Ryan Issakainen of First Trust - Buffered ETFs, Artificial Intelligence and Much More

[MUSIC] The weighing machine was created to help you, the financial advisor or investor, reach your long-term financial goals. Each episode, your hosts, Rusty Vanemon and I, Robin Murray, cut through the market clamor to find the time-tested principles that help investors succeed. The weighing machine is inspired by the classic investing saying attributed to Benjamin Graham. The stock market is a voting machine in the short term and a weighing machine over the long run. In other words, emotion and expectations drive short-term market movement, but fundamentals and valuations determine returns over time. Welcome to the weighing machine. Enjoy and as always, let us know what you think. [MUSIC] On the podcast today, buffered ETFs, artificial intelligence and much more. We will discuss the ins and outs of buffered ETFs, the exchange-traded fund landscape in general, and what interest rate cuts might mean for the markets. Plus, investment themes like reshoring and de-globalization. That's what our guest, Ryan Issa-Kynen from First Trespor Folios. Welcome to the weighing machine on Rusty Vanemon. And I, Robin Murray, okay, Rusty, let's start with a look at the markets. What are you watching out for at the moment? Well, we are agreeing this in September and September is living up to its reputation as it being a volatile month so far. And it isn't just prices that are volatile, though. We've noticed investor sentiment has been a bit more volatile of late as well. In turn, there has been more interest for investment products and strategies that could offer some downside protection. And that includes something called buffered ETFs, which are also often deemed as defined outcome ETFs. And speaking of ETFs, they're having another game bus three year in terms of raising assets. Today's guest is a perfect guest to help us understand not only why the markets are so volatile late, but also why ETFs continue to be so popular, including buffered ETFs. All right. Well, let's bring him in. Ryan Issa-Kynen is an ETF strategist and senior vice president at First Trust Folios in Wheaton, Illinois. Ryan, welcome back to the weighing machine. Well, I am happy to be with you. Thank you for inviting me. Well, Ryan, so the first question is going to be the toughest question of all. We're going to put you on the spot. We need a walk-up song. Okay. So this is a really difficult question because I'm torn between a few different things. There's different elements of my persona. But the way that I, as you told me in advance, I was going to have to think about a walk-up song. And I think a walk-up song should get you fired up, should get you pumped up. And it brought me back to my days when I was growing up and I played lacrosse. And what we would listen to was an inner sandman from Metallica. And that would all mean just a lot of energy gets the adrenaline going. So that's if I had to pick a walk-up song, I think inner sandman would be a good one. That's a great one. Hey, when I shoot baskets, that's on my top three for shooting baskets. So that's awesome. I love that song. Yeah, that's good one. All right. Well, Ryan, let's talk about you a little bit. So you've been at First Trust Folios for nearly 25 years. All is what drew you to this industry in the first place and why you stuck with this firm for such a long time. That is a good question as well. You know, when I started out at First Trust almost 25 years ago now, I was just out of college and I honestly wasn't sure what I was supposed to do when I wanted to do. I just needed a job. And that's, that was the reality of it coming out of college. And I started very entry level at First Trust. And what I discovered is it wasn't as much, you know, and I came into the industry. I thought it was all about doing some complex math or something like that. And I didn't really want to spend my time doing that. And what I found out is that's not true at all. You have to really understand people. You get to interact with a lot of people. But a lot of the decisions you make is an analyst or a strategist have much more than just what's quantitatively available. You have to understand what's happening with politics and what's happening around the world. It's not just, you know, a lot of these things can be boiled down into algorithms, but there's a lot more to it than that. And that's really when I find fascinating. Just the sort of the behavioral psychology side of the investment industry. But, you know, honestly, being at First Trust for that whole time, 25 years has been because of the people, because of the people that I work alongside, because of the leadership at the firm, because of the ability to interact with some amazing financial professionals that I work with on a daily basis. So I've been very blessed to be there all of my career. But tell us more about First Trust. What drives its investment philosophy and how is it different from its peers? So First Trust is a privately held company. We were founded in 1991. So about nine years before I started there. And what sets us apart, I think, is primarily our focus on equipping financial professionals. That's really what we seek to do on a daily basis. And I say that that is one of the distinctions of First Trust as opposed to trying to, you know, market investment products directly to investors. There's nothing necessarily inherently wrong with that. But we just think that investors are better suited by working with investment professionals. Most people don't have the time, the education, or really the emotional stability when it comes to their money to make wise decisions. So our focus has always been and always will be on providing great products as well as some of the resources to help investment professionals understand how to use those products with their clients. And we're very focused on innovation as well. We want to provide those sort of unique value added type products as opposed to, you know, a lot of the ETF industry has been developed and focused on providing