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Speaker 1: Welcome to Trillions. I'm Joel Webber and I'm Eric bel

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Speaker 1: Tunas Eric, I have this show that I really like watching.

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Speaker 1: And before the show I watched, I read the books

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Speaker 1: Game of Thrones into it that never heard of it.

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Speaker 1: I've heard of it, but I've never seen it, believe

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Speaker 1: it or not. I know generally it's about I missed

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Speaker 1: it out for you. I know, I heard it's amazing.

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Speaker 1: I justin and the time season is going to start

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Speaker 1: next month. I'm so excited for And I saw the

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Speaker 1: commercial in the super Ball where ahead of Dragon. So basically,

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Speaker 1: you have one month to binge Game of Thrones? Can

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Speaker 1: you get through all of them? See? This is the problem,

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Speaker 1: this is what what what the problem with breaking bad Wiz?

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Speaker 1: For me, I I get addictive, addictive personality, so I

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Speaker 1: don't have the time. I got two small children. I

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Speaker 1: can to go on a bingeing thing. Yeah. So with

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Speaker 1: that in mind, we want to have a Game of

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Speaker 1: Thrones and fired show well, but we just it just

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Speaker 1: sort of popped out. Yeah right, so moats and boats

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Speaker 1: that's what we're calling this one. Yeah, this is the

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Speaker 1: first time we actually built the show around just the

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Speaker 1: cool sounding title. But as I thought about. I did

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Speaker 1: go looking for a dragon, because dragon would have invest

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Speaker 1: but we couldn't find that. There is an et F

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Speaker 1: called the China Power Shares Dragon something we're gonna have

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Speaker 1: to us listed China Shares anyway. I think it's called

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Speaker 1: the Golden Dragons. Next time, well the investigal guy is

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Speaker 1: coming on. Okay um. But we were about to blow

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Speaker 1: it off. But then I was like, you know, there's

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Speaker 1: moat and there's an e t F called C which

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Speaker 1: is the Global Shipping e TF. So there is moats

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Speaker 1: and boats and so as I thought about this, there's

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Speaker 1: been a few articles that have come out lately that

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Speaker 1: have just talked about how rough and brutal the e

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Speaker 1: t F environment is, which of course you know I've

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Speaker 1: talked about all the time. Barry riddholds at an article

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Speaker 1: saying life is nasty, brutish and short for a new ETF,

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Speaker 1: quoting Thomas Hobbs, I like to quote public Enemy I

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Speaker 1: called a terror dom and e t F dot Com

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Speaker 1: had this thing looking at how closures are now creeping

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Speaker 1: up to new launches. In other words, Darwinism is just

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Speaker 1: rearing its ugly head. It's hard to survive, but here's

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Speaker 1: two e t f s that aren't blockbusters. They're firmly

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Speaker 1: sort of in the middle class, and they're both over

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Speaker 1: five years old, which is the sort of age you

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Speaker 1: have to live to get to to to where all

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Speaker 1: the money is. The revenue in E t f s

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Speaker 1: goes to E t F or five years old. But

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Speaker 1: here's the thing. Of all the E t f that

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Speaker 1: have closed, there's been about nine and twenty closures, the

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Speaker 1: average age is three point four years. As such, most

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Speaker 1: of them cannot make that fifth birthday right, a lot

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Speaker 1: of the new ones. So if you can get past

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Speaker 1: that time, you don't need to be the biggest thing. Ever,

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Speaker 1: there's a firm middle class about eight hundred kickers. So

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Speaker 1: I looked at one that was sort of on the

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Speaker 1: upper band, which is MOTE, which is two billion dollars,

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Speaker 1: and one sort of on the lower band, which is

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Speaker 1: c which is fifty million. So I thought, just a

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Speaker 1: good episode just to drill into two E t f

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Speaker 1: s that you may or may have heard of. One's

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Speaker 1: more like a strategy, like an active strategy in a

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Speaker 1: way in rules baith index, and the other one is

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Speaker 1: sort of like a deep really not that known industry

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Speaker 1: the shipping industry. So just talk about the index design,

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Speaker 1: how it's going, and how these ETFs have managed to

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Speaker 1: sort of like carve out a living even though winter

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Speaker 1: is coming this weekend ruins moats boats and there's going

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Speaker 1: to be a surprise a dragon. Okay, we're gonna talk

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Speaker 1: about moat with Brandon Kshatsky. Got it, got it first try? Uh,

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Speaker 1: he's at Vanek. Tell us about mote. Well, moat is

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Speaker 1: a great investment concept. It's really leveraging morning Stars equity

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Speaker 1: research process. That's really what goes into the ETF and

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Speaker 1: what powers it's it's long term performance. It's been around

