Animal Spirits Podcast - Talk Your Book: Equities With Guardrails

Episode Date: October 23, 2023

On today's show, Michael and Ben are joined by Hamilton Reiner, MD, PM, and Head of US Equity Derivatives at J.P. Morgan Asset Management to discuss: how hedging ladders provide downside protection, the goal of the HELO ETF, hedged equity strategies vs traditional 60/40 portfolios, the impact of volatility on the strategy, 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. Wealthcast Media, 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 Talk Your Book is brought to you by JPMorgan Asset Management. Go to a.m.j.jp.morgon.com to learn more about the J.P. Morgan Hed Equity, laddered Overlay, E.T.F. Ticker, hello. Just go to an H.E.L.O. Again, that's J.P. Morgan Asset Management to Learned 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 Ridholt's wealth management may maintain positions in the securities discussed in this podcast. Welcome to Animal Spurds with Michael and Ben. You know, on the intros, we're describing the ticker. Did I call it Hilo? You did, call it Hilo. We're just sitting there for you.

Hello. I'm surprised that one was not. not been taking yet. So the idea, and I don't want to step on too much from the tarot because it really did dissect it pretty well, but the idea behind this new ETF is equities with guardrails. And I think that that category is going to continue to grow and grow and grow as older people living longer still want to stay in the stock market, but don't necessarily want to. all of the risk of the stock market and they're willing to forego some of the upside so long

as they don't have to take all the downside. You and I were just talking about this this morning for some client communication about buy and holds continues to be like the best long term strategy, but some people just are not hardwired to live through a buy and hold for all of eternity, right? It's just, guess what? Most people aren't. Yes. I doubt when I'm 70 years old that I'm going to want all of the smoke. I probably won't. Right. And the ability to somehow lay off some volatility or risk in your portfolio, whatever it is, whether it's a hedge strategy or cash or bonds or trend following or whatever it is, a black swan fund, whatever that can be, if it can allow you to hold on to the other buy and hold stuff, whatever percentage of your

portfolio it is, then it's a worthwhile strategy. Yes. That's right. So we had Hamilton Ryan around before to talk about JEPI, which was by far one of the biggest sources of questions that we've gotten over the years for a specific fund, and we've got a ton of feedback on that. This is kind of similar, kind of different. And we go over that. This is the J.P. Morgan Hedged Equity Strategy. Ticker is hello. And so here's our conversation with Hamilton-Riner about this.

We're rejoined today by Hamilton-Riner. Hamilton is the manager, portfolio manager, and head of U.S. equity derivatives at J.P. Morgan Asset Management. Hamilton, welcome back. Thanks for having me, guys. Always a pleasure. Last time when you were on, we spoke about JEPI, which is the largest active hedged equity strategy in the industry.

So now you're coming to market with a sibling strategy. The ticker is Hilo. I was but say hello, but it's hello with one L. It's hello. It's hello. Why would you not want to take the greatest ticker of all time, hello, and butcher it? You know, every time I see these great tickers, I'm like, huh, how is this still available? but we're not running out of new neat tickers.

Okay, so how is hello similar or different to Jeppie and other hedged, buffer, whatever we want to call them, strategies that are out there in the marketplace? Sure. So some may say, Michael, that you start with the ticker and you figure out the words to go along with it. There may be a little truth to that because if you could have the word hello, why not? some people will say the Beatles, Adele, the Doors, Lionel Richie, you figure out what the theme music is, but one of those does work. When we think about this strategy, I'm kind of partial to the Beatles. And it really is about don't say goodbye to your equities, say hello. It really is about helping people get invested, stay invested. Our goal is to really get people to be able to get invested, stay invested. And it's so darn important, as you guys know. If I was on this phone, on this podcast at 830 Eastern Standard Time last Friday,

and the unemployment number came out, futures went down 35 handles. And then by early afternoon, they were up 60, a 95 handle move. Getting invested, stay invested, because you hedge is incredibly important. And you would naturally think that that was a one-off. But then on Monday, after the unfortunate circumstances over the weekend, when I woke up, futures were down 30 to finish up 25. So the idea of hello is how do I get equities into your portfolio, partner with folks, and help them stay invested. You say that you're using laddered options.

