Animal Spirits Podcast - Talk Your Book: Defining Risk with Structured Protection ETFs

Episode Date: May 13, 2024

On today's show, Ben Carlson and Michael Batnick spoke with Matt Kaufman, SVP and Head of ETFs at Calamos Investments to discuss: why embedding options within ETF wrappers has gotten so popular, how Calamos structures protection ETFs, why timing can matter with structured protection ETFs, demographic tailwinds for structured protection products, and much more! 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://www.idontshop.com Past performance is not indicative of future results. The material discussed has been provided for informational purposes only and is not intended as legal or investment advice or a recommendation of any particular security or strategy. The investment strategy and themes discussed herein may be unsuitable for investors depending on their specific investment objectives and financial situation. Information obtained from third-party sources is believed to be reliable though its accuracy is not guaranteed.   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. 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. Investments in securities involve the risk of loss. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. The information provided on this website (including any information that may be accessed through this website) is not directed at any investor or category of investors and is provided solely as general information. Obviously nothing on this channel should be considered as personalized financial advice or a solicitation to buy or sell any securities. See our disclosures here: https://ritholtzwealth.com/podcast-youtube-disclosures/ Learn more about your ad choices. Visit megaphone.fm/adchoices

Today's Animal Spirits is brought to you by Calamos Investments. Go to Calamos.com and learn more about the Calamost Structured Protection ETFs. That's calamose.com for 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. All 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 Ritthold's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spirits with Michael and Ben. Michael, I've been pounding the table on this for a while. There's never been a better time to be an individual investor and every single day it gets better

because of the strategies you're afforded. I thought you were going to say that the market is going to crash. Keep going. No, I haven't... If it is, it would be a good time for the talk we're having today. Some of the stuff that we've expanded to in recent years is stuff that I probably never would have even foreseen in terms of the way that strategies are utilizing options and derivatives within ETFs, because that's just not a world that I have really lived in before. I've done structured products in the past, like in my endowment days, with a 200-page perspective and trying to literally create your own. And it is a giant pain in the butt to do that.

And so having someone else who knows what they're doing, do it for you in a liquid wrapper is kind of insane to me that people have access to this stuff now. Yeah, I love the idea of being able to define your outcome. And obviously, there's costs involved in terms of potential opportunity costs or whatever. Like, there's no free lunch. I think we all know that. But investors were never able, the mass investor was never able to say, okay, 10% upside, no, that doesn't work.

I need more. whatever it is, they've never been able, you've been able to do that, like, to sort of define your risk for award a little bit with stocks and bonds, but like, you don't know what the outcome's going to be, right? You just know that, like, whatever. So to be able to be so precise with what you're willing to give up, I think it's, I think it's a wonderful thing for the investor class. So on today's show, we talked to Matt Kaufman, who's a senior VP and head of ETFs at Calamos. And Calamos is rolling out a new line of ETFs where it's taking all the downside off the table and offering you a capped upside. So, interesting conversation. Here's our talk with Matt Kaufman.

So, Matt, welcome to the show. One of the things that is great for individual investors and financial advisors, I like these past couple of decades, is just the explosion in new products and strategies that are available that just didn't exist in the past at such a low cost or a great scale. And options being in a tax-deferred wrapper like an ETF, is one of them. So why did it take so long for options to strategies to become available to investors? And then what was the catalyst to make that happen in recent years? Yeah, that's a great question. Thanks for having me on. Appreciate the time today. I'll give you a little bit of my background and kind of how that led into some of these

options-based strategies. And I think it's, just to say, I think it's great for the industry. I think the ability to deliver these lower cost, options-based, outcome-based solutions to investors is really changing the game for a lot of people. I started out in the ETF space at PowerShares. Early days of Power Shares, we were building out the Smart Beta ETF space. We launched one of the first, if not the first, options-based ETFs there was a buy-right strategy. I believe that was around 2008. After Power Shares sold to Invesco, a lot of, you know, the partners had moved on.

It was about 2010, I got a call from an actuarial consulting firm, which made very little sense to me at the time, but kind of followed that leading. And the head of the group said, I want to build funds out of the risk management strategies that we've been running on the balance sheets of life insurance companies. So went over to a great firm at Milliman Financial Risk Management still around today. And we were doing all of this risk management in product builds for life insurance companies. We built, I'd say about 50, 55 funds that sat on the balance sheets of life insurance companies. And that business grew very well.

