WEBVTT - The Great Emerging Markets Debate 0:00:05.920 --> 0:00:12.879 Welcome to Trillions. I'm Joel Weber and I'm America Belts Eric. 0:00:13.320 --> 0:00:16.160 I find you yet again on the road. Where is 0:00:16.200 --> 0:00:19.840 it this? I'm in uh the D terminal of the 0:00:19.880 --> 0:00:23.520 Miami Airport, waiting for my flight back from the big 0:00:23.520 --> 0:00:27.560 e t F conference called Exchange. Um, and I am 0:00:27.600 --> 0:00:30.920 I'm weary. I'm tired, I'll be honest, but I had 0:00:30.760 --> 0:00:32.800 I had fun and I met a lot of people 0:00:32.880 --> 0:00:36.200 and reconnected with a bunch of people. Um, but tip 0:00:36.280 --> 0:00:39.040 as usual, I'm I'm exhausted on the way home. So 0:00:39.080 --> 0:00:40.960 you went to Miami to talk about e t F 0:00:41.040 --> 0:00:46.240 s instead of Bitcoin, I'm surprised. Yeah, well it's funny. 0:00:46.240 --> 0:00:48.839 There was a Bitcoin conference the week before, so there 0:00:48.840 --> 0:00:51.559 were some people who were at both. The world's are 0:00:51.600 --> 0:00:53.320 merging a little bit. But yeah, it was the e 0:00:53.400 --> 0:00:56.040 t F conference. So you're in Miami. You did this 0:00:56.080 --> 0:00:59.160 et F conference and this is gonna be another special 0:00:59.200 --> 0:01:04.560 episode of Trillion. Yeah. So they had a special room 0:01:04.560 --> 0:01:08.160 in the conference where they had six different podcasts to 0:01:08.240 --> 0:01:11.760 a live episode. UM. Other ones that were in the 0:01:11.800 --> 0:01:15.480 mix where Animal Spirits, UM, the med favorite Show and 0:01:15.600 --> 0:01:18.280 Flirting with Models, So you know, good company. These are 0:01:18.360 --> 0:01:20.959 popular podcasts with smart people. So I was happy to 0:01:21.000 --> 0:01:23.360 be in the mixed trillions. You weren't there obviously, so 0:01:23.440 --> 0:01:25.600 Katie Gray felt sort of filled in and you know, 0:01:25.640 --> 0:01:28.240 played your part. She was great as usual. It was 0:01:28.319 --> 0:01:30.120 great hanging out with her at the conference as well. 0:01:30.360 --> 0:01:32.080 And then we got two guests. We got Jeremy Schwartz 0:01:32.080 --> 0:01:34.919 and Wisdom treat and Perth Toll from Life and Liberty 0:01:34.920 --> 0:01:38.360 Indexes who was famously from the Freedom ETF which is 0:01:38.400 --> 0:01:41.720 doing very well. And Jeremy has China in their funds 0:01:42.080 --> 0:01:46.440 and Jeremy's Wisdom Tree ets also never got rid of Russia, 0:01:46.880 --> 0:01:49.120 and so I thought, let's have a little friendly debate 0:01:49.240 --> 0:01:51.760 about whether you should own China, Russia and some of 0:01:51.760 --> 0:01:55.760 these other authority authoritarian countries. Perth, obviously we know where 0:01:55.800 --> 0:01:57.920 she stands there, not in her fund and that's what 0:01:57.960 --> 0:01:59.800 we did. We had a kind of friendly debate and 0:02:00.080 --> 0:02:02.160 there was a point where they both started talking back 0:02:02.200 --> 0:02:04.200 and forth for maybe a good like I don't know, 0:02:04.400 --> 0:02:07.120 six minutes, which is what we wanted. Um. But we 0:02:07.240 --> 0:02:09.440 brow some other stuff too, but mostly that was the discussion. 0:02:12.840 --> 0:02:17.360 It's time on trillions, the big emerging markets debate. Welcome 0:02:17.400 --> 0:02:21.840 to trillions. I'm Eric thought tunis. I'm Katie Kryfeld, filling 0:02:21.880 --> 0:02:24.960 in for Joel Webber, who couldn't be with us. He's 0:02:25.000 --> 0:02:26.920 stuck in New York City where the weather is not 0:02:26.960 --> 0:02:30.079 as good. Um, but we miss him, and uh we will. 0:02:30.440 --> 0:02:32.160 I think Joel and I might actually have done an 0:02:32.200 --> 0:02:36.040 intro before you're hearing me here. So Katie, thank you 0:02:36.080 --> 0:02:39.280 for filling in. Absolutely. I was honored when you asked. 