WEBVTT - Moats and Boats (and Maybe a Dragon!) 0:00:06.000 --> 0:00:08.399 Welcome to Trillions. I'm Joel Webber and I'm Eric bel 0:00:08.480 --> 0:00:12.760 Tunas Eric, I have this show that I really like watching. 0:00:12.880 --> 0:00:14.720 And before the show I watched, I read the books 0:00:14.840 --> 0:00:17.400 Game of Thrones into it that never heard of it. 0:00:19.760 --> 0:00:21.959 I've heard of it, but I've never seen it, believe 0:00:22.000 --> 0:00:24.880 it or not. I know generally it's about I missed 0:00:24.880 --> 0:00:28.120 it out for you. I know, I heard it's amazing. 0:00:28.200 --> 0:00:31.360 I justin and the time season is going to start 0:00:31.480 --> 0:00:34.720 next month. I'm so excited for And I saw the 0:00:34.760 --> 0:00:38.000 commercial in the super Ball where ahead of Dragon. So basically, 0:00:38.040 --> 0:00:41.639 you have one month to binge Game of Thrones? Can 0:00:41.640 --> 0:00:43.400 you get through all of them? See? This is the problem, 0:00:43.400 --> 0:00:45.959 this is what what what the problem with breaking bad Wiz? 0:00:46.320 --> 0:00:49.800 For me, I I get addictive, addictive personality, so I 0:00:50.080 --> 0:00:52.120 don't have the time. I got two small children. I 0:00:52.200 --> 0:00:58.000 can to go on a bingeing thing. Yeah. So with 0:00:58.080 --> 0:00:59.360 that in mind, we want to have a Game of 0:00:59.360 --> 0:01:03.080 Thrones and fired show well, but we just it just 0:01:03.120 --> 0:01:06.199 sort of popped out. Yeah right, so moats and boats 0:01:06.280 --> 0:01:07.959 that's what we're calling this one. Yeah, this is the 0:01:08.000 --> 0:01:10.000 first time we actually built the show around just the 0:01:10.000 --> 0:01:13.160 cool sounding title. But as I thought about. I did 0:01:13.160 --> 0:01:15.759 go looking for a dragon, because dragon would have invest 0:01:15.840 --> 0:01:17.880 but we couldn't find that. There is an et F 0:01:18.000 --> 0:01:22.240 called the China Power Shares Dragon something we're gonna have 0:01:22.319 --> 0:01:26.160 to us listed China Shares anyway. I think it's called 0:01:26.160 --> 0:01:31.400 the Golden Dragons. Next time, well the investigal guy is 0:01:31.440 --> 0:01:35.080 coming on. Okay um. But we were about to blow 0:01:35.120 --> 0:01:36.959 it off. But then I was like, you know, there's 0:01:37.040 --> 0:01:39.760 moat and there's an e t F called C which 0:01:39.800 --> 0:01:41.800 is the Global Shipping e TF. So there is moats 0:01:41.800 --> 0:01:43.880 and boats and so as I thought about this, there's 0:01:43.880 --> 0:01:45.520 been a few articles that have come out lately that 0:01:45.600 --> 0:01:48.800 have just talked about how rough and brutal the e 0:01:48.920 --> 0:01:50.840 t F environment is, which of course you know I've 0:01:50.840 --> 0:01:53.360 talked about all the time. Barry riddholds at an article 0:01:53.440 --> 0:01:56.560 saying life is nasty, brutish and short for a new ETF, 0:01:56.680 --> 0:01:59.160 quoting Thomas Hobbs, I like to quote public Enemy I 0:01:59.200 --> 0:02:01.240 called a terror dom and e t F dot Com 0:02:01.280 --> 0:02:03.920 had this thing looking at how closures are now creeping 0:02:04.000 --> 0:02:06.400 up to new launches. In other words, Darwinism is just 0:02:06.440 --> 0:02:09.320 rearing its ugly head. It's hard to survive, but here's 0:02:09.360 --> 0:02:13.200 two e t f s that aren't blockbusters. They're firmly 0:02:13.320 --> 0:02:15.840 sort of in the middle class, and they're both over 0:02:15.919 --> 0:02:17.880 five years old, which is the sort of age you 0:02:17.919 --> 0:02:20.680 have to live to get to to to where all 0:02:20.720 --> 0:02:23.240 the money is. The revenue in E t f s 0:02:23.440 --> 0:02:25.280 goes to E t F or five years old. But 0:02:25.400 --> 0:02:27.280 here's the thing. Of all the E t f that 0:02:27.280 --> 0:02:30.240 have closed, there's been about nine and twenty closures, the 0:02:30.280 --> 0:02:34.000 average age is three point four years. As such, most 0:02:34.080 --> 0:02:36.520 of them cannot make that fifth birthday right, a lot 