Speaker 1: Welcome to Trillions. I'm Joel Webber and I'm Eric Belchertis Eric.
Speaker 1: My Twitter has been blowing up so far this week
Speaker 1: because we did this video series with our colleagues at
Speaker 1: Bloomberg Quick Take that turned Trillions from the podcast that
Speaker 1: we hold so dear to us into a video show. Yeah.
Speaker 1: It's our second production, the first one being that et
Speaker 1: F Story audio documentary, but that still was audio only.
Speaker 1: This is our first foray into video and it was fun.
Speaker 1: I had had a good time, I thought, Um, I
Speaker 1: was proud that we were able to highlight a part
Speaker 1: of the industry that is rarely highlighted and for an
Speaker 1: audience that is more retail and is able to get
Speaker 1: inside look at how professionals assemble et F portfolios and
Speaker 1: pick ETFs and think about the market. And you had
Speaker 1: to kind of a I will credit you for this epiphany.
Speaker 1: I've long talked about food on the show, as any
Speaker 1: listener knows. Uh, you were the one that brought it
Speaker 1: all together. So, and we had some guests who are
Speaker 1: amazing and all of those guests are going to join
Speaker 1: us today. What was your epiphany? Well, we were debating
Speaker 1: what to do and UM, two things, Uh, one. A
Speaker 1: lot of our ideas were just despaired. It would require
Speaker 1: like so much different, like go to the gold Vault
Speaker 1: and it it was like, man, that's gonna take weeks
Speaker 1: to pull off for four minute episodes. So one of
Speaker 1: it was just convenience, you know, let's let's just shoot
Speaker 1: it all in one day. But the other thing was,
Speaker 1: you know, I get it comes back to when I
Speaker 1: wrote my book on e t F s in I
Speaker 1: was interviewing institutions, and none of them really knew about
Speaker 1: e t S. They knew like the top ten most
Speaker 1: traded one like SPY and i WM. But then I
Speaker 1: would interview a certain kind of investor called an e
Speaker 1: t F strategist, and they knew everything. I mean, I
Speaker 1: could throw the thirty seven tech et F at them
Speaker 1: and they would have an opinion on it. And and
Speaker 1: so for the whole second half of the book, I
Speaker 1: quote these strategists, and as I talked to them, I
Speaker 1: just felt that what they were doing was making E
Speaker 1: t F recipes. Essentially, I almost called the book the
Speaker 1: e t F Cookbook, and I was gonna put some
Speaker 1: of their recipes. It went a different direction, but that idea,
Speaker 1: I guess just sort of lingered in the back of
Speaker 1: my mind for the years after, and finally it found
Speaker 1: a home here. So we kind of made it like
Speaker 1: a Master Chef TV show. Oh it's like genius okay
Speaker 1: joining us in this episode that I don't I sense
Speaker 1: a little sarcasm there, but I'll take it. It was.
Speaker 1: It was rich with sarcasm, okay. So joining us on
Speaker 1: this episode we got John Davies, Shane iss Thistle to
Speaker 1: shar Yadava and Ben Levine this time on Trillions the
Speaker 1: e t F Master Chef's John Shana to shar Ben,
Speaker 1: thanks for joining us on on Trillions the podcast this time.
Speaker 1: Thanks for having us. Thank you. Yeah, welcome, happy to
Speaker 1: be here. Oh Gate too. Jar. I want to start
Speaker 1: with you. Can you describe when you're when we're not
Speaker 1: using a force metaphor like being a master Chef, how
Speaker 1: do you describe being an et F strategist. I mean,
Speaker 1: I would say, you know, um, credit to Eric right,
Speaker 1: and I'm gonna just blow smoke right in his direction
Speaker 1: and say that this is the king of all metaphors.
Speaker 1: But you know, look, I think what we're trying to
Speaker 1: do is we're trying to build portfolios for at least
Speaker 1: an our side, and portfolios that we're building for advisors
Speaker 1: that they can use to help scale their practice, help
Speaker 1: build wealth for their households. And so you know, really,
Speaker 1: if there wasn't something killer metaphor, I mean, maybe it
Speaker 1: would be you know, kind of like thinking about building blocks,
Speaker 1: but that's so hackneyed and so well traveled. I think
Speaker 1: in the E t F world that I think, you know,
Speaker 1: no one can see the screens now, but everyone's shaking
Speaker 1: their heads at me with disdain. So um, you know,
Speaker 1: I'd say maybe that's probably the closest experience you could
Speaker 1: think of. Um, But really, you know, it is about
Speaker 1: that sort of end product of just what you put
Speaker 1: out there, what the model looks like, what it's behaving like,
Speaker 1: ink it's like we've seen over this year, and what
Speaker 1: it's doing for households, uh and their end results, you know,
Speaker 1: which we're hoping to build that well for them and
Speaker 1: do it at a fees with less risk, which is
Speaker 1: kind of the big goal that we're looking for. And
Speaker 1: let me jump in here real quick, because one thing
Speaker 1: that I discovered when I was covering ETFs, it was
Speaker 1: about the years into covering them, that was that advisors
Speaker 1: don't really do a lot of investing. Um, that was
Speaker 1: something I you know, some do, but a lot of
Speaker 1: them outsource it. They're going to work on planning the
Speaker 1: like estate planning, and uh for the relationships and the
Speaker 1: behavioral coaching. UM, I guess I'll go to John for
Speaker 1: that one. Can you talk a little bit about what
Speaker 1: advisors are doing in that they're going to use your portfolio?
