00:00This is a new launch for us and it's designed to invest in Nasdaq 100.
00:05Stocks but have a full notional hedge.
00:08So the entire portfolio.
00:10It's hedged with put options part of it nine months out part of it three months out and
00:14then we pay for.
00:15That was a little bit of put spread writing which is kind of complicated and I won't go
00:18into on this show.
00:19But the.
00:20The idea is how do you have a position in Nasdaq 100 names in other words that.
00:25That allows you this decision allows you to to stay invested to continue to participate.
00:30To at least some degree if mag seven and tech stocks move higher but have some kind of.
00:35Contingency plan built in and this way you don't put the onus on the investor.
00:40To kind of figure out who potential winners and losers are going to be from each earnings
00:44report.
00:45Exactly.
00:45So what we recommend is investors put half of your equities in just conventional stuff.
00:49Mm hmm.
00:50Uh.
00:50Half of your passive fund.
00:51Exactly.
00:52And half of your equities in something that has some kind of a hedge in it.
00:54Why start with.
00:55Nasdaq 100.
00:56OK.
00:57So we have launched and we currently manage MRSK which is an S&P.
01:00500 hedge equity fund.
01:02Uh.
01:03One of the reasons we're launching this fund.
01:05is because we're we're seeding it through something called a 351 exchange.
01:09Should we go there now.
01:10Mm hmm.
01:11OK.
01:12So a 351 exchange is.
01:13I.
01:14It's a.
01:15It's an iris tax code but it's fascinating don't I don't don't snooze.
01:19OK.
01:20Scarlett.
01:21Fascinating iris tax code.
01:22Exactly.
01:23So what it allows you to do is.
01:25move in.
01:26That's like 100 stocks.
01:28So you know if you've got let's say.
01:30Palantir some of these other stocks with huge gains in them.
01:33You're thinking how do I diversify without.
01:35paying a 20% capital gains tax.
01:36I don't want to sell it necessarily exactly do want to diversify.
01:39Exactly.
01:40So with a 351 exchange you can.
01:42Transfer in stocks or let's say you.
01:45own the triple Q's ETF or you own the other Nasdaq type 100 type things you can.
01:50transfer that in on day one only of the launch of the ETF.
01:53Mm hmm.
01:54And it happens.
01:55So you can take highly concentrated positions.
01:59Move.
02:00move them into potentially more diversified ETF and then automatically have a hedge associated
02:04with.
02:05that.
02:06So we've been seeing a lot of interest in that from advisers and investors.
02:10who want to try to diversify out of some of these concentrated.
02:12So that's that's where I'm really interested in.
02:14Yeah.
02:15Talk a little bit.
02:15about the demand from advisers from investors.
02:17At what point did this really start to peak because.
02:20we've seen different waves of the AI trade.
02:22Right.
02:23You know wax and wane.
02:24Right.
02:25And each time.
02:25you think you know really there's a rotation of a more permanent rotation out of big cap
02:29tech.
02:30into the cyclicals into small caps.
02:32Right.
02:33It then goes back in the other direction again.
02:34Right.
02:35It then goes back in the other direction again.
02:35So the interest isn't necessarily in triple Qs or NASDAQ 100 itself.
02:39The interest is in.
02:40And in this case the ability to use a 3d1 exchange to come out of some of these concentrations.
02:45underrated positions or.
02:46Let's say you didn't have a fully invested position right.
02:49Right now.
02:50Et vous voulez dire, je veux dire, j'aimerais faire un half de ça.
02:52Ça va permettre de faire ça sans payer 20 euros.
02:55Je veux dire, c'est un peu plus 20% de capital gains tax.
02:56Because who wants to basically just lose 20% of your holdings to tax?
03:00If you can come into something like this tax-free, that is what...
03:05Many people find quite interesting.
03:06Okay, so this HQQQ, when it launches, is going to be the first launch...
03:10A 351 exchange into a hedge product.
03:12Right.
03:13How much is the SEC involved?
03:15Is there a process through which everything has to go through?
03:19Yeah, so...
03:20The ETF itself, HQQQ, is just an ETF.
03:24So...
03:25It went through the normal filing period, 75-day quiet period, and it's just on a path.
03:29It's...
03:30It's out of that quiet period, obviously, otherwise I wouldn't be here talking to you.
03:32Sure.
03:33But it's on a path to launch.
03:34So that...
03:35That's all standard SEC stuff.
03:37The new nuance is just IRS rules.
03:40And many, many 351 exchanges have been done historically.
03:43We just started seeing them...
03:45That happen into ETFs that are syndicated, in other words, many...
03:50Advisors are funding them, and this is, I believe, the first one where it's a hedged index.
03:55That you can come into via 351 exchange.
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