Wellco Natrolius.
I'm Joel Webber and I'm Eric belchernas Eric.
There is a company that I have been really fascinated in because of the suite of products they have. This is Granite Shares, and the thing that I've been looking at this year is like Nvidia mostly just goes up, up, up up, and Granite Shares as this ETF that is a two x in Vidia, which basically is like, not only is it a rocket ship, it's like a bigger rocket ship. And I'm really curious about who's behind all this.
Yeah. I refer to this broader category as hot sauce because a lot of portfolios in the middle of the portfolio it's pretty dull. You buy and hold some low cost beta vanilla index funds and you have to wait thirty five years. So people like to have a little fun on the outside speculate, and so single stock ETFs are one of many varieties of hot sauce, and they're taking off. The assets in these have doubled this year.
We're only halfway through and they've already doubled. Probably the big hit is NVDL, which is the Granite SHARE's two x long Navidia, which now has Joel four billion dollars in assets. That is big time money right there. And there's a you know, a lot of this is them trial and error that they launch different stocks and some take off, some don't. So not all these are a hit, but there's been a couple of breakouts that I think have shown people, hey, this is a category that is
here to stay, and it's an interesting one. I think for people on the outsets somethings they scratch their heads like who needs that? But the people have spoken. There's definitely an audience for this.
Joining us on this episode, Will Rhynd, CEO and founder of Granite Shares also worth mentioning. This episode was recorded on June twenty fourth, as Nvidia had kind of a down day, this time on trillions x single stock etf Well, welcome with jillions, Thank you. How is going to start gambling?
Well, I think that, you know, with anything that's leveraged, there's an element clearly of speculation depending on who's using it. But underneath the leverage you're talking about real companies, and in the case of Nvidia, you know, this has become the most important stock in the market. You know, overtook Apple and Microsoft very recently to become the world's most valuable company. So, on the one hand, leverage is probably the oldest concept that we have in finance, you know,
borrowing money to obtain more notional exposure. But this is done in a very sort of modern way by putting it in the ETF rapper, giving people institutionally priced you know, leverage. But with the access, the ease of access, the efficiency of the ETF rapper.
How do you think Jack Bogel would feel about what you offer.
I'm not sure he would be the biggest fan. But it's funny because well, I know if you're about to say this, Eric, but one of his big things from day one was he was bearish or he did not like ETF's period because of people's ability to trade them. And it's precisely that that this group of customers are our group of customers. It's precisely that element that they love. So it's you know, very perhaps contradictory or different to the buy and hold crowd. It's not something that they
subscribe to. But there's a massive now amount of people and increasingly so that want to be self directed, who are self directed and you know, want to trade.
Is there anything that Will make that is not rated R or red light.
Sure they have like a gold ETF for example, that would be greenlight, okay to be honest. So I think some of the more recent ETFs that Will has put out have been these sort of more red light ETFs. But back to Bogel, I mean he had problems with like seventy percent of woo Vanguard offered. I mean, he
was pretty brutal to everybody. But I think one of the things I try to explain to people about these is when I show my pie chart of like a modern portfolio eighty five percent cheap beta boring weight thirty five years and then like ten to fifteen percent hot sauce, is that the hot sauce can actually have a behavioral purpose to it if it keeps you from touching the eighty five percent, Right, So, because compounding returns or where it's at, that is the magic that we're all here for,
but you can't touch it. So to give your idle hands something to do and speculate, sometimes you win, sometimes you lose. If that distracts you, that's a behavioral hack to me in a way. So I do think you could argue there's actually a bogulian purpose. He would say, well, why do you need to do that? But people are human, they like to speculate thematic ETFs I put in this category. Arc is a great example, So I'm fine with it. And I think you know, you can gamble on sports,
you can gamble. Stock investing is kind of gambling, So I'm fine with it. I think it's you know, these things have a small percentage of the assets too. If they took over, it'd.
Be kind of weird.
But you have like your own little niche and you are in what is very valuable these days, which is a VFZ, a Vanguard free zone, so he never has to worry about Vanguard coming in like ruining life in that category. So that's got to be nice, right.