How exactly does this work and how much of the fund are you trying to hedge? Yeah. So think about it as an equity portfolio with guardrails, Ben. We're going to own stocks and then around that, that are benchmarked to the S&P 500. So it's a low tracking error equity portfolio that looks, smells, and tastes like the S&P 500. however we're active with low tracking error and then around that we're going to hedge with s and p 500 options now when we talk about laddered the idea here is we're going to have a three month hedge in place but you guys are smart guys there are three different three month hedge windows

every three months so you know think about it hedging for one window January February March another one February March and April and then another one March April May and then you rinse lather repeat and you do it all over again So think about it. That's how we ladder and stagger our hedge has been. All right, many questions. First one is, what are you trying to hedge exactly? Are you trying to protect from any drawdowns?

Because obviously, that comes with a very significant cost. You're trying to eliminate the right tail of the really nasty and nasty decline. Are you trying to hedge the 10% decline? What are we trying to accomplish here? Yeah. So if you think about it, if you're trying to help people get invested, stay invests, Michael. The idea is, is actually removing that part of the downside or that left tail, if you will, that's going to help people say, help people not say, get me out.

So when we think about it, we hedge every three months from down five to down 20. People could handle a down 5% sell off, Michael. It's something more than that. So if we're thinking in terms of like the volatility characteristics or, I mean, is there a simple way to look at this like this is kind of like an 8020 portfolio or 7030 or 9010? And is there a corollary there? Absolutely. So think about this strategy as being a 60-40, where your stocks are the 60 and your hedges are

the 40. The difference, though, Ben, is that even though the 40 is wonderful right now, bonds are back in case you haven't heard, they're not always a hedge. Our 40, in this case, is a bona fide hedge, something that will zig with market zag. And to me, that's incredibly important because how else can you stay invested unless you know your hedge is going to work? All right. So just talk to us about how this works in practice. So you're hedging the first X percent, which I'll let you fill in again. And then does that mean that if the market is down more than that, like what actually happens with the with the price on the screen that the person is seeing? So we're going to hedge from down 5 to down 20 in three different hedge windows, Michael.

Let's call it, as I said, January, February, March, March, and April, is one window. February, March and April, May is another. And back to Ben's question earlier, this strategy is going to give you about half the vol and half the beta at the market. So we're reducing volatility in beta significantly. But what's nice about using options as a hedge, it doesn't decrease your returns over time by the same 50%. options give you the ability to have some asymmetry around your return. So we expect through a cycle this strategy to give you two-thirds of the market, but with only half the ball and half the beta.

So the superior sharp ratio. And as we all know, markets are up, what are they up, 16% year to date, but nobody's happy or believes it. How about actually finding a way to help people own some of the market and not really worry about the zigs and the zags and all the fearmongers in the ecosystem? So you hedge five to 20. Does that mean if the market, if the market, I'll just say the S&P 500 is down 11, does that mean that you're only going to be down a maximum five?

So if the market would be down 11, because you have three different hedge windows, we should be down around five. If the market were to be down 15, we'd expect to be down around seven-ish. So helping you not have as much downside, Michael, means you don't need to make as much money when the market bounces. Does that mean that if you get passed down 20% all bets are off? Like does the protection disappear or how does it work then? It's incremental. So over one of those hedge windows, if the market were to be down 22 percent, for that one hedge window, we'd be down around seven. That first five was an incremental too. Nothing explodes. No Oppenheimer moment. It would actually be something that's really just incremental. So to bring it to life, we do run the largest hedge equity strategy in the industry and a mutual fund. And in the first quarter of 2020, the market was down just to,

about 19.6 percent, and we were down just under five. But that was for a single hedge window. Think about it as three different hedge windows to create that shorter-term smoother experience. And you mentioned the cost of the options. So you obviously don't want to have the cost of that protection, eat up all your upside gain. So explain to that again. How much does the cost of the options fit into how much of your upside gain is taken away? So, Ben, I love the question. The reason I love the question is because one of the historical challenges with hedging is you don't have staying power. One of the largest pensions in the U.S., a West Coast pension in February of 2020, unfortunately said we can no longer handle the cost of our hedges. We're taking half of them off.