very low cost market indexes in an ETF wrapper. And again, there's nothing wrong with that either. Those are, there's a lot of utility in those types of products, but we think that you can add value. And I think hopefully we'll get a chance to talk about some of those things in the podcast today, but we're, we're headquartered in primarily in our Chicago office, which is actually in the suburbs in Wheaton, but we've also got offices in Austin, Texas and Nashville. We've got a first trust global portfolios over in Europe. We've got some operations in Canada. We've got some operations in Latin America. We've even gotten some distribution in Japan. I just met with some of our Japanese distribution folks. So it's been really incredible to see over the last 25 years the way that the firm has developed. And we're very, we're very excited about what lies ahead. So first trust does have a lot of great products, of course. And we do have a lot of questions related to some of the strategies, but one thing I just need to say real quick is that when it comes to the service and content from first trust, it is really top notch. I mean, something that we always strive for, including here on the weighing machine is for people to have like great talking points about what's going on in the marketplace. And I just have to say first trust, particularly in the economic side, just has really great concise, easy to understand economic reports, a lot of what talking points for advisors. So I definitely agree with what we said there, right? The less top markets now. And we are reporting this before the Federal Reserve's meeting on September 18th, where it is widely expected they will cut short term interest rates. Longer term interest rates have been already falling for a while now. What interest rates are falling? What tends to work in the stock market? That is the question of the day because I think you're absolutely right. I think the Fed is likely to cut rates at this next meeting. The only question is, is it going to be 25 or 50 basis points? And I think once they head down that path, it'll be very difficult for them to pivot again until they've gone through the full cycle of cuts. And so that is the question. What happens to stocks typically? What tends to do better? What tends to do worse when you're in that rate down environment? I guess the cop-out answer is that it depends. Partly on the reasons why rates are falling, especially if there's a recession. And so my caveat is there's a lot of uniqueness in the current cycle. We've gone through a pandemic and all that goes along with that. There's multi-trillion dollar spending laws have been passed in the last few years. There's huge deficits as far as the I can see. You see, there are a return of inflation that has been subdued, but you never know if that's going to have a return like we did in the 1970s where inflation was high. It came down. There was a second peak. And so all those caveats in place, when we look historically, what tends to work better during those rates down, those rate cutting environments, usually that is accompanied by maybe not quite as big of a magnitude at the longer end of the yield curve, but directly it tends to be the same. But we've seen high dividend paying stocks as well as low volatility stocks have been the best performing factors. High quality stocks tend to do well also, but they also tend to work when rates are moving higher. The areas that have often struggled are smaller companies and also some value, especially more cyclical companies, have struggled when rates are dropping. Those last two groups, smaller companies and value companies, I think that's why it's important to remember some of the uniqueness of this particular cycle because a lot of times what happens is the Fed is cutting rates in response to a recession. And it makes sense that smaller companies, maybe more cyclical companies, are going to work as well in that sort of recessionary environment. That's often what happens. But in this cycle, we don't think we're in a recession yet. We certainly could have one. I think there's probably higher probability than most people think of a recession. That's where economics team thinks at least. But I'm not so sure it's going to follow that same pattern because especially considering the fact that, especially those smaller companies are cheaper from an earnings multiple standpoint, then we've often seen coming into this sort of environment. It's very similar in that way to the early 2000s period. I do think one in this particular cycle, one of the areas that will maybe give a benefit to those smaller companies and also industries, which have really struggled with high interest rates over the past couple of years because that was such an abrupt shift by the Fed, such a steep increase in rates. It would be those companies that are very capital intensive. In a one example that comes to mind in particular, would be something like the biotech industry. Biotechnology stocks, as the Fed has seen like they're ready to pivot, have done actually quite well. That was after a period where they hadn't performed well. What's interesting about that is that it makes sense. If you're a capital intensive industry where you're not necessarily profitable, you're doing a lot of research and development, you're financing all of your operational activity, the cost of capital that you're paying to do that is really important. If the cost of capital comes down because interest rates are coming down, I think that could have a tailwind effect on some of those more capital intensive industries and again, biotech is one that comes to mind. Again, in summary, I think those dividend payers, the low volatility, that's what typically works in the playbook and I think those will work this time as well. But I think what might be a little bit different this time is some of those smaller stocks, which have often not worked and some of those more capital intensive industries like biotechnology, I think those could work as well because they're cheap and because they haven't worked