Let's Talk ETFs

REITs were a popular choice for income seeking investors in 2019 with healthy inflows and strong performance for broad REIT ETFs like VNQ and SCHH. Net Lease REITs account for roughly 8-10% of broad REIT ETFs; investors that wanted greater exposure to the relative safety of this REIT sub-sector were required to buy individual names. That all changed with the launch of NETL - the first ETF to offer targeted exposure to an index comprised exclusively of the 23 U.S.-listed net lease REITs in March 2019. NETL's founders, Chris Burbach and Alexi Panagiotakopoulos, join the latest Let's Talk ETFs to explain why net lease REITs are at the sweet spot of a relatively safe and balanced total strategy.
Show Notes

2:45 - Chris and Alexi's backstories - Why a net lease REIT-focused ETF? 

6:30 - What is a "triple net" lease?

11:45 - Why do REITs generally hold just one type of property?

12:30 - How many publicly traded net lease REITs are there in the US?

18:15 - Are triple net leases a growing phenomenon?

19:30 - Is this a U.S.-specific model, or are there international equivalents?

22:00 - Why is the current 8-10% exposure to triple net lease REITs offered by broad ETFs like Vanguard Real Estate ETF (VNQ), iShares U.S. Real Estate ETF (IYR) and Schwab U.S. REIT ETF (SCHH) not nearly enough? 

30:45 - Breaking down the index: Tiered cap-weighting strategy, single company limitations, geographical diversification 

35:15 - NETL's top holding... STOR breakdown.

42:45 - Is this a true total return strategy: Dividend income vs. capital appreciation


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Artificial Intelligence, and the machine learning algorithms that underlie it, is showing up pretty much everywhere these days so it's no surprise that there's now an AI-powered ETF firm, EquBot. EquBot's founders, CEO Chida Khatua and COO Art Amador, join the latest episode of Let's Talk ETFs to explain the inner workings of their AI Powered Equity (AIEQ) and International Equity (AIIQ) ETFs. They believe placing artificial intelligence investing strategies into an ETF wrapper offers investors the best chance of obtaining persistent alpha. And while there are reasons for skepticism, the performance of AIEQ and AIEQ versus relevant index benchmarks makes this a story worth watching in the coming years.
Topics Covered

2:30 - Given your very different backgrounds in tech and finance, how did you end up starting this company together?

4:15 - After years of smart beta indexes and academic approaches to investing, what does AI bring to the table that is new?

8:45 - Welcome to the Machine: Zeroing in on the stock selection process for AIEQ and AIIQ

14:30 - Why roll this out as a low cost ETF and not an 'over-priced' Hedge Fund?

16:45 - Are capital markets too dynamic for AI and machine learning at this stage?

21:00 - As AI strategies proliferate, will they not reach a point where they mimic the human investing experience, with some beating the market and others not?

23:30 - How did Alphabet (GOOG) (GOOGL) and Toyota (TM) become the top holdings in your two funds?

25:45 - Factoring in "Black Swan" risks to your models

29:45 - How can you call an AI managed fund "actively managed"?

33:15 - Is there a set number of holdings in these funds, or is it open ended?

38:00 - What about things like annual turnover and tax management?

41:45 - What has AIEQ gathered so much more in the way of assets than AIIQ? 

45:00 - What does the future hold for EquBot?


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Ed Lopez, Head of ETF Product at VanEck, joins Let's Talk ETFs for a special end-of-year episode - our final one of 2019. One of the ETF industry's brightest lights, Ed walks listeners through VanEck's unique innovation process - and how the firm has managed to continually innovate over the years. We take a deep dive into many of VanEck's best performing funds - from gold miners (GDX) (GDXJ) to unique fixed income (ANGL), sector (ESPO) and thematic (MOAT) (MOTI) strategies.
Show Notes:

2:15 - What is it about the culture at VanEck that has allowed the firm to remain at the forefront of innovation?

7:45 - Process for deciding what/when to launch a new ETF

12:45 - Genesis of funds where similar types of funds already existed (OUNZ) (RTH) (ISRA) 

19:45 - Why hasn't VanEck jumped on the smart beta bandwagon?

26:30 - Was self indexing just about cost cutting? How do you decide when to self index and when to go with an outside firm?

