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Navigating a Changing Macroeconomic Environment

Join SmartBe Investments Chief Strategy Officer Mr. Gavin Graham for an informative and entertaining conversation about yield curve spread trading with Nancy Davis, Portfolio Manager of the Quadratic Interest Rate Volatility and Inflation Hedge ETF (IVOL – NYSE). Regarded for her asymmetric approach to investing in leveraging opportunity and minimizing risk, Nancy discusses: her background as a “student options trader”, a mother and time at Goldman Sachs and JP Morgan; how to benefit from fixed income volatility, rising inflation expectations and yield curve normalization, and; how IVOL can act as a hedge against equity, bond and real estate pullbacks . All this and more in this segment of the Gavin Graham Show.

About the Speakers

Adam.jpeg

Adam is Chief Investment Officer of ReSolve Asset Management Global* and has 15 years of experience in investment management, including 12 years as a Portfolio Manager, and holds both CFA and CAIA charters. He is primarily responsible for research efforts related to the management of investment portfolios. He is the lead author on several public research whitepapers. Adam worked as a Portfolio Manager at Richardson GMP and Macquarie Private Wealth and as an Investment Advisor at BMO Nesbitt Burns. Subsequently, Adam, along with his partners Mike and Rodrigo, continued to evolve their quantitatively focused investment methodology as a Portfolio Manager at Dundee Goodman Private Wealth before launching ReSolve Asset Management.

About Gavin

Mr. Graham joins SmartBe with over 30 years of experience in Canadian and international markets. A graduate of Magdalen College at the University of Oxford, Mr. Graham has directed investment strategy at numerous institutions, such as the Guardian Group of Funds in the UK and BMO Asset Management in Canada. In addition to his position at SmartBe, he serves as a contributing editor to The Income Investor, a respected online Canadian investment journal. The Gavin Graham Show is a platform for Gavin to share his wealth of knowledge with the SmartBe community, as well as engage in stimulating conversations with peers and thought leaders.

Transcript

[00:00:00] Gavin: Hello and welcome to The Gavin Graham Show sponsored by SmartBe Investments. Today we're going to talk to Adam Butler, chief investment officer of Resolve Asset Management, which runs a long short global investment fund using numerous different strategies with a focus on risk management. So to start off with, how long have you been doing this for and what got you into it in the first place?

[00:00:26] Adam: I've been doing this on and off now for almost 16 years. But it was a rather convoluted path to get here. I started out doing psychology in school, and this was during the time when they were first launching those online TD Greenline, those online trading platforms, in the late 1990s. TD had this investment competition. You could trade options and equities for six months and whoever had the most wealth at the end of the three-month period ended up winning the competition. So I was a psych major, but came across this and found it fascinating. I can't recall what motivated me to sort of look in that direction, but I was paying attention to that and entered it. And I ended up winning the first one and then I entered the second one and I came third. And I parlayed that into a role on the equity trading desk at Scotia MacLeod for where I spent my first 18 months in this business.

[00:01:26] Gavin: So it was obviously something that appealed to you, even as you say it wasn't in your particular specialization at college, and obviously you were pretty good at it. What happened after Scotia?

[00:01:34] Adam: Well, at Scotia I learned the meaning of risk because I was a junior trader on the equity desk that's interfaced between the retail book and the institutional book. And so our job really was to come up with trading ideas, to generate commissions for the retail advisors, and a lot of it involved knowing what the institutional desk had for sale and size, and coming up with switch ideas. We wanted to sell our Stelco to buy Algoma, or we wanted to sell Royal Bank to buy TD, or BCE to buy Rogers, or, you know, these types of switch ideas. So we would get on the squawk box with these ideas and talk about the fundamentals and why it was a strong technical setup, et cetera, and give the advisors talking points to implement this across their book. But as part of this mission we also had this omnibus account that the four of us on the trading desk could use to sort of stay in the flow of the market. So we could trade our own kind of prop capital. It was only kind of $2 or $3 million. And I didn't have much in the way of allocation in the beginning. They only gave me a kind of a hundred grand, but I used the techniques that I'd applied during my trading competition to trade my small piece of the omnibus account. And which is basically just throwing darts at extremely high beta tech stocks two or three days before they reported earnings. And you'll recall back in those days that you were allocating to a double handful of different tech stocks at any given time. After they reported earnings they were virtually guaranteed to go up by 5, 10, 20, 50%. That worked very, very well for a time. And I was able to sort of take my both grow organically, my small amount into a larger amount. And then I was given access to more and more of the desk's capital. So that coming into September of 1998, I had taken my small little piece to total value of about 8 million bucks. And at one point you'll recall the bank mergers in early 1998. And I remember making a really great call on one of the bank mergers. And having a very large payoff and my team carrying me around the trading floor with a inflatable Burger King crown. And I was 21 or 22 at the time. And I 100% believed that I was God's gift to trading. And I came into the Thai baht crisis and the long-term capital management bailout. With guns blazing, levered into a wide variety of far out of the money call options and ended up over that subsequent six week period taking that for about $8 million down to below a million. And within a few weeks had been escorted off the trading desk. So that was my first lesson in risk management and humility. Which is absolutely fundamental and invaluable in this business in my opinion.

