Janus Henderson’s Nick Cherney says the tokenization of ETFs is potentially the most transformative technology to hit financial services in decades and how the firm is getting ahead of the interest by launching products in the category.

Industry experts from Janus Henderson and other firms discussed the evolving landscape of exchange-traded funds (ETFs), noting a significant investor focus on high-quality yield products as interest rates trend lower. Despite the proliferation of new ETFs, the market remains concentrated, with a small number of large funds dominating assets under management.

A key theme highlighted was the emergence of tokenization in the ETF space, with Janus Henderson launching tokenized versions of its flagship strategies. The use of blockchain technology is seen as potentially more transformative for financial services than artificial intelligence, primarily due to its ability to reduce costs and streamline operations by minimizing intermediaries. This innovation is expected to enhance efficiency and accessibility for clients and asset managers alike.

Why the tokenization of ETFs is 'potentially more impactful than AI'

As investors gear up to go into the final quarter of the year there are two dominant themes to contend with. First you've got the Fed and the dominance of the tech sector and both of these require strategic positioning. Joining me now is Nick Turney head of innovation at Janus Henderson along with Nicholas Frost a product manager at the neck. And Nicholas we're going to talk semiconductors in a minute. But I want to start with Nick and fixed income innovation. So here you've got Janus the second largest provider of active fixed income ETF products. You've got investors really positioning or trying to ahead of the Fed decision. What are the flows telling you. Yeah well what we see is a lot of investors you know realizing that as the Fed cuts rates right. The absolute yields are coming down and that excess yield starts to matter a lot. Right. When when money markets are yielding 6 or 7 percent maybe it's a little bit easier. And as we're going to start seeing those spreads our yields compress excess spread starts to matter a lot. And so we're seeing really significant investor interest in all things securitized really is really the biggest area that we've seen and in particular in highly rated products. So AAA CLOs is certainly one of the largest winners I would say in terms of asset allocation really over the last five years. But but in particular this year and even in the last couple of months. And again I think it's pretty simple. If you see interest rates kind of trending down towards 2 or 3 percent that extra 1 or 2 percent of yield that you can get out of these products starts to matter a lot more. And so it continues to be really that focus on high quality yield. You were pointing out to me that there are all these new ETFs but the top five are still or the top 10 largest ETFs still make up about 30 percent of assets under management. Where do you which trends do you see really developing as key themes when you're looking at the ETF space overall. Yeah it's really been interesting to see that the evolution of the of the industry. There's been a huge proliferation of new products. Right. So we have four thousand five hundred ETFs about in the US today. Half of those were launched just in the last five years. But we continue to see an extremely top heavy market. Right. So the top 100 ETFs about 65 percent of the total market. The top 10 ETFs right alone are 30 percent right. Just the top three ETFs. They're all S&P 500 products. They're two trillion out of the 12 trillion. And so there's been really a lot of growth in terms of the big getting bigger. But if you look at the categories say those new products launched last five years that have really been able to break in. It's only a couple of things. There's one fixed income product. There's two that are in the Bitcoin space. Right. Not too surprising. And then you have some some things around the queues. Right. So a little bit of tech. And so it's a pretty narrow market. And it's really the theme of this show. Right. Which is what's happening. It's yield. It's tech. And then it's a little bit around crypto and Bitcoin. Let's talk a little bit about government regulations and how quickly that's changing and sort of accelerating the pace of change. For instance tokenization an area where Janice Henderson is launching it. Yeah. I mean we see tokenization as potentially the most transformative technology to hit financial services really maybe in decades and certainly potentially more impactful than AI. AI is clearly the dominant tech that's going to transform the economy. But in the in the subset of financial services blockchain is is really transformational. And so we're trying to build the asset manager of the future. And if we want to do that we need to be a leader in blockchain. And so we've started by taking some of our core flagship strategies. So I mentioned triple a CLO is what we've done with a triple A in the ETF space. We've launched a tokenized version of that as well as treasuries. And we really see the potential for this technology to increase the efficiency of how we deliver to our clients. Why do you think it's more transformative than AI though. Well because so much of what happens in financial services requires layers upon layers of intermediaries. And many of those intermediaries are incredibly valuable. Right. For for delivering high services to clients. But some of it's just cost and some of it's time. And so blockchain can really reduce a lot of the cost layers a lot of the steps in the middle and help asset managers like ourselves or other ETF providers to deliver their services more efficiently more cheaply more fast to more people. And that's I think really going to transform the way that industry works. And that's really going to transform the way that industry works. And that's really going to transform the way that industry works. And that's really going to transform the way that industry works.