Well, I mean it's something, as you know, an independent issuer that clearly you need to be able to provide products that frankly the larger companies like Bangard don't because when you're an independent it's the sort of boutique argument versus the big box store. So if you're trying to be a big box store but on a boutique budget, it's not going to work. So you have to be offering something different and you know, ideally something that you
just can't get from those big players. And that's where companies like us come into play, that we offer things that are unique and with something like leverage single stocks. I mean, this is a new category that we pioneered, and you know, leverage on single companies, in my opinion, is more intuitive than some of the other applications. But leveraged dtfs have been around for a long time. You know, you've been able to trade leveraged ETFs on broad equity benchmarks,
fixed income benchmarks, commodity benchmarks, even individual commodities. So this is really just an extension of that trend.
You've like thirteen now of these single stock leverage gtfs. Where did it all start? What was the one that you were like, oh my god, we have to do this.
So we got to rewind a little bit because we actually started this in Europe in twenty nineteen. And the reason we did that was that when I started Grantwitch Shas seven years ago in the US, there were only two companies that could do leverage dtfs period in the United States. So we couldn't do leverage dtfs even if we wanted to at that time. That was a weird sort of government exemption that existed at that time. It no longer does.
So there was an a sec thing, correct.
That was when the old sort of era was under exemptive relief. That was a thing called exemptive relief and exemption that was given to two companies and then not given to anybody else.
Pro shows and direction.
Yeah, there you go. And then fast forward a few years. We thought the idea was really good, but we couldn't do it in the US, so we started in Europe. And we have a platform in Europe where we offer over one hundred products on different exchanges in every major country, so we started doing it there. In that time, the regulation here changed and this exemptive relief or this exemptive regime went away and was replaced by a generic rule update that everybody nicknames the ETF rule. And what that
effectively allowed is any company to do leverage dtfs. Obviously, with some caveats, two x is the maximum amount of leverage that you can do. But that opened the door for US to then bring leverage single stocks, which had been doing in Europe.
Here in the US and in Europe, Joel, they've got three x Navidia, they really party over.
There, which we'll come back to.
But Eighthan on my team sometimes we joke about that because they've got like five x the Queues two three x Navidia, five x AI and we feel like it's kind of wasted on that crowd, Like it's the American gambling degenerate mindset that would really have fun with those products. Maybe that's why the SEC limits it to two x, because they know that these would probably fly off the shelves.
But still, you know, when you just design these products, you put them out there, it looks to me like the ones that sell are the ones connected to stocks that are like see the most trading Navidia, Tesla. We ran a study. It looked like they're like maybe eighty percent of the market share of all single stock ETFs, even though they probably cover for fifty stocks. But those
two companies are like the majority of them. Is that just because people just love trading those two names, and if you can make putting on a different trade around them easier to me sort of like a parlay, I'm going to trade that, whereas Microsoft, Eh, I'm not that interested in that stock. It's not that volatile it's not that hot. Is Is that why those sell?
In a way I think I would I would add them one more thing to that, which is less quantitative, more qualitative, I'd say, it's about the enthusiasm for the stock at the given time. An enthusiasm is a concept that you know, you can't really sort of measure as such. But my example is NVIDIAs the stock today that has all the enthusiasm, and Tesla, which you mentioned, is the
second most popular. However, if we are talking about, oh, we're having this conversation three years ago, I would argue that we'd be talking about Tesla being the most popular because there was the most enthusiasm at that time for that stock. In Europe, we've seen where we have a lot more of these products, you know, We've seen huge amount of enthusiasm for companies like Neo for example, which
is another EV car manufacturer from China. Less so these days, of course, as that has moved on into AI and so I think.
It's matured slightly and there's more competition for Neo etc.
Exactly. I think it reflects, you know, the two biggest trends in my mind of this year have been AI and cryptocurrency, So naturally in our product offering, the two biggest products and the most of activity enthusiasm we've seen are for Nvidia and we have coinbase two x Coinbase,
So that's kind of where we've seen that enthusiasm. And to Eric's point, you know that it hasn't been necessarily for companies like Microsoft because arguably that was you know, maybe sort of twelve to eighteen months ago when that stock's kind of made a big move. But you know, again, I think it's it's really down to what investors care about at that time.
