WEBVTT - Are “Buffered” ETFs the Next Big Thing? 0:00:06.360 --> 0:00:08.360 Welcome to Trillions. I'm Joe Weber and I'm Eric Bell 0:00:08.440 --> 0:00:14.880 tunis Eric. We have a guest, not there's one guest, 0:00:14.880 --> 0:00:19.640 actually two guests this week. Both are legends, legends. One 0:00:19.720 --> 0:00:22.200 is an industry legend, and one is a Bloomberg News legend. 0:00:22.520 --> 0:00:25.239 Bloomberg News legend is Caroline Wilson. Carolina, welcome on the 0:00:25.239 --> 0:00:27.800 show again. Thank you for having me and and Carolina, 0:00:27.880 --> 0:00:31.360 this is your guest. Actually, who do we have? We 0:00:31.480 --> 0:00:35.000 have Bruce Bond here. He is co founder of Innovator 0:00:35.040 --> 0:00:38.080 Capital Management, but you might know him a little better 0:00:38.120 --> 0:00:41.479 potentially as the co founder of power Shares Capital Management 0:00:41.479 --> 0:00:43.519 back in the day. And let me let's not understate 0:00:43.600 --> 0:00:47.400 that he recognized smart Beta before it was a household name. So, 0:00:47.960 --> 0:00:50.160 and Carolyn, what was the thing that a little spark 0:00:50.360 --> 0:00:52.160 that made you say we should talk to Bruce Bond 0:00:52.240 --> 0:00:55.120 right now? Sure? So, before I covered exchange traded funds, 0:00:55.160 --> 0:00:59.520 I covered these byzantine products known as structured notes, which 0:00:59.560 --> 0:01:02.800 have a pretty horrible reputation. It was a really fun 0:01:02.880 --> 0:01:05.480 beat to cover. It was hated by a lot of 0:01:05.520 --> 0:01:10.039 people with um pretty critical stories on that industry. But 0:01:10.080 --> 0:01:13.160 what's really interesting here is that these are e t 0:01:13.360 --> 0:01:16.560 f s that sort of make better and change the 0:01:16.600 --> 0:01:18.479 structure of a structure note and make it a bit 0:01:18.520 --> 0:01:22.480 more accessible for investors. So it's sort of the marriage 0:01:22.520 --> 0:01:24.720 of these two worlds that I used to cover um 0:01:24.720 --> 0:01:26.360 and let me give you some stats on this, so 0:01:26.400 --> 0:01:29.399 the that we call them buffer or downside protection ETFs 0:01:29.920 --> 0:01:31.720 before Bruce is going to go into what they do, 0:01:31.800 --> 0:01:34.640 but they're pretty instant hit um and I'm a little 0:01:34.640 --> 0:01:36.600 shocked by the numbers. We've got one point eight billion. 0:01:37.040 --> 0:01:39.400 There's another issue where that has some but that's quite 0:01:39.400 --> 0:01:42.440 a bit especially I know the markets not up a 0:01:42.440 --> 0:01:45.160 lot per se, but it's not down either. These to 0:01:45.319 --> 0:01:47.920 me have their biggest potential when the market goes down 0:01:47.960 --> 0:01:50.360 because people tend to search for that like after the fact. 0:01:50.920 --> 0:01:52.440 So the fact that they got this much and they're 0:01:52.440 --> 0:01:54.320 a little more on the complicated side, which tends to 0:01:54.400 --> 0:01:56.800 be a tougher self for e t s typically, but 0:01:57.200 --> 0:01:59.680 I could see why they have appeal. They do limit 0:01:59.680 --> 0:02:02.720 your side and that is a very powerful concept. So 0:02:02.960 --> 0:02:08.600 I'm excited to dive into this time on trillions downside 0:02:08.600 --> 0:02:13.519 protection with Bruce Bond. So Bruce, welcome to Trillions. Thank 0:02:13.520 --> 0:02:15.640 you for having me. So you're You're like, we've set 0:02:15.639 --> 0:02:18.840 this up. You're kind of a legend in the ETF industry. 