WEBVTT - Climbing the Alps with Paul Baiocchi 0:00:06.280 --> 0:00:12.600 Wokeno trillions. I'm Joel Webber and I'm Eric bell Tunas Eric, 0:00:13.240 --> 0:00:17.360 we often try and make things accessible for people. I'm 0:00:17.400 --> 0:00:19.720 gonna go out and say that this episode is going 0:00:19.760 --> 0:00:24.840 to be more technical than most, but it serves a purpose. 0:00:24.880 --> 0:00:27.640 What is that purpose? Yeah? No, here, here's the purpose 0:00:28.160 --> 0:00:31.280 on the show today is Paul by Aki of Alps 0:00:31.960 --> 0:00:34.320 and Paul by Achi. Let me just take you to 0:00:34.400 --> 0:00:36.839 my personal career in I'm going to take you back, 0:00:36.920 --> 0:00:41.639 Joel to the year two thousand six two right around there. 0:00:41.920 --> 0:00:45.080 This is years ago. I get assigned E t F 0:00:45.120 --> 0:00:48.800 s in data. I'm in data and I don't know 0:00:48.880 --> 0:00:50.640 much about them. So where do I learn about them? 0:00:50.680 --> 0:00:53.400 I go to this place, Index Universe, as well as 0:00:53.400 --> 0:00:57.400 reading books and whatnot. An Index Universe was a hotbed 0:00:57.440 --> 0:01:00.760 of et F analysis way before it was cool, and 0:01:00.840 --> 0:01:03.240 Paul Baiacky was one of these original analysts. They had 0:01:03.240 --> 0:01:07.080 about ten people there who were really good. I mean 0:01:07.080 --> 0:01:09.360 they'd be good today, but they were. They were ten 0:01:09.440 --> 0:01:11.839 years ahead of their time. This was led by Dave Natick, 0:01:11.880 --> 0:01:14.680 who we found the show, and Matt Hogan. Dave now 0:01:14.680 --> 0:01:16.319 at E t F Trends. Matt is now a bit 0:01:16.360 --> 0:01:19.480 wise and but they had a whole crew and I 0:01:19.520 --> 0:01:22.240 would listen to their podcasts, and Paul had a podcast, 0:01:22.319 --> 0:01:25.679 he wrote articles, and since then he went to Fidelity, 0:01:25.760 --> 0:01:27.840 a lot of them went other places, and so he 0:01:27.880 --> 0:01:31.160 was at Fidelity. Now he's at ALPS. So today we'd 0:01:31.160 --> 0:01:34.679 be talking to an analyst who is smart as an 0:01:34.680 --> 0:01:38.720 analyst and used to have to judge ETFs critically, who 0:01:38.800 --> 0:01:40.560 now went to an issuer and now he's got to 0:01:40.600 --> 0:01:43.440 talk to advisors about the e t s that this 0:01:43.520 --> 0:01:47.000 one firm sells and make the case. And so we 0:01:47.080 --> 0:01:49.880 wanted to sort of take you into how an analyst, 0:01:49.880 --> 0:01:54.480 a specialist talked to an advisor about why they should 0:01:54.560 --> 0:01:56.919 use not only the e t F that the firm cells, 0:01:56.960 --> 0:02:00.080 but that that category like why should I buy and 0:02:00.200 --> 0:02:02.440 energy et F now? And then why should I buy yours? 0:02:03.280 --> 0:02:06.120 In other words, this episode is you taking me to 0:02:06.320 --> 0:02:10.440 your record shop. Yeah. This is definitely someone who I 0:02:10.440 --> 0:02:13.560 would call it early influence on my career. So it's 0:02:13.560 --> 0:02:15.560 it's it's it's fun to talk to him a and 0:02:15.639 --> 0:02:18.040 be just um, you know, talk about some of those 0:02:18.040 --> 0:02:20.120 early days, but also really talked about what he does 0:02:20.200 --> 0:02:24.000 today and how he uses all that knowledge and you know, 0:02:24.080 --> 0:02:25.720 it is interesting once you go to an issuer, you 0:02:25.800 --> 0:02:28.800 kind of have to sell their products, and it isn't interesting, 0:02:28.880 --> 0:02:30.800 you know how you have to wear. But I'm I 0:02:30.880 --> 0:02:34.080 am certain that all of his analysis, on all the 0:02:34.240 --> 0:02:37.239 articles he wrote have got to come in very handy. 