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

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Speaker 1: My Twitter has been blowing up so far this week

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Speaker 1: because we did this video series with our colleagues at

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Speaker 1: Bloomberg Quick Take that turned Trillions from the podcast that

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Speaker 1: we hold so dear to us into a video show. Yeah.

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Speaker 1: It's our second production, the first one being that et

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Speaker 1: F Story audio documentary, but that still was audio only.

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Speaker 1: This is our first foray into video and it was fun.

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Speaker 1: I had had a good time, I thought, Um, I

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Speaker 1: was proud that we were able to highlight a part

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Speaker 1: of the industry that is rarely highlighted and for an

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Speaker 1: audience that is more retail and is able to get

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Speaker 1: inside look at how professionals assemble et F portfolios and

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Speaker 1: pick ETFs and think about the market. And you had

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Speaker 1: to kind of a I will credit you for this epiphany.

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Speaker 1: I've long talked about food on the show, as any

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Speaker 1: listener knows. Uh, you were the one that brought it

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Speaker 1: all together. So, and we had some guests who are

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Speaker 1: amazing and all of those guests are going to join

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Speaker 1: us today. What was your epiphany? Well, we were debating

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Speaker 1: what to do and UM, two things, Uh, one. A

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Speaker 1: lot of our ideas were just despaired. It would require

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Speaker 1: like so much different, like go to the gold Vault

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Speaker 1: and it it was like, man, that's gonna take weeks

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Speaker 1: to pull off for four minute episodes. So one of

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Speaker 1: it was just convenience, you know, let's let's just shoot

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Speaker 1: it all in one day. But the other thing was,

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Speaker 1: you know, I get it comes back to when I

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Speaker 1: wrote my book on e t F s in I

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Speaker 1: was interviewing institutions, and none of them really knew about

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Speaker 1: e t S. They knew like the top ten most

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Speaker 1: traded one like SPY and i WM. But then I

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Speaker 1: would interview a certain kind of investor called an e

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Speaker 1: t F strategist, and they knew everything. I mean, I

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Speaker 1: could throw the thirty seven tech et F at them

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Speaker 1: and they would have an opinion on it. And and

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Speaker 1: so for the whole second half of the book, I

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Speaker 1: quote these strategists, and as I talked to them, I

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Speaker 1: just felt that what they were doing was making E

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Speaker 1: t F recipes. Essentially, I almost called the book the

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Speaker 1: e t F Cookbook, and I was gonna put some

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Speaker 1: of their recipes. It went a different direction, but that idea,

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Speaker 1: I guess just sort of lingered in the back of

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Speaker 1: my mind for the years after, and finally it found

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Speaker 1: a home here. So we kind of made it like

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Speaker 1: a Master Chef TV show. Oh it's like genius okay

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Speaker 1: joining us in this episode that I don't I sense

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Speaker 1: a little sarcasm there, but I'll take it. It was.

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Speaker 1: It was rich with sarcasm, okay. So joining us on

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Speaker 1: this episode we got John Davies, Shane iss Thistle to

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Speaker 1: shar Yadava and Ben Levine this time on Trillions the

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Speaker 1: e t F Master Chef's John Shana to shar Ben,

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Speaker 1: thanks for joining us on on Trillions the podcast this time.

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Speaker 1: Thanks for having us. Thank you. Yeah, welcome, happy to

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Speaker 1: be here. Oh Gate too. Jar. I want to start

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Speaker 1: with you. Can you describe when you're when we're not

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Speaker 1: using a force metaphor like being a master Chef, how

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Speaker 1: do you describe being an et F strategist. I mean,

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Speaker 1: I would say, you know, um, credit to Eric right,

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Speaker 1: and I'm gonna just blow smoke right in his direction

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Speaker 1: and say that this is the king of all metaphors.

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Speaker 1: But you know, look, I think what we're trying to

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Speaker 1: do is we're trying to build portfolios for at least

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Speaker 1: an our side, and portfolios that we're building for advisors

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Speaker 1: that they can use to help scale their practice, help

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Speaker 1: build wealth for their households. And so you know, really,

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Speaker 1: if there wasn't something killer metaphor, I mean, maybe it

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Speaker 1: would be you know, kind of like thinking about building blocks,

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Speaker 1: but that's so hackneyed and so well traveled. I think

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Speaker 1: in the E t F world that I think, you know,

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Speaker 1: no one can see the screens now, but everyone's shaking

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Speaker 1: their heads at me with disdain. So um, you know,

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Speaker 1: I'd say maybe that's probably the closest experience you could

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Speaker 1: think of. Um, But really, you know, it is about

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Speaker 1: that sort of end product of just what you put

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Speaker 1: out there, what the model looks like, what it's behaving like,

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Speaker 1: ink it's like we've seen over this year, and what

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Speaker 1: it's doing for households, uh and their end results, you know,

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Speaker 1: which we're hoping to build that well for them and

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Speaker 1: do it at a fees with less risk, which is

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Speaker 1: kind of the big goal that we're looking for. And

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Speaker 1: let me jump in here real quick, because one thing

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Speaker 1: that I discovered when I was covering ETFs, it was

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Speaker 1: about the years into covering them, that was that advisors

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Speaker 1: don't really do a lot of investing. Um, that was

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Speaker 1: something I you know, some do, but a lot of

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Speaker 1: them outsource it. They're going to work on planning the

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Speaker 1: like estate planning, and uh for the relationships and the

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Speaker 1: behavioral coaching. UM, I guess I'll go to John for

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Speaker 1: that one. Can you talk a little bit about what

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Speaker 1: advisors are doing in that they're going to use your portfolio?

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Speaker 1: What are they doing? Then, since you're doing the investing,

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Speaker 1: it's it's exactly what you said, it's um. You know,

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Speaker 1: they're worrying about the overall client relationships, so that doing taxes, insurance,

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Speaker 1: state planning, behavioral coaching, um, you know. And and they

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Speaker 1: their expertise isn't really to be markets people or to

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Speaker 1: you know, how to design a portfolio, so that's where

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Speaker 1: they leave that to, you know, subadvisors such as you

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Speaker 1: know bend myself too, sure, Shanna. So I think it's

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Speaker 1: a win win for everyone that the end client gets

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Speaker 1: a better portfolio experience, a better outcome that they're looking

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Speaker 1: to solve for. And um, you know, everyone is happy

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Speaker 1: in the end. Do they ever come back or they

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Speaker 1: ever look at it and go, hey, man, why did

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Speaker 1: you pick uh, you know XLK instead of v G

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Speaker 1: T or whatever, Like do they ever needle you over

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Speaker 1: your picks? Well, I mean what happens nowadays? You know,

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Speaker 1: the SMP has gone straight up the last ten years,

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Speaker 1: so everyone wants to just know why you didn't do

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Speaker 1: as good as the SMP. But that's a separate conversation.