Speaker 1: What are they doing? Then, since you're doing the investing,
Speaker 1: it's it's exactly what you said, it's um. You know,
Speaker 1: they're worrying about the overall client relationships, so that doing taxes, insurance,
Speaker 1: state planning, behavioral coaching, um, you know. And and they
Speaker 1: their expertise isn't really to be markets people or to
Speaker 1: you know, how to design a portfolio, so that's where
Speaker 1: they leave that to, you know, subadvisors such as you
Speaker 1: know bend myself too, sure, Shanna. So I think it's
Speaker 1: a win win for everyone that the end client gets
Speaker 1: a better portfolio experience, a better outcome that they're looking
Speaker 1: to solve for. And um, you know, everyone is happy
Speaker 1: in the end. Do they ever come back or they
Speaker 1: ever look at it and go, hey, man, why did
Speaker 1: you pick uh, you know XLK instead of v G
Speaker 1: T or whatever, Like do they ever needle you over
Speaker 1: your picks? Well, I mean what happens nowadays? You know,
Speaker 1: the SMP has gone straight up the last ten years,
Speaker 1: so everyone wants to just know why you didn't do
Speaker 1: as good as the SMP. But that's a separate conversation.
Speaker 1: I mean, you know, Shannon myself and I mean, we
Speaker 1: could spend hours talking about that alone. But they don't
Speaker 1: really go too much into the weeds. They just like
Speaker 1: to look at like how they count as growing and um.
Speaker 1: You know, sometimes the financial advisor will actually say why
Speaker 1: did you pick this one ETF This is down whereas
Speaker 1: the market's up, And then you gotta explain, Okay, you know,
Speaker 1: when you go to portfolio, it's like a recipe. All
Speaker 1: the ingredients fit together. Someone was supposed to spice, someone
Speaker 1: supposed to be you know, sweet savory. But in collection,
Speaker 1: and you know the collection, the entire recipe works on
Speaker 1: the end. So sometimes you just explain, like, Okay, this
Speaker 1: one ETIF is meant to like be your portfolio dampener.
Speaker 1: We're supposed to provide protection. Shana, you had kind of
Speaker 1: the rock star portfolio, so I'm gonna ask you if
Speaker 1: there's one other portfolio that you most invied other than
Speaker 1: your own, which one was it? I I like, uh
Speaker 1: John Davids portfolios as a matter of fact. It's it's
Speaker 1: one of those portfolios that complements well some of the
Speaker 1: stuff we do, which is a little more exotic, a
Speaker 1: little more as you put rock star ish, those inflation
Speaker 1: oriented types of portfolios actually are a great heads that
Speaker 1: we can layer on top and and we do look
Speaker 1: at a story as products at Spotlight, uh to complement
Speaker 1: some of those things we're doing. Because you know, we're
Speaker 1: a small organization, we can't do everything in house, so
Speaker 1: we look to people, just like everybody that's here, whether
Speaker 1: it be John or Ben or Touchar, we are looking
Speaker 1: to use their expertise is along with our own in
Speaker 1: house to layer upon and complement depending on our client's needs.
Speaker 1: And just talk a little bit about you were you
Speaker 1: had some clients that were athletes, and everybody is always
Speaker 1: intrigued about that because we we actually hear about athletes
Speaker 1: getting ripped off by their advisors pretty frequently, where movie
Speaker 1: stars getting into bad deals. Everybody remembers made off. Um,
Speaker 1: what's a conversation with an athlete, like when you're sharing
Speaker 1: your portfolio or with the relationship manager who shares the portfolio,
Speaker 1: do they kind of care what the tickers are or
Speaker 1: they just sort of trust you. How's it work. It's
Speaker 1: interesting because I think we understand the risks that a
Speaker 1: lot of athlete to have in terms of um they
Speaker 1: have capital, they have assets, and so they are often
Speaker 1: asked to invest in, you know, relatively risky things as
Speaker 1: an angel or an a venture capacity. Uh So we're
Speaker 1: aware of those concerns that they have, and we actually
Speaker 1: try to present ourselves and uh as a gatekeeper for them.
