1 00:00:03,440 --> 00:00:06,269 Sean Aylmer: Welcome to the Fear and Greed Daily Interview. I'm Sean 2 00:00:06,269 --> 00:00:08,700 Sean Aylmer: Aylmer. We talk a lot about how to pick the 3 00:00:08,700 --> 00:00:11,789 Sean Aylmer: right stocks. There have been hundreds of thousands of new 4 00:00:11,789 --> 00:00:14,810 Sean Aylmer: investors getting involved in equities over the past year, which 5 00:00:14,810 --> 00:00:18,220 Sean Aylmer: isn't surprising with the market surging, but what about defensive 6 00:00:18,220 --> 00:00:21,169 Sean Aylmer: assets? Is there still a place for investments in bonds 7 00:00:21,170 --> 00:00:24,910 Sean Aylmer: and cash and gold in a portfolio? Chris Brycki is 8 00:00:24,910 --> 00:00:28,550 Sean Aylmer: the CEO of online investment advisor, Stockspot. Chris, welcome back 9 00:00:28,550 --> 00:00:29,330 Sean Aylmer: to Fear and Greed. 10 00:00:29,650 --> 00:00:30,770 Chris Brycki: Thanks for having me back, Sean. 11 00:00:31,490 --> 00:00:34,920 Sean Aylmer: So firstly, can you explain what we're talking about when 12 00:00:34,920 --> 00:00:37,700 Sean Aylmer: we say defensive assets? What are we including? 13 00:00:38,080 --> 00:00:41,810 Chris Brycki: Well, defensive assets are typically assets that don't provide too 14 00:00:41,810 --> 00:00:44,850 Chris Brycki: much of a capital return over time and provide either 15 00:00:44,850 --> 00:00:48,130 Chris Brycki: some income or not necessarily much income these days because 16 00:00:48,350 --> 00:00:51,100 Chris Brycki: cash in the bank or gold don't provide much income. 17 00:00:51,360 --> 00:00:54,700 Chris Brycki: But what makes them defensive is that when share markets 18 00:00:54,700 --> 00:00:58,630 Chris Brycki: fall or other growth assets like property fall, typically these 19 00:00:58,630 --> 00:01:01,100 Chris Brycki: defensive assets rise in value or at least hold their 20 00:01:01,100 --> 00:01:03,350 Chris Brycki: value and so they provide a bit of a cushion 21 00:01:03,350 --> 00:01:04,210 Chris Brycki: to your portfolio. 22 00:01:04,910 --> 00:01:07,950 Sean Aylmer: Now, one thing I think is worth explaining to listeners. 23 00:01:08,090 --> 00:01:11,770 Sean Aylmer: When we talk about bonds, that's a fixed interest investment. 24 00:01:11,920 --> 00:01:14,429 Sean Aylmer: So you get back your 2% or 3% or whatever it is, 25 00:01:14,830 --> 00:01:17,670 Sean Aylmer: but they're traded on the secondary market. So the actual 26 00:01:17,880 --> 00:01:20,740 Sean Aylmer: price of those bonds changes. So that's where you can 27 00:01:20,860 --> 00:01:22,940 Sean Aylmer: sort of win or lose in terms of money. Is 28 00:01:22,940 --> 00:01:23,320 Sean Aylmer: that right? 29 00:01:23,760 --> 00:01:27,300 Chris Brycki: That's right. So typically what happens with a bond trading 30 00:01:27,300 --> 00:01:30,910 Chris Brycki: in the secondary market is if interest rate expectations are 31 00:01:30,910 --> 00:01:34,020 Chris Brycki: rising, that's not good for bonds, but typically that happens 32 00:01:34,020 --> 00:01:36,220 Chris Brycki: when the share market is doing well and that's why 33 00:01:36,220 --> 00:01:39,940 Chris Brycki: they move in the opposite direction. Whereas, if interest rate 34 00:01:39,940 --> 00:01:43,580 Chris Brycki: expectations are falling, that typically is because the economy isn't 35 00:01:43,580 --> 00:01:46,750 Chris Brycki: doing well and that's when bond prices rise. So in 36 00:01:46,750 --> 00:01:49,809 Chris Brycki: the secondary market, bonds do fluctuate a lot, even though 37 00:01:49,810 --> 00:01:52,560 Chris Brycki: they do pay, like you mentioned, a fixed level of income. 