[00:04:42] Gavin: No, you're absolutely correct. And you learn so much more from the mistakes you make, as long as it's not a completely career ending because hey, things are going up. It's easy, you know, as they say, don't confuse brains with a bull market. So after that exciting experience, what then happened? What got you back on the path in investing? You liked it enough to want to continue evidently.

[00:05:03] Adam: Yeah, I meandered a little bit. I went back to school and learned programming and I worked at IBM for a little while, and then I worked at an internet startup. And then my wife and I went to Thailand. I taught math and physics at a boys school. 6,000 boys from kindergarten to grade 12. Like a fusion bomb went off every morning in terms of total energy created and destroyed throughout the day. While I was there, I decided to do my CFA. And so I did my level one CFA in Singapore, because like there were no places to write it in Bangkok at the time. I remember my parents sending over boxes of Schweser books for me to study, which was very nice of them, obviously. And so I pass by level one in Singapore then passed by level two and level three when I came back to Canada. And I started work as an advisor trainee BMO Nesbitt Burns . And that would have been in 2005. So that's where I got back into the business officially and kind of built a book of business around my desire to run a discretionary portfolio management business, which was relatively novel at the time in the big brokerage houses. And that ended up being a bit of a struggle in terms of how they were able to accommodate me as both a new adviser and wanting to pursue a relatively new business model. And so soon after that, I found a new home at Richardson GMP, which was building a business model specifically for portfolio managers. And that's where I met my partner Mike.

[00:06:30] Gavin: And so Resolve has been going for how long?

[00:06:33] Adam: We launched Resolve in 2015. But Mike and I partnered up soon after I landed at Richardson, which was just GMP at the time. And of course then Richardson bought the Wealth division soon after. And so Mike was the branch manager at the time. I had a very tight book of business. I had maybe seven or eight clients. Two or three were very large clients. I was very fortunate in landing some very large and loyal clients very early on. And so that gave me some leverage and the ability to sort of run the business I wanted in the way I wanted at that firm that I wanted. Mike as branch manager was very much sort of a leader of man or leader of people. So we soon discovered that we had very complimentary skill sets and interests. So that grew into a lasting partnership. So we started running discretionary model portfolios based on something called adaptive asset allocation in 2011 or 2012. Which has kind of a long only systematic trend following, but kind of global macro oriented, strategy with the purpose of avoiding the outcomes that both Mike and I had found very distasteful through the 2007, 2008 financial crisis. We sort of embraced the exchange traded fund wave Randy strategies using ETFs, model portfolios. And by 2013 we'd built up enough of a track record and had enough assets running in it that we decided to wrap the strategy unit fund. Once we had sort of built up enough of a track record in that bond and had a sizable enough book of business to make it worthwhile we then moved on to found Resolve Asset Management. Which is of course the firm that we have been running ever since.

[00:08:27] Gavin: Which is now seven years. How much do you have in terms of assets under management?

[00:08:31] Adam: A little over 400 million in Canadian dollars. And we started out basically exclusively as a wealth book where the wealth book invested primarily in both our fund and in separately managed accounts from our strategies. And since then we have moved on from exchange traded fund to primarily focus on global futures strategies. And so we run a futures ETF in Canada, as well as a couple of hedge funds. And we run a futures mutual fund in the US. So the business is now a little over 50% of revenues come from outside Canada and Canada makes up the remainder. So it's evolved quite a bit.

