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you new only. only. Happy

1:38

Holidays everybody We got an exceptional

1:40

episode today. It's been almost

1:43

seven years since Mike Venuto

1:45

has been on the show.

1:47

on Mike is a CIO, CIO

1:49

of of Group, an ETF

1:51

platform, helps you create, manage,

1:53

grow your ETFs. They have

1:55

over your ETFs. They ETFs with over

1:57

over 25 billion on the the platform.

1:59

in the? Today we're going to talk to

2:01

Mike about the state of the ETF industry.

2:03

Then we're going to talk about some fun

2:05

new strategies he's working on. Mike, welcome back

2:08

to the show. Meb, it's so great to

2:10

be back, man. I know we were just

2:12

chatting. I was just re-listened to episode 87

2:14

that we did together seven years ago, and

2:16

it's a wealth of predictions that I think

2:18

people should listen today, because if we get

2:20

it as right as we did seven years

2:22

ago, we gave some gems out. Well, the

2:24

one thing we didn't get right, and listeners,

2:26

we'll put this in a shownote links, but

2:28

it's well worth a listen, because again, 2017,

2:30

the one thing we didn't get right, I

2:32

said, Mike, this is so much fun, let's

2:34

do this every month. And then you and

2:36

I got busy and it's been seven years.

2:38

Listeners, Mike is sort of a brother from

2:40

another mother. We've been working together for many

2:42

years, formally, informally. But it's funny, if you

2:45

look back in that show, We

2:47

had probably 500 million under management, we're

2:49

now almost at 3 billion. You guys

2:52

probably a billion maybe, and now you're

2:54

26? You hadn't even started the white

2:56

label business. The S&P has doubled. We

2:59

talked a lot about Bitcoin and crypto.

3:01

That's been a five-bagger, probably. But we

3:03

talked about a lot, like you mentioned,

3:06

a lot of ideas in the ETF

3:08

industry. Turns out all you got to

3:10

do is get behind a big trend

3:12

and just hang on for dear life.

3:15

Is that what it feels like? Yeah,

3:17

I mean, it's funny because one thing

3:19

that I also thought at the end

3:22

we were both like, S&P can't continue

3:24

to just crank out double digit returns.

3:26

We said that, but we also said

3:29

a lot of other things that you

3:31

could augment it with, so we weren't

3:33

exactly wrong. I would say that when

3:36

I listened to it, that was the

3:38

one thing I thought we got wrong.

3:40

Let's start with a tweet I'm going

3:42

to read and then we'll go deep

3:45

in a lot of different topics. This

3:47

is from our good common friend, podcast

3:49

alum Eric Balcunas, and it says, juggernaut.

3:52

I bit, IBIT, has hit the 40

3:54

billion asset mark a mere two weeks

3:56

after hitting 30 billion in a record

3:59

211 days annihilating record

4:01

of 1,250 three days held by

4:03

IEMG. It's now top 1% of

4:05

all ETFs by assets and at

4:07

10 months old it is bigger

4:10

than all 2,800 ETFs launched in

4:12

the past 10 years. Is that

4:14

the most amazing stat I've heard

4:16

this year? It might be. Way

4:18

in. You've been a long-term crypto

4:20

bull. We talked about it again

4:22

back in 2017. What do you

4:24

think about this from both a

4:27

crypto perspective as well as from

4:29

a product perspective? It is absolutely

4:31

amazing how quickly this has taken

4:33

in assets. And it's not just

4:35

them. It's a number of them.

4:37

I think our other friend Nature

4:39

AC, he had a tweet where

4:42

out of the 25 fastest growing

4:44

ETF this year. 14 were like

4:46

crypto related or adjacent right there

4:48

either Bitcoin ETFs or some derivation

4:50

of micro strategy so it's been

4:52

the year of adoption by institutional

4:54

RIA's things like that it's funny

4:56

I think USCO always said this

4:59

isn't going to actually happen till

5:01

Black Rock gets behind it right

5:03

and it's actually what happened the

5:05

approval process because we went through

5:07

it for one of our clients

5:09

of working with the SEC to

5:11

get these ETFs out was completely

5:14

unprecedented. They've never done anything like

5:16

this. They've never tried to line

5:18

everybody up to the same day.

5:20

They never approved a 19B4 on

5:22

one day, and everything launched the

5:24

next day. I've never seen anything,

5:26

and I want to get into

5:29

the jargon, but 19B4 is just

5:31

this hard process of working with

5:33

the regulators to get something approved.

5:35

I've never seen 10 ETFs launched

5:37

the day after a 19B4 gets

5:39

approved. Like, so the political will.

5:41

either changed or was forced. History

5:43

will tell us someday I'm sure.

5:46

And now there's a way to

5:48

get the access. What's amazing to

5:50

me though is all these Bitcoin

5:52

ETFs combined have an average expense

5:54

ratio that's lower than the average

5:56

expense ratio. of all the gold

5:58

ETFs. He waited for assets, unweighted

6:01

for assets, like we're talking somewhere

6:03

south of 20 average for the

6:05

Bitcoin ETFs, north of 30 average

6:07

for the gold ETFs. How did

6:09

that happen? It's pretty exciting times,

6:11

and I think there's a lot

6:13

more to come. One of our

6:15

clients just had a 19B4 approved

6:18

for Bitcoin plus carbon credits in

6:20

a 33 actor app, so that'll

6:22

be coming soon. Another great client

6:24

of ours, David Jekansky, who's worked

6:26

for us for many years, spud

6:28

out to start quantify funds and

6:30

he partnered with Corey at Return

6:33

Stack. He launched Bitcoin and Gold,

6:35

so $1 of BTGD gets you

6:37

a dollar of Bitcoin and a

6:39

dollar of gold. Right, like, it's

6:41

funny, I know I'm talking too

6:43

much, but we said seven years

6:45

ago there's going to be these

6:48

structural things, and this is exactly

6:50

what that is. The

6:52

Bitcoin gold is an interesting example because

6:54

I wonder like when you think of

6:56

the Venn diagram you got your Bitcoiners

6:58

on one hand in blockheads whatever you

7:00

want to call them say that lovingly

7:03

you got your gold bugs on the

7:05

other hand and there's definitely a Venn

7:07

diagram overlap but then there's also the

7:09

people who are alligators and they may

7:11

not like either personally they may just

7:13

be like you know what these clients

7:15

want this I can't buy either these

7:18

because I don't want the. career risk

7:20

of them looking at their be like,

7:22

oh my gosh, we own gold, are

7:24

you crazy, you own Bitcoin, you're crazy,

7:26

but put it to two together, it

7:28

might be palatable, and so it finds

7:30

a home, and I can see how

7:32

the two of those would be perfect

7:35

cut fellows. Yeah, it's a hard money

7:37

trade. So if you believe there's this

7:39

debasement, then for $1, I get $2

7:41

of exposure and things that theoretically aren't

7:43

getting debased. Limited supply stores of value.

7:45

I'm not going to get into the

7:47

merits of it all I believe it

7:50

I'm an investor at it, but I

7:52

can understand The allocation of capital if

7:54

you tried to have 5% Bitcoin and

7:56

5% gold in your portfolio. It's a

7:58

hard thing to deal with risk,

8:01

5% in this gets you that exposure

8:03

without having 10% allocated. So let's rewind

8:05

seven years. You and I were talking,

8:07

it's funny because you guys weren't known

8:10

as titled in, you're known as Taroso,

8:12

you hadn't even started the white label

8:14

business, just dreams of what may come,

8:16

walk us through the last seven years

8:19

and 26 billion in assets and over

8:21

a hundred funds, what has been the

8:23

runway, what's been the vision and update

8:25

as to where you are now, and

8:27

then for those listening, with the Lepicron

8:30

Dreams pot of gold in the inner

8:32

rainbow that want to do a fun,

8:34

we'll get into that too. So what's

8:36

happened? On the last time we spoke,

8:38

we spent a lot of time talking

8:41

about this fund called TETF. It was

8:43

kind of our flagship. So TETF was

8:45

an ETF that tracked all the companies

8:47

in the ETF industry. We thought it

8:50

was the greatest idea, very meta. We

8:52

thought this will give us the platform

8:54

to talk from and the performance because

8:56

I kept the index alive. It was

8:58

actually very good. Listeners, I loved, loved

9:01

this fund, loved. We never got past

9:03

7 million, and so I would say

9:05

it was one of those mistakes that

9:07

we learned to pivot from that made

9:09

us what we are today. This was

9:12

meant to be a public exposure to

9:14

the ETF industry. Yeah, you own Wisdom

9:16

Tree, Black Rock, New York Stock Exchange,

9:18

State Street, S&P Global. We still run

9:21

the index, it's still on the title

9:23

website. So TTF we did with another

9:25

white label firm and they were fine

9:27

they did everything they said they were

9:29

going to do but we just looked

9:32

at it and said man I wish

9:34

they could help us with marketing I

9:36

wish they could help us with sales

9:38

I wish they could help us think

9:40

about how to position in the market

9:43

I wish they could help us get

9:45

on national accounts programs I wish they

9:47

helped us iterate and come up with

9:49

better products or change it or pick

9:52

the right ticker and that's just not

9:54

what they do they were a firm

9:56

that did what they did well. We

9:58

saw it as men. we could

10:00

do this so much better

10:03

because we were already helping

10:05

people grow. We already had

10:07

contracts with We already had contracts with direction

10:09

and Robo to help them grow

10:11

by doing portfolio consulting. grow by

10:13

doing said, okay. consulting. So we don't

10:16

we take the lesson from what we

10:18

saw here and make a better make a

10:20

platform? So we started working on that. So

10:22

we At the same time, that.

