Speaker 1: Welkre trillions. I'm Joel Weber and I'm Ericastreness. So Eric,
Speaker 1: I have this amazing colleague named Josh Green who's the
Speaker 1: national correspondent for Bloomberg Business Week. UM. He wrote a
Speaker 1: book about Steve Bannon and Donald Trump a couple of
Speaker 1: years ago called Devil's Bargain. He does a lot of
Speaker 1: work for Bloomberg Business Week, the magazine that I'm editor of.
Speaker 1: UH and he came to me with an idea recently
Speaker 1: that made me want to bring him on the podcast.
Speaker 1: It's in the current issue of the magazine. UM, and
Speaker 1: it's about UH an et F company called Second Vote Advisors.
Speaker 1: Have you heard of them? Uh? Yeah, I mean they
Speaker 1: I think they have two funds out. I remember the filings.
Speaker 1: But there's been a couple type companies like this, and
Speaker 1: they sometimes blend together and largely they just sort of
Speaker 1: go right to oblivion. UM. So we're not on our
Speaker 1: radar a lot, but I do it does sort of
Speaker 1: ring a bell, if you will. UM. And I think
Speaker 1: one of them's what pro life and the other ones
Speaker 1: pro gun. And there's gonna be another one that comes
Speaker 1: out next month. UM. And it was interesting about this
Speaker 1: obviously the strategy here is to appeal to UH sort
Speaker 1: of more of a right wing UH style of politics
Speaker 1: then you would probably usually see in investing. And we've
Speaker 1: actually done a version of this story on trillions a
Speaker 1: couple of years ago around them MAGA E t F
Speaker 1: that ticker. Um, how is that one faired historically? Yeah?
Speaker 1: So I remember that was with Rachel Evans, she went
Speaker 1: to Dallas. That was one of our field reports that
Speaker 1: we need to do more up. By the way, those
Speaker 1: are really great. It was like from the from the
Speaker 1: before times. Yeah. So look, the MAGA E t F
Speaker 1: hasn't done much. I mean talk about everyone. That filing
Speaker 1: hit and I tweeted out the ticker. Everybody went crazy
Speaker 1: and it obviously broke through in a marketing sense, but
Speaker 1: it didn't really gather much assets. You know why because
Speaker 1: it tends to be light tech and heavy like industrial
Speaker 1: rills and energy. UM, so for the most part, it's underperformed.
Speaker 1: That said, there was a time in the first quarter
Speaker 1: and and this year in general, where tech, especially in
Speaker 1: the Q one, really lagged and energy and industrials were
Speaker 1: coming back and those value stocks. So I actually wrote
Speaker 1: a note saying that MAGA was actually an ironically backdoor
Speaker 1: way to play the Biden presidency because that there had
Speaker 1: been a shift in the sector. So I would say
Speaker 1: that if you wanted an industrial, oily kind of play
Speaker 1: that doesn't have tech, MAGA will work in that regard.
Speaker 1: I don't know if anybody would use it for that,
Speaker 1: but it actually has this sort of other purpose in
Speaker 1: my opinion. But um, it is beating the SMP this
Speaker 1: year by a little bit, but it's been destroyed lifetime
Speaker 1: by about thirty eight percentage points, largely because it doesn't
Speaker 1: have any tech this time. On trillion, the Rise of
Speaker 1: the anti woke et F. Okay, Josh, welcome to trillions.
Speaker 1: Great to be with you. Dan Grant, what's his pitch? So?
Speaker 1: Dan Grant is uh former JP Morgan banker, conservative guy
Speaker 1: who I know through politics, who last year started up
Speaker 1: a company called Second Vote Advisors, and the idea basically
Speaker 1: is to pitch right leaning E t F products to
Speaker 1: balance out what he and his colleagues feel is a
Speaker 1: kind of galloping on Wall Street towards E S G
Speaker 1: woke liberalism. Dan thinks that this is a bad politics,
Speaker 1: but more important, bad investment, and so uh, he and
Speaker 1: his company, which has some conservative luminaries on the board
Speaker 1: are rolling out a series of e t F to
Speaker 1: try and appeal to that conservative MAGA audience. And how's
Speaker 1: it going so far? Well, it isn't an entirely new idea,
Speaker 1: you know, as you guys had said in the intro. Uh,
Speaker 1: you know there's a MAGA fund rolled out in seventeen.
Speaker 1: There was another e t F that came out I
Speaker 1: think last year, American Conservative Values Fund. So people have
Speaker 1: had the idea before of trying to sell financial products
Speaker 1: to you know, a Trump friendly MAGA crowd. And if
Speaker 1: you look at the huge inflows into et F over
Speaker 1: the last year or so, and especially you know E
Speaker 1: s G, that does seem to be an audience um
Speaker 1: of consumers who have at least a kind of a
Speaker 1: political awareness. I mean, so far it seems to be
Speaker 1: more geared toward environment and social justice and not so
Speaker 1: much right leaning stuff. But Dan's belief is that, you know,
Speaker 1: there are a lot of conservatives out there who are
Speaker 1: gonna want products that that both reflect their personal and
Speaker 1: political views and and can also turn a profit. That's
Speaker 1: the pitch. Now. Having said that, as I say in
Speaker 1: the piece, none of these funds has managed to amass
Speaker 1: more than thirty five million dollars, so they're still trying
Speaker 1: to get off the ground. And I think that that's
Speaker 1: actually like an interesting point because so much money, as
Speaker 1: Eric and I have talked about before, has gone into
Speaker 1: E S G and Eric, so when you when you
Speaker 1: think about that, because you're no fan of V S
Speaker 1: G T. By the way, I'm not generally speaking, I'm not. Um. Well,
Speaker 1: I don't care how people want to invest. I mean,
Speaker 1: if you want to invest with your values one way
Speaker 1: or the other, I don't. I mean, I don't mind.