0:02:37.639 --> 0:02:40.359 Who's Alps and how big are they? They're a mid 0:02:40.400 --> 0:02:43.240 size issuer. They've been around for a while, I don't know, 0:02:43.280 --> 0:02:46.840 probably ten fifteen years. They've got six billion in assets, 0:02:47.320 --> 0:02:49.680 so I guess that puts some rate around the top 0:02:49.720 --> 0:02:55.880 twenty somewhere maybe biggest. Uh. They have sixteen products, um 0:02:56.000 --> 0:02:58.280 and I know them for things like a m LP 0:02:58.520 --> 0:03:01.560 which is the big MLP TF those are passed through 0:03:01.639 --> 0:03:05.680 high yielding securities. And also the dogs they have like 0:03:05.880 --> 0:03:07.639 S dog E dog. These are dogs of the dow 0:03:08.320 --> 0:03:11.639 E t S. So it's a you know, honestly, this 0:03:11.720 --> 0:03:15.320 is a classic like shop that had a couple of 0:03:15.360 --> 0:03:17.880 hits enough to keep it going. I mean, you need 0:03:17.919 --> 0:03:21.400 a couple none of these. The MLP was a blockbuster, 0:03:21.800 --> 0:03:24.400 and then they had a few moderate hits and then 0:03:24.440 --> 0:03:27.240 someone they struggle with. It's a it's really a metaphor 0:03:27.280 --> 0:03:29.400 for the whole industry. But as long as you get 0:03:29.400 --> 0:03:31.560 a couple of couple of hits, you know you're good. 0:03:31.560 --> 0:03:32.880 And I think a lot of what they do now 0:03:32.960 --> 0:03:36.320 is making sure they re um reintroduce those e t 0:03:36.520 --> 0:03:38.440 F s that were hits, but also the new ones 0:03:38.480 --> 0:03:41.040 they have that can compliment thus so which we will 0:03:41.080 --> 0:03:52.920 discuss it this time on Trillions Climbing the Alps with Paula. Paul, 0:03:52.920 --> 0:03:57.080 Welcome to Trillians. Thanks for having me. I'm excited, so 0:03:57.160 --> 0:04:02.200 talk to me about what you do. So currently, I 0:04:02.280 --> 0:04:06.040 am what in the E t F industry is typically 0:04:06.040 --> 0:04:11.000 defined as a specialist, so I support a subset of ALPS, 0:04:11.040 --> 0:04:14.320 s S S and c ALPS et F specifically in the 0:04:14.480 --> 0:04:18.840 MLP energy infrastructure space. So basically I'm the subject matter 0:04:18.920 --> 0:04:22.560 expert for our wholesaling team. I helped them when they're 0:04:22.560 --> 0:04:25.800 meeting with advisors to talk at a high level about 0:04:25.839 --> 0:04:30.040 the the industry, the product suite, portfolio solutions. And then 0:04:30.080 --> 0:04:34.280 I also work with our portfolio management team, our capital 0:04:34.320 --> 0:04:38.360 markets team, and then are management team to ensure that 0:04:38.720 --> 0:04:44.159 distribution strategy on down to portfolio management is operating in 0:04:44.160 --> 0:04:47.680 a way that's as efficient as possible. So talk to 0:04:47.680 --> 0:04:51.320 me about your journey. How did how did you get there. Yeah. Sure. 0:04:51.440 --> 0:04:55.680 So this podcast isn't anyways a decade in the making. 0:04:55.720 --> 0:04:58.440 I mean, Eric and I have known each other for 0:04:58.440 --> 0:05:01.640 for quite a while, and it's it's money because ten 0:05:01.720 --> 0:05:04.680 years ago I was at index Universe, which became e 0:05:04.760 --> 0:05:08.200 t F dot Com, and it was at the time 0:05:08.279 --> 0:05:12.920 this team of analysts that they built too really disrupt 0:05:13.080 --> 0:05:18.039 the way that advisors and investors thought about and analyzed ETFs. 0:05:18.120 --> 0:05:20.840 We were sort of going after morning Star in terms 0:05:20.920 --> 0:05:24.400 of an et F classification system and and E t 0:05:24.560 --> 0:05:27.880 F analytics, and that's really how I cut my teeth 0:05:28.120 --> 0:05:31.400 in the E t F world. Before that, I was 0:05:32.000 --> 0:05:35.039 working at a small r A that was building indexes 0:05:35.040 --> 0:05:37.039 for U I T S and we built an index 0:05:37.080 --> 0:05:39.839 four And this is going way back now, the first 0:05:39.880 --> 0:05:43.960 global shipping a t F s c A, which you 0:05:44.000 --> 0:05:46.440 think about launching an e t F in two thousand 0:05:46.400 --> 0:05:49.440 and eight, two thousand nine on global shipping not exactly 0:05:49.480 --> 0:05:52.320 the best timing, and so I would