Speaker 1: You know, we look at these core portfolios as a
Speaker 1: way of you know, having that trust and saying, look,
Speaker 1: we're not going to sell you anything exotic. Here's a
Speaker 1: nice core model for you to to begin with the
Speaker 1: foundation of your assets. And then as things get presented
Speaker 1: to you, where your gatekeeper, We're gonna do the due
Speaker 1: diligence for you, We're gonna help you make these decisions.
Speaker 1: We're gonna be honest with you and tell you this
Speaker 1: sounds like a scheme because quite frankly, as a fiduciary
Speaker 1: and with the expertise that we have me in particular,
Speaker 1: working in the private fund market, I can look at
Speaker 1: some fine prints on on a pit deck and tell
Speaker 1: you right away, like this is not gonna fly for me,
Speaker 1: asking the right questions, finding out who other backers are.
Speaker 1: You know, our goal is to present ourselves and to
Speaker 1: sort of be that trusted gatekeeper for our athlete clients.
Speaker 1: And I think that's why they trust us. We're not
Speaker 1: selling them anything overly exotic. If there's something in particular
Speaker 1: that they're interested in looking into, we can do that.
Speaker 1: But more often than not, they get in trouble because
Speaker 1: they get presented with opportunities and no one's doing the
Speaker 1: real due diligence for them. They're kind of doing it
Speaker 1: on their own, and that's where they end up with problems.
Speaker 1: And not all financial advisors have the capacity to do that.
Speaker 1: And we're just lucky and that someone like myself, who
Speaker 1: has been doing private fundue diligence for the last fifteen years,
Speaker 1: does have some expertise in that that area and can
Speaker 1: look at some of the things that they get presented
Speaker 1: with and say, look, this isn't good for your brand.
Speaker 1: Maybe it's a fine investment, but maybe it's done aligned
Speaker 1: with their brand. Or you know, I just don't think
Speaker 1: this is an appropriate way to to invest your money
Speaker 1: right now. And let me tell you all the red
Speaker 1: flags I found along the way and the do deal
Speaker 1: just process. Ben, Um, you've been quiet so far. Uh.
Speaker 1: You had one of the most I think impressive video
Speaker 1: performances out of all of us. Eric and I both
Speaker 1: looked fat and shlowby on camera, and you were like, uh,
Speaker 1: you know, Keto, by the way, can I just address
Speaker 1: this anybody who's watched this video. I've lost ten pounds
Speaker 1: since we shot that. Um. But yeah, Ben shut us
Speaker 1: all up. But Ben, I thought Ben also Ben dove
Speaker 1: into the metaphor the hardest. He went all the way.
Speaker 1: What kind of movie deals have you struck since your
Speaker 1: your Trillions debut? I'm still a low profile O our
Speaker 1: podcast numbers and the hundred's not the thousands. Okay, So
Speaker 1: so Ben, what did you what did you learn from
Speaker 1: from uh the other guests that we had on and
Speaker 1: and just the whole experience of of doing the video
Speaker 1: series with us jes sa, there's more than one type
Speaker 1: of chef. Uh. To extend the metaphor, Um, you can
Speaker 1: look at an ETF portfolio. EI there as a recipe
Speaker 1: that has combined ingredients, or you can look at as
Speaker 1: a bento box that has kind of its own individual
Speaker 1: dishes pulled together and to sort of one cohesive lunchtime meal.
Speaker 1: I would say that there isn't just a one size
Speaker 1: fits all approach to asset allocation. What we have discovered
Speaker 1: over the years with e t fs is it really
Speaker 1: is a technological advancement from traditional acid allocation that has
Speaker 1: been historically done with either mutual funds or with separate accounts,
Speaker 1: and e t fs just extends that asset allocation exercise
Speaker 1: in a much more efficient, practical, tax effective manner. And
Speaker 1: and so the chefs can basically apply their their their
Speaker 1: style there, their chef making skills and create portfolios UM
Speaker 1: in a much more seamless fashion using ETFs. Whereas with
Speaker 1: with mutual funds that didn't have intry day pricing that
Speaker 1: didn't have the same kind of transparency that we have
Speaker 1: with e t f s, you can still cook a
Speaker 1: meal with them, but it's it's it's different in the
Speaker 1: sense that that you really just sort of don't have
Speaker 1: as UM I would say, transparent access to what it
Speaker 1: is that you're putting together, Like you do with with
Speaker 1: the E T F structure and like when you're all
Speaker 1: you guys, when I when I worked with you to
Speaker 1: pick the portfolio, we had this prep call, like which
Speaker 1: one should we choose? And we try to be diverse,
Speaker 1: so some are a little more aggressive and some are
Speaker 1: more I think too. Sure you had the most vanilla sixty.
Speaker 1: But do you guys just walk down the street and
Speaker 1: then one day you're like, you know what that's the
Speaker 1: next portfolio? Or like, what where do you get the
Speaker 1: idea to add to your menu? So to speak? I
Speaker 1: guess I'll start with Ben and then go to two Shark. Sure.
