And welcome everyone to another Smart Money Circle episode. I'm Adam Sarhan. With me today is Octe Kavrak, who's the Director of Communications and Strategy at Leverage shares with approximately 2 billion in AUM. Octe, thank you so much for taking the time and welcome to the Smart Money Circle. Thanks a lot for the invite Adam, really happy to be here. So Octe, I always like to begin, can you please tell us a little about your story and how you got to where you are today? Yeah, sure.
Absolutely. So actually leveraged shares was my first, let's say, foray to the ETF space, right. So I studied finance in college. My first job outside of university was, you know, working for IBM. So I was working within their corporate finance department. I spent about a year and a half there. So it was a lot of stuff regarding like, you know,
financial statements. And, you know, I realized at some point that that part of, you know, the entire finance industry isn't very interesting for me. So I mean, I got, you know, exposure to a lot of different, a lot of different, you know, things that you can do within the company. And then you with huge corporations like that, you almost realize that it's almost little entities or smaller versions of that entire giant in different countries and different geographies.
So after I spent some time at IBMI, realized that maybe, you know, I should try something else. And then I went into sort of the brokerage business. So I joined a company called the Jiro, which is one of the biggest pan European brokers in Europe. And I joined that firm when they were still, I would say at the startup stage. So it was about, let's say 50 people at the time. They were just getting started.
I don't even think they had like a proper like business plan in place in terms of where they, you know, found their niche or where they wanted to be within a few years. But, you know, Fast forward a few years, you know, it caught on like wildfire and they were taking on clients left and
right. And it turned out the brokerage business, especially in Europe was really interesting because if you're, let's say, a retail investor right in the US, you're very accustomed to things like, you know, fractional trading or being able to open up a brokerage camp for just a few dollars. And in Europe, that wasn't the case. I would say for, you know, probably up until five years ago, you know, you had to have at least 10K to open up like a brokerage account.
There was like just a lot of hoops you had to go through to, to make an account. So these types of neo brokers sort of started proliferating, I would say all across Europe probably about five years ago. And then it really took off after COVID. And I, I basically saw that entire growth phase and I saw how more and more retail investors, you know, on this side of the continent, we're getting more involved in active of trading. And yeah, ultimately the company made an exit.
They were brought out, they were bought out by a, a German firm. And after that I joined a bank, which was an Italian bank, so unit credit. So it's like going from a big corporation to a startup and then going back to a big corporation. And then at the bank, that's where I got my ultimate confirmation that, you know, I'm not a big fan of like the big corporate sort of environment. I like, you know, helping build things. I like, you know, being able to do multiple tasks.
I'm, I'm not the kind of person that's, you know, keen on doing the same thing every single day and being like a specialist just in one thing. And during my time at the bank, I, you know, I was contacted by who's now the CEO of the company. And, you know, I saw a job ad for an up and coming ETF company at the time. They just had a few employees. They just had a few, you know, products already listed on the London Stock Exchange.
I wasn't really, you know, familiar with the entire ETF space, especially in Europe. So I was like, OK, this sounds pretty interesting. Had a few conversations, had a conversation with the CEO and and yeah, I guess the rest is history. Wow, what a great story. I love that. So I love also the fact that you knew what worked for you and you also learned what didn't work for you. So you did more of what works and less of what didn't. That's a great way of of getting
there. Yeah, I mean, I guess it took a second try at a big corporation to sort of confirm the fact that, you know, it's not the right environment for me. But ultimately, I think I, I know the kind of environment that I want to work in that's, you know, so important for anybody, you know, that's willing to progress in their careers within a certain firm because, you know, certain perks and certain items are nice to have us.
But if you don't ultimately enjoy where you work and what you're doing, then all else you know at some point becomes pointless. Yeah, I couldn't agree with you more. All right, let's talk about leverage shares. Please tell us about your business, what you do and some of your competitive advantages. So leveraged shares is best known for a concept called leveraged ETFs. So leveraged ETFs basically multiply whatever a normal ETF does by a factor of two or
three, right? So, you know these have existed for the better part of two decades in the US, let's say the NASDAQ 100 goes up 1%. The leveraged version of that would go up either 2 or 3%. So we took that concept and applied it to single stocks, which had never been done before, right? So we're the first company globally to launch what's called single stock leveraged ETFs.
