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Speaker 1: Welcome to Trillions. I'm Joe Weber and I'm Eric Bell

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Speaker 1: tunis Eric. We have a guest, not there's one guest,

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Speaker 1: actually two guests this week. Both are legends, legends. One

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Speaker 1: is an industry legend, and one is a Bloomberg News legend.

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Speaker 1: Bloomberg News legend is Caroline Wilson. Carolina, welcome on the

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Speaker 1: show again. Thank you for having me and and Carolina,

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Speaker 1: this is your guest. Actually, who do we have? We

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Speaker 1: have Bruce Bond here. He is co founder of Innovator

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Speaker 1: Capital Management, but you might know him a little better

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Speaker 1: potentially as the co founder of power Shares Capital Management

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Speaker 1: back in the day. And let me let's not understate

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Speaker 1: that he recognized smart Beta before it was a household name. So,

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Speaker 1: and Carolyn, what was the thing that a little spark

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Speaker 1: that made you say we should talk to Bruce Bond

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Speaker 1: right now? Sure? So, before I covered exchange traded funds,

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Speaker 1: I covered these byzantine products known as structured notes, which

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Speaker 1: have a pretty horrible reputation. It was a really fun

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Speaker 1: beat to cover. It was hated by a lot of

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Speaker 1: people with um pretty critical stories on that industry. But

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Speaker 1: what's really interesting here is that these are e t

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Speaker 1: f s that sort of make better and change the

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Speaker 1: structure of a structure note and make it a bit

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Speaker 1: more accessible for investors. So it's sort of the marriage

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Speaker 1: of these two worlds that I used to cover um

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Speaker 1: and let me give you some stats on this, so

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Speaker 1: the that we call them buffer or downside protection ETFs

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Speaker 1: before Bruce is going to go into what they do,

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Speaker 1: but they're pretty instant hit um and I'm a little

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Speaker 1: shocked by the numbers. We've got one point eight billion.

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Speaker 1: There's another issue where that has some but that's quite

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Speaker 1: a bit especially I know the markets not up a

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Speaker 1: lot per se, but it's not down either. These to

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Speaker 1: me have their biggest potential when the market goes down

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Speaker 1: because people tend to search for that like after the fact.

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Speaker 1: So the fact that they got this much and they're

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Speaker 1: a little more on the complicated side, which tends to

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Speaker 1: be a tougher self for e t s typically, but

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Speaker 1: I could see why they have appeal. They do limit

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Speaker 1: your side and that is a very powerful concept. So

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Speaker 1: I'm excited to dive into this time on trillions downside

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Speaker 1: protection with Bruce Bond. So Bruce, welcome to Trillions. Thank

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Speaker 1: you for having me. So you're You're like, we've set

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Speaker 1: this up. You're kind of a legend in the ETF industry.

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Speaker 1: Why did you do this? What was the idea? Well, I,

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Speaker 1: you know, I really didn't intendo coming back to being

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Speaker 1: all honesty with you and uh my partner John Southard,

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Speaker 1: he bought a life insurance product that had some type

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Speaker 1: of kind of a defined outcome within the product and

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Speaker 1: he was like, you know, it's really amazing this isn't

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Speaker 1: available in an e t F. I mean, the value

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Speaker 1: proposition here is really neat and uh, it's surprising people

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Speaker 1: don't have access. What do you what is that? Look like,

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Speaker 1: what is the benefit of that? The benefit of the

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Speaker 1: defined outcome where the buffery TF is? Eric said, you know,

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Speaker 1: um is the ability for an investor to purchase an

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Speaker 1: e t F in today a to understand their outcome

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Speaker 1: a year in the future, depending on what the SMP

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Speaker 1: five does. So instead of just going to the mercy

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Speaker 1: of the market hoping for the very best, hoping it

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Speaker 1: doesn't go down, which is what most people do, you

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Speaker 1: know that you have a buffer toward losses on the downside,

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Speaker 1: but you're going to participate on the upside. And until

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Speaker 1: now that has not been available in an E t F.

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Speaker 1: So let me stop you right there, because when when

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Speaker 1: someone might here participate in the upside, but let me

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Speaker 1: you're downside, they may go that that sounds too good

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Speaker 1: to be true. Um, just go into that a little bit.

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Speaker 1: Why isn't it too good to be true? And how

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Speaker 1: much of the upside do you get? Do you get

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Speaker 1: it all? No? You know, well you might get it all,

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Speaker 1: and the thing is you don't really know. So the buffers,

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Speaker 1: there are three different buffers, right, There's a there's a

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Speaker 1: nine percent buffer protects your first nine percent of losses.

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Speaker 1: There's a fifteen percent buffer that protects the first fifteen percent,

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Speaker 1: and then there's a thirty percent buffer, and that buffers

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Speaker 1: you from negative five to negative thirty five percent. So

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Speaker 1: there's three levels, depending on how concerned you are about

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Speaker 1: where the market is and how much capit you want

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Speaker 1: to preserve and that, and so with each level, as

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Speaker 1: Eric was pointing out, each level, it costs a little

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Speaker 1: bit more to have that buffer, and therefore your cap

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Speaker 1: is adjusted a little bit as you get more buffer.

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Speaker 1: This seems like something that should have happened already. We

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Speaker 1: thought the same thing. I think we were really shocked.

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Speaker 1: Initially we said, you know, we should do this. This

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Speaker 1: is a tremendous value to investors. Let's there must be

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Speaker 1: some reason it can be done. It's like a structural

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Speaker 1: problem you know within an e t F that it's

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Speaker 1: not or it's a regulatory probably the regulators won't allow

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Speaker 1: it because that, and the more we dug into it,

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Speaker 1: the more we looked at realize, you know, what, this

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Speaker 1: is possible. There were some structural things we had to do,

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Speaker 1: some kind of aha moments that we had to overcome

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Speaker 1: that hadn't been done in the E t F before.

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Speaker 1: And that's the reason some people, I think gave up

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Speaker 1: on the idea and never accomplished it, because effectively, you're

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Speaker 1: sort of putting an insurance policy inside an e t

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Speaker 1: F and wrapping it up in a breed in a sense,

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Speaker 1: exactly right, speaking of the burriedo, So what is it?

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Speaker 1: What is in it? So? What is in the e

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Speaker 1: t F? There are seven options positions in the E

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Speaker 1: t S So not I'm not buying equities like I

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Speaker 1: would usually do with an E t F. I'm right,

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Speaker 1: I'm getting options right, and you own options solely with

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Speaker 1: this breedo have a name. Well, well, you don't defined

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Speaker 1: outcome or you know buffer yeah exactly exactly. Buffer for

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Speaker 1: t F. I mean I think buffer e TF, so

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Speaker 1: buffer yeah exactly, that will work. Uh So basically, h

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Speaker 1: there's seven positions in there, and these positions are designed

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Speaker 1: to provide you this outcome over one year period. I

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Speaker 1: think the important thing for people listening is to understand

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Speaker 1: is that, uh it runs for a year, the outcome period,

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Speaker 1: but then it just resets after a year and then

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Speaker 1: you get another, uh year of the same thing. So

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Speaker 1: what doesn't change is the length of the outcome period

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Speaker 1: is a year, and also the buffer doesn't change. So

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Speaker 1: if you bought the nine percent buffer, we're going to

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Speaker 1: have that for a year, and then it's going to

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Speaker 1: reset the next year and you're gonna have it again

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Speaker 1: for another year. Year. Is almost like a contract basically

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Speaker 1: in a sense, it's just when you buy the options positions.