recently in the last 18 months or so. - All right, so my next question is, your answer could be similar to what you just said, but we think about the overall stock market this year. It's having a great year. As of this recording at least, and now that I said that, we are entering the spooky time year from a seasonal standpoint, so I'm not conwood. But for most of the year, it has been primarily led by names that are expected to benefit from artificial intelligence. So the stock market has been unusually narrow for the past several years in fact. What do you think it will finally broaden and what might be some of those potential catalysts? You kind of talked about interest rates, but are there other potential catalysts that you see? - Yeah, catalysts, it's always a tough question when you're trying to identify inflexible points. But the narrowness of this market has really been very distinct. At least we haven't seen anything like this in the last couple decades. Today if you look at 10% of stocks, that are the largest segment of the equity market, they represent 75% of its market cap. And that's even higher than it was at the dot com bubble. We really haven't seen anything like it since the 1930s. And so for I think a lot of investment professionals and certainly investors, it's easy to become paralyzed and think, well, what's gonna change? What's gonna be the catalyst? And you think that you have to time it right or you're gonna miss out on something. And I think it's instructive to look back historically and to recognize it, let's say we went through a period that's similar to the early 2000 period. The market became maximum concentration March of 2000, right? Is the dot com bubble was about to burst. And nobody got that exactly right. Very, very few people even came close. But let's say you were, you know, you were listening to some of the irrational exuberance talk in the late 90s and let's say in 1998, you decided, I'm gonna pull the trigger and I'm gonna broaden my portfolio allocations out because I think this is just getting too overheated. Well, what happened with the benefit of hindsight, say 10 years later is yet you missed out on some of that upside from 99 and 2000. However, if you look at the performance of an equal weight S&P in 1998 over the next decade compared to a market cap weighted portfolio, your excess returns were probably about five percentage points per year that you actually deliver that out performance. And so I think even absent recognizing what those catalysts are going to be and you know, we talked about some of them, interest rates could certainly be one of them. But I think there's catalysts that we won't even recognize until it's too late. The reality is smaller companies, better valuations today. The other part of it is a lot of large numbers for some of those mega-cap companies. It's hard to recognize, you know, what's gonna slow them down, but then again, we look back at historical situations. The reality is once you become so large, it's harder to find those opportunities to continue its spending at the rate that you have over the past five or 10 years. You look at, you know, a company like General Electric, which you know, that was in the early 2000s, that was an amazing company. And it became a conglomerate. It was involved in so many different industries and trying to, you know, expand and it turns out that you can't be an expert at everything. And what happens with any type of company is, you know, they have competitors that are hungry, that come and you know, maybe they can do things a little bit better and they can grow a little bit faster. And so those valuations that are much more expensive for the biggest companies today when compared to those smaller companies might not be warranted. So I think that could be a catalyst certainly, but it's tough to tell. - So staying on the issue of AI for a minute, what do you see as sort of the second order effects of the build out of AI? - Yeah, I think that's such an important question to ask. Thinking about not just what's worked so far related to AI, but what is related to AI that might work as we head down the road? Because again, I keep going back to the late 90s, early 2000s, when I was beginning my career, a lot of people were excited about the internet. And what turned out is, you know, there's the dot-com bubble that burst, but it was that second order type of industry that actually added enormous wealth. We think about, you know, the biggest companies in the world today, Apple, Microsoft, Amazon, none of those companies would be generating the revenue and the earnings that they have today without the internet. And so, you know, what are some of the second order effects for AI? What are those companies that are going to benefit, but maybe aren't benefiting already from this amazing, amazing technology? One of them, I think, that is, finally, we're starting to hear more about it, is the amount of build out that's going to be necessary in the power grid, because there's so much electricity demand that is going to be needed to operate those AI data centers. We look at AI data centers, the increase in demand from data centers, overall, by 2026, there's going to be something like a thousand terawatt hours of power usage by data centers. And for listeners that, you know, to put some context to that, that's as much power, that's as much electricity that Japan uses in a year. And it's a remarkable amount of increase. And at the same time, you've got Bitcoin mining and you've got electric vehicles and all these other reasons that the power grid is going to need to be invested in reinforced. And so, I think that's one of those areas that AI is creating this enormous demand for electricity. And there has to be a build out in the power grid. So, investments related to that infrastructure, I think, are very attractive over the next decade. We look at the boost for demand from other areas in technology, whether that's something like cybersecurity or computing, you know, those areas are also going to have a boost for demand. Cybersecurity, for