38 00:01:53,270 --> 00:01:56,140 Sean Aylmer: OK. So where we are at the moment and people 39 00:01:56,140 --> 00:01:59,970 Sean Aylmer: are sort of confident that the economy will grow next year. 40 00:01:59,970 --> 00:02:04,960 Sean Aylmer: That's both Australia and internationally, though Omicron has obviously thrown 41 00:02:04,960 --> 00:02:06,910 Sean Aylmer: a bit of a spanner in the works on that one. 42 00:02:07,410 --> 00:02:10,790 Sean Aylmer: People are saying that you're just not going to get a good return on bonds. 43 00:02:10,790 --> 00:02:11,810 Sean Aylmer: Is that the case? 44 00:02:12,150 --> 00:02:15,480 Chris Brycki: Well, the challenge is people's expectations of the future don't 45 00:02:15,480 --> 00:02:19,130 Chris Brycki: always turn into reality and I think people's expectations probably 46 00:02:19,130 --> 00:02:23,900 Chris Brycki: in 2007 before the financial crisis were positive, certainly in 2019 47 00:02:23,900 --> 00:02:27,180 Chris Brycki: before COVID were positive. So that's probably why I think 48 00:02:27,180 --> 00:02:30,359 Chris Brycki: a lot of people are thinking that defensive assets aren't worthwhile. 49 00:02:30,740 --> 00:02:35,560 Chris Brycki: It is absolutely correct that the income or return expectations 50 00:02:35,560 --> 00:02:38,970 Chris Brycki: from defensive assets are quite low, but actually that may 51 00:02:38,970 --> 00:02:41,520 Chris Brycki: be better than a negative return from growth assets over 52 00:02:41,520 --> 00:02:44,030 Chris Brycki: some periods of time. So that's where the cushioning in 53 00:02:44,030 --> 00:02:45,020 Chris Brycki: impact really comes in. 54 00:02:45,470 --> 00:02:49,760 Sean Aylmer: Okay. You've written about defensive assets being an inexpensive insurance 55 00:02:49,760 --> 00:02:52,740 Sean Aylmer: policy. Explain that and perhaps with some examples. 56 00:02:53,250 --> 00:02:56,369 Chris Brycki: Yeah, sure. So defensive assets, what they do is improve 57 00:02:56,440 --> 00:02:59,419 Chris Brycki: what you describe in finance as the quality of returns 58 00:02:59,419 --> 00:03:02,550 Chris Brycki: in your portfolio. And what that means is that, look, 59 00:03:02,550 --> 00:03:04,450 Chris Brycki: you can go out and buy shares and over the 60 00:03:04,450 --> 00:03:08,470 Chris Brycki: long run earn 10% or 11% per year, but actually you're going 61 00:03:08,470 --> 00:03:11,269 Chris Brycki: to experience some very severe draw downs along the way. 62 00:03:11,270 --> 00:03:15,169 Chris Brycki: So the COVID market crash in February, March last year 63 00:03:15,169 --> 00:03:18,620 Chris Brycki: was a good example. The market fell 35% in Australia 64 00:03:18,990 --> 00:03:22,600 Chris Brycki: and obviously the financial crisis was more than 50%. That's 65 00:03:22,600 --> 00:03:24,660 Chris Brycki: some pretty heavy falls you're going to have to suffer 66 00:03:24,660 --> 00:03:27,270 Chris Brycki: in order to earn the 10%. Now the benefit of 67 00:03:27,270 --> 00:03:30,900 Chris Brycki: owning some defensive assets is that you're going to sacrifice 68 00:03:30,900 --> 00:03:33,770 Chris Brycki: a little bit of return overall. So you might rather 69 00:03:33,770 --> 