So when you think about a product like 3 times Tesla or inverse 2 times NVIDIA, this concept basically started out in Europe. You know, we were the first company to to do this. And we initially started out with about 8 products, I believe. And they were on relatively, I would say stable companies, but you know, not so volatile names. So think of names like Walmart and McDonald's. And I would say initially it was a very slow burn, right? So the uptake was quite slow.
People didn't know how the products work. There's alternative versions of, you know, trading with leverage in Europe. So a lot of people thought that there wasn't really a need for these kinds of products. But ultimately, you know, as as time went on, people started to realize that it's really an effective way to get a certain type of exposure if you understand how the products work. And, and we've been building the business since then. So we started out with eight
products listed on one exchange. Fast forward six years, we have over 180 products listed on the biggest exchanges in Europe. We currently have the most traded ETF on the London Stock Exchange, which is triple leveraged Tesla. And honestly, I'm sure nobody could have foreseen this like 5 or 6 years ago when people were, you know, calling these products, you know, pointless or, you know, they, they thought there was no need or no niche for such products in the market.
So it's it's been a ride. I love that, I love the vision too and being able to see something and test it and if it works, great. And like you said, you never know how high or how strong it can be. So let's talk about attic and income. I know you do some other things as well. If you don't mind, please share all that. Yes. So we have AI would say pretty strong pedigree in terms of ETF background. So the CEO and the owner of the company is José González.
So he is no stranger to the ETF game. He was one of the Co founders of a big thematic ETF issuer called Global X. So that was ultimately sold to a Korean asset manager and leverage shares was, you know, along with the Co founders, Dobermar Kumborov and and Tracy Grant. This is basically their first
European venture. So we started out with the leverage products and you know, over time we realized that we sort of, you know, we've we've specialized in being able to launch a lot of products and we have a lot of flexibility in terms of what kind of products we can bring to market and the speed at which we can bring them to market. So after the leveraged products, we introduced income options ETFs in Europe, which was also first for the continent.
And then we introduced a white label offering, meaning we would launch exchange traded products for other asset managers that didn't want to go through the the hassle of launching their own entire ETF business. So in Europe, those are, I would say the core businesses that we're focused on. And then in the US just a few years ago, we have a sister company that launched a bunch of thematic ETFs.
So, you know, if you think of anything from cybersecurity to generative AI, it has I think one of the widest ranges of thematic ETF offerings. And the differentiator there is the management fee, which for a lot of the different, you know, themes or categories, it's the lowest management fee in the category for many of them. And we also, you know, just a year ago, we started launching 2X leverage single stock ETFs as
well. And you know, I'm really happy to say that that a few of them have really caught on quite well. And with such launches, you know, you do need a bit of luck, right? So with the certain decline of stock prices of certain stocks like UNH, especially as of late, I know there's been a lot of chatter on Twitter. And as soon as we launched it, the uptake was like nothing we've seen before.
I mean, I think it got to 100 million in AUM in something like under 2 weeks, which, you know, for us was unprecedented. It's a proven concept. So at this point, we know what we're good at. We know what people know what's best for. So ultimately, we're just going to keep addressing that demand in the market. And you know, I think there's no better signal of demand than people voting with their money or them investing into your
products. And we've only seen, you know, that those investments go in One Direction that's up over the last few years. And that's been really promising to see because I can tell you the first few years were not very pretty. And it's only, it's only, you know, taken off probably the last few years. So it's really satisfying to finally hit that inflection point and and see the business really grow. I love that. So let's talk about risk management out there. What are some lessons you've
learned about risk management? How do you handle risk? And anything you want to share about risk management, please? So risk management from an ETF issuer's perspective is even more important when you're involved in the kind of business that we have, which is leveraged ETFs, right? Because the more exposure you offer to the end investor, the more careful you have to be on your side to make sure that the
product is functioning properly. So there's a few perks with leveraged ETFs, which is this thing called daily rebalancing. So basically, if the stock goes up, you have to rebalance by buying or getting more exposure to the underlying instrument and vice versa. So what that means is that if, let's say the underlying were to drop by a large amount, then you would, you know, ultimately be on the hook if the ETF were to lose, you know, let's say it's full value.