0:02:19.200 --> 0:02:22.360 Why did you do this? What was the idea? Well, I, 0:02:22.520 --> 0:02:24.760 you know, I really didn't intendo coming back to being 0:02:24.840 --> 0:02:28.680 all honesty with you and uh my partner John Southard, 0:02:29.240 --> 0:02:32.680 he bought a life insurance product that had some type 0:02:32.680 --> 0:02:35.520 of kind of a defined outcome within the product and 0:02:35.560 --> 0:02:37.359 he was like, you know, it's really amazing this isn't 0:02:37.400 --> 0:02:40.200 available in an e t F. I mean, the value 0:02:40.280 --> 0:02:45.400 proposition here is really neat and uh, it's surprising people 0:02:45.440 --> 0:02:48.280 don't have access. What do you what is that? Look like, 0:02:48.360 --> 0:02:52.120 what is the benefit of that? The benefit of the 0:02:52.200 --> 0:02:54.960 defined outcome where the buffery TF is? Eric said, you know, 0:02:55.360 --> 0:02:58.800 um is the ability for an investor to purchase an 0:02:58.840 --> 0:03:02.240 e t F in today a to understand their outcome 0:03:02.760 --> 0:03:05.360 a year in the future, depending on what the SMP 0:03:05.480 --> 0:03:08.440 five does. So instead of just going to the mercy 0:03:08.440 --> 0:03:11.120 of the market hoping for the very best, hoping it 0:03:11.160 --> 0:03:14.040 doesn't go down, which is what most people do, you 0:03:14.200 --> 0:03:17.440 know that you have a buffer toward losses on the downside, 0:03:17.639 --> 0:03:20.880 but you're going to participate on the upside. And until 0:03:21.080 --> 0:03:23.680 now that has not been available in an E t F. 0:03:23.960 --> 0:03:26.959 So let me stop you right there, because when when 0:03:26.960 --> 0:03:29.360 someone might here participate in the upside, but let me 0:03:29.360 --> 0:03:31.160 you're downside, they may go that that sounds too good 0:03:31.200 --> 0:03:34.160 to be true. Um, just go into that a little bit. 0:03:34.200 --> 0:03:35.800 Why isn't it too good to be true? And how 0:03:35.920 --> 0:03:37.640 much of the upside do you get? Do you get 0:03:37.640 --> 0:03:40.720 it all? No? You know, well you might get it all, 0:03:40.920 --> 0:03:43.600 and the thing is you don't really know. So the buffers, 0:03:43.840 --> 0:03:47.000 there are three different buffers, right, There's a there's a 0:03:47.080 --> 0:03:50.240 nine percent buffer protects your first nine percent of losses. 0:03:50.520 --> 0:03:53.880 There's a fifteen percent buffer that protects the first fifteen percent, 0:03:53.960 --> 0:03:57.680 and then there's a thirty percent buffer, and that buffers 0:03:57.680 --> 0:04:01.840 you from negative five to negative thirty five percent. So 0:04:01.880 --> 0:04:05.000 there's three levels, depending on how concerned you are about 0:04:05.000 --> 0:04:07.160 where the market is and how much capit you want 0:04:07.160 --> 0:04:10.120 to preserve and that, and so with each level, as 0:04:10.240 --> 0:04:12.800 Eric was pointing out, each level, it costs a little 0:04:12.800 --> 0:04:15.680 bit more to have that buffer, and therefore your cap 0:04:15.800 --> 0:04:18.520 is adjusted a little bit as you get more buffer. 0:04:18.920 --> 0:04:22.320 This seems like something that should have happened already. We 0:04:22.400 --> 0:04:24.720 thought the same thing. I think we were really shocked. 0:04:24.720 --> 0:04:26.840 Initially we said, you know, we should do this. This 0:04:26.920 --> 0:04:31.039 is a tremendous value to investors. Let's there must be 0:04:31.080 --> 0:04:32.960 some reason it can be done. It's like a structural 0:04:32.960 --> 0:04:34.600 problem you know within an e t F that it's 0:04:34.600 --> 0:04:37.800 not or it's a regulatory probably the regulators won't allow 0:04:37.800 --> 0:04:40.200 it because that, and the more we dug into it, 0:04:40.240 --> 0:04:42.360 the more we looked at realize, you know, what, this 0:04:42.440 --> 0:04:45.880 is possible. There were some structural things we had to do, 0:04:46.040 --> 0:04:48.680 some kind of aha moments that we had to overcome 0:04:48.760 --> 0:04:50.640 that hadn't been done in the E t F before. 