Speaker 1: I mean some of the newer portfolios we've launched have
Speaker 1: come from our advisors, and typically that's where you see
Speaker 1: the best product development occur or the best solution development occurs.
Speaker 1: Is you get requests from advisors, hey can you do this?
Speaker 1: So we did that with the Global Growth Model that
Speaker 1: we profiled on your show. We've done that with the
Speaker 1: s G. We did that more recently with a downside
Speaker 1: protection strategy that doesn't look to do tactical asset allocation
Speaker 1: but instead invest in the new newly launched buffery ETFs
Speaker 1: that are invested in color option programs. So these are
Speaker 1: all uh ideas that came from our advisor base, and
Speaker 1: I think that's where you basically get your best best
Speaker 1: ideas in terms of what you could be doing differently
Speaker 1: and to sharm. You know, black Rock is massive and
Speaker 1: I'm you know, obviously the biggest asset manager, biggest model
Speaker 1: portfolio maker. And when you make a shift, I mean
Speaker 1: I can see it in the flows. I mean I
Speaker 1: have my my NAV screen and I was like, Okay,
Speaker 1: they must have done something. It's either you or Meryl.
Speaker 1: So you know, there's a lot of pressure on you.
Speaker 1: How many how many people do you have to get
Speaker 1: approval from before you move out of say us m
Speaker 1: V into empty um or something. Yeah, I mean from
Speaker 1: the portfolio management team M that there is some very
Speaker 1: heavy debate that goes on. There's a lot of committee
Speaker 1: uh you know meeting that goes on, and you know
Speaker 1: it's something that is extremely you know, we can do
Speaker 1: it in a heartbeat if we have to respond to
Speaker 1: a market environment, but it's also something that isn't done
Speaker 1: lightly right, and there's a lot of work that goes
Speaker 1: into preparing any kind of trade. You want to think
Speaker 1: about it and make sure you're sort of ex anti
Speaker 1: kind of changes in risk, what you're looking for, um
Speaker 1: in your information ratio, all these kind of wonkish ways
Speaker 1: of thinking about how you're adjusting your portfolio to make
Speaker 1: sure the move that you're making is additive, it is
Speaker 1: really important. And then there's just the basic portfolio hygiene
Speaker 1: of of rebalancing every quarter. I think that that we
Speaker 1: do that that's important as well. And you know, a
Speaker 1: lot of what we do comes back to you said vanilla, like,
Speaker 1: you know, pejoratively, but I'll remind you that vanilla is
Speaker 1: the most popular flavor in the United States, and everyone's
Speaker 1: had bad vanilla, and you know everyone's had to heat
Speaker 1: should vanilla in the little gelato like you know, glass
Speaker 1: jar thing that you pay eight dollars for. And you
Speaker 1: know you're trying to impress family with And I try
Speaker 1: and believe that we're truly in that, you know, And
Speaker 1: I said I think on the show is like it's
Speaker 1: a very simple product, but if you can deliver it
Speaker 1: in a really powerful manner that that resonates. And I
Speaker 1: think when you look inside our model, you've got things
Speaker 1: like E. S. G. In there as a stock selection
Speaker 1: that you've got commodities in there as inflation protection. You know,
Speaker 1: we're looking at fallen angels, we're looking at sectors. So
Speaker 1: it's not your basic sixty forty, you know, just sort
Speaker 1: of set it and forget it. And we're trading on
Speaker 1: things like, you know, the worst of COVID or you know,
Speaker 1: the aftermath of the election last year. So we consider
Speaker 1: ourselves and pride ourselves and being active managers. And I
Speaker 1: think the Furey reflects that. Um, even if it is
Speaker 1: a bit vanilla and I didn't come up with the
Speaker 1: fantastic analogy of the Bento box. Bend had to have
Speaker 1: written that down. Isn't an amazing how easy the food
Speaker 1: metaphor is, though, Like when it's just like it's just
Speaker 1: like right there, it's like so easy, how can you
Speaker 1: this swing? And he just pulled it out and just
Speaker 1: laid it out there. I'm so not a food person.
Speaker 1: I just want to jump on some things that Charter said.
