The limited presence of ETFs in defined-contribution plans is not explained solely by investor preference or product cost. Many record-keeping systems were built around mutual funds and cannot easily accommodate ETF trading and accounting.

Some 401(k) plans already offer very inexpensive mutual funds
ETF costs alone do not determine plan adoption
Legacy record-keeping infrastructure favors mutual funds
Institutional systems can delay otherwise attractive innovations

“there are other reasons related to record keep the way in which record keepers UM and those you know systems, some of which are are…”
Jason Schwartz · 40:22

#401k#etfs#mutual funds#recordkeeping

Hot Take· 2

Hot Take22:54

There Are More Indexes, but Only a Few Will Win

Indexes evolved from neutral benchmarks into intellectual property that can be licensed as investable products. That creates room for innovative factor, thematic, and ESG strategies, but the market is already crowded and ETF assets remain concentrated among a few dominant providers.

Quantitative ideas can be translated into indexes and licensed
Index proliferation supports thematic and factor-based products
There are reportedly several times more indexes than global stocks
Broad-market beta is increasingly free
Niche strategies still have room when they deliver differentiated exposure

“there's something like four times the amount of indexes as there are just global stocks.”
Jason Schwartz · 25:37

“great ideas will always have a place in investor portfolios.”
Jason Schwartz · 27:18

#indexes#etfs#smart beta#investment products

Hot Take36:27

Mass-Customized Portfolios Could Challenge Mutual Funds

Technology may eventually make separately managed, personalized portfolios economical for smaller accounts. Investors could customize broad indexes for tax needs, values, or security exclusions, potentially weakening the mutual fund's position as the default pooled vehicle.

Customized strategies already exist for wealthy investors
Software can lower the minimum viable account size
Personalization can incorporate tax planning and security exclusions
Digital advisors can create customized portfolios at high volume
Entrenched record-keeping systems will slow adoption

“maybe we get to a point where technology will allow for for more mass customization, so everybody gets their own kind of s m A”
Jason Schwartz · 36:48

“then calls into question the viability of the mutual fund as really the kind of default package for many UH individuals.”
Jason Schwartz · 38:02

#direct indexing#customization#mutual funds#fintech

Explainer· 5

Explainer08:02

Why the Wilshire 5000 No Longer Contains 5,000 Stocks

The index contained roughly 5,000 securities when it launched in 1974, but the count later peaked near 7,500 before falling below 3,500. Delistings after the dot-com crash and companies remaining private for longer reduced the number of publicly traded, investable US companies.

The Wilshire 5000 launched in 1974 as an early total-market measure
Its constituent count changes with the public equity market
The dot-com collapse removed many listed and microcap companies
Private capital lets companies delay public listings

“The Wilshire five thousand was UM created in nineteen seventy four, and at the time it was the first really broad based measurement of the…”
Jason Schwartz · 08:23

“companies are staying private for longer UM and are able to do so without needing to go to the public equity markets to raise capital.”
Jason Schwartz · 09:45

#indexing#public markets#ipos#private capital

Explainer15:45

Bringing Institutional Portfolio Design to Individual Investors

Wilshire Funds Management adapted institutional practices for financial intermediaries serving individuals. The approach combines multiple asset classes, active and passive managers, diversification, and outcome-oriented portfolio construction rather than relying on a single fund.

Institutional investors commonly hold many asset classes
They combine active managers with passive components
Portfolio elements are blended around a desired outcome
Financial advisors increasingly use a similar advice-embedded model

“the idea behind Wilsher Funds Management was to take the firm's institutional expertise, it's risk management capabilities and provide investment advisory solutions designed really for…”
Jason Schwartz · 16:00

“they blend everything together in a way that's designed to to really optimize a particular outcome.”
Jason Schwartz · 17:03

#asset allocation#diversification#financial advice#portfolios

Explainer17:45

How Separate Accounts Reduce Hedge Fund Operational Risk

Wilshire's Cayman hedge-fund platform sought to preserve access to a manager's trading skill while reducing opacity and counterparty risk. Managers receive trading authority over separate accounts, while Wilshire controls counterparty relationships and acts as a fiduciary.

Traditional limited-partnership investments can lack transparency and control
A separate account limits the manager to trading authority
Wilshire controls counterparty relationships
Manager research complements the structural safeguards

“many people may be uncomfortable with the operational risk that comes with that, the fact that, uh you know, you don't have a lot of…”
Jason Schwartz · 18:25

“if we could essentially just have the hedge fund manager run a separate account right where they just have trading authority, but will share controls…”
Jason Schwartz · 18:45

#hedge funds#operational risk#fiduciary#separate accounts

Explainer27:25

Robo-Advisors Disrupt Distribution More Than Investing

Schwartz characterizes robo-advisors as direct-to-consumer distribution models that weaken the traditional link between advisors and clients. He expects self-directed, digital, and human-advised services to coexist because clients may seek more planning support as their financial lives become complex.

