Animal Spirits Podcast - Talk Your Book: Cash Was Easy… Now What?

Starting point is 00:00:00 Today's Animal Spirits Talk Your Book is brought to you by Federated Hermes. Go to federatedhermies.com. That's H-E-R-M-E-S. Federatedhermes.com to learn more about all their income products and strategies. 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. All opinions expressed by Michael and Ben are solely their own opinion and do not reflect the opinion of Redhol's wealth management. This podcast is for informational purposes only and should not be relied upon for any investment decisions.

Starting point is 00:00:35 Clients of Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Before investing, carefully consider the fund's investment objectives, risks, charges, and expenses. Read this and more information on the prospectus or summary prospectus at federatedhermise.com. Federated Securities Corp is distributor of the Federated Hermes funds. investments are subject to risk and may lose value. Views are for informational purposes only and do not constitute tax or investment advice. Welcome to Animal Spirits with Michael and Ben. On today's show, we spoke with Brandon Clark,

Starting point is 00:01:09 ETF business director at Federated Hermes about income and how investors are behaving and responding to the shape of the yield curve today. My read on the situation is that investors are thinking too much about income and not enough about what might happen if the economic and market environment shifts. Meaning they're pushing out on the risk curve essentially? No, the opposite. Okay. They're getting too comfortable with cash because...

Starting point is 00:01:40 Oh, they're more on the short-term side of things. Yeah, they're like, oh, I don't want to go out on the curve. Look how much volatility there is and I'm still getting paid. But that's messing a really key part of the equation. So people have gotten comfortable in a rising rate in... environment essentially, that they're pretend, they're investing like that is going to last much longer than it might, essentially. So not thinking about, well, wait a minute, what happens if Fed fund rates goes down by 50 basis

Starting point is 00:02:08 points and I miss the ability to lock in rates for a longer period of time? What happens if the economic environment softens and inflation comes in lower? And then the 5% is now down to 4% and the bonds are up 3%. I just think they're just hyper-focused on the income component. That's fair. If you would have said six or seven years ago, hey, the 10 years is going to be at 4.7 and the 30 year is going to be at 5.3. Would you lock that in now?

Starting point is 00:02:36 Yeah, give me all of it. Everyone would have said, yes, and now we're there. People are going, whoa, well, well, but what if the 30 year goes to six? And what if the 10 year goes to five and a half? People want to catch the top or the bottom in this case, I suppose. Yes, that makes sense. But it is hard to believe that we've got to. into this place where I call it more normalized or just rising or stable yields, and you're right,

Starting point is 00:02:58 and no one wants to touch them. So I definitely, I definitely am not of the opinion. Hey, hey, dinghling, take your money out of cash and put it into 30-year bonds. It's not what I'm saying. Right. But, you know, it's not, it's, I don't think all or nothing is the right approach here. And all of it being in cash is probably not the right approach. I don't think most people are doing that, but I think there's a lot of money that is very comfortable in cash. Yeah, and to your point, if the Fed does lower rates because growth slows and we go into recession or whatever the reason. It doesn't even have to be a recession, really. It could just be inflation slows and the Fed cuts rates because they're worried about AI bubble bursting or whatever it is.

Starting point is 00:03:36 By that point, it's probably too late and you miss the moving bonds. Correct, Ben. Right? And then you're sitting in lower cash and you go, oh, no, what? And the people who are in the option income stuff, that's a different type of risk, obviously. There's an equity-related risk there. Right. Anyway, we talked about all these different angles of income. Here's our talk with Brandon Clark, Confederate Hermes.

Starting point is 00:03:57 Brandon, welcome to the show. Thanks for having you. All right, so today we're going to be covering all things income-related, not just on the fixed side, but how clients and their advisors are structuring portfolios to deliver income. Before we get into that, I believe that you're the first person we've had on from the firm, Federated Hermes, not to be confused with the luxury brand or maze. Tell us a little bit about the background of the firm. We're a global asset manager focused on active strategies. I'll start there. We've got about

Starting point is 00:04:30 $900 billion in assets under management, which puts us in a mutual fund context. You know, we're inside the top 10. And so we're a large business that's been around for almost 70 years. Our focus, I'd say, primarily has been around money market or where most of our assets are concentrated around money markets. So, you know, just given our our, our capabilities around money markets. That being said, I mean, we're largely intermediary or have been intermediary sold. So, you know, I'd say our client base largely knows us from the advisor world, given the fact that that's been our main source of distribution. And really, we focus on trying to help advisors solve problems, right? And so when we think about this, it's like, what can we do