say that my 0:05:52.400 --> 0:05:55.120 timing in in many ways in life isn't always perfect, 0:05:55.160 --> 0:05:58.240 as as I'm sure is the case with everybody. But 0:05:58.600 --> 0:06:02.600 now ten years on I've gone to Fidelity to help 0:06:02.760 --> 0:06:05.240 them build out their et F capability and grow their 0:06:05.279 --> 0:06:07.520 asset base. And now I'm at SS and c ALPS. 0:06:08.240 --> 0:06:11.200 I want to go back to the index Universe world 0:06:11.200 --> 0:06:12.720 that was before et F dot com. They used to 0:06:12.760 --> 0:06:15.599 have these conferences. I remember Paul the first time I 0:06:15.640 --> 0:06:18.279 went there. I mean, I was probably the only person 0:06:18.320 --> 0:06:21.800 from Bloomberg besides Chris Condon who covered UH funds. At 0:06:21.800 --> 0:06:24.040 the time, it was two of us there. The last conference, 0:06:24.080 --> 0:06:25.839 I think there was like twenty people from Bloomberg, but 0:06:26.080 --> 0:06:29.720 this is probably back in maybe And I remember Jim 0:06:29.720 --> 0:06:32.360 Wyant opened the conference with welcome to the right side 0:06:32.360 --> 0:06:34.520 of history, and there was a buzz about it, and 0:06:34.520 --> 0:06:37.320 that just before a trillion. Now they've got five trillion, basically, 0:06:37.720 --> 0:06:39.560 but for a long time, et s for the underdog. 0:06:39.920 --> 0:06:41.760 And do you as you go out on the road 0:06:41.800 --> 0:06:45.400 and you talk to clients knowing all that, and now 0:06:45.440 --> 0:06:47.400 you're talking to them about, like say a m LP 0:06:47.600 --> 0:06:51.479 or specific e t F, how far have advisors come 0:06:51.560 --> 0:06:56.680 or the users in using them, and also how much 0:06:56.800 --> 0:07:01.200 further could this industry grow. So I think you hit 0:07:01.200 --> 0:07:02.919 the nail on the head in terms of sort of 0:07:02.960 --> 0:07:06.160 the counterculture of the early days in the E t 0:07:06.320 --> 0:07:10.240 F market, And I think advisors. Back then, we're being 0:07:10.280 --> 0:07:12.520 introduced to the e t F rapper, and in many 0:07:12.520 --> 0:07:16.800 ways you just had this opposition, this this structural opposition 0:07:16.840 --> 0:07:20.040 to the e t F rapper because of either misinformation 0:07:20.160 --> 0:07:22.520 or just misconceptions about what e t f s were 0:07:22.560 --> 0:07:24.720 designed to do and what they were actually doing. And 0:07:24.760 --> 0:07:29.920 I think ten years on, advisors are are less opposed 0:07:29.960 --> 0:07:32.080 to the sort of ideal of the e t F 0:07:32.280 --> 0:07:34.520 and they're more accepting of the fact that e t 0:07:34.760 --> 0:07:39.720 F s can fit within a broader advisory strategy. And 0:07:40.600 --> 0:07:44.280 that's important because it gets to the heart of what 0:07:44.320 --> 0:07:46.960 these advisors are trying to do, which is just investment 0:07:47.040 --> 0:07:51.360 solutions that take into account things like asset location and 0:07:51.440 --> 0:07:56.000 taxes and financial planning. And so now when I talked 0:07:56.040 --> 0:07:59.000 to an advisor, that that conversation about what an e 0:07:59.080 --> 0:08:01.400 t F does, or how an e t F operates, 0:08:01.480 --> 0:08:05.160 or what the creation redemption processes, that those conversations don't 0:08:05.160 --> 0:08:09.560 need to be had because there's there's now this varied 0:08:10.080 --> 0:08:12.200 user base of e t f s that maybe didn't 0:08:12.200 --> 0:08:17.120 exist ten years ago, and the intelligence around e t 0:08:17.280 --> 0:08:20.920 F application has evolved and accelerated in many ways, and 0:08:20.960 --> 0:08:24.720 so it makes it easier to have the conversation about 0:08:24.880 --> 0:08:28.640 the exposure and the product as opposed to having to 0:08:28.680 --> 0:08:31.040 take three steps back and start from scratch, if that 0:08:31.080 --> 0:08:35.000 makes sense. How often do you meet with someone who's like, 0:08:35.760 --> 0:08:41.600 