0:02:36.520 --> 0:02:38.680 of the new ones. So if you can get past 0:02:38.720 --> 0:02:41.600 that time, you don't need to be the biggest thing. Ever, 0:02:42.120 --> 0:02:44.680 there's a firm middle class about eight hundred kickers. So 0:02:44.760 --> 0:02:46.000 I looked at one that was sort of on the 0:02:46.040 --> 0:02:48.639 upper band, which is MOTE, which is two billion dollars, 0:02:48.639 --> 0:02:50.320 and one sort of on the lower band, which is 0:02:50.360 --> 0:02:52.520 c which is fifty million. So I thought, just a 0:02:52.560 --> 0:02:55.040 good episode just to drill into two E t f 0:02:55.120 --> 0:02:57.000 s that you may or may have heard of. One's 0:02:57.000 --> 0:02:59.360 more like a strategy, like an active strategy in a 0:02:59.360 --> 0:03:02.560 way in rules baith index, and the other one is 0:03:02.600 --> 0:03:05.760 sort of like a deep really not that known industry 0:03:05.800 --> 0:03:08.440 the shipping industry. So just talk about the index design, 0:03:08.520 --> 0:03:10.560 how it's going, and how these ETFs have managed to 0:03:10.600 --> 0:03:13.959 sort of like carve out a living even though winter 0:03:14.080 --> 0:03:19.720 is coming this weekend ruins moats boats and there's going 0:03:19.760 --> 0:03:24.160 to be a surprise a dragon. Okay, we're gonna talk 0:03:24.160 --> 0:03:28.760 about moat with Brandon Kshatsky. Got it, got it first try? Uh, 0:03:29.040 --> 0:03:33.360 he's at Vanek. Tell us about mote. Well, moat is 0:03:33.520 --> 0:03:37.480 a great investment concept. It's really leveraging morning Stars equity 0:03:37.520 --> 0:03:40.480 research process. That's really what goes into the ETF and 0:03:40.520 --> 0:03:43.560 what powers it's it's long term performance. It's been around 0:03:43.560 --> 0:03:46.440 since two thousand twelve, so well over a five year 0:03:46.440 --> 0:03:49.920 track record. Attracts an index created by morning Star two 0:03:50.040 --> 0:03:53.920 package essentially morning Stars equity research. So there's sell side 0:03:54.040 --> 0:03:58.600 research teams the best ideas essentially, and their research is 0:03:59.120 --> 0:04:03.680 built around owned identifying great companies, companies that they believe 0:04:03.760 --> 0:04:07.360 have a sustainable competitive advantage. That's key. That's kind of 0:04:07.360 --> 0:04:09.680 step one in their research process, and that gets to 0:04:09.720 --> 0:04:12.720 the name mote exactly. It's like which these are companies 0:04:12.760 --> 0:04:16.280 that have a moat around them effective and that Buffett 0:04:16.279 --> 0:04:18.320 put that term on the map right, isn't that his 0:04:18.480 --> 0:04:20.600 term I look for wide moat companies? Is that where 0:04:20.600 --> 0:04:23.400 it's exactly he You know, he's used the term in 0:04:23.400 --> 0:04:26.800 in annual letters. He was Fortune magazine article back in 0:04:26.800 --> 0:04:28.320 the nineties. I think might have been the first time 0:04:28.320 --> 0:04:31.560 he coined that term. So similar strategy certainly its own 0:04:31.680 --> 0:04:35.960 unique approach. So what came first the name or the 0:04:36.040 --> 0:04:39.800 E t F. Well, the beauty of this particular et F, 0:04:39.839 --> 0:04:41.840 which I mentioned has been around since two thousand twelve, 0:04:42.480 --> 0:04:46.120 is that the idea didn't start then. Um So the research, 0:04:46.360 --> 0:04:50.600 this economic mode research has been implemented by morning Star 0:04:50.640 --> 0:04:53.039 since for over over well over a decade, almost two decades, 0:04:53.080 --> 0:04:56.000 since two thousand and two. So they have embraced the 0:04:56.080 --> 0:05:00.960 concept of identifying companies with sustainable competitive vantages since then. 0:05:01.520 --> 0:05:04.839 And then they developed an index to capture some of 0:05:04.880 --> 0:05:08.200 that equity research in in in a in a trackable 0:05:08.240 --> 0:05:11.320 index fashion. That's been around live since two thousand seven. 