WEBVTT - ETF Mailbag: Answering Listener Questions 0:00:06.000 --> 0:00:08.559 Well came New Trillions. I'm Joel Webber and I'm Eric 0:00:08.600 --> 0:00:12.160 bel Chionis. We're gonna do something difference this week. Eric, 0:00:12.440 --> 0:00:15.560 we are. It's called mail Back. He's exciting. I love it. 0:00:15.720 --> 0:00:18.040 So we get a lot of questions about ETFs in general, 0:00:18.239 --> 0:00:22.320 and people reach out on Twitter, on Instagram, on email 0:00:23.000 --> 0:00:25.479 via the terminal, and we want to take a moment 0:00:25.520 --> 0:00:27.000 and just dedicate the rest of this show to a 0:00:27.000 --> 0:00:29.720 bunch of questions that people have about E t S. Yeah, 0:00:29.720 --> 0:00:32.640 we collected some of the questions. I sent a bigger 0:00:32.680 --> 0:00:35.199 group of questions that I've gotten to Joel. He added some, 0:00:35.280 --> 0:00:38.000 and Joel is essentially going to pick five or six 0:00:38.040 --> 0:00:39.279 of the ones that he likes, and we're gonna try 0:00:39.320 --> 0:00:42.280 to answer them to cover some areas that you're interested in. 0:00:45.360 --> 0:00:50.000 This time on Trillions, we ran out of ideas. Great 0:00:50.040 --> 0:00:53.720 question here from Kevin bomb at u s c F. 0:00:54.480 --> 0:00:58.080 That's a school, No, it's actually an E T F company. Yeah, 0:00:58.160 --> 0:00:59.760 so he's in the industry. I was going to say 0:01:00.080 --> 0:01:03.960 University of Southern California, Florida. Okay, there you go. It 0:01:04.000 --> 0:01:08.959 sounds like a sixteen seed. So here's Kevin Baum. Have 0:01:09.080 --> 0:01:12.920 you recently analyzed e t F launch size and the 0:01:13.000 --> 0:01:18.039 subsequent flows. That's a good question and very specific. There 0:01:18.080 --> 0:01:21.679 really isn't much connection. There are e t fs that open, 0:01:21.800 --> 0:01:25.080 they come out with a couple hundred million dollars. We 0:01:25.160 --> 0:01:28.360 call those big number. That's huge, right, that's bespoke. It's 0:01:28.400 --> 0:01:30.720 because issuers more and more want to line up like 0:01:30.760 --> 0:01:33.880 an anchor tenant in that ETF. So there's a few examples, 0:01:33.880 --> 0:01:37.640 like the United Nations seeded the low carbon ETF with 0:01:37.640 --> 0:01:40.240 about a hundred and fifty million dollars, just literally like here, 0:01:40.560 --> 0:01:43.760 we want this to work. Here's some opening money. Correct, 0:01:43.800 --> 0:01:46.080 and it has barely more than that four years later. 0:01:46.600 --> 0:01:50.400 So while it's profitable on that one anchor tenant, it 0:01:50.440 --> 0:01:53.640 doesn't necessarily mean it's gonna work later. She is another 0:01:53.640 --> 0:01:56.559 one member the globe. The Diversity e t F Gender 0:01:56.600 --> 0:01:59.480 Diversity ETF has three two million. Almost all of that 0:01:59.520 --> 0:02:04.440 was seed from calisters on the flip side. That's um, yeah, 0:02:04.440 --> 0:02:06.600 pension money that're looking to do that, and they didn't 0:02:06.600 --> 0:02:09.760 really you know, beef up more after that. But having 0:02:09.800 --> 0:02:12.280 that money in there, you'd think might attract other people. 0:02:12.280 --> 0:02:16.560 In that case, it did not. So organic flows usually 0:02:16.840 --> 0:02:19.919 it doesn't matter. Usually what determines whether an ETF gets 0:02:19.919 --> 0:02:22.840 assets is whether it just starts to crush the index, 0:02:22.880 --> 0:02:25.560 like it just shoots right up and just it becomes 0:02:25.600 --> 0:02:28.440 too big to ignore. The out performance, Yeah, the outperformance. 0:02:28.880 --> 0:02:30.880 The other thing that can attract people is if it 0:02:30.919 --> 0:02:34.160 comes in dirt cheap um. When something is so cheap, 0:02:34.919 --> 0:02:37.720 it just excites people. A good example is the Goldman 0:02:37.760 --> 0:02:41.120 sachs Um Multi Factory t f G s LC. That's 0:02:41.120 --> 0:02:44.280 not a great ticker. The the strategy is not that 0:02:44.320 --> 0:02:48.079 easy to understand, but it charges point oh nine percent. 