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Speaker 1: I mean, you know, Shannon myself and I mean, we

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Speaker 1: could spend hours talking about that alone. But they don't

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Speaker 1: really go too much into the weeds. They just like

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Speaker 1: to look at like how they count as growing and um.

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Speaker 1: You know, sometimes the financial advisor will actually say why

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Speaker 1: did you pick this one ETF This is down whereas

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Speaker 1: the market's up, And then you gotta explain, Okay, you know,

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Speaker 1: when you go to portfolio, it's like a recipe. All

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Speaker 1: the ingredients fit together. Someone was supposed to spice, someone

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Speaker 1: supposed to be you know, sweet savory. But in collection,

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Speaker 1: and you know the collection, the entire recipe works on

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Speaker 1: the end. So sometimes you just explain, like, Okay, this

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Speaker 1: one ETIF is meant to like be your portfolio dampener.

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Speaker 1: We're supposed to provide protection. Shana, you had kind of

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Speaker 1: the rock star portfolio, so I'm gonna ask you if

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Speaker 1: there's one other portfolio that you most invied other than

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Speaker 1: your own, which one was it? I I like, uh

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Speaker 1: John Davids portfolios as a matter of fact. It's it's

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Speaker 1: one of those portfolios that complements well some of the

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Speaker 1: stuff we do, which is a little more exotic, a

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Speaker 1: little more as you put rock star ish, those inflation

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Speaker 1: oriented types of portfolios actually are a great heads that

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Speaker 1: we can layer on top and and we do look

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Speaker 1: at a story as products at Spotlight, uh to complement

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Speaker 1: some of those things we're doing. Because you know, we're

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Speaker 1: a small organization, we can't do everything in house, so

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Speaker 1: we look to people, just like everybody that's here, whether

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Speaker 1: it be John or Ben or Touchar, we are looking

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Speaker 1: to use their expertise is along with our own in

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Speaker 1: house to layer upon and complement depending on our client's needs.

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Speaker 1: And just talk a little bit about you were you

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Speaker 1: had some clients that were athletes, and everybody is always

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Speaker 1: intrigued about that because we we actually hear about athletes

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Speaker 1: getting ripped off by their advisors pretty frequently, where movie

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Speaker 1: stars getting into bad deals. Everybody remembers made off. Um,

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Speaker 1: what's a conversation with an athlete, like when you're sharing

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Speaker 1: your portfolio or with the relationship manager who shares the portfolio,

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Speaker 1: do they kind of care what the tickers are or

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Speaker 1: they just sort of trust you. How's it work. It's

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Speaker 1: interesting because I think we understand the risks that a

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Speaker 1: lot of athlete to have in terms of um they

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Speaker 1: have capital, they have assets, and so they are often

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Speaker 1: asked to invest in, you know, relatively risky things as

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Speaker 1: an angel or an a venture capacity. Uh So we're

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Speaker 1: aware of those concerns that they have, and we actually

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Speaker 1: try to present ourselves and uh as a gatekeeper for them.

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Speaker 1: You know, we look at these core portfolios as a

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Speaker 1: way of you know, having that trust and saying, look,

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Speaker 1: we're not going to sell you anything exotic. Here's a

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Speaker 1: nice core model for you to to begin with the

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Speaker 1: foundation of your assets. And then as things get presented

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Speaker 1: to you, where your gatekeeper, We're gonna do the due

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Speaker 1: diligence for you, We're gonna help you make these decisions.

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Speaker 1: We're gonna be honest with you and tell you this

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Speaker 1: sounds like a scheme because quite frankly, as a fiduciary

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Speaker 1: and with the expertise that we have me in particular,

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Speaker 1: working in the private fund market, I can look at

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Speaker 1: some fine prints on on a pit deck and tell

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Speaker 1: you right away, like this is not gonna fly for me,

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Speaker 1: asking the right questions, finding out who other backers are.

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Speaker 1: You know, our goal is to present ourselves and to

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Speaker 1: sort of be that trusted gatekeeper for our athlete clients.

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Speaker 1: And I think that's why they trust us. We're not

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Speaker 1: selling them anything overly exotic. If there's something in particular

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Speaker 1: that they're interested in looking into, we can do that.

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Speaker 1: But more often than not, they get in trouble because

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Speaker 1: they get presented with opportunities and no one's doing the

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Speaker 1: real due diligence for them. They're kind of doing it

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Speaker 1: on their own, and that's where they end up with problems.

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Speaker 1: And not all financial advisors have the capacity to do that.

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Speaker 1: And we're just lucky and that someone like myself, who

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Speaker 1: has been doing private fundue diligence for the last fifteen years,

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Speaker 1: does have some expertise in that that area and can

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Speaker 1: look at some of the things that they get presented

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Speaker 1: with and say, look, this isn't good for your brand.

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Speaker 1: Maybe it's a fine investment, but maybe it's done aligned

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Speaker 1: with their brand. Or you know, I just don't think

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Speaker 1: this is an appropriate way to to invest your money

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Speaker 1: right now. And let me tell you all the red

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Speaker 1: flags I found along the way and the do deal

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Speaker 1: just process. Ben, Um, you've been quiet so far. Uh.

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Speaker 1: You had one of the most I think impressive video

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Speaker 1: performances out of all of us. Eric and I both

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Speaker 1: looked fat and shlowby on camera, and you were like, uh,

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Speaker 1: you know, Keto, by the way, can I just address

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Speaker 1: this anybody who's watched this video. I've lost ten pounds

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Speaker 1: since we shot that. Um. But yeah, Ben shut us

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Speaker 1: all up. But Ben, I thought Ben also Ben dove

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Speaker 1: into the metaphor the hardest. He went all the way.