[00:09:14] Gavin: Indeed. And so you started with ETS because that was low cost, easy to express a view on macro factors. And, at the same time, a very wide variety of choice futures. Talk a little bit about that because obviously it's something that a lot of our listeners may not be as familiar with, and there's always the oh my gosh, you can do so much money in futures because you have margin, you have exposure, and things can change very rapidly. And maybe, perhaps, even a little bit about the risk controls you have in place.

[00:09:41] Adam: So I won't go into much about the underlying mechanics of futures, other than to say that a future is a derivative that allows you to gain exposure to a very wide variety of global markets from well over a couple of dozen global equity indices, to global fixed income benchmarks. So, for example, derivatives that track the performance of various points along the US treasury curve, along with European bonds, Japanese bonds, and bonds from a variety of other countries. And of course they were originally created to express views and to enable the hedging of a wide variety of global commodity contracts. The great thing about futures is that you're allowed to express, or they enable you to express, fairly granular views on a very wide variety of markets in virtually every major global sector from equities, to bonds, to currencies, to commodities, and some more esoteric asset classes. In addition, they allow you to express your views using extremely inexpensive leverage. And the reason that that's important is that most people think about their allocation to global markets in terms of the amount of capital that they have allocated. So take a typical 60% 60/40 portfolio. Where, let's say, 60% invested in global equities and 40% in some major bond benchmark index. And so people sort of think, well, if I'm 60% in stocks and 40% of bonds, and 60% of my risk is in stocks and 40% of my risk is in bonds. But in fact, that's not at all the case because bonds are so much less volatile than stocks. In fact, about 90 to 95% of the total risk of that portfolio comes from the equities, right? So one of the foundational principles of how we operate. Is that we want to allow all of the different markets in the portfolio to have an equal opportunity to express their unique personality. If you're limited to making allocations to these markets on a capital basis, then every portfolio that you invest in will be completely dominated by the riskier markets in the portfolio. Whether that's equities or commodities. And you might have a great deal of skill in fixed income or in currency markets, but that won't matter a hill of beans because all of the risk in the portfolio is going to be completely, and returns and the portfolio, are going to be completely dominated by how well you do in your investments, in the riskier instruments. So in order for us to be able to fully take advantage of the diversity across all of these global markets, futures make that possible because, you know, if we want to have an equal amount of our risk in equities and bonds, and we can have a 25 or 30% position in equities, and 140% position in say two year treasuries, which are extremely low volatility, and that allocation may allow for the equity component and that two year treasury position to express an equal amount of risk and diversity within the portfolio. So those are the two primary features that make futures attractive. I will say for American investors, which comprise well over half of our total assets now, futures trading also has the benefit of more favorable tax treatment. So that's a nice little bonus.

[00:13:19] Gavin: So you've done a very good job of explaining the way that futures can be used to express, as you say, very granular views. Is it the Osprey fund is the major fund? How is it set up in terms of positioning at the moment and sort of what sort of granular views are you expressing at Resolve?

[00:13:34] Adam: Right. So Gavin, if you'll indulge me, I'd like to back up a little bit to sort of present how we kind of think about making decisions and markets more generally, right? Because when I started my career and even when we were first making investments from a global macro framework, I understood markets to be complicated. In so far as there are a lot of moving parts, the dynamics that drive those parts are myriad, and require a lot of in-depth knowledge across a wide variety of fields. Right? So you need to understand the underlying drivers of supply and demand in energy markets and in other raw materials markets. What drives interest rates and what motivates changes across various global equity markets and their expected returns, et cetera. But my assumption was that by gaining a deep and broad understanding of all of these major underlying dynamics, that I would be able to sort of understand economic machine well enough at a mechanical level to be able to apply kind of inductive and deductive reasoning to make my portfolio allocations. And I applied this methodology into 2007, into 2008, taking large bets on emerging markets and several major commodity markets and underlying commodity equities. Like the fertilizer companies, et cetera, and recognizing the risk in the US and global banking system as a result of mortgage securities that were offside and underwritten and very irresponsible ways, and then further hypothecated and securitized. So I had a deep understanding of many of the underlying dynamics, but what I did not account for, and I did relatively well throughout much of the financial crisis and navigating the situation, but what I did not account for was the reflexive nature of markets and the fact that it's not just that markets are allowed to evolve consistent with the underlying macro economic drivers. But there are other extremely large and powerful participants in markets that have very large incentives and the capacity to change the direction of global markets. Right? And so the lesson for me didn't come from what happened to the banks and commodities during the global financial crisis. The lesson came once the authorities, the central banks and the governments of the world, interfered with markets and changed the rules. That highlighted for me the reflexive complex nature of markets and that it was virtually impossible to be able to navigate markets using a discretionary view. Right? It's not a chess or checkers game. It is a poker game and a poker game where one player at the table has an unlimited stake. And so how do you navigate markets in that context? And so we migrated from an attitude of markets as the machine to markets as a complex computational process. We migrated from kind of discretionary thinking to systematic thinking. And that was largely informed by some of the research, especially by Philip Tetlock and his publication called Expert Political Judgment.