0:02:48.639 --> 0:02:52.600 So for for a smart beta type strategy that was 0:02:52.680 --> 0:02:55.240 like hugely cheap at the time, and that thing has 0:02:55.600 --> 0:02:58.080 a couple of billion dollars. And what's interesting about both 0:02:58.120 --> 0:03:01.760 of these though, the from flows perspective is like it's 0:03:01.800 --> 0:03:05.200 sticky money, right, It's all this money has come in 0:03:05.320 --> 0:03:08.160 and it's stuck around. When e t f s are cheap, 0:03:08.280 --> 0:03:10.840 the money's tends to be more sticky. When the ones 0:03:10.880 --> 0:03:13.120 that they get money because they're high flyers and they 0:03:13.160 --> 0:03:15.880 have a good run, like the Robotics CTF, when when 0:03:15.919 --> 0:03:18.240 that event when they inevitably clucked crash and they will 0:03:18.600 --> 0:03:21.280 there'll be a time when they really underperformed the indexes. 0:03:21.840 --> 0:03:24.120 They're probably going to see some outflows, but not all, 0:03:24.200 --> 0:03:27.720 so that money is less sticky, but not entirely not sticky. 0:03:27.760 --> 0:03:30.320 I'd say half is sticky. Some people I think forget 0:03:30.320 --> 0:03:33.040 they bought it, or they really believe in the idea. 0:03:33.400 --> 0:03:42.120 Kevin Bomb at usc F, thanks for the question. Okay, 0:03:42.160 --> 0:03:44.800 nothing matters more to me than my retirement money. But 0:03:44.880 --> 0:03:46.600 one thing I know about my four ohhen K is 0:03:46.600 --> 0:03:50.120 that it doesn't hold e t s. Why is that good? 0:03:50.360 --> 0:03:52.080 I get this question a lot, and the reason e 0:03:52.160 --> 0:03:54.040 t s aren't four when K plans is because a 0:03:54.080 --> 0:03:57.360 lot of the advantages that we all know about them 0:03:57.480 --> 0:04:00.920 don't really matter there. Right, So I'll go over a 0:04:00.920 --> 0:04:04.680 couple here. Um, the tax efficiency, that doesn't matter because 0:04:04.680 --> 0:04:08.320 you're already buying its pre tax. It's pre tax, right. Um. 0:04:08.360 --> 0:04:11.119 You also don't need to interdate trade your fourwind K plan, 0:04:11.200 --> 0:04:13.280 so the trading please don't do that. Yeah, the liquidity 0:04:13.360 --> 0:04:15.760 kind of doesn't matter. And then you also have the 0:04:15.800 --> 0:04:18.440 cost issue. Right. E t f s are dirt cheap. However, 0:04:18.960 --> 0:04:21.400 in a four one K plan like say Bloomberg, we 0:04:21.480 --> 0:04:23.760 pull all our money together, we can afford the institutional 0:04:23.800 --> 0:04:26.279 class of mutual fund and the eye class as almost 0:04:26.360 --> 0:04:28.120 as cheap as an E t F. Correct E t 0:04:28.320 --> 0:04:30.520 F s ultimately are kind of priced at the institutional 0:04:30.560 --> 0:04:33.840 class level, where the four one k market where you're 0:04:33.839 --> 0:04:35.839 going to see the shift is you're going to see 0:04:35.880 --> 0:04:38.279 index funds take over. And then the other thing is 0:04:38.360 --> 0:04:41.880 there's some technical accounting issues with buying fractional shares. I 0:04:41.880 --> 0:04:44.040 won't get to the weeds, but the idea that if 0:04:44.080 --> 0:04:45.839 you put money in all the time, when when you 0:04:45.839 --> 0:04:47.760 go to buy a mutual fund, there is no bid 0:04:47.760 --> 0:04:49.920 ask spread, whereas E t F you have to buy 0:04:49.920 --> 0:04:52.640 it that spreads. You could argue that dripping and dripping 0:04:52.680 --> 0:04:54.679 and dripping money into an e t F could cost 0:04:54.720 --> 0:04:56.880 you more than on the mutual fund side. But on 0:04:57.120 --> 0:04:59.640 outside of a four wing k plan, an e t 0:04:59.800 --> 0:05:03.440 F will blow away a mutual fund. But that's why 0:05:03.560 --> 0:05:06.800 the four one k plan is essentially the mutual funds 0:05:06.800 --> 0:05:09.520 Alamo because they're protected there. Right. E t f s 0:05:09.560 --> 0:05:11.279 can't really get in there trapped. You know, they're they're 0:05:11.279 --> 0:05:14.400 fighting for their life there. I love the Alamo metaphor. 