Starting point is 00:05:19 to best serve serve you in a way of creating solutions. And so a lot of our investment strategies are based around how do we solve certain problems for clients or their clients. That being said, we recently entered the ETF business about five years ago and that obviously opens up a whole new world

Starting point is 00:05:36 for us when it comes to retail. Right. So where most firms, I'll say traditional asset managers have gotten into this business, if they have been intermediary sold, the ETF world is just kind of opens up the entire investable universe in terms of clients. So what are the biggest solutions that you're providing today? Where are people coming to you with? What are they trying to solve? Yeah, I think it's multifaceted, just given kind of our background.

Starting point is 00:06:00 What I would say is, you know, I think right now there's a lot of uncertainty. We can talk all about the uncertainty that's out there, or whether it's around the geopolitical climate, whether it's around rates, inflation. You can go through all the different, you know, potential issues that are out there that clients and advisors are having to navigate. what they really focus on or where we've been looking or we're trying to solve solutions. Definitely on a fixed income side, kind of two year and in space, having some attractiveness in terms of your risk of return opportunities. And so we're having a lot of conversational advisors around how to best manage.

Starting point is 00:06:38 We'll say that income sleeve for portfolios. Brandon, you mentioned the short term. There was an article in the Wall Street Journal talking about how individual investors don't want to get off cash. There's $3 trillion in money market funds, and they don't find the opportunity set attractive in bonds. I think a lot of that is PTSD from 2022. You mentioned uncertainty. I would say the number one area in the market right now, or at least top five, I don't know if number one is fair. Area of the market that I see uncertainty is in long-dated treasuries. So we're recording this on Monday, August 17th. And the 30-year,

Starting point is 00:07:18 is breaking out to new highs. We haven't been at 5.295% since June 2007. So it has been a long, long time. I do find it interesting that the income on long-dated bonds, as I just mentioned, is at the highest level it's been in a long, long time, and nobody seems to want any part of it. Now, I understand that you could have said this for the last year, last five years, and there's been negative returns, a lot of all,

Starting point is 00:07:48 all volatility to no upside. At some point do they become attractive because I know we're going to talk about income, but I feel like the potential price appreciation on bonds is something that I'm not hearing anybody talk about. Like, recessions do exist. It's possible that you get a boost from bonds if the economy softens. What's your take on where we are short, long, and the opportunities in between? Again, going back to there's a lot of uncertainty. Oh, heck, your PTSD from, you know, this last four or five years here where we saw what was a traditional 6040 portfolio working for most. And then 2022 happens. And we saw rates, you know, obviously go up.

Starting point is 00:08:30 And it really hurt the overall, you know, there was a lot of challenges on the fixed income size in terms of negative returns. To your point around the Wall Street Journal, money and money markets, obviously we are a benefactor of that. So it's not necessarily the worst thing in a lot for us. But what I would say is at some point, you know, the challenge I always think about when we talk to advisors and when we talk about clients is I think the challenge at some point is you've got to move. You're not going to be able to necessarily catch the bottom on a lot of this stuff. So it's where we start to see that risk reward tradeoff out, call it a little bit further out on the curve, call it two years and in, starting to try to find ways to catch. some of that yield and lock it in for longer is definitely, I think, some benefit. I think the challenge is there's just so much of volatility on a long end of the curve right now, right?

Starting point is 00:09:23 And so advisors have the challenge of trying to have their clients stay the course. And so there's a lot of behavioral finance in that when it comes to managing clients' expectations around kind of on the go-forward side of this. I think the question becomes out on that far end of the curve, are we there yet? Right? You know, is it, is it something that we want to be moving clients out into or do advisors? Do some clients want to move their clients out there only to have rates go up again like we saw here in the last couple weeks? And then, you know, next thing, you know, they're wanting to go back into money mark, go back into cash. That makes sense to me because it's a long-term asset. It's going to be more volatile. If people want income, they're looking for more stability. Is that what you're trying to provide with your products? Are you looking more from stability? Are people looking for? No, I want the income piece of the pie to grow and go up with inflation or beat inflation. I want higher yields. What exactly are people looking for in terms of income these days? So I think in terms of income, it's, there's a couple different approaches. And we're really seeing it in terms of, I'll say, Bravi in the ETF industry, rally in terms of flows.

