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Speaker 1: Loker trillions. I'm Joe Webber and.

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Speaker 2: I'm Eric Balchernas.

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Speaker 3: Eric, you sent a note that caught my attention because

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Speaker 3: you were like, it's the wave of the future. Manufactured

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Speaker 3: high yield gonna be a big category. I was like,

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Speaker 3: that's like Eric Balchina's at his finest. Let's unpack those three.

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Speaker 3: The category a new one Auto callables. Yeah.

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Speaker 2: I honestly I'd heard the word a couple of times,

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Speaker 2: didn't know what it meant. This is part of a

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Speaker 2: bigger theme that we call yield three point zero where

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Speaker 2: manufactured yield. We used to use the meme of the

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Speaker 2: breaking bad where using the lab making the meth. They

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Speaker 2: are making yield that isn't from like bonds or stoughts.

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Speaker 2: They're just making it and it's very popular, especially if

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Speaker 2: it's a big yield.

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Speaker 4: So auto callibles are.

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Speaker 2: One of the latest areas that has a big yield,

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Speaker 2: usually thirteen fourteen percent at least in the colum most

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Speaker 2: etf that I looked at, And there is a huge

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Speaker 2: demand for this. People love income. I've been to the

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Speaker 2: Money Show several times, especially older people. They just go

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Speaker 2: crazy for income. So these products are quite complicated. In

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Speaker 2: my opinion. I used to say VIX and China were

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Speaker 2: the two most complicated areas of ETFs. This is more complicated.

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Speaker 2: So I want to make sure that we understand this

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Speaker 2: and that we could explain it to you know, our

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Speaker 2: aunt or uncle, like just somebody in our lives.

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Speaker 1: We're gonna try, but we can't.

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Speaker 2: End this podcast until we both understand it. I think

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Speaker 2: I get it, but I get it on a very

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Speaker 2: superficial level that I just learned it quickly for the note,

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Speaker 2: but I really want to get it, and also want

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Speaker 2: to make sure that people are aware of like the

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Speaker 2: pros and cons of these, because Joel, they're going to grow.

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Speaker 2: This thing came out. This calumost One already has four

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Speaker 2: hundred million, and for something complex to come out, it's

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Speaker 2: pretty good money for that, so I would suspect. And

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Speaker 2: I'm hearing a lot of other issuers are going to

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Speaker 2: launch these, And it's a word I hear when I

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Speaker 2: travel around, including from our index team. They bring up

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Speaker 2: auto callables all the time. So it's a word you're

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Speaker 2: gonna hear more and more. Might as well get get

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Speaker 2: our heads around it.

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Speaker 3: Now I'm surrounded by papers trying to make sense of this,

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Speaker 3: it's kind of hilarious.

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Speaker 1: Uh I don't think I understand it.

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Speaker 3: So I'll be the litmus test and to help us

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Speaker 3: make sense of this, we're gonna be joined by Matt

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Speaker 3: Kaufman Global ahead of ETFs at Klamos Investments First market

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Speaker 3: or this year with a UTF in this space, this

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Speaker 3: time my trillions auto callibles.

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Speaker 1: Matt, welcome jillions.

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Speaker 4: Joel, thanks for having me. Great to be here.

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Speaker 1: How does this stuff work?

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Speaker 4: We are going to hopefully get off of the meth analogy. Yeah,

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Speaker 4: that was We'll move toward first step something.

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Speaker 2: Listen, Matt, Matt goes to work every day in like

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Speaker 2: this white suit. Then he's in there testing different things. Yes,

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Speaker 2: that was the hollow costing this year, so you might

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Speaker 2: as well.

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Speaker 4: You already have ramid lab.

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Speaker 3: But Colam Moos came out with a ticker ce ai E.

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Speaker 3: That's the ticker if you want to look into this more.

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Speaker 4: That is the ticker Auto Callable Income ETF. So let's

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Speaker 4: take our minds from the equity markets and move it

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Speaker 4: toward the fixed income market. So think like a bond

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Speaker 4: that will pay you a monthly income and return your principle.

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Speaker 4: As long as the equity markets don't fall too far.

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Speaker 4: If you can understand that, you can understand an auto callable.

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Speaker 4: So it's a lot like a bond that pays a

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Speaker 4: monthly income and delivers your principle back to you either

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Speaker 4: at maturity or if you're called away early. That is

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Speaker 4: the auto call feature. And it's tied to the equity markets.

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Speaker 4: So bonds are usually tied to duration and credit. This

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Speaker 4: is tied to the equity markets. That's essentially it.

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Speaker 3: That was a really great way of breaking it down.

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Speaker 3: It's also a quote that you had in the story

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Speaker 3: Waltree Cream's more auto callables into ETFs and race for

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Speaker 3: yield by our colleagues at Bloomberg News.

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Speaker 1: Yes, Matt, though I got that part. Where does the

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Speaker 1: yield come from? The income? Where am I getting? Where

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Speaker 1: are you getting that income to give it to me from?

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Speaker 4: Yeah, great question. I think one of the easiest ways

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Speaker 4: to think about this is to you know, normally you

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Speaker 4: would frame it around a covered call so that covered

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Speaker 4: call space, as Eric was talking about, is a massive market.

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Speaker 4: It's one hundred and fifty billion dollar market. I was

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Speaker 4: fortunate enough to be at Power Shares in early two thousands.

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Speaker 4: We built the first buy right ETF in two thousand

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Speaker 4: and seven. I think it was a little before it's time.

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Speaker 4: You know, nobody really bought it back then. Now that

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Speaker 4: space is one hundred and fifty one hundred and sixty

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Speaker 4: billion in assets. It's a massive market. And you know,

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Speaker 4: what are you doing with a covered call? You're selling

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Speaker 4: off your upside. It's a by right strategy. Twenty years ago,

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Speaker 4: very few people understood that term. Today it's commonplace. There's

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Speaker 4: equity premium income strategies. You're selling off upside collecting an

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Speaker 4: income payment, and auto callable is a long dated put

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Speaker 4: right stra strategy. So take the other side of the trade.

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Speaker 4: It's a long dated, say five year put right with

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Speaker 4: a call feature, and that's it. That's all. You're collecting.

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Speaker 2: What he just said, and he goes, that's it. You

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Speaker 2: come on, dude, it's okay.

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Speaker 4: You want it simple. So we're starting simple.

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Speaker 2: I'm gonna break this down. Okay, I have ten thousand dollars.

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Speaker 2: I give you ten thousand dollars to this. So first

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Speaker 2: of all, who makes the auto callable? Like is it

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Speaker 2: a bank? And this is like what like a swap

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Speaker 2: contract or? Like whom I am I doing? It's just

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Speaker 2: like Michael Burry where I'm walking into Goldman and I

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Speaker 2: say I have this idea and the bank just says, okay,

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Speaker 2: I'll make a thing for you. Is that what we're

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Speaker 2: doing here?

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Speaker 1: Yeah.

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Speaker 4: So you can't go to the market and you can't

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Speaker 4: go to the listed options market and find an auto

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Speaker 4: callable yield, you know, option that does not exist. You

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Speaker 4: can go to the listed options markets and do put

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Speaker 4: writing strategies, you can call writing strategies. But what we've

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Speaker 4: done is we've partnered with JP Morgan. There you go,

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Speaker 4: biggest bank in the world. So yes, it is a

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Speaker 4: bank strategy. You cannot do this with listed options. So

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Speaker 4: we've partnered with JP Morgan. We took their auto callable

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Speaker 4: pricing methodology and we built a laddered version of this hold.

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Speaker 2: On, hold on. What is JP Morgan's auto callable pricing methodology?

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Speaker 2: So the first of all, what is the index that

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Speaker 2: were based? What's the equity index?

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Speaker 4: Sure, so let me let me explain this to you

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Speaker 4: in a way that we can we can understand. So,

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Speaker 4: you know, you talked about you know what happens if

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Speaker 4: you have ten thousand dollars. So I brought monopoly money,

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Speaker 4: you did I did. Yeah, I actually brought monopoly money

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Speaker 4: here before, so we can we can play with this.

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Speaker 4: So here, Eric, I'll give you one hundred dollars monopolyous.

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Speaker 1: He just gave you a hundred back.

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Speaker 4: It's easy. He would be a bad banker, and it's

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Speaker 4: easier to think about that because it's a Let's let's

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Speaker 4: pretend like that hundred dollars is the par amount.

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Speaker 2: Okay, Okay, So.

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Speaker 1: By the way, I get nothing. I don't like this game.

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Speaker 4: You're going to be the Joel. You're going to be

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Speaker 4: the market. You're going to go to the market here,

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Speaker 4: all right, So Eric's gonna buy an auto callable. Note,

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Speaker 4: I'll be the bank. So you're going to invest in

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Speaker 4: an auto call but note, so give me your hundred

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Speaker 4: oct here's sliding it across the table. Okay, now that's.

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Speaker 1: Stuck in the middle. I'm moving it across.

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Speaker 4: Let's put it.

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Speaker 2: We don't want it in free parking.

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Speaker 4: Sure, So let's put some terms to this note. Let's

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Speaker 4: say it has a five year life, it has a

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Speaker 4: sixty percent principal coupon barrier. So we're gonna pay you

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Speaker 4: monthly income as long as an equity index does not

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Speaker 4: fall by forty.

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Speaker 2: Percent during what time period?

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Speaker 4: Every month?

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Speaker 2: It's a monthly look, so if the S and P.

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Speaker 2: Let's say it's the SMP index. If it doesn't fall

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Speaker 2: forty percent a month.

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Speaker 4: In a month while a starting date, so then I

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Speaker 4: get a little a little something. Yeah, that's right, and

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Speaker 4: then there's so and then there's the same thing at maturity.

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Speaker 4: So let's just play this out.

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Speaker 2: But hold on, does the forty percent restart in the

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Speaker 2: second month. Uh, it's from the starting point we're starting

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Speaker 2: for interception. And let's say the first month the SMP

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Speaker 2: is down two percent. I get I get paid.