On the same day a ground offensive was launched in Gaza City, a United Nations Commission of Inquiry report concluded Israel has committed genocide in Gaza, a finding emphatically denied by Israeli officials.

Jerusalem

Middle East Conflict

Israel committing genocide in Gaza, UN inquiry finds

Yulia Navalnaya, the wife of late Russian opposition leader Alexei Navalny, said that foreign laboratory tests on biological samples obtained from her husband showed that he was poisoned.

Yulia Navalnaya says foreign tests show her husband was poisoned

Prosecutors formally changed Tyler Robinson, the suspect in the assassination of Charlie Kirk, and said they intend to seek the death penalty. Authorities also revealed exchanges between Robinson and his roommate.

Utah County

Prosecutors formally charge Charlie Kirk shooting suspect

U.S. President Donald Trump and first lady Melania Trump arrived at Windsor Castle and were greeted by King Charles III, Queen Camilla, Prince William and Kate, the Prince and Princess of Wales. CBS News' Ed O'Keefe has the latest.

Windsor

Trump greeted by British royal family at Windsor Castle

The eyes of the global financial markets are on the US Federal Reserve. It's expected to be cut later on Wednesday, around a quarter-point. But US President Donald Trump has called repeatedly for much steeper rate cuts.

Washington

Global markets watch as Trump challenges Fed independence

The U.S. Secretary of State has visited Qatar a week after Israel attacked a meeting of the Hamas negotiating team in Doha. Marco Rubio met Qatar's Prime Minister and the Emir, Sheikh Tamim Bin Hamad Al Thani.

Doha

Marco Rubio visits Doha, holds talks with Emir and PM

Utah County Attorney Jeff Gray provided updates Tuesday on the case against Tyler Robinson, the 22-year-old accused of fatally shooting Charlie Kirk. Robinson is charged with seven counts, including aggravated murder. The state is seeking the death penalty.

Charlie Kirk shooting suspect charged with murder

A judge has dismissed two state terrorism-related charges against Luigi Mangione, the 27-year-old accused of killing UnitedHealthcare CEO Brian Thompson last December. CBS News' Anna Schecter has more details.

New York

Luigi Mangione's state terrorism charges dismissed in CEO killing

Israel said it has launched its ground offensive in Gaza City. It comes as a United Nations inquiry finds that Israel's nearly two-year war on Gaza is a genocide. Israeli leaders have denounced the report as "distorted and false."

Israel launches main phase of ground offensive in Gaza City

U.S. President Donald Trump becomes the first U.S. president to receive a second state visit as Britain faces protests over immigration and growing support for the pro-Trump Reform Party. CBS News correspondent Ed O'Keefe reports from London.

London

Trump begins state visit to London amid rising political tensions

U.S. President Donald Trump announced Monday (Sept. 15) the U.S. military carried out a second strike against an alleged Venezuelan drug boat. CBS News' Charlie D'Agata has the latest.

Caracas

Trump announces second U.S. strike on alleged Venezuelan drug boat

U.S. President Donald Trump threatened investigations into the ‘radical left,’ following the shooting death of Charlie Kirk. Vice-President J.D. Vance on Kirk’s podcast encouraged people to turn in those who celebrated the conservative commentator’s killing.

Charlie Kirk’s killing prompts broad threats from Trump administration

The United States and China reached a framework agreement to switch short-video app TikTok to U.S.-controlled ownership, U.S. officials said.

Washington County

U.S., China reach framework deal on TikTok

U.S. Secretary of State Marco Rubio met in Jerusalem with Israeli Prime Minister Benjamin Netanyahu, as close U.S. ally Qatar gathered other Arab nations' leaders for a summit to issue unified condemnation of last week's Israeli airstrike targeting Hamas leaders in the Qatari capital.

What to know about Rubio's trip to Israel, Qatar summit

President Trump announced the U.S. military has carried out a second strike on alleged Venezuelan "narcoterrorists" in international waters. Three men were killed.