Starting point is 00:10:29 I think folks are looking for income. How they're getting there to, as we just discussed, the long end of the curve may not be the, that may be a bit challenging for people to move all the way out there and lock those in. But these shorter duration products, that's definitely of interest for clients. So we see people looking at that shorter end, again, inside of two years. We also see a lot of people, and we've seen this in the industry, we see a lot of people looking at this covered call derivative income category. And folks looking at that category as a new bucket or a new way to generate income and taking that from potentially their fixed income

Starting point is 00:11:10 and or equity portfolio, how do we best build a portfolio on a risk adjusted basis that generates income, keeps my client invested and solve all the challenges that, you know, normal portfolio construction poses for advisors. Brandon, before we get into. to that category. It's worth mentioning, and I know we're talking about an income, but investors, a certain court of investors, obviously on the older side of clients, they love income. And I totally understand why. I mean, it's not, you don't have to scratch your head and figure out what's going on here.

Starting point is 00:11:46 I don't know what the level is where people stop thinking in real terms, but I found that people think about income nominally. they don't think like, oh, oh, man, my cash is giving me 3.25%, but inflation's still running at three or whatever it is. I'm only actually getting 25%, 25 basis points above inflation. They never think like that. And I'm not saying that's like wrong or anything. It's a fact. You might not like it. You might say it's not rational. It doesn't matter. People love nominal income. I agree. And I think we see that in a lot of these cover call strategies, that derivative income space, you know, you can divide that bucket into different strategy types, right?

Starting point is 00:12:31 We've seen the single stocks which have these mind-boggling distribution payouts. Yeah, 80% income. Which, by the way, when you think about it on a total return basis, I mean, from my perspective, I always think about it in total return. Because you can generate a lot of distribution yield, but you're still exposed to the equity. Right. So you've got that cohort and those types of. of products where people are chasing a distribution, which may not necessarily, may or may not be right for them. I think you also have this other cohort of folks who are thinking about income from the

Starting point is 00:13:07 standpoint of it is just a nominal number. And I think, you know, from a financial planning standpoint, we always have those targets, right? I need to generate $200,000 a year to meet my retirement goals. And so the nominal number is what folks, that's what they focus on. That's, you know, I'd say to some extent, that's what that's what folks are kind of trained to think about. I think that part makes sense. I don't disagree. You got to, you got a budget, right? You do have to budget, 100%.

Starting point is 00:13:36 And people budget nominally. I mean, obviously. Agreed. And so, you know, to me, the big thing is how do we create solutions for them to mix and mash, right? I always think about ETFs have become much more of a. toolkit. I'm running a whole portfolio. How do I want to tilt my portfolio, whether it's fixed income, whether it's equity, whether it's some alternative bucket, how do I tilt my portfolio to achieve those outcomes, right? And generally speaking, especially when you're on the retirement

Starting point is 00:14:08 side, for those who are in the retirement side, they're definitely thinking about, you know, how do I meet that number at the end of the year? So I'm curious if you can talk about how ETFs have kind of changed the gamer, because you mentioned that you started out in money market funds and then mutual funds and now ETFs. And there's just been this explosion in recent years in using tools like options for ETFs. And this is still relatively new for a lot of people. People have been, you know, selling calls

Starting point is 00:14:33 or selling puts to generate income. But now that you can do it in this ETF wrapper, just talk about what the ETF has done to the income space. So I think it's very interesting. So I've been in the ETF business for almost 20 years. So I've been working on ETS for a long time. I've seen a lot of the evolution from the indexing world to, you know, I'll call that smart beta or alternative indexing to

Starting point is 00:14:54 where we are inactive. This income bucket, I think, is very interesting on several levels. One, I think investors as a whole have become much more thoughtful about how that income comes to them. And as an example, 20 years ago, as I was getting in the ETF world, you know, return of capital seemed to be a very negative term when it came to paying out return of capital from a fund. now it's almost something that people are they're seeking when it comes to this income. So I think the ETF world being able to manage capital gains, being able to manage taxes,

Starting point is 00:15:33 having all these different levers at its disposal, you have the ability to potentially take distributions and turn them into return of capital. And I think clients are, I think we have some investors who gravitate towards those types of strategies. And again, we're seeing it in the, whether it's in the product development side, whether it's in the asset flows. You know, we kind of saw a couple different cohorts of the derivative income come out. We had some who were just paying out income. Then we had another cohort who was, that came out, I'll say the next iteration, that came out looking to, I'll say basically transform the dividend income or that distribution income into return of capital. And now you're starting to see, I'll say, the alternatives to what are those S&P 500 and Q strategies,