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Speaker 1: What kind of movie deals have you struck since your

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Speaker 1: your Trillions debut? I'm still a low profile O our

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Speaker 1: podcast numbers and the hundred's not the thousands. Okay, So

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Speaker 1: so Ben, what did you what did you learn from

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Speaker 1: from uh the other guests that we had on and

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Speaker 1: and just the whole experience of of doing the video

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Speaker 1: series with us jes sa, there's more than one type

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Speaker 1: of chef. Uh. To extend the metaphor, Um, you can

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Speaker 1: look at an ETF portfolio. EI there as a recipe

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Speaker 1: that has combined ingredients, or you can look at as

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Speaker 1: a bento box that has kind of its own individual

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Speaker 1: dishes pulled together and to sort of one cohesive lunchtime meal.

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Speaker 1: I would say that there isn't just a one size

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Speaker 1: fits all approach to asset allocation. What we have discovered

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Speaker 1: over the years with e t fs is it really

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Speaker 1: is a technological advancement from traditional acid allocation that has

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Speaker 1: been historically done with either mutual funds or with separate accounts,

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Speaker 1: and e t fs just extends that asset allocation exercise

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Speaker 1: in a much more efficient, practical, tax effective manner. And

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Speaker 1: and so the chefs can basically apply their their their

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Speaker 1: style there, their chef making skills and create portfolios UM

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Speaker 1: in a much more seamless fashion using ETFs. Whereas with

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Speaker 1: with mutual funds that didn't have intry day pricing that

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Speaker 1: didn't have the same kind of transparency that we have

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Speaker 1: with e t f s, you can still cook a

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Speaker 1: meal with them, but it's it's it's different in the

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Speaker 1: sense that that you really just sort of don't have

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Speaker 1: as UM I would say, transparent access to what it

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Speaker 1: is that you're putting together, Like you do with with

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Speaker 1: the E T F structure and like when you're all

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Speaker 1: you guys, when I when I worked with you to

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Speaker 1: pick the portfolio, we had this prep call, like which

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Speaker 1: one should we choose? And we try to be diverse,

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Speaker 1: so some are a little more aggressive and some are

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Speaker 1: more I think too. Sure you had the most vanilla sixty.

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Speaker 1: But do you guys just walk down the street and

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Speaker 1: then one day you're like, you know what that's the

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Speaker 1: next portfolio? Or like, what where do you get the

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Speaker 1: idea to add to your menu? So to speak? I

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Speaker 1: guess I'll start with Ben and then go to two Shark. Sure.

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Speaker 1: I mean some of the newer portfolios we've launched have

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Speaker 1: come from our advisors, and typically that's where you see

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Speaker 1: the best product development occur or the best solution development occurs.

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Speaker 1: Is you get requests from advisors, hey can you do this?

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Speaker 1: So we did that with the Global Growth Model that

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Speaker 1: we profiled on your show. We've done that with the

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Speaker 1: s G. We did that more recently with a downside

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Speaker 1: protection strategy that doesn't look to do tactical asset allocation

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Speaker 1: but instead invest in the new newly launched buffery ETFs

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Speaker 1: that are invested in color option programs. So these are

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Speaker 1: all uh ideas that came from our advisor base, and

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Speaker 1: I think that's where you basically get your best best

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Speaker 1: ideas in terms of what you could be doing differently

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Speaker 1: and to sharm. You know, black Rock is massive and

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Speaker 1: I'm you know, obviously the biggest asset manager, biggest model

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Speaker 1: portfolio maker. And when you make a shift, I mean

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Speaker 1: I can see it in the flows. I mean I

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Speaker 1: have my my NAV screen and I was like, Okay,

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Speaker 1: they must have done something. It's either you or Meryl.

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Speaker 1: So you know, there's a lot of pressure on you.

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Speaker 1: How many how many people do you have to get

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Speaker 1: approval from before you move out of say us m

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Speaker 1: V into empty um or something. Yeah, I mean from

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Speaker 1: the portfolio management team M that there is some very

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Speaker 1: heavy debate that goes on. There's a lot of committee

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Speaker 1: uh you know meeting that goes on, and you know

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Speaker 1: it's something that is extremely you know, we can do

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Speaker 1: it in a heartbeat if we have to respond to

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Speaker 1: a market environment, but it's also something that isn't done

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Speaker 1: lightly right, and there's a lot of work that goes

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Speaker 1: into preparing any kind of trade. You want to think

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Speaker 1: about it and make sure you're sort of ex anti

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Speaker 1: kind of changes in risk, what you're looking for, um

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Speaker 1: in your information ratio, all these kind of wonkish ways

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Speaker 1: of thinking about how you're adjusting your portfolio to make

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Speaker 1: sure the move that you're making is additive, it is

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Speaker 1: really important. And then there's just the basic portfolio hygiene

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Speaker 1: of of rebalancing every quarter. I think that that we

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Speaker 1: do that that's important as well. And you know, a

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Speaker 1: lot of what we do comes back to you said vanilla, like,

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Speaker 1: you know, pejoratively, but I'll remind you that vanilla is

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Speaker 1: the most popular flavor in the United States, and everyone's

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Speaker 1: had bad vanilla, and you know everyone's had to heat

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Speaker 1: should vanilla in the little gelato like you know, glass

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Speaker 1: jar thing that you pay eight dollars for. And you

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Speaker 1: know you're trying to impress family with And I try

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Speaker 1: and believe that we're truly in that, you know, And

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Speaker 1: I said I think on the show is like it's

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Speaker 1: a very simple product, but if you can deliver it

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Speaker 1: in a really powerful manner that that resonates. And I

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Speaker 1: think when you look inside our model, you've got things

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Speaker 1: like E. S. G. In there as a stock selection

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Speaker 1: that you've got commodities in there as inflation protection. You know,

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Speaker 1: we're looking at fallen angels, we're looking at sectors. So

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Speaker 1: it's not your basic sixty forty, you know, just sort

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Speaker 1: of set it and forget it. And we're trading on

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Speaker 1: things like, you know, the worst of COVID or you know,

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Speaker 1: the aftermath of the election last year. So we consider

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Speaker 1: ourselves and pride ourselves and being active managers. And I

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Speaker 1: think the Furey reflects that. Um, even if it is

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Speaker 1: a bit vanilla and I didn't come up with the

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Speaker 1: fantastic analogy of the Bento box. Bend had to have

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Speaker 1: written that down. Isn't an amazing how easy the food

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Speaker 1: metaphor is, though, Like when it's just like it's just

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Speaker 1: like right there, it's like so easy, how can you

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Speaker 1: this swing? And he just pulled it out and just

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Speaker 1: laid it out there. I'm so not a food person.

