Animal Spirits Podcast - Talk Your Book: Animal Spirits Live with F/m Investments

Episode Date: May 4, 2026

On this episode of Animal Spirits: Talk Your Book, ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Michael Batnick⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ben Carlson⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ are joined by Alex Morris from F/m Investments for a live show recorded in Washington D.C. that covers inflation, the Fed, AI, tax alpha and much more. Definitions of terms from the episode - AG Index: Evaluates the performance of agricultural sectors across different regions.  Basis point: Is used to indicate changes in the interest rates of a financial instrument.  SALT Deduction: SALT stands for State and Local Taxes. The SALT deduction allows taxpayers to deduct these taxes from their deferral taxable income.  Alpha: Measures an investment’s performance relative to a benchmark index. Tax Alpha: The difference between a portfolio’s after-tax return and the after-tax return of benchmark.  Coupon: A periodic interest payment made to bondholders  Russell 2000: Is a stock market index that measures the performance of 2,000 small cap companies in the U.S.  Options: Financial derivatives that give the holder the right, but not the obligation, to buy or sell an asset  BDCs: Stands for Business Development Company, a type of investment firm. BDCs primarily invest in small and mid-sized businesses  REITs: Stands for Real Estate Investment Trust, a company that owns, operates, or finances income-producing real estate  Par: Stated or face value of a financial instrument, primarily bonds and stocks  GFC: Stands for Global Financial Crisis, which refers to the severe worldwide economic crisis that occurred in 2007-2008  AGG: iShares Core U.S. Aggregate Bond ETF, which tracks the performance of the U.S. investment-grade bond market Find complete show notes on our blogs... Ben Carlson’s ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠A Wealth of Common Sense⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Michael Batnick’s ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Irrelevant Investor⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Feel free to shoot us an email at ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[e-mail]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ with any feedback, questions, recommendations, or ideas for future topics of conversation. Check out the latest in financial blogger fashion at The Compound shop: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://idontshop.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Investing involves the risk of loss. This podcast is for informational purposes only and should not be or regarded as personalized investment advice or relied upon for investment decisions. Michael Batnick and Ben Carlson are employees of Ritholtz Wealth Management and may maintain positions in the securities discussed in this video. All opinions expressed by them are solely their own opinion and do not reflect the opinion of Ritholtz Wealth Management. See our disclosures here: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/podcast-youtube-disclosures/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ The Compound Media, Incorporated, an affiliate of ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Ritholtz Wealth Management⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, receives payment from various entities for advertisements in affiliated podcasts, blogs and emails. Inclusion of such advertisements does not constitute or imply endorsement, sponsorship or recommendation thereof, or any affiliation therewith, by the Content Creator or by Ritholtz Wealth Management or any of its employees. For additional advertisement disclaimers see here ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://ritholtzwealth.com/advertising-disclaimers⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits Talk, your book, is brought to you by FM Investments. Go to fMinvestment.com to look at their whole suite of bond, fixed income, ETFs, and today's show is live, which is great. So the team at FM Investments brought us into their house, kind of. FMinvest.com to learn more. Welcome to Animal Spirits, a show about markets, life, and investing. Join Michael Batnik and Ben Carlson as they talk about what they're reading, writing, and watching. opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Ridholt's wealth management. This podcast is for informational purposes only and should not be relied upon

for any investment decisions. Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Michael, you and I a couple weeks ago did a trip to Washington, D.C., field trip, I guess, you could say in many We walked around the city. We saw some monuments, saw some museums. Got a little sweaty because it was warm. And then the lovely team from FM Investments brought us into their world, beautiful Georgetown neighborhood in Washington, D.C. And we had a live show, overlooking the river, a great spot. And it was a lot of fun. And we've had Alex Morris on the show in the past. One of our favorite guests.

He's been on the show probably five or six times now, and we know Alex is so good at talking about the markets that we had literally zero prep time with him before. You know why? Because we're always prepped. And so is he. We knew he would be ready. We didn't have to give him like a list of questions and he could just go. And we talked about a whole host of different things. The types of funds that they're working on. Tax strategies for fixed income investors. What else? AI. We talked about everything. We had some questions from the audience. We had a whole live group of people there. We had a couple guys in. Animal Spirits, Tropical Burl's shirts there. That's right. It was a great event. And Alex brought it as usual. He's knowledgeable on every single topic there is. What will we call him as a man of who just knows everything?

What's the term for this? I shouldn't be asking you. You don't know these words. You know these words less than I do. He's a Renaissance man. That was it, Renaissance, man. That's the one. Wow.

That is the one time. So anyway, we got into a bunch of different stuff. I think the most interesting topic for advisors and one of the things that you and I have been harping on for a while now, is just this idea of tax alpha, and tax alpha coming to fixed income. And we got into that and much more on the show. So here's our talk,

our live animal spirits from Washington, D.C., with Alex Morris from Mepham Investments. Thanks for showing up. I know today is Dave General Grumpiness, being taxed annal. So thanks for at least getting it done in advance or being willing to take the penalties for filing tomorrow.

You're all patriots. Second time we've done this live. Today we'll talk a little bit about inflation, a little bit about taxes, obviously. and some stuff we're doing around there and some general market stuff. But that's right. You guys here to see them, not us. So let these guys introduce themselves.

All right. Well, I'm not going to introduce myself, but it's great to see everybody. Yeah, my name's Michael. How's everybody doing? Good. Good? Okay. Cheers to you, sir. So, Alex, it's been said by many that the bond market is a smart money.

Right? I'll take that as a compliment. That's a thing people say. Well, why come the bond market? was pricing in rate hikes just a couple of weeks ago when really I think everybody knows that there was no rate hikes coming. It can't be right all. Answer for everybody.