Starting point is 00:16:29 which is changing the equity composure. Right. So if I have S&P 500 or Q's as my base equity, that's what I'm exposed to, especially on the downside. I think it's probably more impactful on the downside. We haven't really seen an environment where we had really low. large drawdowns for extended periods of time. But these new cohorts coming out that are, I'll say, alternative equities where different views of equity around what they give the exposure

Starting point is 00:16:55 to is where ETFs are starting, you know, again, iterate through the different styles that are out there. Brandon, I'm going to ask you a question that I don't think you could possibly answer, but I'd be curious to hear your opinion. These alternative equity strategies, let's talk about the option overlays that are generating income. What percentage of you? What percentage of you of investors in these products do you think are actually using the income versus just reinvesting and just having it as part of their portfolio? Because I would suspect, actually, you know what, I don't want to call it your thinking. What do you think? So obviously don't know. I mean, it's very hard to put a finger on it. I'll just start from my personal view on this. When you start to look at

Starting point is 00:17:33 the composite of feedback that we hear from clients and or I'll say that, you know, the direct DIY type investors, I think there is definitely a cohort using the, them for income, I do think there are investors out there who are probably looking at these strategies as a way to kind of get them further down that path. It's hard, it's really hard to tell where, where a lot of these assets are. But I do think there are, you know, there are probably some investors out there who are using these more as a means to an end to get somewhere in the, future versus where they are right now in terms of retirement. All right, Ben Carlson, I'll set the over under for you. 30%.

Starting point is 00:18:15 of people that are actually taking the income from these products. For spending purposes, that's probably, yeah, that's probably pretty close to good odds. Oh, thank you. We won't even answer. No, that's not bad. I was thinking this too on the, on the taxable side of things. Like, how much do you think people care about the taxes on this income? Like, does that come into play at all where people think about that? Or is it just, no, no, no, no, I care about the amount of the yield. So you don't think people are paying.

Starting point is 00:18:42 I think taxes are totally separate bucket. Like mentally. It's kind of mental accounting. Brandon, what do you think? Totally. How, like... I think I would disagree with that. I think I would take the...

Starting point is 00:18:51 I think taxes are important. Oh, I think they're very important. But I think you might be giving investors too much credit. No offense to us, investors. But go ahead. But he's also working with advisors, though. So I think the advisors probably care about how the treatment of these taxes are because it's... True.

Starting point is 00:19:06 I'm thinking of the end investor and maybe not the advisor or the retail. But yeah, good point. But maybe why don't you talk a little about the tax side of things and how that works for people on these? Yeah, I think the tax side of it. So I do think people, look, I think we can all collectively say everybody cares about taxes, right? I think most people are always thinking about taxes. I think the flows into this category reinforce a bit of the, you know, there is a care about taxes on this. So there's a couple different ways that I'll say the industry has developed these products. So we developed a strategy and I'll cover that in a second. which is kind of why I think where most of the assets are going now. But I'll say one of the early iterations of this was where the ink, the, the, you can use equity link notes.

Starting point is 00:19:56 So equity link notes are basically, I'll say coupon payments, bond payments out of a portfolio. When that comes out, it's income. So it's treated as income. The next iteration of this, which is the path we had taken or have taken when we developed. So payer, P-A-Y-R is the ticker. When we developed that, we use options. The benefit of options is you have the ability to take that option income and treat it as return of capital to the extent that what you're paying out, you know, if you have an option, if you have an option that was you distributed, but it actually lost, I'll say if the option was in the money and we had to close that out. You have the ability to basically, it becomes a return of capital if you distribute it. And so clients look at that and say, I can generate income for my clients, especially now when you think about all the, you know, all the things that advisors having to think of. You know, all the things that advisors having to think of. about. If I can generate some income that is, we'll call it another leg of the stool, but when you think

Starting point is 00:20:50 about you have your tax deferred, you've got your, you know, your raw tax, we'll call it tax exempt, then you have your taxable accounts. If I have a taxable account that can generate some income that's essentially additional income or additional distribution, as an advisor, that creates a very powerful tool, right? That's a very powerful tool when it comes to planning in retirement, this decumulation phase, right? So I have my, I need to manage my Roth distributions. I have my Roth distributions to kind of help my overall income. I got my IRA slash 401, which is taxable, right?