I don't think we were rewound the clock all the way there. What was the what was the one that made you go we got to do this.
I don't know if it was one per se. I think it was more the learnings from what we'd been doing in Europe, where we have more of a platform based approach, and I think kind of what we're all dancing around as this concept of okay, tech works. That's something that people like. There's a lot of enthusiasm for certain tech companies, and so when we launched here, we launched with a lot of the large tech names, but we did try and do some things that were different.
So at the time, the reason why we did a two x coinbase was because there was no crypto. I mean, I should be a specific no spot Bitcoin tea, which was a huge, huge thing that you know Eric's covered for he knows all too well exactly. But you know, that was kind of a way to bring exposure to to bitcoin slash cryptocurrency, but also with leverage because there
was no way to obtain leverage on that. So Ali Baba is another one that we have where again it wasn't necessarily that there was the most enthusiasm for Ali Baba as a stock, but it was a way to give people exposure to Chinese tech, you know, a very concentrated way that didn't exist.
And so let's go over how this happens because you use swap contracts, right, yes, And let me just for anybody listening, do you remember the scene in The Big Short when Michael Burry wants to bet against the housing market. Yes, he can't.
He can't figure it out.
So you go to Goldman and they make you it's like a bar bet, but more formal. This is all you're doing, right, You're basically being Michael Burry. You're going to these big banks and you're making these daily bar bets, and that's the leg work you're doing that somebody at home can hit by and all of a sudden they now have this swap contract bet. Is that about right?
Yeah?
I mean that's the instrument itself, But it's actually a kind of a much simpler concept, which is it's just financing. So it's using the balance sheet of a big bank to effectively lend the fund money to take an increased exposure on a particular stock. And in order to do that, you need to have a bank that has a balance sheet and is in a position to be able to make that financing or lend that money.
So to me, this is in a weird way. You know, we talk about ETFs democratizing investing, in a way that's democratizing that Michael Burry move. Most people do not get access to JP Morgan's like swap desk. So exactly this is all part of the same theme, which is you click a button and things happen, and in this case it's this swap contract.
Yeah.
And I think it's even perhaps even more fundamental than that, which is it's democratizing access to margin and institutional price leverage. So the same price of leverage that we are getting via and delivering via the ETF is not the same price that you're getting at your you know, in your
margin account at a Fidelity or Schwab, et cetera. And so again it's a classic case of the ETF disrupting and existing mechanism that's been used by the banks and broco dealers you know, for many, many years, but making the whole process a lot more efficient, a lot more cheaper.
Because you have a platform, I'm curious that allows you to basically see who's using these perhaps more than other people. Is this I mean like it clearly has an audience for traders, professional ones, institutional ones, but obviously there's because of the popularity and enthusiasm for these company like the retail crowd and the editors of the world would feast on this. Can you tell who's using it?
To certain extent? So I think, like any ETF manager, we're disintermediated always by two entities, which is the stock exchange one hand, and the brokerage that ultimately has the transaction or handles the transaction for the customer. There's something called the thirteen F report, which is a regulatory report that we can look at that gives some analysis or
some look through into the shareholder base. It's not perfect, and it's a once a quarter snapshot, but what I can tell you is that I think, like any successful etf, it's always a spectrum. So you have retail investors clearly on one hand or the barbell, and then you have some of the world's most sophisticated hedge funds and proprietary trading firms on the other hand, and probably everybody in between.
So the other interesting aspect to this is that when you have a company like in VideA, in Vidia has not just appeal with Reddit retail investors, right, this is a company and this is why I say so repe this has become the world's most important company. This has true global appeal. So if you're in Japan, or if you're in career, or if you're in South America somewhere and you want exposure to that company, you can only
get that in the US stock market. And therefore you can only get the leveraged version of Nvidia through our product NVDL here in the US. So providing a broker has access, then you access to the market and increasingly. We're also seeing this trend as well, whereby markets around the world are becoming more connected. Individuals are becoming more
interconnected through technology. The first market they look to outside of their home market, and typically the home market may or may not be that developed, is the US market. And the reason why the US market is because the US market has performed very well. Why because of some of these stocks like Nvideo.