10:24

the other big change big change

10:26

came from TTF as a failure.

10:29

I did an interview on Fox News where

10:31

they asked me, what could threaten the

10:33

ETF industry? And I

10:35

said, well, someday gonna be going to funds

10:37

and they laughed at me. they

10:40

laughed at me. Well, about a month

10:42

after that last podcast, we

10:44

launched Block. It's close to a

10:46

billion dollar today. It's bounced around

10:48

between. between six hundred and two billion

10:50

billion for the last seven years, And it

10:52

and it was the first ETF

10:54

for title. So we did So we did

10:56

it in partnership with Amplify. and

10:59

this gentleman named Gabriel named Gabriel it

11:01

was our first foray into a successful

11:03

ETF. a So ETF. of those

11:05

ideas really came from the failure

11:07

of of TETF, and I love that And I

11:09

love that pivot now. say it was

11:11

I wouldn't say it was that simple. Trias, our

11:14

our CEO. a lot of gets

11:16

a lot of credit here,

11:18

bringing over from from who built a

11:20

built a lot of banks infrastructure and

11:22

knew knew how to deal with boards

11:24

and trust all that. I mean, mean, he... really

11:27

is the nexus of us being able to

11:29

build a real real white platform. And

11:31

over the last seven years, that's

11:33

really what we've been doing. We've been

11:35

helping lots of people launch, of grow,

11:37

and operate ETFs. Walk us through us

11:39

through that a little bit. We can

11:41

start to talk about a handful of

11:44

funds and ideas and what's worked and

11:46

maybe what hasn't worked, but if somebody's

11:48

listening and they're like, look, I really

11:50

wanna launch an ETF. to launch an to

11:52

us about us what's the process? the You've

11:54

done a You've done now, now. so imagine you're

11:56

you're a little more. I don't I

11:58

don't know it's selective is the right word, right word. emails

12:00

you after this. What are you going

12:02

to say? How's it going to work?

12:05

So we take a very consultative approach.

12:07

We don't launch everything. If somebody comes

12:09

to us with an idea that we

12:11

don't think is going to succeed, we're

12:13

going to coach them and work with

12:15

them and try and iterate with them

12:17

to get to a product that we

12:19

think will succeed. So that's the first

12:21

thing. That's that value add of the

12:23

title experience. Gavin Fill or our CRO

12:26

actually has a product development group. I

12:28

mean, how many platforms and service providers

12:30

have a new product development team? That

12:32

team is there for our clients. So

12:34

they come to us and say, I

12:36

want to do an AI ETF and

12:38

we say to them, let us show

12:40

you the market. There's 17 of these

12:42

and this is the average expense ratio

12:44

and here's the market leader and here's

12:47

this and here's that. How can we

12:49

take yours and make it different? What

12:51

is the story that we can put

12:53

to it? Are you going to do

12:55

active or passive and why? So it's

12:57

a very long process if the idea

12:59

is not good. Somebody sticks to it

13:01

and says that's what I still want

13:03

to do and they have no seed

13:05

because seed makes an idea good almost

13:08

automatically. It goes back to if I've

13:10

got seed and the idea is okay,

13:12

well then you've got time for it

13:14

to sit in the market not burn

13:16

a hole in your pocket and maybe

13:18

hit a cycle or you've got time

13:20

to figure out that you need to

13:22

change the product. ETFs change all the

13:24

time. They change tickers, they change. prospectuses,

13:26

we sticker things, we iterate, so there's

13:29

really two things that we care most

13:31

about when somebody comes to us. Is

13:33

it a good enough idea? And do

13:35

you have seed? You don't

13:37

have to have both. It's great if

13:39

you have both. When Mike says seed

13:42

listeners, it's seed assets going into the

13:44

fund. Separate and equally as important is

13:46

assets used to support the actual business.

13:48

So if you launch something with no

13:51

seed, you're going to be paying a

13:53

quarter million dollars a year of expenses

13:55

just to keep the fund open. So

13:57

you need to have, I always tell

14:00

people, a minimum years of expenses to

14:02

even consider launching a fund. Now if

14:04

you have 20, 30, 40, 50 million

14:07

of seed capital going into the ETF,

14:09

theoretically you need less on the balance

14:11

sheet because that fund is automatically break

14:13

even or profitable. So it's a different

14:16

equation. So when you talk to people,

14:18

when you say seed, does that mean

14:20

a million, a hundred million? I know

14:22

more is better, but what does that

14:25

mean when you're talking to them? So

14:27

the simple math is you take that

14:29

250? and you look at your expense

14:32

ratio and you back into what's break

14:34

even. So 50 bips is your expense

14:36

ratio, break even is about 50 million.

14:38

100 bips is your expense ratio, break

14:41

even is about 25 million. You want

14:43

to have that soft circled and then

14:45

you want to have it hard circled

14:47

before you launch, right? Because if you

14:50

don't, you're writing me checks. Now I'm

14:52

not keeping most of that. I'm writing

14:54

those, taking that check. and writing it

14:57

to the stock exchanges and writing it

14:59

to the index providers and writing it

15:01

to the custodians and all that. We

15:03

don't want that. I never want my

15:06

clients to write me a check. I

15:08

want to write you checks. So if

15:10

you come out with 50 million to

15:12

50 BIPs, you're not writing us checks.

15:15

That's awesome. Now you're willing to spend

15:17

money on marketing. If you're spending money

15:19

to keep the fund alive, the odds

15:22

that we're going to convince you to

15:24

pay for some Twitter spaces or get

15:26

a PR firm or... do things that

15:28

can help the fun grow are low.

15:31

So there are two things that tend

15:33

to succeed nowadays. It's either a super

15:35

good product that doesn't exist and is

15:37

differentiated, or has seed and has the

15:40

time for the cycle to come to

15:42

it. It has the survivor. Yeah, and

15:44

you can't count on the regime or

15:47

the market environment working in your favor.

15:49

Listeners, I mean we started this podcast

15:51

talking about how US stocks have mowed

15:53

down everything for 15 years and not

15:56

just everything within the US market market

15:58

cap has creamed everything. So if you

16:00

run an equal fund, a inverse equal

16:02

market cap fund, equal weight, I don't

16:05

even know how to say it, fills

16:07

funds, shut up, fills, sorry, but you

16:09

need to outlast or at least give

16:12

it a chance to grow and compound,

16:14

I think. One of the benefits of

16:16

having a diversified lineup like you or

16:18

we do is it buffers that volatility

16:21

a little bit. If you launch one

16:23

fund, we often tell our friends that

16:25

want to do that, that's fine. But

16:27

realize you may be offsides for not

16:30

just a year, but two, three, four,

16:32

five, six, seven, eight years as well,

16:34

which for a lot of people, it

16:37

feels like a lifetime, a career right

16:39

there. It's very hard to stomach. This

16:41

is a very asymmetric risk reward business.

16:43

But the risk is capped. So you

16:46

can know what your risk is in

16:48

terms of being in the business of

16:50

EETF. The rewards are unlimited. So that

16:52

asymmetry is beautiful. But if you're not

16:55

going into it with the proper risk

16:57

budget, it's a terrible, terrible feeling, which

16:59

I experienced with TETF. But I learned

17:02

so many things from it. And that's

17:04

really what title brings to the table

17:06

is that experience. We made all the

17:08

mistakes, so you don't have to. Yeah,

17:11

that'd be fun. We could talk

17:13

about a few funds, maybe there's

17:15

like case studies. Maybe we could

17:18

even talk about the two you

17:20

guys just launched on the fire

17:22

movement. How about we start there?