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Speaker 4: So Joel, Joel gets to decided he's going to be

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Speaker 4: the market here. Okay, okay, So let's say this pays

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Speaker 4: twelve percent annualized income every month. So I've got you

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Speaker 4: one hundred dollars safe here. So Joel, let's go thirty

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Speaker 4: days in the future. What is the market going to do?

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Speaker 4: Pick a number up or down?

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Speaker 1: Right?

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Speaker 3: This year, I'm gonna say, if we're if we're playing

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Speaker 3: this from the beginning of the year, market gove up.

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Speaker 4: Okay, let's say you're up five percent. So market's of

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Speaker 4: five percent in a month, Eric, you get a dollar

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Speaker 4: you're good.

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Speaker 1: You're good.

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Speaker 4: Okay. Next month, let's say the market.

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Speaker 1: Well it happened, okay, kind kind of was a little chaotic.

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Speaker 4: Okay, let's say it happens.

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Speaker 1: Let's say market went down.

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Speaker 4: Market goes down how much? Ten percent? All right, Eric,

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Speaker 4: you still get a dollar. Market's down ten. It's not

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Speaker 4: down forty, it's down ten.

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Speaker 2: It resets every month.

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Speaker 4: Uh, it's not, it's it's from the inception of the

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Speaker 4: note to that month.

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Speaker 1: I see.

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Speaker 2: So because it went up and down. Now year to date,

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Speaker 2: what do we down six percent or something?

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Speaker 1: We were up five, Now we're down ten, So down

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Speaker 1: five so far? Yeah.

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Speaker 4: Right, So let's let's just keep playing out. Let's say

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Speaker 4: the market is down forty percent the next month from

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Speaker 4: inception no dollar for you.

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Speaker 2: Hold on, stop real quick. So we're down five percent,

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Speaker 2: so the market would have to go down like another

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Speaker 2: thirty five percent. Then, so it hits forty percent year

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Speaker 2: to date. Correct that month, I don't get a dollar.

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Speaker 4: That's correct.

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Speaker 2: And then because this got called in other.

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Speaker 4: Words, the whole getting called yet.

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Speaker 2: Oh okay, so don't get a dollar.

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Speaker 4: Correct.

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Speaker 2: Now the next month it goes up five percent.

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Speaker 4: Your dollar kicks back in.

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Speaker 2: I get another dollar, You get a dollar. Okay, what

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Speaker 2: if it goes down another twenty percent from.

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Speaker 4: The forty then you do not get your dollar, gotcha?

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Speaker 1: Yes?

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Speaker 2: So in other words, as long as it doesn't come

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Speaker 2: above the forty percent watermark, I get no dollars. If

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Speaker 2: it comes up above the forty percent of water mark,

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Speaker 2: I start.

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Speaker 4: Getting my dollars again, exactly.

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Speaker 1: And the one hundred you just hold on to.

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Speaker 2: Who How is this a good deal for JP Morgan?

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Speaker 4: Uh?

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Speaker 2: It seems a little too good, Like I feel like

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Speaker 2: the number should be ten percent. That'd be fair for

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Speaker 2: JP Morgan.

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Speaker 4: Sure, No, that's a good question. So let's keep playing

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Speaker 4: this out. So now you've got your hundred dollars still here.

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Speaker 1: Yep.

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Speaker 4: So five years from now, let's say the market is

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Speaker 4: down twenty percent, you are maturing at par. You get

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Speaker 4: your hundred dollars back. If the market is down forty

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Speaker 4: percent or more, that's when you have principle at risk.

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Speaker 4: So let's say the market is down forty percent five

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Speaker 4: years from now. If I can make the sound in

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Speaker 4: the in the mic, we're gonna tear your one hundred

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Speaker 4: dollars bill by forty percent. You're gonna get sixty percent

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Speaker 4: of your principle back. Oh, that is the risk that

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Speaker 4: you're taking on.

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Speaker 1: But he's collected income along the way. Correct if if it.

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Speaker 2: So after five years, if I collected a dollar every

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Speaker 2: month minus say like five months, that would be fifty

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Speaker 2: five dollars against my sixty forty percent that I lost.

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Speaker 2: So it would cush it in a little bit. That's

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Speaker 2: like a cover call. Okay, yes, exactly.

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Speaker 4: Okay, So that's how a single auto call of works.

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Speaker 4: The call feature then would be if the market is positive,

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Speaker 4: usually after a non call period like one year, then

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Speaker 4: you are called away. JP gets the money back, your prince,

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Speaker 4: you get your principal, you get your hundred dollars back,

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Speaker 4: you get your final coupon payment. Good job shows over,

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Speaker 4: everyone goes home, you have to go buy a new note.

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Speaker 1: That's how it works.

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Speaker 2: Wait, wait, that's that's when it gets called. I thought

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Speaker 2: it got called if it goes down too much, No

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Speaker 2: one goes up. Correct, So so when does it get

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Speaker 2: called again?

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Speaker 4: Yeah, so you're getting called when the market is positive

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Speaker 4: after a one year nine all period.

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Speaker 2: So if the market's up seven percent after like the

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Speaker 2: market is up this year, it's up fourteen percent, so

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Speaker 2: let's just say correct the year under. Now we're up

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Speaker 2: fourteen percent in twenty twenty five, and therefore I would

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Speaker 2: get the one hundred dollars back correct, and then I

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Speaker 2: would have my twelve dollars because it every went down

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Speaker 2: below forty exactly, so I would have So at that

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Speaker 2: point the fund would automatically reinvest in.

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Speaker 4: A new auto callable. That's correct.

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Speaker 2: So now in that getting on the hundred dollars back,

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Speaker 2: big reset, Well right now, a loss of money in

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Speaker 2: that one hundred dollars getting called.

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Speaker 4: Back or not?

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Speaker 2: Those resets correct and you you reset it automatically.

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Speaker 4: Well, so I'm teaching you about an auto callable, so

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Speaker 4: we know how the auto callable works.

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Speaker 1: Now.

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Speaker 4: So what we have done with CIE is we've laddered

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Speaker 4: exposure to fifty two or more of these. It's a

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Speaker 4: weekly ladder, a laddered portfolio of auto callables. So now

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Speaker 4: at week fifty three, if the market's down, you might

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Speaker 4: lose coupon on one, I say, but you have fifty

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Speaker 4: one others in the portfolio. So it's highly diversified.

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Speaker 2: Wow, And the answer is in reality, in this fun CIAE,

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Speaker 2: it is forty percent. That's the number. You don't want

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Speaker 2: the market to go down below.

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Speaker 4: For a severe and sustained time period.

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Speaker 1: That's correct, Like, what's that mean?

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Speaker 4: So we built all of this with JP Morgan and Mercube,

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Speaker 4: a custom indexing provider, and this is all built inside

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Speaker 4: of an index that we trade on swap with JP Morgan.

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Speaker 4: So the risk would be a severe sustained market decline

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Speaker 4: that never recovers, and that in five years your autocollables

291
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Speaker 4: start to mature below the barrier.

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Speaker 1: Let's back test it.

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Speaker 3: What happened, What happens at the if March twenty twenty happens,

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Speaker 3: we're back in the pandemic.

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Speaker 2: Yeah, use one hundred dollars, put one hundred dollars in.

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Speaker 2: Let's say I get Let's say for a year it's fine,

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Speaker 2: so I got twelve dollars back, but then this next

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Speaker 2: year it's like a twenty Let's say it's a two

299
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Speaker 2: thousand and eight where the market, well, the market wasn't

300
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Speaker 2: even down forty percent. It was down thirty three percent,

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Speaker 2: thirty five percent in two thousand and eight, right, So

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Speaker 2: way it's down forty five percent that year, Yeah, and

303
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Speaker 2: it stays down. What happens?

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Speaker 4: So, because this is an index. We can look at

305
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Speaker 4: that history. We go back to two thousand and five,

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Speaker 4: and you would have lost on two point eight percent

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Speaker 4: of those autocollables. Historically, it would have equated to a

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Speaker 4: seventeen percent principle impairment. That was the only time you

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Speaker 4: would have lost money. Again, you did not lose that

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Speaker 4: forty percent.

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Speaker 2: So you don't lose everything. You lost seventy percent, So

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Speaker 2: you basically you bet a seventeen percent loss on something

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Speaker 2: that's almost not never gonna happen because the Fed's going

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Speaker 2: to step in and start buying assets if a go

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Speaker 2: that low again.

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Speaker 4: Probably I think you're right.

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Speaker 1: That's why I don't get I look, it's in this

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Speaker 1: for JP Morgan.

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Speaker 2: Yeah, this sounds like genius from your point of view,

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Speaker 2: But it feels like JP Morgan is pretty smart, Like

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Speaker 2: we had them on, they're pretty smart people. I feel

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Speaker 2: like they could almost get you to do this deal

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Speaker 2: at like fifteen percent. What do you mean, like if

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Speaker 2: if the market goes down below fifteen percent, that's the threshold,

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Speaker 2: Like going down forty seems like almost like beyond a

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Speaker 2: tail risk event. I feel like they could do the

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Speaker 2: same deal with you at fifteen percent like that would

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Speaker 2: be almost pretty good deal because I don't even mark

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Speaker 2: go down. We'll go down fifteen percent before the government

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Speaker 2: starts buying up assets.

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Speaker 4: Sure, I think when you're trying to build something with

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Speaker 4: risk management, you know, Calamos is a risk manager who's

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Speaker 4: been doing this for nearly fifty years. We want to

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Speaker 4: give people the risk managed exposure. We want to give

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Speaker 4: them a high stable tax efficient income. If there is

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Speaker 4: a payoff that we are after, it's that it's high

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Speaker 4: stable tax efficient income. So when you take this and

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Speaker 4: ladder it out fifty two or more times, you put

339
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Speaker 4: forty percent principal barriers on it, you get this really

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Speaker 4: high stable taxificient income.