0:02:39.360 --> 0:02:41.639 Let me just say that, so thrilled to be here. 0:02:41.639 --> 0:02:43.800 You're a regular on the show anyway, so yeah, you know, 0:02:43.960 --> 0:02:47.720 but to put on my jewel Webber hats pretty huge. Um. Well, 0:02:47.960 --> 0:02:49.680 how do you like the conference so far? What have 0:02:49.720 --> 0:02:53.720 you learned? Nuts? I've actually I have shaken so many 0:02:53.800 --> 0:02:57.239 hands over the past I don't know six hours in 0:02:57.400 --> 0:02:59.600 terms of what I've learned. I'm going to get back 0:02:59.600 --> 0:03:03.519 to you on that. Well, you've moderated like two panels, nothing, 0:03:03.680 --> 0:03:08.680 nothing of interest. I'm worried about inflation. Okay, yeah, yeah, 0:03:08.680 --> 0:03:11.359 do you hear Gunlock's presentation, I'm worried about everything. After 0:03:11.400 --> 0:03:15.200 I realize, Um, so I spoke with Michael Sonenshein of 0:03:15.240 --> 0:03:19.760 Gray Scale. I think our panel ended at nine or 0:03:19.800 --> 0:03:22.840 maybe it ended at ten. I didn't realize that Gunlock 0:03:23.000 --> 0:03:26.960 immediately followed us, like immediately like brush past him. So 0:03:27.000 --> 0:03:31.000 that was pretty cool. Yeah, when this conference was in 0:03:31.120 --> 0:03:34.520 Hollywood two and a half years ago, backstage, we ran 0:03:34.560 --> 0:03:37.920 into Derek Jeter and took one of the most famous 0:03:37.920 --> 0:03:41.559 photos within our little et F community of Todd Rosenbluth. 0:03:42.560 --> 0:03:45.160 Looks like he was pitching something to Derek Jeter. Who 0:03:45.280 --> 0:03:49.080 was You got to see the photo. But anyway, Yeah, 0:03:49.080 --> 0:03:51.200 sometimes you meet some people backstage. I actually met Sam 0:03:51.240 --> 0:03:53.800 Hanky backstage. Do you know who that is? I should, 0:03:53.920 --> 0:03:57.520 and I don't anybody know who Sam Hanky is. Yeah. 0:03:57.760 --> 0:04:00.640 You ever heard the phrase trust the process? I certainly have. 0:04:01.120 --> 0:04:04.480 It's all coming together. He put the Sixers together and 0:04:04.480 --> 0:04:07.000 created that a concept of just sort of waiting picking 0:04:07.080 --> 0:04:09.240 high draft picks. Anyway, it was great to meet him, 0:04:09.440 --> 0:04:11.800 great to be here. Let's get on with the guests 0:04:11.840 --> 0:04:14.920 that we have. Um, So, look, I was thinking about 0:04:15.040 --> 0:04:18.040 who to get on this this program for this episode 0:04:18.080 --> 0:04:20.799 because it's live, there's I don't know about forty people 0:04:20.800 --> 0:04:23.039 in the audience which will take questions from after we 0:04:23.080 --> 0:04:26.080 get some questions to our panel of guests, not panelists, 0:04:26.560 --> 0:04:30.839 and I thought the WENI people who are interesting, argumentative, 0:04:30.880 --> 0:04:33.760 and good on stage, and that does narrow the list 0:04:33.800 --> 0:04:35.360 down a little bit, because you could have somebody who 0:04:35.400 --> 0:04:37.279 isn't any of those things and on a podcast, but 0:04:37.360 --> 0:04:39.360 when you're on stage, you kind of have to bring 0:04:39.440 --> 0:04:42.400 some firepower. So I have the two very good, perfect 0:04:42.400 --> 0:04:46.919 people for this Perth Toll of Life and Liberty Indexes. 0:04:47.279 --> 0:04:49.440 Is that the official name of your company? Okay, I 0:04:49.520 --> 0:04:52.400 got it all right. I always just say Perth Tolls 0:04:52.440 --> 0:04:54.200 of Freedom f R D M is the e t 0:04:54.320 --> 0:04:57.560 F that basically she runs. And Jeremy Schwartz of Wisdom 0:04:57.600 --> 0:05:06.679 Tree Welcome, guys, very argumentative. What's expected of us? So, Katie, um, 0:05:06.720 --> 0:05:08.880 we haven't even prepped for this, so you just jump 0:05:08.960 --> 0:05:11.160 in when you feel the urge. I'll start with a question. 0:05:11.200 --> 0:05:14.400 I'm gonna start with just a broad question. I think 0:05:14.480 --> 0:05:17.159 this year really reminded us of why they're called the 0:05:17.200 --> 0:05:21.120 emerging markets. Right. They seem pretty mellow for a while 0:05:21.120 --> 0:05:23.560 and they just went crazy. Let me ask both of 0:05:23.560 --> 0:05:26.880 you guys this, why even invest in the emerging markets 0:05:26.880 --> 0:05:28.800 at all? I mean, you guys have different takes on them, 0:05:28.800 --> 0:05:33.640 but why even allocate to E M? Well, it's it's interesting. 