w t F is an e T F well, or 0:08:41.640 --> 0:08:43.840 somebody who's just read the latest article in the FT 0:08:44.080 --> 0:08:46.959 or something that's just says they've never been tested or 0:08:47.000 --> 0:08:49.880 they're gonna blow up. Is that still a thing because 0:08:49.920 --> 0:08:52.120 those articles do come out, I don't know. Quarterly, there's 0:08:52.160 --> 0:08:55.000 usually one that just like has everyone buzzing, but then 0:08:55.000 --> 0:08:58.400 the flows just come in despite it. It feels like 0:08:58.559 --> 0:09:01.199 they almost are meaningless of this point, But do advisors 0:09:01.240 --> 0:09:06.440 still have worries? You do, and and you never want 0:09:06.440 --> 0:09:09.760 to paint with two broad a brush in terms of 0:09:10.280 --> 0:09:15.040 stereotyping certain demographics or certain cohorts of the advisory community. 0:09:15.080 --> 0:09:18.040 But I do think that some of the the older 0:09:18.200 --> 0:09:22.520 advisors who are used to doing things a certain way, 0:09:22.520 --> 0:09:24.960 are very comfortable with a certain product type or a 0:09:24.960 --> 0:09:29.640 certain strategy, are more likely to to sort of take 0:09:29.640 --> 0:09:32.319 de bait as it were, around some of the sensationalist 0:09:32.880 --> 0:09:36.120 research or or articles on e T S. So you 0:09:36.160 --> 0:09:39.240 do still have a conversation where a guy in the 0:09:39.280 --> 0:09:42.600 fixed income space will will say, hey, we we saw 0:09:42.640 --> 0:09:46.400 these products traded deep discounts, and and I told you so. 0:09:46.760 --> 0:09:49.520 And in some ways, that's just the confirmation bias that 0:09:49.559 --> 0:09:53.439 exists in people generally these days, whether it be financial 0:09:53.480 --> 0:09:57.559 advisors or otherwise. And so I think when you when 0:09:57.600 --> 0:10:00.600 you get down to it, the reality is is that 0:10:01.440 --> 0:10:03.200 a lot of the e t F flows now are 0:10:03.240 --> 0:10:06.440 just structural in nature. I mean, there's automatic buying that 0:10:06.520 --> 0:10:09.880 takes place as a result of home office model subscriptions 0:10:09.880 --> 0:10:13.040 at the big wire houses or otherwise, and so some 0:10:13.120 --> 0:10:16.440 of the flows just happened regardless of what's happening on 0:10:16.480 --> 0:10:26.120 the ground level. In some ways, in other words, the 0:10:26.120 --> 0:10:29.120 e t s are more in models, target date funds, 0:10:29.240 --> 0:10:32.400 and just where the money's coming in rain or shine, right, 0:10:32.480 --> 0:10:36.280 and then there's tactical money. Speaking of tactical let's let's 0:10:36.320 --> 0:10:37.920 dive into some of the e t F here, because 0:10:37.960 --> 0:10:41.319 I think the ones that you're an expert or the 0:10:41.360 --> 0:10:43.199 specialist in now it alps. I think we'll get a 0:10:43.280 --> 0:10:46.640 system interesting conversations. Now, let's talk about m l P. 0:10:47.120 --> 0:10:49.319 This is the MLP e t F. I believe it's 0:10:49.360 --> 0:10:51.280 the largest m l m l P E t F 0:10:51.320 --> 0:10:53.240 on the market right, And this was one of the 0:10:53.240 --> 0:10:57.000 oldest and this is a classic case of what you 0:10:57.040 --> 0:10:59.920 guys would have done an index universe and what we stilled, 0:11:00.160 --> 0:11:03.120 which is a MLP versus a a m J which 0:11:03.160 --> 0:11:06.000 is the E t N or uh the one that 0:11:06.080 --> 0:11:09.760 I think MLP X which only owns m LPs. There's 0:11:09.760 --> 0:11:13.040 a tax issue with mlp s and the way that 0:11:13.080 --> 0:11:16.320 they get taxed, which makes it all kind of picking 0:11:16.320 --> 0:11:21.920 your poison kind of situation. Now you're on team a MLP. Now, 0:11:22.040 --> 0:11:24.240 so sell me on a m l P if I'm 0:11:24.240 --> 0:11:26.720 an advisor, And I said, well, the there's such a 0:11:26.720 --> 0:11:28.800 big tax drag inside that thing, why don't I just 0:11:28.880 --> 0:11:30.840 use the E t N instead, which