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Speaker 2: Just jpen working consider this like issuing a bond on

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Speaker 2: their port, where it's a high yield bond, but with

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Speaker 2: this tail risk possibility. Therefore, that's why they're giving you

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Speaker 2: a higher yield.

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Speaker 4: Well, they're issuing the auto callables, so they're the issuer

346
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Speaker 4: of the auto callables, so they're going to take a

347
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Speaker 4: spread on that note. They're going to make money on

348
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Speaker 4: the on the swap that we're trading, so we trade

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Speaker 4: so for plus ten basis points. It's much more efficient

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Speaker 4: for JP Morgan to trade swap with us than it

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Speaker 4: is for somebody to go buy a note from JP Morgan,

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Speaker 4: where you tie up all of their balance sheet, tie

353
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Speaker 4: up all their capital. You've got a subordinated debt structure

354
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Speaker 4: to that note, whereas here, if you build it synthetically

355
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Speaker 4: and just trade on swap, well, ninety five percent of

356
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Speaker 4: the assets in the ETF are in treasuries, so that

357
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Speaker 4: money is sitting at State Street at the custodian. There's

358
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Speaker 4: no real credit risk from that perspective. And then post

359
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Speaker 4: Dodd Frank, JP Morgan has got to pay variation margin

360
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Speaker 4: on the swap, so the whole structure is nearly one

361
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Speaker 4: hundred percent collateralized. So go back to eight. You know,

362
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Speaker 4: when a couple banks went under, you're on the hook

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Speaker 4: for a lot of that. Hopefully you get some of

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00:16:01,000 --> 00:16:02,800
Speaker 4: your money back if you're a note issue or if

365
00:16:02,840 --> 00:16:04,520
Speaker 4: you're a note buyer, who's here.

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Speaker 2: You don't have that whose money is in collateral? Does

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Speaker 2: JPM Moore can get a cut of the interest from

368
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Speaker 2: the collateral.

369
00:16:09,120 --> 00:16:12,480
Speaker 4: No, it's the investor. So we pay JP Morgan SOFA

370
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Speaker 4: plus ten bases points.

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Speaker 1: I see.

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Speaker 4: Okay, They in turn give us the performance of that

373
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Speaker 4: auto callable index that we've created with Sofa overnight rate, so.

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Speaker 2: You pay I see. So they get a little interest

375
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Speaker 2: from you plus ten BIPs correct, and they feel like

376
00:16:29,480 --> 00:16:31,400
Speaker 2: that's what they get out of it. That's right, and

377
00:16:31,440 --> 00:16:33,960
Speaker 2: that balances out the income they have to give you.

378
00:16:34,520 --> 00:16:38,640
Speaker 2: But they also have this like sort of you know,

379
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Speaker 2: fine print that if it goes down for forty percent,

380
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Speaker 2: they really wine that's right.

381
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Speaker 4: They're taking the other side of the trade.

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Speaker 3: I feel a little bit like the guy at the

383
00:16:46,600 --> 00:16:48,680
Speaker 3: craps table that's like, now, I'm gonna just watch that

384
00:16:48,720 --> 00:16:50,240
Speaker 3: game play out.

385
00:16:49,800 --> 00:16:53,400
Speaker 2: What well I mean, I mean here, I'll if you

386
00:16:53,480 --> 00:16:55,600
Speaker 2: yield is twelve is well, if you get a dollar

387
00:16:55,640 --> 00:16:57,520
Speaker 2: a month, that's twelve percent, but this is like fourteen

388
00:16:57,560 --> 00:16:58,760
Speaker 2: percent a little more of a dollar.

389
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Speaker 4: The average weighted coop on which is based on that

390
00:17:01,440 --> 00:17:04,320
Speaker 4: par amount of your note, is fourteen point four percent.

391
00:17:04,400 --> 00:17:06,359
Speaker 4: Right now. Okay, So the thing that we did not

392
00:17:06,440 --> 00:17:08,640
Speaker 4: get into yet, which we have to build a base

393
00:17:08,720 --> 00:17:12,760
Speaker 4: understanding of auto callables. It's a one hundred billion dollar

394
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Speaker 4: market in the United States. You know, as you alluded

395
00:17:14,800 --> 00:17:18,280
Speaker 4: to the structured note world, Well, let me back up

396
00:17:18,680 --> 00:17:20,199
Speaker 4: the cover call space. You know, he said is one

397
00:17:20,240 --> 00:17:23,920
Speaker 4: hundred and fifty billion dollar market. Derivative income is dominating

398
00:17:24,040 --> 00:17:27,480
Speaker 4: the ETF landscape. If you go to the other side

399
00:17:27,520 --> 00:17:31,600
Speaker 4: of the house, the structured note house, derivative income dominates

400
00:17:31,600 --> 00:17:33,960
Speaker 4: there as well, but it's through the auto call. The

401
00:17:34,000 --> 00:17:36,240
Speaker 4: auto callable is one hundred billion dollar market in the

402
00:17:36,359 --> 00:17:40,199
Speaker 4: United States alone, multiples of that globally. People love this

403
00:17:40,280 --> 00:17:41,640
Speaker 4: type of exposure.

404
00:17:41,200 --> 00:17:43,320
Speaker 1: And it's never been in an ETF until this show.

405
00:17:43,359 --> 00:17:44,960
Speaker 4: We built the first ETF correct.

406
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Speaker 2: This is really interesting. You know that when he talks

407
00:17:48,000 --> 00:17:51,919
Speaker 2: about people wanting income that is derivatives based. If you

408
00:17:51,960 --> 00:17:54,720
Speaker 2: look at all the flows into income ETFs that would

409
00:17:54,720 --> 00:17:58,160
Speaker 2: be equity, including which we've talked about before, that could

410
00:17:58,160 --> 00:18:00,240
Speaker 2: be divid in ETFs which a plane vanilla or these

411
00:18:00,280 --> 00:18:04,280
Speaker 2: derivative yield three point zero, over eighty percent goes into

412
00:18:04,320 --> 00:18:08,040
Speaker 2: the derivative ones, which again would include the covered call.

413
00:18:08,480 --> 00:18:11,480
Speaker 2: So this is again that the ones the stock ETFs

414
00:18:11,480 --> 00:18:14,320
Speaker 2: that pay dividends like those old school, they're less than

415
00:18:14,359 --> 00:18:16,400
Speaker 2: twenty percent of the flow. So this yield three point

416
00:18:16,400 --> 00:18:20,200
Speaker 2: zero is taking the lion's share of all the income

417
00:18:20,240 --> 00:18:22,800
Speaker 2: seeking money in the equity space. And I'm not counting

418
00:18:22,840 --> 00:18:23,360
Speaker 2: bonds but.

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00:18:23,320 --> 00:18:26,840
Speaker 1: You were talking about since the CTF has come out.

420
00:18:26,720 --> 00:18:28,440
Speaker 2: I'm talking about this year, so this is TF came

421
00:18:28,480 --> 00:18:30,879
Speaker 2: out after this year. So like the thing is to me,

422
00:18:31,480 --> 00:18:34,720
Speaker 2: I'm going to put this into a category with JEPY.

423
00:18:34,960 --> 00:18:37,199
Speaker 2: This is a little more complex than JEPY, but the

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00:18:37,200 --> 00:18:39,040
Speaker 2: covered call space is huge now.

425
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Speaker 4: But I might push back on you a little bit

426
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Speaker 4: if you look at equity premium income strategies. You know,

427
00:18:45,600 --> 00:18:48,840
Speaker 4: again another JP Morgan, you know tide product, but JEPI

428
00:18:48,920 --> 00:18:53,600
Speaker 4: and JEFQ will hold actual equity linked notes and then

429
00:18:53,680 --> 00:18:57,400
Speaker 4: deliver you know, that income which is somewhat tax inefficient,

430
00:18:57,920 --> 00:19:00,879
Speaker 4: but you don't really know what's going on side those notes.

431
00:19:01,320 --> 00:19:03,840
Speaker 4: Like you, you have to look at what they're publishing,

432
00:19:03,880 --> 00:19:06,560
Speaker 4: which a lot of times they do it late and

433
00:19:06,640 --> 00:19:08,680
Speaker 4: so there's there's not a lot of transparency all those.

434
00:19:08,560 --> 00:19:11,720
Speaker 2: To be fair to them, though, in the yield that

435
00:19:11,800 --> 00:19:13,920
Speaker 2: you get like that we display on the des is

436
00:19:13,960 --> 00:19:16,320
Speaker 2: pretty good. I mean, I think what's like nine ten percent?

437
00:19:16,920 --> 00:19:18,640
Speaker 2: And I think to some degree, like some of these

438
00:19:18,640 --> 00:19:21,800
Speaker 2: products I've seen over the years, you just either trust

439
00:19:21,880 --> 00:19:24,520
Speaker 2: the issue or you don't because correct a lot of advisors,

440
00:19:24,840 --> 00:19:27,160
Speaker 2: they're not going to get what you're selling, they're gonna say, Matt,

441
00:19:27,240 --> 00:19:29,720
Speaker 2: I trust you, You're a good guy. Calamos has a reputation.

442
00:19:30,680 --> 00:19:33,160
Speaker 2: I also think the target altcome ETFs. The buffers are

443
00:19:33,160 --> 00:19:36,280
Speaker 2: also like I just trust Innovator and Bruce Bond or

444
00:19:36,280 --> 00:19:39,679
Speaker 2: I trust black Rock, because these are very complicated. The

445
00:19:39,720 --> 00:19:41,960
Speaker 2: good news is the ETF industry does have this like

446
00:19:42,359 --> 00:19:45,320
Speaker 2: really good track record, and from what you're describing it

447
00:19:45,359 --> 00:19:47,960
Speaker 2: does seem like a pretty good bet to me. I'm

448
00:19:48,000 --> 00:19:51,600
Speaker 2: not really seeing anything too outrageous, except the fact that

449
00:19:52,160 --> 00:19:55,320
Speaker 2: obviously if there's somebody very bearish, this might not be

450
00:19:55,320 --> 00:19:56,000
Speaker 2: the product for them.

