Speaker 1: Many people are not allowed to get into private equity
Speaker 1: in the US. You have to have a net worth
Speaker 1: of over one million dollars and you have to have
Speaker 1: an income above two hundred thousand. I think the potential
Speaker 1: for private equity is larger than crypto. You've got many
Speaker 1: private companies that are worth currently thirteen trillion dollars. There's
Speaker 1: no question Elon Musk people you know, either love him
Speaker 1: or hate him. Arguably, he's one of the greatest entrepreneurs
Speaker 1: we've ever had, certainly the richest on Paperjora.
Speaker 2: And welcome to Shared Lunch, brought to you by Cheesy's.
Speaker 2: I'm Helen Madison, and today on the program, we take
Speaker 2: a look at how retail investors might get the opportunity
Speaker 2: to invest in private equity. Normally you have to be
Speaker 2: a wholesale investor to do this, in other words, an
Speaker 2: institution or an individual who has access to millions of dollars.
Speaker 2: With fewer companies listing on share markets today, searching for
Speaker 2: other potential that's not publicly listed as a hot topic
Speaker 2: in a moment to the people behind the first private
Speaker 2: public crossover exchange traded fund, Dr Joel Schulman from er
Speaker 2: Shares Before we jump in, here's some important information.
Speaker 3: Investing involves the risk you might lose the money you
Speaker 3: start with. We recommend talking to a licensed financial advisor.
Speaker 3: We also recommend reading product disclosure documents before deciding to invest.
Speaker 4: Everything you're about.
Speaker 3: To see and here is current at the time of recording.
Speaker 2: Welcome, Joel, thanks for joining us from Boston tonight.
Speaker 4: Thank you, it's great to join you. Joel.
Speaker 2: You're all about democratizing access to private equity. I'm really
Speaker 2: curious to see why you're so passionate about that.
Speaker 1: Well, so, for the last twenty years, we've seen etl's
Speaker 1: increase from about one trillion to about thirteen trillion dollars.
Speaker 1: In corresponding with that growth in ETRS, we've seen a similar,
Speaker 1: almost identical increase in private equity, growing from one trillion
Speaker 1: to thirteen trillion. And now so we've seen this parallel
Speaker 1: path of two fairly large markets increase in size, considerably
Speaker 1: increase in size thirteen acts. But yet we haven't seen
Speaker 1: any sort of crossover, no linkage, and so we're excited
Speaker 1: to provide opportunity for retail investors to finally access to
Speaker 1: this private market that they've been precluded from investing in
Speaker 1: all these years.
Speaker 2: One thing we can't ignore though this week, Joel, is
Speaker 2: the sort of sea of red that Will Street has
Speaker 2: been experiencing. They're still pretty bruised even the second week.
Speaker 2: And now the tech stocks particularly, I know that's one
Speaker 2: that you favor quite a bit, have been hit. What's
Speaker 2: your perspective a on where things are going?
Speaker 1: But also is.
Speaker 2: This constant volatility sort of making a sort of statement
Speaker 2: whereby some companies may not really want to list anymore
Speaker 2: and remain private.
Speaker 1: Well so, independent of whatever has been going on in
Speaker 1: the last couple of weeks here in the US, and
Speaker 1: they've peaked about mid February, and since mid February, things
Speaker 1: have been on the decline. And that corresponds probably more
Speaker 1: so with policy issues and maybe valuation issues to some extent,
Speaker 1: a lot of things going on that you probably hear
Speaker 1: about New Zealand that is addressing sort of our internal
Speaker 1: situation with you know, potential concerns and.
Speaker 4: Backlash on tariffs.
Speaker 1: Independent of that, however, the reason why private equity has
Speaker 1: not been coming to market more frequently, there's been a
Speaker 1: hesitation among many of the issuers to go to the
Speaker 1: IPO market. Public markets for the last few years, and
Speaker 1: there's a variety of reasons for that, perhaps nuisance lawsuits
Speaker 1: and other things which have caused many companies to pause.