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Speaker 1: These are what are called flex options, and it's really

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Speaker 1: a very simple option. What it lets you allows you

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Speaker 1: to do is put a custom option together, and what

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Speaker 1: that means is you can have a specific start day

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Speaker 1: and a specific end date, and so all the options

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Speaker 1: start on one day and end on one day and

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Speaker 1: then they reset that day and go into a new

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Speaker 1: set of those the following year. And so you just

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Speaker 1: keep doing that year after year, getting as much of

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Speaker 1: the upside of the options industry will give you, but

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Speaker 1: with a nine percent buffer, fifteen or thirty. And this

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Speaker 1: is kind of solving in a way, you know that

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Speaker 1: problem we talk about with lever gtfs. They reset every

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Speaker 1: day and yeah, and therefore you don't actually get the

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Speaker 1: quarter or the month of that leverage. You only get

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Speaker 1: it one day. With this a little bit, right, Yeah,

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Speaker 1: I mean you I have to come out quarterly. Now.

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Speaker 1: You could buy them in between, but it's ideal to

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Speaker 1: buy them on that date. And essentially this is a

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Speaker 1: strategy that you could actually do on your own, right,

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Speaker 1: You're just packaging something that might be a little more

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Speaker 1: on the institutional side, Yeah, into an e t F. Yeah,

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Speaker 1: I think that's a great point. I mean, like all

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Speaker 1: e t F you could buy all those securities on

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Speaker 1: your own if you wanted to write. I mean, it's

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Speaker 1: it's just actually, this one is much more complicated than

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Speaker 1: some of those because you have to understand first of

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Speaker 1: all options, how options work. You also have to understand

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Speaker 1: how to put that position together in order to achieve

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Speaker 1: that outcome for you. So it's more complicated than it

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Speaker 1: would be to put together some type of another et

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Speaker 1: F package. UM and I think the the idea of

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Speaker 1: a one year outcome PARI. If you think about most

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Speaker 1: of the ETFs that we buy that supposedly are going

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Speaker 1: to provide some downside buffer. Typically there's a switching strategy,

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Speaker 1: switches in and out, may not switch at the right time,

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Speaker 1: might switch at the wrong time. And with these I

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Speaker 1: think the thing that can't be overstated is that an

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Speaker 1: investor advisor they can buy today and understand very clearly.

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Speaker 1: Do I think how much? Do I think the market

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Speaker 1: is gonna go out next year? Oh? I think it's

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Speaker 1: gonna be up all right. Well, I'm gonna get all

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Speaker 1: the upside of the market if I get this. But

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Speaker 1: let's say China doesn't come through, the market crashes, it

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Speaker 1: could go down tenner fitting. Well, I want to have

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Speaker 1: that buffer in there, so I'm gonna get all the

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Speaker 1: upside that I think is there, and I'm also going

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Speaker 1: to be buffered against all the potential downside I think

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Speaker 1: is there? Uh downside, I don't know what you're talking

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Speaker 1: about right now. It doesn't seem like there could be

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Speaker 1: any downside exactly. Can you take us to the one

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Speaker 1: that's maybe around this maturity and take us through the

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Speaker 1: last twelve months and what it did versus what it

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Speaker 1: was set up to do up. Yeah, I'll be happy

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Speaker 1: to And and one other thing I want to mention

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Speaker 1: to you. We started out initially offering these quarterly on

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Speaker 1: the calendar quarters, and we kind of decided early on

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Speaker 1: if we did a billion dollars in assets and these

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Speaker 1: within the calendar quarters, when we got to that asset level,

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Speaker 1: we would offer a monthly. So back in June we

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Speaker 1: started offering these funds on a monthly basis. So you

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Speaker 1: have a nine fifteen and buffer every single month being

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Speaker 1: issued the first of the month. That means, you know,

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Speaker 1: there will be thirty six funds in the market achieving

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Speaker 1: these defined outcomes for investors. The reason that's really important

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Speaker 1: is that an investor can know. As Eric said, you know,

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Speaker 1: people like to buy in early or they want to

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Speaker 1: be at the beginning. I mean, that's part of how

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Speaker 1: these started. The reason they like that is they want

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Speaker 1: to know, Okay, I if I get in, I have

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Speaker 1: a buffer starting at zero. It goes down right away,

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Speaker 1: and I have all the upside right there, and they

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Speaker 1: don't want to have to think about buying in the

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Speaker 1: middle and that they just want to participate. So we

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Speaker 1: have them every single month now, and having them every

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Speaker 1: month at the beginning of every month makes some a

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Speaker 1: very powerful tool for advisors for a lot of different reasons.

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Speaker 1: Now let's talk about the portfolio, right, So is this

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Speaker 1: aiming to replace, uh, the equity portion of your portfolio,

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Speaker 1: like the whole thing, or to be like an overlay.

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Speaker 1: I'm seeing people think about all the our ways you

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Speaker 1: could do it just as an overlay over your whole

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Speaker 1: portfolio and say, you know, I want additional exposure the

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Speaker 1: SMP five hunder to the market in general, So I'm

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Speaker 1: gonna buy this, but I have a buffer built in.

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Speaker 1: But we're also seeing uh advisors some taking their entire

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Speaker 1: piece of their equity exposure and just say, I'm buying

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Speaker 1: this with my for my equity exposure. I'm not going

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Speaker 1: to We're at a tenure bull market. We gotta be

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Speaker 1: getting somewhere near the top. I'm gonna buffer my clients

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Speaker 1: against the loss that's going to happen here over the

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Speaker 1: next few years. I don't want to. I don't want

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Speaker 1: them exposed to that. And uh so we're seeing a

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Speaker 1: good bit of that as well. The other thing we're

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Speaker 1: seeing a lot of is gonna saying I don't want

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Speaker 1: to expose my clients to fixed income right here, rates

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Speaker 1: are super low. I'm not getting paid to hold them.

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Speaker 1: Rates move around. I'm taking a huge amount of risk.

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Speaker 1: I'm just gonna take some of that fixed income out.

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Speaker 1: I'm gonna move it over into the equity market, get

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Speaker 1: a good buffer there, get the upside of the equity market,

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Speaker 1: and not risk myself in the debt market. Right now,

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Speaker 1: of all the moments in time that you could bring

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Speaker 1: a product like this to market, it seems like it

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Speaker 1: would be a pretty great one. So what what have

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Speaker 1: the inflo has been like? Because you guys launched when Yeah,

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Speaker 1: we launched last August basically, so about a year ago.

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Speaker 1: We launched the July series in August because we're trying

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Speaker 1: to get it, you know, to July. So we've had

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Speaker 1: one full year in that product and then in October

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Speaker 1: we'll have our next full year in that product. The

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Speaker 1: July one did exactly what it was supposed to do.