It can't be right all the time. But look, the bond market was, why was it doing that? It was pricing in rate hikes because it was afraid of inflation. And inflation delivered in that case. The bond market was right. We did get a big inflation print. We're going to see more of that in the future, right? If you've gone and filled up your car recently, it ain't cheaper today.

And it's getting more expensive. I feel like you're moving the gold post on me. A little bit because that's why the bomb marks in the smart money. You've got to just reframe the story to make it work. But I think they got a little ahead of itself. It was unlikely we were going to see massive rites. Right. And they were like little baby ones built in there.

But it's pretty clear we weren't going to see massive cuts, which we were talking about three, four weeks beforehand, particularly with, where are we going to get a new Fed chair? And, well, that seems like that palace intrigue is far from over. All right, let better. I'd be better hosts. And start from the top. We're here, thanks to you guys. Who is FM investments for people in the audience in front of us and for people listening that might not be familiar with who you are?

Sure. Investment boutique managed about $20 billion today. It's weird that in today's day and age, $20 billion is boutique. When I started here, that was a lot of money. We look after everything from your traditional SMAs in the fixed income world to a handful of pretty cool ETFs, T-bill, bringing the large them when we've talked about a bunch of times, but also things in the credit, you know, ideas. space, high yield, tax advantage space, and inflation protection as well. When you started this, sometimes an ETF is kind of like a movie or a song. You don't know what's going to hit. Does that a T-Bill, ETF is your biggest fund? Yeah, it's more than a little surprising. You can never plan for success. You hope for it a great deal. If you had taken a bet on the desk, which of our first three funds, T-bill, which is the 90-day U-2, which is the two-year and U-10, which is the 10-year, which was going to be the biggest. We all chose the 10-year because it's the 10-year. Of course, TYA is going to win in that sense, and UTEN would do it.

But T-Bill took off because people really love yield, and they love a simple story where it just reinforced itself. We could tell you what the dividend was going to be. You got exactly what you were promised. You came back for more. Well, it's better to be lucky than good, and you're both. But the timing of the launch was Chef's Kiss. So T-Bill has almost $6 billion in assets?

Almost seven. Almost seven. Who's counting? And you launched it when? Was it 22? 22, August 11th. Okay. And the money came in and stayed in and it keeps coming in?

Keeps coming in. We had our best month, best in flows month last month of all times. Are you surprised, because I am, maybe I don't follow your company as closely as you do, that there has not been any copycats? The T-Bill market was pretty saturated anyway. And so T-Bill comes along and it was new. And there was no real motive for Black Rock to create a copycat. I've had a lot of other things that kind of got close to what it was, but weren't exactly.

an audience, I think there was an audience for something different that, you know, was done with some passion and done with some energy and, you know, was more precise than some of those tools. Did you see any drain over the last couple of weeks? Because I feel like, I mean, T-Bill literally is cash and people and people, did you see that as like a piggy bank for some people? We do see a lot of money that comes in and out on a regular basis, which is the design, right? We want your money to come in at a good price and come out at a good price. That's our sort of commitment on both sides of the trade. Certainly March was a lot of inflow. I think there was a lot of concern about Iran that brought it in. Last couple of weeks, we've seen,

folks paying their taxes, but it's a pretty small number relative to what we've seen historically. So we get a bunch of questions in our inbox from people about the markets and investing in one of the ones the last two years, especially since the bond bear market in 2022, I think a lot of people woke up to, I thought bonds were supposed to be easy. This is supposed to be the easy part of the portfolio. And stocks go down and bonds go down almost the same amount because bonds cause the stock market go down. So I think a lot of people have woken up to the fact that like under different economic environments that we hadn't seen in 40 years, you might need different types of fixed income. And so I'm just curious how you think about the need for investors to diversify within this

bond segment when in the past they didn't really think about it that much. Well, they certainly, a lot of us grew up with near zero interest rates, right, in the investing world. So you didn't really think about it. Why would I buy bonds? Choosing my flavor of zero, they all seem kind of complicated and none of them seem to do what I want. And then, yeah, stock bond correlation increase. So sort of making it worse, right? Why not getting the diversification effect. But I think most bond funds suffer from being often very expensive and actively managed, which is an interesting outcome, except when you want some very clear, pure exposure to one of those factors, you want that factor. But the bond world was never designed to do that for you. And indeed,

most of the bond indices are really good at telling you something about the bond market. Here is some very narrow rating band sector, other item, which is a cool data point. It's just not an investment thesis. And, you know, having been a PM for a long time, it's still to throw the dart and hit the bullseye and then have it fall out because something you didn't control for went wrong. In Benchmark Series and the other funds we've created, they're all really that same thing. How do we give you a really clean, this really clean experience? So when you know what you want, you can get that and reliably see it in your portfolio. Most folks are disappointed with bonds, not because the bonds didn't work, but because the person that was managing the bonds

was doing something different than what they thought they were doing. And there's a lot of jargon that gets in the way between investor and bond manager that makes that really easy to happen. We've talked to a lot of bond managers over time, and I think they look at their equity people and kind of thumb their nose because it's hard to beat the S&P 500. But the bond managers think, well, the benchmarks that we have are these tiny little hurdles. It's pretty easy. But most of the time, it's just they're taking more risk, right? They're taking some sort of credit risk or interest rate risk. So I'm curious your thought. You mentioned active management. Like, I'm curious what you think about that, that idea of the benchmarking in bonds. And it may

it's yes, you're beating them, but you're doing other stuff that you didn't know you were doing to get there. Yeah, I mean, certainly bond benchmarks could do with a good rethink, right? The sort of granddaddy them all, L bag to most of us, right? It's done this a long time, but the ag, right? Which you would otherwise see is AGG, the easiest way to get it. It's so big, it's uninvestable. You just called it LBag? Elbag from from laymen.