Speaker 1: I I just think they're not practical. Um and it
Speaker 1: usually practical and and returns trump everything or cost no
Speaker 1: pun intended. Uh, not your values. I think people like
Speaker 1: to exercise their values at the polls or you know,
Speaker 1: writing or in other ways or you know, in their
Speaker 1: spare time. Um. The E S G funds. The problem
Speaker 1: I have with those is is they're they're sort of
Speaker 1: trying to dislodge Vanguard from the core of your portfolio.
Speaker 1: And no one is really going to let go of
Speaker 1: a three basis point like total market fund. It's too
Speaker 1: good a deal even if you do believe in these things.
Speaker 1: The other thing with E s G. I feel like
Speaker 1: they're selling the feeling of doing something good, like oh,
Speaker 1: we're not gonna hold energy stocks, but then they fly
Speaker 1: off on vacation, they have an SUV. I mean, honestly,
Speaker 1: I feel like it's almost um like a uh insincere
Speaker 1: form of slacktivism. And there's no evidence that will actually
Speaker 1: return better, Like their academic studies have not been able
Speaker 1: to show that E s G investing does better. But
Speaker 1: the media eats it up. They love E s G.
Speaker 1: It gets it's the most press per assets that I've
Speaker 1: ever seen in the history of etf s. And about
Speaker 1: the s G t fssets are black Rock moving the
Speaker 1: funds into their own model portfolio. So there's actually not
Speaker 1: even a lot of grassroots interest. But there is more
Speaker 1: than the right leaning stuff, I will say. But that said,
Speaker 1: I could see why if you're on the right, because
Speaker 1: I have people who aren't even political on Twitter who
Speaker 1: are a little annoyed about the E s G sort
Speaker 1: of um high hat thing going on where it's like
Speaker 1: we're doing good, we're doing great, you know, we're changing
Speaker 1: the world, and I don't know, I think a lot
Speaker 1: of people smell bullshit in it, Yeah, and I think
Speaker 1: it's I think it's part of part of the second
Speaker 1: vote Advisor's pitch is that listen, everybody says politics and
Speaker 1: investing don't mix, but but look at what's happening with
Speaker 1: the s G. You know they're there, they become slaves
Speaker 1: to this idea of of being kind of woke and
Speaker 1: foregrounding social justice, that whole kind of thing. That's not
Speaker 1: the way to go. I mean, my sense in talking
Speaker 1: to Dan Grant and the people around him is that
Speaker 1: you know, they're offended by that politically um, but also
Speaker 1: that they think that it's it's bad business. I mean,
Speaker 1: one of the things that Grant talks about a lot
Speaker 1: is that he believes in, uh, you know, Milton Friedman's
Speaker 1: famous dictum about the only job of corporations to make
Speaker 1: money for shareholders. And if you're busy, as Dan says
Speaker 1: to me in the piece donating to Black Lives Matter,
Speaker 1: they're trying to save the planet, then you're not focused
Speaker 1: on your shareholders. So uh, you know, I think the
Speaker 1: interesting question with these funds that I mean, you point
Speaker 1: out that they haven't gotten a lot of traction, is
Speaker 1: is this an investment vehicle or is it really another
Speaker 1: means of political expression, because I think part of the
Speaker 1: inherent pitch in this and one of the reasons why
Speaker 1: we're seeing so much activity around Trump and investing. Right,
Speaker 1: he's got his back. You can buy non fungible Trump tokens.
Speaker 1: We've got a bitcoin eat here. They are all sorts
Speaker 1: of ways you can kind of begin to express things.
Speaker 1: I think there's a feeling that everything in American life
Speaker 1: has become so hyper politicized. Dan Grant would say, you know,
Speaker 1: why shouldn't e tfs too, And I think it's a
Speaker 1: fair question to raise. Yeah, you know, and sports in
Speaker 1: particular and entertainment. It is unfortunate. Used to be these
Speaker 1: places you can hide out, and investing was one of
Speaker 1: those places where you can just escape the politics. Used
Speaker 1: to just be in politics. But just the way it is,
Speaker 1: I guess um, and I think to your point about E.
Speaker 1: S G. There's two ways to pitch both of these things.
Speaker 1: It's just like you can do better return wise, or
Speaker 1: you can express your values. So when I think of
Speaker 1: the expressing of the values, I think that when when
Speaker 1: people really think, deep down, do I really want to like,
Speaker 1: you know, potentially the SMP, because if you do charts.
