ETF Seed Amount Not 'One Size Fits All': Christensen

ETF Seed Amount Not 'One Size Fits All': Christensen

Bloomberg

Mon, September 21, 2026 at 11:45 PM GMT+3

• BLK -2.17%

Brittany Christensen, SVP Head of Business Development at Tidal joins Scarlet Fu and Eric Balchunas on "Bloomberg ETF IQ." They discuss how funds are coming to market with more liquidity than before and M&A consolidation in sector.

00:00 Speaker A

Valerie, as Eric was just laying out, the competition is fierce here in the ETF world, especially when it comes to the Big 3 and those passive products. Are the Big 3 going to be able to carry their weight going forward, or are they inevitably going to lose market share like we saw with, um, BlackRock?

00:23 Valerie

I think we will continue to see a little bit of erosion of market share, and I think that's a natural maturation of the industry, right? Historically, ETFs were viewed as this very narrow passive indexing investment vehicle, and really over the past five to six years, we've seen that spectrum broaden out with this proliferation of products, but really about growth beyond just a typical passive benchmark.

00:53 Eric

Yeah, so let's talk about that. So, um, the chart we showed earlier in the intro was active ETFs. So there's seven ETFs launching a day, six of them are active. Active finally says, okay, we can get something going here. So they're launching like crazy. And they're also getting cheap. And some of those are actually maybe selling against IVV. They're like, hey, we can do IVV, but we'll beat the benchmark and only charge 30 bips. Um, what do you see here? Because you're a market maker, you you have a lot of experience there. Can the market handle all these products at this rate for like years to come?

01:29 Valerie

That's a great question, and I don't think the growth rate will slow down a little bit. The the directory has been parabolic, right? And I think we will see that taper off, but the growth I think has still years left in that. Uh and when it comes down to the growth of active, I do think it's what's old is new again, and we're seeing that come into the ETF space as well, right? We're seeing people reinvent, restorytell, replatform different ideas that have done well in the past. And I think it's all about bringing that storytelling element to the investment strategy to stand out in what you mentioned is an extremely competitive area.

02:10 Speaker A

Okay, so there's more issuers than ever kind of competing with the big three. Can the market movers support all these new products? I mean, can they provide enough liquidity so that these products can get going?

02:29 Valerie

Yes, that's a very key feature of what a market maker needs to be able to do, especially when we're acting in the support role of lead market maker. We are promising our key partners that we will be there to providing quality two-sided markets for them. We also want to help sponsor our LMM partners through the full life cycle of the ETF. So that's everything from product inception through to product development and then the ongoing trading support. Uh and like you mentioned though, there's an increasing number of issuers and the number of market makers has pretty much stayed the same. So even just talking to the future guests in the green mar- the green room earlier, we are launching ETFs for both of those providers this week alone. So it is a very concentrated space from the market making perspective, but I still think there's there's our technology is scalable and we can tap into that.

03:22 Eric

Yeah, that's interesting. Um, you call that Ghost in the machine, which is my second favorite police album. Uh, anyway, that is interesting. What's going to happen? Like, will the spreads just be wider for some of these new ETFs? Or are we going to see these because all these active ETFs, most of them are from these big deep-pocketed issuers. I'm sure they'd happily pay the market makers to keep the spreads and the quotes tight. So how do you think this will play out? Like, is it even a problem? Because some of these firms have so much money. And you can see here's a chart of the different exchanges, which are now, in my opinion, ETFs are kind of the new IPO. Since there's so little IPOs, they're competing big time. Now you got Texas in there. So, what, are they going to throw money at this problem just to keep the spreads tight?

04:17 Valerie

Yeah. So, I guess on the th- surface, they can't because there's a finra rule that prohibits explicitly paying for market making. We are seeing exchanges like Texas and Nasdaq come to market with a new innovative program that comes up with a way to rebate lead market makers for upholding a quantitative standard of liquidity within the ETFs. So that keeps us honest as market makers. They're asking for quantitative stats like top of book, depth of book, spread, auction volumes, and if we hit those quotas, then there'll be a rebate from the exchange to the LMM provider.

05:00 Speaker A

You know, one thing I think about when we look at the launches of all these new active ETFs is how often the word yield comes up. It's like, when did the word yield turn into something propulsive and growthy as opposed to something kind of passive and defensive? Because you have yield coming up constantly and it's all about like generate yield, maximize yield.

05:27 Eric

Yeah, no doubt. Um, it reminds me of Brawndo from the movie Idiocracy when it's like The Thirst Mutilator. Uh, income is turned into like this real kind of almost like a soft drink kind of ad. Yield maximizer, all caps. Then you've got Tuttle has income blast. Um this is getting pretty crazy. Obviously people love income, but there, this is the one part of the ETF market where I feel like education is needed because a lot of that income is just happening from giving up your you're just taking your total return and giving it back to yourself in income. Do you think these are dangerous in any way?

06:05 Valerie

No, I wouldn't say they're dangerous, but they do require investor due diligence. And I think again, it talks to the competitiveness of the market that people need to sell their idea and through the catchy name and the catchy title. But if you look people just need to do the research to understand because there's a wide spectrum when it comes down to income yield focused strategies. I make the joke there's actually three certainties in life, death, taxes, and the search for yield. And so there's so many ways. There's there's thousands of ways we can come up with yield. And more than ever, investors need to do their due diligence and understanding exactly where that yield is coming from. And there are reasons why people might want return of capital, but I'm not going to be the arbiter of why or why not. It's just you need to understand where that yield is coming from.

06:58 Eric

Okay. Um, let's go to Canada. Um, basically, here in the US, as we just talked about, you've got the big two, and you've got 300 issuers just trying to kind of take them out with all these little products. It reminds me of the cover of Gulliver's Gulliver's Travels with the giant kind of pinned down to the ground there. And ultimately at some point Oh look, they actually get a graphic for this. I love this. Yeah. This is Black Rock and Vanguard and then thus all the other issuers basically finally taking their toll. What's the scene like in Canada? Is is it basically a replica of this?

07:33 Valerie

I would say so, yes. We've got a very burgeoning and growing middle class of ETF issuers, and a lot of them are kind of stand-alone ETF businesses that have been built from the ground up. They've been built from advisor interest and the growing DIY interest without going into too much of the speculative area. And we haven't seen M&A in the way that we've seen here in the US, but if I could bet money on it, I would expect that trend to happen in Canada as we see kind of these these smaller issuers look very interesting to people who might be behind the race.

08:08 Speaker A

You know, my last question to you has goes back to the record flows that we've been talking about, that Eric shows us every week. 10 years ago, I think flows were seen kind of as an indicator of um potential price action, but that really is no longer the case, is it? It feels like flows don't really support any particular narrative about the market, and it's more a reflection of just ETFs being used across asset classes as a device, as a product.

08:40 Valerie

Yes. Absolutely. And I think that's just the rise of adoption, right? Institutional money is coming in and out intraday, intra week, and it's kind of golfing kind of investor sentiment. Yes, sometimes you can get pulls on investor sentiment, and every day I'm in there trying my best to read the tea leaves as are you, Eric. But, um, yes, I think the proliferation and adoption across different investor buckets, using these ETFs for different priorities, uh really makes it a little bit more difficult to kind of read through and pull from the flows.