I know they're hot stocks. Navidia is now trading four times any other stock speaking of trading, listen to this statroll. So even an NVDL is probably at four billion, maybe right around the top in the top two hundred and fifty ets by assets. It's in the top ten regularly in trading. So today it's already traded one point five billion as of whatever time it is two thirty pm today. That's more than ready General Motors, Berkshire, Dell Computer. Right, these are massive names.
How does it compair with Spy, which would be day and day out number one.
Yeah, So as of right now, Spy has traded thirteen billion and his is one point five billion. Now that is a pretty big gap, but everything's a big gap from Spy in the queues. But one point five billion puts you ninth. That's above HyG, above XLF. These are some big legendary names that.
But also Eric on Spy. Remember that NVDL is, like I said, it's four billion dollars. Spy is over half a trillion. Yeah, yeah, right, I mean the difference in size, yeah, is monumental.
Just getting yourself like you know, Ibit is in the top twenty two and that's obviously very impressive. It's hard to get on this leaderboard. You know, ARC did it for a couple couple of years there. So anytime an outsider can come in on the volume list and be like right there with those legendary spider sectors and it's it's a major feat. And when you have volume, then you get bigger fish volumes like chumming the water for big fish.
So it's a very interesting business model. And it's like feels like you found a corner of the ETF universe that was more or less kind of open, open enough that you could come in and make a name for yourself. I'm curious, though, what are the limitations? Can you go to black Rock and say I'm going to take ibit and to exit.
Well, this is actually a really good question. So in theory, yes, you can. Again, remember the concept of leverage is the most basic concept in finance. It's just borrowing money to get an increased exposure to a given security. So in
theory you can leverage anything. What we have to be careful of or mindful of is that with an etfor it's open ended and therefore there has to be a scale aspect to it, and part of that means that counterparties, spot counterparties, investment banks have to be able to continuously finance and provide more exposure to it. So a better example might be something like a game star or or an AMC, where as you may or may not imagine, we get a lot of requests for these on a daily,
if not intra day basis. Now the problem is in.
Theory from roaring kidding or other people.
That's from all sorts of people. That's from all sorts of people. On the one hand, yes, it's it's easy to provide some leverage against that. The harder aspect is
how much and for how long? And so that kind of is really at the core of, you know, how we think about building these products for the longer term and not just you know, flash in the pan whereby you know, we might be able to provide twenty million dollars a capacity, but if somebody wants a hundred then we have no way to deliver on that.
But that would be one that you know, back to your enthusiasm, like there's enthusiasm.
For it, correct, and so providing that we could provide or get leverage against that, then yes, you could provide it. Just a question of how much we'd be able to get would really be the key question.
Joel, Ready for some trivia. There's thirteen I found like you're.
Going to give it to me no matter what. But yes, okay, now I'm ready.
I'm sorry. There's eleven thousand, seven hundred ETFs in the world. Okay, the world, the world?
What is it? Does that include exchange traded products?
Yes? Okay, yes? What is the top performer year to date? I'll give you a hint. It came up.
Already in video two x three x three x three x.
Guess how much it's up here to date?
Well, like five hundred percent, double double one thousand, You're up one thousand percent.
It's not even June thirtieth. Yeah, that's pretty crazy. Now, guess what the worst performing ETF is year to date.
Uh Tesla short?
Actually no, no video the video, so.
There is a negative, yes, which that was gonna mean. My next question is when you bring one of these into the world, do you have to think about let's call that the yen. Do you have to think about the yang simultaneously, because for every bowl there's going to be somebody who's like, I'll take the other side of that.
Bet we do. Now, it doesn't exactly the US we do for some now. Part of the reason is, first of all, launching ETFs and maintaining them is very expensive, so that's really the main reason. So you have to be conscious of the fact that at the end of the day, for us, it's an asset management vehicle, meaning we don't get paid or compensated for the turnover, for the volume, anything like that. It's purely on the management fee. So it has to be something that we can generate
management fees from over time. The market is naturally long.