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Speaker 1: since two thousand twelve, so well over a five year

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Speaker 1: track record. Attracts an index created by morning Star two

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Speaker 1: package essentially morning Stars equity research. So there's sell side

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Speaker 1: research teams the best ideas essentially, and their research is

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Speaker 1: built around owned identifying great companies, companies that they believe

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Speaker 1: have a sustainable competitive advantage. That's key. That's kind of

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Speaker 1: step one in their research process, and that gets to

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Speaker 1: the name mote exactly. It's like which these are companies

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Speaker 1: that have a moat around them effective and that Buffett

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Speaker 1: put that term on the map right, isn't that his

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Speaker 1: term I look for wide moat companies? Is that where

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Speaker 1: it's exactly he You know, he's used the term in

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Speaker 1: in annual letters. He was Fortune magazine article back in

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Speaker 1: the nineties. I think might have been the first time

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Speaker 1: he coined that term. So similar strategy certainly its own

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Speaker 1: unique approach. So what came first the name or the

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Speaker 1: E t F. Well, the beauty of this particular et F,

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Speaker 1: which I mentioned has been around since two thousand twelve,

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Speaker 1: is that the idea didn't start then. Um So the research,

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Speaker 1: this economic mode research has been implemented by morning Star

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Speaker 1: since for over over well over a decade, almost two decades,

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Speaker 1: since two thousand and two. So they have embraced the

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Speaker 1: concept of identifying companies with sustainable competitive vantages since then.

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Speaker 1: And then they developed an index to capture some of

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Speaker 1: that equity research in in in a in a trackable

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Speaker 1: index fashion. That's been around live since two thousand seven.

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Speaker 1: So this is a long, a long standing And what

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Speaker 1: are some of them? You know, you've got companies across

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Speaker 1: the game at mostly household names, you know, companies that

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Speaker 1: get all of the headlines. You know, firms like Facebook

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Speaker 1: all the way down to you know, materials companies, firms

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Speaker 1: like Caterpillar, large household names. They skewed towards large cap

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Speaker 1: the excuse exkew towards established companies, those that have been

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Speaker 1: able to establish those economic motes and and build competitive

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Speaker 1: advantages around there, around like you're gonna get into the

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Speaker 1: Caterpillar business tomorrow with Chiganic equipment. So if you go on,

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Speaker 1: if you google this, uh, morning Star has a whole

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Speaker 1: like fact sheet and on their process. So I have

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Speaker 1: the definitions of moats here. I guess one is high

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Speaker 1: switching cost, like it costs a lot to switch to

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Speaker 1: a competitor. Cost advantage. I guess you're much cheaper like Walmart.

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Speaker 1: Intangible assets trademarks like Harley Davidson, and the network effect,

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Speaker 1: which is firm service to become more valuable as the

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Speaker 1: user base grows. Facebook effect right, which, by the way,

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Speaker 1: I looked at the performance of this, it's up a

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Speaker 1: hundred thirty seven percent since it launched, which is better

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Speaker 1: than the SMP, which is best contributing stock Facebook, and

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Speaker 1: you'd even hold that long kind of came in and out.

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Speaker 1: But Facebook was on fire for a while. So how

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Speaker 1: do you guys decide what's in, what's out, and how

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Speaker 1: how much turnover is there. So we talked about identifying

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Speaker 1: sustainable competitive advantage motes. That's essentially the foundation for this index.

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Speaker 1: A morning Star produces more economic mote research, but they

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Speaker 1: also produce valuation research. They are forecasting cash flows into

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Speaker 1: the future to arrive at a current intrinsic value of

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Speaker 1: a stock of a company, and the index at more

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Speaker 1: from morning Star UH in a very repeatable way, takes

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Speaker 1: all of those wide mote companies every quarter, looks at

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Speaker 1: them and then allocates to those wide mote companies that

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Speaker 1: are most attractively priced relative to their fair value. Because

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Speaker 1: in theory, that sounds like something that shouldn't turn over

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Speaker 1: that much, like if you've got a got a moten

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Speaker 1: that This is anti Buffett in my opinion. So while

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Speaker 1: it gets tied to Buffett, this is a pretty active strategy.

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Speaker 1: The turnover per years a hundred and okay, that's that's

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Speaker 1: a ton. The Vanguard Total Market Index fund turns over

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Speaker 1: two percent a year three percent, So this is probably

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Speaker 1: as close to active as an index based et F

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Speaker 1: could possibly get. Right, Yeah, I mean that that's what's

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Speaker 1: really fascinating about the strategy. It is an index strategy.