Speaker 1: Let's say you get five pc of the SMP five
Speaker 1: seven percent every year, that's gonna end up being like
Speaker 1: like so much money difference over like ten years. You
Speaker 1: would probably hate yourself then. That said, the other side
Speaker 1: of the coin is if you go in thinking it
Speaker 1: will out perform and it doesn't, it's almost like but
Speaker 1: betting on an active manager back in the day, and
Speaker 1: it's just so difficult to outperform. And most of these
Speaker 1: funds have decent, you know, pretty high expense ratios. So
Speaker 1: to me, a lot of this is almost like just
Speaker 1: new active. Instead of hiring a tro price manager to
Speaker 1: pick stocks based on fundamentals and paying seventy five BIPs,
Speaker 1: you're hiring second vote to go and screen these companies
Speaker 1: for political vocalism, and you're paying them seventy fives. I mean,
Speaker 1: you might not perform, you might not and ultimately, though
Speaker 1: the odds are in the numbers show you will not.
Speaker 1: So Josh actually talk to us about how they decide
Speaker 1: what they put into their et s. Well, So this
Speaker 1: is this is surp risingly controversial. Um As I'm sure
Speaker 1: you guys know as as political observers, there's a lot
Speaker 1: of infighting among Republicans about who is a genuine Republican
Speaker 1: and who is a rhino a Republican a name only. Uh.
Speaker 1: And what's kind of funny about the different right leaning
Speaker 1: you know MAGA type ETFs is that each one of
Speaker 1: them has a different measuring uh stick for what constitutes
Speaker 1: an authentically conservative fund and they all differ, and they
Speaker 1: all kind of bicker with each other. So uh, Second
Speaker 1: Vote Advisors, I think probably has the most sophisticated one,
Speaker 1: although it's often difficult to understand um. The company grew
Speaker 1: out of a nonprofit that was started by a guy
Speaker 1: named David black Back in twelve, a conservative who became
Speaker 1: upset when he gave money at the supermarket's a March
Speaker 1: of dimes and then found out later on that March
Speaker 1: of Dimes, I guess gives grants to plan parenthood. That
Speaker 1: offended his values. So he started me on. I mean,
Speaker 1: we're talking like, there's the pennies that you put at
Speaker 1: the box at the ready. Yeah. Well you know, hey,
Speaker 1: you know I sent them off. We've all got our
Speaker 1: trigger points, right, And and so what he did was
Speaker 1: he took a bunch of money, independently wealthy guy and
Speaker 1: he started an outfit that rates every company in the
Speaker 1: S and P five hundred according to his proprietary scale
Speaker 1: of whether the company is liberal or conservative. And that's
Speaker 1: based on, uh, it can be you know, political donations,
Speaker 1: corporate policies, you know, whether the CEO say nice things
Speaker 1: about block Lives matter that kind of thing, Whether they
Speaker 1: give grants to outfits like Planned Parenthood to try and
Speaker 1: detect and rate like where they where they rank on
Speaker 1: a scale. And then what what what the the group
Speaker 1: does that they send by certified letter. They send their
Speaker 1: reports to the boards of all fire companies. There's no
Speaker 1: no idea if anybody ever opens these letters, but this
Speaker 1: is what they do. They go out there and you know,
Speaker 1: they've they've had these crusades against Nike for quoting here
Speaker 1: denigrating the American flag. They put out reports on Walt
Speaker 1: Disney um because the Muppet Baby's TV show they allege
Speaker 1: promotes gender confusion and youth. So these you know, hardcore
Speaker 1: kind of kind of conservatives here trying to influence conservatives,
Speaker 1: spending habits without any real evidence that it's working. But
Speaker 1: was interesting was last year they decided, hey, you know,
Speaker 1: we're going to start the second vote. Advisors we're going
Speaker 1: to try and make money doing this in the vehicle
Speaker 1: we're gonna use or these conservative ETFs. And then the
Speaker 1: way I first found them was the way they're trying
Speaker 1: to reach retail investors is, you know, they're not going
Speaker 1: so much to investment advisors who are gonna like put
Speaker 1: them in a fund that Eric would like three pip
Speaker 1: Vanguard five hundred. They're going on right wing talk radio.
Speaker 1: Dan Grant is railing against woke corporations like Nike and
Speaker 1: Coca Cola and trying to get those fired up talk
Speaker 1: radio listeners to invest some of their retirement money and
Speaker 1: a second vote E t F. And you know, last
Speaker 1: I think I checked for this piece went to press. Yeah,
Speaker 1: they were up somewhereround fifty million dollars. You know, in
Speaker 1: a year they were they were kind of gaining, not
Speaker 1: a huge fund, but not nothing. And I think the
Speaker 1: hope is, especially now that Democrats are in charge and
Speaker 1: Joe Biden as president, is that they can somehow find
Speaker 1: a way to kind of harness that Trump energy that's
Speaker 1: been so powerful and culture in other ways and get
Speaker 1: people to use it to buy their products. Josh, something
Speaker 1: interesting you said earlier is the Disney, like the Conservative
Speaker 1: ETF doesn't want Disney in there. Well, I remember we
Speaker 1: interview with the woman who's behind the Vegan e t F,
Speaker 1: which I would assume is sort of left leaning that
Speaker 1: doesn't hold Disney, and I think we asked her. I
Speaker 1: think it was something about the animals usage in the
Speaker 1: movies and maybe at the theme park. They didn't like that. Um.
Speaker 1: But it's interesting that there's probably a couple of companies
Speaker 1: that they both agree on that are good, and maybe
Speaker 1: some they both agree are bad for different reasons. And
Speaker 1: this is so very subjective, I think, but I gotta agree.