We raised about $70 billion in four or five years. So there's a point to my story here. During that time, rates were extremely low. And so we saw the insurance world move from a risk, you know, principal protected model to a risk sharing model where the rates that they could give you on 100% protection at the time was very low. the upside caps they could give you were low. The guarantees on annuities were very low at the time. And so what you could do was deliver, you know, a 10% protection level or a 20% protection level and then give people meaningful upside. And so we saw a lot of insurance companies move toward this structured annuity type approach. We saw banks doing it on the structured product side as well.

And so what we found and what we saw is you can deliver that type of model very efficiently using options positions. We can give you a 10% buffer, 20% buffer, building options packages. And then because those are options, we can now move those into a 40-act wrapper. We don't necessarily need an insurance company balance sheet or a bank balance sheet to deliver that type of outcome. And so that really, I'd say, gave rise to the buffered ETF for the defined outcome ETF space. You know, Bruce Bond, great guy, was coming back into the industry, was looking for a way to put innovator on the map. And I think that those buffer strategies really did that.

The environment was right. The interest rate environment was right. One of the things that I did as we were talking about that space is I went to, you know, one of the large ETF conferences, there was an options panel. And I said, okay, I'm sure someone has thought about this before. So sat in the options based panel and they were talking about the same product that we had built in 2008. They were talking about buy right strategy.

and the ability for the covered call to, you know, provide good portfolio income. And so I viewed that as a really big opportunity in the space. Like, okay, nobody is really driving options-based products into the ETF world. And so that's what we did back then. Well, the proof is in the pudding in terms of this being a viable product that investors are clamoring for JEPI, I think is the largest active ETF. You mentioned the buy-right strategies. Bruce Bond, as you mentioned, has had a lot of success with the buffered ETFs.

So there is, I think one of the unique and exciting things about these products is that you can sort of control your risk and reward, which is the two tenants of investing with your asset allocation, but you can't really define your outcome, right? You can't say, like, I like this tradeoff. No, that doesn't make sense to me. With these new vehicles, you can do exactly that. That's exactly right. We can use options positions and we use flex options to do them. So just to demystify that a little bit. Flex options are simply customized exchange listed options. So we can decide what the underlying should be, you know, S&P 500 or NASDAQ or Russell. You build big liquid underlying so we can identify that. We customize the underlying, the strike prices, the expiration date. So we can make all of those options expire on the exact same day. And then we can customize the style. So American style, you wouldn't want to do that because you could get called away on one of those legs.

So we make them all European style. And when you use Flex to do that, you can deliver, you know, really great outcomes. You can deliver really customized, precise outcomes for people and put them in the tax-efficient 40-act wrapper. So you and Calamos are relatively new to this marketplace. What are you all doing that's different and unique from some of the existing products that are already out there? Yeah.

So the space that we're capturing is this capital protected or 100%? downside protection space. It's a space that really hasn't been captured by the ETF vehicle yet. And I think it's the next iteration of where we are in the rate environment and where the ETF ecosystem is going. And the other reason that it really hasn't been captured yet is think about what I was saying. When rates were extremely low, you could deliver a partial principle protection. And so that space grew really, really well. It's almost $50 billion in the ETF space today. There's, let's say, 50, 60 billion of structured annuity selling. It might be more than

that now. That capital protected space is about four times the size in the structured note and annuity world. And it really has not been captured by the ETF because rates were in a place where you really couldn't. Now that rates are four or five north of five percent, we can afford to deliver 100 percent protection using options positions. And so that's not. Sorry to cut Cutting, can you just explain what higher rates, the juice that it gives you to afford the ability to protect all the downside? What does that mean for the listener that's not super familiar? So a simple explanation is your outcome is derived from, you know, interest rates, some equity premium, and you can really build 100% protected products as rates are higher.

Your put becomes cheaper that you're buying. And so the exercise that we like to go through is, like let's just pretend that you have $100. So to construct this outcome, we're going to buy a deep in the money call or close to a zero strike call, which will give you all of the upside exposure and all of the downside exposure of the S&P 500. So that'll cost you like around $98. It's going to take up almost all of your money. And then we're going to buy an at the money put, which is going to give you full downside protection. So at the money put gives you 100% protection. That might cost you let's say four dollars. So those following along, you say, okay, I busted my budget. You gave me $100 and I've spent 102. Whereas the next leg is we're selling an out of the money call. And so we're going to sell

enough out of the money call in order to generate enough premium to pay for that downside protection to get us back to 100. And so when we construct all that package, it gives us all of the upside to a cap, which right now is 9.81% with 100% downside protection. So the hurdle rate being higher with interest rates just kind of increases that cap. That's exactly right. Yeah, the higher the interest rate environment, the higher your cap's going to be. And you can see that in the buffers too. Do you view these as a fixed income alternative, as a cash sleeve, as a equity protection?