doesn't have that. 0:11:32.320 --> 0:11:36.359 So it's it's one of these trade offs and investors 0:11:36.520 --> 0:11:40.440 make in the markets in that if you want to own, 0:11:40.679 --> 0:11:42.840 if you want to own an individual MLP, you're gonna 0:11:42.840 --> 0:11:46.200 get issue to K one and in some for some 0:11:46.280 --> 0:11:48.959 advisors that's just not palatable or for some investors that's 0:11:49.000 --> 0:11:51.400 just not palatable. And so if you want to be 0:11:51.480 --> 0:11:54.040 in the MLP space, which is a pass through vehicle 0:11:54.160 --> 0:11:58.760 and has some interesting income characteristics, some tax deferral associated 0:11:58.800 --> 0:12:02.199 with them at means they in order to get a 0:12:02.240 --> 0:12:06.000 diversified pool of MLPs, you have to make some trade 0:12:06.000 --> 0:12:09.200 offs because the RICK structure and i r S guidelines 0:12:09.800 --> 0:12:15.520 cap MLPs of a RICK compliant mutual fund or et F, 0:12:15.679 --> 0:12:17.920 and so the workaround is to create a C corps 0:12:18.440 --> 0:12:20.559 around the e t F and so, without getting too 0:12:20.559 --> 0:12:23.120 far in the weeds, but to answer your question, that 0:12:23.200 --> 0:12:28.280 can create some tax drag in periods of positive performance. Now, 0:12:28.520 --> 0:12:31.440 currently a m l P has what's called a deferred 0:12:31.480 --> 0:12:35.040 tax asset, which means there is no tax drag for 0:12:35.040 --> 0:12:40.040 for the foreseeable future given the near term performance of MLPs, 0:12:40.080 --> 0:12:45.120 and so removing the tax consequences or some of the 0:12:45.160 --> 0:12:48.160 tax complications of of running a C CORPSTF. What I'll 0:12:48.200 --> 0:12:53.720 say is of MLPs distributions historically have been considered tax 0:12:53.760 --> 0:12:58.320 deferred return of capital, which means those that portion of 0:12:58.360 --> 0:13:02.040 your income that's coming into the into the funds just 0:13:02.160 --> 0:13:06.280 lowers your cost basis and isn't taxed in that tax 0:13:06.360 --> 0:13:09.360 here when it's kicked out. And so in that way 0:13:09.720 --> 0:13:13.000 you do have some tax benefits for a taxable investor 0:13:13.080 --> 0:13:14.800 that you don't get it in e t N, which 0:13:14.840 --> 0:13:19.000 is just paying out a stream of income replicating the 0:13:19.120 --> 0:13:22.760 income that's thrown off by the underlying securities in the index. 0:13:22.800 --> 0:13:25.960 And it's taxes as ordinary income, as as any coupon 0:13:26.000 --> 0:13:28.559 payment on a fixed income instrument would be. And so 0:13:29.280 --> 0:13:32.079 so this gets down to sort of asset location and 0:13:32.400 --> 0:13:35.240 tax consideration. So if you're in a I R A 0:13:35.559 --> 0:13:38.240 or a tax defered account, something like an e t 0:13:38.360 --> 0:13:40.880 N might be more appropriate because you're not really concerned 0:13:40.920 --> 0:13:45.520 about tax deferral. And in a taxable account, that tax 0:13:45.559 --> 0:13:49.360 deferral can be significant because let's say that you're an 0:13:49.360 --> 0:13:53.239 older investor who's panning, planning on passing on your investments 0:13:53.280 --> 0:13:56.160 to your children or your grandchildren. You get a step 0:13:56.240 --> 0:13:59.400 up in basis at that point, and that can be 0:13:59.679 --> 0:14:03.360 signal eificant in terms of the state planning and and 0:14:03.400 --> 0:14:06.400 other tools that advisors are now being asked to deliver 0:14:06.480 --> 0:14:09.600 to their clients. And so MLP is the largest, most 0:14:09.640 --> 0:14:13.240 liquid ETF. To your point, it was the first MLP 0:14:13.440 --> 0:14:16.360 only t F launch. We just had our tenure anniversary 0:14:16.360 --> 0:14:17.720 and did a little bit of a bell ring at 0:14:17.720 --> 0:14:21.080 the NYC and some some press around that, and so 0:14:22.240 --> 0:14:25.360 in many ways, as you know better than anybody Eric 0:14:25.440 --> 0:14:28.680 