example, you know, hackers can use AI tools to become more productive and efficient, just like any other business can. And so, you're going to have to continue to make investments in things like cybersecurity to protect against some of those vulnerabilities. I already talked about biotechnology. There's a lot of interesting things about biotechnology. But one of those interesting things is I was just watching a presentation from Nvidia. The tools that they have got that artificial intelligence are providing to boost the productivity and the ability to discover disease, curse for diseases for biotechnology companies, it is remarkable. It is like science fiction. And, you know, we're only beginning to understand some of those tools in the ways that biotech companies and pharmaceutical companies are going to be able to better identify the compounds that they're going to use to treat diseases and to better understand diseases themselves. And so, I think there are industries like that that are going to be really boosted. The productivity and efficiency of those industries and the profits eventually, it's going to be profound. And so, again, I think some of those things that have done well so far are the semiconductors and those sorts of companies may continue to do well. But there's a lot that's already in their valuations. I think these other opportunities are also very, very attractive today. So, a couple other emerging investment themes include reshoring and decalabalization. How do you define themes in general? And what do you think they mean for the economy and the market? So, when we think about themes, generally speaking, these are looking at trends that are happening in society and they tend to be long-term secular trends So we're talking a decade plus. And an asking the question, Well, if this trend continues to play out, what sort of company, what sort of stocks are going to benefit? Oftentimes, those are not well represented today in market benchmarks. And that's because those trends haven't actually happened yet. And so, you know, you look early on in the development of smartphones and things like that. Well, Apple wasn't already a big part of the S&P 500 when they launched the smartphone. But obviously, they've grown to be the biggest or one of the biggest companies in the world. And I think that's true in other sort of themes. And so, when we look at something, a theme like de-globalization, reshoring, those things are obviously connected. If you're going to, you know, have less of a global supply chain, you've got to bring it home. This is a trend that's just beginning to play out, that we expect will have legs for at least a decade. We look at the evidence that it's happening. There's this building boom in factories that's across the US. It's just an enormous amount of magnitude. If you look at a chart of construction on factories. I mean, there's a lot of reasons for that. And there's a lot of reasons why we think it'll continue. One of the obvious reasons looking in the rearview mirror is that, you know, supply chains, there's vulnerabilities that were exposed by COVID. We look at the reasons that people would offshore, their manufacturing in the past will labor costs for much cheaper in China and other parts of the world. Well, those differentials have actually shrunk over the last several years. But I think maybe most importantly, are some of those geopolitical stresses, whether it comes to shipping through the Middle East and some of the stress that's happened there, or whether you're thinking about some of the potential for war breaking out in Taiwan and China. All of these things are vulnerabilities geopolitically that makes policymakers say, well, we've got to bring manufacturing to the US. And so they come up with things like the fiscal spending plan that is accompanying the CHIPS Act. Those that are familiar with that, that's basically a $50 billion incentive plan to incentivize semiconductor manufacturing to build in the US. And that's happened across the country. I think there's about 16 or 17 billion dollars of that 50 billion left to be awarded to companies. But this is going to result in hundreds of billions of dollars in investments in things like semiconductors. And there's other incentive plans as well. But when we think about the need for all of this supporting reasons why manufacturing has to actually get built up in the US, then we ask the question that I mentioned earlier. Who benefits from that? Is it the semiconductor companies that are building factories? Well, maybe, but that's very capital intensive. One of the maybe, again, maybe we can think about second order effects who really benefits today are those companies that are doing the engineering and construction, those companies that are the smaller manufacturers that are already in the US, they're building the parts and the wiring and all of the site work that are doing that. I think more immediately, those companies are going to benefit over the next, again, we think of a secular trend over the next five or 10 years as that reshorring trend emerges. We think those are very well positioned today. And by the way, they're not that expensive when you look from an earnings multiple standpoint. So those medium and smaller industrial and manufacturing firms are very well positioned for that particular trend. Nice. Today's episode is brought to you by Janice Henderson investors. Janice Henderson is a valued partner of Orion in celebrating 90 years of excellence. Janice Henderson is available on the Orion portfolio solutions, communities, and breaker capital platforms at Orion. Where I have switched gears here and moved to exchange traded funds, otherwise known as ETS, of course, where first trust has quite a presence, births an open-ended question, what is your outlook for the growth of ETFs and ETF models? So ETFs first trust is the sixth largest ETF issuer in the US. The ETF industry overall, I just looked, it's nine and a half trillion dollars in assets under management. It's remarkable the way that the industry has grown up, but then I