WEBVTT - Now There Are ETFs Making Money While You Sleep 0:00:06.040 --> 0:00:09.200 Welcome on Trillions. I'm Joel Webber and I'm Eric bel Tunis. 0:00:14.880 --> 0:00:19.960 Eric new launch just happened very much, caught your attention 0:00:20.520 --> 0:00:22.720 and you immediately we're like, we gotta get these guys 0:00:22.760 --> 0:00:26.680 on Trillions to talk to him. What's the product. Yeah, 0:00:26.720 --> 0:00:30.800 there's two launches a year, that's over one a day, 0:00:31.520 --> 0:00:33.880 and I don't know, maybe five or six just catch 0:00:34.000 --> 0:00:37.000 my attention big time over the course of the year. 0:00:37.440 --> 0:00:39.479 This is one of them. Because just when you think 0:00:39.520 --> 0:00:42.160 there's no white space left and etf, somebody comes around 0:00:42.159 --> 0:00:45.480 with something that's pretty original and this is really interesting idea. 0:00:45.479 --> 0:00:47.440 It's called night Shares, that's the name of the brand, 0:00:48.040 --> 0:00:50.919 and it really tries to put into reality something that 0:00:50.960 --> 0:00:53.560 we've been reading about over the past several years where 0:00:53.880 --> 0:00:56.640 you see this article or study that that points out that, hey, 0:00:56.680 --> 0:00:59.920 if you only hold the U S Stock market at night, 0:01:00.000 --> 0:01:01.720 in other words, you buy at the clothes and you 0:01:01.760 --> 0:01:04.080 sell it the open, so you hold it overnight and 0:01:04.120 --> 0:01:07.160 you don't hold it during the day. You crush holding 0:01:07.200 --> 0:01:10.400 it during the day. There's something about that. It's like 0:01:10.440 --> 0:01:13.759 a phenomenon, but it's really never been tried in reality 0:01:13.840 --> 0:01:17.040 because there are real world issues that have probably stopped 0:01:17.040 --> 0:01:19.319 some people from trying it, Um. But here we have 0:01:19.319 --> 0:01:21.040 an et f issuer or that's come out and said 0:01:21.040 --> 0:01:22.560 we're going to try to do this, and they have 0:01:22.600 --> 0:01:27.679 two launches that have our live which is the large 0:01:27.680 --> 0:01:30.319 caps and then a small cap version. So they're trying 0:01:30.319 --> 0:01:33.520 to capture what they call the night effect. Um. And 0:01:33.600 --> 0:01:36.000 you know, we'll there, we'll go into, you know, some 0:01:36.080 --> 0:01:40.039 of the hurdles and challenges, but it's gonna be a 0:01:40.040 --> 0:01:45.360 fascinating experiment. Joining us on trillions is gonna be Max Cookman, 0:01:45.440 --> 0:01:49.680 he's this chief investment officer, and Bruce Levine he's the 0:01:49.760 --> 0:01:59.200 CEO this time on trillions, the night Effect Bruce, Max, 0:01:59.200 --> 0:02:02.440 welcome to Trillion, Thanks so much for having us, nice 0:02:02.440 --> 0:02:05.960 to be here. Can you explain the big idea here, 0:02:06.000 --> 0:02:10.320 Bruce absolutely, Um. You know Eric touched on it. The 0:02:10.320 --> 0:02:14.960 big idea is that there are some unusual differences between 0:02:15.000 --> 0:02:17.960 what happens in the markets overnight and during the daytime session, 0:02:18.480 --> 0:02:23.200 and the overnight session historically has shown far better returns 0:02:23.280 --> 0:02:27.760 and it's far better behaved from volatility standpoint. So we 0:02:27.800 --> 0:02:31.080 find the night session to be a really interesting, uh 0:02:31.240 --> 0:02:34.920 place to play, and we brought ETF to market that 0:02:35.080 --> 0:02:38.320 would for the first time separate these very unique and 0:02:38.400 --> 0:02:44.040 differentiated return streams between the day and night and and max. 0:02:44.760 --> 0:02:48.840 How do you actually set this up to work? Right? 