0:04:50.680 --> 0:04:52.720 And that's the reason some people, I think gave up 0:04:52.720 --> 0:04:55.680 on the idea and never accomplished it, because effectively, you're 0:04:55.680 --> 0:04:58.160 sort of putting an insurance policy inside an e t 0:04:58.320 --> 0:05:00.839 F and wrapping it up in a breed in a sense, 0:05:01.240 --> 0:05:04.080 exactly right, speaking of the burriedo, So what is it? 0:05:04.120 --> 0:05:06.560 What is in it? So? What is in the e 0:05:06.640 --> 0:05:09.960 t F? There are seven options positions in the E 0:05:10.000 --> 0:05:12.400 t S So not I'm not buying equities like I 0:05:12.440 --> 0:05:14.080 would usually do with an E t F. I'm right, 0:05:14.120 --> 0:05:17.240 I'm getting options right, and you own options solely with 0:05:17.360 --> 0:05:21.960 this breedo have a name. Well, well, you don't defined 0:05:22.000 --> 0:05:28.520 outcome or you know buffer yeah exactly exactly. Buffer for 0:05:28.680 --> 0:05:30.600 t F. I mean I think buffer e TF, so 0:05:31.720 --> 0:05:38.120 buffer yeah exactly, that will work. Uh So basically, h 0:05:38.200 --> 0:05:41.919 there's seven positions in there, and these positions are designed 0:05:42.279 --> 0:05:46.560 to provide you this outcome over one year period. I 0:05:46.600 --> 0:05:49.680 think the important thing for people listening is to understand 0:05:49.760 --> 0:05:53.279 is that, uh it runs for a year, the outcome period, 0:05:53.279 --> 0:05:55.000 but then it just resets after a year and then 0:05:55.040 --> 0:05:57.800 you get another, uh year of the same thing. So 0:05:58.120 --> 0:06:00.679 what doesn't change is the length of the outcome period 0:06:00.760 --> 0:06:03.279 is a year, and also the buffer doesn't change. So 0:06:03.320 --> 0:06:05.240 if you bought the nine percent buffer, we're going to 0:06:05.360 --> 0:06:06.600 have that for a year, and then it's going to 0:06:06.680 --> 0:06:08.360 reset the next year and you're gonna have it again 0:06:08.360 --> 0:06:10.920 for another year. Year. Is almost like a contract basically 0:06:11.320 --> 0:06:14.880 in a sense, it's just when you buy the options positions. 0:06:14.960 --> 0:06:17.919 These are what are called flex options, and it's really 0:06:18.240 --> 0:06:20.240 a very simple option. What it lets you allows you 0:06:20.279 --> 0:06:22.120 to do is put a custom option together, and what 0:06:22.160 --> 0:06:24.880 that means is you can have a specific start day 0:06:25.200 --> 0:06:28.480 and a specific end date, and so all the options 0:06:28.640 --> 0:06:30.839 start on one day and end on one day and 0:06:30.839 --> 0:06:32.760 then they reset that day and go into a new 0:06:32.800 --> 0:06:35.039 set of those the following year. And so you just 0:06:35.160 --> 0:06:37.919 keep doing that year after year, getting as much of 0:06:37.920 --> 0:06:41.000 the upside of the options industry will give you, but 0:06:41.080 --> 0:06:43.960 with a nine percent buffer, fifteen or thirty. And this 0:06:44.279 --> 0:06:45.960 is kind of solving in a way, you know that 0:06:46.000 --> 0:06:48.640 problem we talk about with lever gtfs. They reset every 0:06:48.720 --> 0:06:53.120 day and yeah, and therefore you don't actually get the 0:06:53.680 --> 0:06:56.560 quarter or the month of that leverage. You only get 0:06:56.600 --> 0:06:59.440 it one day. With this a little bit, right, Yeah, 0:06:59.440 --> 0:07:01.279 I mean you I have to come out quarterly. Now. 0:07:01.320 --> 0:07:03.479 You could buy them in between, but it's ideal to 0:07:03.480 --> 0:07:05.640 buy them on that date. And essentially this is a 0:07:05.640 --> 0:07:07.720 strategy that you could actually do on your own, right, 0:07:07.760 --> 0:07:10.600 You're just packaging something that might be a little more 0:07:10.600 --> 0:07:13.800 on the institutional side, Yeah, into an e t F. Yeah, 0:07:13.840 --> 0:07:15.400 I think that's a great point. I mean, like all 0:07:15.480 --> 0:07:17.080 e t F you could buy all those securities on 0:07:17.080 --> 0:07:18.640 your own if you wanted to write. I mean, it's 0:07:18.720 --> 0:07:21.960 it's just actually, this one is much more complicated than 0:07:21.960 --> 0:07:23.640 some of those because you have to understand first of 0:07:23.640 --> 0:07:26.800 all options, how options work. You also have to understand 0:07:26.840 --> 0:07:29.400 how to put that position together in order to achieve 0:07:29.480 --> 0:07:32.240 that outcome for you. So it's more complicated than it 0:07:32.280 --> 0:07:34.600 would be to put together some type of another et 0:07:34.720 --> 0:07:39.240 F package. UM and I think the the idea of 0:07:39.280 --> 0:07:41.440 a one year outcome PARI. If you think about most 0:07:41.560 --> 0:07:44.360 of the ETFs that we buy that supposedly are going 0:07:44.400 --> 0:07:49.320 to provide some downside buffer. Typically there's a switching strategy, 0:07:49.400 --> 0:07:51.800 switches in and out, may not switch at the right time, 0:07:51.880 --> 0:07:54.760 might switch at the wrong time. And with these I 0:07:54.880 --> 0:07:58.000 think the thing that can't be overstated is that an 0:07:58.080 --> 0:08:02.400 investor advisor they can buy today and understand very clearly. 0:08:02.480 --> 0:08:03.760 Do I think how much? Do I think the market 0:08:03.840 --> 0:08:05.240 is gonna go out next year? Oh? I think it's 0:08:05.240 --> 0:08:07.160 gonna be up all right. Well, I'm gonna get all 0:08:07.200 --> 0:08:08.800 the upside of the market if I get this. But 0:08:09.440 --> 0:08:13.240 let's say China doesn't come through, the market crashes, it 0:08:13.320 --> 0:08:15.240 could go down tenner fitting. Well, I want to have 0:08:15.320 --> 0:08:17.080 that buffer in there, so I'm gonna get all the 0:08:17.200 --> 0:08:19.120 upside that I think is there, and I'm also going 0:08:19.160 --> 0:08:22.560 to be buffered against all the potential downside I think 0:08:22.680 --> 0:08:25.680 is there? Uh downside, I don't know what you're talking 0:08:25.720 --> 0:08:27.360 about right now. It doesn't seem like there could be 0:08:27.400 --> 0:08:31.560 any downside exactly. Can you take us to the one 0:08:31.640 --> 0:08:33.959 that's maybe around this maturity and take us through the 0:08:34.040 --> 0:08:37.160 last twelve months and what it did versus what it 0:08:37.320 --> 0:08:39.000 was set up to do up. Yeah, I'll be happy 0:08:39.000 --> 0:08:40.320 to And and one other thing I want to mention 0:08:40.400 --> 0:08:43.800 to you. We started out initially offering these quarterly on 0:08:43.960 --> 0:08:48.199 the calendar quarters, and we kind of decided early on 0:08:48.320 --> 0:08:50.600 if we did a billion dollars in assets and these 0:08:50.679 --> 0:08:53.840 within the calendar quarters, when we got to that asset level, 0:08:54.040 --> 0:08:57.120 we would offer a monthly. So back in June we 0:08:57.240 --> 0:09:00.280 started offering these funds on a monthly basis. So you 0:09:00.400 --> 0:09:04.600 have a nine fifteen and buffer every single month being 0:09:04.679 --> 0:09:07.679 issued the first of the month. That means, you know, 0:09:07.760 --> 0:09:11.199 there will be thirty six funds in the market achieving 0:09:11.280 --> 0:09:15.360 these defined outcomes for investors. The reason that's really important 0:09:16.000 --> 0:09:18.280 is that an investor can know. As Eric said, you know, 0:09:18.360 --> 0:09:20.240 people like to buy in early or they want to 0:09:20.280 --> 0:09:22.760 be at the beginning. I mean, that's part of how 0:09:22.880 --> 0:09:24.920 these started. The reason they like that is they want 0:09:24.920 --> 0:09:27.679 to know, Okay, I if I get in, I have 0:09:27.920 --> 0:09:30.600 a buffer starting at zero. It goes down right away, 0:09:30.679 --> 0:09:32.440 and I have all the upside right there, and they 0:09:32.440 --> 0:09:33.880 don't want to have to think about buying in the 0:09:33.960 --> 0:09:37.120 middle and that they just want to participate. So we 0:09:37.240 --> 0:09:41.160 have them every single month now, and having them every 0:09:41.240 --> 0:09:44.199 month at the beginning of every month makes some a 0:09:44.520 --> 0:09:47.800 very powerful tool for advisors for a lot of different reasons. 0:09:48.760 --> 0:09:51.400 Now let's talk about the portfolio, right, So is this 0:09:51.559 --> 0:09:55.360 aiming to replace, uh, the equity portion of your portfolio, 0:09:55.480 --> 0:09:57.480 like the whole thing, or to be like an overlay. 