[00:17:07] Gavin: That's right. How experts are wrong and you can have group think and reinforcement, and you end up with the Bay of Pigs Invasion of Cuba and other exciting things. And that what's happening then changes what other people do. As you say that comparison of a poker game it's about investor psychology. So you would be a big believer in that as a major driver?

[00:17:25] Adam: Absolutely. The vast majority of investors with some degree of experience are operating with a set of models at any given time. Some of those models are going to be aligned with the underlying dynamic. It doesn't mean the models are the territory. It does mean that sometimes some models are right enough to make money. And so if that is the underlying computational mechanism for markets, then what you need is a very large number of models informed by a very large array of different sources of information so that some of those models are in sync with the market at any given time. And enough of those models are in sync with the market. Keep in mind being in sync with the market beans that you're able to more consistently generate profit. Otherwise the models are noise. So it's not that they're a consistent money loser. It's just that they're consistent noise. If you have some fraction of your models that are operating with skill, they're all in alignment with the market and another basket of models that are currently noise traders, they're misaligned with the market. Then you at least have a chance at generating fairly consistent P and L. And so that if I were to sort of describe what the underlying mechanics of our current investment strategies, that would be the overarching kind of mechanics of what's going on.

[00:18:46] Gavin: So you have access to enough, as you say, strategies drive from enough different people to enable you to have some of them working enough of the time to be able to add alpha and make profits. And to recognize which ones are working and which ones aren't. And of course those . Won't change, those will not remain the same the whole time, they will change. Part of the skill, presumably, is the ability to know when to make the move from what's working to what's not working or what might be working in the future.

[00:19:11] Adam: That's the hardest problem perhaps is determining in real time. Right? Cause it's not enough to wait until you have enough data in hand to make a strong statistical conclusion on whether a model is working or not, because you may need to wait 5, 10 years. Even if you're trading at daily timeframes in order to be able to determine with some degree of statistical confidence that a model is no longer operating as expected. So I think the idea is to have a large enough set of models where at least a substantial proportion of them are expected to be operating in alignment with the market at any given time so that you don't need to have to make those choices in real time. That's not to say you can't, you know, absolutely a high-frequency trader where you're getting, you know, hundreds of thousands of data points a day. Absolutely those types of traders can switch models on and off, derive new bottles, et cetera, derive conditional relationships much more quickly because the data is coming at them a lot more quickly. But for those operating with strategies that they want to be able to run with large capacity. So in other words, be able to run billions of dollars in service, many thousands of different investors and their objectives, you can't trade it at microsecond timescale. You know, you need to trade maybe throughout the day, et cetera, or at daily scale, move a little bit more slowly. And when you move a little bit more slowly, you just don't have the statistical data generating process that allows you to turn models on and off very easily over time. I would quantify that as a hard problem.

[00:20:50] Gavin: But you evidently had some success in addressing that. Would you like to describe the way that the fund is positioned at the moment? Not in terms of giving away any secrets as such, but what have you found has been helpful in terms of generating returns?