0:02:48.880 --> 0:02:51.519 Because it's as Eric mentioned in the in the beginning there, 0:02:52.000 --> 0:02:56.040 it seems like, you know, very obvious idea, but like, 0:02:56.120 --> 0:02:59.400 how do you actually bring this into practice? Yeah, and 0:02:59.639 --> 0:03:01.760 this is actually one of the things that made me 0:03:01.800 --> 0:03:04.440 think a bit of the myth of Prometheus, where we're 0:03:04.480 --> 0:03:08.360 taking something that exists that was uncapturable for for a 0:03:08.400 --> 0:03:12.120 common investor in bringing it down to them. Um, it 0:03:12.200 --> 0:03:14.320 actually is is a little bit more complex, and it 0:03:14.360 --> 0:03:17.840 requires uh some knowledge of derivatives, that requires understanding how 0:03:18.040 --> 0:03:21.919 the futures market works, how total return swaps work. Because 0:03:21.919 --> 0:03:25.359 we really want to create an efficient exposure tonight effect 0:03:25.360 --> 0:03:30.080 where we really make it um something that considers the impact, 0:03:30.080 --> 0:03:34.040 that considers tea costs and um. The way we're implementing 0:03:34.040 --> 0:03:37.520 it right now is we're buying futures at the close 0:03:37.600 --> 0:03:39.880 and selling them at the open, and as we scale, 0:03:39.920 --> 0:03:44.760 we're able to really expand on that construction to continue 0:03:44.760 --> 0:03:49.440 making it highly efficient. Okay, UM, I want to circle 0:03:49.440 --> 0:03:52.560 back on you call tea cost transaction costs. That's been 0:03:52.600 --> 0:03:56.120 a big worry or I guess something people who pointed 0:03:56.120 --> 0:03:58.800 out when a table I just for one second, I 0:03:58.840 --> 0:04:01.760 want to get back to the night effect, Bruce. And also, 0:04:02.640 --> 0:04:06.360 can you explain why why would the stock market do 0:04:06.520 --> 0:04:08.960 better at night than during the day. What factors are 0:04:09.000 --> 0:04:11.880 contributing to that? And that's a really great question, and 0:04:11.920 --> 0:04:15.200 it was so interesting to look at it. And the 0:04:15.240 --> 0:04:18.400 first time you see this data, it's just stunning. Uh. 0:04:18.560 --> 0:04:20.280 You know, there's been research done for a long time. 0:04:20.320 --> 0:04:22.440 There's sort of three buckets of reasons. I call it. 0:04:22.880 --> 0:04:24.960 One is just that there's news flow when the markets 0:04:24.960 --> 0:04:29.120 are closed. So this could be earnings announcements, which although 0:04:29.160 --> 0:04:32.920 not universally positive on balanced stocks trade up and then 0:04:33.320 --> 0:04:36.160 M and A, which is generally extremely positive for the market. 0:04:36.240 --> 0:04:37.760 So those all happen when the markets are closed, so 0:04:37.760 --> 0:04:40.440 you have to be invested to catch them. The second 0:04:40.480 --> 0:04:45.320 thing is just structural de risking that seems to happen 0:04:45.320 --> 0:04:50.280 among institutions. And an example this would be an et 0:04:50.360 --> 0:04:55.560 F market making firm. Their business is to play between 0:04:55.600 --> 0:04:58.000 the bid and the ask all day long, but their 0:04:58.040 --> 0:05:00.839 business is not to hold inventory overnight, so at the 0:05:00.880 --> 0:05:02.440 end of the day, they kind of flatten out their 0:05:02.440 --> 0:05:05.520 positions and then they kind of read buying the next morning. 0:05:06.120 --> 0:05:07.640 And then the last one is also kind of there's 0:05:07.640 --> 0:05:09.600 a bunch of complexities that you can avoid if you 0:05:09.640 --> 0:05:12.760 just get out by the end of the day. So, um, 0:05:12.800 --> 0:05:17.320 we found this pattern, uh of the night effect happens worldwide, 0:05:17.400 --> 0:05:20.240 which is interesting. So there must be something going on, 0:05:20.920 --> 0:05:24.240 you know, And it's I've seen people pitch their whole 0:05:24.240 --> 0:05:26.919 investment strategy to investors, and what they pitch is we 0:05:26.960 --> 0:05:29.159 get out so you can sleep at night. And and 0:05:29.200 --> 0:05:31.239 it also almost leaves something on the table for those 0:05:31.279 --> 0:05:35.120 that are you know, not so m scared by the 0:05:35.160 --> 0:05:38.080 overnight session. Yeah, we we think that your money should 0:05:38.120 --> 0:05:42.000 work while you sleep, not and not make you, you you know, 0:05:42.240 --> 0:05:46.080 work harder during the day. Well, I