0:05:11.360 --> 0:05:13.919 So this is a long, a long standing And what 0:05:14.000 --> 0:05:16.480 are some of them? You know, you've got companies across 0:05:16.520 --> 0:05:18.960 the game at mostly household names, you know, companies that 0:05:19.400 --> 0:05:22.480 get all of the headlines. You know, firms like Facebook 0:05:22.680 --> 0:05:25.840 all the way down to you know, materials companies, firms 0:05:25.880 --> 0:05:29.320 like Caterpillar, large household names. They skewed towards large cap 0:05:29.839 --> 0:05:33.160 the excuse exkew towards established companies, those that have been 0:05:33.200 --> 0:05:36.560 able to establish those economic motes and and build competitive 0:05:36.560 --> 0:05:39.000 advantages around there, around like you're gonna get into the 0:05:39.080 --> 0:05:42.600 Caterpillar business tomorrow with Chiganic equipment. So if you go on, 0:05:42.640 --> 0:05:45.320 if you google this, uh, morning Star has a whole 0:05:45.360 --> 0:05:48.440 like fact sheet and on their process. So I have 0:05:48.600 --> 0:05:51.800 the definitions of moats here. I guess one is high 0:05:51.800 --> 0:05:54.360 switching cost, like it costs a lot to switch to 0:05:54.400 --> 0:05:58.359 a competitor. Cost advantage. I guess you're much cheaper like Walmart. 0:05:58.800 --> 0:06:03.520 Intangible assets trademarks like Harley Davidson, and the network effect, 0:06:04.160 --> 0:06:06.280 which is firm service to become more valuable as the 0:06:06.360 --> 0:06:09.720 user base grows. Facebook effect right, which, by the way, 0:06:09.760 --> 0:06:11.880 I looked at the performance of this, it's up a 0:06:11.960 --> 0:06:15.479 hundred thirty seven percent since it launched, which is better 0:06:15.520 --> 0:06:20.080 than the SMP, which is best contributing stock Facebook, and 0:06:20.120 --> 0:06:22.279 you'd even hold that long kind of came in and out. 0:06:22.720 --> 0:06:24.840 But Facebook was on fire for a while. So how 0:06:24.880 --> 0:06:27.680 do you guys decide what's in, what's out, and how 0:06:27.720 --> 0:06:31.360 how much turnover is there. So we talked about identifying 0:06:31.800 --> 0:06:36.200 sustainable competitive advantage motes. That's essentially the foundation for this index. 0:06:36.240 --> 0:06:38.960 A morning Star produces more economic mote research, but they 0:06:39.000 --> 0:06:43.200 also produce valuation research. They are forecasting cash flows into 0:06:43.240 --> 0:06:45.880 the future to arrive at a current intrinsic value of 0:06:45.920 --> 0:06:49.280 a stock of a company, and the index at more 0:06:49.400 --> 0:06:53.320 from morning Star UH in a very repeatable way, takes 0:06:53.360 --> 0:06:55.640 all of those wide mote companies every quarter, looks at 0:06:55.680 --> 0:06:59.680 them and then allocates to those wide mote companies that 0:06:59.720 --> 0:07:02.760 are most attractively priced relative to their fair value. Because 0:07:02.760 --> 0:07:04.840 in theory, that sounds like something that shouldn't turn over 0:07:04.880 --> 0:07:07.119 that much, like if you've got a got a moten 0:07:07.520 --> 0:07:09.840 that This is anti Buffett in my opinion. So while 0:07:09.840 --> 0:07:12.720 it gets tied to Buffett, this is a pretty active strategy. 0:07:12.800 --> 0:07:17.320 The turnover per years a hundred and okay, that's that's 0:07:17.320 --> 0:07:19.960 a ton. The Vanguard Total Market Index fund turns over 0:07:20.000 --> 0:07:22.440 two percent a year three percent, So this is probably 0:07:22.480 --> 0:07:25.560 as close to active as an index based et F 0:07:25.640 --> 0:07:28.160 could possibly get. Right, Yeah, I mean that that's what's 0:07:28.640 --> 0:07:31.080 really fascinating about the strategy. It is an index strategy. 