451
00:19:56,160 --> 00:20:00,240
Speaker 3: So who who was doing it before the ETF going

452
00:20:00,240 --> 00:20:01,960
Speaker 3: to a bank and saying I want.

453
00:20:01,880 --> 00:20:05,280
Speaker 1: That autocullable, autocullable thing that you guys have told me about.

454
00:20:05,600 --> 00:20:08,520
Speaker 3: And then how is that changing now that it's you know,

455
00:20:08,640 --> 00:20:10,280
Speaker 3: potentially retail friendly.

456
00:20:11,440 --> 00:20:13,520
Speaker 4: You mentioned the buffer at ETF, so I had a

457
00:20:13,560 --> 00:20:15,320
Speaker 4: hand in building though, so if you trust the bus

458
00:20:15,400 --> 00:20:18,200
Speaker 4: buffer ETF SO, those have been working phenomenally for nearly

459
00:20:18,240 --> 00:20:21,840
Speaker 4: a decade. It's a very big space. Now that model

460
00:20:21,920 --> 00:20:25,439
Speaker 4: is very commoditized. Everybody who builds buffers tends to do

461
00:20:25,480 --> 00:20:28,880
Speaker 4: it closely the same way, So yeah, if you understand

462
00:20:28,960 --> 00:20:32,320
Speaker 4: that space or that was something that was mildly confusing.

463
00:20:32,359 --> 00:20:34,960
Speaker 4: Back then, people had to get their heads around it.

464
00:20:34,960 --> 00:20:38,000
Speaker 4: It was new. Now it's not. Most people understand it.

465
00:20:38,040 --> 00:20:40,240
Speaker 4: The same is going to happen with auto calls. It's

466
00:20:40,280 --> 00:20:42,480
Speaker 4: a new space for ETFs. People are going to wrap

467
00:20:42,520 --> 00:20:45,760
Speaker 4: their heads around it. They're going to understand it, you know.

468
00:20:45,800 --> 00:20:48,880
Speaker 4: But what we did with the buffers was largely disruptive

469
00:20:48,920 --> 00:20:52,280
Speaker 4: to the banks. They did not really appreciate that there

470
00:20:52,280 --> 00:20:54,840
Speaker 4: were flex options being built around this. It wasn't a

471
00:20:54,880 --> 00:20:58,919
Speaker 4: bank driven product, whereas here this is collaborative with the banks.

472
00:20:59,640 --> 00:21:02,320
Speaker 4: You know, we're seeing a tremendous amount of demand to

473
00:21:02,359 --> 00:21:05,919
Speaker 4: actually bring in those structured note strategies and do that

474
00:21:06,040 --> 00:21:09,720
Speaker 4: inside the ETF world. That's going to be a massive space.

475
00:21:09,800 --> 00:21:12,600
Speaker 4: We've opened this huge gate where we can now partner

476
00:21:12,680 --> 00:21:16,200
Speaker 4: with banks and bring their structured strategies into a liquid,

477
00:21:16,640 --> 00:21:21,680
Speaker 4: transparent and ETF ETF wrapper. I'd say it's also tax efficient.

478
00:21:22,240 --> 00:21:25,880
Speaker 4: So most large banks around the world have an equity

479
00:21:25,920 --> 00:21:31,479
Speaker 4: derivatives desk, they have an autocallable business JP Morgan, Morgan Stanley, RBC,

480
00:21:31,560 --> 00:21:34,280
Speaker 4: like you name it, SoC Chan, Barclays, They all have

481
00:21:34,880 --> 00:21:37,560
Speaker 4: these types of products that they issue, and it's on

482
00:21:37,600 --> 00:21:40,040
Speaker 4: a massive scale, hundreds of billions of dollars. And so

483
00:21:40,080 --> 00:21:44,240
Speaker 4: we've taken one of the most popular versions, laddered it together,

484
00:21:44,640 --> 00:21:46,840
Speaker 4: did it in swap form, and did it in a

485
00:21:46,880 --> 00:21:50,119
Speaker 4: way where we can deliver really high stable income in

486
00:21:50,160 --> 00:21:54,840
Speaker 4: a very tax efficient way. Most derivative income products are

487
00:21:54,840 --> 00:21:57,600
Speaker 4: a little less tax efficient. They'll give you either ordinary

488
00:21:57,600 --> 00:22:00,720
Speaker 4: income or they'll give you maybe sixty four already treatment

489
00:22:00,800 --> 00:22:05,919
Speaker 4: if it's index options. Here the coupon that we're delivering,

490
00:22:06,880 --> 00:22:09,600
Speaker 4: about eighty to ninety percent of it will be treated.

491
00:22:09,960 --> 00:22:13,400
Speaker 4: Our expectation is that it'll be return of capital, so

492
00:22:13,440 --> 00:22:16,760
Speaker 4: that will be tax deferred until you sell, and then

493
00:22:16,760 --> 00:22:18,400
Speaker 4: if you held for a year, it'll be long term

494
00:22:18,400 --> 00:22:19,080
Speaker 4: capital gains.

495
00:22:19,119 --> 00:22:23,120
Speaker 3: So his ten thousand spits out this income for the

496
00:22:23,200 --> 00:22:27,440
Speaker 3: duration and then you give up whatever the market gains.

497
00:22:27,480 --> 00:22:29,080
Speaker 1: But you're going to get your principle back.

498
00:22:29,680 --> 00:22:30,360
Speaker 4: That's correct.

499
00:22:30,440 --> 00:22:33,280
Speaker 3: And at what percentage of the time do you get

500
00:22:33,280 --> 00:22:34,399
Speaker 3: your principle back when you did this.

501
00:22:34,440 --> 00:22:36,960
Speaker 4: If you look historically, it would have been ninety seven

502
00:22:37,040 --> 00:22:39,600
Speaker 4: point two percent of the time for our our US

503
00:22:39,720 --> 00:22:42,800
Speaker 4: large cat version. We're launching a NASDAK version that historically

504
00:22:42,920 --> 00:22:47,520
Speaker 4: had never breached principle. Yeah, so I know, I know

505
00:22:47,560 --> 00:22:49,200
Speaker 4: what you're saying. It sounds too good to be true.

506
00:22:49,880 --> 00:22:52,800
Speaker 4: So the piece that we have not unlocked yet now

507
00:22:52,840 --> 00:22:56,040
Speaker 4: that we know understand auto calls is the reference index.

508
00:22:56,640 --> 00:22:59,320
Speaker 4: So if you just tied this to the S and

509
00:22:59,320 --> 00:23:02,680
Speaker 4: P five hundred, you would get a low coupon. You'd

510
00:23:02,680 --> 00:23:06,320
Speaker 4: get maybe seven eight percent something like that, a little

511
00:23:06,320 --> 00:23:10,520
Speaker 4: bit over risk free. If you're familiar with covered call strategies,

512
00:23:11,000 --> 00:23:15,159
Speaker 4: the income that you collect changes with market parameters, it

513
00:23:15,240 --> 00:23:19,879
Speaker 4: changes with volatility, interest rates, dividends. So what we have

514
00:23:19,960 --> 00:23:23,200
Speaker 4: done is we've built an equity index that has been

515
00:23:23,240 --> 00:23:26,760
Speaker 4: customized for auto callables. So it's an S and P

516
00:23:26,880 --> 00:23:30,359
Speaker 4: five hundred base and it has a high volatility target.

517
00:23:30,480 --> 00:23:34,560
Speaker 4: It's a stable vault target of thirty five percent, so

518
00:23:34,600 --> 00:23:37,920
Speaker 4: that every week when we write a new auto callable

519
00:23:38,040 --> 00:23:43,200
Speaker 4: inside that index, the volatility is the same. So that's

520
00:23:43,240 --> 00:23:45,560
Speaker 4: how I can come here confidently and say you're going

521
00:23:45,600 --> 00:23:49,720
Speaker 4: to get a high stable income because we've stabilized the

522
00:23:49,760 --> 00:23:53,560
Speaker 4: parameter inside that options pricing model. I know we're getting

523
00:23:53,560 --> 00:23:55,560
Speaker 4: really deep. But then when you compile all that together,

524
00:23:56,359 --> 00:23:59,800
Speaker 4: the VALL of the strategy historically has been around eighteen percent.

525
00:24:00,040 --> 00:24:03,840
Speaker 1: But what happens in those moments where the volatility spikes.

526
00:24:03,440 --> 00:24:06,359
Speaker 4: Then your VALL will come down in the VALL target.

527
00:24:06,400 --> 00:24:08,760
Speaker 4: So you mentioned twenty twenty, so I put that on

528
00:24:08,840 --> 00:24:11,679
Speaker 4: pause for a reason. So in twenty twenty, what was

529
00:24:11,720 --> 00:24:16,119
Speaker 4: equity market volatility sixty seventy percent, So you're at thirty five.

530
00:24:16,600 --> 00:24:20,439
Speaker 4: So in that environment you're defending the barrier. Not only

531
00:24:20,480 --> 00:24:23,480
Speaker 4: do you now have a forty percent barrier, but it's

532
00:24:23,520 --> 00:24:26,200
Speaker 4: even more powerful because your VALL is at thirty five

533
00:24:26,280 --> 00:24:27,880
Speaker 4: while the SMP is at seventy.

534
00:24:31,119 --> 00:24:34,480
Speaker 2: But in twenty twenty.

535
00:24:33,680 --> 00:24:37,040
Speaker 3: Only that was like when Eric's quite it that long,

536
00:24:37,080 --> 00:24:39,520
Speaker 3: He's like, it's like next level, We've done it.

537
00:24:39,880 --> 00:24:42,000
Speaker 4: We have never made Eric Roy too like.

538
00:24:41,960 --> 00:24:44,760
Speaker 2: A physics conversation you can have in like our podcast.