0:05:14.440 --> 0:05:16.600 That was a good one. Have you been It's quite 0:05:16.640 --> 0:05:19.000 small it's funny. I grew up in Texas, but I 0:05:19.040 --> 0:05:21.640 never went. Also, that Alamo story didn't work out so 0:05:21.680 --> 0:05:28.919 well in the end. That's why I use the metaphor. Okay, 0:05:29.200 --> 0:05:31.760 came up just a couple of seconds ago. You said 0:05:31.760 --> 0:05:34.359 something that I want to ask you about bid ask spread. 0:05:34.560 --> 0:05:37.240 I don't think we've actually really addressed that one. What 0:05:37.400 --> 0:05:41.640 is bidass spread? Bidass spread is essentially the round trip 0:05:41.720 --> 0:05:44.640 toll for trading in ETF, the difference between what you 0:05:44.680 --> 0:05:47.359 can what they'll sell and buy because they're making a market. 0:05:47.400 --> 0:05:51.000 And usually for most TTF there's a penny difference, right, 0:05:51.360 --> 0:05:53.560 So if you bought like say spy, you buy it 0:05:53.640 --> 0:05:56.800 at say a hundred dollars and one cent, but when 0:05:56.800 --> 0:05:58.760 you go to sell it, you have to sell it 0:05:58.800 --> 0:06:03.800 for a hundred dollars even you're losing a penny and 0:06:03.839 --> 0:06:06.440 that is what the middlemen make for making the market. 0:06:07.000 --> 0:06:09.119 So it's very tiny. And if you take that penny 0:06:09.120 --> 0:06:11.920 and divide by the price of the e t F, 0:06:12.320 --> 0:06:16.480 you're talking about point oh one in cost. But that's important. 0:06:16.560 --> 0:06:18.520 But if you do that all the time and you're 0:06:18.520 --> 0:06:20.400 trading all the time, it can add up. And if 0:06:20.400 --> 0:06:23.320 you go to less liquid ETFs you may trade and 0:06:23.360 --> 0:06:26.719 may maybe four or five basis points'll have a bigger 0:06:26.760 --> 0:06:28.360 bit ass bread, right, Yes, so just look at the 0:06:28.400 --> 0:06:31.920 bit asks a spread as the tiny, tiny little cut 0:06:32.000 --> 0:06:34.440 that the middleman get for making a market in in 0:06:34.480 --> 0:06:43.640 the stocks and ETFs. Here's a great question, super meta, 0:06:44.640 --> 0:06:46.440 what's the best performing e t F of all time? 0:06:47.880 --> 0:06:50.640 So we actually just looked at this. Uh, it's interesting 0:06:50.680 --> 0:06:55.479 if there's two categories. There's including leverage thetfs, right, and 0:06:55.600 --> 0:06:59.520 there's ones without. So we'll start with the whole enchilada rights, 0:06:59.560 --> 0:07:02.039 what's the best performing e t F of all time? 0:07:03.760 --> 0:07:06.279 We did, Yeah, and the answer to that question is 0:07:06.360 --> 0:07:10.400 T E C L what T It's nearly five thousand 0:07:10.400 --> 0:07:13.400 percent since it came out. It's the triple leveraged Tech. 0:07:13.880 --> 0:07:16.920 Triple leverage TECH of course. And the thing with leverages, 0:07:17.000 --> 0:07:20.480 if something goes up in a nice steady pattern, the 0:07:20.560 --> 0:07:23.880 daily leverage, when it resets every day, it compounds. So 0:07:24.480 --> 0:07:29.160 that's why leverage ETFs are path dependent. If it were volatile, 0:07:29.200 --> 0:07:31.040 you wouldn't see that. But Tech has had a nice 0:07:31.120 --> 0:07:33.680 nice run since this came out. Was that it came 0:07:33.680 --> 0:07:35.440 out in two thousand eight, so it came out right 0:07:35.480 --> 0:07:39.560 at the bottom. Over ten years, it's up five thou percent. Yes, 0:07:39.640 --> 0:07:42.080 that blows away everybody. So that's number one. If you 0:07:42.120 --> 0:07:44.920 take away leverage, which is sort of like you know, steroids, 0:07:44.960 --> 0:07:47.400 you know, and just going with like clean play, the 0:07:47.440 --> 0:07:49.520 best performing e t F is m d Y, which 0:07:49.560 --> 0:07:52.520 is the spider MidCap um. And what's interesting about m 0:07:52.600 --> 0:07:54.440 d Y it has a big head start. It came 0:07:54.440 --> 