0:09:58.400 --> 0:10:00.520 I'm seeing people think about all the our ways you 0:10:00.600 --> 0:10:02.880 could do it just as an overlay over your whole 0:10:02.920 --> 0:10:05.599 portfolio and say, you know, I want additional exposure the 0:10:05.720 --> 0:10:07.800 SMP five hunder to the market in general, So I'm 0:10:07.800 --> 0:10:10.000 gonna buy this, but I have a buffer built in. 0:10:11.080 --> 0:10:15.319 But we're also seeing uh advisors some taking their entire 0:10:15.400 --> 0:10:17.840 piece of their equity exposure and just say, I'm buying 0:10:17.880 --> 0:10:20.200 this with my for my equity exposure. I'm not going 0:10:20.320 --> 0:10:22.839 to We're at a tenure bull market. We gotta be 0:10:22.880 --> 0:10:25.680 getting somewhere near the top. I'm gonna buffer my clients 0:10:25.720 --> 0:10:27.880 against the loss that's going to happen here over the 0:10:28.000 --> 0:10:29.760 next few years. I don't want to. I don't want 0:10:29.760 --> 0:10:33.120 them exposed to that. And uh so we're seeing a 0:10:33.200 --> 0:10:34.880 good bit of that as well. The other thing we're 0:10:34.880 --> 0:10:37.520 seeing a lot of is gonna saying I don't want 0:10:37.600 --> 0:10:41.160 to expose my clients to fixed income right here, rates 0:10:41.200 --> 0:10:43.240 are super low. I'm not getting paid to hold them. 0:10:43.559 --> 0:10:45.520 Rates move around. I'm taking a huge amount of risk. 0:10:46.200 --> 0:10:48.319 I'm just gonna take some of that fixed income out. 0:10:48.720 --> 0:10:51.079 I'm gonna move it over into the equity market, get 0:10:51.120 --> 0:10:53.520 a good buffer there, get the upside of the equity market, 0:10:53.559 --> 0:10:56.000 and not risk myself in the debt market. Right now, 0:10:57.640 --> 0:10:59.959 of all the moments in time that you could bring 0:11:00.080 --> 0:11:02.839 a product like this to market, it seems like it 0:11:02.880 --> 0:11:05.760 would be a pretty great one. So what what have 0:11:05.840 --> 0:11:08.679 the inflo has been like? Because you guys launched when Yeah, 0:11:08.760 --> 0:11:12.280 we launched last August basically, so about a year ago. 0:11:13.120 --> 0:11:15.920 We launched the July series in August because we're trying 0:11:15.960 --> 0:11:17.559 to get it, you know, to July. So we've had 0:11:17.760 --> 0:11:20.480 one full year in that product and then in October 0:11:20.559 --> 0:11:22.760 we'll have our next full year in that product. The 0:11:22.880 --> 0:11:24.959 July one did exactly what it was supposed to do. 0:11:25.679 --> 0:11:27.679 But to give you an example, we started out no 0:11:27.760 --> 0:11:30.600 one knew what they were, how they worked, or anything, 0:11:30.800 --> 0:11:32.679 and so you know, we brought them out and we 0:11:32.800 --> 0:11:35.480 probably in the first couple of weeks did maybe ten 0:11:35.559 --> 0:11:38.400 million bucks in the three Across the three ended the 0:11:38.520 --> 0:11:40.960 year we had maybe a hundred and fifty million dollars 0:11:41.000 --> 0:11:44.160 in those three and then now we're probably in the 0:11:44.240 --> 0:11:47.560 defined outcome alone, probably around the one point three one 0:11:47.640 --> 0:11:51.080 point four billion dollar mark. It's a pretty successful year. Yeah, yeah, 0:11:51.160 --> 0:11:54.120 I mean listen, you know, UH there's a lot of 0:11:54.200 --> 0:11:57.680 E t F providers uh that are struggling out there 0:11:57.960 --> 0:12:01.199 to get visibility, to get asked uts. We're not in 0:12:01.600 --> 0:12:05.000 any of the big distribution UH systems right now, so 0:12:05.640 --> 0:12:08.719 we are doing this uh hand to hand, going through 0:12:08.760 --> 0:12:10.960 the r I A channel, explain it to them how 0:12:11.040 --> 0:12:13.640 they work, what they are, and they're being embraced by 0:12:13.720 --> 0:12:17.600 that channel. So, like any new sensation, once you hit 0:12:17.600 --> 0:12:19.920 a billion dollars, people start to look at look, maybe 0:12:19.920 --> 