00:03:36,720 Chris Brycki: than earning 10% or 11% per year, you might earn 8% or 9% 70 00:03:37,070 --> 00:03:39,560 Chris Brycki: per year or maybe 9% or 10% per year, but 71 00:03:39,560 --> 00:03:42,710 Chris Brycki: the volatility you suffer and the draw downs you suffer 72 00:03:42,860 --> 00:03:45,970 Chris Brycki: will be significantly less. So as an example, during the 73 00:03:45,970 --> 00:03:50,790 Chris Brycki: market meltdown in March last year due to COVID emerging 74 00:03:50,790 --> 00:03:54,700 Chris Brycki: on the scene, where our all share portfolio fell by 35%, 75 00:03:54,950 --> 00:03:57,460 Chris Brycki: even a high growth portfolio with a little bit of 76 00:03:57,460 --> 00:04:00,930 Chris Brycki: defensive assets in there, only fell about half of that. So 77 00:04:00,930 --> 00:04:03,070 Chris Brycki: you really didn't have to suffer the sort of losses 78 00:04:03,540 --> 00:04:05,910 Chris Brycki: everyone else was suffering in the share market and what 79 00:04:05,910 --> 00:04:09,090 Chris Brycki: that does psychologically is keep you more confident to stay invested. 80 00:04:09,410 --> 00:04:12,910 Sean Aylmer: Okay. So are defensive assets more for the short term or 81 00:04:12,910 --> 00:04:14,520 Sean Aylmer: long term, or both? 82 00:04:14,930 --> 00:04:18,159 Chris Brycki: Well, I'd say any sort of investing is necessarily for 83 00:04:18,160 --> 00:04:20,540 Chris Brycki: the long run because in the short run it's just speculation. 84 00:04:21,270 --> 00:04:23,120 Chris Brycki: Anything can go up or down in value in the 85 00:04:23,120 --> 00:04:25,900 Chris Brycki: short run. What we've seen actually over the last few 86 00:04:25,900 --> 00:04:29,620 Chris Brycki: months is as people have got more confidence around, like 87 00:04:29,620 --> 00:04:33,370 Chris Brycki: you mentioned before the expectations of our economy warming up 88 00:04:33,370 --> 00:04:37,970 Chris Brycki: further and improvements in jobs and increases in inflation, it's 89 00:04:37,970 --> 00:04:41,210 Chris Brycki: actually been bad for bonds and bond prices in Australia 90 00:04:41,210 --> 00:04:44,610 Chris Brycki: have fallen. So in the short run, anything kind of 91 00:04:44,610 --> 00:04:47,560 Chris Brycki: goes, but yeah, in the long run, bonds have actually 92 00:04:47,560 --> 00:04:50,870 Chris Brycki: been a great performing asset class, both in Australia and in 93 00:04:50,940 --> 00:04:55,210 Chris Brycki: other markets, particularly over the last 20 or 30 years as interest 94 00:04:55,210 --> 00:04:58,370 Chris Brycki: rates have been falling. There are questions though, of whether 95 00:04:58,370 --> 00:05:00,880 Chris Brycki: that's going to continue into the future because a world 96 00:05:00,970 --> 00:05:03,720 Chris Brycki: where interest rates are rising and that could happen for 97 00:05:03,720 --> 00:05:06,810 Chris Brycki: instance, if we see a lot of inflation, isn't typically 98 00:05:06,820 --> 00:05:09,320 Chris Brycki: a good environment for bonds, but it may be a 99 00:05:09,320 --> 00:05:11,670 Chris Brycki: good environment for other defensive assets like gold. 100 00:05:12,339 --> 00:05:15,250 Sean Aylmer: Okay. So let's take gold. You can invest in gold 101 00:05:15,250 --> 00:05:18,390 Sean Aylmer: through ETFs, that type of thing. Now we all know 102 00:05:18,390 --> 00:05:22,220 Sean Aylmer: gold is a safe haven and it's a hedge against 103 