539
00:24:45,200 --> 00:24:45,600
Speaker 1: This is.

540
00:24:47,119 --> 00:24:48,879
Speaker 2: I mean, we're about to get into black holes and

541
00:24:48,920 --> 00:24:49,600
Speaker 2: like dark matters.

542
00:24:49,720 --> 00:24:52,760
Speaker 4: No, no, no, black shoals, not black holes.

543
00:24:53,080 --> 00:24:56,000
Speaker 2: But in twenty twenty, you still got your thing. You

544
00:24:56,080 --> 00:24:58,960
Speaker 2: still got the there was no call. It didn't get called.

545
00:24:59,119 --> 00:25:01,000
Speaker 4: Over the last ten years, you would have gotten every

546
00:25:01,040 --> 00:25:03,720
Speaker 4: single coupon and you never would have breached barrier.

547
00:25:04,119 --> 00:25:06,400
Speaker 2: So I think this is something When you go talk

548
00:25:06,440 --> 00:25:09,720
Speaker 2: to advisors and people about this, it sounds like you're

549
00:25:09,760 --> 00:25:12,800
Speaker 2: gonna get interest. But I'm assuming they put like two

550
00:25:12,880 --> 00:25:13,280
Speaker 2: percent to.

551
00:25:13,280 --> 00:25:14,280
Speaker 4: Three percent of the portfolio.

552
00:25:14,320 --> 00:25:16,240
Speaker 2: Wouldn't go too crazy and where do you put it?

553
00:25:16,280 --> 00:25:17,520
Speaker 2: What do you ad this?

554
00:25:17,520 --> 00:25:21,240
Speaker 4: This has equity market like volatility. So think of fifty

555
00:25:21,280 --> 00:25:25,080
Speaker 4: two auto callables like rubber bands that will trade at par.

556
00:25:25,680 --> 00:25:28,199
Speaker 4: And as the market goes down, the rubber bands will

557
00:25:28,240 --> 00:25:30,680
Speaker 4: start to stretch. You'll trade at a discount to par.

558
00:25:31,400 --> 00:25:33,960
Speaker 4: And as long as they don't break, then you're going

559
00:25:34,040 --> 00:25:36,159
Speaker 4: to snap back to par. Those rubber bands will go

560
00:25:36,240 --> 00:25:39,719
Speaker 4: back to par. So we want to make sure that

561
00:25:39,800 --> 00:25:43,080
Speaker 4: people are comfortable with equity market like volatility. If you're

562
00:25:43,080 --> 00:25:46,160
Speaker 4: comfortable with that, you can exchange it for a high, stable,

563
00:25:46,200 --> 00:25:47,240
Speaker 4: tax efficient coupon.

564
00:25:47,400 --> 00:25:50,159
Speaker 2: So if the markets go down, say twenty percent, and

565
00:25:50,440 --> 00:25:53,680
Speaker 2: you're seeing a discount in these, there's a certain kind

566
00:25:53,720 --> 00:25:57,080
Speaker 2: of trader who may think that's the braid yeah, Versus

567
00:25:57,119 --> 00:25:59,600
Speaker 2: in the flip side, if the market keeps going up,

568
00:26:00,240 --> 00:26:01,960
Speaker 2: a trader may be like, you know what, let me

569
00:26:02,359 --> 00:26:04,720
Speaker 2: not buy that right now because it's looking a little pricey.

570
00:26:05,440 --> 00:26:05,919
Speaker 2: I get it.

571
00:26:06,359 --> 00:26:08,359
Speaker 4: I mean we have so let me.

572
00:26:08,320 --> 00:26:11,879
Speaker 2: Ask you this. Are these used mostly by buy and

573
00:26:11,960 --> 00:26:14,440
Speaker 2: hold with a little traders if it gets into a discount,

574
00:26:14,480 --> 00:26:16,960
Speaker 2: like what's the buy and hold trader ratio here for

575
00:26:17,000 --> 00:26:17,439
Speaker 2: something like this?

576
00:26:17,800 --> 00:26:22,000
Speaker 4: It's both early adopters. There's more than ten thousand shareholders

577
00:26:22,000 --> 00:26:24,400
Speaker 4: in KAI right now. Let's what we're calling ci E KAI.

578
00:26:25,480 --> 00:26:27,760
Speaker 4: A lot of them are financial advisors who use auto

579
00:26:27,760 --> 00:26:30,600
Speaker 4: callable notes. They said, we've been using these for decades.

580
00:26:31,160 --> 00:26:33,480
Speaker 4: We get called away after you know, six months to

581
00:26:33,520 --> 00:26:35,359
Speaker 4: a year, we have to go buy a new note

582
00:26:35,520 --> 00:26:38,600
Speaker 4: of all changes on us. The parameters are different, might

583
00:26:38,640 --> 00:26:40,960
Speaker 4: not be able to get the same terms. I've got

584
00:26:40,960 --> 00:26:42,919
Speaker 4: a hundred of these things on the books, one for

585
00:26:43,000 --> 00:26:46,120
Speaker 4: every different client. I can't keep it all straight. One

586
00:26:46,160 --> 00:26:47,919
Speaker 4: advisor that we were talking to said, I go to

587
00:26:47,960 --> 00:26:50,600
Speaker 4: New York every quarter, meet with the banks, find good

588
00:26:51,160 --> 00:26:54,040
Speaker 4: you know, good products. He said, I'm canceling my flights

589
00:26:54,080 --> 00:26:57,000
Speaker 4: to New York. I've got this. This ETF gives me

590
00:26:57,080 --> 00:27:00,240
Speaker 4: what I'm looking for. It's an evergreen solution. I'm going

591
00:27:00,280 --> 00:27:02,240
Speaker 4: to play golf and this makes things easy for me.

592
00:27:02,320 --> 00:27:02,960
Speaker 2: Where does he live?

593
00:27:03,400 --> 00:27:04,159
Speaker 4: He's out West.

594
00:27:04,640 --> 00:27:07,920
Speaker 2: Yeah, that's it. That's a long flight. Yeah, well this

595
00:27:08,000 --> 00:27:11,439
Speaker 2: is the this is what ETFs do, drool. They take complicated, messy,

596
00:27:12,040 --> 00:27:15,440
Speaker 2: institutional type stuff and they just make it simple, fast,

597
00:27:15,440 --> 00:27:15,920
Speaker 2: good cheap.

598
00:27:24,280 --> 00:27:27,439
Speaker 3: Okay, so fast, good cheap. How do you what color

599
00:27:27,480 --> 00:27:29,960
Speaker 3: of uh light do you give this?

600
00:27:30,040 --> 00:27:30,800
Speaker 4: We have what we do.

601
00:27:31,520 --> 00:27:32,199
Speaker 1: I don't believe if we.

602
00:27:32,200 --> 00:27:36,439
Speaker 2: Could dress this one yet, I think, hold on, hold on,

603
00:27:36,480 --> 00:27:36,920
Speaker 2: what do you give?

604
00:27:37,000 --> 00:27:39,359
Speaker 4: What do you give? Covered? Call ETFs? What light do

605
00:27:39,400 --> 00:27:39,720
Speaker 4: they get?

606
00:27:41,000 --> 00:27:43,879
Speaker 2: I gotta look. I believe they're green. They might get

607
00:27:43,960 --> 00:27:47,560
Speaker 2: dinged once for using derivatives. Okay, so maybe you'd be

608
00:27:47,600 --> 00:27:50,399
Speaker 2: the same green, but one little note for like the

609
00:27:50,440 --> 00:27:53,479
Speaker 2: fact that it uses derivatives. But I guess that's it.

610
00:27:53,560 --> 00:27:58,480
Speaker 2: I mean there's no leverage thet there's no rolling of commodities,

611
00:27:58,480 --> 00:28:01,639
Speaker 2: and there's no hidden fees. Correct, those would be the

612
00:28:01,680 --> 00:28:04,080
Speaker 2: things we ding them. But I'd have to look deeper.

613
00:28:04,080 --> 00:28:08,320
Speaker 2: But I would to me, these feel you know, between

614
00:28:08,359 --> 00:28:10,920
Speaker 2: PG and PG thirteen somewhere.

615
00:28:11,160 --> 00:28:13,080
Speaker 3: So the risk really is I'm not going to get

616
00:28:13,080 --> 00:28:17,920
Speaker 3: my principal back if there's some you know, real big downturn,

617
00:28:19,480 --> 00:28:21,800
Speaker 3: or I'm going to give up some upside.

618
00:28:22,680 --> 00:28:24,840
Speaker 4: Yeah, your risk is largely to the other side.

619
00:28:25,680 --> 00:28:26,080
Speaker 1: Here's what I.

620
00:28:26,080 --> 00:28:28,679
Speaker 2: Don't get like, if I'm in the VU, right, I'm

621
00:28:28,680 --> 00:28:32,119
Speaker 2: a SAP five hundred, and I get Oh, I know

622
00:28:32,160 --> 00:28:34,080
Speaker 2: why you don't get the return of the index.

623
00:28:34,160 --> 00:28:36,720
Speaker 1: You just get the Yeah. Yeah, the principle just comes back. Yeah.

624
00:28:36,760 --> 00:28:38,560
Speaker 2: So in the end, VU could be up twenty percent

625
00:28:39,080 --> 00:28:43,000
Speaker 2: that would outperform this. This is more like just getting

626
00:28:43,000 --> 00:28:45,680
Speaker 2: a little income based on VU not going down a

627
00:28:45,720 --> 00:28:48,800
Speaker 2: super amount, which I feel like is a sort of

628
00:28:48,840 --> 00:28:51,720
Speaker 2: the words. This would be kind of a little less

629
00:28:51,800 --> 00:28:53,960
Speaker 2: risky than VU in a way.