Speaker 1: So when we think about, you know, twenty five thirty
Speaker 1: years ago when Amazon went public at five hundred million
Speaker 1: dollars and in Nvidia went to market a five hundred
Speaker 1: and sixty million dollars. This is back in ninety eight
Speaker 1: ninety nine around that time period. We're not seeing that anymore.
Speaker 1: We're seeing companies stay private longer and come to market
Speaker 1: you know, ten billion, twenty billion, thirty billion, levels that
Speaker 1: twenty five years ago would have been unheard of. And
Speaker 1: so it's more of that, you know, compared to the
Speaker 1: you know, the recent tumult in the marketplace.
Speaker 2: Okay, so this volatility, you thinking too, that this is
Speaker 2: going to be the new normal.
Speaker 1: For example, Well, I think the current volatility is a temporary,
Speaker 1: a temporary happenstance in the US markets. In fact, if anything,
Speaker 1: I think this may be a buyer's opportunity to come in.
Speaker 1: And the reason why I say that we're the last
Speaker 1: tip we had was in twenty one twenty two, we
Speaker 1: actually had a recessionary environment. Recessionary conditions. We had interest
Speaker 1: rates going up, we had the economy slowing down. We
Speaker 1: a lot of problems stemming from the COVID nineteen.
Speaker 4: You know crisis. And the follow from that.
Speaker 1: Is now we're seeing a volatility associated with internal and
Speaker 1: concerns regarding your terrif issues. But the economy here in
Speaker 1: the US one of the strongest economies in the world.
Speaker 1: The economy is generally okay. I mean there's that, you know,
Speaker 1: the economy is you know, is chugging along at a
Speaker 1: two three percent you know, or so clip on GDP,
Speaker 1: and and so I don't see the same sort of
Speaker 1: issues we've had in the past when we've seen markets
Speaker 1: slow down. So I see this particular drop the last
Speaker 1: month more temporary than long term. I think actually in
Speaker 1: twenty twenty five, we're going to see the markets end
Speaker 1: in a very strong path, you know, particularly here in
Speaker 1: the US.
Speaker 4: I see the markets on a strong note.
Speaker 2: John, Just thinking about the popularity of private equity. I mean,
Speaker 2: we've seen the likes of governments and pension funds, a
Speaker 2: number of kind of traditional institutions if you like, want
Speaker 2: a piece of the pie. What's behind that? Are they
Speaker 2: feeling that it's least risky because I mean it is
Speaker 2: classed as an a liquid a seat.
Speaker 1: It is a liquid And unfortunately, retail investors are not
Speaker 1: allowed to get into this. You have to be an
Speaker 1: accredited investor, at least that's the case in the US
Speaker 1: and most markets.
Speaker 4: You have to have a net worth.
Speaker 1: Again, in the US, you have to have a net
Speaker 1: worth of over one million dollars and you have to
Speaker 1: have an income above two hundred thousand or two hundred
Speaker 1: thousand if you're a joint filer between you and your spouse.
Speaker 4: And so many people are not allowed to get.
Speaker 1: Into private equity and they have to watch these opportunities
Speaker 1: pass them by. So when they read about an anthropic
Speaker 1: or an open AI or a scale AI, or an
Speaker 1: and a ROLL or an r case space X, they're
Speaker 1: not allowed to invest in. And so it's only the
Speaker 1: accredited investors, the institutional investors, the big pension funds, endowments,
Speaker 1: and the rich individual investors, the ultra high networth high
Speaker 1: network that can invest in private equities and sharing these rewards.
Speaker 2: Joel, lets have a look at XOVR, which is the
Speaker 2: private public crossover exchange traded fund which I think you
Speaker 2: launched back in August last year, so not that long ago.
Speaker 2: And it's called the first of its kind, but is
Speaker 2: that because it is actually excess for retail investors? What's
Speaker 2: the difference?
