00:00This is a new launch for us, and it's designed to invest in NASDAQ 100.
00:05100 stocks 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.
00:14And then we pay for it.
00:15And I remember that with a little bit of put spread writing, which is kind of complicated
00:18and I won't go into on this show.
00:20The idea is how do you have a position in NASDAQ 100 names?
00:24In other words, that.
00:25That allows you, this decision allows you 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.
00:36And 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.
00:50Half 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 a.
00:55NASDAQ 100.
00:56Okay.
00:57So we have launched and we currently manage MRSK, which is an S&P.
01:00500 hedge equity fund.
01:02One 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?
01:10Okay.
01:11So a 351 exchange is, I, it's, it's.
01:15It's an IRS tax code, but it's fascinating.
01:17Don't, don't, don't snooze.
01:19Okay.
01:20Scarlett.
01:21Fascinating IRS 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.
01:37I don't want to sell it necessarily.
01:38Exactly.
01:39Do want to diversify.
01:40Exactly.
01:41So with a 351 exchange, you can transfer in stocks or let's say you.
01:45own the triple Q's ETF or you own the other NASDAQ type, uh, 100 type things you can.
01:50You can transfer that in on day one only of the launch of the ETF and it happens.
01:55Tax deferred.
01:56So you can take highly concentrated positions, move the.
02:00Move them into potentially more diversified ETF and then automatically have a hedge associated
02:04with.
02:05That.
02:06So, uh, we've been seeing a lot of interest in that from advisors and investors.
02:09So, uh, we've been seeing a lot of interest in that from advisors and investors.
02:10Who want to try to diversify out 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 advisors from investors.
02:17At what point did this really start to peak?
02:19Because.
02:20Because we'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, a more permanent rotation out of big cap tech.
02:30Into the cyclicals.
02:31Into small caps.
02:32Right.
02:33It 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.
02:40In this case, the ability to use a 3d1 exchange to come out of some of these concentrations.
02:45Traded positions or let's say you did have a fully invested position.
02:49Right.
02:50Right now.
02:50And you wanted to say, well, I do want to hedge half of that.
02:52This would allow you to do that without paying a $20.
02:5520% capital gains tax because 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 money.
03:05Many people find quite interesting.
03:06Okay, so this HQQQ, when it launches, it's 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.
03:25It went through the normal filing period, 75-day quiet period, and it's just on a path.
03:30It's out of that quiet period, obviously, otherwise I wouldn't be here talking to you.
03:33But it's on a path to launch.
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...
03:45We just started seeing them happen into ETFs that are syndicated.
03:49In other words, many...
03:50Advisors are funding them, and this is, I believe, the first one where it's a hedged index.
03:55You can come into via 351 exchange.
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