17:24

Yeah, so the fire ETFs that

17:26

we launched just recently, these ETFs

17:28

fit into that realm of how

17:30

title helps our existing clients. So

17:33

the fire movement is extremely interesting

17:35

to me and it resonates so

17:37

much with so many things that

17:39

I've seen in my life. We

17:41

say things like 26 billion sounds

17:43

great. We didn't cross a billion

17:45

until 2018. So the first six

17:48

years I barely paid myself anything

17:50

and there were years where I

17:52

paid myself zero. So it was

17:54

almost forced into fire and fire

17:56

stands for financial independence retire early.

17:58

And it's a community. has been

18:00

growing rapidly of people that just

18:03

help each other achieve financial independence.

18:05

It's moved a little away from

18:07

retire early because it's to them

18:09

it seems retire early really means

18:11

the freedom to do whatever I

18:13

want so most of them still

18:15

have some sort of passive income

18:18

or pet projects or consulting or

18:20

board seats and things like that.

18:22

I think that the younger crowds

18:24

vision of retirement is different than

18:26

our parents who like worked to

18:28

the bone get to

18:30

all I get to my pension and

18:33

then like sepnequatas and cabo like type

18:35

of retirement I feel like the under

18:37

40 under 50 crowd is probably a

18:39

little more freedom like maybe it's FIFA

18:42

financial independence freedom really but fire yeah

18:44

who's the mr money mustache you got

18:46

the bogo heads who's kind of the

18:48

fire the big names out there there's

18:51

a lot of them it's easy to

18:53

find we've been reaching out to all

18:55

of them and talking to them and

18:57

trying to understand the the the community

18:59

I been surprised because they're all like

19:02

shocked that we're talking to them because

19:04

most of Wall Street avoids them because

19:06

they're not paying for financial advisors most

19:08

of them because they're working with each

19:11

other and most of them just by

19:13

VTI and Chill they really care about

19:15

low fees so I think they've been

19:17

very much ignored. We found them because

19:20

the yield Mac suite that we have

19:22

it's been a very successful suite for

19:24

our clients a lot of the YouTubeers

19:26

and influencers that were buying and talking

19:28

about the yield Mac stuff were also

19:31

talking about how they use it in

19:33

retirement, right, or as passive income and

19:35

things like that. So I went down

19:37

the rabbit hole of looking at this

19:40

and I started listening to all the

19:42

podcast and all the things that were

19:44

in here and I watched the documentary

19:46

that was on Amazon and then New

19:49

York Times did an article on it

19:51

a few months ago. Then I got

19:53

into the Reddit forum and I'm like,

19:55

wow, this community. is doing financial education

19:57

too. This is the community that's

20:00

actually out there out each other and

20:02

saying the things that you and

20:04

I aren't really allowed to say

20:06

I aren't we say it, it's considered

20:08

marketing material. we say it, it's it's

20:10

not marketing material, material, I

20:12

was like, it's this is the voice that we

20:14

can... right? So I to like, have

20:16

this place to do it. to them.

20:18

We This is where this decided. to do it.

20:21

So this launch title decided to one two

20:23

ETFs, helping them save, them save,

20:25

wealth, which is one phase

20:27

of the fire journey. and

20:29

one that distributes a yield, they they

20:31

target a a % yield, so that's what

20:33

we did in the ETF in the ETF now.

20:36

These are not VTA and Chill, and I

20:38

don't wanna stop anybody from VTI and

20:40

chill. These are alternatives to it,

20:42

or alternatives to it, or people can choose to

20:44

use or not choose to use.

20:46

Either way, use or not to have a conversation

20:48

with the community on it. I'm sure, a mean, Rick

20:50

Ferry looks at this, he's gonna be like, you

20:53

shouldn't do all that. sure, I It's fine, Rick,

20:55

you don't have to. But

20:57

at this, we built was like, F-I-R-S

20:59

for fire savings, savings, which is permanent

21:01

the permanent portfolio, which you and I have

21:03

talked about many, many times. and then we then

21:06

we built which is an income which

21:08

is an income portfolio income. We

21:10

income. We income. use things

21:12

like the yield max suite combined with

21:14

very low low low volatility

21:16

funds. Here's the kicker. the charging We're

21:18

charging a as a platform for it. is

21:20

doing So is doing this to engage

21:22

with the fire community. and to and

21:24

to support title clients. This

21:26

is us giving free models out. I

21:28

love the quote I got on the I.com

21:30

article on it. It says, on it. says they

21:33

will lose money on this. That's true.

21:35

We are not doing this for the money.

21:37

We're doing this for the benefit of

21:39

title clients and to engage with the fire

21:41

community. of I know it's been early

21:43

to engage with What's the reception in the

21:45

community? know What are the people in the

21:47

fire world saying so far? I

21:49

mean, everyone we've spoken to has been

21:51

pretty supportive, but they do ask the questions

21:54

that you expect the fire community to

21:56

ask. like, are the acquired fun fees and

21:58

why shouldn't I just buy just buy a VTA? how

22:00

are you structuring this, why is

22:02

it different, things like that? I

22:04

don't see a reason for somebody

22:06

who is 20 years from their

22:08

retired date to really use our

22:10

fund. VTI and CHL is fine

22:12

for that person. Our thinking is,

22:14

as you get closer to your

22:16

fire number, your date that you

22:18

can say, all right, I've got

22:20

my independence and I want to

22:22

switch to distribution phase of our

22:24

lives, we think. Having a more

22:26

of a portion in a permanent-like

22:28

structure, right, a portfolio that has

22:30

less volatility and way more diversified,

22:32

is a good solution. Now, you

22:34

don't ever have to be 100%,

22:36

but that's the kind of thing

22:38

we're trying to bring to the

22:40

table is most people in the

22:42

fire community have never lived through

22:44

the 1970s thing. They've never seen

22:46

the prolonged downturns. It's been very

22:48

easy to VTA. What do you

22:50

mean, prolong downturns, even downturns? Like,

22:52

it's been 15 years. Talk to

22:54

us about a few of your

22:56

successful funds. What has worked? We

22:58

talk about some things that didn't

23:00

or new, etc. It would have

23:03

been some big standout successes for

23:05

you guys. And if you could

23:07

go back, would you have predicted

23:09

these with certainty that they would

23:11

have been the ones you would

23:13

have bet on? I love to

23:15

start with our indie hit that

23:17

we had no idea would be

23:19

what it is. So it was

23:21

one of the first ETF ETFs

23:23

we launched. ETF we launched. We

23:25

launched. We launched. was a SPUS,

23:27

Sharia portfolio version of the S&P

23:29

500. This was an $80 million

23:31

RIA who came to us with

23:33

this idea and we thought, no

23:35

way this is going to be

23:37

huge, but say they've got the

23:39

seed and it's something different. It's

23:41

now multiple ETFs and well over

23:43

billion dollars. They've built a whole

23:45

suite of Sharia compliant ETFs. They've

23:47

really done an amazing job. You

23:49

know how hard it is to

23:51

get. approved on platforms. The platforms

23:53

call us about this fund. They

23:55

did so many things right. I

23:57

love products that become sweets. And

23:59

that's the holy grail to the

24:01

asymmetry. So they have Sharia, they

24:03

have the first to cook ETF

24:05

as well, which is Sharia Islamic

24:07

law does not like lending. So

24:09

their form of fixed income is

24:11

very different. It's more like a

24:13

zero coupon. So it's not an

24:15

interest rate. And that's done spectacular.

24:17

I really love it. Actually, I've

24:19

used it in our models from

24:21

time to time because it has

24:23

a different duration and all that.

24:25

They've done a Sharia real estate

24:27

portfolio, so like they've turned it

24:29

into a suite. I love those

24:31

success stories. Yeah, and listeners, like

24:33

the one-off funds are all great

24:35

and well, but if you look

24:37

at what Mike's talking about, if

24:39

you have a new idea or

24:41

concept, you can expand horizontally, vertically,

24:43

vertically into different demographics, others have

24:45

done it. You mentioned this yield

24:47

Max concept where it's not just

24:49

one fund, it becomes a platform.

24:51

Yeah, so yield Max is a

24:53

good one to talk through, because

24:55

that's an example of... The client

24:57

came to us with an idea.