Speaker 1: So it's the it was the first etr to allow
Speaker 1: private equity in the ETF wrapper, and so private equity
Speaker 1: has been around for a while in open m mutual
Speaker 1: funds or closed them mutual funds, or even something called
Speaker 1: an interval fund, but this is the first time it's
Speaker 1: been in an ETF wrapper. And there's some, you know,
Speaker 1: some nuances to that. The interval fund may not trade
Speaker 1: as often or allow it may trade, it may trade more,
Speaker 1: it may trade, but it may not allow liquidity very often.
Speaker 1: I should have said that a closed end fund may
Speaker 1: trade in a premium or a discount to NAV and
Speaker 1: so the net asset value. So if it trades the premium,
Speaker 1: that means that the true value of the assets are
Speaker 1: one level and the price that you pay to access
Speaker 1: them may be at a higher level. With an ETF,
Speaker 1: it's chairly price very close to net asset value, and
Speaker 1: it allows trading through the day, which enables people to
Speaker 1: have liquidity to go in and out, which for a
Speaker 1: private equity for an et for an ETF to have
Speaker 1: private equity as unusual, it's eighty five percent. In our index.
Speaker 1: We have an index called the Entrepreneur thirty Index. It
Speaker 1: has a track record that goes back for many years
Speaker 1: and it's a growth oriented index. And importantly, when we
Speaker 1: built the index, we built the index on a VC platform.
Speaker 1: So by way of background, I'm a professor at a
Speaker 1: school called Batson College, which some people in New Zealand
Speaker 1: may have heard of. It's the number one school notnchpreneurship
Speaker 1: and I've been a ten yearful professor there for many years.
Speaker 1: And I built this model to invest in publicly traded
Speaker 1: companies based on how venture capitalists investing private companies, and
Speaker 1: so we've been doing that for many years. So for
Speaker 1: us to now go into private equities, it's consistent with
Speaker 1: the way we've invested right along, where we look at
Speaker 1: companies as if they were a private or venture capital backfirms,
Speaker 1: and we look at those companies both in the public form.
Speaker 4: But now we're going back and getting them right before
Speaker 4: they go public.
Speaker 2: So Joe, that index is that what this ETF private
Speaker 2: public crossover actually tricks? Is that right?
Speaker 4: Right?
Speaker 1: So the index is called the entrepreneur thirty index. It
Speaker 1: actually has a ticker. The E is an Edward Ars
Speaker 1: and Robert three zero thirty. If people, investors, or anyone
Speaker 1: chooses to look at XOVR, they'll see that it's highly correlated,
Speaker 1: moves very closely with the ER thirty tier indexes. We've
Speaker 1: relaunched in August twenty ninth, twenty twenty four, So prior
Speaker 1: to August twenty ninth, the fund was investing differently.
Speaker 2: Okay, so the CTF tracks that entrepreneurial index. If you
Speaker 2: like an inseet basket of thirty entrepreneurial stocks, but you
Speaker 2: have the private equity aspect as there included, and that
Speaker 2: like I know, SpaceX is eleven percent I think of
Speaker 2: the holdings you have currently and any of these other
Speaker 2: things like open AI.
Speaker 1: So the index does not include private So the difference
Speaker 1: between the index and XOVR. XOVR has the index for
Speaker 1: the majority of the fund, but also now has ten
Speaker 1: to fifteen percent private equities. The largest holding SpaceX. So
Speaker 1: SpaceX is around ten or eleven percent of our total
Speaker 1: portfolio and it represents the majority of our private equity holdings.
Speaker 1: We have another stock, another private stock called Klarna, which
Speaker 1: is a buy and LP later stock. It's a Swedish company.
Speaker 1: They just announced that they're going to come up with
Speaker 1: their IPO and that we expect that news to be
Speaker 1: forthcoming in the next.
Speaker 4: Week or so.
Speaker 2: So the holding of say ten to fifteen percent private equity,
Speaker 2: is there a cap like would the regulator come down
Speaker 2: on you if you increased that? Because I've seen, you know,
Speaker 2: some of the other competitors are thinking about maybe up
Speaker 2: to thirty five percent private equity in an eating right,
Speaker 2: What sort of constrains you for keeping it there? And
Speaker 2: is there a good reason to keep it, say fifteen percent.