February of 2020, timing is everything, guys. And so when I think about it, I want to make sure that the hedges were paid for so that it actually carries well. So the way we actually pay for our hedges is we sell an out of the money call for going some of the upside. But it also means that you're not bled dry by putting hedges in place, Ben. So, all right. So that's on the downside. Could you give us an example of, obviously, there's no free lunch. And I think people investing in this would understand that, that if you're going to try to

avoid some of the downside, well, then by definition, you're going to give up some of the upside. If the S&P is up 20% in a year, how big of a drag are the options that you're going to be selling going to cost you? Is that, would you estimate that if the market's up 20, you're up 13, 15? What does that look like? So I'll put it in perspective, you know, because we've only been managing strategy for a few weeks, but we have been managing the hedge equity mutual fund for a decade, nearly a decade. You know, year-to-date, the market's up, let me give you an exact number,

year-to-date the market's up, let's call it 14, and that strategy is up about 10.5. Not so bad. Not so bad. But this ride is very smooth. I mean, imagine waking up every single day saying, God forbid something, something unfortunate happens around the economy, the macro, the micro, the geopolitical, and not having to worry about getting out. It's pretty valuable. So if we can give you, let's call it two-thirds to seven percent of the market return through a cycle, but with only half the ball and half the beta,

number one, you'll stay invested, Michael. Number two, you'll also never say those three ugly words of get me out. Are there any benefits to holding options in an ETF wrapper? So one of the nice things about the ETF wrapper at the highest level, Ben, is they are potentially tax efficient based upon the redeemed create process. Now, what that means is that when you have money out, you could take your lowest cost base securities and, you know, give them to the person that just sold your ETF. Well, options on S&P ETFs, according to the SEC, are part of that process. So if you were to have gains on your options, you could potentially redeem them out as well. So there is a potential even, you know, a greater tax efficiency potentially in an ETF wrapper relative to a mutual fund. So this idea of hedging some of the downside for going some of the upside really resonates.

It sounds like it makes a lot of sense. But then I'm thinking to myself, but if you want to hedge, why not just own less stock? So if this is like a 6040, if you're likening this to a 6040, why not just hold this 6040. Last year, the 40 was not a friend. This year, the 40 has not been a friend either. And the 40 is actually, you know, as I said, bonds are back. But the fact is, is they're back from an income perspective. But they really have not zigged when market is zag. And so if you were to have, you know, let's call it 60% in stocks. Now, because over time, that also means you're going to have 60% of the risk. We're only giving you on average half the risk and half the

volatility. We're giving you a better sharp ratio than that average. The other thing I would say is we also are expected and have had in the original mutual fund a positive up-down capture. In your owning less stocks, you end up with, you know, 60% of the upside and 60% of the downside. Giving you that asymmetry by using options is one of the nice features. How are you all educating the advisor who has to educate the end client on products like this? So funny enough, this was our first product, hedge equity in the industry. when we came to market over a decade ago. And it really was not about options.

It really wasn't about hedging, Michael. It was Mr. Mrs. Smith, are you willing to go some of the upside in return for not having all the downside? Most people say yes. Most people say yes. And that's what this strategy does.

You know, as you said and Ben said earlier, there is no free lunch. But imagine if I said to somebody, you're not going to make everything to the upside, but you're not going to have everything downside. You're going to get a lot more yeses than knows. And that's what I think about it. If I actually thought I would sit down with my parents

and talk about calls and puts and hedging or even other things like that, I'd be out of my mind. But to actually say, this is a strategy that helps you get invested, stay invested. This is a strategy that you may forego some of the upside of the upside of the upside. There's a strategy. Think about it as equities with guardrails or bumpers. That is how I think about managing expectations and helping clients think about using this as an important part of their portfolio. Now, for some clients, it's going to be a larger part because they're nervous, kneels,

nervous Nellies or they're older in life. As life expectancy has gone up, Michael, unfortunately, people need to own risk your assets later in life. Or, I mean, think about it, stocks are up, you know, 14, 15% near to date. Imagine you want to take some of those chips off the table. What do you do with that? Putting into a hedge equity strategy actually is another nice way of actually helping people continue throughout the year because I'm not sure where you guys are coming out on it, but there's rumors that say that I'm making appearance in the fourth quarter. I assume the worst case for a strategy like this is 2017 and there's very little volatility and stock just go in one direction and that's up.