0:05:33.680 --> 0:05:36.760 I think certainly the inflation is your main narrative, Katie, 0:05:36.760 --> 0:05:38.600 to your point that that's the big concern. And so 0:05:38.640 --> 0:05:41.960 you see growth stocks selling off everywhere. That's particularly true 0:05:41.960 --> 0:05:46.000 in e M uh now China growth in particulars where 0:05:46.040 --> 0:05:49.240 a lot of the hits came. But I think people 0:05:49.320 --> 0:05:51.120 view EM for the growth. Like so one of the 0:05:51.160 --> 0:05:54.920 reasons why e M should be favored is it comes 0:05:54.960 --> 0:05:58.760 back to valuations and fundamental growth. And so SMP at 0:05:58.760 --> 0:06:04.000 twenty times earnings is more expensive market. Broad emerging markets 0:06:04.000 --> 0:06:08.160 are cheaper called small twelve times earnings maybe for a 0:06:08.200 --> 0:06:11.280 broad e M index, and they've got populations that are 0:06:11.320 --> 0:06:14.679 growing faster theoretically earnings and sales that are growing faster. 0:06:14.720 --> 0:06:18.440 It's that combination of valuations and growth that's interesting. And 0:06:18.480 --> 0:06:20.440 you could see different ways of looking at you and 0:06:20.480 --> 0:06:22.400 have very different performances here. So we can get into 0:06:22.440 --> 0:06:25.400 all that. But value is working very very well in 0:06:25.480 --> 0:06:28.600 e M versus growth is what I would say, even 0:06:28.680 --> 0:06:30.920 like when it came in with heavy Russia. It's working 0:06:31.000 --> 0:06:32.920 very very well, and so we can we can get 0:06:32.960 --> 0:06:35.000 into all those things. Yeah, I would add there that 0:06:35.120 --> 0:06:38.239 in emerging markets right now especially UM in a crisis situation, 0:06:38.320 --> 0:06:39.840 you want to look at what are the safe havens 0:06:39.920 --> 0:06:42.680 right in this type of market? And um, you know, 0:06:42.760 --> 0:06:44.720 in the emerging markets, we're looking for markets that are 0:06:44.720 --> 0:06:46.720 coming from a very low low base, that have a 0:06:46.800 --> 0:06:50.440 high growth potential. And you know, we specifically want countries 0:06:50.480 --> 0:06:54.120 that have the you know, stronger institutions, rule of law, 0:06:54.320 --> 0:06:56.480 individual investor protections, and those I think are going to 0:06:56.560 --> 0:06:59.560 be the safe havens in them going forward. And actually 0:06:59.680 --> 0:07:01.600 I've in one of the panels I did this morning, 0:07:01.640 --> 0:07:05.320 we were talking with Michael Roni of Spider and he 0:07:05.720 --> 0:07:08.960 brought up small cap e M as a place that 0:07:09.040 --> 0:07:11.720 he really likes right now. And I don't often think 0:07:11.720 --> 0:07:13.840 about small cap YEM. I have to say that, but 0:07:14.160 --> 0:07:17.600 I mean, so an obvious question to follow up with 0:07:17.800 --> 0:07:20.600 to you, Jeremy is e M. We talked about it 0:07:20.760 --> 0:07:25.560 as a block U as basically this one singular trade. 0:07:25.600 --> 0:07:29.360 But within e M, what regions are you bullish on 0:07:29.440 --> 0:07:33.440 right now and where are you potentially avoiding? Well? So 0:07:33.600 --> 0:07:36.240 DGS is a small cap e M E T f 0:07:36.360 --> 0:07:38.840 R S fifteen year history. It has a dividend orientation 0:07:38.880 --> 0:07:41.320 to it, so it's very value based. So talk about 0:07:41.400 --> 0:07:43.680 value around the world. The pe on this basket is 0:07:43.720 --> 0:07:47.280 below nine times earnings, right, so this is single digit multiples. 