Speaker 1: So private equity is, as you point out, an illiquid asset.
Speaker 4: And even though space x is.
Speaker 1: A three hundred and fifty billion dollar market cap as
Speaker 1: of the last tender offer, it's still it's it's you know,
Speaker 1: it's widely held among high net worth and institutional investors.
Speaker 1: It doesn't trade is frequently obviously as a public equity security,
Speaker 1: So it's still considered illiquid. And even though it may
Speaker 1: be more liquid than other private equities, it's still in
Speaker 1: the general scheme of things illiquid and as a result,
Speaker 1: a regulatory body here in the US called the SEC
Speaker 1: the Securities Exchange Commission restricts having too much of an
Speaker 1: ETF or any it's they're called forty Act funds, which
Speaker 1: means they're regulated by the nineteen forties Acts, which includes
Speaker 1: mutual funds, open end closed end funds, and ETFs. Those
Speaker 1: instruments which go to the retail market could be limited
Speaker 1: need to be limited to fifteen percent. And I think
Speaker 1: it's a good rule because it protects the retail investor.
Speaker 1: And we're being very careful to stay underneath that fifteen
Speaker 1: percent threshold.
Speaker 2: So it's a sort of a guard viol in some
Speaker 2: ways the font PAS, so that particus the retail and
Speaker 2: vista Right, what about in terms of excess as the
Speaker 2: no minimum investment I think is what I read. And
Speaker 2: also I mean sort of the cost you talk about
Speaker 2: it being relatively low, I mean, actually how accessible is
Speaker 2: it for someone who doesn't have lots of money?
Speaker 1: So access for an ETF and our ETF has no minimum,
Speaker 1: so we have daily liquidity, you can come in. We
Speaker 1: have investors who come in for one hundred dollars or
Speaker 1: you know, you know, I'm sure we have probably some
Speaker 1: investors that come in for fifty dollars or one hundred
Speaker 1: or a thousand, So there's no limit, no minimum investment.
Speaker 1: Daily liquidity you can buy and sell the same day
Speaker 1: through trading hours in the US which are nine thirty
Speaker 1: to four. We try to market pretty close to net
Speaker 1: asset value which on a daily basis to get that
Speaker 1: and so we think it provides and we try to
Speaker 1: keep our fees relatively low for this type of instrument.
Speaker 1: Other instruments that have access to equity charge appreciably more
Speaker 1: than our management fee were well below one percent, and
Speaker 1: so we try to make it attractive to any investor
Speaker 1: could do. Someone could be a retail investor with fifty
Speaker 1: or one hundred dollars to put to work, and they
Speaker 1: could be somebody.
Speaker 2: You know.
Speaker 1: We had an investor today to come in for three million,
Speaker 1: so we have a wide range of investors who come
Speaker 1: into our fund.
Speaker 2: What are the risks though, because we've talked about a
Speaker 2: liquid assets being the private equity aspect, but as you've
Speaker 2: sort of said, it depends really on the likes of
Speaker 2: that private equity with SpaceX, it could be slightly different.
Speaker 2: I mean the risks are they as great as they
Speaker 2: would be for other investments, or how would a retail
Speaker 2: investor kind of assess that right.
Speaker 1: So, first and foremost the fundamental risk that the investor
Speaker 1: has in XOVR, it's just the market movement. And so
Speaker 1: we are growth oriented. We have we have exposure to
Speaker 1: attack and we primarily enforced actors, information technologies, healthcare, consumer
Speaker 1: discretionary and communication services. We have some fintech as well,
Speaker 1: and we have of course exposure you know, to space exploration.