Starting point is 00:21:26 Then you get into R&Ds and all the things that come together that advisors have to think about to manage taxes and keep their clients, whether it's, you know, under an income limit for Irma, whether it's, you know, you think about all the things that they have to manage through. it's a great tool for them at the end of the day. It's a great tool for them. So talk to us about what you guys are doing using options because, as I said, it's a huge category now. And it seems like there's a lot of growth there. There's a lot of interest from investors. So how do you guys think about using options and your strategies. Yeah. So here's how we do that. So we have, again, we start with a high dividend yielding portfolio.

Starting point is 00:22:05 Again, there's benefits to a high dividend yielding portfolio. One, because just the equity exposure is very different than the S&P. or S&P 500 of the queues, right? So when you're trying to generate income, having a high-dive in-earning portfolio gets you potentially, you know, some direction where you're trying to target. Do you all, when you use those dividend, is there else, is that strategy also based on the idea that these aren't highly volatile stocks that are going to see some huge moves and they're not going to get taken out very easily and get called? We don't write them on the underlying strategy, but the benefit of using those is they do tend to have a lower beta to the portfolio, right? So they have less volatility.

Starting point is 00:22:43 So you're using dividends tax than what, then using index options essentially? Yeah. So we have, you know, again, that high dividend yielding portfolio has the potential to create just less volatility for the client. Again, if you think about that S&P 500. So we generate a portfolio or we run a portfolio. Matter of fact, it's based off of a mutual fund strategy that's just a dividend portfolio that we've been running for decades. So we utilize those stocks. And this is your, you know, think about your blue chip securities. We don't have the, you know, it's not necessarily the S&P 500 with the Mag 7, etc.

Starting point is 00:23:15 This is just a high-devenate blue chip portfolio. We then use index options to generate additional distributions, right? Because it's not always income, but to generate that additional income. So we use index options as an overlay on top of it. what we do know, and I'd say how we've iterated this strategy is we do know that if you're writing S&P 500 options at some number, obviously as the S&P, as the S&P, you know, if it goes through that, it, you start to have a negative return profile. So what we've done is we actually, we sell calls and then turn around, we run a call, we'll call it a call spread, right? So we're basically selling calls and then buying calls a little bit further out to target a certain amount of income. The benefit of writing calls and then buying calls is the S&P continues to go higher.

Starting point is 00:24:10 We don't, you know, we're not losing all the way until that next option, you know, until we roll that next set of options. Just stepping back to the earlier part of the conversation about where we are, what type of environment we're in today as advisors and investors. This is a much, much better, healthier environment for generating income. I remember early in my career, we took a meeting in 2013 with somebody who was talking to us about not buying stocks, about buying junk bonds as a way to like dip our toe back into stock market water. And I feel like we are so far on the other side of that environment. Now, that toe dipping had nothing to do with our interest rates were at the time. but just the like the nature of investor behavior and fishing in the pond that you're in.

Starting point is 00:25:02 And so from 2013 to 2019, 80, 20, 20, 20, 20, 20, 20, because interest rates were zero. There was really very little upside. And it's funny how advisors, investors feel burned by bonds at the time where you should be looking for opportunities, I think. The Fed funds rate went from the lower bound at basically zero, up to 5%. That environment is over. So it's not to say that the price of bonds can't hurt you again, but there's a big difference between going from 4-8 up to 5-2, then 0 to 5.

Starting point is 00:25:36 Agreed. Yeah, I think, again, this is that idea of starting to find ways to lengthen or move out the curve. You know, at the end of the day, could the Fed raise rates? Yes. But I would agree with you. That's 0 to 5, highly unlikely, that we are going to... to go from five to ten in rates right so on the fixed income side you know i think the challenge is always just how do we get um clients or how to how to how to advisors how do they have clients think about

Starting point is 00:26:10 now is the time in this now is the time to start moving into more duration and start locking those yields in especially again when you're when you're in this search for yield i think it'd be challenging for us to see rates go um have that dramatic of a share of it. when you were starting on zero. I mean, we were starting off zero. If you think about, like, it's been since the GFC, right? We seem to always struggle to get off of zero for the longest time. So now that we're off there.

Starting point is 00:26:37 We did it. Yeah. We finally did. Right now, I think the Fed has some dry powder now if we have any kind of additional rate shot or any kind of additional systemic shocks that they have to manage, it was always, you know, tough when you're at zero. But I think we're kind of maybe a little bit back more normal times versus where we maybe we were when we were running at. you know, close to zero for, for a long, long time.