How do you view these for investors in terms of where they should put these in their allocations? Yeah, there's a couple ways that we're seeing advisors use them right out of the gate. and they were kind of in line with how we were thinking about them as well. When you can deliver 100% protection over an outcome period, it really unlocks that cash bucket. You know, you think about your alternative is you could buy a risk-free rate product, like a CD or a money market, and you're going to get, you know, quote, guaranteed 5%.

But then at the end of that year, you have to pay ordinary income tax on that. So upwards of 37%. So your five automatically turns into 3.2, 3.3.3. So your opportunity then is to trade in that 3.2% for the upside of the S&P to a cap of 9.8% with no greater downside risk over the outcome period. And so that's for folks who have cash on the sidelines. That is a great opportunity to get almost triple the upside. And that money's going to grow tax deferred. And then you pay long term cap gains rates when you sell.

So I was just about to ask a question that you answered, but I just want to reiterate. We're talking about there's a defined period, and we'll get into the details of that and how that matters. But what you're saying is if you're able to buy it on the outset and get that 9.8% cap, let's say the SP does 15 or let's just say just 9.8%, just to be very clear. And you get all the upside of that 9.8%. But you don't necessarily have to sell. In fact, if you don't sell, you're not paying ordinary income on that 9.8%. Is that the idea?

That's exactly right. Yeah. And you think about the products that deliver this type of capital protection outside of the ETF, they all expire. And then at the end of that expiration, you're forced to pay ordinary income. If you do it inside the ETF wrapper, then that money just grows tax deferred and compounds on itself over time. Is this the idea, though, that to get that protection, you have to hold for the entire

period? Does that apply here? To get the outcome protection, the 100% outcome-based protection, you would want to buy in at the very beginning. There's opportunities along the way as well. You know, the short version is any time that net asset value, the starting NAV crosses back over its starting point, you'll be able to get the exact same 100% protection, but over a shorter time period. So that would be, you know, in some ways, an even better deal than over the full outcome period. But I guess what Ben's saying is, let's just say, and the accrued period is an important, really important detail.

So we're going to spend a little bit of time here. If you buy it and the market falls 20%, and for whatever reason you say, you say, you know what, I changed my mind. I want the money back. You don't get the protection in the first month, right? Like you get your money back. If there are losses over the outcome period, you get your 100% principal protection at the outcome period. Is that, could you walk us through how that works? Yeah, that's correct. Your 100% protection is designed to be delivered over the outcome period. But along the way, it's going to be extremely significant. It's going to be a large amount of protection. It might be 99%, 98.5%. If you see a significant sell-off in the market,

because those put options would increase in value. Yeah, exactly, exactly. Oh, wow. I didn't realize it was that effective as that quickly. Yes, it is very significant. And that is a difference, just a note between a 100% downside protected product and like a buffer, you know, a buffer has a release point. So definitionally, you're protected from the first set of loss and then none thereafter. And so you have more downside volatility. in that movement. Whereas if you have 100% protection, your downside movement is extremely small over time. I'm stating the obvious here. We want to just like spell this out clearly. Your, your biggest risk here would then be, okay, you're not going to earn whatever you earn

in T-bills or a money market account if the stock market finishes down because you just earn nothing, right? Your return would be zero. In that sense, your cost would have been 69 basis points, which is, you know, the price of the ETF. So the market goes down 10%, 20%, 100%, you'll be down 69 basis points. Right. Yeah. So you'd be flat in effect, almost minus cost. That's right. Another potential opportunity cost, just to be very transparent about what you would be giving up here, because of course, there's no free lunch, is that, Ben, you mentioned a couple of weeks ago on the podcast, how many years are up 20 percent? Like, if you are taking this from your equity bucket, and that's obviously a decision that the investor has to make with either their advisor on their own,

if the market is up 30%, it's hard to, it's hard to, it's hard to miss the years like that. And that would be the situation in the product like this. Well, yeah, I think if you're taking from your equity, equity bucket, it would be more of a risk management tool. So, you know, rather than moving all of your money over to get some, you know, specific protection level, yeah, we can go through an example. So, Ben, you know, you've rode the market up the last two or three years. We're at all-time highs, you know, you want to take some risk off the table.