look at the traditional mutual fund industry. It still has 21 trillion dollars, which is a bigger number than I would have expected. And this has been a trend that we've seen, you know, it's been developing for the last decade plus this year, so far, something like five or 600 billion in net inflows for the ETF industry, traditional mutual funds, have had something like 300 billion in net outflows. So some of that's just mapping over. And you know, there's, when it comes to ETF models, there's different figures floating around about how much is allocated to those industry wide. It's probably in the neighborhood of at least a trillion dollars. So this is an area that's also growing rapidly. And I think there's really good reasons why. These are ETF models that allow investment professionals to be more efficient, to be more productive. And if they get to use these superior tools, at least our opinion, that are ETFs. In comparison to some of the tools they were able to use before, but they also get to leverage the intellectual capital of the provider of those models. So first trust, we've got a number of different ETF models. And you know, we get together as a committee on a regular basis and when share ideas and use our technology. And it's really the, it provides the ability for an investment advisor to take advantage of all of that, all of those resources, all that intellectual capital of a big firm like First Trust, and really deliver that to their clients in an efficient way. And so I think it's a great, it's a great set of tools for investment professionals. And it makes sense to me that they're growing in the way that they have. Well, speaking of popular tools, of course, First Trust is now the largest ETF provider of something called Buffert ETFs. Can you define Buffert ETFs for us? And why is there such demand for them? Yeah, there certainly has been a lot of demand. It's surprising. There's so much demand when you consider the fact that these have only been around for about four or five years. But Buffert ETFs are designed to provide exposure to the upside of a benchmark, whether that's the S&P 500 or the NASDAQ, 100 or a different sort of equity benchmark with downside buffers. So what's a downside buffer? It's ultimately a hedge against a certain level of loss over a specific period of time. So for example, let's say you've got a 10% Buffert ETF that has exposure to the S&P 500 over a one-year period. What that means is if the S&P 500 loses, say, 8%, well, that's within that 10% Buffert. At the end of that year, the ETF itself will not have lost anything except for the expenses that have been paid. But let's say you're down 12%, the reference asset, the S&P 500 down 12%, well, your ETF then would be 12 minus 10. That's down 2%. And again, less fees and expenses. So that's what a downside buffer is. So there's no free lunch. What is the other side in that? Well, there's a cap on the upside. And that's determined based on market conditions when those terms are set. But let's say there's something like a 15% cap on the upside, again, a similar scenario if the market's up anywhere from zero to 15%, the investor at the end of that year period gets to keep all of that upside of the price of the underlying index. But let's say the index is up, the benchmark is up 20% and you're capped at 15. Well, guess what, you only get to keep 15 percentage points of that gain. So that's the tradeoff. You're accepting a level of downside buffer, but you're willing to accept a cap on the upside. There has been a lot of demand for this type of product. So more firms are entering the Buffert ETF space. Can you tell us what that means for the ecosystem? Well, I think first and foremost, it brings the more people that are launching products, the more competitors are launching products. It brings more innovation. It pushes everyone to be more innovative. It brings more awareness to the space. And ultimately, I think it brings more assets and more advisors that are comfortable. There's a lot of education that has to be done in order to make someone understand how these actually work. They're very transparent. So that's the good news. And there's a lot of tools that are available on the first trust website and our competitors' websites as well that they really spell out what the terms should be, you know, after the first day of trading, or what happens when you reach the one year period, how do they work? Well, they reset with another set of options. The ETF doesn't liquidate or something like that, like a different type of product would. So there's a lot of education that has to take place. And so the more entrants that come into the ecosystem, hey, we think that that's fine. The more in the barrier pushes everyone to be better, and I think it ultimately expands the size of the pie. - So what's next in this space in terms of product development? Will you be bringing buffers to other asset classes? - Yeah, so I mean, the concept of Buffer ETFs has been around for a long time. And it's been tried in different types of vehicles, whether that's a structured node or a equity-linked CD or something like that. There are similar types of outcomes that those are pursuing. We just do it in a more transparent way when we're trying to make investors comfortable to invest in so far mostly equity-linked indices. We help them to understand how to manage risk with these sorts of products in comparison to maybe other types of risk-managed products. But yeah, there's opportunities to expand into other products. asset classes. In fact, at first trust, we already have an ETF that's linked to GLD, which is the Gold ETF that's a deep buffer product. And so as long as we have options that are liquid, we can build them into the ETF structure. And I think there's opportunities with other asset classes beyond just equities. There's also ways to think about it from creating different outcomes, whether that's you want more income. And so you can structure your portfolio to produce income. You can use different buffered levels. You can certainly follow different equity