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Speaker 1: I just want to jump on some things that Charter said.

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Speaker 1: You know, I think it's really interesting. I'm not sure

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Speaker 1: people really understand some of the thought process that has

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Speaker 1: to go in, especially if you're a larger or a

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Speaker 1: larger percentage of a fund. Having worked for Fidelity Strategic Advisors,

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Speaker 1: you know, there's there's exemptive relief issues. There's there's just

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Speaker 1: a courtesy that occurs where if you're a large investor

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Speaker 1: and a fund and perhaps you have exempted relief, you

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Speaker 1: give a lot of notice or you try to give

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Speaker 1: a lot of notice to the funds you're invested in,

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Speaker 1: because you understand that if you move into or out

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Speaker 1: of a fund, you are going to affect the price

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Speaker 1: of that that product. It's not a big a deal

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Speaker 1: as in e T s because ets have the ability

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Speaker 1: to u through the creation redemption process get rid of

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Speaker 1: the arbitrage related to those individual um inflows outflows. In

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Speaker 1: the mutual fund world, it's a lot harder because if

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Speaker 1: you know you are a large investor and you're gonna

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Speaker 1: move your money, you have to understand the second you

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Speaker 1: do that, unless you do it in a really organized way,

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Speaker 1: over days or months, you are going to move the

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Speaker 1: price of that either upwards or downwards, depending on how

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Speaker 1: your money is going in. And there's a lot of

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Speaker 1: thought gos into that, even at a small firm like

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Speaker 1: Spotlight UM. You know, I'm a big user of alternative funds,

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Speaker 1: whether they be mutual funds, e T s or you know,

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Speaker 1: we talked about crypto a little bit on my UH

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Speaker 1: little segment. These are products that are don't have a

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Speaker 1: ton of liquidity and don't have a lot of market cap.

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Speaker 1: So even a small firm like Spotlight, you know, last

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Speaker 1: year we had a fairly substantial position and e t

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Speaker 1: F called b T a l UH and even at

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Speaker 1: you know, a small firm like us, we actually did

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Speaker 1: UH have impact on that funds pricing. We had to

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Speaker 1: work with a market maker at our custodian to help

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Speaker 1: us move out of that so that we were not

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Speaker 1: negatively impacting the price of that product. And you do

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Speaker 1: have to think about those things. It's huge for for

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Speaker 1: for even the smallest or even the largest of sort

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Speaker 1: of provide is it's something that I don't think a

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Speaker 1: lot of people you know, appreciate that. You know, even

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Speaker 1: all of us, right John and Ben and yourself are

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Speaker 1: trying to make sure that we're having a positive experience

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Speaker 1: in the market as well. And you know, people in

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Speaker 1: the model that are still in the model that I'm

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Speaker 1: you know, staying in the model with how you're trading.

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Speaker 1: You don't want that kind of you know, negative experience

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Speaker 1: that's connected to your UH, to your sort of day

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Speaker 1: to day operations, and so that's really really important. People

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Speaker 1: think you're just putting poor photos together, but we spend

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Speaker 1: a ton of time thinking about the market impact of

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Speaker 1: what we have on these e t s. And you

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Speaker 1: mentioned the t F. It's beautiful with the creation redemption

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Speaker 1: structure that you can get around a lot of that.

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Speaker 1: But Eric mentioned earlier as well. You can look at

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Speaker 1: his NAV screen and he could point to our prints

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Speaker 1: right as soon as they hit the tape um and

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Speaker 1: so there's a lot of eyes that are on that

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Speaker 1: as well. Right, and then with a mutual fund, maybe

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Speaker 1: you just have some cash drag and you know it

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Speaker 1: doesn't ever get seen. But with the t F world,

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Speaker 1: it's it's very visible and you have to make sure

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Speaker 1: that you're um, you know, doing no harm, so to speaking.

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Speaker 1: Prints are on the cookie jar exactly. I call it footprints.

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Speaker 1: And that's why I call Meryl bigfoot. You you there's

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Speaker 1: a sighting every once in a while and you just

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Speaker 1: you you just know it when it's a it's a

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Speaker 1: big footprint. But it's too sure. I will I will

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Speaker 1: say kudos to your Pierre department for acknowledging now when

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Speaker 1: it is you like notice lately when news calls you

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Speaker 1: and says, was this big flow out of such and such,

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Speaker 1: You're like, yeah, it was us, Um, we appreciate at that.

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Speaker 1: But anyway, UM, one thing I would like to talk about,

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Speaker 1: and SHANEA brought it up, and I'll go to Ben

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Speaker 1: on this. Because you have a lot of products that

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Speaker 1: some of them I've never even heard of. I mean,

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Speaker 1: or I guess I saw once but forgot about. This

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Speaker 1: is very different than a normal, bigger professional institutional investor

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Speaker 1: who tends to stay to the top fifty products. Could

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Speaker 1: just talk about how deep you go in the toolbox

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Speaker 1: and do you do you analyze every new ETF that

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Speaker 1: comes out on the market. I mean, how much of

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Speaker 1: your job is just keeping your eye on the smaller,

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Speaker 1: less known stuff. So this will be a shameless plug

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Speaker 1: for a Bloomberg, but I couldn't do my job without

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Speaker 1: having my Bloomberg terminal and morning Star analytics available. Bloomberg

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Speaker 1: port is a analogical tool we use that can basically

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Speaker 1: dig behind the holdings of the tfs, whether their equity

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Speaker 1: or fixed income. We're gonna look at what they Essentially,

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Speaker 1: the systematic risks are associated with the underlying portfolio, and

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Speaker 1: that basically gives us a pretty good idea of not

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Speaker 1: only what the portfolio looks like from a wrist standpoint,

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Speaker 1: but then when you combine that portfolio with other portfolios,

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Speaker 1: which is very again, very handy tool to have something

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Speaker 1: like Port and morning Star around, and you can see

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Speaker 1: how those portfolios get combined together. That means we don't

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Speaker 1: shy away necessarily from UM. The UH the smaller e

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Speaker 1: t F providers now, I will say or is limited

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Speaker 1: in terms of what it can analyze. And because of