Yeah, it goes back that far. But the problem is, in constructing that index, it does a lot. It's so big. It's uninvestable. We know this because Bloomberg has a version of it called the investable ag, sort of implying we know the other one with its 40-some-odd thousand holdings is not the kind of thing you'd actually achieve. By the way, the investable version has like 20,000 things, also largely uninvestable. So go figure. But most of the bonds, because there's a lot more bonds, right? So if you think about it just on a pure Q-SIP basis, so 500 stocks in the S&P 500, Ford Motor Company has one participation there.

F. It has 3,500 other fixed income instruments associated with it. Go to the Muni market, there's 6 million issuances out there, half of which will probably never trade. So the bond market size is big and issued size. It's also three times larger in actual value than the equity markets. So it's hard to pick one item like the S&P 500 and say, that's the bond market target. We've done that on the ag, but it holds mortgages, it holds treasures,

There's all sorts of stuff. So, yes, you're taking different risks than the ag. You probably want those risks because you have other outcomes you're trying to achieve. The bond index is cap-weighted, right? So the more bonds you issue, the bigger weighting. Now, the other side is you can't just issue unlimited bonds. Like at some point, the market will say, okay, well, higher rates because you're being irresponsible. One area of the market that's getting a lot of attention on the equity side is now bleeding

into the bond side, which are the hyperscalers, because they are issuing a lot of debt and they are a large portion of the investment grade index, and spreads are still extremely tight. I know Oracle had some issues with their credit to fault swaps coming out a little bit, but investors are still giving these hyperscalators the benefit of the doubt. And it's having a big impact on the construction of the index, whether you know it or not. Yeah, absolutely.

And it'll continue to. The bond market is strange in that the more debt you take out, the more debt you can. It's sort of like seeing your credit rating for the first time. Like, wait a second. If I take out more debt, my credit rating will go, up, so I should take out more debt and off you go. It's like having more mortgages means that you'll get another mortgage in the future. There's a limit to it, but I think as long as the narrative

is in favor for the hypers, they're going to continue to be able to issue debt pretty cheaply. And the Fed is probably going to come to the rescue even more by driving down, you know, nominal rates, which will make it easier for them to get more money cheaper. And even if they have to borrow at 50 basis points more versus their long-term earnings perspective, it's just a drop in the bucket. Speaking of that, so Ben and I are tourists here in D.C. and also in the bond market, we've said over and over that you would think that they're going to get involved with mortgages. Like, isn't the easiest way to drive down mortgage rates? Because it wasn't just the tenure that went up, which is where mortgages are priced off of. But it was the spread as well. It was like the double whammy. So I'm sure there's a good reason why they can't just buy the bond.

Why didn't they? Why aren't they? Well, they could to some extent, right? They've done it before. Frannie and Freddie have had various relationships of tightness with the government. And the president has made very clear his belief that he can direct them to do whatever he wants, which not quite true, but there's some truth that if you put the right leadership in place. Intervening, though, in the housing market like that has these, is a very short-term effect. People refinance, right?

Like, that one mortgage isn't going to be there forever. So if the government gets in the game of now just sponsoring debt to individuals directly, might as well just hand you money. And you'll see some really interesting second order effects, many of which are not going to be great for the market. So I think most folks have decided to stay away from that. There are also plenty of private mortgage companies out there who will give you better rates than you might see in the conforming world.

So there's a lot of action there. The other problem is when rates come down, everyone refinances. So no one wants to be the first guy in that space to then have to go and figure out something else to do with that money two years from now when someone who came in at seven and a half is now a six and a half rate, and that's worth it for them to refinance and reset the clock. And they're going to keep doing that. So it seems easy until the government tries. If the government wants to bring housing rates down, there are other ways they could try to

affect that. And I think you'll see that happen as we get the midterm. Well, what are some of those other ways? Well, they can push rates down, generally speaking, right, which will have some knock on effect. They can issue all sorts of tax credits that give you back-end benefits for having, you know, your mortgage, right? The salt deduction came out and limited debt. They could undo it. do that and say, look, for all of your mortgage interests, we'll let you deduct it one to one. You can give you a tax credit. So there's other ways they can incentivize that behavior without exposing their balance sheet. The last time that they cut rates, it was weird because the tenure

was rising. And obviously, there was a lot of other dynamics impacting the long run of the curve, but it was not what you would expect. Yeah, I think it was more of a capitulation. Like, we needed to do this. They waited a long time. There was a really weird inversion in the curve for a very long time, right? Most folks who started in post-COVID never really saw a long period of normalized yield curve that we were used to for a long period of time. So we had to get this sort of weird shape back in, which meant the long end kind of needed to go up a little bit, because it was also pretty low. Why was it low? People loved the tenure. So they just kept buying it sort of artificially keeping its yield low because they're so popular. Michael's hoping for a mudroom

deduction. You could try. So one of the big trends following the great financial crisis and not what he's building before was just a lot of people just decided to give up on active management. Not completely, but the index fund revolution, the numbers are pretty clear, right? I think Vanguard is $12 trillion, BlackRock is like 14. It's big numbers. Obviously, the financial advisors play a big role there too in wealth management. Again, not completely giving up an active management, but there was a lot of it. Index funds were like the core position now. And it seems like the next evolution for asset management and wealth management.