the first mover advantage in ETFs can be significant in 0:14:28.720 --> 0:14:32.200 the right categories, and MLPs have proven to be that 0:14:32.320 --> 0:14:37.920 over time. Now MLP X and the RICK compliant Energy 0:14:37.920 --> 0:14:41.400 Infrastructure Products are sort of apples to oranges in some 0:14:41.440 --> 0:14:44.720 ways to MLP because they capped their MLP exposure at 0:14:45.680 --> 0:14:48.840 which means you mute some of the tax deferral and 0:14:49.120 --> 0:14:51.760 you include some c corps that don't have the same 0:14:51.800 --> 0:14:54.360 structure as an m LP from a tax perspective or 0:14:54.360 --> 0:14:57.200 from a pass through perspective. You still play on the 0:14:57.240 --> 0:14:59.960 same theme. And in recent years, Kinder Morgan in one 0:15:00.000 --> 0:15:02.920 know can some of these large MLPs have converted to 0:15:02.960 --> 0:15:07.960 sea corps. So in many ways, they're all different ways 0:15:08.040 --> 0:15:11.680 to play this theme, which is companies that move that 0:15:12.720 --> 0:15:17.000 process and store crude oil and natural gas, and and 0:15:17.440 --> 0:15:19.880 that's a pretty simple business model. You collect a fee 0:15:19.880 --> 0:15:24.160 for doing that, and that leads to pretty steady cash 0:15:24.160 --> 0:15:27.680 flows relative to other pockets of of the energy complex. 0:15:27.840 --> 0:15:29.840 And so if I'm going to make the case for 0:15:29.920 --> 0:15:34.600 being in the energy infrastructure space, that's it. They historically 0:15:34.640 --> 0:15:38.960 have pretty compelling distributions and and dividends. The yields right 0:15:39.000 --> 0:15:42.680 now in the market in fixed income or in utilities 0:15:42.680 --> 0:15:45.560 of reats or other sort of bond procty sectors is 0:15:45.600 --> 0:15:50.040 somewhat low, and advisors who are trying to generate income 0:15:50.120 --> 0:15:53.920 off the equity allocation in their asset allocation might be 0:15:54.000 --> 0:15:57.280 looking for something like a MLP or the energy infrastructure 0:15:57.320 --> 0:16:00.640 as an alternative, which historically has had pretty low correlations 0:16:00.720 --> 0:16:04.520 to reach in utilities and other income producing asset classes. Sure, 0:16:04.520 --> 0:16:05.960 and I think most people out there who have heard 0:16:06.000 --> 0:16:08.400 of MLPs think of it as yield and just so 0:16:08.600 --> 0:16:11.240 for people who it's master limited partnership, they you know, 0:16:11.360 --> 0:16:14.560 it's these companies that have the pipes that that which 0:16:14.600 --> 0:16:17.000 brings me to another question, which ye say, m LP 0:16:17.160 --> 0:16:21.120 yields four currently, so that's a juicy yield. Mlp X, 0:16:21.160 --> 0:16:22.720 by the way, is half that. So to your point, 0:16:22.840 --> 0:16:25.160 that has more of the MLPs and the higher yield. 0:16:25.760 --> 0:16:28.040 Although now we're in energy, and I know energy has 0:16:28.040 --> 0:16:30.440 had a tough go of it, like have you found 0:16:30.440 --> 0:16:34.360 it difficult that you're in that sector? Yes, you have 0:16:34.440 --> 0:16:37.520 the yield, but your energy energy has really taken it 0:16:37.560 --> 0:16:39.600 on the chin lately. And could we see an energy 0:16:39.680 --> 0:16:43.800 rebound um That's something that I think many people, just 0:16:44.120 --> 0:16:46.960 some people say will never happen. Um, I'm not in 0:16:46.960 --> 0:16:48.920 that camp. I think there will be an energy rebound. 