mean, I guess 0:05:46.120 --> 0:05:48.960 people who invest in bitcoin may differ from that because 0:05:49.160 --> 0:05:51.120 on the weekend you can see them having to suffer 0:05:51.360 --> 0:05:53.440 when all the stock people are like, I'm not I 0:05:53.680 --> 0:05:55.360 have nothing to worry about on the weekend. But anyway, 0:05:55.760 --> 0:05:58.360 but it's true, the market doesn't ever truly sleep. It's 0:05:58.400 --> 0:06:01.800 just you only see the prices in action during those 0:06:01.880 --> 0:06:04.560 whatever eight hours during the day. But it's still like 0:06:04.560 --> 0:06:06.080 like a lot of times, they'll be news out of 0:06:06.240 --> 0:06:10.200 UM over the weekend or before the market, and I'll 0:06:10.200 --> 0:06:12.200 do G I, P O and Bloomberg which is UM 0:06:12.279 --> 0:06:15.400 intra day pricing, and I'll tweet out, you know, pre 0:06:15.520 --> 0:06:17.840 market trading the S and P s up two on 0:06:17.880 --> 0:06:20.320 this news or whatever. Now, I will say sometimes it's 0:06:20.360 --> 0:06:22.839 bad like such and such a down on this news. 0:06:23.040 --> 0:06:24.400 And I guess, Bruce, I'll come back to you on 0:06:24.440 --> 0:06:29.440 that question, which is that you know, take something like earnings. Okay, fine, 0:06:29.920 --> 0:06:33.160 in a good market, earnings will be good and announced 0:06:33.160 --> 0:06:35.159 after the clothes. But wouldn't that wouldn't there be the 0:06:35.200 --> 0:06:38.200 reverse in like this kind of market where it's harder 0:06:38.240 --> 0:06:41.599 to get let's say we hit a recession or whatever. Um, 0:06:41.600 --> 0:06:45.679 you know, wouldn't that just be negative for the night effect? Yeah? 0:06:45.720 --> 0:06:48.279 You know, it's interesting when you look at the numbers 0:06:48.440 --> 0:06:50.360 yere to day in a in a really tough market 0:06:50.400 --> 0:06:53.960 where there's been a lot of news. Um. The you know, 0:06:54.000 --> 0:06:56.880 if you were buying a hold here today, you're down 0:06:56.960 --> 0:06:59.200 far more than if you were just owning the night session. 0:06:59.440 --> 0:07:01.479 So you can see you can sort of feel this 0:07:01.680 --> 0:07:03.560 viscerally if you've been in the markets here to date 0:07:03.760 --> 0:07:07.719 where you've had all these days where uh, the markets 0:07:07.760 --> 0:07:11.200 open kind of either slightly up, kind of flattershed slightly 0:07:11.200 --> 0:07:13.280 down and then just start picking up steam to the 0:07:13.320 --> 0:07:17.840 cell side. And so um, we have not seen nearly 0:07:17.880 --> 0:07:20.360 as much you know, damage coming in the night session 0:07:20.640 --> 0:07:24.080 this year, so um. And and that's consistent with our 0:07:24.120 --> 0:07:28.240 research which was you see far more left tail events 0:07:28.280 --> 0:07:31.040 happening during the day, you know, statistically than you do 0:07:31.320 --> 0:07:36.760 happening a night. Okay, So I'm really curious. You guys 0:07:36.960 --> 0:07:39.840 have had to have done a ton of back testing 0:07:39.880 --> 0:07:43.480 on this. Um, how is it held up like both 0:07:43.600 --> 0:07:47.640 both recently while you know, markets have been incredibly turbulent 0:07:47.720 --> 0:07:52.120 so far this year, but also more historically, it's it's 0:07:52.120 --> 0:07:53.520 held up really well. I mean, I'll give you an 0:07:53.520 --> 0:07:56.960 example of small caps so UM year to date, if 0:07:57.000 --> 0:08:00.920 you just held say, you know, a small cap up index, 0:08:01.360 --> 0:08:05.760 you'd be down about two If you just held the 0:08:06.000 --> 0:08:09.840 night portion, you'd be down less than six percent. So 0:08:10.000 --> 0:08:13.560 it's pretty substantial. And as we look at it historically, UM, 0:08:13.600 --> 0:08:16.480 it's important to note that this effect does not always 0:08:16.520 --> 0:08:18.480 work right And and by the way, I think if 0:08:18.520 --> 0:08:20.960 anyone comes on the podcast and says, hey, we found something. 0:08:21.360 --> 0:08:24.320 It's always gonna work. It's always going to generate you alpha. 