0:07:47.280 --> 0:07:51.000 It's got average dividents of five broad EM is down 0:07:51.160 --> 0:07:54.480 nine this year or yeah, around nine percent, it's it's up, 0:07:55.040 --> 0:07:57.200 so it's sort of that's my point on value is 0:07:57.200 --> 0:07:59.720 working when growth is not. So that that is a 0:08:00.040 --> 0:08:01.960 eat example. It doesn't all have to be China tech. 0:08:02.080 --> 0:08:03.720 I mean, China tack is its own story that we 0:08:03.760 --> 0:08:06.680 can get into. But the small cap em it's a 0:08:06.760 --> 0:08:09.040 two billion dollar fund. It's one of our top inflows 0:08:09.040 --> 0:08:11.760 this year. You're seeing a lot of people embrace that. 0:08:12.080 --> 0:08:13.880 And I think it's one of the few places where 0:08:13.920 --> 0:08:17.080 a non cap weighted e t F is the largest 0:08:17.120 --> 0:08:19.160 et F in the world. Actually, I think I don't 0:08:19.160 --> 0:08:22.600 think there's a bigger non cap weighted ETF in t gs, 0:08:22.600 --> 0:08:25.360 so I think that's an interesting one. Also. Yeah, and um, 0:08:25.720 --> 0:08:27.840 since you brought up China, I think let's just go 0:08:27.960 --> 0:08:29.720 right there. I think that's one of the most interesting 0:08:29.760 --> 0:08:32.680 things to talk about. We'll get to Russia too, But 0:08:32.920 --> 0:08:36.480 um per um. You know, I think you really showed 0:08:37.440 --> 0:08:40.920 people with your fund um you know why. You know, 0:08:41.160 --> 0:08:45.280 governments are different in the emerging markets, and there's definitely 0:08:45.280 --> 0:08:48.640 been a mental shift. I feel obviously your fund is 0:08:48.679 --> 0:08:50.760 beating the e M by a lot because of some 0:08:50.880 --> 0:08:53.679 of this UM. But there's also when you you e 0:08:53.800 --> 0:08:55.920 t f s catch fire, they also need a narrative 0:08:55.920 --> 0:08:59.000 and psychological shift, and I feel like it's happening. UM. 0:08:59.080 --> 0:09:02.079 I'll let jeremy owner, but explain why you don't want 0:09:02.160 --> 0:09:05.680 China in your portfolio. Yeah. So we think on the 0:09:05.720 --> 0:09:09.600 country level, that governance factor, which we measure using personal 0:09:09.600 --> 0:09:12.720 and economic freedom variables that are from third party think 0:09:12.720 --> 0:09:16.800 tanks UM is the basis for all other kind of 0:09:17.400 --> 0:09:19.880 other kind of factors that you can put onto emerging 0:09:19.880 --> 0:09:22.920 markets or any other strategy. So in developed markets, you know, 0:09:23.040 --> 0:09:26.520 these these freedom metrics are all pretty high. Most developed 0:09:26.520 --> 0:09:29.440 markets are pretty free, the governance is pretty strong UM, 0:09:29.480 --> 0:09:31.199 and you don't really need to worry about that. But 0:09:31.240 --> 0:09:35.200 in emerging markets, the universe is so rife with autocracies. 0:09:35.240 --> 0:09:38.880 It is so there's so many, you know, countries like Russia, China, 0:09:39.040 --> 0:09:42.839 Saudi Arabia, Turkey, Egypt, um A, u A, so forth. 0:09:42.880 --> 0:09:45.319 So there are a lot of these autocracies. And when 0:09:45.320 --> 0:09:48.920 you market cap weight without regard to country level governance 0:09:49.320 --> 0:09:52.320 you are looking at and autocracies and your broad emerging 0:09:52.360 --> 0:09:55.240 markets allocation and that's just a lot of risk and 0:09:55.320 --> 0:09:58.120 China I think is the biggest risk in that allocation. 0:09:58.120 --> 0:10:01.440 It's currently about and you're broad emerging markets in disease. 0:10:01.800 --> 0:10:05.880 But I mean at its height it was about in August. 0:10:06.559 --> 0:10:09.440 That's come down since them because of market movement. So 0:10:09.679 --> 0:10:12.960 um going forward, you know, China has in its governance 0:10:13.000 --> 0:10:15.400 and policies reversed all of the policies that have made 0:10:15.400 --> 0:10:19.120 them prosperous and they are going full speed ahead on 0:10:19.200 --> 0:10:21.960 that reversal. So we think that's going to be a 0:10:22.040 --> 0:10:26.120 huge drag on emerging markets going forward. It's interesting. I mean, 0:10:26.320 --> 0:10:29.839 so it comes back to these big decisions and benchmarks. 