indices. So there's a lot of innovation, I think, that is coming down the road. So Ryan, we touched upon this a little bit earlier, but I think it's worth asking again, more precisely, but how does first trust partner with registered investment advisors and financial advisors in a way that might be different from other ETF fund companies? Some of our best ideas that we have as a firm, when it comes to product development, we've talked a bit about that so far, are as a result of the fact that we listen to the needs of registered investment advisors and other financial professionals. We want to understand what they need to be successful. Some of that ends up being better products or products that best suit the needs of their clients. Sometimes they need specific resources. They want to understand a certain facet of the economy or a certain industry better. And so we listen, we want to understand what they need to be more successful and to help their clients be more successful. We also have a wonderful best practice management division that can help advisors understand how to become most efficient, how to become most productive, how to help their clients more effectively. And so that's a resource that we make available to those that we engage with at first trust. But we also make our other intellectual capital accessible in a way that very few firms do. If someone has a question, they want to get a bit of insight from one of our portfolio managers or strategists or analysts, we can get those answers. We can go directly to the source because we're a very flat organization. I like to think that we're a big firm that operates with some of the same principles we had when we were a small firm 25 years ago and I started where you still have access to those people that are making decisions that can help guide investment professionals. And then lastly, we have a wonderful portfolio analytics team that's really hands on that can help advisors understand maybe they've got a model portfolio that they want to make comparisons. We can help them perform those analytics and really allow them to outsource some of that operational challenge to our team at first trust. This question I bet you get because I have actually had this question before. But just earlier this week, I was in a conversation on the markets and somebody cited your economist Brian Westbury. And I said that I was interviewing you this Friday and the question they had is there are actually big followers of Westbury, but they were asking, how does first trust mesh the great macro research with the products you want? That is an excellent question. One of the ways that practically that happens is we just talk a lot. We often speak at the same meetings and so forth together a lot and we end up getting sharing the perspectives and having opposing conversations where maybe some of our team thinks interest rates are going to do one thing. The rest of the team thinks interest rates are going to do something else or the Fed is going to behave in a certain way or that certain policies are going to be passed into law or not passed into law. So one of the things that's really, and I think this is somewhat unique at first trust is we're encouraged to really have those sorts of debates. And so I talked to Brian Westbury on a somewhat regular basis. I get to ask him questions about what's really happening in the economy. And so that helps inform my opinions. And it helps inform Dave McGarrel's opinions, who is our chief investment officer. So we really get to understand and really challenge some of those narratives that you hear commonly from the rest of the industry. And so that helps us give gives us a sort of a unique perspective on what's happening in the world around us. And I think ultimately it doesn't mean that we're always going to be right. But it does give us a somewhat unique perspective. And you know when it comes to the products that we launch, maybe it helps us uncover ideas that maybe some of our peers in the industry haven't thought of yet. All right, well this has been really great conversation so far, but we're not done with you yet. We have a few more questions that we like to ask all of our guests here on the weighing machine. And the first is what is currently your favorite investment idea? Ooh, do I have to call it with one or can I give you a few? Oh, multiples, great. Okay, great. So a few of the things we talked about earlier, you know, it's the easy thing to do is to look at where assets have gone. And you know, a lot of net inflows and say, yeah, this is my favorite idea because it's already got the the moments of behind it. But I'm going to do the opposite. One of the things that has had consistent net outflows that I think should perform really well if we're right about, you know, what performs well in a rate dropping environment, especially if the economy slows a bit would be those products that are that are factor geared to have low volatility and dividends. One of those is FVD. It's it's whatever dividend based ETFs. And that has had a significant amount of net outflows over the last year. And I'm not sure what the number is exactly. But I think that should be just the opposite. I think that should have significant net inflows. And we're already seeing some outperformance over the last couple of months. We'll see if that continues. But I think if we're in an environment where you've got more attraction towards dividends, low volatility stocks, it's got an overweight and utilities by the way, which have done very well recently. I think that's poised to do well. And it's something that's off the radar of many investors. We talked about the the need for the power grid. That's another one of my favorite themes from the next 10 years. I think there's I just have very little doubt in my mind. There's going to have to be massive investments to modernize and expand the power grid around the world. In RETF GRID is one of my favorites to play that sort of global theme of building out the power grid. Are reshoring ETFs related to that in some ways. But also there's