0:08:25.000 --> 0:08:27.960 I would hope there's a lot of skepticism in the room. Um, 0:08:28.000 --> 0:08:29.400 but we do find that if we do like a 0:08:29.480 --> 0:08:35.040 rolling one three five year analysis of sharp ratios or 0:08:35.160 --> 0:08:41.480 um or returns, the night effect consistently does outperform the 0:08:41.559 --> 0:08:44.360 day's session. And it's across a lot of different betas. 0:08:45.320 --> 0:08:48.000 Um let me let me just let me just jump 0:08:48.040 --> 0:08:50.760 in there real quick. Um, So you talk about this. 0:08:50.920 --> 0:08:53.120 I remember looking at the Bespoke study, which was the 0:08:53.120 --> 0:08:57.240 one I think that the papers covered, the media covered 0:08:57.280 --> 0:08:59.400 like a year ago. Bloomberg had an article on it. Anyway, 0:08:59.600 --> 0:09:04.240 it shows that the night returns something like six and 0:09:04.280 --> 0:09:07.720 the day was like flat or down. Even so, a 0:09:07.840 --> 0:09:10.240 very cool chart. One line goes up big, one line 0:09:10.280 --> 0:09:13.360 is flat. However, if you just held the S and 0:09:13.400 --> 0:09:16.560 P five and didn't do just held at the whole time, 0:09:16.600 --> 0:09:20.600 you were up. So I guess what would you say 0:09:20.600 --> 0:09:23.280 to somebody who's like, well, what I'm not going to 0:09:23.400 --> 0:09:26.120 just hold during the day, I'm gonna hold day and night. 0:09:26.280 --> 0:09:29.280 Isn't that just easier? I would say, it's it's it's 0:09:29.320 --> 0:09:31.760 a story of risk and return, right, and I think 0:09:32.120 --> 0:09:35.720 especially in this environment where investors are looking for ways 0:09:35.800 --> 0:09:39.160 to well create a more divorce PI portfolio, create a 0:09:39.160 --> 0:09:43.720 more stable portfolio, it's really important to consider the denominator 0:09:44.040 --> 0:09:47.800 of what should be really any acid allocation equation, which 0:09:47.880 --> 0:09:51.160 is your standard deviation. And it's true about with large caps. 0:09:51.200 --> 0:09:53.120 You do see a positive day effect. And yes, you 0:09:53.160 --> 0:09:57.360 will earn more money if you hold twenty four hours 0:09:57.360 --> 0:10:00.120 over most periods, but you will do so at the 0:10:00.200 --> 0:10:05.920 expense of a disproportionately higher risk. Yeah. So I would 0:10:05.960 --> 0:10:09.160 just add to that that potentially, Eric, you can expand 0:10:09.520 --> 0:10:12.880 your equity exposure if you're playing in the lower risk 0:10:13.920 --> 0:10:16.640 portion of them. You know of the equity market, and 0:10:16.679 --> 0:10:19.120 that's what the night session is. So that's one thing. 0:10:19.760 --> 0:10:22.840 And then the other thing I'll add is um that 0:10:23.000 --> 0:10:25.800 chart you referenced was a was a large cap, but 0:10:25.840 --> 0:10:29.680 what we found in small caps was really surprising, which 0:10:29.720 --> 0:10:33.720 was that the day portion of the Russell too over 0:10:33.800 --> 0:10:39.559 time was negative. So they're holding the night only actually 0:10:39.600 --> 0:10:42.360 outperformed not only on the risk side, but on the 0:10:42.360 --> 0:10:53.600 performance side. So I'm curious anything that ever seems this 0:10:53.679 --> 0:10:57.439 good to be true feels like, just like, why hasn't 0:10:57.480 --> 0:10:59.880 somebody else figured this out or figured out a way 0:10:59.880 --> 0:11:03.240 it are this? And specifically I'm just thinking of hedge 0:11:03.240 --> 0:11:07.480 funds who have you know, teams of analysts specifically trying 0:11:07.520 --> 0:11:10.600 to find things like this that are just sitting in 0:11:10.600 --> 0:11:13.800 in plain side, even if that plain side as the 0:11:13.880 --> 0:11:16.920 lights off. But why, you know, why hasn't this been 0:11:16.960 --> 0:11:21.920 exploited yet and what risks does that maybe create? Yeah, 0:11:21.960 --> 0:11:24.720 so we know there's some hedge funds doing this trade 0:11:25.280 --> 0:11:28.440 and you know there are people playing at it. UM 