Speaker 1: I mean, you're right, it's entirely subjective. And one of
Speaker 1: the reasons these conservative funds are bickering is that they
Speaker 1: measure different ways. Right, so that how Lambert the guy
Speaker 1: runs the MAGA E t F, he measures it based
Speaker 1: very simple metric, do you give more money to Democrats
Speaker 1: or Republicans. Well, what's interesting is they disagree on specific
Speaker 1: companies and one I mentioned the piece as Goldman Sacks,
Speaker 1: And so these conservatives at Second Vote Advisors are happy
Speaker 1: to have Goldman Sachs, you know, in one of their
Speaker 1: funds because you know, it doesn't offend their right to
Speaker 1: life stuff or what have you. Whereas how Lambert calls
Speaker 1: me up, these guys are total rhinos, total fakes. Because
Speaker 1: Golden gave more money to Democrats and Republicans last cycle,
Speaker 1: how can they call themselves conservative? So you're right, it's
Speaker 1: completely arbitrary at the end of the day what gets
Speaker 1: called conservative and what goes into these funds. But but
Speaker 1: really what they're trying to do, and I think grants
Speaker 1: branding on this, is to try and capture a slice
Speaker 1: of that anti woke energy you see royal ing in
Speaker 1: servative politics and direct some of that energy toward their products. Man,
Speaker 1: it is such a yin and yang to the E.
Speaker 1: S G. Because E. S G. If you ask ten
Speaker 1: d SG analysts is tesla E s G five will
Speaker 1: say S five will say no. They'll have an argument
Speaker 1: and Amazon somethink. Amazon does great things, but then they
Speaker 1: treat their workers like crap. Uh. This subjectivity is exactly
Speaker 1: the whole thing is one big mirror, I think, and E.
Speaker 1: S G. I think, is also trying to tap into
Speaker 1: the reverse energy, which is corporations are bad, they only
Speaker 1: want to make money. These are trying to do good
Speaker 1: things and there's there's a very they're almost like the
Speaker 1: same ends. What we're trying to say that the same
Speaker 1: size of two sides of the same mirror images. Now
Speaker 1: that's that's that's exactly right. It's funny. My way of
Speaker 1: coming into this, I write mainly about politics, was the
Speaker 1: bickering among the different MAGA advisers sort of mirrors the
Speaker 1: bickering among Republican politicians about who is closer to Trump
Speaker 1: and who can show more fealty and a you know,
Speaker 1: like that's the currency in Republican politics these days. But
Speaker 1: it's funny because it really is a mirror of kind
Speaker 1: of what's going on with the s G. It all
Speaker 1: comes down to, you know, how do you how do
Speaker 1: you define what it is what you're gunning for? And
Speaker 1: everybody doesn't in the way that is you know, self serving,
Speaker 1: and everybody is going out there stabbing their rivals in
Speaker 1: the back, trying to convince you that they're the phonies,
Speaker 1: that they're the authentic ones. And it's the same thing
Speaker 1: playing out in finance that I see playing out in politics.
Speaker 1: I think that common denominator between everything we're talking about
Speaker 1: his purity. It's like there's a purity test. Remember on
Speaker 1: the Democratic primary, M Warren and Buddha Jes got into
Speaker 1: that over the purity. She was like, oh you had
Speaker 1: you had a one of those fundraisers and you all
Speaker 1: bought like forger bottles of wine with like millionaires in
Speaker 1: the cave right, Yeah, in the cave right. He's like, look,
Speaker 1: is this a purity test? Like are we gonna have
Speaker 1: to all live in the woods and like not, do
Speaker 1: you know? And so there is this sort of thing
Speaker 1: of like how pure are you in this sort of
Speaker 1: cause that you take up. And that's a problem with
Speaker 1: some of the E s G funds that are popular
Speaker 1: is they hold a lot of right cular stocks because
Speaker 1: people want to have something close to the SMP so
Speaker 1: they wanted to perform. But then you end up holding
Speaker 1: Facebook and JP Morgan and you're not pure, your fake
Speaker 1: get out of here. Yeah, okay, I gotta throw another
Speaker 1: company out here. XXN. How How did how does everybody
Speaker 1: in this uh, you know, this universe feel about Exxon Josh?
Speaker 1: I mean, look, if you're asking me, you know, uh
Speaker 1: fossil fuel hydrocarbon that that would rate as an old
Speaker 1: school conservative company and yet second vote on their on
Speaker 1: their ratings scale considers both Exxon and Chevron liberal companies.
Speaker 1: So going back again to the idea that all of
Speaker 1: this is entirely subjective. I mentioned that to a liberal
Speaker 1: friend who works on climate and like his head exploded.
Speaker 1: He's like, wait, what you know? You know the idea
Speaker 1: that Wall Street is this bastion of of out of
Speaker 1: control rampant liberalism driven by hippie companies like Exxon Mobile,
Speaker 1: Like just didn't didn't compute with him. I don't think
Speaker 1: we compete with a lot of people. By the way, Um,
Speaker 1: why does life hold black Rock? I mean Black Rocks
Speaker 1: like the biggest pusher of yes she funds there is.
Speaker 1: I think the answer is because, um, they apparently don't
Speaker 1: violate the social screen on abortion or or or right
Speaker 1: to life that second Vote Advisors is applying on that fund.