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Speaker 1: But to give you an example, we started out no

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Speaker 1: one knew what they were, how they worked, or anything,

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Speaker 1: and so you know, we brought them out and we

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Speaker 1: probably in the first couple of weeks did maybe ten

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Speaker 1: million bucks in the three Across the three ended the

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Speaker 1: year we had maybe a hundred and fifty million dollars

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Speaker 1: in those three and then now we're probably in the

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Speaker 1: defined outcome alone, probably around the one point three one

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Speaker 1: point four billion dollar mark. It's a pretty successful year. Yeah, yeah,

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Speaker 1: I mean listen, you know, UH there's a lot of

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Speaker 1: E t F providers uh that are struggling out there

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Speaker 1: to get visibility, to get asked uts. We're not in

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Speaker 1: any of the big distribution UH systems right now, so

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Speaker 1: we are doing this uh hand to hand, going through

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Speaker 1: the r I A channel, explain it to them how

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Speaker 1: they work, what they are, and they're being embraced by

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Speaker 1: that channel. So, like any new sensation, once you hit

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Speaker 1: a billion dollars, people start to look at look, maybe

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Speaker 1: I'll get into that. And you do have somebody filing

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Speaker 1: First Trust has put in filings to track a cbo

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Speaker 1: E index that does something very similar. There's look like

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Speaker 1: it's ten percent buffer series years or nine I just

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Speaker 1: real quick try to suss out how theirs will be

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Speaker 1: different or the same as yours. Yeah, well, you know,

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Speaker 1: they've had their filings in for a while. I mean,

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Speaker 1: it took us a long time to get our filings

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Speaker 1: approved by the SEC. So they basically have duplicated our

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Speaker 1: products and just made them slightly different levels, is what

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Speaker 1: they've done. So we came out with a nine percent buffer,

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Speaker 1: the fifteen buffer, and the thirty buffer. They did a

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Speaker 1: ten buffer and a twenty five buffer. So those are

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Speaker 1: the two that they have versus the three that we have.

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Speaker 1: There's another competitor to that. They're not an actually any

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Speaker 1: t F structure. They use ETFs. It's a lot of capital.

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Speaker 1: They're called M plus funds, so they're unit investment trust

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Speaker 1: or u i T that uses options on e t

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Speaker 1: f s in the underlying um, so a different legal structure.

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Speaker 1: But the founders, they're the guys running these funds, are

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Speaker 1: these old school structured note guys. They ran the structure

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Speaker 1: note desk at BAML for a while, so I do

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Speaker 1: see some similarities there. They like to say they offer customization,

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Speaker 1: so you can sort of customize what that payout structure

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Speaker 1: is going to look like. For your note, but another

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Speaker 1: player out there in the space. Yeah, So how big

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Speaker 1: do you think that this overall slice of the e

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Speaker 1: t F kingdom might become? And I'm asking you this

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Speaker 1: because you're somebody who is there in the beginning of

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Speaker 1: smart data, right, and that's become a huge, uh you know,

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Speaker 1: plus of the overall one billion of the overall et

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Speaker 1: F market. This seems like something that a lot of

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Speaker 1: people could say, we can do this. Yeah, well, you know,

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Speaker 1: this one is harder to do than those I mean, everybody.

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Speaker 1: The the thing about this is, remember we had the

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Speaker 1: SMP five hunter. We got different buffer levels. With those,

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Speaker 1: everybody can come out with their own slice of well,

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Speaker 1: this is how I do it, and this is how

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Speaker 1: you know, it's kind of like act of management almost

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Speaker 1: this one. But I would say that I think the

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Speaker 1: size of the market is tremendous. If you think about

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Speaker 1: a lot of the insurance products, people that invest in

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Speaker 1: structured outcomes and insurance, you know, is multiple multiples of billions.

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Speaker 1: Structure product market is you know, multiples of billions. You know,

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Speaker 1: there's probably a true one or two trillion dollars within

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Speaker 1: that those marketplaces. So, um, we think there's a tremendous

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Speaker 1: opportunity in this space, and primarily because people don't have

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Speaker 1: reliable downside protection. You know, they have so called downside protections,

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Speaker 1: but there's always things that can go wrong. Rather than

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Speaker 1: saying I know I have this buffer, this is the

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Speaker 1: buffer I have. I'm good with that. I'm totally willing

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Speaker 1: to give up some of my upside. You know, if

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Speaker 1: you think the investable assets today from individuals are in

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Speaker 1: the baby boomer's hands basically, and they're right at retirement.

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Speaker 1: They don't want to make their money with yeah, where

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Speaker 1: I got and they're like they're they're like, do I

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Speaker 1: really want to lose my money? Do I really want

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Speaker 1: to take all this risk on? And and so if

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Speaker 1: they can buy something like this and say I still

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Speaker 1: have access to the upside, but I'm buffered against losses, um,

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Speaker 1: you know, that's a tremendous value proposition for them. But

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Speaker 1: insurance isn't free. How insurance it's seventy nine basis points

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Speaker 1: and that's all in. It's a unitary fee like most

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Speaker 1: ETFs have today. And so that's all anyone's gonna pay.

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Speaker 1: And that is if if you go out and try

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Speaker 1: to replicate this on your own, it's gonna be more

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Speaker 1: expensive than that. If you go out and try to

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Speaker 1: buy a structure product, annuity, anything like that, it's gonna

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Speaker 1: be much more expensive, regardless of what the documentation says.

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Speaker 1: Um you know. Sometimes I know within the annuity products

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Speaker 1: they say they're free in this and that, But I mean,

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Speaker 1: if you try to get out any year, you know,

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Speaker 1: there's a leve percent UH redemption fee. So I think

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Speaker 1: you have to just be careful and and and look

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Speaker 1: at for what the beauty of these products is, you

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Speaker 1: can get out any time, you can buy them anytime

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Speaker 1: you're not held. You know, there's even instructured product. You know,

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Speaker 1: if they're kind of tie you up, it doesn't happen here.

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Speaker 1: You have the transparency. You can see exactly what's in

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Speaker 1: the portfolio. There's no counterparty rist remember with the other ones,

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Speaker 1: you know, you're relying on the insurance company to be

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Speaker 1: in business, or you're relying on the bank that issued

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Speaker 1: the note on a structure note to be in business.

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Speaker 1: You know, like our thirty percent product. You know, i'd

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Speaker 1: like to say if the market crashes is down thirty percent,

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Speaker 1: you don't want to hope those guys are gonna stay

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Speaker 1: in business. You want to know you got what you own,

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Speaker 1: and that's the important time. Can I play a quick game, yes?

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Speaker 1: Can we guess of the nine percent know exactly what

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Speaker 1: you're doing? Yes? And the thirty percent buffer, which is

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Speaker 1: the most popular, I'm going thirty. I'm going fifteen. Also,

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Speaker 1: full disclosure, I knew the answer, but but like, break

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Speaker 1: it down. What's the percentages between each three? It's it's

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Speaker 1: probably fifteen and then the nine and then the third. Yeah, well,

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Speaker 1: I mean you're good listen to thirty. The way to

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Speaker 1: think about that is and and uh, I think we

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Speaker 1: thought it was gonna be a huge seller at the beginning.

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Speaker 1: To um is that in the cost the same, Yeah,

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Speaker 1: the costs are the same. Is that if you're in

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Speaker 1: the thirty, you're what you're saying is I'm willing to

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Speaker 1: risk five percent, right, that first five percent you can lose,

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Speaker 1: but I don't want to risk anything else. And so

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Speaker 1: that's somebody who thinks the market is really gonna completely

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Speaker 1: crash and they're willing to take the risk on the five.

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Speaker 1: The other ones they started zero, And so I think

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Speaker 1: that maybe why fifteen has been a little more that

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Speaker 1: changed through the year though, Yeah, it's interesting. Um, it

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Speaker 1: depends on where the funds are trading, the et f

360
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Speaker 1: s are trading in the market, because we see a

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Speaker 1: lot of people like right now, I haven't seen the

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Speaker 1: numbers for today, but like the October series is very

363
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Speaker 1: like over the last few weeks has been very successful.