0:07:31.080 --> 0:07:34.560 It's following very transparent rules to allocate among wide mode 0:07:34.600 --> 0:07:37.320 companies on a quarterly basis. But it's leveraging morning Stars 0:07:37.640 --> 0:07:41.240 equity research process and it's a hundred plus equity research 0:07:41.360 --> 0:07:45.240 team that covers stocks globally and and without them, there 0:07:45.280 --> 0:07:48.520 isn't a strategy. So you know, it's definitely leveraging the 0:07:49.600 --> 0:07:52.120 expertise and the reputation of morning Star equity research. But 0:07:52.160 --> 0:07:54.520 why is the why is that turnover so high? Well, 0:07:54.560 --> 0:07:57.200 that's the that that speaks to the valuation side of 0:07:57.200 --> 0:07:59.400 this investment strategy. So if you were to invest in 0:07:59.560 --> 0:08:03.480 just wide moat companies as identified by their equity research team, 0:08:03.520 --> 0:08:05.920 you know, there isn't always going to be out performance, 0:08:05.920 --> 0:08:07.840 and in over long period of time, there isn't. If 0:08:07.840 --> 0:08:10.440 you just market cap weighted their entire universe of US 0:08:10.720 --> 0:08:13.120 wide mote companies a hundred and forty or so companies, 0:08:13.160 --> 0:08:16.280 generally speaking, you know in periods there are and periods 0:08:16.280 --> 0:08:19.040 there are not outperformance. But when you add that valuation 0:08:19.480 --> 0:08:23.680 component to the allocation process, that's where we have seen 0:08:23.760 --> 0:08:26.520 the significant outperformance. Eric, you mentioned the out performance since 0:08:26.520 --> 0:08:28.240 the et F has been live, but if you look 0:08:28.280 --> 0:08:31.000 back to when the index went live, the Morning Star 0:08:31.080 --> 0:08:33.960 Wide Mote Focus Index, that was two thousand seven. So 0:08:34.000 --> 0:08:36.120 this is something that's been around for over ten years. 0:08:36.160 --> 0:08:39.200 It's not a back tested strategy. It's outperformed the SMP 0:08:39.400 --> 0:08:43.800 five hundred by almost four percent annually, so since that time. 0:08:44.160 --> 0:08:46.280 This isn't a factor et F per se. But it's 0:08:46.280 --> 0:08:49.360 definitely smart data in my opinion. Um, it has a process. 0:08:49.400 --> 0:08:52.800 It's almost like an active mutual fund. It just happens 0:08:52.840 --> 0:08:55.160 to be. Everything is transparent, you can see the rules, 0:08:55.640 --> 0:08:57.800 but the rebalances are where you're hoping to pick up 0:08:57.840 --> 0:09:00.840 some uh, some return. Look, it used to have five 0:09:01.200 --> 0:09:02.600 million for a while, so it was like in the 0:09:03.080 --> 0:09:05.000 firmly in the middle class for a number of years. 0:09:05.040 --> 0:09:08.120 Then it started out perform. Now it just hit two billions, 0:09:08.120 --> 0:09:12.079 so that's sort of breaking up into the Yeah, so 0:09:12.280 --> 0:09:14.400 uh and in a case like this, this is a 0:09:14.440 --> 0:09:16.120 kind of et F where if you're if you're trying 0:09:16.160 --> 0:09:18.520 to sell it, the out performance is key. Right. If 0:09:18.520 --> 0:09:21.280 this thing underperforms, it's just gonna be harder to get looks. 0:09:21.320 --> 0:09:26.079 It's kind of to a degree, live and die on performance, right, Yeah, yeah, 0:09:26.200 --> 0:09:29.520 certainly any any investment strategy that has something behind it 0:09:29.760 --> 0:09:33.080 that's not just purely rules based or factor driven. You know, 0:09:33.120 --> 0:09:35.320 it's gonna have to prove itself. But you know what 0:09:35.360 --> 0:09:38.440 we've seen is, you know, while it sat in you 0:09:38.480 --> 0:09:40.560 know that what you referred to as the middle class 0:09:40.600 --> 0:09:42.439 for a while, it actually got off to a really 0:09:42.520 --> 0:09:44.880 great start. It hit a hundred million before before the 0:09:44.960 --> 0:09:46.959 end of the first year that it was around. So 0:09:47.000 --> 0:09:49.319 in terms of the E t F industry, that's a 0:09:49.559 --> 0:09:51.680 that's a pretty good success, knowing knowing what what a 0:09:51.679 --> 0:09:54.600 lot of issuers are going through these days, and and uh, 0:09:54.679 --> 0:09:57.320 the trajectory was going upward for for quite some time. 0:09:57.360 --> 0:09:58.880 I think it hit hit a bit of a plateau 0:09:58.920 --> 0:10:02.720 asset wise whenever we saw generally speaking across the industry 0:10:02.760 --> 0:10:05.560 some outflows from the US equity funds in fifteen sixteen. 