The best better case, I guess, for the strategy doing better is not only a down market, but maybe like a sideways, very volatile market because that's decent for options. Is that fair? So in the sideways market, if I'm truly equities with guardrails, I'm going to be flat-ish, Ben. But in a down market, in a one-way low-volve market like 2017, absolutely. would it be a challenging environment because the options are cheaper. You're not getting as much upside. But let's talk about 2018 for a second. Well, it's very interesting about 2018 was the fourth quarter. And because we reset our hedges every three months, ladder and staggering them,

when the market did a U-turn in the fourth quarter, we were able to lock a lot of what we made in the first and second and third quarter. So one of the things that you highlighted is volatility. And let's just focus on that for a second. Volatility is a friend of the the strategy, which is incredibly important because you would naturally think when volatility goes up, you would hate to be a protection buyer or a hedge buyer. But because we buy one option, one down five, but we sell two, one down 20 and an out of money called to pay for it. You mentioned 2022, and you're absolutely right.

And it continues to 2023 that the idea of if you want to take less risk, own more bonds. But bonds have not protected you in terms of price appreciation. on down equity days because we're in this regime where higher yields, lower bond prices are leading to lower stock prices. So for right now, it's all one trade. So you're going to see a dampen return stream or price returns, I should say, because the beta of the actual portfolio is what did you say, half of half or two thirds of the underlying? We expected to be half the ball and half the beta and through a cycle about two-thirds of the return.

Okay. So a pretty good trade. The underlying investment, though, is that strictly the S&P or is there any active management in there as well? It's an active portfolio using J.P. Morgan's fundamental analysts, but it's very low tracking error, less than 150 basis points of annualized tracking error. We would expect that low tracking error portfolio, which we've been managing for over 35 years here at JPMorgan to generate, let's call an average 60 to 80 bibs of alpha, which is nice because it actually helps pay for our fees through a cycle. In the JEPP portfolio, you have a little more sort of like the low volatility, high quality stocks. Was there thoughts of doing that here too? Or did you want it to be more where it's

closer to match the market? Was there a reason for that? Yeah. So we wanted, so Ben, we wanted to be closer to the market because the last thing I want to talk to you or Michael about is the hedged exactly is supposed to do. But unfortunately, the portfolio was very different than the hedge. We want this portfolio to really mimic the index because we're hedging with the index and the outcome that we're solving for is really that equities with guardrails. Would there be a point where you decide to manually override the hedging strategy that's systematic? In other words, the market provides you with this unusual opportunity. And that could be, you know, whatever the case may be. or is it 100% systematic?

So I would use the word discipline, but systematic works well. We're always going to have those hedges in place and we're going to keep them on. And the reason is, is because you just don't know. I mean, no one saw the unfortunate circumstances of last weekend happening. And when we talk about an unusual or the word you use, I guess, was unusual or, you know, wonderful opportunity in the market, it's always backward looking, not forward looking. And so the way that you're hedging is at the index level, right? right? You're not hedging the underlying components, or is that wrong?

At the index level, the most liquid equity products in the world, Michael. I'm just curious how you see different advisors using this, because at the end of the day, it doesn't really matter where you bucket this for asset allocation purposes, but is there sort of a middle alt's bucket that this is going into because, yes, it's like stocks, but with guardrails where it has a hedging component? So the first thing I would say is that, you know, we view ourselves as a conservative of equity. Now, where you bucket us, whether it be equities or equity alternatives, I can't, I can't have a voice because people will put us where they want to put us. But this is a strategy

that we're rooting for the market to go up every single day. I have a hedge and I hope I never need to use it. I don't want to use it, but it's nice to know that it's there. So we see people using it in mainly three ways. Number one, as a way to help people own more stocks. I mean, you guys know, you talk to so many people. The average investor has 20% on average in cash and cash equivalents. Right now, they're over 30%. Imagine taking that 10% and put it into a strategy like this. Very important and valuable. The second way is, you know, it's about managing risk. Imagine if you were, you know, you were perfectly allocated to start the year and now you want to take some chips off the table. We see people using this as a de-risking tool.