24:59

It was a good idea, and

25:01

we actually filed for it, but

25:03

we never launched it. But it

25:05

iterated with our product development team

25:07

to a massive idea. So Yield

25:09

Max is essentially taking a single

25:11

security, Tesla, or Invidia, or Micro

25:13

Strategy, or Disney, and you're doing

25:15

essentially a synthetic covered call and

25:17

distributing the income. So these things

25:19

have very high yields and you

25:21

get a lot of the upside,

25:23

you don't get all of it,

25:25

of the underlying security. That led

25:27

to the next iteration. After we

25:29

had 20 of those, we launched

25:31

a fund of funds, that owns

25:33

all the yield max funds. So

25:35

that becomes a feeder to every

25:37

yield max fund having seed. Then

25:39

we launched short versions. So we

25:41

have Tesla and we have Crash.

25:43

You're going to love these tickers.

25:45

I know you're a ticker junkie.

25:47

So CRSA is the short version

25:49

of Tesla with a yield. We

25:51

have NVDY for invidia and then

25:53

we have dips, chips and dips,

25:56

which is the short version. But

25:58

it's funny because this really goes

26:00

back to when I think about

26:02

this type of. strategy. To me,

26:04

it's a trade or an exposure

26:06

that makes life easier for someone.

26:08

It's a trade or exposure they

26:10

want, but they don't necessarily want

26:12

to put on themselves. And the

26:14

OG of this was DXJ. The

26:16

Wisdom Tree Fund was a dollar

26:18

hedged yen. So Yin hedged Nikai.

26:20

And this fund went to like

26:22

15, 20 billion or something. This

26:24

was a Wisdom Tree ETF. But

26:26

when you wanted to place that

26:28

trade, what individual or what advisor

26:30

is going to e-trade or Schwab

26:32

in trying to do yin hedge

26:34

nieke, like nobody is, but you

26:36

could buy the ETF. And so

26:38

there's certain types of expressions that

26:40

traders want, but they don't necessarily

26:42

want to have to do it

26:44

themselves. And often involves derivatives of

26:46

some form, whether it's an overlay,

26:48

additional exposure, less exposure, but this

26:50

is a good example of that.

26:52

Yeah, this is another one of

26:54

our predictions, right. We said structural.

26:56

So buffer shares was a sweet,

26:58

that's one of those structures. Now

27:00

we've seen return stacking, our mutual

27:02

friend Corey Hofstein doing the portable

27:04

Alpha's trades. I mean, Corey had

27:06

no ETF business a year and

27:08

a half ago, and he's over

27:10

a billion. We both know how

27:12

hard it is to get to

27:14

a billion, and he's done it.

27:16

So these structures really came from

27:18

the second rule. So you talked

27:20

about the ETF rule earlier. I

27:22

think that did a lot for

27:24

active management. When we were talking

27:26

years ago, we didn't really talk

27:28

about active. You've moved your entire

27:30

suite to active now. Almost everybody

27:32

who's coming to us is active.

27:34

Then there was a second rule

27:36

called 18F4, which is called the

27:38

derivatives rule. It's complex, but it

27:40

allowed for leverage. It broke up

27:42

a monopoly that pro shares in

27:44

direction used to have. And it's

27:46

allowed for all these single stocks.

27:48

It's allowed for all these leverage.

27:50

It's allowed for managed futures, things

27:52

that just weren't doable before that.

27:54

and it's just been a renaissance

27:56

and ideas of structuring new forms

27:58

of traits. Not only Does it a headache

28:00

for somebody to go do their

28:02

own own buy on Tesla or strategy? They're

28:05

not going to they're not going to get the

28:07

borrow rates that we get. They're not going to get

28:09

the trades that we get, Right? Not Not only do we the

28:11

do the synthetic covered call, we also

28:13

do a call spread to capture more

28:15

upside. a That's a daily trade. That's massive

28:17

amounts of active management Zaga and his whole team are

28:19

doing. his whole team are doing. These

28:21

are not trades that you can set

28:23

and forget on your own. So putting it takes

28:26

an active manager. the So putting it in

28:28

the wrapper the the ETF ETF. and doing it

28:30

as tax tax as you can you can using the

28:32

scale of of what we we can negotiate

28:34

with Citadel and what we can negotiate

28:36

with X and all these places, these places, to

28:38

you're not going to get that done

28:40

at Interactive Brokers with your own

28:42

account. Well, mean, this really started

28:44

50 years ago. You look at ago. You

28:46

Jack Bogle and others, Bogel, their Most

28:48

investors, hey, I'm gonna have stocks. 10

28:50

My broker at EF Hutton or Dean Witter

28:52

put me put me in some blue chips

28:55

and that's the way it's been forever.

28:57

But the concept of pooling assets and

28:59

being able to buy 500 positions, no one

29:01

was gonna do that do that, because A, A,

29:03

have killed you would B, you. trying to

29:05

manage that on paying taxes and everything

29:07

else. It's just a huge headache. So

29:09

all of a else. sudden a sudden hey, just now

29:11

hey can buy the Vanguard mutual boom. boom trillions

29:13

dollars in assets. then the next next

29:16

as you've seen, these various exposures,

29:18

hey you can you can buy foreign

29:20

investments you couldn't you couldn't do that

29:22

before. Like, forget about trying to

29:24

go go on to Fidelity buying 100, 500 500

29:26

foreign stocks. a trade ever try to

29:28

make a trade listeners in Colombia or

29:30

Brazil these any of these places?

29:32

Like, forget about it. have even other you

29:35

have even other ideas. I about

29:37

mean, whether it's these whether it's these

29:39

ideas that are now it doesn't mean

29:41

doesn't mean everything should be available. at

29:43

least people least people can pick and choose and

29:45

the product market fit of the free market

29:47

gets to decide to decide. Yeah, and I love

29:49

that that. the listeners and

29:51

all the people following us on Twitter. Keep us

29:54

the the cause we'll launch them. One of

29:56

the them. One of the funds, I I think Why

29:58

was a listener idea that came on

30:00

Twitter or on a YouTube channel. Don't

30:02

ask. Somebody's going to ask for some

30:04

royalties, man. Oh, no, no. I know

30:06

which one it was. What's one we

30:08

have filed, so I can't talk about

30:10

it. Should we do a shark tank

30:12

episode and submit ideas and the best

30:14

one get selected and we give the

30:16

winner a basis point or something? That

30:18

sounds like a good idea. I could

30:20

do something like that. I don't have

30:22

a problem giving up a basis point

30:25

or even a scholarship for the startup

30:27

fees or something like that you get

30:29

to ring the bell. I'll let you

30:31

figure out the legal on this idea

30:33

before Elon Musk's style. We just start

30:35

giving out millions of dollars at rallies.

30:37

If we can figure out a shark

30:39

tank and launch it, that'd be fun

30:41

alongside my old monkeys throwing darts idea.

30:43

So all right, let's talk about a

30:45

few more. I mean, I could do

30:47

this all day. This is super fun

30:49

to me and I'm sure the listeners

30:51

love talking about innovation because one of

30:53

my favorite things is hearing about strategies

30:55

I've never considered. and strategies that raise

30:57

billions of dollars and I say wow

30:59

that was really cool what a great

31:01

idea like the Sharia like what a

31:03

great idea good for them they came

31:05

up with something that no one else

31:07

had really thought of and sure enough

31:10

people wanted it and so tell me

31:12

some more you guys got a hundred

31:14

plus to choose from but let's get

31:16

into a few more that listeners may

31:18

never have heard of. Let's talk about

31:20

Gotham if any of you know Joel

31:22

Greenblot or you don't know him go

31:24

find the little green book that beats

31:26

the market it is a must read

31:28

When I read it the first time,

31:30

I said, this is an ETF. That

31:32

was 20 years ago. And I started

31:34

talking with his chief compliance officer who

31:36

was a good friend of mine, Rory

31:38

Collins. And I was like, this has

31:40

to be an ETF. Let's do this

31:42

together. Well, it took me like 15

31:44

years to get him to do it.

31:46

But I was right. So he's got

31:48

two ETS G-Spi and G-V-L-U that are

31:50

long biased, and then he's got one

31:53

that's SHR-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H-H So let's talk about G-Spy

31:55

first. G-V-L-U's the one that's like the

31:57

little green. Short's a great ticker because

31:59

it also gets pronounced as chart, which

32:01

is a not safe for work. My

32:03

seven-year-old's probably favorite word today. Let's start

32:05

with G-Spy. So G-Spy is Gotham. of

32:07

the S&P. They don't say S&P because

32:09

we don't want to pay licensing fees,

32:11

but Gotham's version of the top 500.