So how much, how much equity risk do you want to take off the table? Well, Ben's very nervous at these levels, am I right? Right, but yeah, but yeah, this would be going from a total risk-on situation to a very conservative. So let's say, all right, I'm a 60-40 investor. I want to be 50-50 now. So I'm going to take 10% of my equity and downshift. Okay. So you take 10% of your equity, move it into a 100% downside protected ETF.

And now you've got a profile that gives you, you know, 90% downside participation. So you've taken 10% of your downside risk. off the table. But then what I love about these is your zero to 9.8% upside remains untouched. And so you can preserve, you know, that upside exposure of 100% of your portfolio assets. And then, you know, you're not capping your upside on the equity portfolio sleeve. Now you get 90% participation above that cap because you've moved 10% in. And so, you know, we're not asking for all your money. If you're de-risking your equity exposure, you can use these as a tool.

But again, if you're moving cash over, you know, moving more cap, moving 100% of your cash might make sense. But if you're de-risking equity, it should sort of take a portion to do it. I'm sure this is a commonly asked question. If the market, if you buy this and then the market is up 30% in the first five months of the year, unlikely, but it's, let's just say that happens. Would you be capped out? Could you get capped out of the first four months? And then you're like, hey, listen, I want to lock in these gains. I understand I'll pay taxes.

but the math, the equation, the arithmetic changes, I want to do something else. How should investors think about that potential scenario unfolding? Yeah, there's time value built into the options that the ETF is holding. And so if the market is up 30% or more really early on, the ETF may only be up, you know, three or four percent. And so it still has, you know, another five and a half percent to go. And you really won't scrape that last penny of the 9.8 percent until the very last day in the outcome period.

But we do see advisors, you know, moving around within those different products, finding opportunities, you know, if the market's run up and maybe they get 6% and they're happy with that, they may move into a different, a different ETF and try to capture more growth. Some people move in at that point, too, if the market's up 30% and they haven't bought, and like, okay, if I think the market's going to stay above the cap, that's essentially a free 6% to me. And so we see people using it that way as well. Right. But yeah, the way that I would look at this, because it is so conservative, is unless you're really determined to put a hedge on or time the market, wherever it is, it's hard to compare this kind of product to investing in stocks, right? It's a completely risk-off position, right? So this is, this would, to me, fit more in the fixed income to cash to alternative sleeve. Yeah, I agree. I think we're seeing more people use it as a cash alternative with rates higher. They're able to get, you know, equity linked. upside, you know, take your cash, link it to the equity markets, but take on no greater downside

risk to do it. And you mentioned, sorry, you mentioned the tax piece of it, how you're, it's tax deferral because it's in ETFs. Explain to us how the taxes work with options. How does that different than just holding regular securities, or is it different at all? Yeah, we're, we're diving deep, so hopefully everybody's ready to go here. Yeah, so when you think about taxes and options, you've got index options, which are typically taxed as 60-40 treatment, long-term, short-term treatment. And then you have equity options, which can be taxed as capital appreciation. And then what we do inside the ETF is we hold equity options because we want that capital appreciation potential. If you hold index options, you end up with some weird mark-to-market accounting things

that you don't necessarily want inside your ETF. So using equity options is usually the best approach there. But the reason we go flex then is most equity options are American style, which means they can get called away. And so we use the flex market because it allows us to shift from American style to European style. And that gives you the upside potential that cannot get called away until the end of the outcome period. Probably the deepest I've gone on a podcast. So hopefully everybody's stuck with us here. But it is important because it does highlight the fact that if you do this on your own, you can get close, but you can't actually construct the same way and the same manner to get that tax deferred and compounded growth inside of

the ETF wrapper. So the ETF and the flex market really make this possible. Right. And to your point, if you're, if you're hitting that upper bound in your 9% or whatever gain, that you're not, it's not like you're paying income on that like you would for a short-term cash position in T-bills or money markets or online savings account, whatever it is. Any of the other wrapper that you're holding that would deliver this type of capital protection that I can think of would kick off either income or it would be treated as ordinary income when you sold the product or when it expired. Let's say that I buy this product on day one and it's a 9.8% cap. And a year later, when the options roll, interest rates have gone down from 5% to 3%.

it's quite likely that in that scenario, the cap would move from 9% of making this up to 6%. Yeah, I think that's obviously very likely, and that's kind of what we've seen historically as well. I would say anything over a risk-free rate of, you know, call it 1, 1.5% and we'll be able to deliver meaningful value over the risk-free rate. Okay, sticking with the time sensitivity piece of this, so the 9.8% that we keep mentioning, that's on day one. This thing floats. So how does an investor know what the cap is on month three, four, five, or six or whatever?