We're seeing this from clients all the time in prospects. They're coming to us, and the new thinking for them is, All right, fine, you can't give us alpha in the markets. We want tax alpha, right? And they're coming to us with questions. How do you make my after-tax returns better? That's like I can, and I feel like, you know, we can control that a lot more than we can control beating the market.

I think that's the theory. So why don't you talk about that idea in the fixed-income space? It's sort of strange that it's taken us a long time to think about post-tax returns, right? We've always invested in that world, just, and for a long long, while parametric, APEO, AIA, a handful of these shops primarily on the West Coast, sprang up in the tech world where they had the ability to look at individual tax lots and now produce an after-tax return. And just getting that math was actually kind of hard for a long time. Great sort of rise of those assets and then last decade or so, just quiet.

It used to be tax alpha was a thing about 10 years ago. Here in D.C., we ran a business called Fortigent that did this for family offices. We published a tax alpha number for them. And then, for just stop talking about it. Well, it's back. Taxes are back. A lot of folks have capital wealth that they're going to try to defer income tax on or capital gains tax on. And now it's time to really think about that. Also, we have cost basis legislation happened quietly about eight years ago, which makes it way easier to do. Like, if you were to go back to your Schwab account a decade ago, you didn't always have all the bases in there. And sometimes at the end of the year, you were sending your account in the numbers and making it up. It was a lot harder to do. And

you'd had like two months to call your accountant and your custodian up and have them change the basis of what it was. So it took a long time for all that to play in now. But now I think folks have realized, wow, there's a problem. I don't want to pay as much in tax as I'm going to. How can I defer income as long as possible? How can I convert income from capital, you know, income tax to capital gains? How can I defer short to long-term capital gains? We came out with the compounder series and will continue to add to them through the accumulator series. is how do you own something and not collect a dividend? It turns out dividends are kind of messy.

They generate 1099, which is what folks don't want. So can we avoid that? Followed by, if you've ever looked at your reinvestment program from your broker-dealer directly, they stink. I mean, we were shocked issuing an ETF, just how bad the execution has been. Bad how? It's lazy execution is off the marks that you would get

if you just put it in a market order. It's because your broker-dealer looks at it over their entire book. and just launches an order at the end of the day, the beginning of the day, whenever the system gets around to doing it, it's not someone sitting there, like, taking a lot of care and feeding of that trade. Their goal is just get the trade done as soon as possible, so you're back in the market. If you lose two pennies on the trade, you're back in the market. That was the goal, right? It turns out's kind of sloppy. You look at that over the course of a year, you could be out of the market two or three weeks, right? In the fixed income world, every day I'm

earning my coupons is an important day. And if you look at an execution basis, you could be losing 50, 60 basis points on some of these higher yield funds, which it's kind of scary when you think about it. So BlackRock reported the day before yesterday, and they said that they've had nine consecutive quarters of inflows into a perio, $13 billion. I'm surprised, not 30, frankly. It will be. Well, they said they're going to double and triple it in the near term. And one of the reasons, at least on the equity side, that the damn burst was the elimination

of asset-based pricing. And so when you were doing these direct index type products, and there's 300, 7, whatever it is, paying a $7 commission on each becomes unpalatable, at least for accounts under X million dollars. And then, of course, Robin came in, commissions went zero, asset base pricing. Gone. Free trades, game on. Exactly. And the payment for order flow model helps there, because it encourages you to make the trades you want to make, not the one. that you feel you should make after paying an eight, and let's not forget, 10, 15 years ago, we were talking 20, 30 years ago, $40 ticket charges when 40 bucks was a lot of money, and you were paying a quarter to, you know, before decimalization, 8th to a quarter was not an unusual spread. So put all that together, payment for order flow has been a great thing there.

But that's also the index revolution working. Active management plus after tax returns with a third party manager become hard. But when you're trying to achieve an index return, say the Russell 2000. You got a lot of stocks to buy. I can buy half of them today. I can sell some tomorrow, and I've got a lot of things to turn in and out of. If you have a manager is going to buy 30 stocks, you got to own all 30 stocks. It's hard to turn in and out of it. I think you would agree with this statement that investors have never had better options than they do today. We say all the time, particularly on the tax minimization side, what is available to people with means and with advisors steering them is unbelievable. It's amazing. You've never been a better time to be an investor

of any any asset category than today. And it's only going to get better. If anything, it's starting to become too much. Some things are a little too similar. Some things are a little too cute by half that you might get into a little bit of trouble with. And deregulation has helped. But also, I think, the rise of individuals who can trade from their phone, trade in a way that makes sense for them, with a lot of certainty that they're getting a pretty decent price. used to be kind of hard logging on, doing this all the stuff, a lot of paperwork, moving money around was hard, wires were like a three-day exercise waiting at the bank. That's all gone. Like, we've moved a lot of those barriers for good reason. My bigger worry isn't, is it a good time to be investors? It's now,

do you have too many choices that you actually become paralyzed? Then when you need to make a choice, you get kind of wooed into one that seems a little funky and you assume it's fine. Like we look at some of the ETFs coming out for, you know, are the Eagles going to win this? Are they going to make the postseason? Those are things that are great to put on polymarketing, Cal She. But once you make them brokerage account level easy, you start to get into some trouble. And so I worry a little bit that,

and as somebody has done a lot of innovative things from a firm that's happy to embrace that. Look, we came up with a, we own a single treasury in an ETF. I mean, we were laughed out a lot of rooms. When we say, you know, it might be a little too far. Kind of look at that is there's some things that might be a little too far. So getting back to the tax stuff, remind us how, what you do on the Componder series,

because a lot of these, a lot of places are now, there's a ton of ETFs using options. Like, how are you trying to defer this tax situation and not pay out as much income? Sure. So options, we try to do the same thing, right? We're always trading in kind. So we'll buy security, say, AGG. And before it declares its dividend,