Speaker 1: I mean, Dan was was Dan Grant was a little
Speaker 1: defensive when I pointed set this out, but he said,
Speaker 1: I think, in fairness, look like for this fund, we
Speaker 1: apply this screen, and if companies make it through that screen,
Speaker 1: we're gonna pick the ones that we think are gonna
Speaker 1: perform best. And it may be that you know, or
Speaker 1: I guess it is that he thinks black Rock is
Speaker 1: gonna gonna do a good job and perform well, and
Speaker 1: is is kosher on the issue in this particular fund,
Speaker 1: whereas if it were like an anti climate fund ors
Speaker 1: something like that, you probably woudn't see them in there. Okay.
Speaker 1: So another interesting element here is that, especially with MAGA
Speaker 1: for instance, like the goal here was to appeal to
Speaker 1: a retail audience, and I so I suppose that sort
Speaker 1: of happened also with the Trump uh Digital World acquisition
Speaker 1: Corps back, you know, the Trump's back that happened. I mean,
Speaker 1: there's like a retail fervor for this in this kind
Speaker 1: of the age of meme stocks. But the other thing
Speaker 1: that your article goes into is that um Dan Granted
Speaker 1: and Second Vote seems to think that there might be
Speaker 1: an institutional dollar that they could attract, right, So so
Speaker 1: what's what do they see on that front? So this
Speaker 1: is a great point. I mean, as as as uh,
Speaker 1: you know, Eric has explained in the past, you need
Speaker 1: to reach a certain scale to be viable, and it's
Speaker 1: not clear you know you need you know, Grant says
Speaker 1: they're gonna need a hundred fifty dollars assets under management
Speaker 1: in order to remain of going concern. It's not at
Speaker 1: all clear that you're gonna get that through the retail
Speaker 1: investor right hasn't really worked yet with these funds, um
Speaker 1: But what what what he is eyeing at second Vote
Speaker 1: Advisors are a lot of these Republican led red state
Speaker 1: pension funds where you have politicians in these states who are,
Speaker 1: you know, adamantly anti liberal, anti woe Oak and so
Speaker 1: Grant has been traveling around the country. He met last
Speaker 1: week with Arizona's Republican treasure. He's met with pension funds,
Speaker 1: I think a state pension funds in Louisiana and Missouri,
Speaker 1: and last week he was down in Orlando talking to
Speaker 1: a gathering of state treasures, trying to basically appeal to
Speaker 1: their political beliefs and say, listen, you guys should be
Speaker 1: investing in my funds because I'm against all these anti
Speaker 1: woll companies and you're against them too. And if he
Speaker 1: were able to tap into those institutional dollars, well, that
Speaker 1: could be a real game change, I think for his company.
Speaker 1: One of the interesting things that I see in politics
Speaker 1: is I don't think that that's a crazy belief to have,
Speaker 1: right If you look at a state like Texas Governor
Speaker 1: Abbott there has gone after his past laws, you know,
Speaker 1: banning specific bank banks and bank practices because they've taken
Speaker 1: e s g stands against fossil fuels or guns. And
Speaker 1: just last week in Florida, Ron de sand As, the
Speaker 1: Republican governor, I think, uh possibly a Republican frontrunner for
Speaker 1: president or at least candidate for president, give a speech
Speaker 1: to the Florida Chamber of Commerce in which he blasted quote,
Speaker 1: the rise of woke capitalism. And he said, and I quote,
Speaker 1: if you're using your powers of corporation and you're leveraging
Speaker 1: that to try and advance in ideology, I think it's
Speaker 1: gonna be very dangerous for the country. And I'm not
Speaker 1: just gonna sit idly by. So the Republican governor of
Speaker 1: Florida is like threatening Florida businesses overwoke capitalism. To me,
Speaker 1: that says that this has salience in Republican circles, among
Speaker 1: Republican politicians. So who's to say that, you know, at
Speaker 1: some point in the near future we might see red
Speaker 1: state Republicans trying to push the Teacher's Fund or the
Speaker 1: Firefighters Fund or whatever in their state to invest in
Speaker 1: companies like second vote advisors, and that's certainly something that
Speaker 1: Dan Grant is gunning for. Yeah, two things I want
Speaker 1: to dive into their with what you're talking about, Josh
Speaker 1: is interesting, which is first, this just portfolio practicality. I
Speaker 1: think if you're an institution, I mean, if you have
Speaker 1: a lot of money, usually can get a lot cheaper
Speaker 1: than seventy five basis points. I would wonder if Dan
Speaker 1: would offer maybe an s M A. I Honestly, the
Speaker 1: E s G E T s that do the best
Speaker 1: are the ones below twenty. In fact, E s G
Speaker 1: didn't take off at all until the category got vanguarded
Speaker 1: and became below twenty. Vanguard came in at like thirteen
Speaker 1: BIPs and then black Rock following now would explode it
Speaker 1: because advisors and institutions just don't want to pay. They
Speaker 1: know that cost will really mess up the return. So
Speaker 1: has he talked about the fee if? I mean, it's
Speaker 1: really high, and that's that's a great point. One of
Speaker 1: the things that they're working on rolling out are indexes
Speaker 1: that would essentially be you know, have much lower fees,
Speaker 1: but also more closely tracked some of the benchmarks you're
Speaker 1: talking about earlier, So you don't wind up with these
Speaker 1: very actively managed portfolios. Instead, you have, you know, hypothetically
Speaker 1: the S and P five minus you know, the companies
Speaker 1: that are mean to Donald Trump and Bannon from Twitter
Speaker 1: and the companies that you know won't invest in guns
Speaker 1: or whatever. Subtract those out. Maybe that at a much
Speaker 1: lower fee is something that you can sell to you know,
Speaker 1: a Florida or a Louisiana or a Texas pension fund
Speaker 1: at some point, or an advisor. And that's exactly what
Speaker 1: they do. On the E s G side, that's when
Speaker 1: it started working if you But then again that's not pure.