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Speaker 1: It's following very transparent rules to allocate among wide mode

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Speaker 1: companies on a quarterly basis. But it's leveraging morning Stars

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Speaker 1: equity research process and it's a hundred plus equity research

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Speaker 1: team that covers stocks globally and and without them, there

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Speaker 1: isn't a strategy. So you know, it's definitely leveraging the

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Speaker 1: expertise and the reputation of morning Star equity research. But

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Speaker 1: why is the why is that turnover so high? Well,

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Speaker 1: that's the that that speaks to the valuation side of

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Speaker 1: this investment strategy. So if you were to invest in

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Speaker 1: just wide moat companies as identified by their equity research team,

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Speaker 1: you know, there isn't always going to be out performance,

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Speaker 1: and in over long period of time, there isn't. If

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Speaker 1: you just market cap weighted their entire universe of US

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Speaker 1: wide mote companies a hundred and forty or so companies,

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Speaker 1: generally speaking, you know in periods there are and periods

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Speaker 1: there are not outperformance. But when you add that valuation

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Speaker 1: component to the allocation process, that's where we have seen

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Speaker 1: the significant outperformance. Eric, you mentioned the out performance since

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Speaker 1: the et F has been live, but if you look

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Speaker 1: back to when the index went live, the Morning Star

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Speaker 1: Wide Mote Focus Index, that was two thousand seven. So

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Speaker 1: this is something that's been around for over ten years.

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Speaker 1: It's not a back tested strategy. It's outperformed the SMP

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Speaker 1: five hundred by almost four percent annually, so since that time.

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Speaker 1: This isn't a factor et F per se. But it's

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Speaker 1: definitely smart data in my opinion. Um, it has a process.

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Speaker 1: It's almost like an active mutual fund. It just happens

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Speaker 1: to be. Everything is transparent, you can see the rules,

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Speaker 1: but the rebalances are where you're hoping to pick up

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Speaker 1: some uh, some return. Look, it used to have five

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Speaker 1: million for a while, so it was like in the

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Speaker 1: firmly in the middle class for a number of years.

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Speaker 1: Then it started out perform. Now it just hit two billions,

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Speaker 1: so that's sort of breaking up into the Yeah, so

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Speaker 1: uh and in a case like this, this is a

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Speaker 1: kind of et F where if you're if you're trying

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Speaker 1: to sell it, the out performance is key. Right. If

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Speaker 1: this thing underperforms, it's just gonna be harder to get looks.

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Speaker 1: It's kind of to a degree, live and die on performance, right, Yeah, yeah,

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Speaker 1: certainly any any investment strategy that has something behind it

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Speaker 1: that's not just purely rules based or factor driven. You know,

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Speaker 1: it's gonna have to prove itself. But you know what

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Speaker 1: we've seen is, you know, while it sat in you

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Speaker 1: know that what you referred to as the middle class

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Speaker 1: for a while, it actually got off to a really

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Speaker 1: great start. It hit a hundred million before before the

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Speaker 1: end of the first year that it was around. So

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Speaker 1: in terms of the E t F industry, that's a

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Speaker 1: that's a pretty good success, knowing knowing what what a

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Speaker 1: lot of issuers are going through these days, and and uh,

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Speaker 1: the trajectory was going upward for for quite some time.

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Speaker 1: I think it hit hit a bit of a plateau

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Speaker 1: asset wise whenever we saw generally speaking across the industry

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Speaker 1: some outflows from the US equity funds in fifteen sixteen.

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Speaker 1: And it's continued that upward trajectory from there. And this

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Speaker 1: is all despite I mean sixty five basis points is

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Speaker 1: the fee it's actually nine. It's like Walmart just knocking

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Speaker 1: knocking it lower. UM forty nine. You know, that's um

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Speaker 1: cheaper than an active mutual fund, a little more expensive

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Speaker 1: than a typical et F I think the asset weight

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Speaker 1: at average GTFC has twenty one basis points. But it

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Speaker 1: does show that you can have a fee over twenty

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Speaker 1: or forty basis points and and carve out a living.

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Speaker 1: I mean, two billion is pretty nice. This is um

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Speaker 1: a product a lot of issuers are probably jealous of.

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Speaker 1: If you I think you have to justify fees in

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Speaker 1: any environment, I mean, no one is immune to that.