Because in theory that is possible, right? So as a company, we have to make sure that we have the proper risk management measures in place that if something were to happen, you know, we have the proper, you know, sort of procedures to start taking action as soon as possible to do what's called an intraday rebalance just to try to ensure that the product doesn't go below 0. Or, you know, investors, obviously with an ETF, they can't lose more than they're invested.
But at the issuer level, we also have to really have to have the proper precautions in place to make sure that that we do everything we can to curtail or minimize risks when an asset might drop drastically or have like a big gap down with some of these products. So risk is it's not part of what we do. It's a major part of what we do,
right. And the, the good thing about, you know, controlling risk, especially with regulated products like ETF's and ET PS is that you have a lot of counterparties that you have to please. So nobody's going to allow you to do like a 5X levered version of GameStop or something like that because the risk is just too high, right? So the exchange will probably have issues with it. The market makers, they won't want to price it there, They won't want to take on that risk.
So there's, there's a lot of checks and balances within the industry itself that you know, make sure that, you know, we're, we're doing everything to make sure that the end investor is, is safe with their investments ultimately. Yeah, I love that. That's really, really powerful because like you said, 2X3X all of a sudden now leverage could work, you know, for you or against you. So it's really important to to respond.
Exactly. So in the US that the latest regulations say that you can only go up to 2X in terms of leverage DTF offerings. But in Europe you know we can do all the way up to 5X and we do have a few 5X leverage ETFs or ET PS. So we have 5X NASDAQ for example, we have 5X Magnificent 7 exchange traded products. So it's it gets pretty wild on on on this side of the pond. I definitely could imagine. All right, let's talk about some
timeless lessons. What are some timeless lessons you've learned along the way that you'd like to share with the audience? I. Mean you pick a category and then I can share a lesson around it. But I guess if, if we're talking about maybe, I guess this applies to both my personal life and, and my profession is probably just adaptability or just being able to just adapt to different things, different
environments, right? Because just to give you an example, you know, I remember of just a few years ago, programming and coding, that was all the rage, right? People were saying, if you get a job in programming, then it's it's future proof. And then you're going to be set for the rest of your life and things like that.
And all of a sudden you have major CE OS like like CEO of NVIDIA and AMD coming out and saying that, you know, it's not that important to be able to program anymore because you can put a lot of that legwork to, to AI. You know, ChatGPT can do a lot of it on its own. And obviously it has a bunch of alternatives out there. So if I were to, you know, hone down on one key message that has really helped me over the years is, is being able to adapt.
Because if I've learned one thing over my career and life is that the only constant is a really is change, right? So even for me on a personal level, five years ago, I never thought I'd be where I am right now. Five years from now I probably, you know, will be very surprised to see where I ended up because it could be in a different industry, could be in a different position, it could be a different content, who knows? Absolutely love it.
Yeah, it's evolved, you know, evolution, it's change. It's adaptability. Absolutely love what you're saying. All right, let's talk about the other side of that. What are some timeless mistakes either you've made, you've seen people make, and how do you learn from them so you don't keep repeating them? Yeah, I think mistakes are also equally important, right?
So because sometimes the best lesson is to make a mistake and to learn from it, because people can give us advice and, you know, tell us like the know hows or the best or the best practices all day long. But until you live through it yourself or until you make that mistake or until you put in that losing trade, you know, until you experience it first hand and have that feeling of regret, you never truly understand, you know, how to how to properly learn from from mistakes.
But I would say probably my biggest mistake over the years probably has been related to, to, to not, you know, to not really go for it, you know, to, to be a little bit more conservative, right? So this could be, you know, it could be with, with your relationship with your, with your wife, with your partner. It could be picking a certain university, it could be quitting your job and trying to start your own business. And it could be a lot of things.