630
00:28:55,000 --> 00:28:57,880
Speaker 4: At times it could be forget volatility. Yeah, if you're

631
00:28:57,880 --> 00:29:00,440
Speaker 4: looking for income, yeah, or if you don't think the

632
00:29:00,480 --> 00:29:03,000
Speaker 4: market's going up fourteen and a half percent next year,

633
00:29:03,600 --> 00:29:05,560
Speaker 4: then this would be a way to essentially lock that

634
00:29:05,640 --> 00:29:07,240
Speaker 4: in as long as you're not going to fall by

635
00:29:07,240 --> 00:29:07,719
Speaker 4: that barrier.

636
00:29:07,880 --> 00:29:10,280
Speaker 1: So maybe instead of buying a.

637
00:29:12,280 --> 00:29:16,280
Speaker 3: Rental property real estate property like this, this is in

638
00:29:16,320 --> 00:29:18,480
Speaker 3: that category if you're thinking about it from like what

639
00:29:18,560 --> 00:29:20,760
Speaker 3: a financial advisor would tell a client.

640
00:29:21,080 --> 00:29:22,920
Speaker 4: Yeah, that's an interesting here.

641
00:29:22,920 --> 00:29:27,360
Speaker 2: It is. It's a rental property in Florida. But you've

642
00:29:27,400 --> 00:29:29,600
Speaker 2: got to pray there's nothing once everything in your hurricane.

643
00:29:29,960 --> 00:29:30,680
Speaker 2: That's what it is.

644
00:29:31,160 --> 00:29:32,880
Speaker 4: It is your God kind of like that. Yeah, so

645
00:29:33,520 --> 00:29:36,960
Speaker 4: let's pretend like you are the insurer and you are

646
00:29:36,960 --> 00:29:39,880
Speaker 4: collecting premiums from people all over the country.

647
00:29:40,280 --> 00:29:41,760
Speaker 1: It was way more fun when we were doing it

648
00:29:41,800 --> 00:29:42,120
Speaker 1: a way.

649
00:29:42,720 --> 00:29:45,160
Speaker 2: I'm an insured I think we nailed it, and that's

650
00:29:45,240 --> 00:29:47,160
Speaker 2: I don't think you're can improve on it though.

651
00:29:47,280 --> 00:29:49,440
Speaker 4: No, I say, if you're an insurer, you're collecting premiums,

652
00:29:50,040 --> 00:29:52,400
Speaker 4: maybe there's a storm in Florida, but everyone else is

653
00:29:52,440 --> 00:29:53,000
Speaker 4: still paying you.

654
00:29:53,800 --> 00:29:56,240
Speaker 2: Yeah, but aren't you doing these fifty or so all

655
00:29:56,240 --> 00:29:58,520
Speaker 2: are on equity indexes, right, I mean one of them.

656
00:29:58,840 --> 00:30:03,360
Speaker 5: Insures got out of not but there's fifty starting in

657
00:30:03,440 --> 00:30:06,680
Speaker 5: the starting You're right, I say, Oh, I say, okay,

658
00:30:06,720 --> 00:30:08,760
Speaker 5: so it's like all over the country, but there's one

659
00:30:08,800 --> 00:30:09,640
Speaker 5: hurricane in Miami.

660
00:30:09,680 --> 00:30:09,960
Speaker 1: Okay.

661
00:30:09,960 --> 00:30:12,200
Speaker 4: Correct. You're diversified by time instead of geography.

662
00:30:12,560 --> 00:30:14,800
Speaker 2: That's a lot of work. Yeah, Like do you have

663
00:30:15,320 --> 00:30:17,800
Speaker 2: like associates that like do all this like keep up

664
00:30:18,400 --> 00:30:21,640
Speaker 2: Kai take like an army of people like putting these

665
00:30:21,680 --> 00:30:23,959
Speaker 2: new notes on like just seems like a lot of effort.

666
00:30:24,240 --> 00:30:26,800
Speaker 4: The beauty of KAI is that it's all swap based.

667
00:30:27,240 --> 00:30:28,680
Speaker 4: So we built everything.

668
00:30:28,800 --> 00:30:30,440
Speaker 2: JP Morgan is the rest. It's all in them.

669
00:30:30,640 --> 00:30:36,160
Speaker 4: Well, we built everything inside that Mercube index. And so Mercube, Yeah.

670
00:30:36,280 --> 00:30:39,800
Speaker 2: That sounds like like matrix or something that sounds like

671
00:30:40,120 --> 00:30:44,240
Speaker 2: what's that sounds too much? Merkcube? Who is that somebody's

672
00:30:44,280 --> 00:30:44,680
Speaker 2: last name?

673
00:30:44,920 --> 00:30:47,760
Speaker 4: Mercube is an indexing provider that was ok yeah, founded

674
00:30:47,760 --> 00:30:49,760
Speaker 4: by the former head of custom indexing at S.

675
00:30:49,720 --> 00:30:51,920
Speaker 2: And P the Mercube theory.

676
00:30:52,480 --> 00:30:54,280
Speaker 1: Okay, so you're not alone anymore?

677
00:30:54,600 --> 00:30:54,760
Speaker 2: Right?

678
00:30:55,080 --> 00:30:57,760
Speaker 3: You got Kai was out there first. Yeah, you got

679
00:30:57,760 --> 00:30:59,600
Speaker 3: some competition. What does the competition look like?

680
00:30:59,680 --> 00:31:02,000
Speaker 4: Can I backup for thirty seconds? And we're going to

681
00:31:02,040 --> 00:31:04,800
Speaker 4: spend a while on this. So on the ETF side,

682
00:31:05,240 --> 00:31:08,280
Speaker 4: the last point here, because we did this index based

683
00:31:08,840 --> 00:31:11,920
Speaker 4: it trades extremely tight. We don't have to post Greeks

684
00:31:11,920 --> 00:31:15,640
Speaker 4: to the website. There's not a lot of active management here.

685
00:31:16,120 --> 00:31:17,880
Speaker 4: So we take this index by Greeks.

686
00:31:17,880 --> 00:31:20,840
Speaker 2: By the way, Ajoul, he doesn't mean Athnosios. He means

687
00:31:20,920 --> 00:31:27,320
Speaker 2: like formulas like Vega, Gamma, Kalamos. He's picturing Athnosios and

688
00:31:27,400 --> 00:31:28,880
Speaker 2: John Stamos on your website and.

689
00:31:28,800 --> 00:31:31,360
Speaker 4: That's not true, that's right. Not yet. We do have

690
00:31:31,440 --> 00:31:36,200
Speaker 4: Yanis though. Yeah, yeah, so where was I We take

691
00:31:36,240 --> 00:31:39,000
Speaker 4: that index, We give that price almost like an intra

692
00:31:39,080 --> 00:31:42,440
Speaker 4: day nave to the market makers, so they are very

693
00:31:42,480 --> 00:31:45,680
Speaker 4: tight to that index level. JP Morgan is trading swap

694
00:31:45,720 --> 00:31:48,760
Speaker 4: on the index. It is trading at one to three

695
00:31:48,800 --> 00:31:52,760
Speaker 4: cents wide every day, and that's largely because of that index.

696
00:31:52,800 --> 00:31:54,920
Speaker 4: So it's extremely operationally light.

697
00:31:56,120 --> 00:31:58,760
Speaker 3: Okay, now my question, yes, oh yes, you were first.

698
00:31:58,880 --> 00:32:01,080
Speaker 3: Now there's some competition. Yes, how do you feel about

699
00:32:01,160 --> 00:32:01,840
Speaker 3: the competition?

700
00:32:02,000 --> 00:32:05,640
Speaker 4: I think it's great. Competition is good for the market.

701
00:32:05,840 --> 00:32:08,600
Speaker 4: It's going to grow. We're not going to raise you know,

702
00:32:08,640 --> 00:32:11,360
Speaker 4: one hundred billion dollars all by ourselves. I hope we do,

703
00:32:11,480 --> 00:32:13,720
Speaker 4: but I know it's going to be because a rising

704
00:32:13,760 --> 00:32:17,239
Speaker 4: tide is lifting all boats. If there's an encouragement, I

705
00:32:17,280 --> 00:32:21,040
Speaker 4: hope that it's done correctly. The covered call space took

706
00:32:21,080 --> 00:32:24,360
Speaker 4: fifteen twenty years to grow and then become more risky.

707
00:32:24,400 --> 00:32:28,160
Speaker 4: You've got weekly daily single stock. My fear is the

708
00:32:28,160 --> 00:32:30,880
Speaker 4: auto call space does that too fast, and you go

709
00:32:30,920 --> 00:32:33,640
Speaker 4: into this risky stuff and then people get hurt and

710
00:32:33,680 --> 00:32:35,760
Speaker 4: they get burned, and like I thought, I had a barrier,

711
00:32:35,800 --> 00:32:38,080
Speaker 4: I was tied to a single stock. It went down fast.

712
00:32:38,640 --> 00:32:39,440
Speaker 4: That's what we don't want.

713
00:32:39,480 --> 00:32:42,040
Speaker 2: Oh yeah, because somebody filed for single stock auto call

714
00:32:42,960 --> 00:32:46,640
Speaker 2: Yeah you too. I see so that well, let's go

715
00:32:46,720 --> 00:32:48,400
Speaker 2: I know you don't do those, but like let's say

716
00:32:48,400 --> 00:32:51,480
Speaker 2: you're doing Navidia. Let's say you did Navidia single stock

717
00:32:51,560 --> 00:32:52,640
Speaker 2: auto call Well, what would.

718
00:32:52,480 --> 00:32:52,920
Speaker 1: The barrier be?

719
00:32:53,000 --> 00:32:56,040
Speaker 4: You think, Well, the volatility would be you know, fairly

720
00:32:56,120 --> 00:32:57,680
Speaker 4: high higher, but it comes at it.

721
00:32:57,720 --> 00:32:58,880
Speaker 2: Could the barrier be sixty?

722
00:32:59,160 --> 00:33:01,520
Speaker 4: It depends. You know, you can pull those levers and

723
00:33:01,640 --> 00:33:02,280
Speaker 4: change your coupon.