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Speaker 1: That's that's clear. Um. You know, when when you think

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Speaker 1: about what you're getting through the mod E t F

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Speaker 1: getting access to those one plus equity analysts, all of

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Speaker 1: that research they're producing, that's a lot of intellectual property,

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Speaker 1: you know. And on top of that, if you look

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Speaker 1: at the rankings and the performing it's not only relative

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Speaker 1: to the broad market. Has it done well relative to

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Speaker 1: its peers. It's as of January thirty one, in the

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Speaker 1: morning Star Large Blend category, it is the number one

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Speaker 1: performing fund on a three year basis. That's includes mutual funds, active, passive, smart, beta,

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Speaker 1: whatever you whatever you might look at. So the morning

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Speaker 1: Star category, no, No, it's okay. So I got a

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Speaker 1: question though, because it sounds like these morning Star people

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Speaker 1: are working really hard. What are you doing? We are

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Speaker 1: are are making sure that as our mandate, we're tracking

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Speaker 1: the benchmark as it's as it's presented. And you know,

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Speaker 1: we work very closely with morning Star. Has been a

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Speaker 1: great relationship. I've been fortunate enough to be with van

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Speaker 1: X since when you know, when we were developing the CTF,

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Speaker 1: working with morning started bringing this to market. So we

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Speaker 1: work with the equity research scene. We have quarterly calls,

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Speaker 1: quarterly webinars with that team to inform investors, make sure

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Speaker 1: they know what they're getting, why they're getting it, um

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Speaker 1: and we make sure that that the e t F

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Speaker 1: is is running efficiently and meeting its subjective. One thing

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Speaker 1: about this and about the et F structure that I

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Speaker 1: think we talked about versus active is a hundred and

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Speaker 1: seventy turnover a year, and yet this thing has never

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Speaker 1: had a capital gains distribution. That is almost unthinkable because

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Speaker 1: in the mutual fund rapper, you'd be taxed because of

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Speaker 1: that turnover. Can you talk a little bit about the

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Speaker 1: structural advantage. It's very much speaks to the advantage of

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Speaker 1: ets in terms of a very actively traded portfolio in

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Speaker 1: the in the case of Mode, it's a US equity

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Speaker 1: primarily large cap strategy lends itself to potential tax efficiency.

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Speaker 1: Nothing's guaranteed in the space. You know, there is definitely

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Speaker 1: a potential that that an ETF can can spit off

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Speaker 1: a capital game. But fortunately, despite the turnover in the strategy,

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Speaker 1: the ability for an et F portfolio manager to work

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Speaker 1: within the capital markets and and and particularly the primary

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Speaker 1: markets to deliver in and out securities via via the

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Speaker 1: in kind um creation redemption mechanism has has benefited the CTF.

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Speaker 1: And you know, shareholders are certainly um benefiting from from

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Speaker 1: no capital games payments since it's since its inception. Now,

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Speaker 1: Mote just hit two billion, and just last year, you

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Speaker 1: guys did what a lot of ETFs do when they

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Speaker 1: hit one to three billion. Not a lot of them,

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Speaker 1: but some of them. You spawn sequels, just like the

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Speaker 1: movie business. You launched Goat and Moody, Right, these were

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Speaker 1: because mode successful. You're like, hey, let's let's we had

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Speaker 1: a good thing going on. Let's ride this a little bit.

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Speaker 1: Um h y G did it with s h y

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Speaker 1: G which is short term high yield and h y

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Speaker 1: G H which is hedged, and they build little families

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Speaker 1: around them. Can you talk about what Goat and mody

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Speaker 1: What what are those? Yeah, so, um, it goes a

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Speaker 1: little bit beyond you know, seeing a good thing going

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Speaker 1: and deciding to to add to a lineup. So we've

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Speaker 1: had a lot of success with Mode our US strategy,

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Speaker 1: and I would imagine it's fair fairly similar for other

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Speaker 1: other issuers in the marketplace. You get a lot of

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Speaker 1: feedback from clients. So we had a lot of early

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Speaker 1: adopters for our US Mode strategy, a lot of very

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Speaker 1: strong believers in the morning Stars methodology and their approach,

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Speaker 1: and they started asking about different exposures to that investment

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Speaker 1: strategy across different markets. The first iteration, the first sequel,

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Speaker 1: if you will, was MODI m O T I are

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Speaker 1: International and uh we had some success with with with

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Speaker 1: that particular offering. And again it's it's a combination of

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Speaker 1: a a a warranted investment strategy that can work in

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Speaker 1: different applications, but also client interest client deman. So what

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Speaker 1: are some companies in that one? So you see any

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Speaker 1: you know, companies across the gamut and internationally, anything from

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Speaker 1: the London Stock Exchange all the way through to Australian

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Speaker 1: companies that have have a pretty heavy heavy presence geographically

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Speaker 1: it's very diverse, you know. It's it's across Europe Asia. Um,

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Speaker 1: there's a lot of casino companies actually, and how do

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Speaker 1: those get weighted? These are all weighted actually on a

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Speaker 1: on an equal weighted basis, all of these industries that

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Speaker 1: we're talking about that underlying Moat, Moody and Goat as

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Speaker 1: your reference, they're all equally weighted, which means you're gonna

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Speaker 1: get a little extra zip, you know. Equal weight it

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Speaker 1: means little tilt towards the smaller size companies because it

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Speaker 1: is more volatile. So that return that we've talked about

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Speaker 1: does come with a little extra risk which should be noted.