An example of that from what I'm seeing is you can go long Amazon, long Microsoft, but you're not going to short those.
We haven't bought a short version of that to market, and there's not really a sort of a great reason for that. But we have MVD, which is our two x short in video, and you know that's traded fifty three million shares today already, which is you know, a huge amount of volume for a stock that again has performed very poorly up until the last few days where a video has gone through a bit of a correction. So again typically we we try and bring a short if we think it makes sense in the context of
these stocks. We have a Tesla short as well as a Tesla long. That was not always the case.
That one makes sense to me because there's been so many Tesla haters Elon Hayters through the years. It's like you can give the people who are the fans something to trade, but you can also give the haters. But like there's just not that much palpable hatred for Microsoft really in the same way.
That's right. Yeah, it was always as Eric knows, you know, we have a goldietf and I've been involved in in the gold market for many, many years, and it was always a saying, you know, in the gold market that you know, people would be bearish on gold, but they were never prepared to short gold, and so it was sort of this idea that you could be, you know, very sort of openly skeptical, but you were never that skeptical where you actually put your own money, you know,
to try and take the other side of it and short and I think there's a little bit of that in some of these stocks as well.
So you've got this line of single stock ets. Now you filed, and you can't talk about filing. So I'll explain as much as I can in the question. You filed for what you call yield boost, and the boost is all caps, by the way, that matters. Yield boost. Now this is a new form of hot sauce about income. Joel So, yield max is the current issuer. Will is now yield boost up. In Canada they got yield Maximizer, which, by the way, just recently changed their name from yield
Maximizer where there's lowercase to everything's uppercase. I've never seen that.
It reminds me of maximize.
Their punctuation, remember Idiocracy, Brondoye, the thirst Mutilator. It just it has some similar vibes.
But so this is like you can capture their attention better. Yeah, you're yelling when it's all caps.
So anyway, these are giving you massive annual yields, like over one hundred percent. So a Treasury's five percent, this
would be one hundred percent. So what you're doing is you're taking highly volatile ETFs like like Bitcoin, like volatility itself, like the cues, and then you write call options just out of the money, which people will pay a lot more for premium for because it's more likely to come do so as an investor, you give up almost all your upside, but you get this massive influx of income. Is that the idea? And who are these four?
So?
I think first of all, you know the reason why this is this is something that we think is relevant or or is it good? Idea is combining the two hottest trends really of this year, which is leverage and income, but income particularly through options, and you'll boost first and foremost. These are not leveraged products. And that's important to say because I think there'll be some confusion potentially around because the security that the option is written on as leverage
that people say, oh, it's leveraged, it's not. So it's not a leverage strategy. But the idea here is to be able to generate higher levels of income options based income that you can generate from clearly a non leveraged strategy, again in a market that doesn't exist today.
So Yield Max every single one of their funds has inflows. And this is a company that came from the outside, and the fees are not cheap, So that tells you there is definitely some demand for this. But some people would push back and go, well, fine, I get like a yield Max Tesla or yield Booze Tesla, and I get all this income like eighty percent, but I'm still down even with the yield factored in because Tesla's down.
I guess what's the point or how much do you have to be sure or care that the stock goes up or down because it does the yield matter if you're still down on a total return basis.