0:07:57.440 out a second e t F launched, But m d 0:07:57.640 --> 0:07:59.600 Y is midcaps, and you know, we talked about them 0:07:59.600 --> 0:08:02.200 being the g and Brady of the of the stock 0:08:02.240 --> 0:08:05.800 market because they're overlooked. M d Y since it launched 0:08:05.920 --> 0:08:11.000 is up. Now. If you take the large caps during 0:08:11.000 --> 0:08:13.800 that same time period, they're up seve If you take 0:08:13.840 --> 0:08:17.480 small caps there are up seven. In other words, mid 0:08:17.520 --> 0:08:21.160 caps almost doubled. That is a crazy stat to me. 0:08:21.200 --> 0:08:24.240 I was shocked by that. Something to consider when you're 0:08:24.560 --> 0:08:26.120 investing in the stock market. A lot of people like 0:08:26.120 --> 0:08:28.400 broad market strategies which include mid caps, but if you 0:08:28.440 --> 0:08:31.080 go just large, you know, kind of missing out on that. 0:08:31.160 --> 0:08:32.600 So I kind of what I what I like about 0:08:32.600 --> 0:08:34.680 this though, too, is that the leverage speaks to like 0:08:34.679 --> 0:08:38.000 the steroid era of baseball. Yeah, it's Barry Bonds, bonds 0:08:38.160 --> 0:08:40.920 like Mike Trout. Well, I would go with Roger Marris 0:08:41.120 --> 0:08:43.560 A right, Roger Marris. There you can have your contemporary, 0:08:43.600 --> 0:08:52.320 you can have your class there you go. So erk. 0:08:52.400 --> 0:08:56.680 One thing that people always ask about is um public companies, right, 0:08:56.720 --> 0:08:59.440 because the needs you have basically you're only investing in 0:08:59.440 --> 0:09:02.240 public market. But if you look at the data over 0:09:02.280 --> 0:09:04.600 the past, you know, fifteen years or whatever, A, there's 0:09:04.760 --> 0:09:08.880 fewer public companies overall, and b there's fewer and fewer 0:09:08.920 --> 0:09:13.000 companies actually going public. So is there an option for 0:09:13.080 --> 0:09:16.760 investors to actually engage it in private markets via E 0:09:16.840 --> 0:09:20.640 t f s? Not directly, No is the answer, and 0:09:20.720 --> 0:09:22.920 this is probably why I think, you know, hedge funds 0:09:22.920 --> 0:09:25.679 and other parts of finance are always going to have 0:09:26.200 --> 0:09:29.360 a home because ETFs can only track what's publicly available. However, 0:09:29.840 --> 0:09:32.600 with that said, I've heard a few arguments recently and 0:09:32.720 --> 0:09:37.040 I'll throw out some options. Surrogates. Microcap stocks have been 0:09:37.120 --> 0:09:39.960 argued as a close thing to private equity because these 0:09:39.960 --> 0:09:43.120 are companies that are smaller, no analysts coverage, they don't 0:09:43.360 --> 0:09:46.200 their financial strength is lower. How small are we talking 0:09:46.240 --> 0:09:48.839 with the microcap These are companies with market cap of 0:09:48.920 --> 0:09:52.680 fifty million, two about million. And what's interesting about microcaps 0:09:52.720 --> 0:09:55.959 is there's like, there's a couple of microcap ets. IWC 0:09:56.080 --> 0:09:58.320 for my Shares is the biggest one. It holds a 0:09:58.400 --> 0:10:02.160 thousand stocks. And I looked if you take the broad 0:10:02.200 --> 0:10:05.200 market e t F like v t I, which holds 0:10:05.640 --> 0:10:09.880 you know, three thousand large, mid, small, the market cap, 0:10:10.559 --> 0:10:13.560 it barely has any microcaps. So there's a thousand stocks 0:10:13.559 --> 0:10:15.520 out there that are not even in the broad ones. 0:10:15.920 --> 0:10:19.240 The thing is, those thousand stocks together only equal one 0:10:19.280 --> 0:10:23.400 too of the entire market. That said, nobody is really 0:10:23.440 --> 0:10:25.840 buying or getting exposure to these thousand stocks. I think 0:10:25.880 --> 0:10:27.839 that's just interesting alone that there's a thousand companies that 0:10:27.880 --> 0:10:30.520 almost nobody owns because microcap ETFs have I don't know, 0:10:30.559 --> 0:10:34.400 around a billion maybe less um. So that's one option 