32:13

Actually, you know what? I think we

32:15

are paying the license fee on that

32:17

one. So it was the core of

32:19

their mutual funds with these same 500

32:21

stocks. So they have a number of

32:23

mutual funds with multiple billions and assets

32:25

and the mutual funds. Keep hearing about

32:27

mutual fund conversion, mutual fund conversion, these

32:29

guys just said, let's launch an ETF

32:31

and own it in our mutual funds,

32:33

we'll have two forms of distribution, the

32:36

mutual funds will augment the returns, so

32:38

the heck with the share class stuff,

32:40

they just have two different ways of

32:42

getting the exposure. You can either have

32:44

them do it hedged for you in

32:46

multiple different ways, or you can own

32:48

the long only. All the trading within

32:50

the G spy is tax efficient, and

32:52

it's passed onto the mutual fund holders.

32:55

So that's one of those great innovations of

32:57

using the structure. Short was a mutual fund.

32:59

It had a bang up awesome 2022, but

33:01

nobody wants to buy a short mutual fund

33:04

because you're stuck with 30-day rule where you

33:06

got to buy and hold it. Things that

33:08

have a short bias are the things that

33:11

people want to trade. So we converted that

33:13

from a mutual fund to an ETF for

33:15

them. It was our first conversion. So that's

33:17

just another one of those like going through

33:20

it with a great client. I mean this

33:22

is a guy who used to run a

33:24

hedge fund that was like famous for it

33:26

like had a record setting year he's obsessed

33:29

with taxes just like I am I don't

33:31

want to pay taxes that I shouldn't have

33:33

I pay taxes all day long on something

33:35

that I've realized the gain on. including those

33:38

going but I don't want to pay taxes

33:40

on somebody else's thing. This is amazing by

33:42

the way because like I consider myself I'm

33:45

an ETF issuer we use ETFs and here

33:47

we are we're talking I sure enough I

33:49

followed Dreamblatt Gotham for forever he's been on

33:51

the show he's a podcast alum and I

33:54

knew he had a couple ETF and I

33:56

did not know about the short strategies ETF

33:58

and that is a cool It's

34:01

50 % net short by being 100 %

34:03

long, 150 % short. What a cool

34:05

strategy. I would totally use this. And

34:08

look, 500 episodes in, I've never heard

34:10

of it. Great use of time getting

34:12

to hang out with you, man. Every

34:14

seven years we learn something. That's a

34:16

fun idea. One of his original books,

34:18

listeners, let me type it because I

34:20

want to want get the name totally right.

34:23

You too can still be a stock

34:25

market genius. You can be a stock

34:27

market genius. Yeah, that is one of

34:29

the original classic

34:32

investing books about how to really place

34:34

trades. And also he's got the Value

34:36

Investing Club, which is an investment community

34:38

that you have to apply to get

34:40

into and submit ideas. As your resident

34:42

quant, I'm kind of useless because I

34:44

don't have the write -ups. And also

34:46

the reason I'm a quant is I'm

34:48

an optimist and I read every single

34:51

one of those write -ups. I think they're

34:53

all good ideas. I always told like

34:55

some zero and VIC, Vic, I don't

34:57

know what they say. They should do

34:59

a crowd source version of their picks

35:01

as well. It was like the old

35:03

marketocracy fund. Dude, does that still exist?

35:07

No. old That was like the

35:09

original crowd source mutual fund. Yeah,

35:11

we have with SoFi something

35:13

like that right now. So we

35:15

have the SoFi 50 and

35:17

it's an ETF that every month

35:19

rebalances to the top 50

35:22

names held by other SoFi investors.

35:24

So it's like invest along

35:26

your peers. And it's actually a

35:28

beautiful portfolio because it's very

35:30

barbelled, call it half and really,

35:32

really boring stuff, Ford and

35:34

GE and Berkshire Hathaway kind of

35:36

stuff. And then you got

35:38

the juice on the other side,

35:40

right? It's micro strategy and

35:42

Palantir and it's just this beautiful

35:44

like barbell of, I guess,

35:46

I don't know if it's millennials

35:48

anymore or what age group

35:50

it is, but do it yourself,

35:52

younger investors, what they're buying

35:54

for themselves. All right. listeners, since

35:56

you mentioned Buffett, I'm going

35:58

to yourself, mention three things. These

36:00

are the three most amazing I've heard

36:02

in heard in the last year

36:04

or two All three three of

36:06

these like a like a total false

36:08

false statement they're so mind amazing. The first

36:10

one first one was a quote

36:13

earlier the the ETF has at less than a

36:15

year less than a year bigger

36:17

than almost 3 ,000 ETFs that

36:19

have launched in the last

36:21

10 years The second as you

36:23

mentioned Buffett was that that. Berkshire

36:25

could decline 99% and and still

36:27

be beating the S&P since inception. Astonishing. And

36:29

the third is a fellow

36:31

card player player in puzzle master.

36:34

Most mornings, my son and I

36:36

work on a puzzle that that us,

36:38

is is time you shuffle a

36:40

deck of cards. of cards. The odds are

36:42

that that exact combination has

36:44

never been shuffled in history by

36:46

anyone before. let that sink and let

36:48

that sink in I was I was like, there's

36:50

no way that's true, but you do if

36:52

you do 52 factorial, end up with whatever it

36:54

is, 80 80 quadsilian, the number gets very gets very

36:56

large, very quick. all all three of those sink

36:59

in. I don't know which one's most impressive. All

37:01

three of them are. them are. So anyway, fact of

37:03

the day. of the day. full know what

37:05

the full circle is. The first idea

37:07

for yield max was Berkshire that's the one we

37:09

that's the one we haven't launched. You should. so

37:12

There's so little volatility that the yield

37:14

would only be like be like But that led

37:16

to, we we do it on more volatile

37:18

stocks? right? So a covered call call is just

37:20

selling the volatility and when Berkshire has

37:22

so low volatility. Or how

37:24

about Berkshire, you where you

37:26

get exposure by selling times book?

37:29

is that where 1 .2 always going that where

37:31

he says he's always gonna buy the

37:33

stock back I don't know what it

37:35

is now a a half Well, a new client of

37:37

ours of ours has just filed for So

37:39

once once that's listed, maybe there'll be

37:41

options and then I can do do a. volatility

37:44

Yeah, cool. All right, cool

37:46

some more. Well, right, so tell me

37:48

some more all the hats too. all the hats it, saw

37:50

you hat. it your hat a just got a

37:52

shipment listeners. Which one is that I can't

37:55

see see. This one's Yield Max. so we've

37:57

talked enough about yield max. Yield we

37:59

have a have a whole. over here, which

38:01

you can't really see listeners, the

38:03

only one you can see is

38:05

hodle. And up there is all

38:07

the Cambria hats, and then if

38:09

you guys send me one, we'll

38:12

throw it on the wall of

38:14

Hall of Fame. All right, which

38:16

one's this? Vets. So we just

38:18

passed Veterans Day. This is one

38:20

of my feel-good favorites, and it's

38:22

mostly home loans, but it's also

38:24

small business and student loan. So

38:26

you're actually having an impact. Like

38:28

I think ESG has had a

38:30

bad run. I think it's bad

38:33

marketing, bad story, because there's no

38:35

impact. This is actually loans that

38:37

are going to veterans. Number two,

38:39

they are more likely to pay

38:41

back, but they trade exactly the

38:43

same as loans to everybody else.

38:45

So it's a great fixed income

38:47

play. I use it for duration.

38:49

in the portfolio, you know, really

38:51

getting that deflation component in, and

38:54

they give a portion of the

38:56

profits back. It's run by a

38:58

veteran-owned broker-dealer Academy. They're in San

39:00

Diego, and then they have an

39:02

asset management arm. that launched the

39:04

vet CTF VETC. ETC. This is

39:06

a use case that I've never

39:08

understood doesn't take off more where

39:10

not speaking specific to vets, but

39:13

it's almost like not a special

39:15

interest, but targeted to a specific

39:17

community, a community that's passionate, and

39:19

this could be so many different

39:21

areas. It could, you know, weighed

39:23

into charity and downments, it could

39:25

wait into. whatever your affiliation may

39:27

be, where there is some tangible

39:29

benefit of associating. Now, the strategy

39:31

has to stand on its own

39:34

merit, of course, but in this

39:36

case, it's a unique strategy. I

39:38

don't think there's any others quite

39:40

like it, is there? No, there

39:42

isn't. That's why we got so

39:44

excited when we met them, and

39:46

we're like, wow, this one, you're

39:48

really having an impact, then. Right,

39:50

actually you need to own those

39:52

things to vote on them. I

39:55

really love what Seth and team

39:57

have done there with us and

39:59

it's getting institutional interest. It's another

40:01

one that UBS and V, you

40:03

know, the bigger platforms will call

40:05

us about. And this is VETZ,

40:07

almost 100 million. Yeah. Nice. You

40:09

know how hard it is to

40:11

get to 100 million in the

40:13

first three years. The first three

40:16

years are critical for these clients.