0:16:48.920 --> 0:16:51.760 I don't see energy consumption going down that all that much. 0:16:52.120 --> 0:16:54.840 But what do you say about that? So I think 0:16:55.560 --> 0:16:58.400 you're being a little bit diplomatic and saying that energy 0:16:58.440 --> 0:17:01.160 has been a difficult place to be. It's been an 0:17:01.320 --> 0:17:04.560 awful place to be for certain periods of time recently, 0:17:04.720 --> 0:17:07.399 and so you look at the energies waiting in the 0:17:07.480 --> 0:17:10.400 SMP just as a way to reflect that, and it's 0:17:10.800 --> 0:17:13.480 at its lowest levels in thirty plus years, and that's 0:17:13.880 --> 0:17:18.399 I think aligned really well with this growth value disparity 0:17:18.480 --> 0:17:20.160 that we've seen in the market. And so you can 0:17:20.160 --> 0:17:22.280 sort of relate the too, in the sense that there 0:17:22.320 --> 0:17:24.720 are value managers out there who are pounding the table 0:17:24.760 --> 0:17:26.720 saying value is going to come back, and we get 0:17:26.760 --> 0:17:29.960 these short pops and and value relative to growth, and 0:17:29.960 --> 0:17:32.880 and people say, is this the start of that mean 0:17:32.960 --> 0:17:35.520 reversion as it relates to the value versus growth, and 0:17:36.480 --> 0:17:38.199 those tend to be short lived, or at least they 0:17:38.240 --> 0:17:40.639 have recently. I think energy is very similar to that 0:17:40.720 --> 0:17:43.960 in the sense that we've had these short periods of outperformance. 0:17:44.200 --> 0:17:46.760 People are sort of saying, well, is this the energy renaissance? 0:17:46.840 --> 0:17:49.480 Is this when energy starts to outperform the market and 0:17:49.520 --> 0:17:52.440 retake its leadership in the market, and then you get 0:17:52.600 --> 0:17:54.960 negative headlines, or you get a pause, or you get 0:17:55.280 --> 0:17:59.520 a significant period of extended negative performance. And so I 0:17:59.760 --> 0:18:02.720 don't think that energy is as we currently see it 0:18:02.760 --> 0:18:05.080 goes away anytime soon. I mean, the reality is is 0:18:05.119 --> 0:18:10.080 that natural gas, in any version of the Green New 0:18:10.119 --> 0:18:12.840 Deal or otherwise, is going to be an important bridge 0:18:12.960 --> 0:18:16.280 to a renewable energy future. We we rely on it 0:18:16.359 --> 0:18:19.400 to generate electricity if you're gonna be plugging your car 0:18:19.480 --> 0:18:22.720 into the wall of your garage. That electricity currently isn't 0:18:22.760 --> 0:18:25.000 coming from wind or solar, and it's unlikely to come 0:18:25.040 --> 0:18:29.240 extensively from wind, solar or hydrogen in the future. And 0:18:29.280 --> 0:18:32.560 so natural gas does provide us with the bridge. Crude oil, 0:18:32.600 --> 0:18:35.880 on the other hand, is the one that's perhaps most 0:18:35.960 --> 0:18:39.040 at risk, at least from an existential perspective right now, 0:18:39.119 --> 0:18:43.200 and as we think about more progressive or or overhaul 0:18:43.240 --> 0:18:45.800 of our energy policy. But even then, if you look 0:18:45.800 --> 0:18:49.440 at some of the projections for energy demand going forward, 0:18:49.560 --> 0:18:51.880 a lot of the incremental demand for crude oil isn't 0:18:51.880 --> 0:18:55.320 coming from highway mileage or jet fuel. It's coming from 0:18:55.359 --> 0:19:00.359 petrochemical demand, an emerging market specifically, and that's not likely 0:19:00.400 --> 0:19:04.720 to subside anytime soon. And so there are these structural 0:19:04.800 --> 0:19:08.199 challenges facing the legacy fossil fuel industry that I think 0:19:08.240 --> 0:19:11.399 are real and and investors have to be wary of. 0:19:11.560 --> 0:19:14.800 But as it relates to midstream energy infrastructure, I mean, 0:19:14.800 --> 0:19:19.120 the reality is is that pipelines are valuable assets. And 0:19:19.359 --> 0:19:21.399 if you look at the d A p L news 0:19:21.440 --> 0:19:24.720 where there was an attempt to shut down this pipeline 0:19:24.760 --> 0:19:27.520 that was already operating for an environmental review and then 0:19:27.520 --> 0:19:31.000 a court stay and then an abandonment of a pipeline 0:19:31.000 --> 0:19:33.960 on the East Coast, I mean, if anything, that means 0:19:34.000 --> 0:19:36.800 that existing pipelines are more valuable than they were because 0:19:36.800 --> 0:19:38.600 they're gonna be harder to build and harder to get 0:19:38.600 --> 0:19:44.280 approval for. And the