0:10:29.880 --> 0:10:31.480 So M s c I, to your point, is now 0:10:31.559 --> 0:10:34.640 thirty percent China, and which is so if you're going 0:10:34.679 --> 0:10:37.280 to go to zero China and listen, there's now a 0:10:37.320 --> 0:10:39.480 whole category of e M X China al right, so 0:10:39.520 --> 0:10:42.440 you're seeing flows go to beta solutions. We have a 0:10:42.480 --> 0:10:45.439 filing for an e M X China without state owned companies, 0:10:45.480 --> 0:10:48.000 which is something Perthonite agree on. It will be agreeable 0:10:48.000 --> 0:10:51.080 on the x state owned factor. As a concept. Um. 0:10:51.120 --> 0:10:56.160 But the China bet to, I think it is a 0:10:56.200 --> 0:10:59.319 big leap to go all the way to zero UM. 0:11:00.600 --> 0:11:05.920 I mean, they're certainly a lot of talk about being uninvestable. Right, 0:11:05.960 --> 0:11:08.840 So for a while energy was uninvestable as a sector. 0:11:08.960 --> 0:11:11.559 When oil went negative, you're hearing, well, you know, it's 0:11:11.600 --> 0:11:14.120 it's uninvestable, and that's exactly when you wanted to be investing. 0:11:14.240 --> 0:11:16.880 I feel like some of that narrative is happening around 0:11:17.000 --> 0:11:20.520 China now that everybody's saying it's it's quote unquote uninvestable. 0:11:20.960 --> 0:11:24.400 Yet the companies are growing like four times. If you 0:11:24.440 --> 0:11:26.720 look at some of the China tech companies are growing 0:11:26.760 --> 0:11:29.760 four times the SMP at multiples that are less than 0:11:29.800 --> 0:11:33.840 the SMP. So it's it becomes that becomes the inherent 0:11:33.840 --> 0:11:35.840 thing is is they are they actually trying to make 0:11:35.840 --> 0:11:38.800 these companies completely unprofitable. There they are putting their hands 0:11:38.880 --> 0:11:41.520 on these companies, there's no question about it. UM. But 0:11:41.640 --> 0:11:43.640 often when you hear it's completely on investable, that's when 0:11:43.640 --> 0:11:45.920 you time to go Okay, So you're looking at this 0:11:46.080 --> 0:11:51.480 value play, right, it's a well the growth characteristics combined 0:11:51.480 --> 0:11:55.000 with their valuations make it an interesting combination all right, 0:11:55.040 --> 0:11:57.000 So I'm gonna I'm gonna counter that if you look 0:11:57.040 --> 0:11:59.599 at the freer markets, you can do value place in 0:11:59.640 --> 0:12:02.040 the free markets where you have investor protections, where you 0:12:02.120 --> 0:12:04.800 have rule of law. But in a market like China, 0:12:04.880 --> 0:12:07.480 if you look at the mc h I INDE, that's 0:12:07.480 --> 0:12:10.319 the ms c I China on shore and offshore, very 0:12:10.360 --> 0:12:16.360 complete picture of China investing um since inception in the 0:12:16.559 --> 0:12:20.360 cumulative return is now approaching zero percent. So that's a 0:12:20.360 --> 0:12:24.520 time of extreme growth in China from now. That was 0:12:24.559 --> 0:12:27.439 a time when it really opened up from the policies 0:12:27.480 --> 0:12:30.120 of bysmal policies under MAO where tens of millions of 0:12:30.120 --> 0:12:33.440 people died and famine. Um. I've seen someone that is 0:12:33.480 --> 0:12:37.040 at this conference. Another firm used the term Great Lead 0:12:37.120 --> 0:12:40.080 Forward for marketing purposes. The Great Lead Forward killed tens 0:12:40.080 --> 0:12:43.199 of millions of people. So no, please don't use that 0:12:43.240 --> 0:12:46.040 for marketing. First of all, and second of all, Um, 0:12:46.080 --> 0:12:49.760 those policies were reversed to you know, not so bad policies, 0:12:49.920 --> 0:12:52.920 and that is what caused this great growth in China 0:12:53.000 --> 0:12:55.160 the last thirty and forty years. That was an increase 0:12:55.240 --> 0:12:58.199 in economic freedom. And now they are reversing all of 0:12:58.240 --> 0:13:00.560 those policies. If you got zero per cent during a 0:13:00.559 --> 0:13:04.840 period of extreme growth, good luck going forward. So back 0:13:04.840 --> 0:13:08.000 in the nineties, like of it was all state owned companies. 0:13:08.440 --> 0:13:10.679 Now you could say all of China. There's definitely a 0:13:10.679 --> 0:13:13.400 bit narrative that all of China is a state owned company. 