Speaker 1: So we tend to be in high growth industries, high
Speaker 1: growth companies. And so first and foremost the risk that
Speaker 1: investor would have in our funds, which is the same
Speaker 1: that they would have for example, if they invest in
Speaker 1: the qqques or other growth oriented indices that invest heavily
Speaker 1: in tech and healthcare, is the market movement. So if
Speaker 1: interest rates rise tech in other securities which are considered
Speaker 1: long duration, long duration means you get more of your
Speaker 1: benefits in the future, those types of stocks are going
Speaker 1: to suffer when interest rates go up or when this
Speaker 1: market volatility or when markets contract. So you investors tend
Speaker 1: to see when when investors, when investors get nervous, they
Speaker 1: tend to move more to value, or they tend to
Speaker 1: move to cash, or they tend to move to bonds.
Speaker 1: When you come to private equities, you'll see it's probably
Speaker 1: even more exacerbated in the marketplace like that. So for example,
Speaker 1: one of the stocks, and even though the private markets
Speaker 1: have been you know, showing with SpaceX, you know, some
Speaker 1: of the secondary markets are showing SpaceX you know, doing
Speaker 1: well and so forth, which you know, we would expect that,
Speaker 1: you know, to do well based on a lot of
Speaker 1: idiosyncratic conditions. Some of the pure benchmarks in this market
Speaker 1: are moving. So sometimes you'll see privates not correspond with
Speaker 1: those movements because the other public markets are moving daily
Speaker 1: and privates may be seeing a stationary They tend to
Speaker 1: move in step function. They can move into step function
Speaker 1: both up and they can move into step function down.
Speaker 1: And as we saw in twenty one and twenty two, privates,
Speaker 1: you know, we're moving in a step function down. Now
Speaker 1: we're seeing you know, over the last couple of years
Speaker 1: markets were more positive, more growth oriented. We saw privates
Speaker 1: appreciating during twenty twenty three and twenty twenty four, early
Speaker 1: part of twenty twenty five, and we'll see soon. For example,
Speaker 1: probably our best litmus test is going to be one
Speaker 1: of our holdings, Klarna.
Speaker 4: We'll see how it comes out.
Speaker 1: We bought it an evaluation of market evaluation twelve billion. Well,
Speaker 1: it's going to come out to peer benchmarks like a firm.
Speaker 1: There's a company in Australia called after Pay that was
Speaker 1: bought by Block. You'll we'll see very soon how the
Speaker 1: market is valuing these and we expect our stock to
Speaker 1: move comparable to these valuations as well. So we'll we'll
Speaker 1: have a pretty good insight fairly soon, probably within the
Speaker 1: next few weeks, how how that particular private security is
Speaker 1: holding up or not when market information comes out.
Speaker 2: As the advantages to investing in an eighteenth flight this
Speaker 2: into of that private equity aspects, and would you get
Speaker 2: more transparency than if I would just went straight into
Speaker 2: private equity privately you know if you know what.
Speaker 1: I mean, Well, if you went into a private equity
Speaker 1: directly yourself, that means you're again ultra you're either a
Speaker 1: high net worth ultra high networth individual investor. You can
Speaker 1: spread your legal costs and infrastructure costs in buying these things,
Speaker 1: and plus you'll have a better idea of how to negotiate.
Speaker 4: If you're doing it frequently.
Speaker 1: So for many investors or let's say putting to work
Speaker 1: five hundred thousand dollars or less. Even if you're an
Speaker 1: individual investor, even if you're a high net worth investor,
Speaker 1: you may not want to go directly in. And for
Speaker 1: everyone else it's you're not allowed. You can't get into
Speaker 1: it because there are restrictions in getting in. And for
Speaker 1: even ultra high networth people, they may want the liquidity
Speaker 1: because they may want to go in. Even if they
Speaker 1: have the ability to go directly into a private equity,
Speaker 1: they may want the liquidity. Maybe they have a wedding
Speaker 1: in the family than want to spend money or buy
Speaker 1: a new house, or you'll do a buy a boat.
Speaker 1: So the liquidity becomes very important to people. And that's
Speaker 1: the advantage of an ETF.
Speaker 2: What do you think the potential for private equity is.
Speaker 2: I've seen you've quoted before saying it could be I
Speaker 2: think five to six times the size of crypto, and
Speaker 2: well bigger than as you've already explained to ETFs. Why
Speaker 2: do you think that and how soon are we talking?