00:05:22,220 --> 00:05:25,330 Sean Aylmer: inflation pressures. The only problem with that is that in 104 00:05:25,330 --> 00:05:29,010 Sean Aylmer: recent times, it hasn't been such a hedge against inflation 105 00:05:29,010 --> 00:05:32,469 Sean Aylmer: expectations, at least because it hasn't really risen. Now, Shane 106 00:05:32,470 --> 00:05:35,020 Sean Aylmer: Oliver from AMP Capital, I heard him in the last 107 00:05:35,020 --> 00:05:37,630 Sean Aylmer: couple of days and he reckons it's because people are 108 00:05:37,630 --> 00:05:39,880 Sean Aylmer: spending their money in Bitcoin and those sorts of things and not 109 00:05:39,880 --> 00:05:42,349 Sean Aylmer: in gold. He was sort of halfhearted about it, I 110 00:05:42,400 --> 00:05:44,520 Sean Aylmer: must say, when he said it, but why is it 111 00:05:44,520 --> 00:05:47,600 Sean Aylmer: that gold hasn't quite had the safe haven attributes that 112 00:05:47,600 --> 00:05:49,550 Sean Aylmer: we're used to in recent months? 113 00:05:50,060 --> 00:05:52,239 Chris Brycki: Well, I mean, first of all, I think Shane Oliver's 114 00:05:52,240 --> 00:05:55,820 Chris Brycki: point is actually quite accurate in that when people are very 115 00:05:55,820 --> 00:05:59,270 Chris Brycki: positive about risk assets and Bitcoin I would definitely classify as 116 00:05:59,270 --> 00:06:02,270 Chris Brycki: a risk asset as well as shares and property, there's 117 00:06:02,270 --> 00:06:04,570 Chris Brycki: just not a lot of interest in having this insurance 118 00:06:04,570 --> 00:06:07,479 Chris Brycki: in your portfolio. So when people are making thousands of 119 00:06:07,480 --> 00:06:10,770 Chris Brycki: percent in Dogecoin and they're seeing their residential property in 120 00:06:10,770 --> 00:06:13,880 Chris Brycki: Sydney rise by 20%, they're thinking, "Well, what do I need 121 00:06:13,880 --> 00:06:17,050 Chris Brycki: any defensive assets for?" And really it, even though gold 122 00:06:17,050 --> 00:06:20,800 Chris Brycki: had a good move up straight after the March crisis 123 00:06:20,800 --> 00:06:23,839 Chris Brycki: in 2020, it's kind of remained sort of steady or 124 00:06:23,839 --> 00:06:27,040 Chris Brycki: bounced up and down since then. We've now seen inflation 125 00:06:27,040 --> 00:06:30,739 Chris Brycki: increase in the economy, but potentially gold already rose last 126 00:06:30,740 --> 00:06:34,940 Chris Brycki: year in anticipation of that. So, the problem with trying 127 00:06:34,940 --> 00:06:38,159 Chris Brycki: to look at short term correlations is often asset prices 128 00:06:38,160 --> 00:06:41,550 Chris Brycki: move in advance of actually the inflation coming and that's 129 00:06:41,550 --> 00:06:45,450 Chris Brycki: probably what we saw with gold and gold really is 130 00:06:45,470 --> 00:06:48,700 Chris Brycki: going to perform best and it has at least historically 131 00:06:48,930 --> 00:06:52,210 Chris Brycki: in an environment where real interest rates, which is interest 132 00:06:52,210 --> 00:06:55,900 Chris Brycki: rates minus inflation, are negative. And so at the moment, 133 00:06:55,900 --> 00:06:59,070 Chris Brycki: the market is both looking at okay, is inflation going to 134 00:06:59,070 --> 00:07:01,659 Chris Brycki: keep on increasing or is it going to disappear? But 135 00:07:01,660 --> 00:07:04,690 Chris Brycki: also what is the Fed and the RBA in Australia 136 00:07:04,690 --> 00:07:06,810 Chris Brycki: going to do with interest rates. And it's actually the 137 00:07:06,810 --> 00:07:09,680 Chris Brycki: difference between these two numbers that has the biggest impact 138 00:07:09,680 --> 00:07:10,130 Chris Brycki: on gold. 139 00:07:10,140 --> 00:07:12,640 Sean Aylmer: Okay. Stay with me, Chris, we'll be back in a 140 00:07:12,640 --> 00:07:12,700 Sean Aylmer: minute. 