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Speaker 1: He's taking a lot of assets right now because right

365
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Speaker 1: around its starting point, it's starting asset our dollar price,

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Speaker 1: and so you can get in today. You can have

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Speaker 1: the same buffer and the same cap that you did

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Speaker 1: day one, but you only got a month and a

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Speaker 1: half left. So they're saying, wow, I got a ten

370
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Speaker 1: percent cap and I got a fifteen percent buffer. I

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Speaker 1: like that, you know, for a month and a half.

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Speaker 1: So we're seeing a lot of people participate in the middle,

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Speaker 1: which we didn't know of what happened, but we've seen

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Speaker 1: a lot of assets flowing in the middle. I was

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Speaker 1: recently at an event and uh, these came up for

376
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Speaker 1: the downside of the buffer, ETFs came up. One of

377
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Speaker 1: the analysts that I was on a panel with said

378
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Speaker 1: something to the effect, I haven't looked into this yet

379
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Speaker 1: that well, you're only getting the price and it doesn't

380
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Speaker 1: have divot in there. So that's kind of like a

381
00:18:51,680 --> 00:18:54,960
Speaker 1: cost that you're not seeing. Can you address that? Yeah, well,

382
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Speaker 1: you get the price return of the SMP five with these.

383
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Speaker 1: You don't get the return of the SMP five hundred

384
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Speaker 1: with the dividend. Some people look at the dividend as

385
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Speaker 1: a buffer in a sense, and I think that's why

386
00:19:07,000 --> 00:19:10,040
Speaker 1: we've priced ours at a nine percent, and you know

387
00:19:10,160 --> 00:19:11,719
Speaker 1: we don't have it lower than that if you think

388
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Speaker 1: about it. If you if you think about it that

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00:19:13,920 --> 00:19:16,560
Speaker 1: way as a two or three percent, then if you

390
00:19:16,640 --> 00:19:19,720
Speaker 1: look at nine percent and fiftcent, it's pretty well spaced out.

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Speaker 1: Most people, Uh, look at the two percent and they'll

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00:19:23,359 --> 00:19:25,320
Speaker 1: make that, but that's not enough for them. They want

393
00:19:25,440 --> 00:19:28,639
Speaker 1: more buffer than that. And so you know, the dividend

394
00:19:28,800 --> 00:19:31,399
Speaker 1: isn't included. So if you think that the market is

395
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Speaker 1: gonna be down two percent or less, you probably go

396
00:19:33,760 --> 00:19:36,320
Speaker 1: ahead and stick with it. If you want more buffer

397
00:19:36,440 --> 00:19:39,119
Speaker 1: than that, then you need to buy these. You mentioned

398
00:19:39,400 --> 00:19:44,440
Speaker 1: sp Uh, what all do you think you could do

399
00:19:44,680 --> 00:19:48,080
Speaker 1: this for? Put this rapper around? That's a good question. Currently,

400
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Speaker 1: we have the SMP five hundred, we have the ms

401
00:19:50,640 --> 00:19:53,080
Speaker 1: c I EFA and the ms c I Emerging Markets.

402
00:19:53,119 --> 00:19:55,720
Speaker 1: We just started that and we're gonna have those quarterly.

403
00:19:55,920 --> 00:19:58,840
Speaker 1: Why did you pick those? Really, what we're doing is

404
00:19:58,880 --> 00:20:02,879
Speaker 1: working from the trading level back because you need to

405
00:20:03,000 --> 00:20:07,160
Speaker 1: have options at trade enough that allow these UH products

406
00:20:07,200 --> 00:20:09,200
Speaker 1: to be established on them, and so you need to

407
00:20:09,240 --> 00:20:12,359
Speaker 1: have a very liquid market, and so there's only really

408
00:20:12,440 --> 00:20:15,040
Speaker 1: about five or six markets that allow that. So those

409
00:20:15,080 --> 00:20:18,960
Speaker 1: two international markets as well as the Accus and as

410
00:20:19,080 --> 00:20:22,240
Speaker 1: the Russell two thousand, and we're gonna be introducing the

411
00:20:22,640 --> 00:20:25,760
Speaker 1: the Nazac one and the Russell two thousand here in October,

412
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Speaker 1: so we have five of them, and and and with

413
00:20:30,600 --> 00:20:33,119
Speaker 1: the emerging markets and those we just did the fifteen

414
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Speaker 1: percent buffer, so we don't we're not doing every month.

415
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Speaker 1: We didn't do all three levels. It's it's it's very

416
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Speaker 1: expensive to bring a new product out every month for

417
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Speaker 1: all of them. So we're just doing the fifteen percent

418
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Speaker 1: buffer for each of those until they gain enough assets

419
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Speaker 1: and enough interest and everyone's educated, and then we'll start

420
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Speaker 1: to introduce some more when it makes sense. What would

421
00:20:51,440 --> 00:20:56,520
Speaker 1: you like to do but looks really complicated, You know

422
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Speaker 1: it would be it would be a hit, but it'll

423
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Speaker 1: take some work to get there. You know. What we

424
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Speaker 1: really want to figure out a way to do and

425
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Speaker 1: we haven't quite got there yet, but to put together

426
00:21:06,480 --> 00:21:09,800
Speaker 1: a product similar to this that relates to people for

427
00:21:09,960 --> 00:21:12,959
Speaker 1: like lifetime fixed income, to be able to incorporate something

428
00:21:13,080 --> 00:21:15,800
Speaker 1: like that for fixed income for people within this type

429
00:21:15,800 --> 00:21:18,320
Speaker 1: of structure, using the option structure to be able to

430
00:21:18,400 --> 00:21:23,159
Speaker 1: do that um like options for bonds that well, we

431
00:21:23,359 --> 00:21:25,399
Speaker 1: we've looked at a lot of different structures on how

432
00:21:25,480 --> 00:21:28,239
Speaker 1: we could do this, and we haven't arrived on one

433
00:21:28,280 --> 00:21:30,840
Speaker 1: that we like a lot, but we're we're looking at

434
00:21:30,880 --> 00:21:33,560
Speaker 1: all types of different things to to determine is there

435
00:21:33,600 --> 00:21:36,560
Speaker 1: a better way to deliver some type of an income

436
00:21:36,600 --> 00:21:40,399
Speaker 1: product of people as they're nearing retirement now kind of

437
00:21:40,400 --> 00:21:43,600
Speaker 1: the decumulation phase of you know, everybody's accumulating their assets

438
00:21:43,680 --> 00:21:46,280
Speaker 1: and they don't have a real efficient way to to

439
00:21:46,520 --> 00:21:48,520
Speaker 1: spend that down now, and so to help them do

440
00:21:48,640 --> 00:21:50,399
Speaker 1: that and make it last as long as possible, how

441
00:21:50,480 --> 00:21:52,800
Speaker 1: much you know about your consumer and their age, because

442
00:21:53,160 --> 00:21:56,440
Speaker 1: this is like if you're right around retirement age, this

443
00:21:56,640 --> 00:21:58,800
Speaker 1: is like a perfect thing, Like I'm not getting any

444
00:21:58,880 --> 00:22:01,800
Speaker 1: yield on my fixed income um and I can basically

445
00:22:02,080 --> 00:22:06,280
Speaker 1: hedge my exposure to equities. It seems great for me right. Yeah,

446
00:22:07,240 --> 00:22:10,440
Speaker 1: how much of this is actually in that baby boom, Well,

447
00:22:10,600 --> 00:22:12,760
Speaker 1: I would imagine a good bit of it. But um,

448
00:22:13,359 --> 00:22:17,560
Speaker 1: what we're seeing, like Carolina mentioned, um, advisors are getting

449
00:22:17,560 --> 00:22:20,159
Speaker 1: ahold of this for their business and they're saying, holy smokes,

450
00:22:20,200 --> 00:22:22,600
Speaker 1: I'm putting us across all my clients because it just

451
00:22:22,720 --> 00:22:26,080
Speaker 1: makes too much sense from a strategic standpoint to be

452
00:22:26,160 --> 00:22:29,000
Speaker 1: able to have better outcomes. You know, one of the

453
00:22:29,040 --> 00:22:32,560
Speaker 1: things strategi strategists want when they're investing their assets is

454
00:22:32,600 --> 00:22:34,919
Speaker 1: they want to have a better understanding of what are

455
00:22:34,960 --> 00:22:37,720
Speaker 1: their risks and what outcomes will they have. This gives

456
00:22:37,800 --> 00:22:40,760
Speaker 1: them more control over the potential outcomes rather than one

457
00:22:40,800 --> 00:22:42,640
Speaker 1: of the market crashers I'm not sure what will happen.