0:13:13.440 --> 0:13:16.320 So you could say, can is there anything a private company? Right? 0:13:16.320 --> 0:13:18.320 So there are people we have that discussion with all 0:13:18.320 --> 0:13:19.920 the time. We have c X as c R China 0:13:20.080 --> 0:13:22.559 state owned, and I get that view, Like I'm not 0:13:22.600 --> 0:13:26.200 gonna completely argue with that view, um, but they are 0:13:26.960 --> 0:13:30.480 position as private companies and they do have fact like 0:13:30.520 --> 0:13:32.880 if you just look at the fundamentals of the companies, 0:13:32.920 --> 0:13:36.640 they are growing sales a year for the last three years, um. 0:13:36.840 --> 0:13:39.920 And so there becomes a valuation number where if they 0:13:39.960 --> 0:13:42.640 don't make these a zero that they are at trapped. 0:13:42.800 --> 0:13:45.080 You know, they could be good good investments. Is the 0:13:45.120 --> 0:13:47.360 point I would come back with. I do agree with 0:13:47.400 --> 0:13:51.040 the non state owned aspect of what he's saying here 0:13:51.080 --> 0:13:53.840 for freer markets now in markets like China, yes, I 0:13:53.880 --> 0:13:56.800 do agree that most companies are all companies actually are 0:13:57.120 --> 0:14:00.480 state owned. In fact, there's a law an article actually 0:14:00.480 --> 0:14:04.840 says all company information is considered a state secret and 0:14:04.880 --> 0:14:06.600 we can't share. And that's what the audit problem that 0:14:06.600 --> 0:14:09.040 we're having now with the p C O B. But 0:14:10.400 --> 0:14:12.480 in a place like China where they can come in 0:14:12.559 --> 0:14:14.920 overnight and just say okay, you guys are nonprofits now, 0:14:15.320 --> 0:14:17.440 like they did with the education companies last year, there's 0:14:17.440 --> 0:14:19.640 no way an investor could recover from that. And it's 0:14:19.720 --> 0:14:21.440 very similar to what we see in Russia. In fact, 0:14:21.480 --> 0:14:23.800 with the freedom metrics that we use from the Cat 0:14:23.880 --> 0:14:26.440 Institute and the Fraser Institute, a a combination of seventy 0:14:26.520 --> 0:14:30.560 nine variables encompassing personal and economic freedoms, China ranks worse 0:14:30.600 --> 0:14:33.480 than Russia. So this is great. I have to say, 0:14:33.520 --> 0:14:36.280 like I'm already really loving this, and I've asked one question, 0:14:36.360 --> 0:14:39.560 but Jeremy, listening to you, describe sort of the valuation 0:14:39.760 --> 0:14:43.600 opportunity that you see here in Perth. Hearing your counter that, Okay, 0:14:43.680 --> 0:14:47.160 China isn't a free society. You don't know what's going 0:14:47.240 --> 0:14:51.240 to happen to you know, your investments, things can change overnight. 0:14:51.760 --> 0:14:55.320 I'm curious do you at all consider, you know, f 0:14:55.480 --> 0:14:59.200 R D M a E s G fund from that standpoint? Yeah, 0:14:59.200 --> 0:15:01.040 So we have two type to investors, and some people 0:15:01.080 --> 0:15:03.360 are both like myself on both. Um we have one 0:15:03.600 --> 0:15:06.440 that is wanting to align their values for freedom and 0:15:06.520 --> 0:15:09.280 human rights UM in emerging markets and and that's one 0:15:09.280 --> 0:15:11.320 type investor. And we have one type investor that believes 0:15:11.320 --> 0:15:14.520 that freer markets will outperform. And we have seen twenty 0:15:15.080 --> 0:15:19.640 outperformance over e M since inception. Um so, so that 0:15:19.760 --> 0:15:21.800 is another type of invest Now, we don't always promise 0:15:21.880 --> 0:15:23.960 that kind of out performance, just very stark right now 0:15:24.000 --> 0:15:25.960 because of what has happened in the market. UM So, 0:15:26.040 --> 0:15:28.200 don't expect that going forward, I would say, but I 0:15:28.240 --> 0:15:31.480 do expect freer countries to outperform because they have more 0:15:31.520 --> 0:15:33.960 sustainable growth, they recover faster from draw downs, and they 0:15:34.000 --> 0:15:36.520 have better allocation of personal and economic capital, so they 0:15:36.560 --> 0:15:39.000 use their