141 00:07:17,940 --> 00:07:21,670 Sean Aylmer: My guest today is Chris Brycki, CEO of Stockspot. You 142 00:07:21,670 --> 00:07:25,580 Sean Aylmer: mentioned housing then in that defensive asset class, I'm not 143 00:07:25,580 --> 00:07:28,170 Sean Aylmer: sure whether you would call them defensive, but real assets. 144 00:07:28,170 --> 00:07:31,390 Sean Aylmer: So infrastructure and some property they're kind of the more 145 00:07:31,390 --> 00:07:33,820 Sean Aylmer: defensive side of equities. Is that fair to say, and 146 00:07:33,820 --> 00:07:35,160 Sean Aylmer: how do they fit into the spectrum? 147 00:07:35,540 --> 00:07:39,170 Chris Brycki: Look, I think some people do classify property and infrastructure 148 00:07:39,170 --> 00:07:41,650 Chris Brycki: and utilities and some of these sorts of assets as, 149 00:07:41,750 --> 00:07:44,840 Chris Brycki: like you described, the defensive part of equities and certainly 150 00:07:45,140 --> 00:07:47,630 Chris Brycki: over most of the market cycle what you'll see is 151 00:07:47,630 --> 00:07:50,890 Chris Brycki: they tend to be less volatile than shares. In finance speak, 152 00:07:50,890 --> 00:07:54,429 Chris Brycki: we say they have a low beta to the market. 153 00:07:54,670 --> 00:07:56,900 Chris Brycki: If the market goes up by 1%, they might only go 154 00:07:56,900 --> 00:08:00,280 Chris Brycki: up by half 0.5%. The problem often in big draw 155 00:08:00,280 --> 00:08:03,800 Chris Brycki: downs or big market falls, property and infrastructure, we see 156 00:08:03,800 --> 00:08:06,220 Chris Brycki: actually falls by a similar amount to the share market 157 00:08:06,470 --> 00:08:09,670 Chris Brycki: and last year was a good example. Infrastructure, which is 158 00:08:09,670 --> 00:08:13,450 Chris Brycki: typically more defensive in its cash flows, suddenly became very 159 00:08:13,450 --> 00:08:16,210 Chris Brycki: non defensive because no one was going to airports. No 160 00:08:16,210 --> 00:08:19,130 Chris Brycki: one was using ports for shipping for a while. All 161 00:08:19,130 --> 00:08:23,870 Chris Brycki: of the defensive attributes of infrastructure really disappeared very quickly. 162 00:08:24,190 --> 00:08:26,680 Chris Brycki: And the same happened in the financial crisis with property 163 00:08:26,680 --> 00:08:29,900 Chris Brycki: was because property as an asset class often gets levered 164 00:08:29,900 --> 00:08:33,360 Chris Brycki: up with a lot of borrowings, especially in a positive market. 165 00:08:33,690 --> 00:08:36,440 Chris Brycki: That really can unwind the value of the equity in 166 00:08:36,440 --> 00:08:39,940 Chris Brycki: property very quickly in a down market. So I'm a 167 00:08:39,940 --> 00:08:42,579 Chris Brycki: bit of a cynic when it comes to using infrastructure 168 00:08:42,679 --> 00:08:46,309 Chris Brycki: or properties as defensive assets and history would actually show that 169 00:08:46,309 --> 00:08:48,580 Chris Brycki: they're not very defensive when you actually need them to be. 170 00:08:48,940 --> 00:08:52,990 Sean