29:30 - Naming process of ticker symbols

30:30 - What's the case for the gold miners to continue to outperform in the coming year? (GDX) (GDXJ)

34:00 - What is it about the "Fallen Angles" bond strategy that has proved so successful over time? (ANGL)

38:15 - A deep-dive into the Morningstar wide moat index (MOAT) (MOTI)

43:00 - One new fund (ESPO)


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After a decade of growth stocks leading the market higher, there are signs that value stocks are finally ready to take the baton and overtake growth - or are they? Unlike during the last growth-fueled rally - the dot-com bubble of the late 1990s, many today's "growth" stocks (AAPL) (MSFT) pay dividends and have rock-solid balance sheets and business models. Director of Asset Allocation at WisdomTree, Jeff Weniger, joins Let's Talk ETFs to explain why he believes value's time is finally here.
Show Notes:

4:30 - Jeff's backstory: Why he's a top-down asset allocator

14:15 - What does the shift to value say about where we are in the current economic expansion cycle?

26:00 - How does WisdomTree define value (hint: it's not about book value) - and how does that play out in its fund construction? A look under the hood of the WisdomTree U.S. LargeCap ETF (EPS) and the WisdomTree U.S. LargeCap Dividend ETF (DLN)

35:30 - Growth stocks today vs. growth stocks in 1999: Apple (AAPL) and Microsoft (MSFT) as the top 2 holdings in both EPS (core/growth) and DLN (value)

52:30 - Current valuations for U.S. vs. international equities


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Life + Liberty Indexes founder Perth Tolle joins Let's Talk ETFs to discuss her firm's flagship Freedom 100 Emerging Markets Index and related ETF (FRDM). Unlike nearly all other emerging market products, which heavily weight some of the world's least democratic countries, FRDM omits countries like China, Russia and Saudi Arabia completely. Does the underlying thesis that less free societies and economies are destined to produce worse long-term investing returns actually hold up?
Show Notes:

2:30 - Perth's backstory and how she came to found Life + Liberty Indexes

7:00 - How is Life + Liberty's approach different and what's your underlying thesis?

12:00 - Example of "freedom" metrics used for the index

14:45 - Discussion of data sourcing given the difficulty of getting accurate information from more closed societies

18:15 - Why specifically are China, Russia and Saudi Arabia to left out of the Freedom 100 Emerging Markets Index?

30:30 - Which countries are considered emerging? The specific cases of South Korea and Poland

35:00 - Weighting methodology

36:15 - Sector breakdown and (lack of) diversification: The seeming overlap between energy/materials and autocratic regimes

39:00 - The Freedom 100 Emerging Markets ETF (FRDM): What are appropriate benchmarks

43:00 - Is this an ESG fund?

47:30 - Differences and similarities between ESG investing and the approach taken here

52:00 - What's next for Life and Liberty Indexes?


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Today's conversation was sparked by the excellent piece penned by today’s guest, Victor Haghani, back in November of this year: There's No Place Like Home: The Case For And Against Extreme Home Bias In Equity Investing. With U.S. equities outperforming their international counterparts by as much as 170% over the past decade, it's no wonder that surveys show that U.S. investors typically allocate as much as 80-85% of the equity portion of their portfolios to U.S. domiciled stocks, a condition Victor refers to as "extreme home bias".
In the aforementioned article, Victor lays out 10 different arguments investors often make in favor of "extreme home bias", and then debunks them one by one. During our conversation, we take a step back and start by evaluating the evidence for being properly "globally" diversified. We then get into some of the arguments Victor lays out against "extreme home bias", trying to stress test them where we can. Finally, we end with a discussion of the specific ETFs Victor and his partner James White use in constructing properly diversified portfolios - both for their clients and themselves.
Show Notes:

2:30 - Why do "long-form" research? You never learn anything as well as when you have to "teach" it

5:00 - Dynamic vs. static asset allocation: Establishing a baseline for global allocations

7:30 - How to allocate a portfolio globally: Getting specific

12:00 - Discussion of "Home Bias" issues

13:30 - How much should momentum be applied to country ownership allocations?

16:15 - How much should expected returns be applied to country ownership allocations?

21:30 - How does geopolitical risk factor in to allocations?

25:00 - Why isn't "invest in what you know" relevant for international investing (or possibly ever)?

31:30 - Breaking down the data: Historical returns from home biased vs. globally diversified portfolios

36:00 - Why shouldn't US investors limit themselves to just dollars? Currency hedged equity funds.

43:30 - 9 basis points: Expense ratios on international index funds are now negligible  

48:00 - Specific ETF suggestions for building low-cost, globally diversified portfolios: (VXUS), (VT), (VGK), (VPL), (VWO), (IEMG), (IEUR), (IPAC)

ETF to avoid: (EEM) and its 67 basis point expense ratio


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On the latest episode of Let's Talk ETFs, we take a look at the Amplify Seymour Alternative Plant Economy ETF (CNBS). CNBS' manager, Tim Seymour, who also hosts CNBC Fast Money lays out the long-term bullish case for this sector while trying to make sense of its terrible performance YTD. We want to wish a Happy Thanksgiving to all of our listeners!
Topics include:

2:00 - Tim's backstory: What drew him to cannabis investing?