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Speaker 1: the e t F rule, we're now seeing a launch

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Speaker 1: of some very interesting e tfs based on built on

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Speaker 1: investment concepts and built on underlying products, securities or derivatives

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Speaker 1: that you can't necessarily easily track with something like Port

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Speaker 1: and morning Star. For instance, there was an e t

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Speaker 1: F that just got rolled out that is betting on

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Speaker 1: long negative convexity. In essence, it's a it's a major

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Speaker 1: bear market fixed income product UM that basically UM will

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Speaker 1: do really out and the event that we have a

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Speaker 1: major type of major bearing market type of sell off

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Speaker 1: in the bond market, that's not really something you can

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Speaker 1: track easily import But that said, I mean you just

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Speaker 1: if you kind of have. The reason why e t

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00:22:14,200 --> 00:22:17,600
Speaker 1: s are so attractive is because, Um, the rules are

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Speaker 1: laid out there that they're laid out in the prospectives,

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Speaker 1: they're laid out in the in the firm's documentation. This

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Speaker 1: is what the product is designed to do. You can

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Speaker 1: confirm that with analogical tools for the most part. And

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Speaker 1: so whether it's a huge multibillion dollar fund or if

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Speaker 1: it's a fund that just got launched out of the gate,

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Speaker 1: was with C capital, we'll we'll take a look at it.

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Speaker 1: You know, the reality ben Um and Joel and Eric

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Speaker 1: is that you know, these super sophisticated products. You know,

429
00:22:44,880 --> 00:22:48,560
Speaker 1: it's basically the person listening to this podcast is really

430
00:22:48,600 --> 00:22:51,440
Speaker 1: not going to understand what those products are, you know,

431
00:22:51,520 --> 00:22:53,800
Speaker 1: how they can utilize. That's that's why I think they need,

432
00:22:54,520 --> 00:22:57,119
Speaker 1: you know, strategists or you know, guys like Eric and

433
00:22:57,240 --> 00:23:01,000
Speaker 1: his team to kind of analyze these et because what

434
00:23:01,160 --> 00:23:02,960
Speaker 1: I fear is like, you know, and I've been involved

435
00:23:03,000 --> 00:23:05,760
Speaker 1: with ETFs into late nineties, I remember when I share

436
00:23:05,880 --> 00:23:08,640
Speaker 1: is you know, long fifttfs in the first day when

437
00:23:08,680 --> 00:23:12,200
Speaker 1: they went to market, you know, we're getting so down

438
00:23:12,280 --> 00:23:15,520
Speaker 1: the risk curve in terms of how complicated these products are, leveraged,

439
00:23:15,880 --> 00:23:18,720
Speaker 1: super sophisticated. This is why I think you need education

440
00:23:18,800 --> 00:23:21,719
Speaker 1: and you need people to explain like, okay, a negative

441
00:23:21,720 --> 00:23:25,040
Speaker 1: convexity fixing coming TF. I mean people in the institutional

442
00:23:25,080 --> 00:23:27,600
Speaker 1: world that I an't understand that, let alone people you

443
00:23:27,640 --> 00:23:29,560
Speaker 1: know that are listening to this podcast. So I think

444
00:23:29,560 --> 00:23:32,760
Speaker 1: we just have to be careful as FIDU sharies, you know,

445
00:23:33,000 --> 00:23:35,320
Speaker 1: just to make sure that people understand what they're using.

446
00:23:36,240 --> 00:23:39,919
Speaker 1: UM with some of those more complex products haven't written

447
00:23:40,080 --> 00:23:44,720
Speaker 1: prospectives and mandates. Oftentimes we leave them pretty open ended

448
00:23:44,760 --> 00:23:49,880
Speaker 1: on purpose, we want to have flexibility. We also understand

449
00:23:49,960 --> 00:23:52,960
Speaker 1: that things are going to happen for example, UM you

450
00:23:53,040 --> 00:23:57,680
Speaker 1: know often times UM at the very end of the month,

451
00:23:57,880 --> 00:24:00,480
Speaker 1: just by virtue of when the snapshot has taken, it

452
00:24:00,520 --> 00:24:03,879
Speaker 1: could look like you would never negative cash because somebody

453
00:24:03,960 --> 00:24:07,360
Speaker 1: had a redemption and you don't actually have negative cash

454
00:24:07,480 --> 00:24:10,240
Speaker 1: is just a cash flow in process, but just that's

455
00:24:10,240 --> 00:24:13,119
Speaker 1: when the snapshot was taken. So when when we're writing

456
00:24:13,160 --> 00:24:16,920
Speaker 1: that legal ease and those do in those documents, and

457
00:24:17,040 --> 00:24:19,760
Speaker 1: we want to be clear and what the intended stated

458
00:24:19,880 --> 00:24:22,520
Speaker 1: purpose of the product is, whether it be an et

459
00:24:22,680 --> 00:24:25,520
Speaker 1: F mutual fund closed and fun name your product, but

460
00:24:26,280 --> 00:24:28,840
Speaker 1: that the language in many of those are are written

461
00:24:28,960 --> 00:24:32,359
Speaker 1: in such a way as to you know, leave some

462
00:24:32,560 --> 00:24:37,520
Speaker 1: flexibility and leave some um, you know, cover if you

463
00:24:37,600 --> 00:24:40,679
Speaker 1: will when weird things happen in the market. And um,

464
00:24:40,880 --> 00:24:44,119
Speaker 1: So it's important oftentimes with those more exotic products to

465
00:24:44,200 --> 00:24:45,760
Speaker 1: make sure you read them. You know, you look at

466
00:24:45,800 --> 00:24:48,479
Speaker 1: some of these inverse products and people think it's just hey,

467
00:24:48,560 --> 00:24:52,760
Speaker 1: I'm shorting the spill. No, no, you're not. It's mostly derivative.

468
00:24:52,800 --> 00:24:54,680
Speaker 1: So there's a lot of leverage that's going on there.

469
00:24:55,400 --> 00:24:58,080
Speaker 1: The way you're getting that exposure is not they're taking

470
00:24:58,160 --> 00:25:01,359
Speaker 1: the s um this tighter and a s p y

471
00:25:01,520 --> 00:25:03,880
Speaker 1: and just shorting it. That's that's almost never what they're doing.