Speaker 1: You know, I think it's really interesting. I'm not sure
Speaker 1: people really understand some of the thought process that has
Speaker 1: to go in, especially if you're a larger or a
Speaker 1: larger percentage of a fund. Having worked for Fidelity Strategic Advisors,
Speaker 1: you know, there's there's exemptive relief issues. There's there's just
Speaker 1: a courtesy that occurs where if you're a large investor
Speaker 1: and a fund and perhaps you have exempted relief, you
Speaker 1: give a lot of notice or you try to give
Speaker 1: a lot of notice to the funds you're invested in,
Speaker 1: because you understand that if you move into or out
Speaker 1: of a fund, you are going to affect the price
Speaker 1: of that that product. It's not a big a deal
Speaker 1: as in e T s because ets have the ability
Speaker 1: to u through the creation redemption process get rid of
Speaker 1: the arbitrage related to those individual um inflows outflows. In
Speaker 1: the mutual fund world, it's a lot harder because if
Speaker 1: you know you are a large investor and you're gonna
Speaker 1: move your money, you have to understand the second you
Speaker 1: do that, unless you do it in a really organized way,
Speaker 1: over days or months, you are going to move the
Speaker 1: price of that either upwards or downwards, depending on how
Speaker 1: your money is going in. And there's a lot of
Speaker 1: thought gos into that, even at a small firm like
Speaker 1: Spotlight UM. You know, I'm a big user of alternative funds,
Speaker 1: whether they be mutual funds, e T s or you know,
Speaker 1: we talked about crypto a little bit on my UH
Speaker 1: little segment. These are products that are don't have a
Speaker 1: ton of liquidity and don't have a lot of market cap.
Speaker 1: So even a small firm like Spotlight, you know, last
Speaker 1: year we had a fairly substantial position and e t
Speaker 1: F called b T a l UH and even at
Speaker 1: you know, a small firm like us, we actually did
Speaker 1: UH have impact on that funds pricing. We had to
Speaker 1: work with a market maker at our custodian to help
Speaker 1: us move out of that so that we were not
Speaker 1: negatively impacting the price of that product. And you do
Speaker 1: have to think about those things. It's huge for for
Speaker 1: for even the smallest or even the largest of sort
Speaker 1: of provide is it's something that I don't think a
Speaker 1: lot of people you know, appreciate that. You know, even
Speaker 1: all of us, right John and Ben and yourself are
Speaker 1: trying to make sure that we're having a positive experience
Speaker 1: in the market as well. And you know, people in
Speaker 1: the model that are still in the model that I'm
Speaker 1: you know, staying in the model with how you're trading.
Speaker 1: You don't want that kind of you know, negative experience
Speaker 1: that's connected to your UH, to your sort of day
Speaker 1: to day operations, and so that's really really important. People
Speaker 1: think you're just putting poor photos together, but we spend
Speaker 1: a ton of time thinking about the market impact of
Speaker 1: what we have on these e t s. And you
Speaker 1: mentioned the t F. It's beautiful with the creation redemption
Speaker 1: structure that you can get around a lot of that.
Speaker 1: But Eric mentioned earlier as well. You can look at
Speaker 1: his NAV screen and he could point to our prints
Speaker 1: right as soon as they hit the tape um and
Speaker 1: so there's a lot of eyes that are on that
Speaker 1: as well. Right, and then with a mutual fund, maybe
Speaker 1: you just have some cash drag and you know it
Speaker 1: doesn't ever get seen. But with the t F world,
Speaker 1: it's it's very visible and you have to make sure
Speaker 1: that you're um, you know, doing no harm, so to speaking.
Speaker 1: Prints are on the cookie jar exactly. I call it footprints.
Speaker 1: And that's why I call Meryl bigfoot. You you there's
Speaker 1: a sighting every once in a while and you just
Speaker 1: you you just know it when it's a it's a
Speaker 1: big footprint. But it's too sure. I will I will
Speaker 1: say kudos to your Pierre department for acknowledging now when
Speaker 1: it is you like notice lately when news calls you
Speaker 1: and says, was this big flow out of such and such,
Speaker 1: You're like, yeah, it was us, Um, we appreciate at that.