0:11:28.520 --> 0:11:30.959 asked for why it's never been packaged as an E 0:11:31.040 --> 0:11:33.680 t F M. I don't know, other than you know, 0:11:33.720 --> 0:11:36.360 I've spent like twenty years doing E t F product 0:11:36.400 --> 0:11:38.280 launches that I've never seen the research. In the minute 0:11:38.320 --> 0:11:41.800 I saw it, I said, wow, this is really interesting. Um, 0:11:41.840 --> 0:11:46.480 in terms of the risks. Uh, really, I think mind, 0:11:46.480 --> 0:11:49.360 your question is if it works as it get arped away, 0:11:49.960 --> 0:11:54.040 And that's a really fascinating question and I hope we 0:11:54.120 --> 0:11:58.360 find out, UM. But the question is at what level right, 0:11:58.720 --> 0:12:02.520 and even how structural it is and how the research 0:12:02.559 --> 0:12:05.120 has been out there for a while and the phenomenon 0:12:05.240 --> 0:12:07.840 persists are sensitive takes it would take quite a lot 0:12:07.920 --> 0:12:11.280 of capital to r to trage it away if if 0:12:11.320 --> 0:12:14.840 that's even going to occur. I mean, for me, there 0:12:15.000 --> 0:12:18.280 there's no question that hedge funds are doing it. We 0:12:18.280 --> 0:12:20.240 we have a sister company that that is a hedge fund, 0:12:20.240 --> 0:12:22.960 which is actually where of this effect was discovered UM 0:12:23.000 --> 0:12:26.680 and this is one of our strongest um effects that 0:12:26.760 --> 0:12:32.960 we do capture there. And we just see that a 0:12:32.960 --> 0:12:36.920 lot of structural things, whether it's earnings, economics, announcement, et cetera, 0:12:37.000 --> 0:12:40.160 they do occur when cash markets are closed. You see, 0:12:40.160 --> 0:12:44.160 investor makeup is very different between who trades in equities 0:12:44.440 --> 0:12:47.120 when US markets are closed in terms of European institutions 0:12:47.240 --> 0:12:50.839 and Asian institutions, and so those are the things that 0:12:50.880 --> 0:12:53.720 are really key versus if I say, hey, I found 0:12:53.720 --> 0:12:55.679 this really cool skew and options and I'm going to 0:12:55.760 --> 0:12:58.360 trade on it. Well, yeah, once you start doing that 0:12:58.400 --> 0:13:02.160 in size, everyone else starts reverse engineering it and you 0:13:02.200 --> 0:13:05.319 see about alpha fade UM. We think the structural reasons 0:13:05.480 --> 0:13:10.720 is why this effect can be significantly more persistent. So 0:13:10.880 --> 0:13:13.800 right now you've you've got US focused products. But at 0:13:13.800 --> 0:13:16.200 the beginning you mentioned that you've noticed this night effect 0:13:16.240 --> 0:13:21.920 actually has global potential, right, so I'm wondering, you know, what, 0:13:21.920 --> 0:13:26.160 what kind of global ideas are you kind of eyeing here, 0:13:26.160 --> 0:13:32.320 and what what challenges withoud that product potentially create. So 0:13:32.360 --> 0:13:36.000 we have a pretty long product development queue because it 0:13:36.120 --> 0:13:39.360 when you start to really dig into this night effect, 0:13:39.400 --> 0:13:41.959 there's lots of different ways to work with it, and 0:13:42.040 --> 0:13:44.000 so we would expect at some point to have products 0:13:44.000 --> 0:13:48.880 that offer us investors, um perhaps the chance to be 0:13:49.000 --> 0:13:52.000 in different segments of the market at different times over 0:13:52.080 --> 0:13:54.920 the twenty four hour cycle, so that we're sort of 0:13:54.960 --> 0:14:00.320 capturing the right effect differently as time persists. Uh, so 0:14:00.880 --> 0:14:05.079 you know, stay tuned for that. Um, Okay, we gotta 0:14:05.200 --> 0:14:08.400 here's the big challenge. So I've seen people right about 0:14:08.400 --> 0:14:11.120 this the replies on Twitter, and this is part of 0:14:11.160 --> 0:14:15.520 what the factor world sometimes bumps up against, especially momentum, 0:14:15.640 --> 0:14:18.160 is the fact that you have to trade a lot 0:14:18.240 --> 0:14:20.560 to keep up with this. So I'm just gonna do 0:14:20.680 --> 0:14:24.520 quick math correct if I'm wrong. Let's say I know 0:14:24.600 --> 0:14:27.160 you're using futures, but let's say you held spy during 0:14:27.160 --> 0:14:31.000 the night only to one basis point a bit as spread. 