we'll sell it and we'll buy something that's pretty similar to it. Or two or three things that, on average, look a lot like AGG. We'll hold on to that through AGG's dividend period. And then before any of those other funds declare a dividend, sell back out and rotate back into AGG, which just basically has the benefit of capturing the

dividend every day. So if you watch the nav of AGG, you'll watch it go up because all the coupons get collected and ingested into the nav. We just get out of the way before that nav is decreased and the dividend provided. By doing that, we never collect the dividend, and therefore you're just getting a total return experience. I mean, I imagine there's not a ton of activity. No, it's just 20 trades a year in that sense. I mean, it seems like a lot of turnover because we're constantly in and out. We can't own half of it. We'd still get half the dividend. But you're getting a pretty clean exposure. And our goal is to give you a GG, whatever it is. And then we do a high yield version. You'll see us branch out into cash for folks who don't like the options-based world

to get cash. You actually want to own a treasury. We'll do it in that space. We'll go to BDCs. We'll go to REITs. We'll go to things where you have a lot of cash income that you'd like to defer or not collect the dividend on. All right. BDCs. A lot of smoke. So to be fair, BDCs has been around for a long time and many of them done a really good job. Some of them recently have gained a garnered a lot of negative interest, perhaps deservedly so. So I've been, I think pretty fair on what's happened in the space. And I think the most legitimate criticism is that I think everybody understands how we got here. 2002 sucked for everybody. And the bonds were supposed to be your ballast. They were supposed to protect you, and they pushed you overboard. So your bonds fell and then the stocks fell

with it. And because there was a relatively benign economic environment, the credit held up. And the floating rate was amazing for these private loans. And everybody was readily happy and then all the money came in and et cetera, et cetera. The money came in so fast. They couldn't spend it. And so there just can't be... It's a problem, by the way, I'd like to have. There can't be that many good borrowers. And so how do you think about that? How should investors think about the rise of this asset class? Which, by the way, I don't think that in three years we're going to look back and say,

like, holy shit, can you believe how crazy that was? I think it's going to be way bigger. I think it'll be much bigger. And are there that many good borrowers? Maybe the banks have stopped doing a lot of that activity. So someone had to step in. Some of it's private credit. Some of it's in the BDC market, flavors in between the two,

or private credit using raising BDCs. Why don't you explain the difference? So private credit firms, generally speaking, things like a hedge fund, a lot of different ways they can lend money to you, and it's a one-to-one relationship. And they can have a lot of covenants, just like your mortgage, and you can customize some of those features. BDC is a very technical Fortiac wrapper, which is a way for someone like a private credit issuer to do underwriting

to raise capital from all of us, and then find a way for it to get into our brokerage account, and just about anyone can buy it. Whereas most private credit funds, you have to be fairly wealthy to get involved. BDCs, because of their Fortiac nature, much more ecumenical, but they have some limitations in what they can do

and how much money they can pay out and how they're formed. The upside is you get liquidity. You can sell it to anyone on the street at any time. And the downside is you get liquidity. You get liquidity. And if you get a mark to market every day, intraday, you get it every, you know,

a couple times a second. So if you're in a fund where your manager says, hey, we really think this to be marked at par, at 100, but the market says, I don't know, I think it's 80. You're getting 80, whether you like it or not. Blue Owl got in trouble. when they tried to merge a private fund

into a public one, and everyone in the private fund said, we don't want to take that haircut for liquid. And there was another blue rock where the other said, oh, you're getting 65. Yeah, and the marks on those are hard.

Look, we work prove this in the equity market. When you have 14 people who decide the value of something, there's a whole market out there who doesn't have to agree with them. Those 14 folks can get group thing pretty fast. You open it up to analysts on the street, individual retail investors

who have their own ideas. They'll come up with their own number. So actually, I'm glad you said that. So there are a lot of publicly traded BDCs. Aries is the biggest, I believe. ARIES is like $14 billion or something like that. And they trade like a stock. And I would imagine that most individual investors have no idea what they're trading, right?

Like how to mark the loans. Who is actually in there on an intradite basis? Are these hedge funds? Who is setting the price that we see on the screen? So market makers who are generally trading ETFs, trading stocks. trading other bonds, they're the ones who are ultimately offering that liquidity. But there's got to be some shock absorber, although I could put a market order in and you could be exactly on the other side and we're just going to meet in the middle and off we go. But it's mostly professional market makers

have a pretty good idea. At the end of the day, there's a combination of third-party providers, so your trust companies, your accountants, your third-party valuation agents who are going to come up with that mark that they'll determine the nav on that will sort of start us off the next day. But that isn't to say the managers don't get some say in it. If a manager looks at a number and says, that's just wrong, here's why, the boards and independent boards that control this may side with the manager. So you will get some noise. Oh, may they? They may. It used to be the manager's job and the board would just say, yes, now, because of all this news, there's a lot more contention in that space. And the boards aren't, you know, particularly interested in saying, we know more about this credit than you. They don't.

But at the same token, they appreciate big moves or big deviations from a third-party valuation source, expose them to some liability. I'm curious for your thoughts on the illiquidity side of things because bonds themselves are not as liquid as stocks, obviously. They don't trade as much. Maybe you'll disagree with me there. But some of these ETFs have had problems in the past. Remember during COVID, some of the corporate bond ETFs. Remember there was a huge divergence and even some really high-quality ETFs. not having the background of the ability to see through private credit and do credit analysis on these individual loans, the mismatch of assets and liability is the thing that I think obviously got a lot of them in trouble. And even the blue owl CEO admitted, like maybe us and the advisors didn't explain this whole illiquidity thing. And it is tough to me to think of having these illiquid loans in a more liquid structure. That's obviously a big part of the problem. It doesn't matter what the loans are worth if people are trying to sell all at once. So I'm curious, just your thought. on the whole nature of putting in illiquid security in a little more of a liquid wrapper. That mismatch has always been problematic, right? And we found ways to work through it. Market making helps.