0:10:34.520 --> 0:10:36.560 for people who might want to just get to companies 0:10:36.559 --> 0:10:39.640 that are closer to the private stage. Another option is 0:10:39.640 --> 0:10:42.160 there's an e t F called b U Y. This 0:10:42.240 --> 0:10:45.440 is an et F that's uh synthetically trying to get 0:10:45.440 --> 0:10:48.400 you private equity returns by looking for companies that have 0:10:48.520 --> 0:10:51.199 those attributes. So it's sort of like the microcap model, 0:10:51.200 --> 0:10:53.600 except it's going out for mid small and just looking 0:10:53.640 --> 0:10:56.720 at companies that have similar attributes and trying to basically 0:10:56.760 --> 0:11:00.960 replicate the private equity through public equity. Interesting. One caveat 0:11:01.000 --> 0:11:04.079 that one's pretty expensive, just be careful, doesn't trade a lot, 0:11:04.160 --> 0:11:06.920 it's very new. Just a caveat on buy. Where's the 0:11:06.960 --> 0:11:09.360 microcap ETFs have a long track. I think it's all 0:11:09.360 --> 0:11:11.720 about ten years old um, and they're a little more 0:11:11.760 --> 0:11:15.840 liquid in terms of trading volume. UM. The third way 0:11:15.880 --> 0:11:18.360 is there's a private equity et f. The tracks private 0:11:18.360 --> 0:11:22.280 equity companies that are publicly listed in other words like KKR. 0:11:22.800 --> 0:11:26.079 These are companies that, yeah, they manage private equity funds. 0:11:26.440 --> 0:11:29.199 This is a way to invest in them. However, you're 0:11:29.240 --> 0:11:31.840 gonna get a lot more exposure to things that are 0:11:31.880 --> 0:11:35.439 not private equity, like just general macro movements, the FED, 0:11:35.920 --> 0:11:38.280 those kind of things will push around these big stocks 0:11:38.880 --> 0:11:42.600 just as much as their revenues. So it's it's almost 0:11:42.640 --> 0:11:45.960 like playing equity our energy stocks through xl E when 0:11:46.000 --> 0:11:49.040 you want oil. I think there's some disconnect there. So 0:11:49.120 --> 0:11:52.200 it's these are all imperfect ways, but they're just some 0:11:52.240 --> 0:11:54.640 options out there. I think if people are really on 0:11:54.679 --> 0:12:03.120 the hunt for something that's private equity esque. So Eric, 0:12:03.120 --> 0:12:07.280 there's this plan. It's called marijuana. I've heard of it. 0:12:07.280 --> 0:12:10.320 It's kind of popular in some places. It's even becoming legal. 0:12:11.000 --> 0:12:14.320 You know. There's medical marijuana, there's recreational marijuana, which more 0:12:14.320 --> 0:12:16.880 and more stamps are adopting. And then there's an entire 0:12:16.920 --> 0:12:19.640 country just to the north called Canada. Canada is in 0:12:19.640 --> 0:12:23.800 the process of legalizing recreational marijuana. So what's going to 0:12:23.920 --> 0:12:27.440 happen with e t f s and marijuana? Popular question? 0:12:27.520 --> 0:12:29.440 In fact, I don't just get this on Twitter, but 0:12:29.559 --> 0:12:32.720 when I traveled around, people would ask me. People internal 0:12:32.800 --> 0:12:36.160 here who just have jobs doing whatever have said, hey, here, 0:12:36.200 --> 0:12:39.280 potty TF. I think they sense that they want to 0:12:39.280 --> 0:12:41.719 get in on this early, and they want an e 0:12:41.800 --> 0:12:44.839 t F because it diversifies, because they don't want to 0:12:44.840 --> 0:12:46.520 go around trying to pick one of these pot stocks. 