capital more efficiently and have less capital flight 0:15:39.040 --> 0:15:43.040 and capital destruction. UM So, yeah, I do consider it 0:15:43.120 --> 0:15:45.000 kind of an E s G product. We don't sell 0:15:45.040 --> 0:15:48.600 ourselves that way because we don't use company level s 0:15:48.600 --> 0:15:50.400 G metrics. But what we found is that on the 0:15:50.440 --> 0:15:53.360 country level, UM, when that G is in place, that 0:15:53.440 --> 0:15:56.880 the S and the E on both the country level 0:15:56.920 --> 0:15:58.960 and the security level level tends to take care of 0:15:59.040 --> 0:16:02.160 itself and we have an A rating from MSCI on 0:16:02.400 --> 0:16:07.640 y s G actually far fund. Okay, let's move to Russia. Um. 0:16:07.680 --> 0:16:09.520 And by the way, I like just go into debate 0:16:09.520 --> 0:16:12.840 mode that I like that. I would just stand back 0:16:12.880 --> 0:16:14.840 like an old school presidential debate. You guys, just go 0:16:14.880 --> 0:16:17.920 at it. Um, let's talk about Russia. I mean, obviously 0:16:17.960 --> 0:16:20.840 everybody's seen what's happened. Russia has gotten dropped from all 0:16:20.840 --> 0:16:23.600 the major indexes, and it's basically those stocks are worth 0:16:23.680 --> 0:16:27.480 nothing basically. Um. But you know, Jeremy, talk about what 0:16:27.600 --> 0:16:31.120 happens if I don't know, there's a resolution, how's all 0:16:31.200 --> 0:16:34.480 this come back to normal? So they've been dropped from 0:16:34.480 --> 0:16:37.240 the major indexes besides for Wisdom Trees, UM. So we 0:16:37.280 --> 0:16:39.200 have not So you haven't dropped them. We have not 0:16:39.320 --> 0:16:42.920 dropped them from the indexes, um, partly because you're I 0:16:42.920 --> 0:16:46.600 think the question some people ask is are they now 0:16:46.720 --> 0:16:49.200 in the funds? They're being marked zero? Okay, you can't 0:16:49.200 --> 0:16:52.280 trade these stocks, So even the removal is symbolic. Okay. 0:16:52.320 --> 0:16:55.280 So it's it's like a statement that we are against 0:16:55.320 --> 0:16:58.120 Russia and we're not. We're not pro Russia at Wisdom Trede. 0:16:58.160 --> 0:17:00.320 That's not what I'm saying at all, but I saying 0:17:00.360 --> 0:17:03.560 these securities may not be valued at zero. And as CEO, 0:17:03.640 --> 0:17:05.879 I'm responsible for assuring we get the best value for 0:17:05.920 --> 0:17:09.600 our funds. And if they're not necessarily valued at zero, 0:17:09.640 --> 0:17:12.760 should you make that symbolic statement today? And so this 0:17:12.800 --> 0:17:14.520 comes back to this E S G question. There's no 0:17:14.640 --> 0:17:18.560 question about it. Um. But so today they're still in 0:17:18.600 --> 0:17:20.680 the indexes we'll have to We don't have a rebound, 0:17:20.720 --> 0:17:23.359 so there's nothing to do today. Our next rebound is 0:17:23.400 --> 0:17:26.560 in November, which is where I'll get even more interesting, um, 0:17:26.600 --> 0:17:28.960 if nothing is resolved or they're not worth more than zero. 0:17:29.359 --> 0:17:31.479 But we haven't made that statement. But we also think 0:17:31.520 --> 0:17:33.760 about like what are the other Are there other countries 0:17:34.000 --> 0:17:36.639 like a China that becomes an issue and and and 0:17:36.760 --> 0:17:38.920 at thirty of the market, it's so much you'd say 0:17:38.920 --> 0:17:42.359 it's a bigger issue. Um. What's interesting is our fund 0:17:42.359 --> 0:17:45.159 that had the most Russia coming into this year was 0:17:45.320 --> 0:17:48.080 d E M High dividend Value. The PS and these 0:17:48.119 --> 0:17:52.080 baskets are six times earnings. It's up to on the 0:17:52.160 --> 0:17:55.080 year when the markets down ten, the S ANDPS down seven. 