Yeah, so we have a pricing chart on our website. And so that will tell you any day that the market's open. You can go to the website and see where the ETF price is. And because we know what the outcome period is and what the cap is, you can know what your upside potential is, how much downside protection you have, and how many days you have to hold in order to get that. So if you went to the website today, you might have an upside cap of, you know, 9.4, 9.5%. The markets run up a little bit since we launched last Wednesday. And so now you can say, okay, I've got a 9.5% cap. Markets gone up, but now I've got a 99.5% protection

level instead of a 100% protection level because you've got 50 basis points of downside risk built in there. So I'm making up some numbers, but that gives you an example of how to play this. And then if the market's down, as we were talking earlier, the NAV might be down below that starting point a bit, in which case your cap would actually be higher than 9.8%. You might be at over 10%. So I would encourage people to use a tool. Go ahead. Yeah. So you have to educate yourself if you're coming into one of these on any day besides the launch date. Yeah, that's right. And I would say that that's a good thing. We're giving people an extreme amount of transparency into options strategies. And so, you know, because we're telling them, you know, what their outcome period looks like,

what the performance could look like over time, we give them all of that insight into the options. It allows you to go and see that. You know, there's options, ETFs out there today that don't do that. And so there are people who are buying in at the wrong time and they just don't know it. Like you might look at a quarterly rolling option strategy and people may be buying when that market is down and they may not have any, you know, a hedge effectiveness left. But they just don't realize it. So we've talked about option strategies on the S&P 500. For your list of options, ETFs on your website, there's also coming in the future looks like NASDAQ 100 and Russell 2000. What would be the difference of using those? Is it just the

fact that maybe those indexes are a little bit more volatile and you're going to get more bang for your buck? Why would an investor choose one index over the other? Yeah, a few reasons there. You're right. There is a little bit more bang for your buck. We've seen a little bit of a stair step in cap rate for those indexes. So we've seen a little bit higher on the NASDAQ 100 and then even higher for Russell 2000. I think people love the idea of getting NASDAQ 100 exposure and getting it in a downside protected way. And I think the Russell 2000 small caps is a great story right now. I think that a lot of folks are looking at small caps.

And so being able to access that marketplace, I think makes a lot of sense as well. So, yeah, we're seeing an opportunity to get into all three of those areas. And we really, again, wanted to capture this capital protection space. It's massive outside of the ETF wrapper. And so we wanted to have the broadest offering, you know, give the most reference assets. So we've got monthly entry points. You know, we don't necessarily think we need to have, you know, a bunch of these out all at once, but having one every month that people can get into, I think, you know, gives people

a really focused, focused potential. And I guess having those different entry points gives you, because as Michael mentioned, the rates are going to be different. The volatility is going to be different. It gives you different options in terms of kind of diversifying your pricing and what the cap might be because it's going to fluctuate. That's exactly right. Yeah, the cap's going to be different every time we launch one of these. And so it gives you an opportunity to like ladder yourself in. You can buy multiple. So there's a lot of different ways you can do it. It changes your mindset a little bit too when when you have 100 percent protect. action over an outcome period. It does change your mindset, you know, to like, normally it's a risk reward tradeoff. If like, okay, do I want Russell? Do I want NASDAQ? Which one has the best risk reward payoff? But when you have no downside risk and your mindset almost shifts like, okay, which index do I think has the best potential to perform over the next 12 months? And that might be where you're seeing people move into. I'm sure the answer is it's a combination, but I'm curious to hear how you're seeing investors, probably mostly advisors,

but you could correct me if I'm wrong, using this. Is it like set it and forget it as in here's the strategy, here's what we're doing, versus how many people are active in saying, okay, now there's a strategic opportunity to pivot to a more attractive investment? Yeah, I can speak to just prior experience, having built a lot of target outcome-based funds. As we see about half the money coming in on day one, people wanting that outcome period performance, they're lining up for it, financial advisors. you know, gives them a great opportunity to meet with their clients.