458
00:22:42,880 --> 00:22:45,040
Speaker 1: It gives them a little more control. And so strategists,

459
00:22:45,080 --> 00:22:48,520
Speaker 1: I think, are attracted to these products because of that, Carolyn,

460
00:22:48,600 --> 00:22:51,240
Speaker 1: What could go wrong? What if the market goes down?

461
00:22:53,040 --> 00:22:56,960
Speaker 1: What the market goes down, you're gonna well in the

462
00:22:57,080 --> 00:22:59,480
Speaker 1: nine percent, you would lose thirty five last nine you know,

463
00:22:59,640 --> 00:23:03,080
Speaker 1: so you know you uh. The way I if you

464
00:23:03,200 --> 00:23:05,680
Speaker 1: think about these products, I think a great way to

465
00:23:05,760 --> 00:23:08,760
Speaker 1: really think about them is if the market goes down,

466
00:23:09,359 --> 00:23:11,520
Speaker 1: you're going to outperform the market by the amount of

467
00:23:11,560 --> 00:23:14,719
Speaker 1: the buffer, depending on how much the market is down right,

468
00:23:14,920 --> 00:23:16,600
Speaker 1: So you're gonna beat the market of the markets down.

469
00:23:17,240 --> 00:23:19,359
Speaker 1: If the market is flat, you're gonna be with the market.

470
00:23:19,640 --> 00:23:22,240
Speaker 1: And the market is up slightly but below the cap,

471
00:23:22,280 --> 00:23:25,320
Speaker 1: you're gonna meet the market. The only time you're gonna

472
00:23:25,359 --> 00:23:27,920
Speaker 1: underperform the market is if the market has a huge

473
00:23:27,960 --> 00:23:30,280
Speaker 1: boom year and and you get capped out and you

474
00:23:30,320 --> 00:23:33,719
Speaker 1: don't get all the upside that And think about how

475
00:23:33,800 --> 00:23:38,159
Speaker 1: many uh, you know, funder active managers can beat the market,

476
00:23:39,280 --> 00:23:42,840
Speaker 1: very very few on the downside or the upside. And

477
00:23:42,960 --> 00:23:46,399
Speaker 1: so this gives people, you know, they're gonna beat the market,

478
00:23:46,480 --> 00:23:49,000
Speaker 1: and you know, three out of the four scenarios, it's

479
00:23:49,080 --> 00:23:51,879
Speaker 1: it's a pretty good opportunity to be able to participate

480
00:23:51,920 --> 00:23:56,280
Speaker 1: in something like this. Would you ever add leverage to

481
00:23:56,400 --> 00:23:59,200
Speaker 1: the upside and them thinking back on the traditional structured

482
00:23:59,280 --> 00:24:01,840
Speaker 1: note structure or is where you know you get two

483
00:24:01,960 --> 00:24:04,399
Speaker 1: times the underlying up to a cap and then some

484
00:24:04,480 --> 00:24:07,120
Speaker 1: buffer on the downside. Any interest from clients that you've

485
00:24:07,160 --> 00:24:10,080
Speaker 1: heard to add some juice to that upside return people

486
00:24:10,160 --> 00:24:14,800
Speaker 1: like Jews. But you know, the the SEC has moratorium

487
00:24:15,119 --> 00:24:19,560
Speaker 1: on leveraged E t F s and so right now, um,

488
00:24:19,880 --> 00:24:22,200
Speaker 1: you know that's not possible, but you know we were

489
00:24:22,280 --> 00:24:25,080
Speaker 1: hoping in time that something like that will be possible. Eric,

490
00:24:25,160 --> 00:24:27,520
Speaker 1: have you have you guys covered this at all? Yeah? So, um,

491
00:24:27,640 --> 00:24:30,280
Speaker 1: my colleague James Seffert has kind of a it's one

492
00:24:30,320 --> 00:24:33,600
Speaker 1: of his focus ideas. Every one of every analyst in

493
00:24:33,640 --> 00:24:36,359
Speaker 1: Bloomberg Intelligence has to have a focus idea. Mine is

494
00:24:36,400 --> 00:24:38,560
Speaker 1: that there will be more more closures than launches in

495
00:24:38,600 --> 00:24:40,320
Speaker 1: the next twelve months. It's kind of a call. If

496
00:24:40,359 --> 00:24:42,240
Speaker 1: you will not something will go up and down, but

497
00:24:42,320 --> 00:24:45,000
Speaker 1: just the call in our industry, his is that these

498
00:24:45,040 --> 00:24:47,199
Speaker 1: will were bullish. We think that if they can get

499
00:24:47,359 --> 00:24:49,320
Speaker 1: you know, over a billion in this kind of market,

500
00:24:49,720 --> 00:24:51,560
Speaker 1: if the market goes down, they should really do well

501
00:24:51,600 --> 00:24:54,320
Speaker 1: because people are gonna definitely want downside protection there. So

502
00:24:54,920 --> 00:24:56,800
Speaker 1: we find that the fact that they could pull this off.

503
00:24:57,240 --> 00:24:58,920
Speaker 1: So he has a great note go to b I

504
00:24:59,040 --> 00:25:00,720
Speaker 1: E t F you can read the whole things. So, yeah,

505
00:25:00,720 --> 00:25:03,360
Speaker 1: we've covered it, and that note is maybe three mini

506
00:25:03,440 --> 00:25:07,640
Speaker 1: notes for a total of like say twelve bits. I'm

507
00:25:07,640 --> 00:25:10,680
Speaker 1: wondering about the economics of this on your side, because

508
00:25:10,720 --> 00:25:12,960
Speaker 1: this is not like a typical e t F. You're

509
00:25:13,200 --> 00:25:17,240
Speaker 1: you're dealing with options. Obviously it's coming through with basis

510
00:25:17,320 --> 00:25:19,879
Speaker 1: points to the consumer, But what does it look like

511
00:25:20,320 --> 00:25:25,600
Speaker 1: on your side? UM, from a from a cost perspective, Yeah, well,

512
00:25:25,680 --> 00:25:29,320
Speaker 1: from a cost perspective, we are working with Milliman UH

513
00:25:29,440 --> 00:25:32,480
Speaker 1: Financial Essay Management. Don't know you're familiar with them out

514
00:25:32,480 --> 00:25:34,720
Speaker 1: of Chicago. They have offices around the world, but they're

515
00:25:34,760 --> 00:25:38,720
Speaker 1: the subadvisor for the products and UM. They're one of