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Speaker 1: Um and Got, by the way, was nominated for Ticker

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Speaker 1: of the Year. What is it? Um, that's what Global

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Speaker 1: International us together. You know, a couple people on Twitter

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Speaker 1: we were debating about this. We thought that tickers should

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Speaker 1: have been reserved for something the greatest of all time. Yeah,

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Speaker 1: like like I don't know what, or just off limits permanently.

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Speaker 1: But um, you're lucky, you got it's a great ticker.

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Speaker 1: It's nominated for Ticker the Year at the e t

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Speaker 1: F Dot Comic Words. Believe it or not, there is

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Speaker 1: such a thing and uh, I think I think it

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Speaker 1: has a good shot. I looked at the other ones.

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Speaker 1: Oh pause, p A w Z isn't there that's a

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Speaker 1: that's a strong one. Head to head there, come on, go.

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Speaker 1: So when you talk to institutional investors or retail investors,

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Speaker 1: how are people using it in their portfolio? We have

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Speaker 1: seen them using it in different ways. Um. There are

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Speaker 1: a lot of investors that are using it as a

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Speaker 1: replacement their core holding, of of their of their market

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Speaker 1: cap indexes UM, so a replacement of the SMP. You know,

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Speaker 1: the forrmants is compelling to a lot of these investors,

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Speaker 1: and and it's it's fairly diversified. You know, there's currently

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Speaker 1: I think there's forty nine components in the index in

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Speaker 1: the e t F, So it's it's not like you're

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Speaker 1: getting this complete concentrated bed on on on a particular

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Speaker 1: sector or particular industry by using the CTF. There's also

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Speaker 1: a lot of allocators that are are complementing that exposure.

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Speaker 1: So you know, there's a whole set of investors that

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Speaker 1: are not going to get away from the ultra keeap

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Speaker 1: market cap weighted SMP type exposure. So you you you

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Speaker 1: add a little bit of a compliment to that exposure,

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Speaker 1: you might allocate that that sleeve to to mote UM.

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Speaker 1: But in the third way is in the actively managed space,

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Speaker 1: and we talked a little bit about that. It is

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Speaker 1: more and more as we see with investors with financial

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Speaker 1: advisors UM being used to replace certain actively managed slices

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Speaker 1: that just over the last ten plus years unfortunately just

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Speaker 1: just haven't haven't been able to meet benchmark returns within

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Speaker 1: that strategy. I have a very important question, on a

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Speaker 1: scale of zero to ten and being high, how big

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Speaker 1: of a fan of Game of Thrones are you? I'm

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Speaker 1: a I'm a pretty big fan that I'll say. I'll

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Speaker 1: say between eight and nine. I'm definitely just I'm just

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Speaker 1: a show guy. Um, what do you think of Eric

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Speaker 1: who literally don't knows nothing about it? Well, well, I

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Speaker 1: know of the show, I'm not I don't live in

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Speaker 1: a like is your Amish country or something. I just

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Speaker 1: I missed. I miss these things. I missed breaking bad,

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Speaker 1: I missed Game of Thrones. And then once it's like

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Speaker 1: four years in, I don't have time to go and

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Speaker 1: I know I'm gonna get addicted. Do you think he

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Speaker 1: can make a go at it and try and watch

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Speaker 1: them all with a month to go, and that's pushing it.

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Speaker 1: That is that is pushing. I'm gonna get kicked out

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Speaker 1: of the house. I'm out of there, man, I can

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Speaker 1: barely like squeeze in like a fifteen minute basketball game. Okay,

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Speaker 1: Nick Khalibus. Uh, you're with Investco and you you've got

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Speaker 1: the the C S E A E t F there,

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Speaker 1: which is are metaphor for for boats in Game of Thrones. Yeah,

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Speaker 1: and let me set this up a little bit. See

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Speaker 1: is the global Shipping E t F. And if you know,

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Speaker 1: MOTE was the two hundred and sixty six biggest we

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Speaker 1: saw it was upper middle class. C is the undreds

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Speaker 1: around biggest ETF. So there's twenty two hundreds, so it's

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Speaker 1: kind of right in the middle, and it's it's a

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Speaker 1: survivor um. It's inception date is two thousand ten, but

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Speaker 1: it actually existed before that. It's a long, quirky story

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Speaker 1: about them shutting it down temporarily to get a new advisor.

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Speaker 1: But it's actually a number of years older than that.

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Speaker 1: So this thing has just been around for a long time.