Speaker 1: But anyway, UM, one thing I would like to talk about,
Speaker 1: and SHANEA brought it up, and I'll go to Ben
Speaker 1: on this. Because you have a lot of products that
Speaker 1: some of them I've never even heard of. I mean,
Speaker 1: or I guess I saw once but forgot about. This
Speaker 1: is very different than a normal, bigger professional institutional investor
Speaker 1: who tends to stay to the top fifty products. Could
Speaker 1: just talk about how deep you go in the toolbox
Speaker 1: and do you do you analyze every new ETF that
Speaker 1: comes out on the market. I mean, how much of
Speaker 1: your job is just keeping your eye on the smaller,
Speaker 1: less known stuff. So this will be a shameless plug
Speaker 1: for a Bloomberg, but I couldn't do my job without
Speaker 1: having my Bloomberg terminal and morning Star analytics available. Bloomberg
Speaker 1: port is a analogical tool we use that can basically
Speaker 1: dig behind the holdings of the tfs, whether their equity
Speaker 1: or fixed income. We're gonna look at what they Essentially,
Speaker 1: the systematic risks are associated with the underlying portfolio, and
Speaker 1: that basically gives us a pretty good idea of not
Speaker 1: only what the portfolio looks like from a wrist standpoint,
Speaker 1: but then when you combine that portfolio with other portfolios,
Speaker 1: which is very again, very handy tool to have something
Speaker 1: like Port and morning Star around, and you can see
Speaker 1: how those portfolios get combined together. That means we don't
Speaker 1: shy away necessarily from UM. The UH the smaller e
Speaker 1: t F providers now, I will say or is limited
Speaker 1: in terms of what it can analyze. And because of
Speaker 1: the e t F rule, we're now seeing a launch
Speaker 1: of some very interesting e tfs based on built on
Speaker 1: investment concepts and built on underlying products, securities or derivatives
Speaker 1: that you can't necessarily easily track with something like Port
Speaker 1: and morning Star. For instance, there was an e t
Speaker 1: F that just got rolled out that is betting on
Speaker 1: long negative convexity. In essence, it's a it's a major
Speaker 1: bear market fixed income product UM that basically UM will
Speaker 1: do really out and the event that we have a
Speaker 1: major type of major bearing market type of sell off
Speaker 1: in the bond market, that's not really something you can
Speaker 1: track easily import But that said, I mean you just
Speaker 1: if you kind of have. The reason why e t
Speaker 1: s are so attractive is because, Um, the rules are
Speaker 1: laid out there that they're laid out in the prospectives,
Speaker 1: they're laid out in the in the firm's documentation. This
Speaker 1: is what the product is designed to do. You can
Speaker 1: confirm that with analogical tools for the most part. And
Speaker 1: so whether it's a huge multibillion dollar fund or if
Speaker 1: it's a fund that just got launched out of the gate,
Speaker 1: was with C capital, we'll we'll take a look at it.
Speaker 1: You know, the reality ben Um and Joel and Eric
Speaker 1: is that you know, these super sophisticated products. You know,
Speaker 1: it's basically the person listening to this podcast is really
Speaker 1: not going to understand what those products are, you know,
Speaker 1: how they can utilize. That's that's why I think they need,
Speaker 1: you know, strategists or you know, guys like Eric and
Speaker 1: his team to kind of analyze these et because what
Speaker 1: I fear is like, you know, and I've been involved
Speaker 1: with ETFs into late nineties, I remember when I share
Speaker 1: is you know, long fifttfs in the first day when
Speaker 1: they went to market, you know, we're getting so down
Speaker 1: the risk curve in terms of how complicated these products are, leveraged,
Speaker 1: super sophisticated. This is why I think you need education
Speaker 1: and you need people to explain like, okay, a negative
Speaker 1: convexity fixing coming TF. I mean people in the institutional
Speaker 1: world that I an't understand that, let alone people you
Speaker 1: know that are listening to this podcast. So I think
Speaker 1: we just have to be careful as FIDU sharies, you know,
Speaker 1: just to make sure that people understand what they're using.
Speaker 1: UM with some of those more complex products haven't written
Speaker 1: prospectives and mandates. Oftentimes we leave them pretty open ended
Speaker 1: on purpose, we want to have flexibility. We also understand
Speaker 1: that things are going to happen for example, UM you
Speaker 1: know often times UM at the very end of the month,
Speaker 1: just by virtue of when the snapshot has taken, it
Speaker 1: could look like you would never negative cash because somebody
Speaker 1: had a redemption and you don't actually have negative cash
Speaker 1: is just a cash flow in process, but just that's
Speaker 1: when the snapshot was taken. So when when we're writing
Speaker 1: that legal ease and those do in those documents, and
Speaker 1: we want to be clear and what the intended stated
Speaker 1: purpose of the product is, whether it be an et
Speaker 1: F mutual fund closed and fun name your product, but
Speaker 1: that the language in many of those are are written
Speaker 1: in such a way as to you know, leave some
Speaker 1: flexibility and leave some um, you know, cover if you
Speaker 1: will when weird things happen in the market. And um,
Speaker 1: So it's important oftentimes with those more exotic products to
Speaker 1: make sure you read them. You know, you look at
Speaker 1: some of these inverse products and people think it's just hey,
Speaker 1: I'm shorting the spill. No, no, you're not. It's mostly derivative.
Speaker 1: So there's a lot of leverage that's going on there.
Speaker 1: The way you're getting that exposure is not they're taking
Speaker 1: the s um this tighter and a s p y
Speaker 1: and just shorting it. That's that's almost never what they're doing.
Speaker 1: Um And so understanding that and having a professional, as
Speaker 1: John said, kind of understand that and and be able
Speaker 1: to tell you like this is probably not a product
Speaker 1: that's best for your risk profile or or what you're
Speaker 1: looking to achieve, because there's some inherent risk there that
Speaker 1: you might not understand. Is really important. John, I want
Speaker 1: to we we opened with you. I'm gonna bring up
Speaker 1: back to you here at the end uh your segment
Speaker 1: on et F Master Chefs was about your inflation portfolio,
Speaker 1: and it felt like it was so of the moment
Speaker 1: when we're when we recorded it, and this was like
Speaker 1: months ago now that we were all in Brooklyn together
Speaker 1: and recorded, and I'm just wondering, how do you feel
Speaker 1: about that portfolio now and how it stood up, and
Speaker 1: if you wish you had made any changes or if
Speaker 1: you had made changes to it since. Well, I don't
Speaker 1: think the inflat and is like transitory. I don't think
Speaker 1: you can just kind of turn the inflations tickets on
Speaker 1: and off, you know, So I still believe in it.