13:00 - Launching the Amplify Seymour Cannabis ETF, and Tim's Fast Money platform.

20:00 - After so much carnage in the space, are Cannabis sector valuations finally more reasonable?

27:30 - What did prognosticators like Deloitte get wrong in the lead-up to legalization in Canada and California?

37:30 - How does Tim get access to US markets via CNBS and when does he see investors being able to profit from markets beyond Canada?

50:45 - How is CNBS structured and how does Tim value stocks in the space?

1:01:00 - Effect of Bruce Linton firing on Canopy Growth Corporation (CGC).

1:09:45 - Which companies are best positioned for global growth? (ACB)

1:15:30 - Stock recommendation: MediPharm Labs (OTCQX:MEDIF) [TSE:LABS]

1:17:30 - Concluding remarks: Where's the industry headed?


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Gary Gordon isn't buying assurances from the FOMC that the recent string of interest rate cuts were nothing more than a "mid-cycle adjustment". Gary has already seen this movie before - notably in 2000 and 2008. He continues to believe that the end of the current economic expansion is closer than investors realize. He joins the latest episode of Let's Talk ETFs to offer support for his economic outlook - and a behind the scenes look at how he's carefully positioning clients in this environment.
Topics covered:

2:30 - Continuing to doubt the Fed's narrative around the latest rate cuts being a "mid-cycle adjustment": This is how every economic expansion ends

7:00 - What will lead to reduced consumer spending: The inevitable erosion of "The Wealth Effect"

12:00 - The markets are very excited about very mediocre economic data and corporate earnings: Is it a good time to take some risk off the table?

15:45 - Now that the yield curve has steepened, is the risk of a recession in the next year off the table?

18:30 - 10-year Treasuries are likely to outperform stocks between now and the election (IEF) (TLT) 

21:30 - REITs and dividend growers for 'relatively' safe income? (VNQ) (USRT) (SDY) (NOBL) 

23:30 - Low vol and value strategies (SPLV) (USMV) (VTV) (XLU) 

26:30 - Gold as a diversifier? (GLD) (IAU) (GLDM) (UUP) 

31:30 - A football team trying to make its way out of a long-term recession: The NY Giants


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The rapid growth in ETF assets has occurred in parallel with the widespread adoption of index-based approaches to investing - no mere coincidence. As per the recently released Indexing Industry Association (IIA) survey, there are nearly 3 million indexes globally - with the biggest growth areas being fixed income and ESG strategies. IIA CEO Rick Redding joins the latest episode of Let's Talk ETFs to offer listeners an update on the global state of indexing and clear up some common indexing misconceptions.
Topics covered:

2:15 - What drew Rick to go from an "active" shop like the CME to head up the Index Industry Association?

3:45 - How diverse is the index space?

7:00 - Volfefe: Fun/quirky indexes

9:30 - A brief look at the history of indexing

16:00 - Is the trend towards "self-indexing" by asset managers a positive development?

20:30 - Key take-aways from the recently released IIA survey


25:00 - Not all indexes are "passive"

28:00 - Concerns about "too much indexing"?

31:45 - Is the trend towards less publicly listed securities a headwind for the indexing industry?

38:15 - IIA plans for 2020


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TrimTabs portfolio manager Janet Flanders Johnston joins the latest episode of Let's Talk ETFs to discuss why her focus on free cash flow, balance sheet quality and reduced share float size has led to outperformance in the two funds she manages, the US All-Cap Free Cash Flow ETF (TTAC) and the International All-Cap Free Cash Flow ETF (TTAI).
Topics covered:
2:00 - Background: how did Janet first get into a career as a professional fund manager?
4:45 - Understanding Trimtabs' approach to stock selection: It's all about free cash flow
6:30 - Balance sheet quality, reduced share count as factors
9:00 - How does active management overlay with TrimTabs' data-driven screening system?
15:45 - Description of fund management process: The case of top holding Zoetis (ZTS)
19:30 - Tax management with regard to the funds
22:30 - Discussion of Netflix (NFLX): The perfect short opportunity?
28:00 - Development of TTAI
29:15 - Why is an ETF (EWY), vs. individual holdings in that ETF, a top holding of TTAI?
31:00 - What's your approach to U.K. equities with regard to Brexit?
33:45 - What is driving TTAI's outperformance this year?
36:00 - Can Trimtabs approach be used as a predictor on a macroeconomic scale?
37:00 - Assessment of the trend of smaller share floats
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