0:12:21.920 I'll get into that. And you do have somebody filing 0:12:22.000 --> 0:12:25.160 First Trust has put in filings to track a cbo 0:12:25.520 --> 0:12:29.520 E index that does something very similar. There's look like 0:12:29.600 --> 0:12:33.439 it's ten percent buffer series years or nine I just 0:12:33.760 --> 0:12:35.800 real quick try to suss out how theirs will be 0:12:35.840 --> 0:12:38.679 different or the same as yours. Yeah, well, you know, 0:12:38.760 --> 0:12:40.480 they've had their filings in for a while. I mean, 0:12:40.559 --> 0:12:42.560 it took us a long time to get our filings 0:12:42.600 --> 0:12:47.600 approved by the SEC. So they basically have duplicated our 0:12:47.679 --> 0:12:50.760 products and just made them slightly different levels, is what 0:12:50.880 --> 0:12:53.680 they've done. So we came out with a nine percent buffer, 0:12:54.200 --> 0:12:56.400 the fifteen buffer, and the thirty buffer. They did a 0:12:56.520 --> 0:12:59.600 ten buffer and a twenty five buffer. So those are 0:12:59.600 --> 0:13:01.640 the two that they have versus the three that we have. 0:13:02.080 --> 0:13:05.400 There's another competitor to that. They're not an actually any 0:13:05.520 --> 0:13:08.080 t F structure. They use ETFs. It's a lot of capital. 0:13:08.200 --> 0:13:10.800 They're called M plus funds, so they're unit investment trust 0:13:10.920 --> 0:13:13.800 or u i T that uses options on e t 0:13:14.000 --> 0:13:17.440 f s in the underlying um, so a different legal structure. 0:13:17.600 --> 0:13:20.480 But the founders, they're the guys running these funds, are 0:13:20.559 --> 0:13:22.760 these old school structured note guys. They ran the structure 0:13:22.840 --> 0:13:26.000 note desk at BAML for a while, so I do 0:13:26.160 --> 0:13:29.240 see some similarities there. They like to say they offer customization, 0:13:29.400 --> 0:13:32.520 so you can sort of customize what that payout structure 0:13:32.559 --> 0:13:34.800 is going to look like. For your note, but another 0:13:34.880 --> 0:13:37.960 player out there in the space. Yeah, So how big 0:13:38.040 --> 0:13:41.839 do you think that this overall slice of the e 0:13:42.000 --> 0:13:45.640 t F kingdom might become? And I'm asking you this 0:13:45.840 --> 0:13:48.520 because you're somebody who is there in the beginning of 0:13:48.559 --> 0:13:51.599 smart data, right, and that's become a huge, uh you know, 0:13:52.760 --> 0:13:55.880 plus of the overall one billion of the overall et 0:13:56.000 --> 0:13:58.599 F market. This seems like something that a lot of 0:13:58.640 --> 0:14:01.599 people could say, we can do this. Yeah, well, you know, 0:14:01.760 --> 0:14:04.040 this one is harder to do than those I mean, everybody. 0:14:04.400 --> 0:14:06.319 The the thing about this is, remember we had the 0:14:06.440 --> 0:14:09.440 SMP five hunter. We got different buffer levels. With those, 0:14:09.640 --> 0:14:12.600 everybody can come out with their own slice of well, 0:14:12.679 --> 0:14:14.240 this is how I do it, and this is how 0:14:14.400 --> 0:14:16.200 you know, it's kind of like act of management almost 0:14:16.880 --> 0:14:19.920 this one. But I would say that I think the 0:14:20.240 --> 0:14:23.320 size of the market is tremendous. If you think about 0:14:23.440 --> 0:14:25.840 a lot of the insurance products, people that invest in 0:14:26.120 --> 0:14:30.960 structured outcomes and insurance, you know, is multiple multiples of billions. 0:14:31.000 --> 0:14:34.400 Structure product market is you know, multiples of billions. You know, 0:14:34.440 --> 0:14:37.280 there's probably a true one or two trillion dollars within 0:14:37.480 --> 0:14:42.160 that those marketplaces. So, um, we think there's a tremendous 0:14:42.200 --> 0:14:46.600 opportunity in this space, and primarily because people don't have 0:14:46.800 --> 0:14:51.440 reliable downside protection. You know, they have so called downside protections, 0:14:51.520 --> 0:14:53.880 but there's always things that can go wrong. Rather than 0:14:54.040 --> 0:14:56.360 saying I know I have this buffer, this is the 0:14:56.400 --> 0:14:59.040 buffer I have. I'm good with that. I'm totally willing 0:14:59.080 --> 0:15:01.320 to give up some of my upside. You know, if 0:15:01.360 --> 0:15:05.800 you think the investable assets today from individuals are in 0:15:05.840 --> 0:15:08.920 the baby boomer's hands basically, and they're right at retirement. 