Trump Accounts, SPYM and the Future of ETF Growth

**SPEAKER_1** (0:00)
Joining me right now, Matt Bartolini, Global Head of Resource Strategists at State Street Investment Management. Thank you so much for being with us. So let's talk about the new Trump account program that's investing through a devolved ETF selected by the US. Treasury, and we're looking at SPI-M.
So let's tell, tell me about this.

**Matt Bartolini** (0:22)
Yeah, well, the Trump accounts are a tax advantage account that is set up by federal legislation to help America's families grow their wealth over time through their investments in their children. So at birth, clients can set up these Trump accounts, and the default choice for that Trump account is SPI-M, the State Street Spider Portfolio ETF.

**SPEAKER_1** (0:47)
Why do you think they chose this ETF, your ETF? And of course, it builds more interest in ETFs and new generation of investors going forward perhaps. Why do you think they chose this particular ETF?

**Matt Bartolini** (1:02)
Well, looking at the legislation, the legislation was written to be very specific around low-costs US-based investments into freely transparent, well-known, America's leading companies. And that really fits the S&P 500 at its core. The S&P 500 is made up of the largest US companies. And we look at SPI-M, its fee is two basis points. And so looking at the legislation, it's sort of that natural selection to be that default choice because it's low-cost, transparent, invested in US-leading companies and really can help investors compound their wealth over time by limiting the expenses in the investment.

**SPEAKER_1** (1:40)
Thousand dollars, right, for children and the parents have to set this up. You have a new generation of investors, the parents are involved. Is this a big moment for ETFs? If so, why?

**Matt Bartolini** (1:53)
I think it's an immensely huge moment for ETFs because now there's going to be an investor that is going to potentially own an ETF throughout at least their first 17 years and hopefully thereafter to help have that wealth compound and build. But it's also a great entry point to the conversation of Americans and of the smallest investors of children to understanding what investing actually means for your long term potential growth in building those foundations of investing, financial literacy, everything that goes along the lines with it. And this is really where it starts. And we are really happy that SPY M has been chosen as that default option to really help investors grow their fundamental foundations.

**SPEAKER_1** (2:36)
And I believe it's about 7 million accounts at this point, 7 million children signed up. And you said that this is also an opportunity for financial advisors. How so? What should financial advisors be doing at this moment?

**Matt Bartolini** (2:51)
Well, it really starts that conversation. So when you think about financial planning, you have all these different types of accounts, 401Ks, IRAs, 529s. And now you have another one that really helps investors at the youngest age start to grow their wealth and grow their capital over a long period of time. So as a financial advisor, you have another access point in your toolkit to bring to your end clients, have that conversation about what you're doing for financial planning to help your children grow their own wealth over time and help fund their own expenses when they get of age.

**SPEAKER_1** (3:23)
We've already seen massive inflows into ETFs in the first half of the year. Record setting. Do you expect the year to be a record now, particularly with the help of something like this?

**Matt Bartolini** (3:36)
Well, I think it's definitely going to help. I think we're already on this trajectory of, our forecast for 2.3 trillion of flows into the US list of ETF industry. But now, you have a new user coming to the marketplace. The investment from a Trump account is going into an ETF that had not been there in prior years. So it's going to be a continued source of demand for ETFs and going to propel the overall market higher. I really think it just sort of solidifies ETFs as a really well structured investment vehicle to help investors build and accumulate and grow wealth over time.

**SPEAKER_1** (4:12)
And we also think about other opportunities. For example, equal weight S&P, when really sort of levels out the volatility in tech. Would that have been something that, if you were speaking to the president, you might have recommended? I saw that they also, the Trump accounts were picked also, IVV, VTI, Vanguard Total Stock Market Fund. That was another one there. And iShares, Core S&P, ETF, that's another one. There's only a few, but this one, SPYM, is 100% a default now for this ETF strategy for a new child investment plan.