Speaker 1: Well, Crypto is an interesting acid class. I don't recall
Speaker 1: saying it's five to six times a larger than crypto.
Speaker 1: I'm not saying I wouldn't say that I think the
Speaker 1: potential for private equity is larger than crypto in that
Speaker 1: you've got many private companies that are worth currently thirteen
Speaker 1: trillion dollars. Crypto is currently I think one to two
Speaker 1: trillion dollars. I don't know after the most recent your
Speaker 1: price point. So currently it's five to six times higher.
Speaker 1: Maybe I was quoted saying that that's currently it's higher.
Speaker 1: In terms of the trajectory, I think private equity is
Speaker 1: going to continue to attract more and more capital. We're
Speaker 1: seeing it, you know, through the early part of well
Speaker 1: we saw in twenty twenty four, is attracting a lot
Speaker 1: more of the capital going into companies than even public equity.
Speaker 1: And as I mentioned before, many companies are choosing to
Speaker 1: stay private longer for a variety of reasons. And so
Speaker 1: as a result, and this is a global phenomenon. The
Speaker 1: fact that we're seeing Karna, which is a Swedish company,
Speaker 1: coming to market here in the US, you'll suggest that
Speaker 1: this is an opportunity for global investors. So they're probably
Speaker 1: companies in New Zealand that may choose to go public
Speaker 1: someday and maybe you know, it's going to take them
Speaker 1: a while. Maybe some of your best own companies down there,
Speaker 1: you know, would like to tap the public markets. The
Speaker 1: best markets to go public tend to be in the US.
Speaker 1: They tend to be the NASTAC and the New York
Speaker 1: SoC Exchange. So for example, we've seen in Europe the
Speaker 1: London Stock Exchange pale in terms of volume compared to
Speaker 1: the US markets. Maybe one of these types of vehicles
Speaker 1: where larger, better known brands are seeing private equity as
Speaker 1: of mechanism to get there in anticipation of going public
Speaker 1: maybe six months a year, within two years down the road.
Speaker 2: It's rocket Lab one that you've looked at, or is
Speaker 2: it a conflict given you've got SpaceX.
Speaker 1: Rocket Lab is is a pure company. It's an entrepreneurial company.
Speaker 1: It's what we looked at. It's currently a small cap.
Speaker 1: We tend to in our XOVR ETF. One of the
Speaker 1: things I did mention these are entrepreneurial, publicly traded entrepreneurial companies,
Speaker 1: but they're large cap, which means that they tend to
Speaker 1: be ten billion dollars or larger in cap size. So
Speaker 1: rocket Lab is a company that we've looked at. It's
Speaker 1: a little small by our standards in terms of the
Speaker 1: in terms of the fund we have. Moreover, we already
Speaker 1: have a very large position in SpaceX. We see that
Speaker 1: we see SpaceX is the dominant player. And so one
Speaker 1: of the things I did not mention beforehand. When we
Speaker 1: go into private equity, one of the things we want
Speaker 1: to do is pick the leader. We want to pick
Speaker 1: the company with the biggest mote, and the case of SpaceX,
Speaker 1: one of the things I didn't mention before him. It's
Speaker 1: not only an entrepreneurial company that obviously is involved in
Speaker 1: space exploration, but as your group knows in New Zealand,
Speaker 1: it has Starlink, and Starlink is the crown jewel of SpaceX.
Speaker 1: And because they have seventy two hundred plus satellites in
Speaker 1: low Earth orbit around the world, and because they're now
Speaker 1: supplying telecommunications to geographically remote locations both the land, sea
Speaker 1: and air around the world, because it has geopolitical importance
Speaker 1: for military capabilities, this is emerging. SpaceX, which holds Starlink,
Speaker 1: is emerging. Are one of the most critical assets that the
Speaker 1: United States has from a military perspective, and we believe
Speaker 1: that this is one of those companies that's going to
Speaker 1: continue to rise in importance globally, but certainly within the US.