Trump announces second strike on alleged drug boat from Venezuela

Arab and Islamic leaders are gathering in Qatar for an emergency summit following an Israeli attack on Hamas leaders in Doha. The meeting aims to show unity and increase pressure on Israel.

Arab, Islamic leaders meet in Qatar after Israeli attack on Hamas

HBO's medical drama, "The Pitt" beat out heavily-favored Apple TV's "Severance" for outstanding drama series at the Emmy Awards. Meanwhile, Apple TV's "The Studio" walked away with 13 awards and broke the Emmy record for the most wins by a comedy in a single season.

Los Angeles

"The Pitt," "The Studio," and "Adolescence" win big at Emmy Awards

U.S. Secretary of State Marco Rubio arrived in Israel on Sunday to meet with Prime Minister Benjamin Netanyahu and other officials amid the nation's recent strike in Doha, Qatar, and intensified attacks in Northern Gaza.

Israel hosts U.S. Secretary of State Marco Rubio

Over the weekend, tens of thousands of people marched through London in a rally billed as in support of free speech. Many of the chants and speeches at the rally, which was organized by a far-right activist, were protesting against immigration.

Thousands in London march in rally organized by far-right activist

U.S. and Chinese officials concluded a first day of talks in Madrid on their strained trade ties, a looming divestiture deadline for Chinese short-video app TikTok, amid Washington's demands that its allies place tariffs on imports from China over its purchases of Russian oil.

Madrid

Global Tariffs

U.S., China begin trade talks in Spain as TikTok deadline looms

Police are searching for a motive in Wednesday's killing of conservative activist and influencer Charlie Kirk. Authorities say interviews with family and friends of the 22-year-old suspect suggest he could have been radicalized in the dark corners of the internet.

Orem

Charlie Kirk shooting suspect 'not cooperating' with authorities

U.S. Secretary of State Marco Rubio said ahead of the trip that he will be seeking answers from Israeli officials about how they see the way forward in Gaza. Rubio's trip comes after Israel's attack on Hamas leaders in Qatar that upended efforts to broker an end to the conflict.

U.S. Secretary of State Marco Rubio in Israel for talks

Five U.S. F-35 fighter jets landed in Puerto Rico amid escalating tensions with Venezuela. Separately, Caracas said 18 armed U.S. Navy personnel raided a tuna boat sailing in Venezuelan waters.

San Juan

U.S. sends jets to Puerto Rico amid escalating tensions with Venezuela

U.S. President Donald Trump said he believes the Russia-Ukraine war would end if all NATO countries stopped buying oil from Russia and placed tariffs on China of 50 percent to 100 percent for its purchases of Russian petroleum.

Trump calls on NATO members to stop purchasing Russian oil

U.S. Secretary of State Marco Rubio arrived in Israel on Sunday, as Israel intensified its attacks against northern Gaza. The trip is taking place after President Donald Trump rebuked Israel over the unprecedented attack against Hamas leaders meeting in Doha.

Tel Aviv-Yafo

Marco Rubio visits Israel to push for Gaza ceasefire talks

NATO announced plans to beef up the defense of Europe's eastern flank on Friday, two days after Poland shot down drones that had violated its airspace in the first known action of its kind by a member of the Western alliance during Russia's war in Ukraine.

Warsaw

Ukraine Invasion

NATO bolsters its eastern flank after Russian drones hit Poland

Protests broke out in Chicago on Saturday against President Trump's immigration crackdown. A group of Catholic clergy led what they called a "People's Mass" outside the Great Lakes Naval Base. The base will also be used by Immigration and Customs Enforcement as a staging area for deportations.

Chicago

Tensions over immigration escalate in Chicago

More than 100,000 people took to the streets in London on Saturday, in what's believed to be the largest anti-immigration protest in British history. Organizers called it a "Unite the Kingdom" rally.

Huge crowds march for right-wing "Unite the Kingdom" rally in London

President Trump signaled a new position on Russia's war with Ukraine. He said the U.S. will agree to additional sanctions on Moscow, but only when NATO allies stop buying Russian oil. Willie James Inman has more details.

Trump says NATO must stop buying Russian oil

Tyler Robinson, the 22-year-old suspect in the murder of conservative activist Charlie Kirk, is being held in Spanish Fork, Utah. Officials have yet to identify a precise motive for Wednesday's shooting. Carter Evans has new developments.

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