some distinctions to it. AIRR is the first trust American industrial renaissance ETF. And I think that again is very well positioned for this secular theme of moving manufacturing back to the US. Then I think it's going to play over the next decade and then one more for you, Robin. And that is our biotech ETF. I've mentioned biotech a couple times today. And again, this is one of those areas that hasn't performed very well over the last couple of years. And I think partly it's because of the interest rate environment has not been favorable for capital intensive businesses. But I think it's going to get more favorable going forward. And I think about all the potential to leverage artificial intelligence and new technology. So our biotech ETF FBT to first trust NWS ERCA biotechnology index fund. I think that's a very well positioned going forward as well. So those are a few ideas. But certainly, there's a lot more that could be said just in the broadening out trade beyond the S&P 500. Definitely some tasty ideas. I like the first one to constrain and be really like that. And boy, how did you ever come up with that ticker symbol for grid? I just I don't I can't get it. I'm just kidding. That is a great ticker for particularly the topic that it's investing in. So Ryan, in the investment industry, we're all obligated of course to perform at a high level. How do you maintain your health, both physical and mental, make sure you're performing at a high level each and every day? So I have as I've gotten older, one of the things that I talk to my kids about. My kids are teenagers for the most part. And you know, when I was a teenager, I never got enough sleep. And the one I went to college, I never got enough sleep. And I think in my 20s, I never really got enough sleep. As I'm in my late 40s now, I recognize I need to get at least eight hours of sleep. So I have gotten better at actually tracking. I've got my Apple watch set to tell me how much I'm sleeping and make sure I actually get enough sleep being rested has something to do with sleep. So that's the right off the bat. I find that running is one of those things that can clear my head. I've gotten into running a lot lately. And I've also noticed that if I don't have a race that's booked on my schedule, I don't run because I need to have a deadline and a target. So I think exercise is really important. And the thing I've done lately is running. And then also I think cognitively, I think reading not just sort of getting information from social media and you know kind of your brain gets programmed to have this short burst of insight that then you know, splits to a completely different topic. I find reading books to be more and more interesting. I guess I'm getting to, you know, maybe I'm boring old man now, but those are really what keeps me, keeps me hopefully sharp. Wow, those are great ideas. Yes, for sure. I didn't even hold it all. I was just a kid. What are you talking about? All right, here's another one for you. So in your career in those 25 years at first trust, you been along around a lot of successful people in your career who helped you get to where you are. So who are those colleagues and mentors that you are thankful for? >> You know, I have had the blessings to work alongside some really amazing people at First Trust. And it starts from just setting the culture from the top down. Jim Bowen is our CEO. He has been since from the beginning. And he really sets the culture in a way that is contagious. And it starts with challenging narratives and having the ability to think critically, not being forced to tow a company line and to say, well, just because Brian Westbury thinks this, I have to think that or I'm not asking questions or being afraid to ask questions. I think to be successful in the industry, you have to have the ability to ask questions even if it seems like it's going against the narrative. The ability to challenge conventional wisdom is really important. And the real thing is it's easy to be cynical. It's easy to sort of, I don't know, just kind of end up hearing something. Again, I've been doing this for 25 years. Some people have been doing it for longer that are listening to your podcast probably. But it's easy when you've been doing something for a long period of time to be cynical. And one of the things that I appreciate about Jim Bowen and his leadership of our firm is that he really isn't. He has the courage of his convictions and the willingness to express those in a way that is contagious and makes people want to be better and want to work harder and really want to do their best for those financial professionals that we work with. And man, that is, it makes you excited to get up out of bed every morning and to go into work. And it's, again, it's very contagious. Awesome. Ryan, you mentioned earlier that reading is important. So what are you currently reading? And for that matter, what are you listening to or watching at the moment? Do you have any recommendations for our listeners? Well, I mean, in addition to the Wang machine podcast, of course, we actually started a podcast at First Trust a little over a year ago. It's the First Trust ROI podcast. And I am actually the host of that podcast. So I have really enjoyed that. So that would be one thing that I would recommend people to check out, not because I'm particularly insightful, but because I've gotten good at asking questions, I think. And I get to talk to really smart people like Ryan Westberry and Jim Bowen and Dave McGearle and a host of other people. The book that I'm most recently read isn't an investment book, but I think it's really as a parent of teenagers. I think for those that are also parents of teenagers, there's this book called The Anxious Generation by Jonathan H. That it talks about basically the needs that our society has to move kids off of social media, off of being just staring at their phones all the time. And it really identifies some of the mental health and anxiety problems that that generation has and traces it back to some of these issues and encourages kids to