40:18

You get to break even in

40:20

three years or slightly above it

40:22

where you can reinvest and Like

40:24

they just rang the bell the

40:26

other day to celebrate Veterans Day

40:28

and the fund and they have

40:30

access to so many amazing information

40:32

and it's just a great partner

40:34

to have. That's a great story

40:37

and a great use case. I'm

40:39

surprised because you have some of

40:41

these communities and they're passionate and

40:43

you tap into that and it's

40:45

an obvious partnership and it's always

40:47

surprised there's not more. All right,

40:49

what else? I'm looking at the

40:51

other ones that we own in

40:53

fire, I'll put on the fire

40:56

hat for right now. So this

40:58

is another one that goes to

41:00

the three-year rule. So RISER, R-I-S-R.

41:02

So they just hit their three-year

41:04

number. Morningstar gave them the five

41:06

stars. They're the number one unconstrained

41:08

bond fund ranked by Morningstar out

41:10

there. And all of a sudden,

41:12

that three-year mark hit and the

41:14

flow started coming in. Now, there's

41:17

nothing more unique than this one

41:19

in the fixed income space that

41:21

I've seen. They own strips from

41:23

mortgage backs securities. What that means

41:25

is you're getting the dividend or

41:27

the yield from the security, but

41:29

you're getting negative duration because people

41:31

pay back mortgages when they can.

41:33

So it's got about a negative

41:35

10 duration. You can imagine how

41:38

well that's performed in the last

41:40

few years. So you take six,

41:42

seven, eight percent yield from the

41:44

strips plus that negative 10 duration.

41:46

This has been a monster and

41:48

it's now finally getting recognized because

41:50

It came up on everybody's screen

41:52

because it survived the three years.

41:54

The crazy thing in my mind

41:56

and so this traditionally will do

41:59

best in what scenario? It does

42:01

the best when interest rates are

42:03

going up. That's why it's riser.

42:05

When interest rates are going down,

42:07

you're going to take a little

42:09

bit of a hit, as long

42:11

as it's not going down super

42:13

fast, that 8% dividend offsets it.

42:15

When interest rates are flat, it

42:18

does great. So you have some

42:20

funds I put in the innovative

42:22

fund category too. Nancy Ann, what's

42:24

the other one? Cruz, K-R-U-Z. Hard

42:26

to remember even your own tickers

42:28

at this point. I was joking

42:30

before and we'll have to put

42:32

this in the show notes. One

42:34

of my single favorite social media

42:36

videos is, I have a couple

42:39

posts, like the fact that sitting

42:41

congressman can trade stocks is probably

42:43

the most universally held belief across

42:45

individual citizens as being absolutely crazy

42:47

and corrupt. Like why in God's

42:49

name should they be able to

42:51

trade stocks with their inside information?

42:53

It's nuts. And there's a video

42:55

of Dave Chappell comedian and then

42:57

it overlays it with Pelosi where

43:00

she's talked someone asked her about

43:02

trading stocks and she's like what

43:04

I can't hear you and just

43:06

like leaves the conference room. We'll

43:08

put it in the show and

43:10

like Chappell does the same thing.

43:12

It's really really funny. Talk to

43:14

us about these funds. What are

43:16

they doing? So the client here

43:18

is a company called Subversive and

43:21

they partnered with unusual whales to

43:23

partial out the data. So the

43:25

data is public disclosure. Anybody can

43:27

go get it. The problem is

43:29

it looks like gobbledook. It's not

43:31

like they're putting a lot of

43:33

effort into making this usable data.

43:35

So unusual whales helps out with

43:37

really partialing through the data. Then

43:39

that data is sent over to

43:42

title. We have also as a

43:44

service here, active portfolio manager. So

43:46

Dan Weiskoff. spends a lot of

43:48

time poking through the data to

43:50

try and find the patterns. And

43:52

patterns are things where we know

43:54

there was a committee hearing or

43:56

we know that multiple people did

43:58

it at once or like for

44:01

example no Republican reported buying Tesla

44:03

until Marjorie Taylor Green did it

44:05

the day before the election. So

44:07

like, yeah, so things like that

44:09

we look for. And then the

44:11

portfolio is essentially because they're required

44:13

to disclose this information, if they

44:15

use inside information, it's not that

44:17

they say they used it, they

44:19

just have to tell us that

44:22

they did something, right, that they

44:24

traded. And that's it. Now, some

44:26

of them have. a

44:28

broker who's just doing some direct indexing

44:30

for him. We have to weed through

44:32

that noise in the data. When we

44:34

see 300 trades and they were all

44:37

like this big five shares of something,

44:39

we know that's just a rebalance. So

44:41

it's all about getting down to the

44:43

nitty gritty of what they're actually doing.

44:45

And hopefully we capture some of that

44:48

alpha that they're legally allowed to do

44:50

and you and I as fiduciaries in

44:52

a regulated asset management firm would never

44:54

even think of doing. But if we

44:57

did, We'd go to jail. And then

44:59

even like clients, I mean, Martha Stewart

45:01

went to jail for what Nancy Pelosi

45:03

and Marjorie Taylor Green are allowed to

45:05

do legally. And if they don't report

45:08

what they did, the fine is like

45:10

$250. It's more of like, yeah. Yeah.

45:12

So when people are like, do you

45:14

think they're going to change this rule?

45:16

I was like, you know what, I

45:19

think at some point, they're going to

45:21

make the fine bigger or the timing

45:23

pre-approval or something like that, but they're

45:25

never going to change this rule. They

45:28

might make it better, which will give

45:30

us better data to make better decisions

45:32

from, but the Stock Act is not

45:34

going to go away. It likens back

45:36

to the old days. I remember there

45:39

used to be a mutual fund that

45:41

would invest based on was Congress in

45:43

or out of session. And when Congress

45:45

is out of session, it actually, I

45:47

think it was much better returns when

45:50

it's in session and you don't want

45:52

it. I can't remember. But it's a

45:54

very simple model. I haven't looked at

45:56

it in many years. conversions. So we

45:59

did a 351. I know you've been

46:01

working a lot in this space for

46:03

Rockefeller asset management. It's a big name

46:05

people recognize. Yeah. What was their concept

46:07

there? What they want to do? Is

46:10

it their own clients? Yeah, it was

46:12

their own clients and it was LPs.

46:14

So it's just structural alpha. The ETF

46:16

wrapper is a better solution for taxable

46:19

investors. We don't get to guarantee anything,

46:21

but I can guarantee that an equity

46:23

strategy managed in a mutual fund that's

46:25

very active will be better for a

46:27

taxable investor in the structure of an

46:30

ETF. That's it. It's that simple. Then

46:32

when you throw the 351 in that

46:34

you're allowed to do this without having

46:36

to realize existing gains, when you sell

46:38

the ETF in the future, you will

46:41

realize a gain, but you're able to

46:43

switch from an inefficient vehicle to an

46:45

efficient vehicle in this structure. It's just

46:47

a game changer. Now that you've done

46:50

it a few times, you have the

46:52

template there, are you starting to have

46:54

a number of conversations with advisors who

46:56

are like, oh, this is a no-brainer,

46:58

I can wrap up all these client

47:01

accounts or these private funds or mutual

47:03

funds into an ETF? Is that a

47:05

sort of increasing, is that going to

47:07

be a 2025 dam-breaking sort of concept?

47:09

Are these mutual funds really start moving

47:12

in mass? Or how does this look

47:14

to you? I don't know yet, I

47:16

don't know if you and I have

47:18

hit the jackpot with these, or it's

47:21

going to be a couple more years.

47:23

And the reason I say I don't

47:25

know is, although the clients are starting

47:27

to understand it and want to do

47:29

it, there's a whole bunch of other

47:32

roadblocks. So it depends on which custodian

47:34

they're using. So if I'm an RIA

47:36

and I'm using Schwab, I don't know.