724
00:33:02,480 --> 00:33:04,960
Speaker 2: So what you're worried about is somebody going for the

725
00:33:05,040 --> 00:33:08,160
Speaker 2: jacked up yield with a lower barrier and people being

726
00:33:08,200 --> 00:33:11,440
Speaker 2: like not understanding the auto callable. Correct, yeah, and then

727
00:33:11,440 --> 00:33:13,000
Speaker 2: it changed the whole camera and you know the industry

728
00:33:13,080 --> 00:33:15,000
Speaker 2: is going to do this and you and they like

729
00:33:15,040 --> 00:33:16,000
Speaker 2: to push the envelope.

730
00:33:16,040 --> 00:33:18,120
Speaker 4: Oh for sure, for sure and you and we've seen

731
00:33:18,160 --> 00:33:21,480
Speaker 4: this in Korea. We've seen this in other markets where

732
00:33:21,520 --> 00:33:24,840
Speaker 4: folks these are big. In South Korea, I extremely they

733
00:33:24,920 --> 00:33:26,040
Speaker 4: love risk, they love risk.

734
00:33:26,080 --> 00:33:29,320
Speaker 2: Going theo is it's a gen per capita in South

735
00:33:29,400 --> 00:33:31,080
Speaker 2: Korea is like off the charts.

736
00:33:31,840 --> 00:33:35,200
Speaker 3: The the Calamost strategy is we're just going to go

737
00:33:35,640 --> 00:33:39,240
Speaker 3: to indexes S and P five hundred.

738
00:33:40,560 --> 00:33:44,120
Speaker 4: Yeah, let's build an index that is customized for auto

739
00:33:44,160 --> 00:33:48,240
Speaker 4: callables to give you the best chance of getting a high, stable,

740
00:33:48,320 --> 00:33:49,400
Speaker 4: tax efficient coupon.

741
00:33:50,120 --> 00:33:52,600
Speaker 2: By the way, has have you talked to Bruce Bond regularly?

742
00:33:53,440 --> 00:33:55,640
Speaker 4: I have you talked to him in about this strategy?

743
00:33:55,680 --> 00:33:55,840
Speaker 1: Yeah?

744
00:33:55,880 --> 00:33:57,640
Speaker 2: I feel like he's an eye in this. I don't know,

745
00:33:57,640 --> 00:33:59,160
Speaker 2: I just feel like this is Bruce bondish.

746
00:33:59,240 --> 00:34:02,760
Speaker 4: Oh that's funny. You know Innovator brought out were First Trust.

747
00:34:02,800 --> 00:34:03,720
Speaker 2: I feel like they might just.

748
00:34:03,760 --> 00:34:06,200
Speaker 4: Like, so we all filed around the same time. Okay,

749
00:34:06,640 --> 00:34:10,200
Speaker 4: Innovator brought out some single stock products. I don't know

750
00:34:10,239 --> 00:34:11,920
Speaker 4: how well those that have done, like you do the

751
00:34:12,040 --> 00:34:15,520
Speaker 4: research on that, and then the other competitors have not

752
00:34:15,560 --> 00:34:17,520
Speaker 4: come to market yet. There's about four or five in

753
00:34:17,560 --> 00:34:20,120
Speaker 4: the market. So you know why you probably feel that way.

754
00:34:20,040 --> 00:34:22,000
Speaker 2: Is because you guys all live in the same town

755
00:34:22,000 --> 00:34:22,680
Speaker 2: and what and Illinois?

756
00:34:22,719 --> 00:34:23,560
Speaker 4: Wow, this is true?

757
00:34:23,719 --> 00:34:26,040
Speaker 2: Like by the way, in Wheaton, like where he lives,

758
00:34:26,040 --> 00:34:28,480
Speaker 2: he has like a cul de sac. His next door

759
00:34:28,480 --> 00:34:31,440
Speaker 2: neighbor is Innovator and this other nextraor neighbor is First

760
00:34:31,440 --> 00:34:33,759
Speaker 2: Trust and all their kids are friends. But they hate

761
00:34:33,760 --> 00:34:34,399
Speaker 2: each other at work?

762
00:34:34,680 --> 00:34:35,320
Speaker 1: Is that true?

763
00:34:35,719 --> 00:34:37,120
Speaker 4: Something like that hate each other?

764
00:34:37,239 --> 00:34:39,880
Speaker 3: Okay, all right, but just confront of me, are you

765
00:34:39,920 --> 00:34:41,600
Speaker 3: on the same kids baseball teams.

766
00:34:41,800 --> 00:34:43,879
Speaker 4: It is a small town, and well, we have seven kids,

767
00:34:43,880 --> 00:34:46,279
Speaker 4: so there's a good chance that we're on everybody's baseball team.

768
00:34:46,320 --> 00:34:49,160
Speaker 1: All right, you have seven kids. We do? Wow? Yeah,

769
00:34:49,200 --> 00:34:49,480
Speaker 1: we do.

770
00:34:49,640 --> 00:34:52,399
Speaker 2: Oh my god, that's going. Wow, that must be you're wow.

771
00:34:52,560 --> 00:34:53,960
Speaker 2: You look pretty good for seven kids.

772
00:34:54,560 --> 00:34:56,080
Speaker 4: I don't sit down. You just got to keep keep

773
00:34:56,080 --> 00:34:56,479
Speaker 4: on going.

774
00:34:56,560 --> 00:34:56,880
Speaker 1: Yeah.

775
00:34:57,000 --> 00:34:58,920
Speaker 2: Yeah, that's your exercise, I guess. But I think the

776
00:34:58,960 --> 00:34:59,720
Speaker 2: reason amazing.

777
00:35:00,040 --> 00:35:02,239
Speaker 4: I think the reason you are thinking that way is,

778
00:35:03,000 --> 00:35:06,240
Speaker 4: you know, the buffers at the time replicated the largest

779
00:35:06,239 --> 00:35:09,080
Speaker 4: structured note market, and in a zero rate environment, buffers

780
00:35:09,080 --> 00:35:12,400
Speaker 4: were the king. When rates rose to five percent, what

781
00:35:12,440 --> 00:35:15,560
Speaker 4: are people doing. They're buying fixed indexinuities. They're buying capital

782
00:35:15,640 --> 00:35:18,800
Speaker 4: protected notes. So that was what we brought at Calamos,

783
00:35:18,800 --> 00:35:22,800
Speaker 4: one hundred percent protected products. I helped Bruce build innovator

784
00:35:22,800 --> 00:35:24,840
Speaker 4: when I was at Milliman. I was there for twelve years.

785
00:35:25,440 --> 00:35:27,640
Speaker 4: So what are people doing now? They won income? You know,

786
00:35:27,719 --> 00:35:30,279
Speaker 4: rates are coming back down, they're chasing that, you know,

787
00:35:30,440 --> 00:35:34,759
Speaker 4: high stable income. The forty year run in bonds is over.

788
00:35:35,280 --> 00:35:38,799
Speaker 4: You cannot get ballast and income from bonds anymore, and

789
00:35:38,840 --> 00:35:41,799
Speaker 4: so they're parsing it out and so the auto call

790
00:35:41,840 --> 00:35:44,480
Speaker 4: space was always the golden goose. We happened to win

791
00:35:44,520 --> 00:35:45,279
Speaker 4: the race this time.

792
00:35:46,120 --> 00:35:48,960
Speaker 2: Yeah, No, he Matt comes from that world. This is

793
00:35:49,080 --> 00:35:52,000
Speaker 2: organic to because I've known him for quite a while

794
00:35:52,560 --> 00:35:56,280
Speaker 2: and his work on the early days of the target outcome,

795
00:35:56,960 --> 00:36:00,600
Speaker 2: having worked in an options industry. But what you will

796
00:36:00,640 --> 00:36:02,760
Speaker 2: find is a lot of the issuers who don't normally

797
00:36:02,800 --> 00:36:04,160
Speaker 2: do this are going to get involved. That's just the

798
00:36:04,160 --> 00:36:07,759
Speaker 2: way it goes, but it is I also think ETFs

799
00:36:07,960 --> 00:36:09,839
Speaker 2: everybody who's seen the Big Short and then Mayor Michael

800
00:36:09,880 --> 00:36:12,400
Speaker 2: Burry going over to Goldman and JP Morgan and being like,

801
00:36:12,480 --> 00:36:16,640
Speaker 2: I want to make this specific bet against the housing market,

802
00:36:16,760 --> 00:36:18,400
Speaker 2: and at first JP More they're like laughing at them.

803
00:36:18,400 --> 00:36:21,800
Speaker 2: They're like, no problem. That idea of a swap contract

804
00:36:21,800 --> 00:36:24,360
Speaker 2: with a bank. People don't realize, like the levere ETFs,

805
00:36:24,400 --> 00:36:27,400
Speaker 2: like so many ETFs are basically just democratizing what you

806
00:36:27,440 --> 00:36:29,680
Speaker 2: saw in the Big Short, and that's kind of cool

807
00:36:30,160 --> 00:36:32,719
Speaker 2: as long as it's done responsibly. Obviously, some of the

808
00:36:32,800 --> 00:36:34,560
Speaker 2: leverage that are they're trying to file his five X

809
00:36:34,560 --> 00:36:37,320
Speaker 2: where you're gonna get like irresponsible. But for the most part,

810
00:36:37,760 --> 00:36:39,239
Speaker 2: you know those two guys who are waiting the lobby

811
00:36:39,280 --> 00:36:42,040
Speaker 2: of JP Morgan in the beginning that this is what Matt.

812
00:36:42,080 --> 00:36:46,160
Speaker 2: Matt has access to those desks that those guys were

813
00:36:46,160 --> 00:36:49,680
Speaker 2: trying to get access to. These are just customized contracts

814
00:36:49,719 --> 00:36:51,839
Speaker 2: with a big bank. It's almost like a high roller

815
00:36:51,880 --> 00:36:53,560
Speaker 2: to casino. Who can get a special table.