Aylmer: Okay. So as we stand now, and I appreciate that 171 00:08:52,990 --> 00:08:55,470 Sean Aylmer: you talk a lot about long term investing, otherwise, it's 172 00:08:55,470 --> 00:08:59,610 Sean Aylmer: speculation. If I had a portfolio though, and I wanted to invest now 173 00:08:59,610 --> 00:09:02,100 Sean Aylmer: for the long term, what would you be saying in 174 00:09:02,100 --> 00:09:05,510 Sean Aylmer: terms of defensive asset allocation? And by that we know 175 00:09:05,510 --> 00:09:08,130 Sean Aylmer: now that that's around bonds and cash and gold and those 176 00:09:08,130 --> 00:09:08,900 Sean Aylmer: sorts of things. 177 00:09:09,309 --> 00:09:11,339 Chris Brycki: Well, the advice would be first of all, make sure 178 00:09:11,340 --> 00:09:13,610 Chris Brycki: that if you are going to have defensive assets in 179 00:09:13,610 --> 00:09:15,770 Chris Brycki: your portfolio, they are actually going to defend in the 180 00:09:15,770 --> 00:09:19,210 Chris Brycki: times that you need that defence, which is what we just mentioned. 181 00:09:19,470 --> 00:09:21,970 Chris Brycki: And the second one would be, the time where it's 182 00:09:21,970 --> 00:09:24,790 Chris Brycki: most tempting not to have defensive assets in your portfolio 183 00:09:24,790 --> 00:09:27,340 Chris Brycki: is when everything's going really well and we've definitely been 184 00:09:27,340 --> 00:09:30,179 Chris Brycki: in that time over the last 18 months. Share marks have 185 00:09:30,179 --> 00:09:34,059 Chris Brycki: been booming. Property has been rising faster than it really 186 00:09:34,059 --> 00:09:36,990 Chris Brycki: ever has before. I think I read yesterday that Adelaide's 187 00:09:37,020 --> 00:09:40,340 Chris Brycki: annual property price increase was faster than it's been for 188 00:09:40,340 --> 00:09:44,640 Chris Brycki: the last 30 years. People are making money speculating on shares, 189 00:09:44,830 --> 00:09:48,090 Chris Brycki: buying Bitcoin. It doesn't feel like the right time to 190 00:09:48,090 --> 00:09:50,630 Chris Brycki: buy defensive assets, but actually that's exactly when you want 191 00:09:50,630 --> 00:09:54,140 Chris Brycki: to own them. Because as Buffett sort of has wisely 192 00:09:54,140 --> 00:09:56,990 Chris Brycki: said in the past, you to buy the straw hats in 193 00:09:56,990 --> 00:10:00,700 Chris Brycki: winter when no one is looking at an asset class 194 00:10:00,700 --> 00:10:03,840 Chris Brycki: and no one's really looking at defensive assets right now. 195 00:10:04,120 --> 00:10:07,990 Chris Brycki: And what that means is that they're probably under owned 196 00:10:07,990 --> 00:10:10,699 Chris Brycki: and under loved, and actually they're going to provide you 197 00:10:10,700 --> 00:10:14,070 Chris Brycki: with good protection if the market turns sour. And there's 198 00:10:14,070 --> 00:10:17,770 Chris Brycki: definitely been times in the past where after everyone's been 199 00:10:17,770 --> 00:10:21,340 Chris Brycki: very exuberant, 2000 is a good example or 2007, that 200 00:10:21,340 --> 00:10:24,770 Chris Brycki: we do see a big period of reset where mum 201 00:10:24,770 --> 00:10:27,170 Chris Brycki: and dad investors out there just don't make any good 202 00:10:27,170 --> 00:10:30,559 Chris Brycki: returns from markets for many years. So our advice, at 203 00:10:30,559 --> 00:10:33,170 Chris Brycki: least to our Stockspot clients, is that even for a 204 00:10:33,170 --> 00:10:37,929 Chris Brycki: high growth investor, we recommend around 20% of your portfolio 205 00:10:37,929 --> 00:10:41,120 Chris Brycki: in defensive assets. And the reasons are, as I've described before, 206 00:10:41,120 --> 00:10:44,059 Chris Brycki: the quality of your return significantly improves, it gives you 207 00:10:44,059 --> 00:10:48,100 Chris Brycki: the confidence to stay invested, even when markets fall significantly. 