You know, having a longer-term view helps. But ultimately, some bonds are way more liquid than stocks. The on the run 90 day, the most liquid security on the planet, right? So certain bonds are more liquid than your average large-cap stock. Some are less liquid. There are some unique bonds that may never trade. They're issued, and they just sit in place. portfolios until they mature 20 years from now, 30 years from now. So it depends where you are.

Some of the BDC loans are somewhat illiquid, but there's a market of folks who want to move them. And a really interesting example is bank loans, BKLN, right? Bank loans are super liquid. They're just really, really hard to settle. Settlement is T plus 7 or T plus 70 or T plus 700, and you don't really know what it's going to be today. So BKLN comes out is this really great ETF, like a derivative now, that's just making that liquidity move around because it's just going to sit around and wait for those settlement change to happen. BDC is work in a sort of similar way. There is a supply and demand imbalance. You can't go and turn to BDC and say, give me the loans, right? Like, you are buying like a closed end fund version of this. So you're going to see the price move.

And the good news is the price can move. So if you really want out today and you're willing to take a lower price, there's probably someone who's willing to take it. Now, we go back to March 8th, sort of 2020. COVID hits. We see this massive dislocation in ETFs. Something weird, I think, actually happened. It was the opposite of what most things. The bonds had no real price, right? There wasn't a lot of liquidity. The ETFs were actually pricing the bonds. But because bonds don't trade every day, we get what we call an evaluated price. Someone is sitting there and says, okay, based on all the math and all the history, we think the value of this bond at 4 p.m. today should be. They're often not looking what the bond actually traded at. They're just looking at the math saying, this is what it should be based on its cash flow, its credit rating, and all these other factors. So you saw this dislocation because the evaluated prices just weren't right. And over time, you kind of need those. You look inside of MUB, half those bonds don't trade every day. They still need a price so we can price the security.

MUB is super liquid, even though you can't transact all of it every day. So we've, like, developed a market structure that is relatively accommodating and pretty good at solving those problems. But there are individual issuances where you do, you know, bust. And there are problems when too many people get on one side of the trade where some really silly things can happen. And that's where you've got to do your homework. So getting back to the after-tax stuff that clients and advisors love, I don't want to get you in trouble. I know we're not tax attorneys here. But how should investors think about the potential risk of is this getting too cute?

Are we running afoul of the intended rules and regulations? Yeah. So, I mean, it's probably for folks who are listening to this, it's tax day. So most American of holidays, we're here in Washington, D.C. So thank you guys for coming. you can drop your tax bills at Indiana Avenue at the IRS HQ. They're happy to have you. But I think there's a good rule.

If they have to explain to you how it works and it takes more than a few sentences, you really need to leave it to someone else to do, right? Don't try to do that on your own. Make sure an accountant or an attorney has blessed it. And if you have to, if they have to hand you a piece of paper that says, hey, hey, we had someone read this thing.

And we've got a new view of how the law should be read. Probably a good sign to turn around. Like, what we do in the Compounder series, it's just a normal ETF trade. There's nothing special about it. It's no different than the trades we do every day in all of our funds that every ETF manager is doing in all of their funds. It's when you start saying things that are really new

and you look at it and say, that seems too good to be true. If you can't back it up in a sentence or two, probably is. Is there an example of things that you're seeing come to market or ideas that you're hearing that investors need to be careful of? Because to your point, there is so much choice. There is so many things that it really becomes paralyzing at a certain point. Yes, I mean, a lot of the derivative income strategies that advertise themselves is income that is natively tax-free and never ever will be subject to tax.

It does have some concern to me. There are some ways that that may work. There's a lot of ways it won't. I do have some risk and some worry about some of the 351s that we see advertised. I think that's a great way if you have a strategy and you want to convert. If you have a bunch of wayward assets with high appreciation and you just stick them into this mysterious rediversification engine that's going to promise you gains and riches and no taxes. Eventually, the IRS, I think, is going to have to look at that pretty hard and say, is this really the intent of when we wrote this thing 40, 50 years ago? Is that what we really meant? Probably not.

A lot of the platforms out there have taken that view. I suspect there will be some headlines in that space. I think you'll see some action there. And I think it's less going to be what actually happened and more the marketing of it. Most of the tax rules that have teeth to them have less to do with what you're doing. So things that are clearly illegal are clearly illegal. It's the things that are probably legal, but can be marketed in an inappropriate way, that become problematic. Look, if you've ever filed a complex 1040, your accountant kind of takes out a bottle of whiskey and looks at it, and you could give three or four accountants the same thing.

You get different answers. It's a bit wild, but it's amazing. And this is the one thing that I never quite understood. I always feel like paying your taxes a bit like a bidding process with the government. Like, they have a number in mind. They just, it's like buying a car. They don't want to be the first to offer a number. So then they make you follow these forms.