0:10:05.640 --> 0:10:08.800 And it's continued that upward trajectory from there. And this 0:10:08.880 --> 0:10:11.640 is all despite I mean sixty five basis points is 0:10:11.679 --> 0:10:17.559 the fee it's actually nine. It's like Walmart just knocking 0:10:18.080 --> 0:10:20.959 knocking it lower. UM forty nine. You know, that's um 0:10:21.400 --> 0:10:23.880 cheaper than an active mutual fund, a little more expensive 0:10:23.920 --> 0:10:25.600 than a typical et F I think the asset weight 0:10:25.640 --> 0:10:28.080 at average GTFC has twenty one basis points. But it 0:10:28.120 --> 0:10:31.160 does show that you can have a fee over twenty 0:10:31.240 --> 0:10:34.280 or forty basis points and and carve out a living. 0:10:34.320 --> 0:10:37.199 I mean, two billion is pretty nice. This is um 0:10:37.400 --> 0:10:39.560 a product a lot of issuers are probably jealous of. 0:10:41.040 --> 0:10:43.240 If you I think you have to justify fees in 0:10:43.280 --> 0:10:46.120 any environment, I mean, no one is immune to that. 0:10:46.120 --> 0:10:49.079 That's that's clear. Um. You know, when when you think 0:10:49.160 --> 0:10:51.240 about what you're getting through the mod E t F 0:10:51.280 --> 0:10:54.520 getting access to those one plus equity analysts, all of 0:10:54.520 --> 0:10:56.960 that research they're producing, that's a lot of intellectual property, 0:10:57.360 --> 0:10:58.600 you know. And on top of that, if you look 0:10:58.640 --> 0:11:01.160 at the rankings and the performing it's not only relative 0:11:01.160 --> 0:11:03.120 to the broad market. Has it done well relative to 0:11:03.120 --> 0:11:06.920 its peers. It's as of January thirty one, in the 0:11:06.960 --> 0:11:10.720 morning Star Large Blend category, it is the number one 0:11:11.240 --> 0:11:16.000 performing fund on a three year basis. That's includes mutual funds, active, passive, smart, beta, 0:11:16.080 --> 0:11:18.080 whatever you whatever you might look at. So the morning 0:11:18.120 --> 0:11:20.640 Star category, no, No, it's okay. So I got a 0:11:20.720 --> 0:11:22.800 question though, because it sounds like these morning Star people 0:11:22.800 --> 0:11:26.200 are working really hard. What are you doing? We are 0:11:26.240 --> 0:11:29.120 are are making sure that as our mandate, we're tracking 0:11:29.120 --> 0:11:31.240 the benchmark as it's as it's presented. And you know, 0:11:31.280 --> 0:11:33.160 we work very closely with morning Star. Has been a 0:11:33.160 --> 0:11:35.959 great relationship. I've been fortunate enough to be with van 0:11:36.160 --> 0:11:38.520 X since when you know, when we were developing the CTF, 0:11:38.640 --> 0:11:41.160 working with morning started bringing this to market. So we 0:11:41.200 --> 0:11:44.080 work with the equity research scene. We have quarterly calls, 0:11:44.240 --> 0:11:47.120 quarterly webinars with that team to inform investors, make sure 0:11:47.160 --> 0:11:49.480 they know what they're getting, why they're getting it, um 0:11:49.679 --> 0:11:51.320 and we make sure that that the e t F 0:11:51.440 --> 0:11:54.960 is is running efficiently and meeting its subjective. One thing 0:11:55.000 --> 0:11:56.880 about this and about the et F structure that I 0:11:56.880 --> 0:11:59.360 think we talked about versus active is a hundred and 0:11:59.360 --> 0:12:03.160 seventy turnover a year, and yet this thing has never 0:12:03.240 --> 0:12:08.480 had a capital gains distribution. That is almost unthinkable because 0:12:08.480 --> 0:12:11.440 in the mutual fund rapper, you'd be taxed because of 0:12:11.480 --> 0:12:13.880 that turnover. Can you talk a little bit about the 0:12:13.960 --> 0:12:19.080 structural advantage. It's very much speaks to the advantage of 0:12:19.080 --> 0:12:22.920 ets in terms of a very actively traded portfolio in 0:12:22.960 --> 0:12:25.280 the in the case of Mode, it's a US equity 0:12:25.520 --> 0:12:30.679 primarily large cap strategy lends itself to potential tax efficiency. 