Speaker 1: And that's irrespective of the fact that Elon Musk is
Speaker 1: part of the the Trump administration. So there's that extra
Speaker 1: political benefit that we see that makes us like this
Speaker 1: particular asset even more.
Speaker 2: Have you had any backlash? I mean, el Musk isn't
Speaker 2: always the most popular with everybody around the world, right.
Speaker 4: So the backlash is there.
Speaker 1: I mean, there's no question Elon Musk people you know,
Speaker 1: either love him or hate him. You may know, our
Speaker 1: president also has has you know, people who are polarized
Speaker 1: around him that you love him or hate him. I
Speaker 1: saw a recent poll that says he's he's now has
Speaker 1: the he now has the most popular ratings he's ever had,
Speaker 1: But he still has a large percent of the population
Speaker 1: that don't like him. So irrespective of whether people think
Speaker 1: they he's great or not, we have to recognize that,
Speaker 1: you know, politicians whether and by the way, the same
Speaker 1: thing held true for the politician before him. You know,
Speaker 1: Joe Biden was very polarizing, so half the population didn't
Speaker 1: really like him. So so in these particular situations, you know,
Speaker 1: there tends to be a backlash among you know, various
Speaker 1: political groups.
Speaker 4: Was with Elon Musk.
Speaker 1: You'll arguably, arguably he's one of the greatest entrepreneurs we've
Speaker 1: ever had, certainly the richest on paper. A lot of
Speaker 1: people don't like him, but a lot of people do
Speaker 1: like him, and in terms of his capabilities and what
Speaker 1: he built with SpaceX and Starlink, we think it's an
Speaker 1: extraordinary company. We know that sometimes there's again geopolitical risks.
Speaker 1: So when the US and Canada we're having tiff issues,
Speaker 1: there is a politician in Canada said, you know, we
Speaker 1: want to we want to cut off the the Starlink.
Speaker 1: We want to cut off the Starlink contract. Well, what
Speaker 1: what they're really doing, what this politician was doing is
Speaker 1: cutting off you know, starlink access for ten or fifteen
Speaker 1: thousand people you're living in geographical remote areas of Canada,
Speaker 1: then weren't going to get the cell phone service and TV.
Speaker 1: So he wasn't really hurting Starling so much as he
Speaker 1: was hurting his own consumers. So the fact that some
Speaker 1: of these assets are becoming a geopolitical you know, hot potato,
Speaker 1: we don't believe is a long term concern. We realize
Speaker 1: it's an issue, but we believe the value and the
Speaker 1: benefit of starlink not only in space exploration, but more
Speaker 1: importantly with telecommunications and what it has in terms of
Speaker 1: capabilities you know, for weather sell like monitoring and helping
Speaker 1: to grow telecommunications globally is really important.
Speaker 2: Just wondering where does sustainability come in with the index
Speaker 2: that the fun tricks for the listed equities anyway, is
Speaker 2: there any thought of that or is it purely on
Speaker 2: on entrepreneurship and picking a great entrepreneur as opposed to
Speaker 2: an average entrepreneur.
Speaker 1: Well, it's interesting when people talk about sustainability or ESG
Speaker 1: the so first and foremost, most of our stocks are
Speaker 1: in tech and healthcare and communication services and consumer discretionary
Speaker 1: so it doesn't have a very large carbon imprint. But importantly,
Speaker 1: when we think about governance, these are the entrepreneurs globally.
Speaker 1: And I'm sure if you think about your top entrepreneurs,
Speaker 1: your top business people in New Zealand.
Speaker 4: They're probably entrepreneurs.
Speaker 1: And that's certainly true in almost every country around the
Speaker 1: world that the people creating the jobs, creating the wealth
Speaker 1: for societies around the world are these entrepreneurs. And this
Speaker 1: has been true forever, right, So if you go back
Speaker 1: in your country's history. You'll see the great entrepreneurs were
Speaker 1: the ones who created the wealth in your society, just
Speaker 1: as it's these entrepreneurs have done it in other places.