516
00:25:38,800 --> 00:25:43,040
Speaker 1: the larger insurance overlay contractors in the world, and so

517
00:25:43,200 --> 00:25:46,560
Speaker 1: they sub advise. In fact, they recently did the Transamerica

518
00:25:46,760 --> 00:25:49,159
Speaker 1: e t F work with Transamerica on that UH and

519
00:25:49,280 --> 00:25:51,720
Speaker 1: our billion dollars, I think they seated that with So

520
00:25:52,359 --> 00:25:54,880
Speaker 1: Milliman is our sub advisor, do a very good job

521
00:25:54,960 --> 00:25:57,440
Speaker 1: and know exactly what they're doing. So we have to

522
00:25:57,480 --> 00:25:59,920
Speaker 1: pay them, and we have everyone else to pay. The reason,

523
00:26:00,040 --> 00:26:02,920
Speaker 1: and this one is difficult to do and expensive to do,

524
00:26:03,920 --> 00:26:07,320
Speaker 1: is that we have to have thirty six funds, which

525
00:26:07,359 --> 00:26:10,479
Speaker 1: would normally take three funds to accomplish the same thing.

526
00:26:11,160 --> 00:26:14,359
Speaker 1: And by having to have a new fund every month

527
00:26:14,520 --> 00:26:17,520
Speaker 1: in order to bring the best value possible, there's a

528
00:26:17,560 --> 00:26:19,840
Speaker 1: big expense in doing that, and that's the reason it's

529
00:26:19,880 --> 00:26:22,040
Speaker 1: necessary for us to have a little higher expense ratio.

530
00:26:22,440 --> 00:26:25,000
Speaker 1: Although that fee is pretty much in line with some

531
00:26:25,240 --> 00:26:27,800
Speaker 1: fancier or smart data products, isn't it. Yeah, it's it's

532
00:26:27,840 --> 00:26:30,159
Speaker 1: up there. But this is a institutional kind I mean,

533
00:26:30,200 --> 00:26:31,800
Speaker 1: this is they're doing a lot of legwork and it

534
00:26:31,920 --> 00:26:34,480
Speaker 1: was first. Usually things get priced down is there are

535
00:26:34,520 --> 00:26:37,200
Speaker 1: more and more products, so I was given all you'd

536
00:26:37,240 --> 00:26:39,040
Speaker 1: have to do on your own. I mean that it

537
00:26:39,160 --> 00:26:42,480
Speaker 1: just you can just you heard Bruce describe all this.

538
00:26:42,600 --> 00:26:45,480
Speaker 1: It sounds like kind of a pain, to be honest,

539
00:26:45,520 --> 00:26:47,800
Speaker 1: whereas smart bait a lot of times it's it's there

540
00:26:48,000 --> 00:26:50,479
Speaker 1: is there is their formula, and that's their intellectual property.

541
00:26:50,520 --> 00:26:53,960
Speaker 1: But honestly, it's just holding stocks. It's not as difficult

542
00:26:54,040 --> 00:26:57,400
Speaker 1: as something like this. So and obviously the flow show

543
00:26:57,520 --> 00:27:00,920
Speaker 1: people aren't that worried about it. Out these are specialty

544
00:27:00,960 --> 00:27:05,600
Speaker 1: products like leverage ETFs, there charging nobody cares um so

545
00:27:06,280 --> 00:27:08,000
Speaker 1: and that's good for you because it is hard to

546
00:27:08,760 --> 00:27:10,479
Speaker 1: carve out a living in the et F world anymore.

547
00:27:10,520 --> 00:27:13,000
Speaker 1: Everything has been priced down pretty low. So from a

548
00:27:13,080 --> 00:27:17,240
Speaker 1: business standpoint, it's pretty remarkable. Feet what you're what you're

549
00:27:17,280 --> 00:27:20,160
Speaker 1: doing UM it is you know a lot of people

550
00:27:20,480 --> 00:27:22,040
Speaker 1: like there was a couple of lunches for zero and

551
00:27:22,119 --> 00:27:24,840
Speaker 1: negative fee that didn't get any assets. So I think

552
00:27:25,320 --> 00:27:28,679
Speaker 1: you have to innovate and next your one way around

553
00:27:28,760 --> 00:27:32,040
Speaker 1: the vanguard effect. Yeah, you know, and and I think

554
00:27:32,080 --> 00:27:34,480
Speaker 1: the thing that you don't want to lose on this

555
00:27:34,880 --> 00:27:38,359
Speaker 1: is to get this type of buffer, this type of

556
00:27:38,480 --> 00:27:41,120
Speaker 1: protection of the market. If they wanted to go buy

557
00:27:41,200 --> 00:27:43,840
Speaker 1: this somewhere else, it's going to be much more expensive.

558
00:27:44,480 --> 00:27:48,800
Speaker 1: So it is very economical for any other way that

559
00:27:48,920 --> 00:27:53,120
Speaker 1: they could buy this type of protection in the marketplace. Okay,

560
00:27:53,160 --> 00:27:55,479
Speaker 1: so you've seen a lot from where you started UM

561
00:27:55,920 --> 00:27:59,600
Speaker 1: in power Shares, rise of smart Beta. Now you've got

562
00:27:59,720 --> 00:28:03,560
Speaker 1: this new whole idea. What do you how do you

563
00:28:03,640 --> 00:28:06,000
Speaker 1: feel about the et of industry as a whole? Where's

564
00:28:06,000 --> 00:28:09,280
Speaker 1: it going? Where where else could innovate? Well, I mean

565
00:28:09,359 --> 00:28:12,159
Speaker 1: I think that Uh, you know, when when we were

566
00:28:12,240 --> 00:28:15,080
Speaker 1: power Shares, we did the first thematic fund, we did

567
00:28:15,160 --> 00:28:17,240
Speaker 1: the first active fund. What was it what was the

568
00:28:17,240 --> 00:28:20,639
Speaker 1: first the metic I think it was water Oh p

569
00:28:20,840 --> 00:28:26,600
Speaker 1: h O, yeah, yeah, it's first thematic fund. Check it out. Yeah, yeah,

570
00:28:26,680 --> 00:28:28,560
Speaker 1: So you know we did we were a lot of first,

571
00:28:28,640 --> 00:28:30,480
Speaker 1: and we innovated a lot. We had the first e

572
00:28:30,560 --> 00:28:32,399
Speaker 1: t F of e t F s, you know, so

573
00:28:32,560 --> 00:28:35,320
Speaker 1: we we pushed the envelope and a lot of things.

574
00:28:35,640 --> 00:28:39,200
Speaker 1: And um, we think in this area where we're at,

575
00:28:39,360 --> 00:28:42,840
Speaker 1: where um, you can use other types of products to

576
00:28:42,920 --> 00:28:45,640
Speaker 1: deliver outcomes that people haven't really considered within the et

577
00:28:45,720 --> 00:28:48,560
Speaker 1: F structure, that there's growth potential there. We think that

578
00:28:48,640 --> 00:28:52,080
Speaker 1: the equity market, and you know, pretty much the fixed

579
00:28:52,120 --> 00:28:54,600
Speaker 1: income market has been sliced pretty thin, you know, and

580
00:28:55,160 --> 00:28:57,360
Speaker 1: there there aren't a lot of other rocks to be

581
00:28:57,480 --> 00:29:01,080
Speaker 1: turned over to. You might have people discover this new

582
00:29:01,160 --> 00:29:04,200
Speaker 1: thing that comes up and another hack or another you know,

583
00:29:04,440 --> 00:29:06,720
Speaker 1: cannabis or you know whatever or something like that. But

584
00:29:07,160 --> 00:29:12,640
Speaker 1: I think generally to establish a process of investing something

585
00:29:12,720 --> 00:29:15,720
Speaker 1: that brings true value across the portfolio, not just a

586
00:29:15,760 --> 00:29:18,440
Speaker 1: one hit wonder type of thing. You know, you have

587
00:29:18,520 --> 00:29:21,240
Speaker 1: to look at areas where there are true growth potentials

588
00:29:21,280 --> 00:29:24,000
Speaker 1: and they contribute to people, you know, across the portfolio.

