the objective of the S &P 500 ETF is to not pay a dividend, not pay a distribution. Right now, the dividend yield is on the S &P 500, let's call it around 2 % just for easy math. But if you're a long-term investor and you are in a high tax bracket, that can create a terrific ton of tax burden on you. And so as tax-aware investing becomes paramount, because essentially after tax returns are what's the most important to an end investor, this allows you over 10, 20, 30-year periods to actually save a significant amount of tax and burden from either having to reinvest those dividends or pay tax on something that you don't necessarily want.

18:25So the objective of the fund is to create the total return of the ETF, sorry, of the index, but do so with sort of just the total return, not the price return and the dividend return. There's other folks that have looked at this in fixed income, which I think is very interesting as well. But this is where, as the ETF wrapper continues to grow in importance, we're now seeing the ability to do sort of unique strategies in it that never existed before. Talk a little bit more about how you do it, right? So this is XDIV, and the S &P is paying the dividend, but you're just not giving it to the investor?

19:06No, so the way this fund works is actually it owns S &P 500 ETFs. So traditional ETFs, your SPY, IVV, VOO, SPLG. Those are the four main S &P 500 ETFs. This fund actually systematically sells the fund, but we can do so in a tax efficient way with ETFs through something called the creation redemption mechanism. We don't have time to dive into the specifics there. I would be happy to discuss creation redemption. You can use that feature to allow you effectively to transfer your exposure in the fund out of the fund that's paying a dividend and transfer in an identical fund that owns the S &P 500 that's not paying a dividend until three months from now.

20:01And the strategy systematically moves between those other ETFs to avoid receiving the distributions. And it does so in a tax-efficient way to make the fund tax-efficient in regards to not paying a distribution. So many investors are trying to move between funds and catch the dividends. You are basically doing the opposite. You're moving between funds to hide from the dividends. Yes. which I think goes to the point of like this is how effective the ETF wrapper has been is that you now literally have so many different strategies that people want to put into these wrappers that it ends up working another fund that you guys have that I personally am just like intellectually intrigued by it's super boring but I think it's very interesting is the treasury weekly pay so talk about like when treasuries normally pay and then what you guys are doing Yeah, so you like all the boring funds, which I like.

20:55We're talking about - Oh, it's because everyone else wants to say MAG7. Yeah. So the ticker is WEK, W-E-E-K. And the idea of WEK is to provide T-bill exposure, but paid distributions weekly. So as opposed to waiting on a monthly basis. But this is in an innovation. The idea of actually for, again, we just talked about people not wanting to receive dividends, but there is a camp of investors who want to, again, use that income to either reinvest in other asset classes, pay their living expenses. There's a huge community of investors. There's large Reddit communities talking about this where you use weak to basically be in some ways that kind of stable account in the portfolio.

21:44It's not a CD. It's not a savings account. But you can get sort of that cash exposure plus the frequent distributions to use in however you see fit. And in this case, if you're getting paid essentially 52 times a year, if you're reinvesting it, there's probably some lift in performance on holding a traditional treasury and only getting paid 12 times a year. Yeah, I know. So over the longer term, you have that benefit. So WEAK sits alongside a series of ETFs that we offer that pay weekly distributions. Some of them are in single stocks. Some of them are on broad-based indices. And then we have this in the, effectively, the cash market and the T-bill market.

22:26And so we have investors who will, depending upon how they see fit, rotate amongst those or use WEAK as sort of that kind of core position to get those payments 52 times a year to then, again, allow them to invest in other areas. Now, before I let you go, one of the interesting things is I told you guys that in the last year, they've gone from called a billion in assets to 7 billion, right? So you would think that they got a big sales team and they're out running around talking to all the institutions. I believe it's still true, zero salespeople, no salespeople, no wirehouses still? Correct. No wirehouses.

23:01So the$6 billion of growth in the last year has pretty much come off direct from retail investors. What do you see the retail investors doing in the products, like from a trend standpoint that you think is noteworthy? Yeah. So Roundhill was actually founded to be distinct from traditional asset managers. We applied that to ETFs as opposed to others doing it in crypto or other areas. But we have, to your point, zero traditional distribution, zero marketing dollars spent in traditional areas. So it is a direct to consumer model. We want to build products particularly for millennials and Gen Z and others who want to have unique outcomes.

23:44So when we think about sort of the way investors are using ETFs broadly, and I think Roundhill is a prime example of how we're seeing the growth of that change, is in a few areas. One is that low cost, long-term invested, set it and forget it. I can build a totally global portfolio, multi-asset class, as I said, for sub-five basis points. So that sort of is a utility that continues to grow. And we see those ETFs continue to gain share. But now we're really, because you have the advent of crypto ETFs, covered call ETFs, or ETFs of pay frequent distributions, it's a whole new community of investors who have came into this space.

24:28And because ETFs provide that instant diversification, the tax efficiency and the liquidity that can be used alongside single stocks or whatever an investor wants to have. Now we're seeing people use strategies. For example, we have a Magnificent 7 ETF mags. There is a leveraged version of that for daily traders. That's mag X. And then actually a covered call strategy, mag Y. And we have investors and And we have the benefit of following them on X or Reddit, what have you, who simply with those three ETFs rotate among them depending upon their particular objective. So if they're super bullish heading into earnings, they'll promote buying MAGX because they want the outsized 2X return.

25:16If they just want the exposure, they use MAGs. or if they want a covered call ETF that yields about 25%, 30 % based off of actually using the volatility of the Magnificent Seven stocks to fund that distribution, or they actually are maybe a little less bullish, they still want the exposure, but want a lower volatility profile, we then see them move into MAG-Y. So it's been fascinating to kind of watch people develop their own strategies and signals using just three ETFs. Round-tail ETFs, round-tail investments. If you Google it, you can find it. These guys are very, very smart. So Dave, thank you so much for joining us.

25:55Dave Moss, everyone.