0:14:31.280 --> 0:14:33.360 So if you add up two hundred days of doing that, 0:14:33.400 --> 0:14:37.520 what is that three four hundred basis points of trading costs. 0:14:37.520 --> 0:14:40.400 That's four So that's like a hurdle to get over. 0:14:41.040 --> 0:14:43.640 And because it's ongoing, it's like a constant corrosion to 0:14:43.760 --> 0:14:46.880 the returns and that has been I think one of 0:14:46.920 --> 0:14:51.240 the biggest um pushbacks on this strategy is that it 0:14:51.320 --> 0:14:53.840 can't be done in the wild because transaction costs would 0:14:53.840 --> 0:14:56.920 eat you alive. So what's your plan for that? Yeah, 0:14:56.960 --> 0:15:01.680 that's absolutely um probably the and the strategy hasn't been 0:15:01.720 --> 0:15:04.280 tried before. So look, our goal is to give you 0:15:04.320 --> 0:15:10.920 the greatest institutional execution quality we can and to do it, 0:15:11.720 --> 0:15:14.000 you know, across we're looking across a number of different 0:15:14.080 --> 0:15:16.840 vehicles to do it. We're starting out with futures and 0:15:16.880 --> 0:15:21.000 you know what we see internally is that we think 0:15:21.000 --> 0:15:24.360 we can trade you know, somewhere between a half a 0:15:24.360 --> 0:15:27.320 basis point and a basis point per day. Okay, so 0:15:27.360 --> 0:15:30.720 if you analyze that over two days, you know that's 0:15:32.600 --> 0:15:37.200 basis points. And then we have cash collateral that backs 0:15:37.240 --> 0:15:40.760 up the futures contracts that's going to sit in treasuries 0:15:40.800 --> 0:15:44.040 and cash, and now that rates have popped up a 0:15:44.080 --> 0:15:45.600 little bit, you know, we may be able to get 0:15:46.240 --> 0:15:49.240 a large percentage of that offset from the cash collatoral. 0:15:50.560 --> 0:15:54.000 Now let's explain this again, uh like the local third 0:15:54.000 --> 0:15:59.400 grade style UM, because when you use futures, right, you 0:15:59.400 --> 0:16:02.400 you you buy a little bit, but you get a lot. 0:16:02.440 --> 0:16:04.800 So just explain the sort of dynamics of how you 0:16:04.800 --> 0:16:07.480 can hold treasuries because when someone pulls this up, I 0:16:07.480 --> 0:16:09.720 guess eventually they're going to see a bunch of treasuries 0:16:09.760 --> 0:16:12.200 in here, right, They're not going to see the S 0:16:12.280 --> 0:16:14.560 and P five hunter or anything like that. So just 0:16:14.680 --> 0:16:18.560 explain how the future's exposure to treasuries works. And that's 0:16:18.560 --> 0:16:21.960 a good question. So you know, futures are contracts, right, 0:16:22.000 --> 0:16:24.480 so so it may just show up as we have 0:16:25.280 --> 0:16:30.760 notional exposure. But but features don't have value themselves until 0:16:30.880 --> 0:16:34.360 you you know, mark them from where you bought them 0:16:34.360 --> 0:16:36.880 to where you sold them. So the holdings of the 0:16:36.880 --> 0:16:40.120 fund will show up as treasuries, which we're gonna hold seven. 0:16:40.680 --> 0:16:45.120 And it's the fact that we can you know, features 0:16:45.680 --> 0:16:49.640 really provide some leverage in the sense of um, we 0:16:49.760 --> 0:16:53.960 can uh sitting as treasuries, and they back the futures 0:16:54.200 --> 0:16:58.560 contracts and allow us to hold larger amounts of futures. 0:16:58.560 --> 0:17:02.520 So it's because of that that we're able to get 0:17:02.560 --> 0:17:07.240 you know, sort of this cash collateral return source in 0:17:07.280 --> 0:17:11.119 addition to staying invested in the equity market. And and 0:17:11.240 --> 0:17:14.440 right now, the treasuries, I'm assuming you'll hold short term 0:17:14.440 --> 0:17:19.680 debt right like two year or something like that. Yeah, 0:17:19.680 --> 0:17:24.000 well we'll we'll we'll hold um fairly low duration treasuries. 