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Speaker 1: It's got about fifty million, although it had more assets

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Speaker 1: back in the day. It's had some performance struggles, but

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Speaker 1: it's just a unique sort of sub industry. Uh arguably

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Speaker 1: maybe a theme E t F that has just sort

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Speaker 1: of been around. So, Nick, what's the vision? I think

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Speaker 1: when you're looking at SE uh, it's it's providing access

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Speaker 1: to a very specific, you know, sector of the market

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Speaker 1: in terms of oil and gas, transport and kind of

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Speaker 1: maritime um. And so people who want that exposure can

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Speaker 1: get can get it from C. I think the other

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Speaker 1: thing that's very interesting about is if you look at

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Speaker 1: kind of how it performs and where it operates, it

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Speaker 1: seems to have very high correlation to commodity prices. It

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Speaker 1: likes rising interest rates, it likes a week dollar, and

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Speaker 1: so from that avenue UM, I think one could also

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Speaker 1: think about it as a little bit of an inflation

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Speaker 1: heade if you are thinking about it more from the

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Speaker 1: macro realm as opposed to maybe the specifics of shipping,

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Speaker 1: because no matter what, this stuff's gonna get done, right,

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Speaker 1: things are going to get shipped. You got Yeah, we're

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Speaker 1: we're we're in a we're in a global trading economy,

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Speaker 1: and that's for sure, stuff's got to get done, got

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Speaker 1: to move. How has the trade war actually affected that?

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Speaker 1: You know it's it's you see it from maybe some

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Speaker 1: of the cautions from a couple of the of the

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Speaker 1: companies in here. I mean, I was interesting. I was

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Speaker 1: reading a little bit about the largest holding, which is

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Speaker 1: a P. Moeller, and they mentioned trade as as something

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Speaker 1: that was a headwind to their operation. And and so

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Speaker 1: I think it's it's something that has created a certainty

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Speaker 1: for the for the sector, and so I would have

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Speaker 1: to term it as a negative. And if when this

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Speaker 1: all gets resolved some day, I think it will will

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Speaker 1: help create a little bit of a of a tail

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Speaker 1: one to this sector. So one interesting thing that I

401
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Speaker 1: thought about the ETF is that you know, it's we're

402
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Speaker 1: not talking about passenger transport at all, right, it's just

403
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Speaker 1: sort of materials and product, Right, Why make that distinction?

404
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Speaker 1: Now that that's exactly right? A matter of fact, I

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Speaker 1: think if you look at the rule book from the

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Speaker 1: index Provider S ANDP, it's specifically it indicates this is

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Speaker 1: not transporting people. It's it's transporting kind of goods and

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Speaker 1: goods in commodity. And why why make that distinction and

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Speaker 1: what why is that a benefit? Well, I think the

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Speaker 1: distinction is really to make it more kind of you know,

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Speaker 1: a focus on trade industry and not let it be

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Speaker 1: kind of um, you know, kind of consumer discretionary and

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Speaker 1: and and part of kind of the the the uh,

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Speaker 1: you know, the what the world I want to say

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Speaker 1: is kind of leisure and transportation type of of of

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Speaker 1: sectors makes it more kind of unique and focused. And

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Speaker 1: and I'll echo that this is definitely unique. It's um,

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Speaker 1: if you look at the countries, Um, you've got the US,

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Speaker 1: but then Denmark is number two. You don't see Denmark

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Speaker 1: in that high in many e t f s, and

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Speaker 1: then Japan, UM, South Korea, Hong Kong. But really here's

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Speaker 1: the kicker, only twenty six stocks, So this is that's

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Speaker 1: about as low as you'll see an E t F

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Speaker 1: that's highly highly concentrated, which does I would I would

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Speaker 1: guess this is probably more for a trader, not necessarily

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Speaker 1: like a buy and hold investor, somebody like you said,

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Speaker 1: trying to get some real targeted exposure. Yeah. I agree,

428
00:22:07,359 --> 00:22:10,960
Speaker 1: it's it's more uh for somebody who's who, who's you know,

429
00:22:11,119 --> 00:22:13,720
Speaker 1: looking for exposure to the sector. And then if you

430
00:22:13,920 --> 00:22:15,800
Speaker 1: if you if you want to think about it as

431
00:22:15,880 --> 00:22:19,159
Speaker 1: like a substitute for for maybe an inflation hedge or

432
00:22:19,280 --> 00:22:21,600
Speaker 1: something that's commodity of sensitive. You could you could you

433
00:22:21,640 --> 00:22:24,159
Speaker 1: could turn it on um, you could you could position

434
00:22:24,200 --> 00:22:27,240
Speaker 1: it that way in a portfolio. Two. You know what