47:38

You and I talked about this when

47:40

we were in Chicago. I've gotten to

47:43

the altar on 351s like 10 12

47:45

times and we've just finished two of

47:47

them. Right. And it's because. Well, it's

47:49

a lot of work. That's why. Yeah,

47:52

it's a lot of work. It's a

47:54

lot of work. And there's all these

47:56

other people with their hands. cookie jar

47:58

that don't have an incentive to help

48:00

you get this done. It's the custodian

48:03

that the assets are leaving or the

48:05

lawyers from the other place. It's the

48:07

same with mutual fund conversions. If you

48:09

and I could do a show where

48:11

we just kind of talk about a

48:14

lot of the maligned incentives of the

48:16

traditional asset management world in the amount

48:18

of people that middlemen who have these

48:20

crazy fees where in Gates. Sometimes people

48:23

say things out loud where my response

48:25

is, did you just really say that

48:27

out loud? Like we had one this

48:29

year in the last couple months. It

48:31

was a big zoom call and the

48:34

person goes, I'm just confused. How are

48:36

we going to get paid on this?

48:38

And I was like, what do you

48:40

mean? Like, do you want me to

48:42

send you a Bitcoin drive? Like, what

48:45

are you talking about? This is... extremely

48:47

shady that you just even requested this.

48:49

It's very bizarre. They're so used like

48:51

the mutual fund historical model has been

48:54

one where everyone takes a fat cut,

48:56

which is why on average the average

48:58

fee is 125, right? It's because Schwab

49:00

marketplace takes a fee, person who sells

49:02

the fund, advisor on and on. It's

49:05

just a million fees and ETFs exchange

49:07

traded. So you got Bangard. It's a

49:09

crazy world. The good news is. That's

49:11

why we're seeing it. internet disinfectant. So

49:14

if I'm a mutual fund manager charging

49:16

100 bips, we'll say 125, I can

49:18

launch an ETF at 60 and basically

49:20

make the same amount of money, not

49:22

because the ETF is that much cheaper

49:25

to run. It's because there's not all

49:27

the other hands in the cookie jar.

49:29

There's not these 12 B1 fees and

49:31

and it seems like the platforms are

49:33

trying to find ways to extract from

49:36

the ETF issuers now, but it's certainly

49:38

not at the same. level that the

49:40

12b1 fees were. When I was at

49:42

Horizon Kinetics, we had mutual funds and

49:45

we still work with Guyad on the

49:47

ATAC mutual fund. Some of these fees

49:49

are 38 basis points. Some of them

49:51

are more than the fund makes. because

49:53

when you're below a certain level, let's

49:56

say you're at 75 million, but these

49:58

platforms have minimum fees, which could be

50:00

more than the overall expense ratio. So

50:02

then you have to decide, do I

50:04

stay on this platform? Or do I

50:07

give up? And then how do you

50:09

get more assets into a mutual fund?

50:11

Mutual funds are not available where new

50:13

people are buying stuff. You can't buy

50:16

mutual funds at public. You can't buy

50:18

them at SOFA. You can't buy them

50:20

at M1 Finance. There's no mutual funds

50:22

at Robin Hood. The new investors are

50:24

not going to buy mutual funds. Mutual

50:27

funds are going to live on forever

50:29

in 401k. Yeah. Which is why the

50:31

assets have maintained, as long as you

50:33

have bull market, the problem is bear

50:35

market, when people sell, they don't go

50:38

back to the traditional legacy. That's when

50:40

it gets cleaned out. So you've had

50:42

this tailwind of assets going up, but

50:44

you've also had the headwind of investors

50:47

redeeming, but it really doesn't matter until

50:49

you have the bear market, right? Because

50:51

then you get the redemption's come. I

50:53

wrote a paper, I think, in 2015,

50:55

because I was one of those downturns.

50:58

that six months after every 10% decline,

51:00

ETFs gain assets. And then Bloomberg, Vidalia

51:02

Hyjek, took that chart and she wrote

51:04

her version of it too, but she

51:06

redid the study and Bloomberg's able to

51:09

get a little more data than I

51:11

can. Well, I guess I can afford

51:13

data now. Every time there's a disruption

51:15

and people pull out of the market,

51:18

when they come back in, they go

51:20

into ETFs, not into mutual funds. It's

51:22

just black and white. And so like,

51:24

even in our own business, when we're

51:26

doing like sensitivity sensitivity analysis, like sensitivity

51:29

analysis, like sensitivity analysis, Down turns aren't

51:31

so bad for us. In fact, I've

51:33

seen it with the yield max stuff.

51:35

We get more redemptions when we go

51:37

up too much. And when we're down,

51:40

they all want to buy the dip.

51:42

I don't get to tell them when

51:44

to buy or whatever. I just have

51:46

to make sure that we're managing the

51:49

portfolio as best as we possibly can

51:51

for them. It's kind of like we

51:53

did last time as we look out

51:55

to the future, any other thoughts that

51:57

we haven't covered today about the ETFs.

52:00

we're like, oh man, somebody's got to

52:03

launch X, any predictions about what's going

52:05

on in our world, what are your

52:07

thoughts as we wind down this year,

52:10

other than Bitcoin a million. All right,

52:12

so first off, ETF is the most

52:14

tax efficient vehicle. I do think that

52:17

there's going to be more iterations and

52:19

innovation there in tax. I think what

52:21

West did with Box is amazing. I

52:23

think what West did with Box is

52:26

amazing. There's a lot of things that

52:28

I think can be done to improve

52:30

the outcome. And it's not about avoiding

52:33

tax. It's avoiding taxes on somebody else's

52:35

bad behavior. That I think is the

52:37

key. I think every derivative trade strategy

52:40

that you can imagine that's been ever

52:42

done and packaged up and sold it

52:44

3% at some bank is going to

52:47

be in an ETF of some sort

52:49

in the next five years. Every RIA

52:51

out there, I know many of you

52:54

are listeners, gets a call from JP

52:56

Morgan's rep who says, I've got Tesla

52:58

upside of X with a downside of

53:00

Y and you get this guarantee yield

53:03

and da-da-da-da-da-da. So like the traditional structured

53:05

product world? Structured products are all going

53:07

into ETS and it's all going to

53:10

be on whatever the hottest stock is

53:12

at that time, and it's going to

53:14

rotate. They're going to rotate from Tesla

53:17

to I think you'll see every one

53:19

of those. I think you can open

53:21

up a CFA handbook and see I

53:24

think there's over 30 option strategies. Iron

53:26

condors and this thing and that thing

53:28

and almost every one of them will

53:31

be done on the S&P and then

53:33

done on the QQ and then done

53:35

on the Russell and then eventually done

53:37

on single stocks and then eventually done

53:40

on baskets. Cryptostocks. If our friends

53:42

have simplified not done that already, I feel

53:44

like they've done a bunch. There's a lot

53:46

of people out there innovating, granite chairs, wrecks,

53:48

round hill, many of our clients that are

53:50

finding ways. The problem is you don't know

53:52

which one is going to hit because you

53:54

don't know which one is going to get

53:56

the zeitgeist. So you can't just launch 30

53:58

of these and wait for one to hit

54:00

because the others look bad to the idea.

54:02

So you have to iterate and you have

54:04

to work with the clients to get out

54:06

the ideas that are in the zeitgeist now.

54:08

Distribution is going to completely change. It's why

54:10

we're trying this fire thing and committing to

54:12

it. It's going to change because one hand

54:15

is being disintermediated. I don't really think the

54:17

focus is always going to be on advisors.

54:19

Again, it's why I'm wearing the fire hat

54:21

today. I want to talk to the new

54:23

people who are buying this stuff because the

54:25

advisors care more about statement risk than doing

54:27

something. So I've been pissing off some advisors

54:29

lately, but that's okay. We have product for

54:31

them and then we have product that we

54:33

can build for people to build their own

54:35

things from. So those are three decent ones.

54:37

I think I'm going to be right again

54:39

seven years from now though. The growth is

54:41

not going to stop. Right, the ETF juggernaut

54:43

is there. I mean, the mutual fund industry,

54:45

it's one of two things. Either it's someone

54:47

who's older or not even older, they're just

54:49

like, look, I'm just going to ride this

54:51

five, ten years, I'm retiring soon, or it's

54:53

too much work to convert it. We're just

54:55

going to hang out. We'll clip our checks.