0:17:24.119 --> 0:17:29.600 We you know, will be smart about that. And certainly, UM, 0:17:29.640 --> 0:17:34.000 you know, having run a pretty large derivative book, very 0:17:34.000 --> 0:17:36.760 comfortable with saying that there's a right and a wrong 0:17:36.840 --> 0:17:40.119 way due to collateral management, UM, and specially something like this, 0:17:40.200 --> 0:17:43.480 we want to be safe. The goal is to offset 0:17:43.880 --> 0:17:48.040 the tea costs and UM, I think at the current 0:17:48.400 --> 0:17:50.719 you know, UM rate environment, we can do that with 0:17:51.040 --> 0:17:54.600 very low duration. Did you file these after the FED 0:17:55.040 --> 0:17:58.080 changed its mission from like keeping rates low to like 0:17:58.119 --> 0:18:01.720 fighting inflation, because clearly that was a a good It's 0:18:01.840 --> 0:18:06.280 arguably good timing in that you were looking for something 0:18:06.280 --> 0:18:10.080 to offset this transaction cost. But did that play into 0:18:10.200 --> 0:18:12.920 your filing filed in March? So I'm not exactly sure 0:18:12.920 --> 0:18:16.960 when they changed. And and look, we were focused on 0:18:17.000 --> 0:18:19.600 bringing this to market and and we were looking at 0:18:19.640 --> 0:18:23.840 lots of different ways to run the fund, and I 0:18:23.880 --> 0:18:26.720 think the fact that rates have popped up and has 0:18:27.200 --> 0:18:30.040 maybe made us lean towards this particular way of running 0:18:30.040 --> 0:18:35.760 the fund. Okay, well, I'm curious, Bruce, you have a 0:18:35.800 --> 0:18:39.119 really interesting backstory. You've you've been in the e t 0:18:39.280 --> 0:18:43.040 F world for a really long time. Um at I shares, 0:18:43.600 --> 0:18:47.200 you help launch l qt h y G. These are 0:18:47.800 --> 0:18:52.040 incredibly um successful bond ETFs. I'm just wondering, you know, 0:18:52.119 --> 0:18:53.720 like all of this, like what have you what have 0:18:53.760 --> 0:18:56.120 you learned from your experience in the industry that you're 0:18:56.119 --> 0:18:59.240 going to be applying here. It has been an interesting, right, 0:18:59.280 --> 0:19:01.520 you know, because I've seen different kinds of products, right, 0:19:01.640 --> 0:19:03.960 some of them. In the early days of I shares, 0:19:04.040 --> 0:19:06.320 it was just an educational thing. We were new with 0:19:06.400 --> 0:19:08.920 this new fangled thing called an e t F and 0:19:08.960 --> 0:19:10.840 once you've got people over the hump of understanding it, 0:19:10.880 --> 0:19:14.960 they really put in. With wisdom Tree, we were new 0:19:15.000 --> 0:19:18.840 with a different way to index, you know. Prior to 0:19:18.840 --> 0:19:21.600 wisdom Tree and ETF, theres just beta and now they're 0:19:21.640 --> 0:19:24.439 smart data, right, And wisdom Tree was a pioneer and 0:19:24.480 --> 0:19:26.560 saying hey, there's a better way to create an index 0:19:27.480 --> 0:19:31.720 and and it was an educational challenge, but now well 0:19:31.760 --> 0:19:34.080 accepted that there's more than one way to index, and 0:19:34.119 --> 0:19:37.280 we see what we're doing with night Shares is similar 0:19:37.280 --> 0:19:40.840 to that in the sense of there is this sort 0:19:40.880 --> 0:19:44.639 of thin slice of the market that is aware of 0:19:44.640 --> 0:19:47.000 this research and a very large slice of the market 0:19:47.040 --> 0:19:50.000 that's not so. First it's just educated and make aware 0:19:50.560 --> 0:19:54.320 that it's out there. Uh. And then you know, people 0:19:54.320 --> 0:19:56.639 will watch it and some will toe dip and some 0:19:56.720 --> 0:20:01.320 will you know, wait for proof. And but we think 0:20:01.320 --> 0:20:06.639 over time, you know, we've added a really interesting um 0:20:06.840 --> 0:20:09.919 dynamic to the market. Uh. And I appreciate what Eric 0:20:09.960 --> 0:20:11.520 said right at the beginning. It's just not that many 0:20:11.600 --> 0:20:16.160 things that you know are truly differentiate in the market space. 