I think it will depend on the investor. But again you're you're basically skirting on a very interesting now concept, which is how important are the different elements of a return? And should we always or do we always need to think about total return as a construct that is based upon income and capital appreciation And in other words, if we just rely on income alone, is that or can that be even a better way to go. And so
an example would be take something like an annuity. Right, if the whole concept of an annuity is you give up one hundred percent of your principle day one, and you receive a stream of cash flows for the rest of your life, hopefully, now apply that to something like this, where you may not give up or you're not giving up your principal day one. You're investing in something. You're getting income stream of monthly cash flows typically, and those
cash flows can be pretty significant. The price of the underlying or the nav can go down, can go up, but it's not necessarily the concept or it's not necessarily the case that it's you know, designed to generate a certain level of capital appreciation in the same way as it's designed to manufacture income. And I think that's the
sort of the fundamental difference. And you know, again, we have another ETF, nothing to do with leverage or options, but it's a classical income one where it's called hips. We pay a monthly the monthly yield, and in that particular fund, we've paid the same monthly distribution cash distribution for now over six years and it's a ten percent plus you know, yielding product. The reason or the way we get there is because the underlying are things like
MLPs so pipeline infrastructure. They're REITs business development companies. And although the clearly has potential for capital appreciation, and MLP is not a growth company, so it's just a fundamentally different asset, the main reason is all tax related. Right, you get a huge amount of income at favorable tax rates.
That's really the reason for buying an MLP. So for somebody that can lock in a ten percent income, they might think, well, that trade off is actually really good for me because I can then get ten percent per annum And although my underlying the value of my portfolio can go down, value can go up. As long as I have my ten percent income and that's locked in,
I know that I have something at the end. And I think that again is sort of part of this concept that is increasingly I think going to be more popular with people where the income is prioritized more than the capital appreciation.
It's interesting that's reflective about the high rate world that we live in exactly, so as long as rates stay where or elevated compared to where they've been like, that strategy totally works.
Yeah, and I think again, part of the reason I think that a lot of these strategies took off in the first place was because on the converse, when you're in a very low interest rate environment, your traditional fixed income, you know, it doesn't work from an income perspective. And the way that people were generating money from fixed income, you know, since the rate rises, you know in early twenty twenty two, was through capital gains, so it was selling the underlying as opposed to income.
Yeah, it's interesting. We've also noticed like this is an area where there's a lot of closures. It seems like because you're not the only one. Leverage Shares has some they're launching their first over their big in Europe. T Rex is another one, Rex Shares. There's probably a direction
has their own line. Of these, I mean, there's probably well over one hundred and fifty, but like ten percent of them catch, you know, and then maybe forty percent of them, like you want to they're doing enough that
you keep them alive. But this is gonna be a high turnover area, probably because we have noticed that a lot of the closed ETFs this year are ones that are young, and it seems like we're getting into a period where, especially in the hot sauce lane, people are like, look, we'll just we'll try all this stuff if some of the sticks will keep it and then the rest will shut down. But that cycle might be getting shorter. I'm
not saying this is good or bad. It's just the reality of the situation and the reality of how the core of the portfolio is pretty much taken over by Vanguard and black Rock, and so you're going to find a lot of experimentation, and so that's going to mean some some you know, some broken eggs where you just throw in the towel, close it up, look for something else.
Yeah, I mean it goes back to on the one howd it goes back to comment and made earlier, which is launching ETFs and managing ETFs is really expensive. Now leaving that aside, base economic sort of quest is that I think we're at a position now where there's no taboo about closing funds. And to your point that the core of the portfolio is heavily dominated by you know, let's call them traditional or core based ETFs. So therefore the more innovation that you're going to see, people are
going to try new things. But if they don't work out. I think there's just no no taboo now about closing down products that don't work, and that's one that's healthy for Everybody's healthy for the market, for the ecosystem, and clearly it allows people to innovate more to be able to bring things out that do work.
We've also talked to people on the podcast who have had the right idea at the wrong time.
Yeah, that happens too, and you know that's yeah, it's amazing when you look back in terms of some of the most successful ETFs, how they've sort of either traded hands a few times before really hitting or or the concept is closed down. I mean, I mean a version of what we're talking about today, which is options based income.
One of my portfolio managers was working on, you know, going back sort of fifteen plus years, probably the first it was actually the first strategy that was in registration for doing this precise thing in the US market just couldn't get I think it was six or seven years with the SEC just couldn't get it done. And you know, the regulator wasn't ready at that time for it. And there was a classic example of where you're you're way early. You know on a great idea.
Okay, as long as we're talking about regulators. When you talked to the SEC about a three x or five X ETF, which right now they capped it to, what did they.
Say, Well, we don't.
I was trying.