472
00:25:04,359 --> 00:25:08,000
Speaker 1: Um And so understanding that and having a professional, as

473
00:25:08,119 --> 00:25:11,880
Speaker 1: John said, kind of understand that and and be able

474
00:25:11,920 --> 00:25:13,919
Speaker 1: to tell you like this is probably not a product

475
00:25:14,000 --> 00:25:16,640
Speaker 1: that's best for your risk profile or or what you're

476
00:25:16,800 --> 00:25:20,080
Speaker 1: looking to achieve, because there's some inherent risk there that

477
00:25:20,160 --> 00:25:29,600
Speaker 1: you might not understand. Is really important. John, I want

478
00:25:29,640 --> 00:25:31,560
Speaker 1: to we we opened with you. I'm gonna bring up

479
00:25:31,600 --> 00:25:34,679
Speaker 1: back to you here at the end uh your segment

480
00:25:34,840 --> 00:25:39,399
Speaker 1: on et F Master Chefs was about your inflation portfolio,

481
00:25:40,200 --> 00:25:43,160
Speaker 1: and it felt like it was so of the moment

482
00:25:43,280 --> 00:25:45,520
Speaker 1: when we're when we recorded it, and this was like

483
00:25:46,000 --> 00:25:48,320
Speaker 1: months ago now that we were all in Brooklyn together

484
00:25:48,400 --> 00:25:50,840
Speaker 1: and recorded, and I'm just wondering, how do you feel

485
00:25:50,840 --> 00:25:53,520
Speaker 1: about that portfolio now and how it stood up, and

486
00:25:54,000 --> 00:25:55,919
Speaker 1: if you wish you had made any changes or if

487
00:25:55,960 --> 00:25:59,240
Speaker 1: you had made changes to it since. Well, I don't

488
00:25:59,280 --> 00:26:01,760
Speaker 1: think the inflat and is like transitory. I don't think

489
00:26:01,800 --> 00:26:04,040
Speaker 1: you can just kind of turn the inflations tickets on

490
00:26:04,200 --> 00:26:07,200
Speaker 1: and off, you know, So I still believe in it.

491
00:26:07,320 --> 00:26:09,840
Speaker 1: You know, there's been trillings of dollars being put into

492
00:26:09,920 --> 00:26:14,520
Speaker 1: investors hands. He's got the supply chain shortage, you know,

493
00:26:14,640 --> 00:26:16,960
Speaker 1: so the cost of materials are going up. It'll be

494
00:26:17,000 --> 00:26:18,480
Speaker 1: interesting to see if it gets to the point where

495
00:26:18,480 --> 00:26:20,680
Speaker 1: it's negative for stocks and earnings. And there's a little

496
00:26:20,720 --> 00:26:22,639
Speaker 1: bit of evidence of that. But you know, if you

497
00:26:22,720 --> 00:26:25,640
Speaker 1: look here to date, the best performers are any inflation

498
00:26:25,720 --> 00:26:29,360
Speaker 1: sensitive assets. Could be commodities, it could be cyclicals. I think,

499
00:26:29,680 --> 00:26:32,600
Speaker 1: you know, my vantage point Joel is like, hey, I

500
00:26:32,760 --> 00:26:35,280
Speaker 1: believe that there's inflation. But even if you don't, the

501
00:26:35,400 --> 00:26:38,680
Speaker 1: traditional sixty forty portfolio that everyone on this call has

502
00:26:39,359 --> 00:26:42,360
Speaker 1: is very heavy on tech and very heavy on duration,

503
00:26:42,520 --> 00:26:45,120
Speaker 1: so there's a lot of fixed income in there. People

504
00:26:45,160 --> 00:26:47,119
Speaker 1: going up, you know, the duration curve to try and

505
00:26:47,200 --> 00:26:49,679
Speaker 1: extract yield. So anytime you see it and pick up

506
00:26:49,760 --> 00:26:53,560
Speaker 1: in interest rates, you know that sixty forty portfolio is

507
00:26:53,920 --> 00:26:56,119
Speaker 1: going to be negatively impacted. So we've always said, just

508
00:26:56,240 --> 00:26:59,360
Speaker 1: hedge that risk by having ten percent and an inflation

509
00:26:59,440 --> 00:27:04,000
Speaker 1: sensitive ETF basket. So, um, you know, what I find

510
00:27:04,040 --> 00:27:07,840
Speaker 1: people doing is putting you know, ten kind of different tickers.

511
00:27:07,920 --> 00:27:10,359
Speaker 1: That's what we've done. We've optimized it against S and P.

512
00:27:10,840 --> 00:27:12,680
Speaker 1: I still think it's relevant. I think we'll be talking

513
00:27:12,720 --> 00:27:15,080
Speaker 1: about I mean, Joe, we've been talking by inflation for

514
00:27:15,160 --> 00:27:16,840
Speaker 1: like five years. I think we're gonna be talking about

515
00:27:16,840 --> 00:27:19,119
Speaker 1: the next five years. So I still definitely believe in

516
00:27:19,160 --> 00:27:22,159
Speaker 1: the thesis. So guys, you know, we brought crypto up

517
00:27:22,200 --> 00:27:24,680
Speaker 1: to most of you in the actual interview. You know,

518
00:27:24,800 --> 00:27:27,000
Speaker 1: we said, is this especially with you John, because it's

519
00:27:27,320 --> 00:27:31,159
Speaker 1: sometimes sold as an inflation hedge. Um, here we are.

520
00:27:31,359 --> 00:27:35,280
Speaker 1: It's a Wednesday, and the SEC has about three or

521
00:27:35,320 --> 00:27:39,359
Speaker 1: four more days to basically stop a whole line of

522
00:27:39,440 --> 00:27:43,000
Speaker 1: Bitcoin futures et F from launching. We think they'll probably

523
00:27:43,080 --> 00:27:45,440
Speaker 1: let him launch. I think Genzer has signaled this is okay.

524
00:27:45,520 --> 00:27:48,480
Speaker 1: They're under the forty Act, YadA YadA. So let's let's

525
00:27:48,480 --> 00:27:51,520
Speaker 1: assume they are launched. Come next week, come next month,

526
00:27:51,560 --> 00:27:54,000
Speaker 1: you've got three or four in the market. Would you

527
00:27:54,080 --> 00:27:58,119
Speaker 1: guys start using a bitcoin futures et F in your portfolio?