208 00:10:48,320 --> 00:10:51,020 Chris Brycki: And actually you might actually not sacrifice that much in 209 00:10:51,020 --> 00:10:54,929 Chris Brycki: returns anyway. Over the long run, as an example, our 210 00:10:54,929 --> 00:10:57,360 Chris Brycki: high growth portfolio and it's similar in many big Super 211 00:10:57,360 --> 00:11:01,480 Chris Brycki: funds has returned pretty similar returns to the share market, 212 00:11:01,640 --> 00:11:03,849 Chris Brycki: but actually provided a lot more of a buffer when 213 00:11:03,850 --> 00:11:06,480 Chris Brycki: markets have fallen. So don't think of it as a 214 00:11:06,500 --> 00:11:09,640 Chris Brycki: big sacrifice. You're making a small sacrifice to get a 215 00:11:09,640 --> 00:11:13,750 Chris Brycki: lot more surety and help you sleep better at night. 216 00:11:14,200 --> 00:11:15,980 Sean Aylmer: Chris, just before you go, last time you were on, 217 00:11:15,980 --> 00:11:18,979 Sean Aylmer: we talked about exchange traded funds and the growth in 218 00:11:18,980 --> 00:11:22,530 Sean Aylmer: ETFs. That's still going on? What's the appetite for ETFs 219 00:11:22,530 --> 00:11:23,020 Sean Aylmer: at the moment. 220 00:11:23,390 --> 00:11:26,410 Chris Brycki: Yeah, it's been phenomenal. So, over the last 10 years, I 221 00:11:26,410 --> 00:11:29,750 Chris Brycki: think they've grown from around $10 billion in Australia of 222 00:11:29,750 --> 00:11:32,770 Chris Brycki: money being managed by these exchange traded funds to, I think, 223 00:11:32,770 --> 00:11:34,761 Chris Brycki: they just popped over $130 billion. So- 224 00:11:34,761 --> 00:11:34,761 Sean Aylmer: Incredible. 225 00:11:34,761 --> 00:11:38,929 Chris Brycki: ... the growth has been significant. A couple of years ago, 226 00:11:38,929 --> 00:11:41,059 Chris Brycki: we only predicted it would reach $100 billion by the 227 00:11:41,059 --> 00:11:44,370 Chris Brycki: end of this year. So it's even exceeded our expectations. Most of 228 00:11:44,370 --> 00:11:47,250 Chris Brycki: the money is still going into these low cost index 229 00:11:47,250 --> 00:11:50,260 Chris Brycki: tracking funds, which we think is great because it gives 230 00:11:50,260 --> 00:11:54,320 Chris Brycki: people great diversification, helps you avoid the chance of really 231 00:11:54,320 --> 00:11:57,870 Chris Brycki: underperforming significantly by picking shares or paying a fund manager. 232 00:11:58,200 --> 00:12:00,270 Chris Brycki: But there's also a bit of a trend at the 233 00:12:00,290 --> 00:12:03,740 Chris Brycki: moment to more thematic style ETFs and I think this 234 00:12:03,740 --> 00:12:06,579 Chris Brycki: is because markets are doing pretty well, I think investors 235 00:12:06,580 --> 00:12:08,839 Chris Brycki: out there are looking, how can I juice up my returns 236 00:12:08,840 --> 00:12:11,160 Chris Brycki: and get something a bit more sexy in my portfolio. 