00:00I think the mutual fund industry clearly was against ETFs and everything's ETFs stood for,
00:05but for a portfolio manager like myself, I quickly gravitated towards them. Tax efficiency,
00:12low cost, wide exposure. Tax efficiency. Just plain and simple. Yes, stop right there.
00:19Paul Sweeney with Kevin Monhenian and Walsh. We're getting into the heat of earnings this
00:25week, Kevin. Lots of big companies here. What's your market call with your team over there?
00:31What are you telling your clients these days? I think you have to resist the temptation to
00:35continue to poke at that perceived AA bubble. Clearly, this rate of spending that's taking
00:40place amongst the big hyperscalers isn't going to go on forever. But if Jensen Wong is correct,
00:47of course, the godfather of AI, and there's going to be between three to four trillion spent
00:51on AI infrastructure by the end of this decade, Paul, well, that tells me we're just at the very
00:56early stages of the buildout. In fact, if I could use a baseball analogy, I would suggest we're just
01:01in batting practice, and there's a doubleheader ahead. But we're going to receive some key updates
01:06this week from Microsoft, from Amazon, and of course, from Meta in terms of what their future
01:12CapEx spending plans are. And if they even hint at pulling back on that spending, you could see a
01:17pullback in the markets. So we want to lean into the metas, the ghouls of the world, or we're going
01:24to do the picks and the shovels. How do you guys think about that? I look at where the money
01:28is
01:28being spent right now. Not who's spending it, who's receiving it. So I'm looking at the data
01:32center construction companies, the electrical connectivity companies, the power solutions,
01:37the cooling providers. And of course, don't forget about my favorite sector, utilities.
01:42Utilities have become a backdoor play into the AI revolution. They hold it well in the face of
01:47volatility. And generally, they pay good dividends as well.
01:49So that's American electric power.
01:52Yes, American electric power supplies electricity.
01:55That sounds about as all American as you can get.
01:56You can't get any more American than that. They supply electricity to over 5 million Americans
02:01right now in 11 different states, including the state of Virginia, which has become the data center
02:06capital of the world.
02:07That's right. This Federal Reserve, I don't think the Fed's going to do us any help. Tom's going to be
02:11hosting a show this week about this Fed meeting and the Fed decision. And what are you guys looking
02:17for?
02:18Yeah, I continue to go back and forth. Is Kevin Warsh a dove in hawk's clothing? Is he a hawk
02:23in dove's clothing? I can't figure it out. But what I do know is he's a reformer. And I believe
02:28he's
02:28going to change the manner in which the Fed communicates, the manner in which the Fed operates,
02:33and the data that they use to make their decisions. And that's going to be done through the task
02:38forces. So what do I expect this week? I expect nothing in terms of interest rate activity,
02:43perhaps more of a hawkish lean. But I'm really interested in hearing from those task forces and
02:48what they're going to do in terms of collecting inflation data, what they're going to do between
02:53meetings in terms of communicating.
02:55I got to admit, I was impressed with the names of the task force. We'll see if they get anything
02:59done. Kevin Mond with us, Erhenian and Walsh. I love the smart trust website, which really flashes,
03:09Paul, back to Nuveen when the Cubs wouldn't win. Cubs are useless. You're bringing back unit trust.
03:15We are.
03:15What's the response of the public to something? I sort of said to myself, if it ain't broke,
03:21don't fix it. They worked. Right. And they still work. They're out of favor. What's the response to
03:27your smart trust unit trust where you buy 15 stocks of a portfolio? This one's a 60 40 quality
03:35allocation. What's the response? Right. So we have 29 different UIT strategies. UITs for your listeners
03:41who aren't familiar are another 40 act type of product. The major difference between a UIT and an ETF
03:47for a mutual fund is that it has a defined life between 15 and 24 months. And the portfolio remains
03:53static over the life of each series of the trust. Now, we have 29 different strategies. One is our 60
03:5940
03:59quality allocation trust. Our most popular one, not surprisingly, is our AI ecosystem portfolio,
04:06because that allows investors to build a portfolio that's across the entire ecosystem,
04:12not just narrowed. Is it competing against ETFs? It is competing against ETFs. And in fact, Tom,
04:18they come in fee based QSIP. So for a two year UIT, such as our AI ecosystem trust,
04:24it's only 50 basis points over those two years in terms of the C and D fee. That's 25 bps
04:29a year.
04:30That competes very well. You're doing unit trusts in under 50 bps. Correct. The advisor can put their
04:36own fee on top of that. So who's the typical client for these? Who's a typical customer for
04:42these? So our customers are financial advisors across the country. They determine which of their
04:47clients are most suitable for the different strategies. We have income based strategies
04:51based on tax free incomes, growth based strategies such as AI ecosystem or a biotech M&A play that we
04:57call
04:58healthcare innovations. It really depends on what their client wants and they can do it on a
05:03transactional basis or a fee basis. Can they go direct? They cannot go direct. They have to go
05:08through a financial advisor. Okay, interesting. So what what's the how do you pitch that vis-a-vis
05:13in an ETF which just seems to be exploding in terms of funds flows? Sure. So we can bring a
05:19new
05:19strategy to market in a very short period of time based upon themes that are resonating in the market.
05:24It also based upon the duration of each UIT keeps your client disciplined because they stay within that
05:31strategy for 15 to 24 months. Of course, it's liquid. They can get out anytime that they want,
05:36but it maintains that discipline. It also gives the advisor the opportunity to talk to their clients
05:41at least every 15 months to 24 months to ask them, do you like this strategy? Do you want to
05:46be in this
05:47part of the market? Do you want to roll to the next series? Do you want to take that cash
05:50and put it
05:50elsewhere? Interesting. So is there a typical like from your RIA, what's his or her typical client? Are they
05:58typically retirees? Are they people looking for capital just allocation? Yeah, it's a great question. So for
06:05some of our clients that have retirees, they really gravitate towards our tax free income product, which
06:10invest in municipal closed end funds for the most part to give an enhanced level yield. But you're also
06:15seeing some of the IRA accounts, they're moving into AI ecosystem, our power solutions trust, our
06:21healthcare trust, because they get the growth opportunities within the qualified accounts. Where's the ETF
06:26industry in five years? I think they're bigger than they are today. I think we're well past the point
06:32of saturation right now. And I think it's very different.
Comments