Starting point is 00:26:58 Michael talked about that Wall Street Journal article about, you know, and you talked about your history of your firm is money market funds and you guys have, you know, short duration bond funds. Do you think more investors are actually open to having those sort of in between intermediate term and ultra short term? Are they more open to having that as a core position now because they see like, well, actually, that's a good hedge against rising rates or rising inflation and maybe I need that part of my portfolio now? Or do you think, well, if the Fed cuts rates back to 2% or something, that money is gone. And it's going to go back into something like bonds or something that has a higher yield. Yeah, I think so, you know, the mutual fund business

Starting point is 00:27:35 we've had here is 70, you know, 70 plus years at this point. So the ETF business is still, we're still in our emphasis of like growing that out. I think what we're seeing is, there's that move into that ultra short space. There's a move a little bit further out to curve. we are definitely seeing a movement towards the longer duration. I say longer, you know, in relative terms, right, out of cash. We're definitely seeing clients move in that direction. And again, it's a lot of behavior fine. It's just trying to get it, trying for advisors,

Starting point is 00:28:08 any of their clients to understand that there is risk of potentially being in cash, right? Because the risk there is, rates come down. And again, money markets are the quick, they're going to be the quickest to reset. So the more you can get a little further out the curve and start to lock those in is net net better for investors, better for, you know, advisor clients. So there's definitely, we're starting to see that. We're seeing that in our short, on the, like, in our short duration mutual funds. We're having a lot of conversations on the advisor side around that, for sure.

Starting point is 00:28:42 Brandon, for people that want to learn more about Federated Hermes, how do they find you guys? So it's Federated Hermes, H-E-R-M-M-E-S- dot com. All right, perfect. Thanks, Brandon. All right, thanks to Brandon. Remember, check out federatedhermes.com to learn more about all of their strategies and email us Animal Spirits at the CompoundNews.com. Before investing, carefully consider the funds investment objectives, risks, charges, and expenses. Read this and more information in the prospectus or summary prospectus at federatedhermies.com. Federated Securities Corp is distributor of the Federated Hermes funds. investments are subject to risk and may lose value. Views are for informational purposes only and do not

Starting point is 00:29:26 constitute tax or investment advice. Federated Hermes Enhanced Income Fund payer seeks to distribute current monthly income. Distributions may vary widely and may not be paid every month. ETF shares are bought and sold on an exchange at market price, not NAV and are not individually redeemed from the fund. However, shares may be redeemed at NAV directly by certain authorized broker dealers, authorized participants, in very large creation redemption units. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions will reduce returns. Market price returns are based on the official closing price of an ETF share, or if the official closing price isn't available, the midpoint between the NAPE. national best bid and national best offer, quote, NBBO. As of the time, the ETF calculates the current

Starting point is 00:30:24 nav per share. Naves are calculated using prices as of the end of regular trading on the New York Stock Exchange, normally 4 p.m. Eastern Time. Recent information, including information about the funds nav, market price, premiums, and discounts, and bid-ask spreads is included on the funds website at federatedhermes.com slash us. Bond funds have the potential for higher yields than cash or money market funds in exchange for greater principal volatility. A rise in interest rates can cause a decline in bond prices. There are no guarantees that dividend-paying stocks will continue to pay dividends and they may not have the same capital appreciation potential as other stocks. A return of capital distribution

Starting point is 00:31:13 will reduce the shareholders' cost basis and result in a higher capital gain or lower capital loss when fund shares are sold. Investing in options involves risks different from or possibly greater than investing in traditional investments. Stocks may decline in value because of an increase in interest rates or changes in the market. Duration is a measure of a securities price sensitivity to changes in interest rates. Securities with longer durations are more sensitive to changes in interest rates than securities of shorter durations. The yield curve compares yields according to maturity. Treasury yields are quoted for illustrative purposes only. The S&P 500 index is an unmanaged capitalization weighted index of 500 stocks and cannot be invested in directly. The MAG 7 is a moniker for seven

Starting point is 00:32:00 mega-cap tech-related stocks. Morningstar ranks Federated Hermes as a top 10 open-end mutual fund manager based on assets under management as of 3.31, 2026. Quote, Q strategies follow the NASDAQ Composite Index.

Animal Spirits Podcast - Talk Your Book: Cash Was Easy… Now What?

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