Speaker 2: Getting back to XOVR, there's a fair bit of competition
Speaker 2: on your heels. I mean Black Rock are looking at
Speaker 2: this or maybe even launched something. I say that Apollo
Speaker 2: and State Street Global Advisors, they've put a fund up
Speaker 2: that said it's gone into a bit of trouble with
Speaker 2: the regulator, and it's probably slightly different when they talk
Speaker 2: about private credit being behind it. Are you worried that
Speaker 2: there's there's many more coming in or do you think
Speaker 2: it's a good thing to have a competition and the
Speaker 2: are the big differences between the funds.
Speaker 1: Probably well so C Street and Apollo or as you mentioned,
Speaker 1: private credit, which is a completely different market. We're in
Speaker 1: private equity and we're trying to take the leadership position
Speaker 1: with EXOVR. We're working with some of the databases to
Speaker 1: take leadership role and how private equity is being priced
Speaker 1: on a regular basis. So we're working very closely there
Speaker 1: and we're continuing to try to advance the state of
Speaker 1: the markets. And so competition's inevitable others will come in.
Speaker 1: We've been grappling with this for a while. We didn't
Speaker 1: We launched the fund in August of twenty nine of
Speaker 1: twenty twenty four, but we didn't buy our first private
Speaker 1: equity until December third, so three months later, so only
Speaker 1: a small part of the overall fund can be in
Speaker 1: private equity. As I mentioned before, private equity is consistent
Speaker 1: with our model. Our entrepreneur model started on the private side.
Speaker 1: It was based on venture capitalists, and then we extended
Speaker 1: that over to the public. And we have a track
Speaker 1: record which goes back and shows how we were able
Speaker 1: to get into things like Nvidia back in two thousand
Speaker 1: and five and our funds when we first launched, and
Speaker 1: we got Amazon in two thousand and five. So our strategy,
Speaker 1: our approach enables to get into companies fairly early on,
Speaker 1: which we think is commenser with again our investment thesis.
Speaker 1: We're basically again taking private companies, venture capital back companies
Speaker 1: and seeing as they go through and identifying them once
Speaker 1: they become public if other companies try to PLoP in
Speaker 1: private equity and maybe inconsistent with their thesis. And in fact,
Speaker 1: we recently talked to a fund manager or a CIO
Speaker 1: of a major company who put a company in called
Speaker 1: app Loven into a value fund and we couldn't we
Speaker 1: couldn't disagree more. And app love and is one of
Speaker 1: the highest growth stocks in the market. We've owned it
Speaker 1: for several years. It's gone up something like three thousand
Speaker 1: times our three thousand percent now three thousand times three
Speaker 1: thousand percent in the last two and a half years.
Speaker 1: It's not a value stock, it's a gross stock. But
Speaker 1: yet this value manager put it in. So other funds
Speaker 1: that try to put private equity into it into their
Speaker 1: funds that they're probably not going to be consistent with
Speaker 1: the investment theme.
Speaker 2: Just to finish off, Joe, I'm just wondering what sort
Speaker 2: of takeap have you head for the IXOVR and particularly
Speaker 2: in Australia mwsaland so.
Speaker 1: We very much appreciate you asking the question. We don't
Speaker 1: see the flows as an ETF. We're not allowed to
Speaker 1: see where they're coming home from, but we know that
Speaker 1: they're strong demand. You're coming from your part of the
Speaker 1: world just recently started. We know there are some brokers
Speaker 1: in your area that have recently listed US, and we
Speaker 1: appreciate the interest that you're express in here. It's a
Speaker 1: great story space Ax and Starlink, great story around the world.
Speaker 1: Having access to private equity is certainly, you know, part
Speaker 1: of our story and with daily liquidity, so we appreciate
Speaker 1: you helping us get the word out. Is a pleasure
Speaker 1: speaking with you, and we hope to communicate with you
Speaker 1: more in the near future.
Speaker 2: Really appreciate you joining us, Joel, and thanks everyone for
Speaker 2: tuning in. You can watch Shed Lunch on YouTube or
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