589
00:29:24,240 --> 00:29:27,040
Speaker 1: And we think this area that we're in now that

590
00:29:27,320 --> 00:29:28,959
Speaker 1: you know there are there are legs there and there

591
00:29:28,960 --> 00:29:32,400
Speaker 1: are other opportunities going forward. It's um, sorry, I have

592
00:29:32,520 --> 00:29:35,280
Speaker 1: to say p h O came out in two thousand five.

593
00:29:36,120 --> 00:29:38,040
Speaker 1: I think that probably makes it the first theme ETF.

594
00:29:38,120 --> 00:29:40,920
Speaker 1: You're right, million dollars. Yeah, you know what, I think

595
00:29:41,000 --> 00:29:42,920
Speaker 1: we did. We did. I think the tickers should have

596
00:29:42,960 --> 00:29:44,840
Speaker 1: been used for the Vietnam ETF, But that's another story.

597
00:29:45,040 --> 00:29:48,000
Speaker 1: What about clean energy might have been before that? Clean

598
00:29:48,080 --> 00:29:49,960
Speaker 1: energy I would call E s G. I would call water.

599
00:29:50,160 --> 00:29:51,680
Speaker 1: I mean there's an E s G. Didn't they given

600
00:29:51,800 --> 00:29:55,000
Speaker 1: exist back? I know you were firing on all clers

601
00:29:59,600 --> 00:30:05,120
Speaker 1: we pay asked on the internet, the Internet. Yeah, so exactly.

602
00:30:05,760 --> 00:30:07,400
Speaker 1: You know the e t F better than anybody. While

603
00:30:07,440 --> 00:30:10,440
Speaker 1: we're on the topic, the SEC is wrestling internally over

604
00:30:10,480 --> 00:30:13,120
Speaker 1: whether to prove a bit coin ETF. My take is

605
00:30:13,160 --> 00:30:15,240
Speaker 1: the E t F structure can handle almost anything. You

606
00:30:15,280 --> 00:30:17,640
Speaker 1: can put Mickey Mickey mental rookie cards in it, and

607
00:30:17,720 --> 00:30:20,280
Speaker 1: it would probably be the best possible deal given the

608
00:30:20,400 --> 00:30:23,600
Speaker 1: arbitrage that the market makers can do. Um, what's your

609
00:30:23,680 --> 00:30:25,920
Speaker 1: take on that? Do you think that a bitcoin would

610
00:30:25,920 --> 00:30:27,320
Speaker 1: be fine? An e t F would all work out

611
00:30:27,360 --> 00:30:28,880
Speaker 1: and not not to say it with stuff the volatility,

612
00:30:29,040 --> 00:30:30,960
Speaker 1: but it would track it pretty well. I think probably,

613
00:30:31,280 --> 00:30:34,479
Speaker 1: you know, I would have Magnan. I'm not really up

614
00:30:34,560 --> 00:30:36,760
Speaker 1: on all the cryptocurrencies. But I think it probably would.

615
00:30:36,880 --> 00:30:39,080
Speaker 1: And and because it prices, and you can see the

616
00:30:39,120 --> 00:30:40,840
Speaker 1: prices long and the prices are reliable, you should be

617
00:30:40,840 --> 00:30:43,360
Speaker 1: able to get it. You know. Interesting thing along those lines, Eric,

618
00:30:43,560 --> 00:30:47,640
Speaker 1: is back when we had the financial crisis, and remember

619
00:30:47,760 --> 00:30:50,360
Speaker 1: Fannie May and all those guys were holding all those mortgages.

620
00:30:51,080 --> 00:30:53,920
Speaker 1: I tried to get them to take those trillion dollars

621
00:30:53,960 --> 00:30:56,000
Speaker 1: and mortgages or whatever they were and just put them

622
00:30:56,080 --> 00:30:58,000
Speaker 1: in an e t F and let the e t

623
00:30:58,120 --> 00:31:00,640
Speaker 1: F trade and let the market determine and the value

624
00:31:00,680 --> 00:31:03,480
Speaker 1: of the pool, and then that would have equitized all

625
00:31:03,520 --> 00:31:06,880
Speaker 1: that right. But you know obviously didn't listen to me there. Wow,

626
00:31:07,040 --> 00:31:09,360
Speaker 1: what a story. Yeah, I think we buried the lead.

627
00:31:09,800 --> 00:31:14,600
Speaker 1: You know, do you have that he Edits a little

628
00:31:14,640 --> 00:31:18,120
Speaker 1: magazine like you know, I tried to. I hadn't went

629
00:31:18,120 --> 00:31:20,000
Speaker 1: to d C and tried to you know, tell them, guys,

630
00:31:20,040 --> 00:31:21,480
Speaker 1: you know you want to get this, get rid of

631
00:31:21,520 --> 00:31:23,480
Speaker 1: This is a way to do it. Actually, And have

632
00:31:23,600 --> 00:31:28,160
Speaker 1: you have you gone and back tested your product and

633
00:31:28,560 --> 00:31:30,560
Speaker 1: you know, showing what it would have been like during

634
00:31:30,560 --> 00:31:32,720
Speaker 1: the financial cred We have and we we provide that

635
00:31:32,760 --> 00:31:35,200
Speaker 1: to advisors all the time. One thing that's really interesting

636
00:31:35,280 --> 00:31:38,440
Speaker 1: by this product if if you think about it, all

637
00:31:38,520 --> 00:31:41,160
Speaker 1: products that we typically buy or that I've ever sold,

638
00:31:41,280 --> 00:31:43,480
Speaker 1: or a better part of it, I've looked at historically

639
00:31:43,760 --> 00:31:45,560
Speaker 1: and I've said, okay, what has what did that do

640
00:31:45,720 --> 00:31:48,240
Speaker 1: in the past? Well, we kind of know what the SUPs,

641
00:31:48,600 --> 00:31:50,720
Speaker 1: S ANDP is done, right, So this is one product

642
00:31:50,760 --> 00:31:54,040
Speaker 1: where you actually think forward. You think about, okay, what

643
00:31:54,120 --> 00:31:56,040
Speaker 1: do I think that Margot will do next year? And

644
00:31:56,120 --> 00:31:57,960
Speaker 1: then you buy the one that you think is going

645
00:31:58,040 --> 00:32:00,480
Speaker 1: to give you the outcome that you want for that

646
00:32:00,640 --> 00:32:02,840
Speaker 1: following year. And so this is much more of a

647
00:32:03,040 --> 00:32:06,719
Speaker 1: forward looking product in than any product I've actually been

648
00:32:06,760 --> 00:32:08,760
Speaker 1: involved with in the past. One thing I would think

649
00:32:08,800 --> 00:32:10,680
Speaker 1: of if if you can and pitch me, I might say, well,

650
00:32:10,880 --> 00:32:12,640
Speaker 1: this is why I use treasuries. You know I have

651
00:32:12,720 --> 00:32:16,440
Speaker 1: treasure an allocation to treasuries and cash. That buffer is

652
00:32:16,520 --> 00:32:18,960
Speaker 1: my equity position. How do you sell against that? Or

653
00:32:19,000 --> 00:32:21,560
Speaker 1: is that somebody just probably wouldn't buy it? Well, no,

654
00:32:21,680 --> 00:32:23,240
Speaker 1: they might buy it, but I would say, okay, so

655
00:32:23,560 --> 00:32:29,000
Speaker 1: that debt exposure reduces your upside potential. Right right, market

656
00:32:29,040 --> 00:32:30,520
Speaker 1: goes up, You've got half your money in there, you

657
00:32:30,600 --> 00:32:34,280
Speaker 1: got half the upside right, potentially apparently right, and so

658
00:32:34,440 --> 00:32:36,120
Speaker 1: you buy this while you got all the upside. We

659
00:32:36,200 --> 00:32:38,120
Speaker 1: just saw the buffer in there, you know what I mean?