They offer a number. And then they say, sorry, we graded your test. We think you're wrong. Pay us penalties and interest. It's like, well, just tell me the number. I'll click the box and say yes and move on with my life. So he started out asking you about the bond market being the smart money. A lot of people, what's the, who is it, the Glenville guy, said he, if he dies, he wants to come back,

as the bond market. So I think is so powerful. I think a lot of people have been scratching their heads in recent years in about, well, if the government debt is so high and we added all these trillions in debt. Like, why are the bond. vigilantes? Why is it not happening? Why aren't bonds screaming higher? Because every time they go up, people go, all right, here we go, this is it. We hit 5% and people go, this is it. We're finally punishing the government for spending so much money. Well, we've warned people. The ball market has made some warning signs of like, hey, we've got issues. The problem is this is what, $28 trillion of

cash sitting on the sideline. So there's a lot of cash that comes sloshing in to help. And it's seemingly insatiable demand for U.S. government securities. Like, eventually an auction will have a terrible failure. So I was going to ask you, like, what would actually make you worry? Like, what would be the, because people keep saying, like, just wait, it's going to happen. And people have been saying that for 50 years. Government debt's too high. Like, what would cause you to say, okay, this is a moment in time when, like, it's worth worrying about something here. We could have a legitimate failed auction. So the government auctions off securities, the 10-year once a quarter, and they reopen it occasionally, you know, up to every week for the 90 day. And we bid. Any of us can bid. You can go and get a TreasuryDirect.com. And it turns out, as an individual taxpayer, you're allowed preference over all the maybe. major institutions. You get your bids filled first. Eventually, they will not, the government will say we want $30 billion for this auction, and there just will not be $30 billion of demand, and they will not be able to fill it, no matter what price they say. Now, practically speaking,

there'll probably be a price there, like we're not going to have debt more expensive than Argentina, but at some point what we expect to happen, like, so if we think a number will come out at 4%. And it comes out of 4.2%, we say that thing trailed by, tailed by 20 basis points. When that number gets big, right, like tens of basis points, weird things will start to happen. At that point, don't we just do what Japan did and we buy our own debt, essentially? We could. We've obviously the balance sheet of the Fed has grown and done that before.

Yield curve control, though, has some real drawbacks to it. I mean, Japan started doing that and lost a whole decade and change in its equity market over that sort of behavior. And JGBs start repricing. They delink from the 10-year and they start to go bid bananas. And the yen goes nuts on the back end of it. So when you have that level of control, you got to really commit to it and you got to accept some pretty negative outcomes are likely. All right. So take us inside the ETF factory. How does it work in terms of you think you have a good idea? You want to bring it to market.

And then what ideas are you most excited about? Not to give anything away that you're cooking up, but like maybe something that currently exists. How does the whole thing work? Sure. So first thing is you've got to talk to your colleagues about it. And if anyone looks at us and just says, that that's really interesting. we get rid of it right away. Like, there's a scrap heap of EF history of just interesting ideas. It has to solve a problem. Like, don't tell me it's interesting. Tell me what problem it's solving.

And we hold each other very much accountable to that. Then we call you guys. We talk to users and say, hey, we have this idea. We want to solve this problem. Here's we think we can do it this way. And if folks actually understand the problem we're solving, agree that is a real problem that needs to be solved,

and they want it solved, then we can carry on down the road. That gets rid of 90. and 95% of the really interesting ideas. Because there's some really complex things we could do. It would be a lot of fun. But they're not actually going to help someone make better investment choice decisions.

So we go down that road. Once you start getting into this, though, I still got to convince a professional market maker to take us on. So if I can't explain it to them, that's a good tell. And if they come back and tell us, hey, interesting idea, it's going to trade a dollar wide,

probably not investable by the average person, another exit spot for us. But at the end of the day, it's really simple. if we can't articulate the problem we're solving and you can't articulate how it solves your problem, we're not going to do it. And it's the marriage of those two that makes products work, we think. We're working on a lot more in the rotational fund, sort of tax-aware space. We'll do some more in inflation. Right. The inflation is a generational problem and it's not solved yet. So we'll see more action there. And the bond world is really big. There's a lot of other products that we think folks want to see

in reimaginations of things we're doing or recombinations of them to make it easier to invest that we'll start working on in the future. But if we talk about one thing that's sort of off, off target for us, maybe just a small reason of why you should pay your taxes, your taxes do go to some pretty cool stuff last week. We sent people around the moon. I mean, when you think about like, I'm trying to save the marginal few dollars on this, just remember that we need tax dollars to sponsor that sort of stuff. And every now and again, you feel kind of proud when you watch those guys, you know, men and women come down, you know, from 35,000 miles an hour to zero in the Pacific ocean. And by the way, NASA, to its credit, stuck the landing within like 200 meters of where

they thought and 20 seconds of it. So like, there's some good that comes from maybe not trying to squeeze every dollar out of that tax stuff because we do want those stories. All right. It's not all bad. I agree. I agree. All right. Anything else? What else? I mean, that's it. Markets have been, have been strange recently. So all time highs today? All time high. Ben, what was this time you told me before we start recording? five percent of stocks hit all-time highs the day the market did, which is their lowest ever or something. Wow. Individual stocks haven't come along yet. Just over concentration of a few stocks driving a lot of action. Still, for all of the political unrest in the world, I wouldn't have thought we'd be seeing all-time highs in what, nine, ten days of up markets in the NASDAQ?

You know what? I think this time the stock market was this more money. It got it right. It did. I mean, I do work for, worry that it's trading the rumor, right? Like, we haven't actually resolved these issues. Yeah. I hope you're right. More right than wrong this decade. But so 2020 is a bare market with, you know, that was an inflationary thing. But we haven't had a credit cycle in, I mean, there's been some flare-ups and scares, but really since the great financial crisis. Has there been one credit cycle that you can point to? Maybe energy couple of those years. 2015 energy. There's been pockets of it. There hasn't been a market-wide credit cycle. So what's going to cause that? I don't know. Maybe you should ask.

why has there not been one right first, which is we added a lot of regulation. Some of it that actually kind of worked. So the GFC regulation you think may is part of the reason for that. Some of it. Yeah. And then I think lenders got smarter, right? And the combination of good regulation, smarter borrowing to some extent, and then a really healthy stock market that was able to just sort of peanut butter over all the cracks and all the other. The stock market created so much wealth. So much wealth. And the housing market. And there's so much wealth and money and liquidity out there. that you see these distress funds popping up before there's even distress. And yeah, I mean, at some point you would think, you know, at somebody, they will stop, but who knows?