And then we also see people using this as a complement to a 60-40. Think about a strategy that's 60-40, but you make it 50, 30, 20. And you put 20 into a strategy like this. The resultant volatility risk profile of your portfolio does not change, but it increases your expected return. It increases your sharp ratio, increases your up-down capture. It's a nice compliment to a traditional 6040. Do you think it makes sense that you're coming to market with Hello, which is not

S&P replication, but it's not, you're not going to stray too far from the index. Are there other areas of the market where you would. think about executing this type of a strategy? So interestingly enough, I think that there are other indices and other things that it could make a lot of sense for. We don't currently manage a emerging markets version, but think about how spicy a meatball emerging markets is. So that could be interesting for people to have a similar philosophy and approach.

Or small cap. You kind of said earlier, Michael, how many times has anyone ever said, I want to. want all the upside and all the downside, as opposed to saying, are you willing to give some of the upside in order to have all the downside? It is a North Star for many investors or an advisor to build and manage a portfolio with those guardrails and helping people stay invested. I mean, so I think this philosophy transcends my product and really is the North Star of many of an advisor or CIO. Yeah, the risk of sounding like a kiss says, I'm all for these strategies that buffer the downside or whatever term you want to use there.

I think that there's been so much talk over the years about behavioral finance and understanding it and you're dumb and not you, but, you know, we're all dumb and we all make poor decisions, but there's been very little in the way of product innovation and not for the sake of complexity or fees or anything like that, but actual product innovation that can help investors better manage their behavior. And I feel like these things, these fit the bill. I agree. And so, So what I would say is that, you know, when we brought this to market, there's some significant differences between us and other people in the landscape. The first one is dividends.

Dividends matter, Michael. Almost all the other folks in the category that we're trafficking in, take their dividends, take your dividends to pay for their hedges. Now, it doesn't sound like a lot, but the fact is going back to 2000, the S&P 500 price index, which many of our competitors benchmark themselves to, is up about 200%. if you include dividends going back to 2000, it's 370%. Dividends matter. And we're going to pay out our dividends every single quarter.

And we're, I think, quite unique in that perspective. As I said, most other people do not pay their dividends out. The second thing I think is important also is you talked about active. I think one of the few, if any, that have active to help give you a little bit of alpha. In addition, our fees are 50 basis points. Most of the landscape is 79 to 85. So this is really a differentiated product when it comes to that. So I think there's enough things different here that, you know, people have embraced us

and we expect them to continue to embrace us. I said this fits the bill, but then I realize there's also a phrase, foot the bill. Am I using those wrong? Those are both separate phrases, correct? Foot the bill is different. Put the bill, I think, is picking up the bill at dinner when you and Ben go out to dinner. Yes. Ben, you were saying?

Whenever we have a strategy that uses options like this, invariably someone will come to us and say, hey, listen, why don't I just do this myself? I can buy the options or I can sell the options and I can create this myself. As a derivative, this guy, maybe you can talk about having an understanding of that world because I always tell Michael,

I've never purchased an option in my life. I've never sold one. I'm just not an option's guy. I would rather have a professional, I'd rather a professional do it for me. So maybe you can talk about that and how that fits into this whole equation. So what I would say is that I'm lucky enough to work at a place like J.P. Morgan. And when you trade options, you have to worry about execution, execution price. And I've got the best trading desk to partner with. The second thing is you have to worry about cash management, collateral management, exercises, assignments, and how they settle. Once again, I've got the best middle office, back office, clearing people, cash management people. So it takes a village. And I'm lucky enough to work at a place like J. P. Moore, which has an incredible village. Could people,

people do it themselves, perhaps. However, the brain damage associated with that in many cases just isn't worth, you know, our fees of only 50 bibs. I know you mentioned earlier and obviously none of us here are tax experts or tax advisors, but how, is there anything funky within the treatment of how these options work? So one of the things, and I'm not a tax expert either, So I'm not going to pretend and I'm not allowed to be one to be honest with you. So when I think about the tax efficiency, the ETF wrapper as a whole is more tax efficient than other wrappers. So check the box on that, Michael. In addition, there are some options on the S&P, which could be more tax efficient than others in the ETF wrapper.