0:12:30.800 --> 0:12:33.840 Nothing's guaranteed in the space. You know, there is definitely 0:12:34.200 --> 0:12:36.560 a potential that that an ETF can can spit off 0:12:36.559 --> 0:12:40.440 a capital game. But fortunately, despite the turnover in the strategy, 0:12:40.520 --> 0:12:44.400 the ability for an et F portfolio manager to work 0:12:44.640 --> 0:12:47.800 within the capital markets and and and particularly the primary 0:12:47.840 --> 0:12:50.679 markets to deliver in and out securities via via the 0:12:50.679 --> 0:12:55.600 in kind um creation redemption mechanism has has benefited the CTF. 0:12:55.600 --> 0:13:00.000 And you know, shareholders are certainly um benefiting from from 0:13:00.000 --> 0:13:03.480 no capital games payments since it's since its inception. Now, 0:13:03.559 --> 0:13:06.920 Mote just hit two billion, and just last year, you 0:13:06.960 --> 0:13:09.080 guys did what a lot of ETFs do when they 0:13:09.160 --> 0:13:10.960 hit one to three billion. Not a lot of them, 0:13:11.000 --> 0:13:13.760 but some of them. You spawn sequels, just like the 0:13:13.840 --> 0:13:18.160 movie business. You launched Goat and Moody, Right, these were 0:13:18.240 --> 0:13:21.120 because mode successful. You're like, hey, let's let's we had 0:13:21.120 --> 0:13:23.080 a good thing going on. Let's ride this a little bit. 0:13:23.200 --> 0:13:25.000 Um h y G did it with s h y 0:13:25.080 --> 0:13:27.120 G which is short term high yield and h y 0:13:27.200 --> 0:13:29.880 G H which is hedged, and they build little families 0:13:29.880 --> 0:13:31.680 around them. Can you talk about what Goat and mody 0:13:31.960 --> 0:13:35.480 What what are those? Yeah, so, um, it goes a 0:13:35.520 --> 0:13:39.240 little bit beyond you know, seeing a good thing going 0:13:39.440 --> 0:13:41.920 and deciding to to add to a lineup. So we've 0:13:42.000 --> 0:13:44.280 had a lot of success with Mode our US strategy, 0:13:44.840 --> 0:13:47.640 and I would imagine it's fair fairly similar for other 0:13:47.800 --> 0:13:49.559 other issuers in the marketplace. You get a lot of 0:13:49.720 --> 0:13:51.800 feedback from clients. So we had a lot of early 0:13:51.840 --> 0:13:55.240 adopters for our US Mode strategy, a lot of very 0:13:55.280 --> 0:13:57.920 strong believers in the morning Stars methodology and their approach, 0:13:58.520 --> 0:14:01.559 and they started asking about different exposures to that investment 0:14:01.640 --> 0:14:05.400 strategy across different markets. The first iteration, the first sequel, 0:14:05.440 --> 0:14:07.360 if you will, was MODI m O T I are 0:14:07.440 --> 0:14:10.719 International and uh we had some success with with with 0:14:10.800 --> 0:14:13.520 that particular offering. And again it's it's a combination of 0:14:13.600 --> 0:14:17.079 a a a warranted investment strategy that can work in 0:14:17.200 --> 0:14:21.640 different applications, but also client interest client deman. So what 0:14:21.720 --> 0:14:23.600 are some companies in that one? So you see any 0:14:23.760 --> 0:14:27.080 you know, companies across the gamut and internationally, anything from 0:14:27.200 --> 0:14:31.400 the London Stock Exchange all the way through to Australian 0:14:31.560 --> 0:14:34.480 companies that have have a pretty heavy heavy presence geographically 0:14:34.520 --> 0:14:38.120 it's very diverse, you know. It's it's across Europe Asia. Um, 0:14:38.200 --> 0:14:41.200 there's a lot of casino companies actually, and how do 0:14:41.280 --> 0:14:43.760 those get weighted? These are all weighted actually on a 0:14:43.880 --> 0:14:46.360 on an equal weighted basis, all of these industries that 0:14:46.400 --> 0:14:48.920 we're talking about that underlying Moat, Moody and Goat as 0:14:48.960 --> 0:14:51.760 your reference, they're all equally weighted, which means you're gonna 0:14:51.760 --> 0:14:53.560 get a little extra zip, you know. Equal weight it 0:14:53.600 --> 0:14:56.440 means little tilt towards the smaller size companies because it 0:14:56.560 --> 0:14:58.640 is more volatile. So that return that we've talked about 0:14:58.640 --> 0:15:01.080 does come with a little extra risk which should be noted. 