And, you know, if I do have one regret, it would just be not taking sort of that bigger leap earlier on in my career and just playing it safe for for quite some time Before, I would say I was a little bit more aggressive in terms of the decisions I made. But but yeah, those, those are the decisions that I that I learned from because ultimately, you realize that, you know, we all have a very limited amount
of time on this planet. It's like at the end of the day, it's like whatever you achieve, it's going to be for yourself. And at the end, if there's somebody that's going to, you know, live through the most amount of regrets, going to be you if you don't actually go for it. Yeah, I couldn't agree with you more. That is so, so powerful. All right, let's talk about leadership. What makes a great leader?
What are some lessons you've learned about leadership that you'd like to share with the audience the best? Leaders that I've worked with are are the people that sort of empower others around them and give them responsibilities, even if they don't necessarily believe that those people are ready for it, right? I've never been keen on working with people that just tell you what to do or they think they
know it all. You know, I've worked with, you know, a bunch of, you know, very high net worth, let's say individuals across my various careers and bosses. And one of the key differences that I've seen is that there, there are a lot of personalities out there, right? Some people can be, you know, jerks.
Another person could have the exact same background, could be a really good guy and all of a sudden it's very easy and very, you know, there's no effort in getting along with one of them, whereas with the other, you can't even be in the same room
with them. So I think leadership is all about, you know, putting other people 1st and helping, you know, push them forward or moving forward together, rather than, you know, putting yourself on the highest pedestal, you know, as possible and, and just trying to tell or prove to other people how good you are, how, how great you are, what you do. Yeah, I love that. That is really, really, really
great piece of advice. So it's, it's, it's empowering the other folks instead of trying to push them down. If I hear. Absolutely, absolutely, absolutely. I mean, especially nowadays everybody seems to have, you know, sort of their own platform and everybody likes expressing their views, right.
And then ultimately, we really do have to, I think, give more credit to the people out there who actually do a really good job of, of, you know, empowering a lot, a lot of people around them or, or many people that they might know or they might not directly know, rather than those that would do anything possible to just, you know, to just amplify their own voice. So I think that's very important. Love that. OK, next question for you is adversity. How do you handle adversity?
What are some obstacles you had to overcome? Anything you want to speak about that subject please? So I think adversity is adversity builds character. So adversity is, is something we all go through and I think for good reasons, like that's, that's what that's what builds, that's what builds courage. That's what you know, we have to know, we have to know adversity. We have to know fear. We have to have gone through certain experiences to be able to appreciate the good and avoid the bad.
So the way I deal with adversity is, is head on, right? I would, I would say the one quality that still holds me back from time to time is procrastination. So I do like to leave the things that I don't want to do right away. I just, I'm, I keep kicking the
can down the road sometimes. But what I've realized is that the earlier you address it, the earlier if you face the truth, the better off you'll be. You know, whether it's good news, bad news, whatever, knowing early on is a lot better than, you know, just expecting or fearing the worst. That's that's something I'm 100% convinced of. I love it. OK, beautiful. Final question for you today Octe, is what is the best piece of advice you'd like to give the audience or your 20 year old
self? My 20 year old self, that is a good question because what I would, what I would say to anyone you know younger than me or you know, even in their 20s, is that don't put too much pressure on yourself to to know it all or to try to know it all within a short span of time because things always change, right? Don't try to pick the perfect university. Don't try to pick the perfect job and try to pick the perfect career because you will evolve, evolve as a person, you will
change. You're going to go through adversity, you might get divorced, you might get fired. And all of those are going to build your character and they're going to lead to certain decisions. And ultimately, you might end up in a different place than what you initially expected expected, but that different place might make you happier than you might have otherwise been. So a lot of things, I would say, most things in our lives are out
of our control. So as long as you're disciplined, as long as you're you know kind to others and you do what you know is right, then ultimately you should be OK. So don't stress too much. I love it. Well, Akhte, thank you so much for coming on the show, for sharing some timeless lessons with us. Congrats on all your success and hopefully we'll have you on again soon. I would love to Adam, thank you very much for having me on It's, it's been a pleasure.