Speaker 1: You know, there's been trillings of dollars being put into
Speaker 1: investors hands. He's got the supply chain shortage, you know,
Speaker 1: so the cost of materials are going up. It'll be
Speaker 1: interesting to see if it gets to the point where
Speaker 1: it's negative for stocks and earnings. And there's a little
Speaker 1: bit of evidence of that. But you know, if you
Speaker 1: look here to date, the best performers are any inflation
Speaker 1: sensitive assets. Could be commodities, it could be cyclicals. I think,
Speaker 1: you know, my vantage point Joel is like, hey, I
Speaker 1: believe that there's inflation. But even if you don't, the
Speaker 1: traditional sixty forty portfolio that everyone on this call has
Speaker 1: is very heavy on tech and very heavy on duration,
Speaker 1: so there's a lot of fixed income in there. People
Speaker 1: going up, you know, the duration curve to try and
Speaker 1: extract yield. So anytime you see it and pick up
Speaker 1: in interest rates, you know that sixty forty portfolio is
Speaker 1: going to be negatively impacted. So we've always said, just
Speaker 1: hedge that risk by having ten percent and an inflation
Speaker 1: sensitive ETF basket. So, um, you know, what I find
Speaker 1: people doing is putting you know, ten kind of different tickers.
Speaker 1: That's what we've done. We've optimized it against S and P.
Speaker 1: I still think it's relevant. I think we'll be talking
Speaker 1: about I mean, Joe, we've been talking by inflation for
Speaker 1: like five years. I think we're gonna be talking about
Speaker 1: the next five years. So I still definitely believe in
Speaker 1: the thesis. So guys, you know, we brought crypto up
Speaker 1: to most of you in the actual interview. You know,
Speaker 1: we said, is this especially with you John, because it's
Speaker 1: sometimes sold as an inflation hedge. Um, here we are.
Speaker 1: It's a Wednesday, and the SEC has about three or
Speaker 1: four more days to basically stop a whole line of
Speaker 1: Bitcoin futures et F from launching. We think they'll probably
Speaker 1: let him launch. I think Genzer has signaled this is okay.
Speaker 1: They're under the forty Act, YadA YadA. So let's let's
Speaker 1: assume they are launched. Come next week, come next month,
Speaker 1: you've got three or four in the market. Would you
Speaker 1: guys start using a bitcoin futures et F in your portfolio?
Speaker 1: I'll start with John, just yes or no? Yes, Shana, no, Ben,
Speaker 1: no too, Sarre. I would say no for now, but
Speaker 1: it could what if I share this was one of those.
Speaker 1: It's still would to be difference if we were one
Speaker 1: of those or not. It's getting kind of accomplished with
Speaker 1: the sixty forty portfolio that you know, well you do
Speaker 1: have CEO MT in there, right, that's a right, yeah,
Speaker 1: you say you cut you cover that with that. You
Speaker 1: don't actually need it it, okay, you just got to
Speaker 1: think about what it would function in a portfolio, right,
Speaker 1: And I think all of us, you know, when we're
Speaker 1: talking about what we do in a portfolio, like what
Speaker 1: is the function that you're obviously not just sort of
Speaker 1: you know, buying it in some n f T s
Speaker 1: and some memes and just you know, like laughing at
Speaker 1: whatever it is, right, Like that's not realistic, right, like
Speaker 1: the realistic Like and it's very pointed you want to
Speaker 1: ask you yes or no question, but like clearly, like
Speaker 1: every one of us would have to analyze, like you
Speaker 1: know what it would do to a portfolio before you
Speaker 1: think about it. But crypto is an entirely different mindset
Speaker 1: of investing. It's it's defy, it's an n f T S.
Speaker 1: You are basically transacting in what Ralph haul has said,
Speaker 1: the metaverse, and basically you think of everything from assets
Speaker 1: to to what is value within a digital concept. And
Speaker 1: I had a hard time kind of grasping this until
Speaker 1: I saw some videos of all things about gaming and
Speaker 1: basically gamers talking about all the digital assets that they've accumulated. Um,
Speaker 1: whether it's a sports type of game or whether it's
Speaker 1: a battlefield type of game. Um, they clearly view what
Speaker 1: they hold as having value, even if it's not tangible.
Speaker 1: So I think it's not just investing in bitcoin or ethereum.
Speaker 1: It's a it's a whole different mindset to the space.