435
00:22:27,359 --> 00:22:29,560
Speaker 1: E t F came out and failed, but c survived

436
00:22:29,680 --> 00:22:33,560
Speaker 1: was the global fishing E t F had similar country breakdown. UM,

437
00:22:33,840 --> 00:22:38,200
Speaker 1: but that didn't make it. But again see again sometimes

438
00:22:38,200 --> 00:22:41,000
Speaker 1: he's targeted ETF. It's it's hard. Um. Can you talk

439
00:22:41,000 --> 00:22:43,159
Speaker 1: a little bit about just an e t F like

440
00:22:43,280 --> 00:22:46,600
Speaker 1: this just surviving over the years, um and just you know,

441
00:22:46,880 --> 00:22:49,840
Speaker 1: whether it's assets and refluctuate above and below a hundred million,

442
00:22:49,920 --> 00:22:52,960
Speaker 1: it's just hanging around. Yeah, what's the secret to its success?

443
00:22:53,960 --> 00:22:57,080
Speaker 1: I think it's the it's the uniqueness in the exposure

444
00:22:57,240 --> 00:23:01,080
Speaker 1: and the fact that um, you know you have there's

445
00:23:01,200 --> 00:23:02,959
Speaker 1: I think there's a lot of ets that have kind

446
00:23:03,000 --> 00:23:05,359
Speaker 1: of unique exposures, and I think this is one of

447
00:23:05,440 --> 00:23:07,560
Speaker 1: them where you know, you may not want to make

448
00:23:07,680 --> 00:23:10,760
Speaker 1: this kind of like a bet on on one name

449
00:23:10,920 --> 00:23:12,720
Speaker 1: or two names, and this allows you to kind of

450
00:23:13,240 --> 00:23:16,760
Speaker 1: get exposure to the basket. And you know, I think

451
00:23:17,000 --> 00:23:20,680
Speaker 1: that's really how it how it survived because it's giving

452
00:23:20,680 --> 00:23:23,200
Speaker 1: you access and it's doing it in a unique way,

453
00:23:23,840 --> 00:23:28,000
Speaker 1: and it's it's kind of I think something that people can,

454
00:23:28,480 --> 00:23:31,680
Speaker 1: you know, use to to capitalize on an idea that

455
00:23:32,000 --> 00:23:34,840
Speaker 1: they may feel strongly about. On a scale of zero

456
00:23:34,920 --> 00:23:37,480
Speaker 1: to ten, how it tend being high? How big of

457
00:23:37,520 --> 00:23:39,440
Speaker 1: a Game of Thrones fan are you? I have to

458
00:23:39,480 --> 00:23:42,639
Speaker 1: admit that I'm pretty pretty low. Okay, so you're like

459
00:23:42,840 --> 00:23:45,040
Speaker 1: focused but plugged into that. Do you feel like it's

460
00:23:45,080 --> 00:23:46,680
Speaker 1: like too late for you? And if you go back

461
00:23:46,720 --> 00:23:49,000
Speaker 1: you just want the time? That's how I feel. Yeah,

462
00:23:49,880 --> 00:23:51,600
Speaker 1: it's not too late, man, I have to get on

463
00:23:51,680 --> 00:23:54,040
Speaker 1: thenation and just do like a binge blush and I'm

464
00:23:54,040 --> 00:23:56,920
Speaker 1: not sure that's just easible right now. I mean, like bang,

465
00:23:57,000 --> 00:23:58,800
Speaker 1: this Game of Throne is gone a little bit longer.

466
00:23:59,240 --> 00:24:01,200
Speaker 1: Something else in USC has that I think is really

467
00:24:01,240 --> 00:24:04,159
Speaker 1: interesting is you guys have effectively a dragon et F.

468
00:24:04,280 --> 00:24:08,960
Speaker 1: What's that? Yeah, so that's the uh the Chinese Golden Dragon,

469
00:24:10,760 --> 00:24:13,320
Speaker 1: and uh, the idea for this show just keeps getting

470
00:24:13,359 --> 00:24:15,600
Speaker 1: better and better. You have a drag. What's the ticker

471
00:24:15,680 --> 00:24:19,240
Speaker 1: for it. It's p as in Paul d J. So

472
00:24:19,560 --> 00:24:24,159
Speaker 1: it's it's definitely a great way to access China. And

473
00:24:24,400 --> 00:24:27,680
Speaker 1: it's been around since four and uh, you know, it's

474
00:24:27,680 --> 00:24:31,119
Speaker 1: actually having pretty good performance this year. So it's something

475
00:24:31,240 --> 00:24:34,040
Speaker 1: that is um you know, you might want to check out.