production in the United States, whether 0:19:44.320 --> 0:19:47.240 it's in any of these various basins where fracking is 0:19:47.280 --> 0:19:50.160 going on in natural gas and crude oil is being produced, 0:19:50.880 --> 0:19:55.680 those pipes connect that to the various demand sights, whether 0:19:55.720 --> 0:19:58.040 it be a refining facility for crude oil or whether 0:19:58.080 --> 0:20:00.159 it be utility site and that's going to contin need 0:20:00.200 --> 0:20:03.119 to be the case. Now, if you're an investor and 0:20:03.240 --> 0:20:05.840 you have some energy exposure, whether it's a m LP 0:20:06.119 --> 0:20:08.840 or something like let's say x l E Abroad Energy 0:20:08.920 --> 0:20:11.600 TF that includes the integrated companies and some of those 0:20:11.680 --> 0:20:15.479 large oil oil service companies, well, I do think that 0:20:15.520 --> 0:20:19.000 it's prudent to think about how you can pair that 0:20:19.320 --> 0:20:22.959 legacy fossil fuel or legacy energy position with something a 0:20:23.000 --> 0:20:26.960 little bit more growth oriented or maybe even an option 0:20:27.040 --> 0:20:30.840 on some of these emerging technologies in the energy space. 0:20:30.880 --> 0:20:34.159 And so you talk about the thel C t F 0:20:34.240 --> 0:20:38.119 lineup and ACES, which is our renewable energy TF is 0:20:38.160 --> 0:20:40.920 something that we talk to advisors a lot about combining 0:20:40.920 --> 0:20:44.560 with say MLP or a legacy energy position as a 0:20:44.600 --> 0:20:47.480 way to to sort of pair the current with the future. 0:20:48.160 --> 0:20:51.080 I want to talk about ACES more, uh, Paul, because 0:20:51.119 --> 0:20:56.040 that's had a great year, like sixty year to date 0:20:56.040 --> 0:20:59.320 that it's up right, what what exactly are you guys 0:20:59.320 --> 0:21:04.120 are accomplishing in that fund? So it fits within this 0:21:04.200 --> 0:21:08.080 thematic lineup of ETFs that that s sn C ALPS 0:21:08.080 --> 0:21:11.000 has launched in the past couple of years, and it 0:21:11.080 --> 0:21:15.200 tries to give you a blended exposure to a range 0:21:15.240 --> 0:21:18.400 of different themes within a theme. And what I mean 0:21:18.400 --> 0:21:20.639 by that is you think about renewable energy, and people 0:21:20.720 --> 0:21:23.520 might think of wind or solar, but there's also fuel 0:21:23.560 --> 0:21:28.160 cell technology and battery technology, hydrogen for example, that are 0:21:28.200 --> 0:21:31.400 all part of this broader renewable energy push and are 0:21:31.400 --> 0:21:33.080 all going to have a role to play in the 0:21:33.119 --> 0:21:36.439 future energy mix within the country. And so what ACES 0:21:36.520 --> 0:21:39.639 tries to do is give you exposure to all of 0:21:39.680 --> 0:21:43.200 those themes in a way that maybe a pure play 0:21:43.240 --> 0:21:45.720 solar fund when in or maybe a pure play wind 0:21:45.800 --> 0:21:48.200 fund would not. And and I think that's why it's 0:21:48.200 --> 0:21:50.760 been popular. I mean, it's over three million in assets 0:21:50.760 --> 0:21:53.320 now to your point, you're a day performance has been 0:21:53.359 --> 0:21:57.120 really compelling, and I think advisors are starting to use 0:21:57.200 --> 0:22:00.480 it in the way that I described as a complement 0:22:00.720 --> 0:22:05.800 to their legacy energy position, because the reality is you 0:22:05.800 --> 0:22:09.800 can get a diversified energy sectory t F for example, 0:22:10.280 --> 0:22:13.919 for less than ten basis ones, but you might be 0:22:13.960 --> 0:22:15.920 willing to pay up a little bit from an expense 0:22:16.000 --> 0:22:19.960 ratio perspective to get the growth oriented nature of renewable 0:22:20.080 --> 0:22:23.040 energy exposure as a complement to that, and it's not 0:22:23.400 --> 0:22:26.760 that you don't necessarily have exposure to some of those 0:22:26.800 --> 0:22:30.040 themes in your portfolio through the SMP five hundred or 0:22:30.320 --> 0:22:32.840