Orit Hodarkovsky: There are many different drivers, but one of the biggest is linked to the demand for multi-asset strategies. Multi-asset portfolios have historically used active strategies as building blocks, but increasingly ETFs are being employed for core asset allocation, particularly in equities. In these portfolios, the alpha source is generated by how the asset allocation model is constructed, which is different from the view that alpha is generated by choosing active managers with the highest perceived skills to fill these portfolios. Of course, such applications have in large part been driven by fee pressures, which we don't see abating any time soon.
But there are other drivers as well, such as regulatory reform. The National Association of Insurance Commissioners evened out the playing field between ETFs and other holdings. Because of new accounting treatment, fixed-income ETFs now look very similar to baskets of bonds held in insurance portfolios, for example. From a capital charge and accounting perspective, those kinds of regulatory changes are very meaningful as they can unlock greater efficiencies in portfolio implementation using ETFs.