528
00:27:58,560 --> 00:28:04,240
Speaker 1: I'll start with John, just yes or no? Yes, Shana, no, Ben,

529
00:28:04,960 --> 00:28:10,399
Speaker 1: no too, Sarre. I would say no for now, but

530
00:28:10,920 --> 00:28:13,720
Speaker 1: it could what if I share this was one of those.

531
00:28:14,640 --> 00:28:16,080
Speaker 1: It's still would to be difference if we were one

532
00:28:16,080 --> 00:28:18,040
Speaker 1: of those or not. It's getting kind of accomplished with

533
00:28:18,080 --> 00:28:22,040
Speaker 1: the sixty forty portfolio that you know, well you do

534
00:28:22,119 --> 00:28:25,560
Speaker 1: have CEO MT in there, right, that's a right, yeah,

535
00:28:25,600 --> 00:28:27,240
Speaker 1: you say you cut you cover that with that. You

536
00:28:27,320 --> 00:28:29,399
Speaker 1: don't actually need it it, okay, you just got to

537
00:28:29,400 --> 00:28:31,919
Speaker 1: think about what it would function in a portfolio, right,

538
00:28:31,960 --> 00:28:33,840
Speaker 1: And I think all of us, you know, when we're

539
00:28:33,880 --> 00:28:35,680
Speaker 1: talking about what we do in a portfolio, like what

540
00:28:35,840 --> 00:28:37,720
Speaker 1: is the function that you're obviously not just sort of

541
00:28:38,200 --> 00:28:39,680
Speaker 1: you know, buying it in some n f T s

542
00:28:39,680 --> 00:28:41,760
Speaker 1: and some memes and just you know, like laughing at

543
00:28:42,280 --> 00:28:45,600
Speaker 1: whatever it is, right, Like that's not realistic, right, like

544
00:28:45,680 --> 00:28:47,760
Speaker 1: the realistic Like and it's very pointed you want to

545
00:28:47,760 --> 00:28:50,320
Speaker 1: ask you yes or no question, but like clearly, like

546
00:28:50,480 --> 00:28:52,320
Speaker 1: every one of us would have to analyze, like you

547
00:28:52,360 --> 00:28:54,000
Speaker 1: know what it would do to a portfolio before you

548
00:28:54,040 --> 00:28:57,080
Speaker 1: think about it. But crypto is an entirely different mindset

549
00:28:57,120 --> 00:29:00,760
Speaker 1: of investing. It's it's defy, it's an n f T S.

550
00:29:01,480 --> 00:29:04,840
Speaker 1: You are basically transacting in what Ralph haul has said,

551
00:29:04,920 --> 00:29:09,720
Speaker 1: the metaverse, and basically you think of everything from assets

552
00:29:09,840 --> 00:29:14,160
Speaker 1: to to what is value within a digital concept. And

553
00:29:14,400 --> 00:29:16,400
Speaker 1: I had a hard time kind of grasping this until

554
00:29:16,440 --> 00:29:20,680
Speaker 1: I saw some videos of all things about gaming and

555
00:29:20,840 --> 00:29:26,720
Speaker 1: basically gamers talking about all the digital assets that they've accumulated. Um,

556
00:29:27,040 --> 00:29:29,960
Speaker 1: whether it's a sports type of game or whether it's

557
00:29:30,280 --> 00:29:33,960
Speaker 1: a battlefield type of game. Um, they clearly view what

558
00:29:34,120 --> 00:29:37,800
Speaker 1: they hold as having value, even if it's not tangible.

559
00:29:37,920 --> 00:29:41,200
Speaker 1: So I think it's not just investing in bitcoin or ethereum.

560
00:29:41,280 --> 00:29:43,960
Speaker 1: It's a it's a whole different mindset to the space.

561
00:29:44,160 --> 00:29:47,520
Speaker 1: You know, Eric I swear twenty years ago the same

562
00:29:47,560 --> 00:29:50,800
Speaker 1: things are said about et F I was there Why

563
00:29:50,840 --> 00:29:52,560
Speaker 1: do you need a country t F. Why do you

564
00:29:52,600 --> 00:29:54,520
Speaker 1: need to short need TOF It makes no sense. I

565
00:29:54,560 --> 00:29:57,640
Speaker 1: could just buy you know, the Tierra price actively managed

566
00:29:57,720 --> 00:29:59,560
Speaker 1: large cap growth from so the same things we said

567
00:29:59,560 --> 00:30:01,400
Speaker 1: about it to twenty years ago. I was JD you

568
00:30:01,480 --> 00:30:03,400
Speaker 1: were the one asking us that I share when we

569
00:30:03,480 --> 00:30:06,920
Speaker 1: were coming to I just want to chime in here

570
00:30:06,960 --> 00:30:10,000
Speaker 1: since I'm one of the folks here that actually does

571
00:30:10,080 --> 00:30:12,840
Speaker 1: invest in crypto. I said no because I just don't believe.

572
00:30:13,120 --> 00:30:16,000
Speaker 1: I'd rather invest directly, and we are able to do

573
00:30:16,160 --> 00:30:19,040
Speaker 1: that through our relationship with on invest. Eric and I

574
00:30:19,080 --> 00:30:21,520
Speaker 1: were on a panel just last week at the Training

575
00:30:21,560 --> 00:30:24,400
Speaker 1: Shows Chicago where we talked about this at at length.

576
00:30:24,960 --> 00:30:28,120
Speaker 1: UM My biggest problem with crypto e t F is

577
00:30:28,200 --> 00:30:32,520
Speaker 1: lack of market cap and UM futures E t F

578
00:30:32,640 --> 00:30:36,280
Speaker 1: I think has additional issues UH that impact that. But

579
00:30:36,400 --> 00:30:39,600
Speaker 1: I'm not anti crypto, and I think there's a large

580
00:30:40,120 --> 00:30:44,280
Speaker 1: misunderstanding on on. You know, whether it's Bitcoin or ethereum

581
00:30:44,480 --> 00:30:48,600
Speaker 1: or Ripple or light coin, you pick your fairly well

582
00:30:48,680 --> 00:30:52,520
Speaker 1: known UM crypto. You know, these are not currencies. Their

583
00:30:52,560 --> 00:30:56,200
Speaker 1: protocols to send money over the internet, and they all

584
00:30:56,280 --> 00:30:59,760
Speaker 1: have a different pros and constant there blockchain, so crypto

585
00:31:00,360 --> 00:31:02,560
Speaker 1: I think has room in a portfolio, especially in the

586
00:31:02,640 --> 00:31:05,200
Speaker 1: types of portfolios we run. I just don't believe in

587
00:31:05,280 --> 00:31:07,040
Speaker 1: et F is the way I want to get exposure

588
00:31:07,160 --> 00:31:09,040
Speaker 1: my clients. If I'm going to invest in them, I'm

589
00:31:09,080 --> 00:31:12,520
Speaker 1: going to invest in it directly. Round Robin. Last question.