Because the rule is the rule is two x.
So is there any chance of challenging that?
Well, can't you do it in ETN because like Reckshares has three X but no singles. I think they're all three X like oil miners and stuff like. But there are three X etns.
Yes, So so etn's obviously come under a totally different setula because we can't issue etns. Only banks can issue etns in the US, So the ETF is the fund world, and under the fund world that's limited to two X. Banks can issue etns because etns are not technically funds, they're debt security is issued by a bank, and therefore when investor buys, they bear the full credit risk, the good faith and credit of whatever bank is issuing them.
And obviously if the bank goes bust, you're an unsecured creditor of that bank, as opposed to when you're an ETF. That pool of assets which is in the ETF is actually a segregated, you know, bankruptcy remote pool of assets, so etns we can't do unfortunately, right, But.
How would you go about challenging the two.
X we we certainly, honestly speaking, we haven't thought about it. I think, you know, it's potentially something that evolves over time, although again I don't know. I just it's not something that we've specifically had a conversation about. Although, like all these things, you know, potentially that evolves over time.
And speaking of an idea that didn't work back, but I almost feel like I could maybe try it again. Is the the two way trades like like two x Navidia plus or like you know long Navidia short Tesla or long gold short bitcoin and two x that, and you could even two exit. I don't know any thought of because we call these packaged trades where you hit by and then you put this trade on. And just seems like there's some things that go against each other
nicely that you could do. They try them back in the day, maybe two different phases, but this was before we had this sort of like hot sauce boom.
I think, look, I think that's example of exactly what you were just talking about, which is this is where you're gonna at innovation in the space, and people will bring out strategies like that and if some which I think, look, the key is a lot of these are performance based. So if the performance is there, I think you'll be able to attract assets, and if that performance stays consistent,
you'll attract even more assets. But it won't be the case for every strategy, and so there'll be one or two that will perform really well, they'll attract a lot of assets, and then there'll be others that don't perform.
Well, what about something like QQQ Right, so we've been talking all about single stocks, but like, could you look at, you know, something that historically has performed just sensationally well the cues and think about bringing leverage to that.
We definitely could. The challenge there is that you remember I said that there were two companies that were allowed to do leverage and so effectively had the market themselves for a long long time. So think about a world where they kind of covered most of the bases with levered products u x three x ques by major bench mod so.
They got to get their first exactly Yeah, agree, qq guess so much as this has.
This is a triple leveraged ques. Guess the assets his has four twenty Yeah, good job man, Look, yeah, I've I hadn't looked your ETF sixth sense is getting better. It's twenty three billion. That's that's an enormous amount and they charge eighty eight basis points on that. That is we always say that those two leverage companies got a good little gig and they're protected from Vanguard.
But they're there, and you can look at them and be like, is that something that I want to like? Are they So? Yeah, they have that such a lockdown that it's not worth your strategy.
So into the it again, you're you're you're kind of entering into a really interesting area of the ETF world because it's not just about product development, it's about index licensing and access to intellectual property. So I think that before even answered that question, we wouldn't even be able to get the license for those indexes, let alone to
be able to launch the strategies. So again, that's a very interesting area of the ETF world where a lot of it comes down to who owns what properties and what intellectual property and is able to sort of build
a moat through access to certain benchmarks. But leaving that aside, I think it would be difficult for us to compete on a like for like basis because we would be adding no value effectively other than maybe doing it for slightly less fees or something like that, which I don't think would be enough of a draw to get people in.
I think that's why we're doing the approach we're doing, which is we're innovating in new categories like every single stocks or your boost, where we're able to bring completely new concepts to market, and we would prefer to own the new concepts then rather trying to compete with existing one where it's you know, it's not it's not likely that that we are going to have much success.
Totally makes sense.
So your second biggest ETF sort of sticks out now in this two x world you've created as bar to gold ETF. I remember interviewing you my first book, The Institutional ETF Toolbox, available on Amazon at the World Gold Council. You were you were mister g LD. Then you launched a lower fee version of gold called Bar and you even call your company Great Inshore. So you're like a
gold guy, I think a core bitcoin comes along. What's your take on that, Like, if you were talking to I don't know, your uncle who was like, hey, what should I do? I do want something that protects me from the devaluation of currencies. Should I go into gold or bitcoin? What would you tell them?