0:20:22.840 --> 0:20:25.159 I want to pitch Max on a product idea I have. 0:20:25.200 --> 0:20:26.480 I think you guys would be the right ones to 0:20:26.560 --> 0:20:29.760 launch it. We had a Shark Tank type episode about 0:20:29.800 --> 0:20:32.440 two years ago where a bunch of reporters and analysts 0:20:32.440 --> 0:20:35.760 pitched e T F ideas to a judge and mine, 0:20:36.240 --> 0:20:38.400 I believe mine one, or it came in second or something, 0:20:38.440 --> 0:20:41.280 but it was called X bond. It was just forgets 0:20:41.359 --> 0:20:44.200 because it's just in his mind it was the greatest 0:20:44.200 --> 0:20:46.879 pitch of all time, but yeah, you gotta see it 0:20:46.920 --> 0:20:50.880 a little bit more Jamaican x mon Um, I wont, 0:20:50.920 --> 0:20:53.439 at least in my mind. Um. And basically this is 0:20:53.440 --> 0:20:57.000 the S and P five hundred x Mondays because you 0:20:57.040 --> 0:21:00.439 know how like everybody freaks out over the weekend if 0:21:00.440 --> 0:21:03.720 there's bad news Friday, and like you've black Monday seven, 0:21:03.840 --> 0:21:05.600 then there was a black Monday too. Just seems like 0:21:05.640 --> 0:21:08.800 Mondays are brutal days and they've done studies that Monday 0:21:08.920 --> 0:21:12.280 does on average return a little less than the rest 0:21:12.320 --> 0:21:14.399 of the week. What do you think of that idea? 0:21:14.480 --> 0:21:16.760 And have you ever thought about actually explaining this out 0:21:16.760 --> 0:21:19.520 of just the night but into other times, like just 0:21:19.560 --> 0:21:23.320 making time your thing? Well, well, I definitely think that 0:21:23.359 --> 0:21:26.480 in the t F game, having a good ticker is important, 0:21:26.480 --> 0:21:28.679 so so Eric, if nothing else, you've definitely nailed that. 0:21:29.680 --> 0:21:33.760 And that was a polite letdown. I think, Max, no, no no, no, no, 0:21:34.680 --> 0:21:37.320 I mean, I I do think there's you know, if 0:21:37.320 --> 0:21:42.240 you look at time overall, um and seasonality and you 0:21:42.280 --> 0:21:46.200 know all of that, there there's more ground to cover there. 0:21:46.240 --> 0:21:50.080 I think for us, um we're pretty focused on on 0:21:50.119 --> 0:21:52.560 the night. We think there's a whole lot to do 0:21:52.640 --> 0:21:56.439 in the nighttime before we start looking at other things. 0:21:56.480 --> 0:22:03.240 But you know, certainly, um, the x mon is a 0:22:03.359 --> 0:22:06.320 concept that that has some some grounding in reality. If 0:22:06.320 --> 0:22:08.760 you do look at the Monday fact, you know, Monday 0:22:08.800 --> 0:22:12.439 scaries are real. Yeah, no one likes Mondays. It's like 0:22:12.440 --> 0:22:16.239 it also hits the heart. Now I hate Mondays. This 0:22:16.320 --> 0:22:19.560 lines up with my values. Eric. The other key thing 0:22:19.960 --> 0:22:22.040 is every ETF needs to have a good spokesman, So 0:22:22.040 --> 0:22:25.560 you've got to get Garfield to be your spokesman. Or 0:22:25.560 --> 0:22:28.119 that moment from office Space, somebody's been a case of 0:22:28.160 --> 0:22:31.640 the Monday's. Yeah, yeah, I don't know. I think there's 0:22:31.640 --> 0:22:33.880 something there. We'll see. Maybe if you guys have success, 0:22:33.920 --> 0:22:36.680 you can branch out into other parts of the calendar. 0:22:36.720 --> 0:22:39.119 You could also do a sell in may E t 0:22:39.320 --> 0:22:41.800 F and just have one that just just doesn't hold 0:22:41.840 --> 0:22:44.320 the stocks during the summer, although that's that's been proven 0:22:44.320 --> 0:22:47.560 to be pretty much a lie. But anyway, there's definitely 0:22:47.600 --> 0:22:50.159 some some some options here. I think in fact that 0:22:50.240 --> 0:22:52.080 the name of the company that I thought of was 0:22:52.160 --> 0:22:55.200 Calendar Shares. You guys are like you're the closest thing 0:22:55.240 --> 0:22:58.720 to that sort of tongue in cheek idea. UM. So again, 0:22:58.760 --> 0:23:00.040 that's part of the reason I was so interesting to 0:23:00.640 --> 0:23:03.560 talk to you guys, because time hasn't really been sliced 0:23:03.640 --> 0:23:08.520