590
00:31:12,600 --> 00:31:15,840
Speaker 1: It's a question we ask everyone who comes on the podcast,

591
00:31:15,920 --> 00:31:18,520
Speaker 1: and now that you've done the video version and now

592
00:31:18,600 --> 00:31:21,280
Speaker 1: the audio version, we gotta ask Chanel will start with

593
00:31:21,360 --> 00:31:25,480
Speaker 1: you favorite et F ticker and then the quiet one

594
00:31:25,560 --> 00:31:28,320
Speaker 1: that is just for to ar is other than your own,

595
00:31:30,360 --> 00:31:34,040
Speaker 1: just my favorite, my favorite ticker, Like just in general,

596
00:31:34,120 --> 00:31:36,040
Speaker 1: it's not gonna have to invest in it. I like

597
00:31:36,200 --> 00:31:40,240
Speaker 1: the w t H the work from Home alright w

598
00:31:40,440 --> 00:31:44,200
Speaker 1: f H. Sorry John, Yeah, I still like move. I've

599
00:31:44,240 --> 00:31:47,080
Speaker 1: said it on you know these I've said on the show,

600
00:31:47,160 --> 00:31:48,920
Speaker 1: and I think on a on a different podcast I

601
00:31:49,000 --> 00:31:52,400
Speaker 1: did with Eric. But it's just it's perfect Hall of fame,

602
00:31:53,000 --> 00:31:59,920
Speaker 1: Hall of fame, big hall of fame um, I mean,

603
00:32:00,000 --> 00:32:04,480
Speaker 1: and I like I like bots um because we don't

604
00:32:04,560 --> 00:32:07,960
Speaker 1: hear that often. It's clip. I mean, it's probably pretty

605
00:32:08,000 --> 00:32:10,800
Speaker 1: much pretty evident what it what it it's designed to

606
00:32:11,360 --> 00:32:15,840
Speaker 1: focus on. So it's robotics alright too, shar favorite et

607
00:32:15,960 --> 00:32:19,240
Speaker 1: F ticker that is not I shares non I shows.

608
00:32:19,240 --> 00:32:23,000
Speaker 1: So I can't say the Ice shows one. You know, well,

609
00:32:23,080 --> 00:32:25,280
Speaker 1: if it was I shares, I would say it would

610
00:32:25,320 --> 00:32:28,240
Speaker 1: be Veggie and imaged to my old boss and John

611
00:32:28,320 --> 00:32:31,120
Speaker 1: and my friends matt Um. But I would say if

612
00:32:31,160 --> 00:32:34,480
Speaker 1: it's non. There is a Fidelity Consumer Discretionary t F.

613
00:32:34,560 --> 00:32:38,320
Speaker 1: I believe that has a particularly hilarious ticker. I think,

614
00:32:38,360 --> 00:32:41,360
Speaker 1: in my opinion, that's you know what, Okay, First of all,

615
00:32:41,440 --> 00:32:44,240
Speaker 1: I'll say it because he will. It's f diss f

616
00:32:44,440 --> 00:32:46,720
Speaker 1: D I S and I agree. There are a couple

617
00:32:46,960 --> 00:32:51,320
Speaker 1: accidentally amazing tickers like there's no way Fidelity really meant that.

618
00:32:51,480 --> 00:32:53,320
Speaker 1: But that's why it adds to the whole value add

619
00:32:53,320 --> 00:32:56,160
Speaker 1: I think I'm going to actually as my honorable mention,

620
00:32:56,280 --> 00:32:59,360
Speaker 1: I'm gonna just throw out because not only is it

621
00:32:59,480 --> 00:33:02,120
Speaker 1: a great ticker, but it's also a great investment and

622
00:33:02,200 --> 00:33:05,880
Speaker 1: has been recently. My my good friend p Tolls f

623
00:33:06,080 --> 00:33:10,320
Speaker 1: r d M Freedom that is a fantastic ticker as well,

624
00:33:10,520 --> 00:33:14,000
Speaker 1: and very descriptive of what it's invested in and and

625
00:33:14,520 --> 00:33:18,280
Speaker 1: has done really well lately because China has done poorly. Yeah,

626
00:33:18,320 --> 00:33:20,480
Speaker 1: we've had perth on. That's that was an epic ticker

627
00:33:20,560 --> 00:33:23,880
Speaker 1: as well. All right, John Shana too sharp. Ben, thank

628
00:33:23,920 --> 00:33:27,120
Speaker 1: you all so much for being et F master chefs

629
00:33:27,200 --> 00:33:31,080
Speaker 1: on Trillions, both video and now audio. Thank you so much,

630
00:33:31,600 --> 00:33:40,200
Speaker 1: Thank you, thank you great. Thanks for listening to Trillions.

631
00:33:40,640 --> 00:33:42,920
Speaker 1: Until next time. You can find us on the Bloomberg Terminal,

632
00:33:43,200 --> 00:33:47,480
Speaker 1: Bloomberg dot com, Apple Podcast, Spotify, and wherever else you

633
00:33:47,600 --> 00:33:50,000
Speaker 1: like to listen. We'd love to hear from you. We're

634
00:33:50,040 --> 00:33:53,959
Speaker 1: on Twitter, I'm at Joel Weber Show, He's at ARIB Baltunus,

635
00:33:54,320 --> 00:33:56,960
Speaker 1: and you can find all these new episodes with our

636
00:33:57,080 --> 00:34:02,040
Speaker 1: e t F master chefs at take. This episode of

637
00:34:02,080 --> 00:34:05,640
Speaker 1: Trillions was produced by Magnus Hendrickson. Francesco Levie is the

638
00:34:05,720 --> 00:34:11,400
Speaker 1: head of Bloomberg Podcast by h