Well, I think that, you know. One thing to also point out is that, you know, we were one of the first people to register for a bitcoin ETF, and it's an entrepreneurial story rather than a technical story. But when we were in the first thing of twenty eighteen, the SEC came round and said, Nope, sorry, not going
to happen. Because of, you know, the ETF experience that I had by being in the market for a long long time, I knew that, hey, this could go on for a number of years, you know, almost certainly going to cost a huge amount of money, and as a startup company at the time, just didn't have the resources to fight, you know, the battle on that. So I think from my perspective, I've always kind of viewed our job as we're somewhat agnostic to the underlying assets that
were invested in. It's our job is to give people or provide products that people love, and you know, if people want access to bitcoin, it's our job to do that. If you want access to gold, it's our job to do that. So I personally don't own any bitcoin. I don't have anything against it. It's just I think for me, I've always sort of struggled with the fact that you know, inherently there's no intrinsic value, and it's different fundamentally from gold.
And so coming from the gold background, I you know, feel like, Okay, there's there's a cost, you clearly of owning gold. There is a cost of mining it, there's a cost of storing it, there's a cost of ensuring it, there's a cost of transporting it. And I think that with bitcoin. The the thing that I always struggle with is that once you've made up your mind you when you take something, any asset that has zero intrinsic value, once you make up your mind that the value is
not zero, then it can be anything. So when I look at the price, it's like, Okay, it's sixty thousand dollars, all right, it could be one dollar, sixty thousand, five hundred thousand, It's whatever I can.
Sell it for exactly way.
And he saything about bar or gold Well, just because some people were its jewelry, is that the argument?
No, I mean, it's a real thing that you know, costs a lot of money to mine, to produce, to get the permitting, you know, so you know that there's a real kind of fundamental economic one oh one principle around any kind of hard asset and has been, you know, for thousands of years. And again people will of course go on about the amount of electricity costs and things to mind bitcoin and the cost of the technology to
do it, and I hear all of that. I think it's just that basic concept of Okay, if the intrinsic value of zero, once you've made up your mind that it's something other than zero, it can be anything.
Final question, favorite ETF ticker other than any of your own?
That is a great question. I know this is this is not necessarily the most in a you know, the most sort of unique or give us something good here.
I can tell it's.
Kind of a tie, but I think it the Q, Q, qu Q and spy one of the three letter three letter tickers are now kind of very rare. They denote something that's a lot older. But I think that while there's not necessarily anything clever about the symbols themselves, what's good about them is they've represented or become to be like sort of like Coca Cola of BTFS for that
particular category, and that's cool, you know. I think when that was the test of a great ETF is when people know the ticker more than they know the actual strategy. And so I've heard stories, just one one particular one that made me laugh. And why I thought of the cues. I was recently in Japan, just a few weeks ago, and I was talking to do some investors there and including somebody from Invesco. And Invesco, of course, is the
the issuer of the cues. And they said that, well, we have a lot of you know, issues with brand recognition in Asia because no one knows Invesco.
Any other cues.
And they said that, yeah, you go to a meeting and you know, the client will say, oh, you know Invesco, Yeah we don't, we don't know who you are. And they said, oh, okay, well we've got the cues. Said oh, I know the cues. And so they know the cues but have no idea the company that represents it. I think that's a sign of you know when you made it as a ticker, if you're a ticket symbol that is looking for when you've made it, and we just know you're a product exactly all right.
Well, Ryan, thanks for joining us on Trillions.
Thank you so much, absolute pleasure.
Thanks for listening to Trillions until next time. You can find us on the Bloomberg Terminal, Bloomberg dot com, Apple Podcasts, Spotify.
Or wherever else you'd like to listen.
We'd love to hear from you. We're on Twitter, I'm at Joel Webbers Show. He's at Eric Balchuna's. This episode of Trillions was produced by Magnus and it's bye.
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