237 00:12:11,520 --> 00:12:13,290 Chris Brycki: And there's a lot of new ETFs coming out that 238 00:12:13,290 --> 00:12:17,569 Chris Brycki: are really targeting these types of investors. ETFs like Hydrogen, 239 00:12:17,770 --> 00:12:21,589 Chris Brycki: ETFs that invest in hydrogen energy companies or battery ETFs, 240 00:12:21,640 --> 00:12:27,390 Chris Brycki: or seem to be more Bitcoin and cryptocurrency ETFs. So, we're sort of cautioning our 241 00:12:27,640 --> 00:12:29,730 Chris Brycki: clients not to get too excited about all of these 242 00:12:29,730 --> 00:12:33,559 Chris Brycki: new thematic ETFs, because typically what happens is these themes 243 00:12:33,559 --> 00:12:36,860 Chris Brycki: sort of come out around the time where you actually 244 00:12:36,860 --> 00:12:38,910 Chris Brycki: shouldn't be buying these things, but you should be probably 245 00:12:38,980 --> 00:12:41,870 Chris Brycki: selling them because everyone else already owns them and that 246 00:12:41,870 --> 00:12:44,420 Chris Brycki: trend is already very well known in the market and 247 00:12:44,420 --> 00:12:46,699 Chris Brycki: there's a lot of research to show that. So it's 248 00:12:47,160 --> 00:12:50,890 Chris Brycki: not something we typically recommend to our clients, these more thematic ETFs. 249 00:12:51,340 --> 00:12:55,010 Chris Brycki: We really think just sticking to the really diversified, broad 250 00:12:55,010 --> 00:12:58,410 Chris Brycki: based, low cost ETFs is what's going to set you up to 251 00:12:58,410 --> 00:12:59,700 Chris Brycki: grow your wealth over the long run. 252 00:13:00,030 --> 00:13:02,179 Sean Aylmer: Chris, we almost managed to get through the whole interview 253 00:13:02,179 --> 00:13:05,290 Sean Aylmer: without mentioned in cryptos, but we just at the end, but 254 00:13:05,290 --> 00:13:07,900 Sean Aylmer: we did get Beta in. That's a pretty good interview, 255 00:13:07,900 --> 00:13:08,319 Sean Aylmer: I'd say. 256 00:13:08,730 --> 00:13:11,170 Chris Brycki: Well, happy to talk about crypto too. I actually saw 257 00:13:11,170 --> 00:13:14,070 Chris Brycki: this morning, one of the big ETF manufacturers in Australia 258 00:13:14,070 --> 00:13:17,059 Chris Brycki: has confidently announced that they think they will have a 259 00:13:17,070 --> 00:13:20,290 Chris Brycki: Bitcoin and an Ethereum ETF out pretty soon. So, yeah. 260 00:13:20,290 --> 00:13:23,699 Chris Brycki: I mean, I expect there'll be some out, at least in the first 261 00:13:23,700 --> 00:13:28,002 Chris Brycki: quarter of next year, which will be very interesting (crosstalk) . 262 00:13:27,900 --> 00:13:30,179 Sean Aylmer: Yeah, I'll invite you back. We'll we'll talk about those 263 00:13:30,179 --> 00:13:30,810 Sean Aylmer: in the new year. 264 00:13:30,890 --> 00:13:32,180 Chris Brycki: Yeah, absolutely. That sounds great. 265 00:13:32,720 --> 00:13:34,300 Sean Aylmer: Chris, thank you for talking to Fear and Greed. 266 00:13:34,559 --> 00:13:35,740 Chris Brycki: My pleasure. Nice to chat. 267 00:13:36,160 --> 00:13:39,840 Sean Aylmer: That was Chris Brycki, CEO of online investment advisor Stockspot. 268 00:13:40,340 --> 00:13:42,410 Sean Aylmer: This is the Fear and Greed Daily Interview. Join me 269 00:13:42,410 --> 00:13:44,710 Sean Aylmer: every morning for the full Fear and Greed podcast with 270 00:13:44,710 --> 00:13:47,040 Sean Aylmer: all the business news you need to know. I'm Sean 271 00:13:47,110 --> 00:13:48,050 Sean Aylmer: Aylmer, enjoy your day.