We've got a product coming up. They can line up money for that. And then we see the other half generally coming in as opportunities arise in the products. You know, if that NAV crosses back over its baseline, we see people moving in or if the market's down, you know, a little bit, then that might be an opportunity for people to come in as well. And then as far as like, you know, clients are concerned, we see a lot of RAs who will say, you know, a lot of my clients have cash on the sidelines.

it's difficult for me to bring that, you know, money in. And so this gives them an opportunity to bring that cash under their books, give them a greater upside opportunity. Let me, let me just, let me just speak to what you just said. So I remember this just triggered a memory. 2013. Josh and I were in a meeting and the person was talking about high yield bonds. And, you know, back in 2013, the environment, the, the, the psychology of the investor was still very much healing from the great financial crisis. And they were talking about high yield bonds as like chicken equity, like a way to like get like market like risk, but like not, you know, not all the downside of the stock market, which whether that was a good idea or not is fully

a different discussion. But the fact that somebody's able to do this instead of that is, I think, a massive leap forward. I do too. I do too. Yeah, we are delivering things that have existed for 20, 30, 40 years, and we're putting it inside of this tax-efficient ETF wrapper. And there's massive amounts of money, you know, sitting on this, either sitting on the sidelines or in those types of products. There's $6 trillion in cash. There's hundreds of billions in capital protected notes and fixed index annuities. And we have built a better mousetrap for that money.

We didn't even really discuss, you just did, but we didn't even really get into the fact that this, these products are not new. They're huge in the insurance world. Now they're in a liquid wrapper. I think you mentioned there's something about something being four times the size of this market. But in terms of the market size and the insurance space, what are we talking? How big is it? Yeah, it's, you know, the insurance space and the structured note space, there's lots of termed products.

So it can go from, you know, one out to 10 years. And so getting an actual measure of the space is difficult. But, you know, it's a lot. Yeah, it's in the several hundreds of billions of dollars. And I will say as rates have risen off of zero, you know, we're at 5% now. You know, people are buying these products again. People are buying CDs again. They're buying money markets.

They're buying fixed index annuities. They're buying capital protected structured notes. And so that space, the note and annuity space, the capital protection version is about four times the size of the buffered version. So it gives you an ETF listeners a framework. You know, that buffered space is massive and it's growing extremely well. there's a whole pie out there that is four times the size that has yet to be tapped into. Well, if you were going on Shark Tank and you're getting in front of Mark Cuban and company,

wouldn't your Tam pitch be, listen, there's 70 million baby boomers retiring. They've been sitting through equity volatility for 40 years. They want an off ramp for some of it. They're going to be, you know, they're going to need three decades of investing still in retirement. But isn't that the opportunity here is just baby boomers who have gains and want to offload some of that risk? I think that's one massive opportunity. And yeah, thanks for bringing that up as well. Retirees who need to provide for themselves when they no longer work need not only to generate income, but they need to outpace inflation. And so, you know, the equity markets tend to outpace inflation over time. But people can't always afford the risk of the equity markets.

And so here you can get equity linked upside performance to the tune of 9.8%, which we know is going to be greater than inflation with no downside risk over that outcome period. And so we're seeing a lot of retirees do things like this. And I think a lot of retirees also do fixed index and hoodies and those types of products as well. And they do it because they want that outcome. They like the value that those wrappers provide. And now we're delivering that same value,

but in a more tax-efficient wrapper. Yeah. And one of the things Michael and I always talk about is, because there are certain investors who just say, listen, Buffett and Munger told me to just hold tight and sit through the volatility. And so some people would say, what's the point of these products if, you know, you're totally cap? But the point is you have your bumpers in and you know what they are in advance. It's not like it's a surprise, right?

You have that idea when you go into them so you know what you're getting and there's no shock value. That's right. And, you know, I think Warren Buffett just also said that his best play right now is cash, which could not be a better sales pitch for, you know, for Calmos ETFs. All right, Matt, where do we send people who want to learn more about all of the things that you're offering? Yeah, go to calamos.com. You can see our ETF tab and you'll be able to find our current structured protection ETF and then all the ones that are upcoming every month.

We're going to have one. So S&P 500 was last Wednesday. Great launch there. We did about 1.5 million shares just in the opening day, a lot of demand. And then the NASDAQ series is going to launch the first business day of June. so June 3rd and then we're on file for Russell in July and then we'll keep going after that awesome this is really great Matt appreciate the time yeah thank you okay thank you to matt remember check out calmos.com for more to learn more about a structured protection

ETFs email us animal spirits at the compound news.com and we'll see you next time