Speaker 1: It would not pass anybody's purity tests. If I showed
Speaker 1: you E s GU the biggest D s G t
Speaker 1: F there is, Facebook is in the top ten uh
Speaker 1: exns in their most people seeking E s G would
Speaker 1: be not into that. But on the flip side, advisors
Speaker 1: and other people also don't want to have tracking are
Speaker 1: So those two things are always going to be opposed.
Speaker 1: But I will say you can move more product if
Speaker 1: you're cheaper and look more like the SMP. On the
Speaker 1: other point, though, is this idea of like all these
Speaker 1: people just wanting to affect things. I mean, I just ever,
Speaker 1: so much conversation is on the investor instead of the consumer.
Speaker 1: You just not shop there, not use Google, there are
Speaker 1: other search engines. Don't use Twitter um, And same thing
Speaker 1: on the s G front. I wonder how many SG
Speaker 1: investors have actually curbed their oil use where they don't
Speaker 1: use Netflix or Amazon, which are excluded from plenty of
Speaker 1: funds UM. I think a lot of this is just
Speaker 1: like sort of I hate to say it, like a
Speaker 1: lazy way, And how much does this really matter? Like
Speaker 1: if you don't own Twitter, someone else is gonna buy
Speaker 1: it if it has a good valuation. On the flip side,
Speaker 1: there was an article on Bloomberg this week about how
Speaker 1: black Rock divesting from coal companies m actually provided opportunity
Speaker 1: for other investors because again, the demands still there until
Speaker 1: you actually curb the actual demand. So if I was
Speaker 1: advising people to invest with your values, I would actually
Speaker 1: really move them more towards their power as a consumer
Speaker 1: and as a voter. I think those two things are
Speaker 1: much more powerful. And then just just you know, live
Speaker 1: with your beta and exercise those influences through your voting
Speaker 1: and through your own pocketbook. I don't know, is that crazy? No?
Speaker 1: I you know the funny. The funny example to me
Speaker 1: again coming at this through a wick in politics is uh.
Speaker 1: The greatest example I can think of the difficulty of
Speaker 1: falling through on those kind of boycotts was back when
Speaker 1: he was in the White House, Donald Trump um got
Speaker 1: angry at at Coca Cola. I think I think it
Speaker 1: had to do uh with with something in the state
Speaker 1: of Georgia, and he said, we're gonna boycott Coca Cola.
Speaker 1: And like two days later, a press photographer snapped the
Speaker 1: picture of his desk and there's a can of coke
Speaker 1: right there. So even he couldn't adhere to his own boycott.
Speaker 1: I think that's that's why though, I think that part
Speaker 1: of part of what these funds are going for isn't
Speaker 1: this pure investment play. Even if they present themselves this way,
Speaker 1: it is it is to offer themselves up as a
Speaker 1: means of political expression. You know, you're listening to Sebastian
Speaker 1: Gorka's talk radio show, the Trump kind of crazy right
Speaker 1: wing Trump advisor who got fired, and you know he's
Speaker 1: got a got a radio show now, and you hear
Speaker 1: him railing against wold capitalism. You know, this company comes
Speaker 1: on and says hey, by our e t F. Let's
Speaker 1: stick it to these woke companies. Yeah, who knows? Maybe
Speaker 1: you know you click here, you click their boom by
Speaker 1: you know, by ten dollars worth. You've done it. You
Speaker 1: feel good about yourself. Is it a smart investment? Maybe not?
Speaker 1: But I think that's that's what they're looking for. This
Speaker 1: isn't the kind of green eye shades. What's going to
Speaker 1: earn me the best return? It's how do I tap
Speaker 1: into that political anger? And I think we see that
Speaker 1: on both sides of the aisle and all kinds of funds, now,
Speaker 1: whether it's you know, woke e s G or anti
Speaker 1: woke second voter visors. So, Eric, have you ever heard
Speaker 1: about the you know them going for institution money like this?