660
00:32:38,240 --> 00:32:40,880
Speaker 1: So it it uh, you know, that's a drag. That's

661
00:32:40,920 --> 00:32:43,479
Speaker 1: like if you think about a mutual fund manager, right,

662
00:32:43,520 --> 00:32:45,800
Speaker 1: they hold too much cash, they have cash drag, right,

663
00:32:45,840 --> 00:32:49,440
Speaker 1: So that's drag on people's portfolios. Here. You don't on that.

664
00:32:49,640 --> 00:32:51,440
Speaker 1: You put it in equities. You get the upside of

665
00:32:51,440 --> 00:32:54,239
Speaker 1: the market and you can. I think the important thing

666
00:32:54,280 --> 00:32:56,520
Speaker 1: to remember on the cap is if you get uh,

667
00:32:56,640 --> 00:32:58,400
Speaker 1: if you run up and you think you're getting slow

668
00:32:58,560 --> 00:33:00,360
Speaker 1: close to the cap, you could roll of the new

669
00:33:00,440 --> 00:33:02,480
Speaker 1: fund and the next month get a new cap and

670
00:33:02,720 --> 00:33:04,880
Speaker 1: lock in your game. You can get the step up.

671
00:33:05,160 --> 00:33:07,200
Speaker 1: So it gives you that flexibility to be able to

672
00:33:07,240 --> 00:33:09,360
Speaker 1: adjust your position as you go, which I think is

673
00:33:09,960 --> 00:33:13,840
Speaker 1: is really a phenomenal feature. He's pretty good, he's you're

674
00:33:13,920 --> 00:33:19,480
Speaker 1: very smooth. You know, how much of your day is

675
00:33:19,520 --> 00:33:23,240
Speaker 1: spent explaining these two people or how much of your week?

676
00:33:23,320 --> 00:33:25,280
Speaker 1: What percentage of your week are you? I don't know

677
00:33:25,520 --> 00:33:27,680
Speaker 1: a good bit and and uh, I mean this is

678
00:33:27,720 --> 00:33:30,800
Speaker 1: my job. We're pretty passionate about it because it's really

679
00:33:30,880 --> 00:33:34,120
Speaker 1: a neat product, and uh it you know, it has

680
00:33:34,160 --> 00:33:36,440
Speaker 1: its drawbacks. I mean, it can get capped out. I mean,

681
00:33:36,560 --> 00:33:39,520
Speaker 1: and you have those things. But even with the cap

682
00:33:39,640 --> 00:33:42,480
Speaker 1: I mean, I do say, remember you're not locked in there.

683
00:33:42,520 --> 00:33:44,080
Speaker 1: You could roll to the new one. If you start

684
00:33:44,120 --> 00:33:45,680
Speaker 1: to get a cap roll into the new one. I

685
00:33:45,760 --> 00:33:48,320
Speaker 1: mean they I would tell you. I mean, for John

686
00:33:48,360 --> 00:33:51,160
Speaker 1: and I to come back into the industry after selling

687
00:33:51,240 --> 00:33:53,840
Speaker 1: power shares, there was we didn't need to come back

688
00:33:53,960 --> 00:33:58,000
Speaker 1: and try in an industry that is super crowded, super difficult.

689
00:33:58,880 --> 00:34:01,000
Speaker 1: You know, the bologna has been life's pretty thin. You

690
00:34:01,080 --> 00:34:05,920
Speaker 1: know what it's left for anyone? Yeah? Yeah, blowny whether

691
00:34:06,480 --> 00:34:08,800
Speaker 1: you know we had to come back for something meaningful.

692
00:34:08,920 --> 00:34:11,359
Speaker 1: It's almost like this isn't It's like another meat. That's

693
00:34:11,400 --> 00:34:18,040
Speaker 1: the equity. You can't slice it anything. Yeah. One question,

694
00:34:18,120 --> 00:34:20,600
Speaker 1: I have you got the month option, You've got the

695
00:34:21,120 --> 00:34:25,080
Speaker 1: year option. Could you go out farther than that? I think? Yeah,

696
00:34:25,200 --> 00:34:28,840
Speaker 1: I mean now we can go longer right where you

697
00:34:28,960 --> 00:34:32,560
Speaker 1: could have a three year and you know, those are

698
00:34:32,600 --> 00:34:36,759
Speaker 1: some of the things we've evaluated. And uh, the reason

699
00:34:36,840 --> 00:34:39,000
Speaker 1: we kept it at a year and we did the

700
00:34:39,120 --> 00:34:41,480
Speaker 1: three and we're just sticking with that for now is

701
00:34:41,600 --> 00:34:45,440
Speaker 1: we want to stay with the most simple, straightforward structure

702
00:34:45,560 --> 00:34:47,920
Speaker 1: so that people can really get their minds around it.

703
00:34:48,440 --> 00:34:50,560
Speaker 1: And I think that in time, you know, as people

704
00:34:50,640 --> 00:34:54,000
Speaker 1: become very comfortable, we'll probably add some other bells and

705
00:34:54,040 --> 00:34:56,960
Speaker 1: whistles that we think add value, like maybe a longer

706
00:34:57,080 --> 00:35:01,360
Speaker 1: date or you know, other other things that we've looked Dad, Carolyna,

707
00:35:01,400 --> 00:35:03,560
Speaker 1: thanks for joining us as always, Thank you, Bruce Bond,

708
00:35:03,560 --> 00:35:11,200
Speaker 1: thanks for joining us on Trillions than thanks for listening

709
00:35:11,280 --> 00:35:13,480
Speaker 1: to Trillions until next time. You can find us on

710
00:35:13,480 --> 00:35:17,560
Speaker 1: the Bloomberg terminal, Bloomberg dot com, Apple Podcasts, Spotify, and

711
00:35:17,640 --> 00:35:19,759
Speaker 1: wherever else you like to listen. We'd love to hear

712
00:35:19,800 --> 00:35:22,719
Speaker 1: from you. We're on Twitter, I'm at Joel Weber Show,

713
00:35:23,080 --> 00:35:26,640
Speaker 1: He's at Eric fall Tunas, and you can follow Innovator

714
00:35:26,719 --> 00:35:31,000
Speaker 1: e t F S at Innovator E t S. Trillions

715
00:35:31,080 --> 00:35:34,239
Speaker 1: is produced by Magnus Hendrickson. Francesca Levy is the head

716
00:35:34,320 --> 00:35:36,240
Speaker 1: of Bloomberg podcast Bye