get outside and to have more freedom and not have helicopter parents kind of looming over them all the time. So that's one book that I have found really, really interesting. Again, it's not necessarily investment related, but it's a really good book. I encourage anyone to check it out. One more thing I'll mention and it's another podcast. I've gotten into podcasts lately. There's a podcast called The All-In Podcast. It's a podcast that is some Silicon Valley folks host a podcast, but what I like about it is they talk about innovation. This is one of the topics that I focus on quite a bit. But what the other thing I like about it is there's four individuals that host it together and they come from different ideological perspectives. They don't all think the same thing. They've got different political perspectives. They've got different ways that they view the world. I think that's lacking and that's really important in the world today. The ability to hear a conservative and a liberal and just different sides of the political spectrum that are friends that can end the podcast episode having disagreed but not hating each other. I think it's really, really important. That's another podcast that I really enjoyed every week. It's one of those must listen to podcasts. Awesome. My rinse and new things down. That's great. You're welcome. Well, this has been really great to have you on the show. Ryan, thank you so much for coming on. Before you go, tell us how can our listeners stay in touch and learn more about what you're doing at first trust? Well, I think the most obvious is always the website, ftportfolios.com. We've got a wealth of information related products. We also have our investment insights blog that I participate and contribute to Brian Westfari and the economic team. He also has their blog. You want to know what's happening as new economic reports are released. They provide an ongoing comments and what the implications are, what you should pay attention to. I mentioned the ROI podcast. The first trust ROI podcast. I'll give that another plug. That's a good way to hear the perspectives of some of the intellectual capital at first trust. Then, of course, if you're a financial professional, we've got a network of wholesalers who are really good at consulting with RIAs and other financial professionals. If you don't know them, I'd encourage you to get to know them because they're wonderful. They do a terrific job in getting to know what investment professionals need and how to best meet those needs. If there's something we can do now. Well, Ryan, we really appreciate your time. One quick question is what is the batting average on people pronouncing their last day correctly the first time? I would say, boy, one in a thousand. Like that. When I go to Finland to visit relatives, it's like 100%. They get it. Buddy, how that works. Yeah. Well, I think Robin and I hit it right. I hope so. That was unprecedented that you both, not one or the other, got it sorted right. You both nailed it. So I'm very impressed. Well, I think you probably noticed that I was worried I was going to mispronounce it and the only thing I mispronounced was the weighing machine. So look, one in a thousand, the joint probability function of both of you is like 100 million, I think. Wow. Well, that's how we do it here on the weighing machine. You guys are amazing. Well, thank you. This was an amazing interview. So we really appreciate your time before your insights and on the markets and on the ETF industry. So we appreciate it. Thanks for having me, guys. All right. Well, that's going to do it for this week. Rusty, take us out with your final words. Well, and be well. We'll be back soon. Thanks for listening to the weighing machine. And if you like this episode, please remember to subscribe. And thank you for your time and trust in Orion. Thanks again for listening. Robert and I truly appreciate you giving us some of your valuable time. We hope to provide you in each episode something you can use in conversations or making decisions or both. If you like this podcast, you might also like some of our sister podcasts that are Ryan. But first, we have the weighing the risk podcast, which I co-host monthly with Nick Codola, on behalf of Orion Risk Intelligence. This is where we consider various market scenarios regarding top of my concerns among financial advisors and investors. Next, we have one of the top rated and most popular podcasts in the financial industry, especially when it comes to behavioral finance, Dr. Daniel Crosby's weekly standard deviations podcast. And when it comes to all things FinTech, we also have a brand new spin in our popular podcast, The Fuse Show. For 2024, to an any year present of advisor technology, Brian McLaughlin and Orion CEO Natalie Wilson, take over for a long time host, Ryan Donovan, and George Faguerra to share innovation stories from across the industry. For more, including commentary, videos, and other great content, please check out the website Orion.com. Go to the Resources drop down menu and find me, plus a wealth of content I create just for you under thought leaders. Thanks again, invest well and be well and we'll talk to you next month. The weighing machine is hosted by Rusty Vanemon, Chief Investments Strategist at Orion and me, Robin Murray, freelance writer and editor. If you have feedback or questions about our podcast today, please send us a note at Rusty@ Orion.com. All opinions expressed by Rusty Vanemon and our podcast guests are solely their own opinions and they don't reflect the opinion of or endorsement by Orion, its affiliate subsidiaries, and its employees. This podcast is for informational purposes only and should not be relied upon as a basis for legal, tax, and investment decisions. The opinions are based upon information the participants consider reliable. Health management services are offered by Orion portfolio solutions LLC, doing business as Breaker Capital Investments, a Register Investment Advisor. Orion portfolio solutions LLC is a wholly owned subsidiary of Orion Advisor Solutions Inc.