Speaker 1: Have you ever have you ever come across anybody else
Speaker 1: in the E t F landscape that's attempted to do
Speaker 1: something like that and kind of crack a different category. Well,
Speaker 1: black Rock has been effective at getting institutions in their
Speaker 1: E s G funds. In fact, that's where a good
Speaker 1: chunk of money comes from. But they're they're pricing them
Speaker 1: at like twelve basis points and it's usually like a
Speaker 1: European institution and it's a fund that will keep we
Speaker 1: have little tracking. Er. So if I show when we
Speaker 1: had a webinar and we had our E s G
Speaker 1: analyst at Alene from Europe on and she does not
Speaker 1: like E s Q to her, it's not pure, doesn't
Speaker 1: really do anything. It just I think it allows that
Speaker 1: institution to check a box. But they might argue, well, um,
Speaker 1: we can't have tracking er. So what this does is
Speaker 1: it gives us real pretty good tracking, but it does
Speaker 1: tilt a little towards what we want. And it's almost
Speaker 1: like that's why we have spectrum scores for all ets,
Speaker 1: whether it's value or E s G. Just like alcohol
Speaker 1: content on a beer, you need to know if it's
Speaker 1: like you know, Odul's zero or like one of these
Speaker 1: like German beers like alcohol level or an I p
Speaker 1: A in the middle, and that is to me, what
Speaker 1: what you need here? So that way a person approaching this,
Speaker 1: whether they want to do a political expression or to perform,
Speaker 1: knows I want the water down version. I'm cool with
Speaker 1: just that way I can track the market, or I
Speaker 1: want the hardcore one, but the water down one has
Speaker 1: to be cheap, and that's the one the institution will
Speaker 1: typically buy, but also Maga, the Maga guy and the
Speaker 1: second Amicu they're not They're not black Rock. I mean
Speaker 1: black Rock is a major force. They have these relationships
Speaker 1: for years. So if a big record performing and the
Speaker 1: and the institution, I will say, you're not gonna get
Speaker 1: any brad press going into E s G. If it
Speaker 1: went into this, it might get some bad press. And
Speaker 1: that's just the way it is, right or wrong. UM.
Speaker 1: I will say. The one thing though, when it comes
Speaker 1: to these political sort of E s G. The one
Speaker 1: E t F idea that is a't out that's political
Speaker 1: ish that everybody wants is Nancy Pelosi's stock portfolio. Um
Speaker 1: I Actually somebody said who's the best active manager right now?
Speaker 1: And everybody was replying Nancy Pelosi. So I think Nancy
Speaker 1: is the best political idea. Both sides of the aisle
Speaker 1: can agree that her portfolio kicks ass and there should
Speaker 1: be an et F tracking it. And some ETFs have
Speaker 1: come along and tried to capture like the legislation politically,
Speaker 1: and it kind of reminds me of there was a
Speaker 1: guy named Ben Phillips who came out with the GOP
Speaker 1: and dem E t F. I'm not sure if you
Speaker 1: had a chance to talk to him. But his e
Speaker 1: t f were more about investing in stocks that would
Speaker 1: benefit from legislation, not necessarily a political expression. And and
Speaker 1: I don't think those did that well either. Yeah. I
Speaker 1: think the cautionary tale in the idea that that politics
Speaker 1: and investing don't mix was his company. I think it's
Speaker 1: called Event Shares, And back in seventeen they came out
Speaker 1: with two e t f s TICK or symbol GOP
Speaker 1: and Dems. And these were actually not political funds. They
Speaker 1: were essentially trying to bet on companies that would win
Speaker 1: based on which party was in control of government. Right,
Speaker 1: so if Democrats come in and they want to build
Speaker 1: highways and spend a bunch on infrastructure, hey, let's go
Speaker 1: buy these construction companies. They'll do well. Vice versa with
Speaker 1: the Republicans. UH had a lot of research to back
Speaker 1: this up, but he spent six months going around the
Speaker 1: country talking to wealth managers. All of them said, listen,
Speaker 1: we understand what you're doing. It's clever nowhere. We're touching
Speaker 1: this thing with a ten foot poll because if one
Speaker 1: of my clients, as a Democrat, opens up his his
Speaker 1: his statement, it sees that he's investing in GOP E
Speaker 1: t F, he's gonna flip and vice versa. And so
Speaker 1: after about six months it became clear to the guy
Speaker 1: running this, Ben Phillips, uh, this isn't working. There is
Speaker 1: no market for this. Like wealth managers by nature, especially
Speaker 1: institutional ones, are cautious, risk averse. They're not going to
Speaker 1: buy my products. Eventually it's shut down. I think what's
Speaker 1: interesting that that that Dan Grant and some of these
Speaker 1: other guys are doing is they're not trying to sell
Speaker 1: to an institutional investor necessarily. They're going out and they're
Speaker 1: flying their freak flag and saying, you know, we are
Speaker 1: the MAGA E t F, we're the Second Amendment E
Speaker 1: t F. We are actively flouting our political affiliations and
Speaker 1: hope that that's going to bring us investors. And we'll
Speaker 1: we'll see if he's able to kind of crack the
Speaker 1: losing streak that a lot of these political funds had
Speaker 1: had up until now. One thing about that Dem GOP fund,
Speaker 1: which is so could there there was a middle stage
Speaker 1: there where he said we're gonna call it p LC
Speaker 1: Y and it's going to be legislative alpha. When that
Speaker 1: came out, people like, well, you know, because they try to.
Speaker 1: There's all these marketing terms that pop up in the
Speaker 1: t F world, and people got to kick out of that.
