Samara Cohen on Managing ETFs (Podcast)

Episode Summary

Executive Summary: Barry Ritholtz interviews BlackRock CIO of ETF and Index Investments Samara Cohen about how ETFs actually work, why they’re not “passive” in practice, and how they behaved during market stress. The conversation covers BlackRock’s scale, ETF market quality, bond-market liquidity, ESG as risk management and transparency, product engineering, direct indexing, hybrid work, and Cohen’s career path and mentorship.

Main Topics: Cohen’s career path and theater-to-finance background (Priority: 4/5): Cohen explains how studying theater alongside finance shaped her leadership style, her attraction to the energy of trading floors, and her eventual return to BlackRock after 16 years at Goldman Sachs. What an ETF and Index CIO actually does (Priority: 5/5): She defines her role as accountable for both investment outcomes and ETF market quality, including trading behavior, liquidity, premium/discount dynamics, and index replication objectives. ETFs during stress and the bond-market function (Priority: 5/5): Cohen argues that ETFs supported price discovery and liquidity during the COVID selloff and other volatile periods, especially in bond markets where trading was otherwise impaired. Why index investing is not ‘passive’ (Priority: 5/5): She rejects the term passive, saying BlackRock actively manages portfolios, market structure, and operating models to deliver index outcomes with minimal friction. ESG, climate risk, and transparency (Priority: 4/5): Cohen frames ESG primarily as measurement and risk management—especially climate and transition risk—while emphasizing investor choice across a spectrum of approaches. Product engineering, direct indexing, and ecosystem leadership (Priority: 4/5): She describes teams that continually redesign ETF structures, improve platform architecture, and work with exchanges and market makers; she also views direct indexing as complementary rather than competitive. Culture, inclusion, and career advice (Priority: 3/5): Cohen highlights employee networks, sponsorship, diversity, hybrid work, and the importance of asking questions and pursuing intimidating opportunities.

Key Arguments: ETFs are actively managed products operationally, even if they are designed to track an index; BlackRock’s job is to optimize implementation, liquidity, and market quality. During crises like March 2020, ETFs improved price discovery when underlying bond markets were hard to trade, helping stabilize the broader market. The criticism that indexing harms markets is repetitive and not supported by the data; stressed-market episodes have repeatedly shown ETF resilience. ESG should be understood less as a slogan and more as a framework for measuring and managing climate and transition risks across portfolios. Investors need choice: some want direct voting and governance control, others want delegated stewardship; BlackRock is expanding options. Direct indexing and ETFs sit in the same ecosystem, serving different purposes, with ETFs contributing transparency and secondary-market liquidity. Career success in finance is not limited to a single profile; diverse backgrounds and perspectives can be strengths, not liabilities.

Data Points: BlackRock assets under management: about $10 trillion - Cohen describes BlackRock’s overall scale ETF business AUM: about $3.27 trillion - Size of BlackRock’s ETF franchise Index business AUM: over $3 trillion - Size of BlackRock’s index investing franchise Estimated global ETF/index users: about 120 million people - Cohen cites BlackRock’s Investor Progress Report U.S. ETF share of daily trading volume: 30% to 40% - Used to explain why stock-exchange volatility guardrails matter Bond ETF vs. underlying bond trades on March 24, 2020: 90,000 ETF prints vs. 30 average trades in top underlying bond holdings - Illustrates ETF-driven price formation during COVID volatility Household median income owning ETFs in the U.S.: $125,000 - Cohen uses this to show ETF access has broadened to affluent but non-elite investors Options open interest increase into Brexit referendum: 1,800% - Example of investors using ETF-related options for volatility exposure Broad market decline during COVID selloff: 34% from February to April 2020 - Referenced in discussion of ETF performance under stress Public index/ETF climate metric: ITR (implied temperature rise) - BlackRock’s transparency metric for climate alignment

Pivotal Quotes: "At BlackRock, there is absolutely nothing passive about index investing." — Samara Cohen: Her explanation of why portfolio implementation, risk management, and market quality require active work "Silliness." — Samara Cohen: Her reaction to claims that indexing is anti-competitive or un-American "If you can't measure it, you can't manage it." — Barry Ritholtz: Discussing ESG/climate metrics and the value of transparency

Implications: The episode frames ETFs as infrastructure, not just wrappers: they help discovery, liquidity, and access. For investors, the message is to focus on implementation quality, transparency, and fit-for-purpose products rather than labels like “passive.”