0:15:01.280 --> 0:15:04.840 Um and Got, by the way, was nominated for Ticker 0:15:04.920 --> 0:15:07.760 of the Year. What is it? Um, that's what Global 0:15:08.880 --> 0:15:13.120 International us together. You know, a couple people on Twitter 0:15:13.440 --> 0:15:15.960 we were debating about this. We thought that tickers should 0:15:15.960 --> 0:15:18.840 have been reserved for something the greatest of all time. Yeah, 0:15:19.000 --> 0:15:21.720 like like I don't know what, or just off limits permanently. 0:15:21.880 --> 0:15:23.880 But um, you're lucky, you got it's a great ticker. 0:15:23.960 --> 0:15:26.200 It's nominated for Ticker the Year at the e t 0:15:26.320 --> 0:15:27.720 F Dot Comic Words. Believe it or not, there is 0:15:27.760 --> 0:15:30.240 such a thing and uh, I think I think it 0:15:30.280 --> 0:15:31.720 has a good shot. I looked at the other ones. 0:15:31.800 --> 0:15:34.280 Oh pause, p A w Z isn't there that's a 0:15:34.400 --> 0:15:38.000 that's a strong one. Head to head there, come on, go. 0:15:40.240 --> 0:15:43.520 So when you talk to institutional investors or retail investors, 0:15:43.560 --> 0:15:46.440 how are people using it in their portfolio? We have 0:15:46.840 --> 0:15:50.560 seen them using it in different ways. Um. There are 0:15:50.680 --> 0:15:52.320 a lot of investors that are using it as a 0:15:52.360 --> 0:15:55.600 replacement their core holding, of of their of their market 0:15:55.680 --> 0:15:59.320 cap indexes UM, so a replacement of the SMP. You know, 0:15:59.440 --> 0:16:02.800 the forrmants is compelling to a lot of these investors, 0:16:02.880 --> 0:16:05.480 and and it's it's fairly diversified. You know, there's currently 0:16:05.520 --> 0:16:07.960 I think there's forty nine components in the index in 0:16:08.160 --> 0:16:09.600 the e t F, So it's it's not like you're 0:16:09.640 --> 0:16:12.520 getting this complete concentrated bed on on on a particular 0:16:12.560 --> 0:16:15.880 sector or particular industry by using the CTF. There's also 0:16:15.880 --> 0:16:19.680 a lot of allocators that are are complementing that exposure. 0:16:19.720 --> 0:16:22.520 So you know, there's a whole set of investors that 0:16:22.600 --> 0:16:26.360 are not going to get away from the ultra keeap 0:16:26.880 --> 0:16:30.240 market cap weighted SMP type exposure. So you you you 0:16:30.280 --> 0:16:32.160 add a little bit of a compliment to that exposure, 0:16:32.160 --> 0:16:35.720 you might allocate that that sleeve to to mote UM. 0:16:35.960 --> 0:16:39.560 But in the third way is in the actively managed space, 0:16:39.680 --> 0:16:41.880 and we talked a little bit about that. It is 0:16:42.320 --> 0:16:45.000 more and more as we see with investors with financial 0:16:45.040 --> 0:16:49.120 advisors UM being used to replace certain actively managed slices 0:16:49.160 --> 0:16:52.000 that just over the last ten plus years unfortunately just 0:16:52.120 --> 0:16:56.240 just haven't haven't been able to meet benchmark returns within 0:16:56.320 --> 0:16:58.320 that strategy. I have a very important question, on a 0:16:58.360 --> 0:17:01.000 scale of zero to ten and being high, how big 0:17:01.040 --> 0:17:02.840 of a fan of Game of Thrones are you? I'm 0:17:02.880 --> 0:17:06.600 a I'm a pretty big fan that I'll say. I'll 0:17:06.640 --> 0:17:11.520 say between eight and nine. I'm definitely just I'm just 0:17:11.600 --> 0:17:13.560 a show guy. Um, what do you think of Eric 0:17:13.640 --> 0:17:16.840 who literally don't knows nothing about it? Well, well, I 0:17:17.200 --> 0:17:18.840 know of the show, I'm not I don't live in 0:17:18.880 --> 0:17:21.840 a like is your Amish country or something. I just 0:17:22.520 --> 0:17:25.280 I missed. I miss these things. I missed breaking bad, 0:17:25.440 --> 0:17:27.080 I missed Game of Thrones. And then once it's like 0:17:27.160 --> 0:17:30.080 four years in, I don't have time to go and 0:17:30.119 --> 0:17:31.680 I know I'm gonna get addicted. Do you think he 0:17:31.720 --> 0:17:33.080 can make a go at it and try and watch 0:17:33.160 --> 0:17:35.879 them all with a month to go, and that's pushing it. 0:17:36.080 --> 0:17:37.840 That is that