54:57

The people that own this have either forgotten

54:59

about it, they've died, or like somebody else

55:01

has it, or they're stuck. and they can't

55:03

sell it because they have huge capital gains,

55:05

or it's sitting in a 401k, they just

55:07

forgotten about it. And we're just gonna go

55:09

full ostracile. There are the ones that will

55:11

convert, and there's so many use cases where

55:13

I look at some of these, and you

55:16

know, I'm saying, man, they're getting outflows, they're

55:18

having to pay these distributions, they should convert

55:20

and just be done with it, but. It's

55:22

all those hands on the way out, man,

55:24

like when somebody comes to us, we talked

55:26

to a mutual fund conversion, Did you pay

55:28

for the assets? If you did, when you

55:30

convert, you're going to lose most of those

55:32

assets because you're going to get kicked off

55:34

the platform. two, did people directly subscribe for

55:36

your ETF? If you did, when you convert

55:38

to an ETF, there's no brokerage account that

55:40

they hold it in. They were a direct

55:42

shareholder. So in order to convert a mutual

55:44

fund to an ETF, you have to get

55:46

rid of all direct shareholders. How do they

55:48

get rid of them? You have to figure

55:50

out how to get to them and ask

55:52

them to move it to a brokerage house

55:54

so it can convert. or you have to

55:56

find a way to liquidate them and send

55:58

them the check, like it is messy. So

56:00

a lot of these like really old school

56:02

ones, it's really difficult for them to convert.

56:04

Next, are you converting from one custodian to

56:06

another? If you are, that one, you're leaving,

56:08

has no incentive to make that easy. So

56:10

if it's a custodian that mainly deals with

56:12

mutual funds and doesn't deal with ETFs, the

56:14

odds that you're going to get to convert

56:16

easily. are very very low. They're going to

56:19

extract legal fees and headaches and all that

56:21

sort of stuff. So I'm a big proponent

56:23

of do more creative things. Madison, big mutual

56:25

fund group that's a client of ours. We

56:27

help them launch their own trust, right? So

56:29

like, there's not a one-size-fits-all solution at title,

56:31

right? We figure out what works for them.

56:33

So we help them launch their own trust

56:35

that we administer and we put the trading.

56:37

to launch iterations of the things that they

56:39

were good at in mutual funds as ETFs.

56:41

Gotham we already talked about, like there's ways

56:43

to unlock the money that's stuck in the

56:45

mutual funds without having to pay a bunch

56:47

of the old guard to get it out.

56:49

Well, I mean, the rest of the world

56:51

is years behind the US on fees and

56:53

a lot of these ideas for title. What's

56:55

y'all's vision for the next three, five years?

56:57

You and Gee always coming up with a

56:59

lot of ideas. Is it sort of just

57:01

head down execute? I mean, 26 billion, man.

57:03

My goodness. How many folks are on the

57:05

team? And as you look out of the

57:07

future, what do you see for you guys?

57:09

So we're 80 people now. put our operations

57:11

in Milwaukee, we're going to scale those up.

57:13

I think that the next five years, we're

57:15

like, what's your business continuity plan? We're like,

57:17

we're already doing it. With 12 years, we've

57:20

been kind of using Zoom while we used

57:22

to go to meeting back then. We consolidated

57:24

our trading desk in Chicago because we needed

57:26

more of a talent pool to bring more

57:28

people in. We put our operations in Milwaukee,

57:30

we're going to scale those up. I think

57:32

that the next five years, you know, even

57:34

though we're an ETF platform, we have a

57:36

product development team to help our clients build

57:38

the next thing. There's no shortage of good

57:40

ideas. There are no shortage of bad ideas

57:42

either. So I love that we can take

57:44

that crumb of an idea and turn it

57:46

into something spectacular. So I think that's a

57:48

big focus for title right now is infrastructure,

57:50

infrastructure, and then innovate. And the innovate really

57:52

comes from Gavin and Aga and our product

57:54

development team working with the Biz Dev team

57:56

to take ideas to the next level. I

57:58

love that part of the business. Title, when

58:00

we started it, it was called Taroso, but

58:02

we consolidated it under this title name. We've

58:04

kept our motto all the way through and

58:06

Guy and I say this on every on-site

58:08

with the team and every town hall, we

58:10

do zoom town halls every month with the

58:12

whole team and it's always bigger. At this

58:14

point, I can't get everybody on one screen.

58:16

We start with this. We're doing this. for

58:18

financial and creative freedom for our clients and

58:21

our stakeholders. Our stakeholders are us and our

58:23

families and everything. I love that for 12

58:25

years that's been our mantra and now I'm

58:27

doing this fire thing that actually links back

58:29

to all that and I'm doing this fire

58:31

thing using portfolios that I built with the

58:33

idea of saving money and distributing money which

58:35

is the whole concept. So it's amazing to

58:37

me how full circle everything can come. And

58:39

now we just have to launch the ETF

58:41

industry, ETF again. really bring

58:43

it full circle in

58:45

permanent portfolio. Well, I'm

58:47

getting the duperm through

58:49

fire. Yeah, good point.

58:51

point. TTF, if I

58:53

brought it back, I

58:55

think I would do

58:57

it active. And I

58:59

do think it's probably

59:01

more powerful in the

59:03

private space. Yeah, absolutely.

59:05

You're not going to

59:07

get the tailwinds of

59:09

growth with the Death

59:11

Star Black Rock and

59:13

some of the companies

59:15

that are 100 billion

59:17

plus. Like, you need

59:19

the little guys that

59:22

are doing all the

59:24

disruption and fun stuff.

59:26

The index is still

59:28

alive and it's been

59:30

annualizing at around 16%.

59:32

The industry itself, though,

59:34

has been growing closer

59:36

to 20, 21%. So

59:38

the public market is

59:40

not reflecting the true

59:42

growth that the private

59:44

market is feeling. But

59:46

I guess that's probably

59:48

pretty common, right? I

59:50

think the IPO window

59:52

is about to smash

59:54

open for the next

59:56

six, eight months. That'd

59:58

be my prediction. There's

1:00:00

so many private companies

1:00:02

that are in the

1:00:04

queue that just have

1:00:06

been waiting. But again,

1:00:08

who knows? Of the

1:00:10

predictions, I many have low

1:00:12

confidence. That's one of

1:00:14

them. I don't think

1:00:16

we're going to see

1:00:18

too many ETF companies

1:00:20

go public, though. It's

1:00:22

rare for asset managers

1:00:25

to go public. Also,

1:00:27

it seems like everything

1:00:29

about my worst nightmare

1:00:31

wrapped into one. But

1:00:33

if you get big

1:00:35

enough, you're a $200

1:00:37

billion company. Like, some

1:00:39

of these are. You

1:00:41

kind of have to

1:00:43

at some point. I

1:00:45

don't know. Maybe you

1:00:47

don't. I think we've

1:00:49

exhausted every topic, my

1:00:51

man. So the listeners

1:00:53

want to launch a

1:00:55

fund. They want to

1:00:57

allocate. They want to

1:00:59

brainstorm with you about

1:01:01

all sorts of crazy

1:01:03

ideas. What is the

1:01:05

best way to get

1:01:07

in touch with you

1:01:09

and your team? Yeah,

1:01:11

want so you go

1:01:13

to titlefg.com. There's this

1:01:15

beautiful little button on

1:01:17

there that says, build

1:01:19

an ETF. Click it,

1:01:21

answer a few questions.

1:01:23

Somebody's going to call

1:01:26

you that day. And

1:01:28

that's going to start

1:01:30

the conversation. And we're

1:01:32

going to work with

1:01:34

you to find the

1:01:36

best way to bring

1:01:38

your idea to market.

1:01:40

It's that simple. For

1:01:42

FIRE, we're at fire -etfs.com.

1:01:44

I want to hear

1:01:46

from the FIRE community,

1:01:48

even if you want

1:01:50

to yell at me

1:01:52

and say, you don't

1:01:54

like it. I'm hoping

1:01:56

you like it. Help

1:01:58

me. make it better,

1:02:00

help me engage. So that's

1:02:02

super That's super important to

1:02:04

us. We know know. future of wealth the

1:02:06

future of wealth management looks like.

1:02:08

I think it's more personal. It's

1:02:11

a community, not some guy putting you

1:02:13

into a Monte simulator. Who has the fire Who

1:02:15

has the think it's a I think it's a

1:02:17

public company. a public company It's

1:02:19

some small cap. There you go. you go.

1:02:21

Wait go to go out of business. Mike,

1:02:23

it's it's been a blast. Again, this let's

1:02:25

do this monthly. of every Cheers.

1:02:28

Thanks so much for joining us today. Hey,

1:02:30

Meb. Always great to speak with you, my friend. You

1:02:34

Podcast listeners post show notes to

1:02:36

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