Many asset managers do not communicate directly with end clients
Robo-advisors provide a direct-to-consumer interface
Digital services attract both former DIY investors and some advisor clients
Complex needs increase the value of human financial planning
Younger investors are unlikely to embrace cold-call distribution

“it strikes me that they are you know, in in many respects disintermediate and the traditional relationship between a financial advisor and a financial advisor's…”
Jason Schwartz · 28:44

“as one's needs become more complex, more of the financial planning component becomes more relevant.”
Jason Schwartz · 29:39

#robo-advisors#financial advice#fintech#distribution

Explainer32:19

Why Smaller Funds Are Turning to Outsourced CIOs

An outsourced chief investment officer receives discretion to manage an asset owner's portfolio within agreed parameters. This removes delays associated with routing every recommendation through committees and can reduce the governance and staffing burden that is especially difficult to justify for portfolios below roughly $1 billion.

Traditional consultants usually provide non-discretionary recommendations
OCIO providers receive authority to implement decisions
The asset owner still establishes parameters and governance
Smaller funds may struggle to justify extensive internal overhead
Customization remains more common among larger asset owners

“the O c I O business model is UM essentially calls for the discretionary management of and acid owners fund more portfolio.”
Jason Schwartz · 32:30

“sub a billion dollars. I think it's getting increasingly difficult to make that case for lots of overhead”
Jason Schwartz · 34:29

#ocio#pensions#governance#institutional investing

Story· 2

Story11:12

How Rocket Science Shaped Wilshire's Investment Technology

Wilshire founder Dennis Tito brought aerospace engineering experience from NASA's Jet Propulsion Laboratory into finance. He recognized that advanced computation could solve investment problems and launched an early commercially viable method for calculating equity beta in 1972.

Dennis Tito worked as an aerospace engineer at JPL
Space-program computing influenced Wilshire's analytical heritage
Wilshire applied advanced mathematics to investment challenges
Its first product calculated equity beta commercially

“Dennis Tito, Uh Wilshre's founder, currently our our chairman and CEO, still active in the business. Uh was a JPL and was was an aerospace…”
Jason Schwartz · 11:29

“the first product that Wilshare launched in nineteen seventy two was was one of the first commercially viable ways to calculate an equity beta.”
Jason Schwartz · 12:14

#wilshire#fintech#risk#aerospace

Story40:43

Starting a Finance Career in a Liberalizing Vietnam

Schwartz began his career in Hanoi during the period when the United States normalized trade relations with Vietnam. An internship led to work with a private-equity firm and the Department of Commerce, exposing him to business in a rapidly opening communist economy.

A summer internship turned into a longer stay
Schwartz worked for a private-equity firm
US trade normalization created new commercial activity
The unfamiliar environment provided an intense introduction to business

“I actually started my career in Hanoi, Vietnam.”
Jason Schwartz · 40:56

“it was absolutely fascinating, absolute wild West. But it really a great way for me as a young you know, as a young person to…”
Jason Schwartz · 42:10

#vietnam#early career#private equity#international business

Takeaway· 3

Takeaway47:11

Why Great People Do Not Automatically Make Great Hirers

Schwartz identifies hiring as one of his most persistent sources of failure. Formal education rarely teaches it, yet leaders often assume it is intuitive, creating predictable mistakes involving the wrong person, role, or organizational fit.

Hiring is rarely taught in school or graduate programs
Leaders often mistake hiring for an intuitive ability
Failures can involve the person, role, or mutual fit
A more systematic approach can improve hiring decisions
Retrospective bias can distort lessons from past hires

“hiring is not ever really something that that I think we learn how to do right.”
Jason Schwartz · 47:41

“Great people just hire great people.”
Jason Schwartz · 47:53

#hiring#leadership#management#decision-making

Takeaway48:48

Olympic Weightlifting Is More Technique Than Brute Strength

Schwartz describes Olympic weightlifting as a demanding combination of strength, speed, technique, and mental agility. The sport illustrates a broader principle: efficient execution can matter as much as raw physical capacity.

The clean and jerk and snatch are the two Olympic lifts
Elite lifters can move more than twice their body weight overhead
Speed and technique are essential
Mental agility complements physical ability
The lesson extends beyond weightlifting

“what's really interesting is it's not just about brute strength. It's about speed and technique”
Jason Schwartz · 50:44

“it's it's actually true for a lot of things in life, thankfully”
Jason Schwartz · 51:30

#weightlifting#technique#performance#training

Takeaway53:03

Simple Investing Beats Complex Strategies Most of the Time

Schwartz's central retrospective investing lesson is that complexity rarely produces superior practical results. Diversified portfolios assembled from sound managers or passive products often outperform difficult-to-understand, fashionable strategies on usability and reliability.

Complexity is not evidence of investment quality
Whiz-bang ideas are often difficult to unpack
Diversification remains powerful
Both good active managers and passive products can serve investors well
Understandability is an investment advantage

“simple beats complex almost all the time.”
Jason Schwartz · 53:11

“Oftentimes you know really well diversified uh, portfolios, UM you know really good Uh you know investment managers or passive products, UM do really really…”
Jason Schwartz · 53:39

#simplicity#diversification#portfolio management#investing

Frameworks in this episode

Factor-Based Manager Skill Attribution

Twenties as Calling-Discovery Capital

Insights & moments

⚡Myth Buster· 1

Inertia Is Not the Only Reason 401(k)s Rarely Use ETFs

◆Hot Take· 2