I think the thing that does it is probably not the credit in. It's actually just the underlying demographics of what we have. We've got, you know, we don't have enough people for jobs we need. We're hoping that AI will come and increase productivity that will kind of keep this train rolling along. But we do have a, just like China's face, just like Japan has faced. We do face a sort of crisis of labor coming in the future. And that's probably the thing that sets it off. We need AI. We do. We might need it. Certainly going to be the new Fed view of we need AI to increase productivity to allow all of the other metrics to keep humming along. And in that sense, if it works, it's going to have a lot of great promise. Well, Alex, thank you very much for inviting us down here.

It's been incredible to see the rise of FM. I think that you are, next time we speak, you will graduate out of the boutique world. I don't know where the line is, but you don't feel the boutique anymore. No, no. We don't feel that way anymore. I think it's 20. 25 billion, so we hope so. I appreciate you guys for being a supporter of this and letting folks know about what we've been doing for really since the get-go. Well, thank you. Okay, thank you to Alex and the whole team at FM Investments for hosting us. It really was a fun show. They brought us out to a wonderful dinner afterwards, too. You and I were blown away. I love, I always love a good dinner like that. FMinvest.com to learn more, and then email us Animal Spears at

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bond rated lower than, quote, B, B, B, B, dash, end quote, by SMP or, quote, BAA3, end quote, by Moody's, or are unrated, may be deemed speculative and may be more volatile than higher rated securities of similar maturity with respect to the issuer's continuing ability to meet principal and interest payments. High yield debt securities total return and yield may generally be expected to fluctuate more than the total return and yield of investment-grade debt securities. A real or perceived economic downturn or an increase in market interest rates could cause a decline in the value of high-yield debt. Interest rate risk. Interest rate risk is the risk of losses attributable to changes in interest rates.

In general, if prevailing interest rates rise, the value, of debt instruments tend to fall, and if interest rates fall, the value of debt instruments tend to rise. Changes in the value of a debt instrument held by an underlying fund usually will not affect the amount of income the fund receives from it, but will generally affect the value of your investment in the fund. Changes in interest rates may also affect the liquidity of an underlying funds investments in debt instruments. In general, the longer the maturity or duration of a debt instrument, the greater is sensitivity to changes in interest rates. The fund is subject to the risk that the income generated by an underlying fund's investments may not keep pace with inflation.

Liquidity risk. Certain securities held by an underlying fund may be difficult or impossible to sell at the time and at the price the advisor would like. As a result, an underlying fund may have to hold these securities longer than it would like and may forego other investment opportunities. There is the possibility that an underlying fund may lose money or be prevented from realizing capital gains if it cannot sell a security at a particular time and price. New fund risk. Each fund is a newly organized management investment company with a limited operating history. In addition, there can be no assurance that the fund will grow to or maintain an economically viable size, in which case the board of directors, parentheses, the board, end parentheses,

of the RBB Fund, incorporated, parentheses, the, quote, company, end quote, and parentheses, may determine to liquidate the fund. Valuation risk. The prices provided by the fund's pricing services or independent dealers or the fair value determinations made by the valuation committee of the advisor may be different from the prices used by other funds or from the prices at which securities are actually bought and sold. The prices of certain securities provided by pricing services may be subject to frequent and significant change and will vary depending on the information that is available.

Holdings and additional information can be found at, colon h t t p s colon forward slash forward slash w w w w w s fm invest dot com forward slash et f s f hg h y dash f m d dh f m dh f m d hd f m u s treasury ten years note E-T-F, parenthesis, U-T-E-N, and Parenthesis, colon. The U.S.T. 10-year note fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the U.S.T. 10-year note funds investments more than the market as a whole, to the extent that the U.S. 10-year note funds investments are concentrated in a particular issue, issuer or issuers, country, market segment, or asset class.

while U.S. Treasury obligations are backed by the, quote, full faith and credit, end quote, of the U.S. government, such securities are nonetheless subject to credit risk, parenthesis, i.e., the risk that the U.S. government may be, or be perceived to be, unable or unwilling to honor its financial obligations, such as making payments. Holdings and additional information can be found at, quote, https, colon, forward slash, forward slash, www.fminvest.com forward slash ETFS, forward slash U-T-E-N-F-M-S-U-S Treasury, dash 10, dash year, dash note, dash ETF. FM, U.S. Treasury, two-year note, ETF. Prentacy, U-T-W-O and parentheses, colon.

The U.S.T. two-year note fund may be susceptible to an increased risk of loss, including losses due to adverse events that affect the U.S.T. two-year note funds investments more than the market as a whole, to the extent that the U.S. two-year note funds investments are concentrated in a particular issue, issuer, or issuers, country, market segment, or asset class. While U.S. Treasury obligations are backed by the, quote, full faith and credit, end quote, of the U.S. government, such securities are nonetheless subject to credit risk, i.e. the risk that the U.S. government may be or be perceived to be unable or unwilling to honor its financial obligations such as making payments. Holdings and additional information can be found at, colon, https, colon, forward slash,

forward slash www. www.fminvest.com slash etFS slash ut-w-O-F-M-U-S-U-S-U-S-U-Stergery-2-year-note-note-E-F.