Speaker 1: But I could see that way. He was like, well,
Speaker 1: it's not demo republican. We're just going after alpha that
Speaker 1: results from legislation. But even that didn't work. So I
Speaker 1: think the bigger, the bigger challenge here is something that
Speaker 1: I told you when we talked about the article, which
Speaker 1: is almost all the money in E t F S
Speaker 1: goes to dirt, cheap or shiny objects, and these are
Speaker 1: really neither unless one of them catches fire and just
Speaker 1: starts destroying the smp um or they get below fifteen
Speaker 1: basis points or or or or Trump tweets about it,
Speaker 1: you know, like possibly, I mean not you do that
Speaker 1: without without equity in the in the company, but even
Speaker 1: sometimes or or an active Twitter account exactly well good, Honestly,
Speaker 1: if you were on that side, I think buying his
Speaker 1: back would be a quick, easy way to because that
Speaker 1: exercises a lot of It's like, let me invest in
Speaker 1: this thing, doing this alternative Twitter, which is what I
Speaker 1: sometimes advise, not advise, but I think about when we
Speaker 1: think about E S G. Instead of replacing Vanguard five hundred,
Speaker 1: what you could do is go after companies that are
Speaker 1: literally conservative companies. Trump's back would be a great example,
Speaker 1: and just by a small little portfolio concentrated stocks that
Speaker 1: have those and that compliments the chief beta you already have,
Speaker 1: and that to me is more practical than trying to
Speaker 1: sell your Vanguard or whatever and plump in this thing
Speaker 1: that may or may not perform basically because you're piste
Speaker 1: off or think you're changing the world. Mhm. You know.
Speaker 1: The other thing that I'm just really curious to see
Speaker 1: how this plays out over the next year, especially as
Speaker 1: we walk up towards mid terms here, Josh, is the
Speaker 1: thing that when when Maga came out and we did
Speaker 1: the episode, you know, a couple of years ago, you know,
Speaker 1: effectively was a different day, and you know, Trump as
Speaker 1: president and and now having Biden as president actually kind
Speaker 1: of feels like it might work in their favor a
Speaker 1: little bit because they can rail against Biden and say,
Speaker 1: we have antithesis for that, right, and it's like that,
Speaker 1: you know, giving something to someone who who can use
Speaker 1: the the president sort of as a bully pulpit, you know,
Speaker 1: invest in this instead. So I'm curious to see Eric,
Speaker 1: I want, I want you to read on this. If
Speaker 1: we if we look at this in a year and
Speaker 1: we've got midterms, what's the what are the odds of
Speaker 1: this thing is cracked? A hundred and fifty very low,
Speaker 1: very low. I'm sorry, it's just it's not Republican or Democrat.
Speaker 1: It's just the way portfolios and investors are behaving now
Speaker 1: and this just doesn't fit into where this just flows.
Speaker 1: Don't go to stuff like this. But interestingly, what you
Speaker 1: just said are cable news like don't Fox's ratings go
Speaker 1: up when there's a dump president? And like, didn't see
Speaker 1: CNN's ratings crash left Like there definitely is a market
Speaker 1: for this. Um, I don't know. I just outside of
Speaker 1: like maybe a fringe audience, it just doesn't seem to
Speaker 1: reach the mainstream of investors. But maybe I'll be proven wrong.
Speaker 1: I'm very doubtful. Yeah, no, Joel, what what you said
Speaker 1: is exactly the spin that these funds give. Well, you know,
Speaker 1: when Trump was in the White House, people people could
Speaker 1: get their fixed no problem. Now he's been pushed off
Speaker 1: the stage, and Grant said to me, actually this is
Speaker 1: a quote. He said, you know our funds offered the
Speaker 1: investor a mechanism to fight back, so I think they're
Speaker 1: going exactly for that, Like we're out of power. This
Speaker 1: is a way to strike back at the establishment, at democrats. Whatever.
Speaker 1: We'll we'll see if that's enough of a sales pitch
Speaker 1: to kind of, you know, a mass, meaningful scale going forward. Josh,
Speaker 1: I got one more question for you, which is one
Speaker 1: that we ask everyone who joins us on Trillions, and
Speaker 1: because you're, you know, kind of a E t F newbie,
Speaker 1: I'm curious to see if you have an answer to this.
Speaker 1: But what is your favorite E t F ticker? Um?
Speaker 1: You know, I gotta say Marga because it's just so
Speaker 1: clever and and perfect, and I do have to say
Speaker 1: I'm surprised really that that it hasn't taken off more
Speaker 1: with the investors they're focusing on, because you know, you
Speaker 1: could spend a lifetime trying to think of a more
Speaker 1: perfect ticker symbol and not be able to improve on
Speaker 1: Maga if that's the audience you're looking for, So good
Speaker 1: call to your point, Josh on Maga. Maga had never
Speaker 1: had a period about performance, so I was always curious, Well,
Speaker 1: maybe if it has its moment in the sun. Then
Speaker 1: they'll come. But it did. For the first half of
Speaker 1: it was up doubling the SMP. It went on a
Speaker 1: nice run. It was ironically perfectly situated for the Biden.
Speaker 1: In fact, as soon as Biden got elected, I think
Speaker 1: started taking off. I don't that's figure, but nobody bought
Speaker 1: it in that run, and that's a that's a bad
Speaker 1: sign to be honest, Josh Green, thanks for joining us
Speaker 1: on Trillions pleasure. Thanks for listening to Trillions until next time.
Speaker 1: You can find us on the Bloomberg Terminal, Bloomberg Com,
Speaker 1: Apple Podcast, Spotify, and wherever else you'd like to listen.
Speaker 1: We'd love to hear from you. We're on Twitter, I'm
Speaker 1: at Joel Webber Show. He's at Eric Falcinus. This episode
Speaker 1: of Trillions was produced by Magnus Hendrickson. Francesco Levie is
Speaker 1: the head of Bloomberg Podcast. Bye.