0:17:55.560 --> 0:17:58.280 So despite being overweight Russia that's now being valued at zero, 0:17:58.320 --> 0:18:01.320 it's still up to which is just telling you how 0:18:01.400 --> 0:18:05.000 strong the value rotation has been UM. But also those 0:18:05.000 --> 0:18:07.320 things may not be worth zero. So that's one of 0:18:07.320 --> 0:18:09.360 the reason why we haven't the reason why we haven't 0:18:09.400 --> 0:18:18.760 kicked it out. Yeah, it's interesting RSX stopped trading van 0:18:18.840 --> 0:18:22.040 Neck with the exchange said you can't trade it. I'm 0:18:22.080 --> 0:18:24.120 have a feeling Vane would would actually prefer to trade. 0:18:24.160 --> 0:18:27.080 I know if I owned RSX UM, I would rather 0:18:27.160 --> 0:18:29.439 just hang in there and wait then have it just 0:18:29.760 --> 0:18:33.480 liquidated it like a dollar or zero um per. Obviously 0:18:33.840 --> 0:18:36.520 this to pivot to you on this UM you know 0:18:37.040 --> 0:18:39.800 we're you know Russia has it ever been in your fund? 0:18:40.280 --> 0:18:43.359 We have never owned Russia, China, Saudi Arabia, Egypt, Turkey, 0:18:43.440 --> 0:18:45.240 or any of the other autocracies. And that's just a 0:18:45.400 --> 0:18:48.280 natural result of the freedom waiting. So our job is 0:18:48.320 --> 0:18:52.080 to find the best opportunities in emerging markets for our investors, 0:18:52.240 --> 0:18:54.920 and we believe those opportunities exist in the freer markets. 0:18:54.920 --> 0:18:57.160 If you have a company that's trying to do good, 0:18:57.160 --> 0:18:59.760 for example, in a freer market versus an un free market. 0:19:00.040 --> 0:19:02.240 In a freer market, they're going to be rewarded and 0:19:02.240 --> 0:19:05.320 incentivized to provide the best value for their clients. That 0:19:05.440 --> 0:19:08.240 is how they compete by making other people's lives better. 0:19:08.760 --> 0:19:11.240 In another free market, you're going to be rewarded by 0:19:11.280 --> 0:19:14.480 gaining the favor of the government. Your entire job is 0:19:14.480 --> 0:19:16.960 to curry favor with the government. And that is why 0:19:17.000 --> 0:19:18.800 a lot of Wall Street firms want to be there 0:19:18.880 --> 0:19:20.920 right now, because if they get the favor of the government, 0:19:21.520 --> 0:19:23.480 that's a monopoly, and the government's going to keep all 0:19:23.480 --> 0:19:26.080 your competitors out, even if they offer a better value. 0:19:26.320 --> 0:19:30.480 So we're here to provide investors with access to markets 0:19:30.480 --> 0:19:33.560 that have the conditions in place to support and encourage 0:19:34.400 --> 0:19:37.720 companies that are willing to put their own, their stakeholders, 0:19:37.760 --> 0:19:40.720 and their customers interests first ahead of those of the state. 0:19:40.920 --> 0:19:42.760 And so we think those are the better opportunities. So 0:19:42.800 --> 0:19:45.919 we don't want to be in countries like Russia, where 0:19:46.080 --> 0:19:50.080 the state's interests always come first. Can I do a 0:19:50.119 --> 0:19:54.320 bad host thing and go back to China? Okay, so, jeremy, 0:19:54.359 --> 0:19:57.240 I am curious. I mean it feels like every few 0:19:57.280 --> 0:20:01.399 months we get worried about potential delisting of Chinese companies 0:20:01.520 --> 0:20:04.040 of the A D r S. I would just love 0:20:04.080 --> 0:20:06.480 to know how you approach that at Wisdom Trade, because 0:20:06.720 --> 0:20:08.440 it feels like, again we're in one of those modes 0:20:08.440 --> 0:20:12.960 where that's a concern for sure. Um. So I say 0:20:13.000 --> 0:20:15.240 a few things. One is we have a woman, Leechen Rent, 0:20:15.320 --> 0:20:17.800 who we had hired away from Vanguard, and she I 0:20:17.800 --> 0:20:20.040 think produces I think some of the best commentary on 0:20:20.080 --> 0:20:22.440 what's happening in China. So I encourage everybody to follow 0:20:22.520 --> 0:20:26.080 Lee chen Um in that regard. She's been on top 0:20:26.080 --> 0:20:27.919 of a lot of what she sees as the narrative 0:20:28.040 --> 0:20:30.040 versus the reality on the ground. One of the things 0:20:30.119 --> 0:20:32.399 we did in our indexes we did add more A shares, 0:20:32.400 --> 0:20:34.480 so we now have about a third A shares in 0:20:34.520 --> 0:20:36.919 our indexes. So we had were migrating away from the 0:20:37.000 --> 0:20:39.960