And we're going to try to maximize the tax efficiency of the ETF wrapper as we manage this strategy. All I would say is, is that, you know, whether it be fitting the bill, footing the bill, when you think about these type of strategies, they're calling card. And hello's calling card is, how do I get you to own more stocks? Many people think about these as bear strategies or defensive strategies. They're not. My favorite client conversation was not March of 2020 when somebody came up to me and said, you must have been so happy. The market was down nearly 20% and your hedge equity mutual fund was down just under five. My favorite conversation was the client that called me in June and said, because of your strategy, I did not sell out and I was able to stay invested.

Going back to your previous comment, if the market gives me this unique, wonderful experience. Well, March was a unique, wonderful experience for the market, but no one, not as many people could or did take advantage of it because, you know, people were saying hell has come upon us, and all this other stuff, if we can help people navigate those markets and stay invested, it's a great partnership. It's footing the bill. It's fitting the bill. And so when I think about this type of strategy, how cool is it that, you know, when the market's up this year, 14, 15%, and we're up 10 in change, you know, people will say it's a narrow-based rally, like it's an excuse. I don't know, guys. There's no asterisk on the market saying that up 15% has an asterisk. Thank you. I said,

of a client called recently. I said, as if a narrow, as if narrow leadership, your money's no good as Schwab. Sorry. Yeah. And I think your point on the behavioral stuff is bigger than ever, especially the, you know, 70 million plus baby boomers that are retiring who have the biggest net worth out of any demographic, they don't have the income coming in anymore. So I think the, the life cycle piece of a fund like this is huge, too, because when you have all your money, and it's just in your portfolio now and you're living off of that portfolio versus in the past when you could continue to buy during a bear market. I think there's a big difference between the person who's young and saving it

has four decades ahead of them versus the person who's retiring and has a few decades, but is relying solely on that portfolio for their well-being. Completely agree. And you can also bracket the world into two types, Ben. Number one, those that are looking to accumulate wealth. What better way of accumulating wealth by being in the market, protecting for the downside and be able to participate in some of the upside? And then you have the other group of people that have already attained their wealth, but with inflation and other things, you need to still continue to grow and why not actually have helped people that have attained wealth, keep a lot of that wealth. So this strategy actually really serves both constituents.

I am psychotically bullish on these strategies as a category with the respect through the lens of gathering assets. Because as we've just mentioned several times now, people want to be invested. If there is a sensible way for them to stay in the game and fine, they'll give up some upside. If the market's up 30 and they're up 22, I don't think anybody's going to be crying. But if the market's down 22, you know, and they're down 11, I'm making that up, that's a world of difference. And I think that's a strategy that investors are clamoring for. So, hello, it fits the bill. It fits the bill. Hamilton, thank you for joining us today.

We appreciate the time. Thanks for having me, guys. And I'll see you next year at Future Proof. Okay, thank you again to JPMorgan Asset Management. Remember, that's a.m.jp.morgon.com to learn more, send us an email, Animal Spirits at the CompoundNews.com. Rolled right off the tongue. See you next time. Jepi Risk Summary. Price of Equity Security securities may fluctuate rapidly or unpredictably due to factors affecting individual companies, as well as changes in economic or political conditions. These price movements may result in loss of your investment, investments in equity-linked notes, ELNs, are subject to liquidity risk, which may make ELNs difficult to sell in value. Lack of liquidity may also cause the value of ELNs to decline.

Since ELNs are in note form, they are subject to certain debt security risks, such as credit or counterparty risk, should the prices of the underlying instruments move in an unexpected manner, the fund may not achieve the anticipated benefits of an investment in an ELN and may realize losses, which could be significant and could include the fund's entire principal investment. JEPI is the largest active hedged equity strategy ETF in the industry, Source Morningstar, as of September 2023. Hello Risk Summary. Writing options on S&P 500 ETFs can reduce equity market risk, but it limits the opportunity to profit from an increase in the market value of stocks in exchange

for upfront cash at the time of selling the call option. The value of positions and options on S&P 500 ETFs will fluctuate in responses to changes in the value of the underlying ETF or index. Unusual market conditions or the lack of ready market for any particular option or specific time may reduce the effectiveness of the option strategies. As a result, the option strategies may not reduce the investments volatility to the extent desired and could result in losses.