Small and micro caps outperform, Bill Ford talks Formula One racing and the iconic brand

Key Concepts

• ETFs (Exchange Traded Funds): Investment funds traded on stock exchanges, offering diversification and liquidity.
• Active ETFs: ETFs managed by a portfolio manager aiming to outperform a benchmark index.
• Fixed Income ETFs: ETFs investing in bonds and other debt instruments.
• Derivative Income ETFs: ETFs generating income through options strategies, like selling call options.
• Call Options: Contracts giving the buyer the right, but not the obligation, to buy an asset at a specific price.
• Defined Outcome ETFs: ETFs designed to deliver specific investment outcomes, like limited downside risk.
• Seasonality (in Stock Market): Recurring patterns in stock market performance based on time of year.
• Sector Rotation: Shifting investment focus between different industry sectors based on economic conditions.
• Tech Transfer (in Racing): Applying technologies developed in racing to improve production vehicles.

ETF Trends and Investment Strategies

The segment began with a discussion of the record-breaking performance of ETFs in 2025, with $1.5 trillion in net inflows – a 32% increase from the previous year (according to FactSet). Marissa Anel of Goldman Sachs Asset Management explained this surge is due to a confluence of factors: increased assets, flows, launches, and trading volumes. This momentum is expected to continue into 2026.

A key trend highlighted was the outperformance of active ETFs. While representing only 11% of total ETF assets by the end of 2025, active ETFs accounted for 32% of ETF flows and 86% of new launches, indicating a growing investor preference for actively managed strategies within the ETF structure.

Specifically, active fixed income ETFs are gaining traction. Anel attributed this to the inherent structural inefficiencies and fragmentation of the fixed income market, making it well-suited for the transparency, liquidity, and ease of trading offered by the ETF wrapper. Active management is also particularly valuable in fixed income due to the complexity of bond selection.

Derivative income ETFs were the biggest flow winner in 2025, attracting $58 billion in inflows. Investors are drawn to these ETFs for their consistent income generation and ability to remain invested in the equity market while receiving regular cash flow. Goldman Sachs’ GPIX and GPIQ ETFs, distributing 8.5% and 10.5% annualized respectively (paid monthly), were cited as examples. These ETFs employ a dynamic call writing strategy: selling call options on the S&P 500 (GPIX) or NASDAQ 100 (GPIQ) to generate premium income. The strategy isn’t fully covered, leaving room for equity market participation and potential capital appreciation. As Anel explained, “we don't cover the whole portfolio…we only cover what we need to to generate those target distribution yields.”

Finally, Goldman Sachs’ recent acquisition of Innovator Capital Management is expected to bolster their presence in the defined outcome ETF space, which has grown at a compound annual growth rate of 66% since 2020. These ETFs cater to investors seeking predefined risk levels and specific investment outcomes.

Market Performance – Weekly Takeaways

Jared Blickery provided a breakdown of the week’s market performance. While the broader market (Dow, NASDAQ, S&P 500) experienced slight declines (less than 1%), small-cap stocks significantly outperformed. The Russell 2000 was up 2%, continuing a trend of outperformance since December, aligning with historical seasonality patterns. The S&P 600 (profitable small caps) rose 1.7%, and the S&P 400 (mid-caps) increased by 1.3%. Notably, the CRSP US micro-cap index jumped 2.3%, and the iShares micro-cap ETF (IWC) achieved a record 11 consecutive days of gains, tying a record from 2017.

In contrast, large-cap sectors were more defensive. Real Estate, Staples, and Industrials led gains, while Financials underperformed due to disappointing bank earnings. Blickery emphasized the need for the tech sector to regain momentum, as it has been largely flat for the past three months.

• Silver and Chip Stocks: Both silver and chip stocks experienced significant gains. Silver rose 6% (up 184% year-over-year), and several semiconductor companies saw double-digit percentage increases, with SanDisk up 75% year-to-date.

Ford’s Strategy and Legacy

An interview with Ford Executive Chairman Bill Ford focused on the company’s commitment to American manufacturing, its EV strategy, and its racing initiatives. Ford emphasized the company’s enduring legacy as an American icon, highlighted by a Time Magazine poll identifying it as the most iconic American company.

Ford reaffirmed the company’s dedication to US-based production, employing the most Americans of any automaker. He noted that maintaining production in the US, while more expensive, was a deliberate choice to support the American industrial base. He cited the company’s ability to rapidly scale respirator production during the COVID-19 pandemic as evidence of the importance of a strong domestic manufacturing sector.

Regarding EVs, Ford has shifted from a pure EV focus to a broader strategy encompassing electric powertrains, including hybrids, in response to a mismatch between regulatory pressures and consumer demand.

Ford’s return to Formula 1 racing with Red Bull is viewed as an opportunity for technological innovation and brand enhancement. Ford highlighted the “tech transfer” benefits of racing, citing the development of the Ford GT and the ongoing testing of Raptors in the DAR (Desert Automotive Racing) competition. He stated, “That’s the cool thing about racing is you know what you see on the racetrack is is amazing but then all the tech transfer that comes from that to the rest of your products is really great.”

Bill Ford’s favorite Ford car is a Torino convertible his father drove as a pace car at the Indy 500 in 1968, a car he later restored after finding it in a field in Iowa.

Synthesis/Conclusion

The broadcast highlighted a dynamic market landscape characterized by strong ETF inflows, particularly into active and income-generating strategies. Small-cap stocks outperformed large caps, while defensive sectors led gains among larger companies. Ford reaffirmed its commitment to American manufacturing and a flexible EV strategy, leveraging racing to drive innovation. The overall message was one of adaptation and opportunity, emphasizing the importance of staying ahead of trends to navigate the evolving investment environment.