is pushing. I'm gonna get kicked out 0:17:37.840 --> 0:17:40.320 of the house. I'm out of there, man, I can 0:17:40.359 --> 0:17:51.240 barely like squeeze in like a fifteen minute basketball game. Okay, 0:17:51.320 --> 0:17:55.159 Nick Khalibus. Uh, you're with Investco and you you've got 0:17:55.240 --> 0:17:58.600 the the C S E A E t F there, 0:17:59.560 --> 0:18:04.040 which is are metaphor for for boats in Game of Thrones. Yeah, 0:18:04.040 --> 0:18:05.520 and let me set this up a little bit. See 0:18:05.640 --> 0:18:08.639 is the global Shipping E t F. And if you know, 0:18:08.800 --> 0:18:12.080 MOTE was the two hundred and sixty six biggest we 0:18:12.160 --> 0:18:15.959 saw it was upper middle class. C is the undreds 0:18:16.040 --> 0:18:18.960 around biggest ETF. So there's twenty two hundreds, so it's 0:18:19.280 --> 0:18:21.320 kind of right in the middle, and it's it's a 0:18:21.400 --> 0:18:26.200 survivor um. It's inception date is two thousand ten, but 0:18:26.440 --> 0:18:29.359 it actually existed before that. It's a long, quirky story 0:18:29.359 --> 0:18:31.680 about them shutting it down temporarily to get a new advisor. 0:18:31.760 --> 0:18:34.480 But it's actually a number of years older than that. 0:18:35.080 --> 0:18:37.520 So this thing has just been around for a long time. 0:18:37.600 --> 0:18:40.840 It's got about fifty million, although it had more assets 0:18:40.880 --> 0:18:43.560 back in the day. It's had some performance struggles, but 0:18:43.680 --> 0:18:48.640 it's just a unique sort of sub industry. Uh arguably 0:18:48.680 --> 0:18:51.200 maybe a theme E t F that has just sort 0:18:51.240 --> 0:18:55.840 of been around. So, Nick, what's the vision? I think 0:18:55.840 --> 0:18:59.880 when you're looking at SE uh, it's it's providing access 0:19:00.040 --> 0:19:04.080 to a very specific, you know, sector of the market 0:19:04.160 --> 0:19:07.879 in terms of oil and gas, transport and kind of 0:19:07.960 --> 0:19:11.840 maritime um. And so people who want that exposure can 0:19:11.920 --> 0:19:14.440 get can get it from C. I think the other 0:19:14.600 --> 0:19:17.159 thing that's very interesting about is if you look at 0:19:17.760 --> 0:19:21.200 kind of how it performs and where it operates, it 0:19:21.560 --> 0:19:26.800 seems to have very high correlation to commodity prices. It 0:19:26.960 --> 0:19:30.040 likes rising interest rates, it likes a week dollar, and 0:19:30.119 --> 0:19:33.680 so from that avenue UM, I think one could also 0:19:33.760 --> 0:19:35.800 think about it as a little bit of an inflation 0:19:35.880 --> 0:19:38.119 heade if you are thinking about it more from the 0:19:38.280 --> 0:19:43.120 macro realm as opposed to maybe the specifics of shipping, 0:19:44.280 --> 0:19:46.639 because no matter what, this stuff's gonna get done, right, 0:19:46.880 --> 0:19:49.560 things are going to get shipped. You got Yeah, we're 0:19:49.600 --> 0:19:53.400 we're we're in a we're in a global trading economy, 0:19:53.440 --> 0:19:55.240 and that's for sure, stuff's got to get done, got 0:19:55.320 --> 0:19:58.639 to move. How has the trade war actually affected that? 0:19:59.680 --> 0:20:02.440 You know it's it's you see it from maybe some 0:20:02.600 --> 0:20:05.440 of the cautions from a couple of the of the 0:20:05.600 --> 0:20:08.359 companies in here. I mean, I was interesting. I was 0:20:08.760 --> 0:20:11.240 reading a little bit about the largest holding, which is 0:20:11.359 --> 0:20:15.359 a P. Moeller, and they mentioned trade as as something 0:20:15.480 --> 0:20:19.320 that was a headwind to their operation. And and so 0:20:19.960 --> 0:20:22.800 I think it's it's something that has created a certainty 0:20:22.880 --> 0:20:25.000 for the for the sector, and so I would have 0:20:25.080 --> 0:20:28.480 to term it as a negative. And if when this 0:20:28.560 --> 0:20:32.160 all gets resolved some day, I think it will will 0:20:32.240 --> 0:20:34.480 help create a little bit of a of a tail 0:20:34.520 --> 0:20:37.320 one to this sector. So one interesting thing that I 0:20:37.400 --> 0:20:39.560