Episode summary
Baird Strategas’ Todd Sohn on ETFs: What’s New and What’s Next
ETF Prime
· · 59 min · Hosts: Simeon Hyman · Guests: Todd Sohn, Simeon Hyman
Summary
The episode centered on two growth areas in ETFs: autocallable income products and the broader rush of new ETF launches. A guest from ProShares argued that autocallables answer a real demand for income in a world where traditional bond yields and pension income are often not enough. He said the ETF wrapper solves the main weaknesses of old structured notes by packaging many weekly autocallables into a diversified ladder with daily transparency, while still keeping the payoff tied to equity risk.
He also framed these products as equity alternatives rather than bond substitutes. In his view, they can fit either in an alternatives bucket or in core equity because the return profile is still driven by the underlying stock index. He said the structure can produce mid- to high-teens income, with some distributions potentially treated as return of capital, but it still carries meaningful downside risk in a severe market drawdown.
Todd Sohn widened the lens to the ETF industry as a whole. He said the year’s biggest story is the full-blown adoption of ETFs, with record launches and inflows, while the most unusual development is sports-futures ETFs and, close behind, perpetual futures and prediction-market products. He was more positive on crypto and active crypto ETFs than in the past, and he argued that the best white space may be in active thematic, active fixed income, and other products that manage concentration and rate risk.
Key takeaways
- The ProShares guest said autocallables are attracting demand because investors need income beyond what a 60/40 portfolio and traditional bonds can provide.
- He said ProShares’ autocallable ETFs use a weekly ladder and volatility targeting to make the income stream smoother and the structure more transparent.
- He argued autocallables belong either in an alternatives sleeve or an equity sleeve because they are fundamentally equity-risk products.
- Todd Sohn said the biggest ETF story of 2026 is the industry’s record-setting adoption, with launches, inflows and distribution all hitting new highs.
- Sohn said sports-futures ETFs are the wildest development in the space, but he is more constructive on prediction markets and active crypto ETFs than on pure gambling-style products.
- Sohn said the best ETF product white space is in active thematic, active fixed income and other strategies that address concentration, rate and portfolio-risk problems.
Notable quotes
“The demand is coming from the need for income”
“That is the classic payoff profile of an auto callable, and that level of income can be quite generous, in the mid to high teens sometimes”
“you are taking equity risk. Now, if you think about where this belongs in a portfolio, you can think of it as two ways”
“There's no debate about this is equity. It's equity income, but it's equity risk”
“I think it's sports ETFs, futures-based ETFs. Maybe that's not the wildest, but that's what comes to mind because we're we're entering some strange territory there”
How the episode opens
The demand is coming from the need for income. On the front end of Gen X, we don't have defined benefit plans and the boomers right before me don't have defined benefit plans. And if you do the math, 60/40 portfolio, even with a generous 5 or 6% yield on your fixed income, that's 2 2 and 1/2%. That's not enough for people to uh to run their lives on.
All right, joining me will be Simeon Hinman, global investment strategist at ProShares, who currently offers 163 ETFs, over $100 billion in assets. And back in August, they launched a suite of auto callable ETFs, which I will tell you, this is a category that continues to expand overall. The first auto callable ETF launched in June of last year, 2025, and already there are now over 30 auto callable ETFs with about $6 billion in assets.
And actually, I've seen a number of auto callable ETF filings with the SEC. So, there's clearly a growing pipeline here. But bigger picture, auto callable ETFs fit into what I refer to as the alternative income category, where investors are seeking income solutions outside of traditional bond exposure.
Areas like cover call ETFs and other options-based or derivative type strategies. And so, Simeon and I are going to walk through how auto callables work and how these ETFs are structured. We'll certainly get into why investors are looking at solutions like these and where they fit in a portfolio.
And then going back to a cover call ETFs, ProShares actually has a suite of those as well. An ETF like the ProShares NASDAQ 100 High Income ETF. So, we'll also touch on that lineup as part of our conversation.
Now later, I'll be joined by one of my favorite ETF analysts, the always uh witty Todd Sohn, chief ETF strategist at Baird Strategas.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- sports futures
- prediction markets
- crypto
- autocallable etfs
- untapped opportunities
Companies and tickers mentioned
- Baird Strategas
- ProShares
Watch the episode
Watch “Baird Strategas’ Todd Sohn on ETFs: What’s New and What’s Next” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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