0:12:46.520 --> 0:12:49.120 They're very small, they could blow up. There's a a 0:12:49.160 --> 0:12:53.120 lot of risk volatil yes, and so a pot e 0:12:53.240 --> 0:12:55.880 t F basically cuts that risk in half. So the 0:12:55.880 --> 0:12:59.160 there's a couple of marijuana eat in half. So it 0:12:59.240 --> 0:13:02.200 takes basically, if you take the volatility of the average 0:13:02.200 --> 0:13:05.680 stock in say the Canadian Party t F or the 0:13:05.679 --> 0:13:08.640 one in the US. The E t F has half 0:13:08.679 --> 0:13:12.000 the VALL as the of the average stock, which makes sense, 0:13:12.120 --> 0:13:15.760 right because you're sort of through that diversification. You do 0:13:15.880 --> 0:13:18.760 cut your single stock VALL in half, and people like 0:13:18.880 --> 0:13:21.480 that is a way to play that because believe me, 0:13:21.520 --> 0:13:24.120 it's volatile enough. The potty t F is about five 0:13:24.160 --> 0:13:26.439 times the volatile of the SMP, so you can imagine 0:13:26.440 --> 0:13:28.800 one of these stocks could be ten times. So these 0:13:28.840 --> 0:13:31.200 ETFs already exists. What are the tickers? The one in 0:13:31.240 --> 0:13:33.520 Canada that came out first. Canada leads the US a 0:13:33.520 --> 0:13:35.640 lot in new E t F launches. Their regulators are 0:13:35.720 --> 0:13:39.079 very liberal. H M m J is the ticker in Canada, 0:13:40.559 --> 0:13:43.640 m m J. The tickers aren't that great. You think 0:13:43.640 --> 0:13:47.520 they're better. I think though. I think issuers didn't want 0:13:47.520 --> 0:13:50.480 to like do a touchdown dance after they got approval 0:13:50.520 --> 0:13:52.560 and like rub it in or make it more um 0:13:52.679 --> 0:13:56.320 because I think the regulators are a little like, uh 0:13:56.440 --> 0:13:59.240 not thrilled with letting E t F s out like this, 0:13:59.400 --> 0:14:01.559 either in Canada or the US with the U S ticker. 0:14:02.480 --> 0:14:05.599 The U S ticker is m J, M and J, 0:14:05.840 --> 0:14:09.520 which is a little more obvious. I think yeah totally. Um, 0:14:10.160 --> 0:14:13.000 I think of Michael Jordan and Michael Jackson, you can 0:14:13.000 --> 0:14:15.520 think that way and the guy who created it differently. 0:14:16.440 --> 0:14:19.000 But there is one in registration with the ticker TOKE, 0:14:19.960 --> 0:14:22.880 which is pretty good. That's a verb. Tickers are the best, 0:14:22.920 --> 0:14:25.840 and that one is a good one. So MJ is 0:14:25.880 --> 0:14:27.720 the one in the US. Now there's a big difference. 0:14:27.760 --> 0:14:30.440 The US one holds more US stocks and has a 0:14:30.440 --> 0:14:32.680 little more filler. The one in Canada, I think, is 0:14:32.680 --> 0:14:35.960 more of a pure play and holds Canadian stocks. The 0:14:35.960 --> 0:14:38.120 Canadian pot companies are the ones that have done way 0:14:38.160 --> 0:14:41.000 better because it's it's pushing, it's moving along faster there 0:14:41.040 --> 0:14:43.840 and Ken Shay of Bloomberg Intelligence gave me some really 0:14:43.880 --> 0:14:47.280 compelling numbers on the marijuana industry. If you look the 0:14:47.440 --> 0:14:51.840 sales last year in Canada were six million dollars, but 0:14:51.880 --> 0:14:54.080 they're projected to go in a year and a half 0:14:54.480 --> 0:15:00.360 to five billions. Does yes, half medicinal, half recu national, 0:15:00.520 --> 0:15:03.440 So it's the recreational market that's the big driver. And 0:15:03.480 --> 0:15:06.920 that's five billion that I mentioned in Canada that other 0:15:06.960 --> 0:15:09.080 companies predict a little higher, like Dewitch Bank. I believe 0:15:09.120 --> 0:15:12.360 this is a seven billion. Globally it's twenty billion. And 0:15:12.720 --> 0:15:15.280 recently I was in Canada at the inside et F 0:15:15.360 --> 0:15:17.760 S Canada conference and one of the panels they do, 0:15:18.200 --> 0:15:20.600 which I'm involved with, is six or seven E t 0:15:20.720 --> 0:15:22.720 F Ana. Let's get up on stage and they all 0:15:22.760 --> 0:15:25.080 have to argue for what the best new launch was. 0:15:25.160 --> 0:15:27.440 It's sort of a rat battle for E t F 0:15:27.440 --> 0:15:29.640 analysts and the one that you were involved in a 0:15:29.720 --> 0:15:33.120 rat battle, I was, except that's et F analysis that 0:15:33.160 --> 0:15:36.280 I'm throwing down, you know, and then the audience votes no, 0:15:36.360 --> 0:15:38.720 there's no beat. But I have power points lives. So 0:15:38.760 --> 0:15:40.640 what I showed was I showed what do you think 0:15:40.680 --> 0:15:42.480 of when I say, Mara want. I showed pictures of 0:15:42.840 --> 0:15:46.040 you know, um Grateful Day Concert, Pineapple Express, Cheech and Chong, 0:15:46.120 --> 0:15:47.520 and I said, this is what most people think of. 0:15:47.880 --> 0:15:50.040 But then I showed the bar chart of the growth. 