Speaker 1: You know, Eric I swear twenty years ago the same
Speaker 1: things are said about et F I was there Why
Speaker 1: do you need a country t F. Why do you
Speaker 1: need to short need TOF It makes no sense. I
Speaker 1: could just buy you know, the Tierra price actively managed
Speaker 1: large cap growth from so the same things we said
Speaker 1: about it to twenty years ago. I was JD you
Speaker 1: were the one asking us that I share when we
Speaker 1: were coming to I just want to chime in here
Speaker 1: since I'm one of the folks here that actually does
Speaker 1: invest in crypto. I said no because I just don't believe.
Speaker 1: I'd rather invest directly, and we are able to do
Speaker 1: that through our relationship with on invest. Eric and I
Speaker 1: were on a panel just last week at the Training
Speaker 1: Shows Chicago where we talked about this at at length.
Speaker 1: UM My biggest problem with crypto e t F is
Speaker 1: lack of market cap and UM futures E t F
Speaker 1: I think has additional issues UH that impact that. But
Speaker 1: I'm not anti crypto, and I think there's a large
Speaker 1: misunderstanding on on. You know, whether it's Bitcoin or ethereum
Speaker 1: or Ripple or light coin, you pick your fairly well
Speaker 1: known UM crypto. You know, these are not currencies. Their
Speaker 1: protocols to send money over the internet, and they all
Speaker 1: have a different pros and constant there blockchain, so crypto
Speaker 1: I think has room in a portfolio, especially in the
Speaker 1: types of portfolios we run. I just don't believe in
Speaker 1: et F is the way I want to get exposure
Speaker 1: my clients. If I'm going to invest in them, I'm
Speaker 1: going to invest in it directly. Round Robin. Last question.
Speaker 1: It's a question we ask everyone who comes on the podcast,
Speaker 1: and now that you've done the video version and now
Speaker 1: the audio version, we gotta ask Chanel will start with
Speaker 1: you favorite et F ticker and then the quiet one
Speaker 1: that is just for to ar is other than your own,
Speaker 1: just my favorite, my favorite ticker, Like just in general,
Speaker 1: it's not gonna have to invest in it. I like
Speaker 1: the w t H the work from Home alright w
Speaker 1: f H. Sorry John, Yeah, I still like move. I've
Speaker 1: said it on you know these I've said on the show,
Speaker 1: and I think on a on a different podcast I
Speaker 1: did with Eric. But it's just it's perfect Hall of fame,
Speaker 1: Hall of fame, big hall of fame um, I mean,
Speaker 1: and I like I like bots um because we don't
Speaker 1: hear that often. It's clip. I mean, it's probably pretty
Speaker 1: much pretty evident what it what it it's designed to
Speaker 1: focus on. So it's robotics alright too, shar favorite et
Speaker 1: F ticker that is not I shares non I shows.
Speaker 1: So I can't say the Ice shows one. You know, well,
Speaker 1: if it was I shares, I would say it would
Speaker 1: be Veggie and imaged to my old boss and John
Speaker 1: and my friends matt Um. But I would say if
Speaker 1: it's non. There is a Fidelity Consumer Discretionary t F.
Speaker 1: I believe that has a particularly hilarious ticker. I think,
Speaker 1: in my opinion, that's you know what, Okay, First of all,
Speaker 1: I'll say it because he will. It's f diss f
Speaker 1: D I S and I agree. There are a couple
Speaker 1: accidentally amazing tickers like there's no way Fidelity really meant that.
Speaker 1: But that's why it adds to the whole value add
Speaker 1: I think I'm going to actually as my honorable mention,
Speaker 1: I'm gonna just throw out because not only is it
Speaker 1: a great ticker, but it's also a great investment and
Speaker 1: has been recently. My my good friend p Tolls f
Speaker 1: r d M Freedom that is a fantastic ticker as well,
Speaker 1: and very descriptive of what it's invested in and and
Speaker 1: has done really well lately because China has done poorly. Yeah,
Speaker 1: we've had perth on. That's that was an epic ticker
Speaker 1: as well. All right, John Shana too sharp. Ben, thank
Speaker 1: you all so much for being et F master chefs
Speaker 1: on Trillions, both video and now audio. Thank you so much,
Speaker 1: Thank you, thank you great. Thanks for listening to Trillions.
Speaker 1: Until next time. You can find us on the Bloomberg Terminal,
Speaker 1: Bloomberg dot com, Apple Podcast, Spotify, and wherever else you
Speaker 1: like to listen. We'd love to hear from you. We're
Speaker 1: on Twitter, I'm at Joel Weber Show, He's at ARIB Baltunus,
Speaker 1: and you can find all these new episodes with our
Speaker 1: e t F master chefs at take. This episode of
Speaker 1: Trillions was produced by Magnus Hendrickson. Francesco Levie is the
Speaker 1: head of Bloomberg Podcast by h