0:15:09.040 --> 0:15:11.840 They don't want to make their money with yeah, where 0:15:11.880 --> 0:15:13.640 I got and they're like they're they're like, do I 0:15:13.800 --> 0:15:15.720 really want to lose my money? Do I really want 0:15:15.760 --> 0:15:18.200 to take all this risk on? And and so if 0:15:18.240 --> 0:15:20.040 they can buy something like this and say I still 0:15:20.080 --> 0:15:24.000 have access to the upside, but I'm buffered against losses, um, 0:15:24.440 --> 0:15:27.480 you know, that's a tremendous value proposition for them. But 0:15:27.560 --> 0:15:31.320 insurance isn't free. How insurance it's seventy nine basis points 0:15:32.000 --> 0:15:35.160 and that's all in. It's a unitary fee like most 0:15:35.200 --> 0:15:38.240 ETFs have today. And so that's all anyone's gonna pay. 0:15:38.840 --> 0:15:41.680 And that is if if you go out and try 0:15:41.760 --> 0:15:43.720 to replicate this on your own, it's gonna be more 0:15:43.760 --> 0:15:45.640 expensive than that. If you go out and try to 0:15:45.680 --> 0:15:47.960 buy a structure product, annuity, anything like that, it's gonna 0:15:47.960 --> 0:15:51.800 be much more expensive, regardless of what the documentation says. 0:15:52.680 --> 0:15:55.960 Um you know. Sometimes I know within the annuity products 0:15:56.000 --> 0:15:58.040 they say they're free in this and that, But I mean, 0:15:58.120 --> 0:15:59.520 if you try to get out any year, you know, 0:15:59.560 --> 0:16:04.120 there's a leve percent UH redemption fee. So I think 0:16:04.200 --> 0:16:07.040 you have to just be careful and and and look 0:16:07.080 --> 0:16:09.080 at for what the beauty of these products is, you 0:16:09.120 --> 0:16:11.240 can get out any time, you can buy them anytime 0:16:11.400 --> 0:16:14.040 you're not held. You know, there's even instructured product. You know, 0:16:14.120 --> 0:16:16.680 if they're kind of tie you up, it doesn't happen here. 0:16:17.120 --> 0:16:19.360 You have the transparency. You can see exactly what's in 0:16:19.400 --> 0:16:22.800 the portfolio. There's no counterparty rist remember with the other ones, 0:16:22.880 --> 0:16:24.880 you know, you're relying on the insurance company to be 0:16:24.960 --> 0:16:27.040 in business, or you're relying on the bank that issued 0:16:27.040 --> 0:16:29.320 the note on a structure note to be in business. 0:16:30.280 --> 0:16:32.160 You know, like our thirty percent product. You know, i'd 0:16:32.160 --> 0:16:34.720 like to say if the market crashes is down thirty percent, 0:16:34.840 --> 0:16:36.320 you don't want to hope those guys are gonna stay 0:16:36.360 --> 0:16:38.240 in business. You want to know you got what you own, 0:16:38.600 --> 0:16:41.560 and that's the important time. Can I play a quick game, yes? 0:16:42.080 --> 0:16:46.280 Can we guess of the nine percent know exactly what 0:16:46.360 --> 0:16:49.360 you're doing? Yes? And the thirty percent buffer, which is 0:16:49.400 --> 0:16:58.560 the most popular, I'm going thirty. I'm going fifteen. Also, 0:16:58.640 --> 0:17:04.680 full disclosure, I knew the answer, but but like, break 0:17:04.720 --> 0:17:07.200 it down. What's the percentages between each three? It's it's 0:17:07.240 --> 0:17:11.120 probably fifteen and then the nine and then the third. Yeah, well, 0:17:11.200 --> 0:17:12.920 I mean you're good listen to thirty. The way to 0:17:13.000 --> 0:17:15.000 think about that is and and uh, I think we 0:17:15.040 --> 0:17:16.800 thought it was gonna be a huge seller at the beginning. 