ETF investors are pouring back into the tech sector as the strong earnings season cycle is renewing confidence over the AI trade. My next guest says the trade will continue to broaden into the picks and shovels of within the sector. Joining me for more is Sylvia Jablonski, Chief Investment Officer at Defiance ETFs for this week's ETF report brought to you by Pimco. We've seen these these tech-related ETFs really gain traction this year. So, where are they now with this recent run-up, Sylvia?

Hi Brooke, thank you so much for having me today. Well, I think I think that, you know, you you said it quite well. Investors have just been flocking into these tech ETFs and in particular ETFs that are related to the AI theme itself. And so, you know, we've just seen massive flows coming into the different themes around tech and and AI and they range from connectivity and space, things like UFOX, you know, quantum computing. Um, we've seen a lot of flows coming into the AI-powered infrastructure trade. There's about a billion of assets that flew into to that fund this year or over the last year or so. And now what you're seeing is ETF issuers like ourselves are really creating products that the investors are looking for in terms of like where else is the puck going, right? So, if Nvidia and the semiconductor were trade number one, trade number two, trade number three might be things like AI inference, AI capacitors, um China robotics and, you know, there's there's been a lot of interest to get exposure to those types of themes and um, we've launched products around it.

That was interesting. You pointed it out that you have a new product around China Robotics. I mean, we've been hearing so much about the competition there. So, walk us through the white space opportunity that you saw there and maybe what that investment opportunity entails.

So China Robotics is an interesting one because I think the the last um the unitry IPO came out, you know, it was 8,000% oversubscribed. I think it closed up over 400% on day one, just massive amounts of interest. And so, this is an area of AI. This is kind of like that that next gen of AI, um bringing robots to life. You know, you think about the aging population, particularly around Asia. um and, you know, in China they've they've really mastered this, right? They have the ecosystem for this, they have the manufacturing expertise, the scalability, the the cost savings and the ability to build these robots and, you know, they've built robots now that are jumping, you know, the the the height of half a building and running sprints and things like this and it's really the first region, you know, why China specifically, um it's really the first region that has actually brought these robots to life and they're showcasing them and what they can do. And so, you know, if you think about um automated factories and replacing um an aging population where you don't kind of have that younger generation to fill in those blanks, that that's really the next uh trade of of China Robotics.

And back home here in the US, we did hear see a note from BMO research saying that the Treasury's decision to double those buybacks to $4 trillion in the next coming months, combined with the weaker dollar, ultimately then ended up renewing investor interest in precious metals like gold. We also see a run-up in Bitcoin, the inflows there were about 3.4 billion for uh GLD. Also, IBIT saw about a $1 billion gain. So Silvia, are is this risk back on sentiment sustainable here?

Well, you know, I think it depends. I and and there's a different way to look at it too. The AI trade because it's so broad, again, you know, AI inference, capacitors, robotics, all of these things. These things are going to these things are going to play out over the next 5 to 10 years. So these are buying and hold trades. I'm not so concerned in terms of like what happens next month to these trades. I think that these are generational opportunities. They're um dollar cost averaging, buy and hold these for a long time, we get exposure to these themes. What's happening in the market though, to answer your question, I think, you know, we've had an epic earnings season, 50% year over year, 85% or more names beat. You know, um the the spending continues, but it's um valuations are looking justified in terms of the revenue growth that these companies have. And I think so long as these companies continue to deliver on this and we get these strong corporate earnings, then we could continue to see tailwinds and we can continue to experience this bull market. You know, the what ifs though, the what ifs are the geopolitics, they're the things like tariffs, they're the things like what will um Fed Chair worst do, um what happens with these buybacks and inflation. And to your point, you know, there's always somewhere to go. You can go to Bitcoin, you can go to gold, you can go to um income funds and things like this. But the market is on good footing, barring any kind of existential um issue here.

Sylvia, on the flip side, we're also seeing that US leverage single stock ETFs, the demand there might be cooling. So, are investors just becoming a little more picky here, a little more selective? What are you watching there?

Yeah, I wouldn't say that the demand is cooling. I would say that it's broadening out over products and so, you know, the year started with a handful of single name ETFs in the market and you know, now you've got hundreds of them out there. And so I think, you know, when you think about single name ETFs with leverage, they're they they tend to um attract traders that are short-term holders, they're, you know, looking for volatility, they're looking for short moves within the underlying name that they're trading. And so, I think that's going to spread out and and different names will have their different moments of volatility and momentum and you'll kind of see the flows go there. But in terms of leverage ETFs, you know, I think there's about um 161 billion now of levered and inverse ETF assets in the market, which is just a massive increase year over year. We're seeing billions of dollars of inflows into this into this section of ETFs.

Sylvia, for of average viewer, for someone out there listening right now, I feel like the ETF market, maybe not saturated, but it has really boomed in recent years. How do you break through the noise and pick out which one works best for your portfolio?

Yeah, I I I think that for investors, it's great because there's so many different opportunities to gain exposure to these themes where you're not going to know how to pick a stock. So for example, I don't think the average investor could could could name, you know, a China robotic stock or an AI capacitor stock. And so when you think about these themes and where the puck is going and how AI will build out the nuts and bolts, the bottlenecks, all these words you're hearing, I think looking at thematic ETFs that give you pure play exposure to those types of themes. Again, inference, capacitors, robotics, Quantum, those are great things to complement your your, you know, tech and semiconductor holdings with versus trying to pick one stock, you're not diversified, you don't really know which is going to be the winner in a nascent space, things like this. That's where ETFs work really well.

Sylvia, thanks so much for your insight. I always appreciate it.

Thank you.