816
00:36:53,719 --> 00:36:56,280
Speaker 1: Yeah, and I'm at that special table just watching it happen.

817
00:36:56,440 --> 00:36:58,360
Speaker 2: I know now you now you can just get the

818
00:36:58,800 --> 00:37:02,879
Speaker 2: for twenty five dollars that can be Let me ask

819
00:37:02,880 --> 00:37:07,920
Speaker 2: you this, you have seven kids, you have other film members.

820
00:37:08,280 --> 00:37:10,359
Speaker 2: Would you feel safe putting your own family in here?

821
00:37:10,480 --> 00:37:12,160
Speaker 2: Is this more for a sophisticated investor?

822
00:37:12,560 --> 00:37:15,120
Speaker 4: No, I would what we've done here, you know, going

823
00:37:15,160 --> 00:37:17,400
Speaker 4: all the way back to the beginning, if you tie

824
00:37:17,680 --> 00:37:19,600
Speaker 4: all of your money or tie your money to a

825
00:37:19,640 --> 00:37:23,480
Speaker 4: single auto callable, you have single point coupon risk, single

826
00:37:23,480 --> 00:37:26,560
Speaker 4: point maturity risk where you can lose forty percent or

827
00:37:26,560 --> 00:37:29,040
Speaker 4: more of your money when you ladder that out fifty

828
00:37:29,040 --> 00:37:31,799
Speaker 4: two or more times and do it weekly. Now you've

829
00:37:31,800 --> 00:37:35,080
Speaker 4: got an opportunity to diversify out that risk. You've got a

830
00:37:35,080 --> 00:37:37,160
Speaker 4: product that looks a lot like the equity markets, but

831
00:37:37,280 --> 00:37:39,920
Speaker 4: delivers that high stable coupon, So you know, I own

832
00:37:40,000 --> 00:37:43,000
Speaker 4: this in my account, you know, not to create suitability.

833
00:37:43,120 --> 00:37:45,239
Speaker 4: My parents, you know, are doing similar. They own a

834
00:37:45,280 --> 00:37:47,840
Speaker 4: lot of buffers. They own this for income. When you

835
00:37:47,880 --> 00:37:51,120
Speaker 4: can tie your money to the equity markets, now you

836
00:37:51,160 --> 00:37:54,280
Speaker 4: can keep pace with inflation. You can do remarkably better

837
00:37:54,320 --> 00:37:57,680
Speaker 4: than your fixed income, which would be inversely correlated to inflation.

838
00:37:58,440 --> 00:37:59,719
Speaker 4: So there's a lot of ways to think about it.

839
00:38:00,000 --> 00:38:03,120
Speaker 3: Best time we talked about this space, boomer candy was

840
00:38:03,200 --> 00:38:04,439
Speaker 3: the phrase that came out of your mouth.

841
00:38:04,640 --> 00:38:06,239
Speaker 1: Is this boomer candy?

842
00:38:06,440 --> 00:38:09,319
Speaker 2: Yeah, I mean I think so, because it's a way

843
00:38:09,320 --> 00:38:12,320
Speaker 2: to participate boomer's love income. But then again, sort of

844
00:38:12,360 --> 00:38:14,719
Speaker 2: the gen z ers too, So I would say the

845
00:38:14,719 --> 00:38:16,640
Speaker 2: only thing that doesn't make this boomer candy is that

846
00:38:18,360 --> 00:38:21,480
Speaker 2: there isn't a protection element. I mean, you're betting the

847
00:38:21,480 --> 00:38:25,120
Speaker 2: market won't get on forty percent, and that actual income

848
00:38:25,160 --> 00:38:27,640
Speaker 2: can be a buffer if it does go down. But

849
00:38:28,239 --> 00:38:29,960
Speaker 2: I think, I don't know. It might be like half

850
00:38:30,000 --> 00:38:32,719
Speaker 2: boomer candy. I consider boomer candy something that helps you

851
00:38:32,760 --> 00:38:35,759
Speaker 2: sleep at night and cures anxiety.

852
00:38:35,920 --> 00:38:39,200
Speaker 1: This is angiin boom boomer candy.

853
00:38:39,239 --> 00:38:42,640
Speaker 2: Maybe, or I don't know, it's just it's ancillary, but

854
00:38:42,719 --> 00:38:44,920
Speaker 2: I could see this appealing, especially we like guy from

855
00:38:44,960 --> 00:38:48,560
Speaker 2: Texas who's a YouTube star. I could see the other

856
00:38:49,160 --> 00:38:52,239
Speaker 2: younger investors actually getting into this because it does have

857
00:38:52,360 --> 00:38:54,560
Speaker 2: you know, that's a pretty big yield. I mean, that's

858
00:38:54,600 --> 00:38:56,680
Speaker 2: going to excite some people. Although some of the yield

859
00:38:56,680 --> 00:38:59,080
Speaker 2: max field like eighty to one hundred percent. But with those,

860
00:38:59,120 --> 00:39:00,920
Speaker 2: you're giving up so much much total return.

861
00:39:01,320 --> 00:39:03,600
Speaker 4: What makes me nervous with those? Well, so you, if

862
00:39:03,640 --> 00:39:06,040
Speaker 4: I remember correctly, you came up with the boomer candy

863
00:39:06,120 --> 00:39:09,200
Speaker 4: term after we launched the one hundred percent protected ETFs.

864
00:39:09,800 --> 00:39:12,040
Speaker 2: Yeah, well it was that I camera when I camp

865
00:39:12,080 --> 00:39:14,200
Speaker 2: with it, but it was that it was the buffers

866
00:39:14,200 --> 00:39:17,520
Speaker 2: combined with the cover calls. Yes, those are both. I

867
00:39:17,560 --> 00:39:17,840
Speaker 2: don't know.

868
00:39:17,880 --> 00:39:21,000
Speaker 4: They just feel it as a specific protection amount. Yes,

869
00:39:21,040 --> 00:39:24,480
Speaker 4: here you're taking diet market correct. Here you're taking on

870
00:39:25,200 --> 00:39:27,600
Speaker 4: tail risks. So there's a chance some of those coupons.

871
00:39:27,680 --> 00:39:28,759
Speaker 2: That's why it's a little.

872
00:39:28,480 --> 00:39:30,960
Speaker 4: Bit I would agree with you. You got to be

873
00:39:31,000 --> 00:39:35,080
Speaker 4: comfortable with equity market like volatility, the single stock covered

874
00:39:35,120 --> 00:39:38,520
Speaker 4: call ETFs as a risk manager, you know, coming from

875
00:39:38,520 --> 00:39:42,319
Speaker 4: an actuarial consulting firm, not something we would build Calamos. As

876
00:39:42,360 --> 00:39:45,440
Speaker 4: a forty five year old risk manager, we would not

877
00:39:45,560 --> 00:39:49,719
Speaker 4: build those. But the yield that those are stating is

878
00:39:49,840 --> 00:39:51,560
Speaker 4: not a yield that you will likely get.

879
00:39:52,120 --> 00:39:52,319
Speaker 1: You know.

880
00:39:52,440 --> 00:39:54,600
Speaker 4: It's if it's a daily by ride or a weekly

881
00:39:54,640 --> 00:39:57,719
Speaker 4: by right, they'll take that number that they've collected and

882
00:39:57,760 --> 00:39:59,920
Speaker 4: they'll annualize it. So if it's a daily buy right

883
00:40:00,120 --> 00:40:02,279
Speaker 4: and the market's volatile, I'm going to get a good

884
00:40:02,320 --> 00:40:04,960
Speaker 4: coupon today and now times that by two hundred and

885
00:40:04,960 --> 00:40:07,840
Speaker 4: fifty two trading days, and it looks like this massive number.

886
00:40:08,360 --> 00:40:11,320
Speaker 4: The odds of you actually achieving that are next to zero.

887
00:40:12,440 --> 00:40:14,440
Speaker 3: All right, Matt, I have one final question for you,

888
00:40:14,480 --> 00:40:17,600
Speaker 3: which is what is your favorite ETF ticker other than

889
00:40:17,840 --> 00:40:18,520
Speaker 3: any of your own.

890
00:40:19,920 --> 00:40:24,480
Speaker 4: Oh that's a good question. A Power Shares product. I

891
00:40:24,520 --> 00:40:28,799
Speaker 4: don't work there anymore. We launched food and Beverage ETF. Eric,

892
00:40:28,840 --> 00:40:30,040
Speaker 4: do you remember the ticker PBJ.

893
00:40:30,200 --> 00:40:33,080
Speaker 2: Here you go, Yes, that is a good one. Yeah,

894
00:40:33,239 --> 00:40:34,239
Speaker 2: no one's ever picked it.

895
00:40:34,200 --> 00:40:37,840
Speaker 3: And it really PBJ protein beverage, I know, healthy fads.

896
00:40:38,080 --> 00:40:41,000
Speaker 2: Yeah, nice kicker, that's a good one PBJ.

897
00:40:41,600 --> 00:40:44,080
Speaker 1: Matt Koffman, thanks so much for joining us on trillions.

898
00:40:44,320 --> 00:40:45,120
Speaker 4: Thanks for having me.

899
00:40:51,920 --> 00:40:54,480
Speaker 3: Thanks for listening to Trillions until next time. You can

900
00:40:54,480 --> 00:40:58,840
Speaker 3: find us on the Bloomberg terminal, Bloomberg dot com, Apple Podcasts, Spotify,

901
00:40:59,440 --> 00:41:01,640
Speaker 3: or wherever you'd like to listen. We'd love to hear

902
00:41:01,640 --> 00:41:03,919
Speaker 3: from you. Hit us up on social I'm at Joel

903
00:41:03,920 --> 00:41:07,359
Speaker 3: Weber Show, He's at Eric Balcino's. Trillions is produced by

904
00:41:07,360 --> 00:41:10,720
Speaker 3: Magnus Hendrickson. Sage Bauman is the head of Bloomberg Podcast