0:15:50.920 --> 0:15:53.040 This could be what you should think of when you 0:15:53.080 --> 0:15:56.760 think of this industry. The question is how much more 0:15:56.840 --> 0:15:58.920 can it go? Up? Right? H MMJ is a hundred 0:15:58.920 --> 0:16:01.920 and six in the past twelve months. The argument back 0:16:01.960 --> 0:16:04.960 after I laid down my case for it, The argument back, 0:16:05.000 --> 0:16:07.120 because you've got to rebuttal they came back was, well, 0:16:07.200 --> 0:16:09.680 a lot of people this isn't new. People know this 0:16:09.720 --> 0:16:12.800 is growing. The price to earnings ratio are extremely high. 0:16:12.840 --> 0:16:14.960 It's like sort of the same argument for like internet 0:16:15.000 --> 0:16:16.880 stocks in the late nineties. One it could all go 0:16:16.960 --> 0:16:23.320 up and smoke. That's pretty good, obvious but good. So 0:16:24.080 --> 0:16:26.640 I didn't win. I came in I think second, but 0:16:26.720 --> 0:16:29.520 third based on the audience um sort of applause meter. 0:16:29.640 --> 0:16:32.200 I feel I feel like this is a consistent thing, 0:16:32.280 --> 0:16:33.920 Like you end up in these show downs and you 0:16:33.920 --> 0:16:36.560 don't take calm the gold. Yeah, but last the one 0:16:36.600 --> 0:16:39.160 I did before, I was sixth, so I'm moving up. 0:16:39.240 --> 0:16:42.640 I think I'm gonna take it next time around. Yes, 0:16:43.160 --> 0:16:45.600 because I realized it's not really the ticker or the 0:16:45.680 --> 0:16:48.240 validity of the e t F. It's the show. Whoever 0:16:48.440 --> 0:16:50.680 just puts on the best show. And so I've raised 0:16:50.720 --> 0:16:53.480 my performance this time and got higher on the ladder. 0:16:53.480 --> 0:16:57.560 But anyway, I will so you can invest in pottytfs 0:16:57.960 --> 0:16:59.760 MJ's won the U s h MMJ is the one 0:16:59.760 --> 0:17:02.840 of what's the US one whole It's it's a mixture 0:17:02.920 --> 0:17:07.920 of Canada and US stocks. It's got mid and small caps. Again, 0:17:07.960 --> 0:17:09.960 I asked ken Sha to look at the holdings. He said, 0:17:10.000 --> 0:17:15.600 well about it is sort of directly linked to cannabis sales, 0:17:16.119 --> 0:17:18.479 but like one company in there. I think Scott's Miracle 0:17:18.560 --> 0:17:21.359 Grow is in the e t F. That clearly pot 0:17:21.520 --> 0:17:23.520 is not a huge but it you know they are 0:17:23.600 --> 0:17:26.840 working in the industry. The question is as the industry 0:17:26.920 --> 0:17:30.040 gets a little more, get bigger, they will give more 0:17:30.080 --> 0:17:32.200 weight to the pure play companies. But when a new 0:17:32.359 --> 0:17:35.120 industry or THEMTF starts, they kind of have to fill 0:17:35.160 --> 0:17:38.159 it out with some bigger, liquid names to make the 0:17:38.240 --> 0:17:41.600 basket actually liquid. For a little shake in your dubie. 0:17:50.200 --> 0:17:53.800 Everybody hates paying taxes, and we know that ETFs have 0:17:54.080 --> 0:17:58.960 some tax benefits. Joe Panino at Panin ll C, ask, 0:17:59.040 --> 0:18:02.159 can you do it? An analysty the tax efficiency of 0:18:02.359 --> 0:18:06.479 e t F s versus mutual funds versus hedge funds. Right, 0:18:06.560 --> 0:18:08.680 The data is is tough to crunch on this, but 0:18:08.840 --> 0:18:11.600 morning Star actually did an analysis. I'll give them credit 0:18:11.680 --> 0:18:13.680 for this. If you look at the e t F 0:18:13.800 --> 0:18:17.360 capital gains distributions over time, it's almost the perfect record. 