0:17:16.840 --> 0:17:20.360 To um is that in the cost the same, Yeah, 0:17:20.359 --> 0:17:23.040 the costs are the same. Is that if you're in 0:17:23.080 --> 0:17:25.000 the thirty, you're what you're saying is I'm willing to 0:17:25.080 --> 0:17:27.920 risk five percent, right, that first five percent you can lose, 0:17:28.200 --> 0:17:31.399 but I don't want to risk anything else. And so 0:17:32.600 --> 0:17:35.800 that's somebody who thinks the market is really gonna completely 0:17:35.920 --> 0:17:38.320 crash and they're willing to take the risk on the five. 0:17:38.560 --> 0:17:40.920 The other ones they started zero, And so I think 0:17:41.000 --> 0:17:43.200 that maybe why fifteen has been a little more that 0:17:43.359 --> 0:17:47.879 changed through the year though, Yeah, it's interesting. Um, it 0:17:48.000 --> 0:17:51.440 depends on where the funds are trading, the et f 0:17:51.520 --> 0:17:53.840 s are trading in the market, because we see a 0:17:53.920 --> 0:17:56.200 lot of people like right now, I haven't seen the 0:17:56.320 --> 0:17:59.480 numbers for today, but like the October series is very 0:18:00.040 --> 0:18:02.240 like over the last few weeks has been very successful. 0:18:02.280 --> 0:18:05.280 He's taking a lot of assets right now because right 0:18:05.359 --> 0:18:09.040 around its starting point, it's starting asset our dollar price, 0:18:09.480 --> 0:18:11.359 and so you can get in today. You can have 0:18:11.480 --> 0:18:14.600 the same buffer and the same cap that you did 0:18:14.720 --> 0:18:16.280 day one, but you only got a month and a 0:18:16.320 --> 0:18:18.879 half left. So they're saying, wow, I got a ten 0:18:18.960 --> 0:18:21.480 percent cap and I got a fifteen percent buffer. I 0:18:21.600 --> 0:18:23.480 like that, you know, for a month and a half. 0:18:23.720 --> 0:18:25.720 So we're seeing a lot of people participate in the middle, 0:18:25.840 --> 0:18:27.720 which we didn't know of what happened, but we've seen 0:18:27.720 --> 0:18:36.440 a lot of assets flowing in the middle. I was 0:18:36.680 --> 0:18:39.520 recently at an event and uh, these came up for 0:18:39.640 --> 0:18:41.800 the downside of the buffer, ETFs came up. One of 0:18:41.840 --> 0:18:44.760 the analysts that I was on a panel with said 0:18:44.840 --> 0:18:46.880 something to the effect, I haven't looked into this yet 0:18:46.920 --> 0:18:49.639 that well, you're only getting the price and it doesn't 0:18:49.640 --> 0:18:51.600 have divot in there. So that's kind of like a 0:18:51.680 --> 0:18:54.960 cost that you're not seeing. Can you address that? Yeah, well, 0:18:55.200 --> 0:18:57.960 you get the price return of the SMP five with these. 0:18:58.000 --> 0:19:00.280 You don't get the return of the SMP five hundred 0:19:00.400 --> 0:19:03.760 with the dividend. Some people look at the dividend as 0:19:03.920 --> 0:19:06.880 a buffer in a sense, and I think that's why 0:19:07.000 --> 0:19:10.040 we've priced ours at a nine percent, and you know 0:19:10.160 --> 0:19:11.719 we don't have it lower than that if you think 0:19:11.760 --> 0:19:13.800 about it. If you if you think about it that 0:19:13.920 --> 0:19:16.560 way as a two or three percent, then if you 0:19:16.640 --> 0:19:19.720 look at nine percent and fiftcent, it's pretty well spaced out. 0:19:20.040 --> 0:19:23.320 Most people, Uh, look at the two percent and they'll 0:19:23.359 --> 0:19:25.320 make that, but that's not enough for them. They want 0:19:25.440 --> 0:19:28.639 more buffer than that. And so you know, the dividend 0:19:28.800 --> 0:19:31.399 isn't included. So if you think that the market is 0:19:31.440 --> 0:19:33.720 gonna be down two percent or less, you probably go 0:19:33.760 --> 0:19:36.320 ahead and stick with it. If you want more buffer 0:19:36.440 --> 0:19:39.119 than that, then you need to buy these. You mentioned 0:19:39.400 --> 0:19:44.440 sp Uh, what all do you think you could do 0:19:44.680 --> 0:19:48.080 this for? Put this rapper around? That's a good question. Currently, 0:19:48.200 --> 0:19:50.600 we have the SMP five hundred, we have the ms 0:19:50.640 --> 0:19:53.080