476
00:24:34,840 --> 00:24:36,960
Speaker 1: That's because we're coming upon what's going to be a

477
00:24:37,000 --> 00:24:40,359
Speaker 1: big dragon showdown in Game of Thrones, no doubt. But

478
00:24:40,520 --> 00:24:43,080
Speaker 1: but what what's the premise of the e TF. So

479
00:24:43,520 --> 00:24:45,160
Speaker 1: the idea of the ETF I mean, if you roll

480
00:24:45,240 --> 00:24:48,080
Speaker 1: back in time is China was a little bit opaque

481
00:24:48,200 --> 00:24:50,000
Speaker 1: and it was you know, it's hard to invest in

482
00:24:50,119 --> 00:24:52,800
Speaker 1: a shares and so this was a way to essentially

483
00:24:52,880 --> 00:24:56,280
Speaker 1: invest in China, but do it through companies that were

484
00:24:56,359 --> 00:24:59,879
Speaker 1: listed on US exchanges and was spelt from kind of

485
00:25:00,080 --> 00:25:03,800
Speaker 1: corporate governance standpoint that would provide a bit of extra

486
00:25:03,880 --> 00:25:07,840
Speaker 1: protection to the investor and they could feel more comfortable

487
00:25:07,920 --> 00:25:13,120
Speaker 1: with the with the trans transparency of the US based listing. Yeah,

488
00:25:13,560 --> 00:25:15,240
Speaker 1: I remember this one back in the day. F x

489
00:25:15,320 --> 00:25:17,440
Speaker 1: I came out and that was only China shares listed

490
00:25:17,480 --> 00:25:19,719
Speaker 1: in Hong Kong. But if you bought that, you were

491
00:25:19,760 --> 00:25:23,040
Speaker 1: missing out on the US listed China shares, which ali

492
00:25:23,080 --> 00:25:25,680
Speaker 1: Baba is one. Although the Ali Baba came out way

493
00:25:25,680 --> 00:25:28,560
Speaker 1: after p g J, but it was the idea. What

494
00:25:28,800 --> 00:25:31,840
Speaker 1: I recall researching my book that I was told. The

495
00:25:31,920 --> 00:25:33,800
Speaker 1: idea was if you own F X I and P

496
00:25:33,960 --> 00:25:35,960
Speaker 1: G J, you were kind of good on your whole

497
00:25:36,040 --> 00:25:39,480
Speaker 1: China because China is very hard. Yeah, but um, yeah,

498
00:25:39,560 --> 00:25:43,320
Speaker 1: it's interesting. Um. This CTF also is you know, kind

499
00:25:43,359 --> 00:25:45,040
Speaker 1: of in the in the same vein as the other ones.

500
00:25:45,080 --> 00:25:48,240
Speaker 1: It's a survivor. It's been around since two thousand four, Um,

501
00:25:49,040 --> 00:25:51,159
Speaker 1: two millions dragons. Get it done, man, they know how

502
00:25:51,200 --> 00:25:53,200
Speaker 1: to do it. Yeah, to what we we've just looked

503
00:25:53,240 --> 00:25:57,080
Speaker 1: at three like this game of throwne themes definitely seems

504
00:25:57,119 --> 00:25:58,879
Speaker 1: to capture a lot of the Yeah, a lot of

505
00:25:58,920 --> 00:26:01,360
Speaker 1: the surviving sort of firmly in the middle class type

506
00:26:01,359 --> 00:26:05,439
Speaker 1: ETFs that are used for very specific purposes. All Right,

507
00:26:05,600 --> 00:26:07,680
Speaker 1: Nick Calligs, thanks for joining us on Trillians. Hey, it

508
00:26:07,760 --> 00:26:10,040
Speaker 1: was great talking to you. Thanks for having me. You know, Kalibus,

509
00:26:10,080 --> 00:26:12,040
Speaker 1: it sounds a little bit like Callisi, but you know,

510
00:26:12,240 --> 00:26:14,320
Speaker 1: just I'll leave it out there. It's just another reference.

511
00:26:19,320 --> 00:26:21,919
Speaker 1: Thanks for listening to Trillians. Until next time. You can

512
00:26:21,960 --> 00:26:26,240
Speaker 1: find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify,

513
00:26:26,640 --> 00:26:28,680
Speaker 1: and wherever else you like to listen. We'd love to

514
00:26:28,760 --> 00:26:31,840
Speaker 1: hear from you. We're on Twitter. I'm at Droll Webber Show.

515
00:26:32,240 --> 00:26:36,760
Speaker 1: He's at Eric Caltuna. You can find Investco at Investco US.

516
00:26:37,200 --> 00:26:41,840
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517
00:26:41,880 --> 00:26:45,440
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518
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