0:18:17.400 --> 0:18:20.040 It almost looks like a picture. No hits, no runs, no, 0:18:20.560 --> 0:18:23.360 you just look almost a perfect game. There's occasions where 0:18:23.400 --> 0:18:25.760 they will distribute to capital gains, but it's so rare 0:18:26.720 --> 0:18:28.560 um and that's what people like about e t s. 0:18:28.640 --> 0:18:30.960 It's a big I put A top five attribute is 0:18:31.119 --> 0:18:33.800 the fact that you don't get tax for doing for 0:18:33.920 --> 0:18:36.359 just sitting there and a mutual fund. You can if 0:18:36.400 --> 0:18:39.080 a big investor were to leave the mutual fund, the 0:18:39.160 --> 0:18:41.440 manager has to cash them out. How do they do that? 0:18:41.480 --> 0:18:44.160 They sell some of the stocks. That's a taxable event, 0:18:44.320 --> 0:18:46.919 and you sit there in the fund. You get a distribution, 0:18:47.600 --> 0:18:49.720 and e t F do not have that. You still 0:18:49.760 --> 0:18:52.119 get tax when you sell it, but you don't get 0:18:52.200 --> 0:18:55.080 taxed just for doing, like a by standard kind of tax. 0:18:55.800 --> 0:18:59.200 Huge deal. E t f s almost no capital gains 0:18:59.240 --> 0:19:04.119 distributions across their life. Mutual funds big problem. And he 0:19:04.160 --> 0:19:06.600 also asked about hedge funds, So how to hedge fund 0:19:06.640 --> 0:19:08.639 stack up? Same deal with the mutual funds. The thing 0:19:08.720 --> 0:19:10.119 is a lot of people who are in hedge funds 0:19:10.160 --> 0:19:13.280 are endowments, pensions who are going pre tax. All of 0:19:13.320 --> 0:19:16.720 what I just said only involves in after tax money, 0:19:17.400 --> 0:19:20.080 which brings us back to this idea that if you 0:19:20.400 --> 0:19:22.240 put an e t F, a mutual fund, a hedge 0:19:22.240 --> 0:19:25.440 fund in a level playing field after tax e t 0:19:25.600 --> 0:19:33.359 F almost always going to win that battle. Oh, I 0:19:33.440 --> 0:19:37.320 like this one from at stand the m F man. 0:19:39.040 --> 0:19:42.960 It's a great hand no no comment. Yes, I don't 0:19:42.960 --> 0:19:46.800 think it's mutual fund man. No comment. Uh, here's what 0:19:46.920 --> 0:19:50.360 he asked. What are your thoughts on index provider selection 0:19:50.880 --> 0:19:54.119 like M s C I versus foot c F t S. 0:19:54.800 --> 0:19:57.160 This is a great question and it's huge. You really 0:19:57.200 --> 0:19:59.400 should look at the index. The index is the thing. 0:20:00.119 --> 0:20:01.879 Most people just look at the issue or now and 0:20:01.960 --> 0:20:04.800 the costs and the exposure. You know, A MSCI versus 0:20:04.840 --> 0:20:07.520 Footsie is a great example. People usually bring up the 0:20:07.520 --> 0:20:10.200 emerging markets. M s C I has South Korean there 0:20:10.200 --> 0:20:12.760 at about a fift weight foot see doesn't they consider 0:20:12.840 --> 0:20:16.359 South Korea developed market? So if you were going and 0:20:16.520 --> 0:20:18.919 using m s C I, which is the I Shares 0:20:19.280 --> 0:20:21.159 version for your international you should use them as a 0:20:21.200 --> 0:20:23.840 set at least because the developed and emerging will be 0:20:23.880 --> 0:20:26.080 in line. If you used one or the other, you 0:20:26.200 --> 0:20:28.680 might have extra or no South Korea. So you really 0:20:28.720 --> 0:20:30.720 should think about that, and that's why some people do 0:20:30.840 --> 0:20:33.920 like to use indexes sort of together for their broad exposure. 0:20:34.320 --> 0:20:37.720 I do think that looking at the index though, ultimately 0:20:37.800 --> 0:20:39.959 comes leads back to looking at the holdings the waitings, 0:20:40.000 --> 0:20:41.920 which we always talk about how is it weighted, So 0:20:42.040 --> 0:20:44.520 it's not that indifferent than looking at the exposure. But 0:20:44.640 --> 0:20:46.400 it is important. But this is you know, it's really 0:20:46.400 --> 0:20:50.959 important because uh, it's about what you're gonna buy, right, 0:20:51.040 --> 0:20:53.199 And like say, China is an interesting one. There's been 0:20:53.359 --> 0:20:56.480 a lot of conversation about when China is in an index, 0:20:56.520 --> 0:20:59.840 when it isn't an in an index. For instance, there's 0:21:00.080 --> 0:21:04.679