[00:21:04] Adam: So most recently, maybe the models that relate to trend. So the underlying variables that we use to make forecasts of what's going to happen in markets, and our forecasts are typically over kind of one to five days. So they do end up being fairly short term. We take information from the underlying time series. So the sort of evolution of the price over time, as well as things like the term structure of the futures market. So our futures that mature in several months, trading at a higher or lower price than the futures that are maturing in the most recent month, or what we're observing in the spot markets that carries a lot of information. There's a lot of seasonal information because of, for example, the fact that global banks have a regulatory requirement to square their books to conform to global rules like Basil II, or various country level regulatory states at the end of every month, or at the end of every quarter. Every country has different rules about how automatic deposits are made for retirement plans. You know, every two weeks or bi-weekly once mid month and once at the end of the month, et cetera. There are all these sort of competing dynamics. If you have favorable trend dynamics, aligning with favorable seasonal dynamics, aligned with favorable futures term structure, for example, then you've got a lot of different models that are converging on a certain direction in a certain market. And that gives us higher confidence. Right? So at the moment, We actually don't have very much risk on. The models do have a decent allocation to energies, to grains, a lot of longs and shorts in both fixed income and equity markets. Very modest positions in currencies. We have had a very good year. We had a very good year last year. We started out with a very good year. This year many of our models were short, fixed income into January. Sort of switched over a few days to a mix of longs and shorts and a fairly consistent allocation on the long side to energies has obviously really helped this year. But I mean the secret sauce really is diversity. Having a wide variety of markets in which we can express views because the macro economic situation can change dramatically. I mean, let's face it we've just gone through 30 plus years of, you know, let's call it 26 out of those 30 years have been a period of reasonable, positive growth. But 9 inflation and abundant liquidity conditions. These are very positive dynamics for global equities and especially developed equities like the S and P 500. We're now potentially moving into a period of, first of all, we had a major pivot in monetary and fiscal policy. Which is leading to a very substantial inflation shock. And historically inflation shocks do not fade overnight. And there's a lot of path dependency and volatility in how inflation manifests over the coming 5 or 10 years. And so we're coming into a period where having the ability to be a bit more agile, and the ability to allocate to a wide variety of different global regions, markets, asset classes, is likely to come in very handy. And we've already seen that type of dynamic payoff so far in the last couple of years.

[00:24:47] Gavin: So Adam, you mean that inflation isn't transitory as the Chairman of the Federal Reserve was claiming last year. Because again, that's a very interesting. I think that suspicion answered. But that's an interesting point in that once you have the dynamics that they tend to run in inflation. They tend to run for 5 or even 10 years. And certainly that was very much an experience in the 70s where you had not one, but two oil shocks and a lot of geopolitical tension. But also effectively the end of the postwar Bretton Woods regime. And am I correct in feeling that you're saying we might be in a similar position now that that post ended the Cold War benign environment for Marlowe or disinflation and Apple liquidity might be coming to an end?

[00:25:25] Adam: I think we're in for a period of escalated, average inflation levels, but also a period of elevated inflation volatility because the governments of this world are extremely incentivized to fight inflation tooth and nail. So we're now experienced a period where governments of the world need to tread this very fine line between allowing inflation to run hot as we continue to try to sustain a level of economic growth that delivers on the promise of prosperity that really dates back to Reagan and Thatcher, against the fact that it's getting harder and harder, and it's consuming more and more debt and central bank reserves to maintain the level of growth that we came to expect in the 70s and 80s. And so I think maybe we're nearing the terminal phase of this paradigm. We've shifted from a reliance on monetary policy, to a regime where we're now going to begin to rely on fiscal policy. And now we have monetary policy now competing with fiscal policy and different countries and regions around the world turning inward in response to this de-globalization trend. And so we're going to see a lot of the underlying dynamics that lead to stability and disinflation over the past several decades, unwind. And so the opposite of disinflation and stability is inflation and instability. And I expect that that's what we're going to see.

[00:27:08] Gavin: No, that's a very neat encapsulation of the view and Resolve is well within its approach is well positioned to be able to help investors navigate that. You said you had a very good year last year, and so far this year, is the fund intended to generate a particular level of return? What does it pay in the way of distributions? How are those composed? Obviously if you're able to give some insight on that, that would be very helpful.

[00:27:31] Adam: Thank you, Gavin. So first to be clear in Canada we run an ETF. And the ETF has a combination of sort of an underlying global market diversified global market exposure. That's kind of layer one. The second layer is to emphasize yield. So which bond markets, stock markets, and commodity markets, and currency markets are generating the highest expected yield. And in commodity market you evaluate the expected yield by something called Kerry. So the degree to which the next month's contracts are above or below the current month's contract, and therefore the price will either roll up towards the spot price or down towards the spot price to generate a yield in either direction. So that is a layer of this sort of yield layer. And then there's a third layer, which is our, that all of the different models that I described across all these different global markets, right? So there's sort of a three layer global general global market exposure, yield, and alpha all in one product in the ETF. And that's designed to be a total portfolio replacement. Relatively moderate risk. Have target of volatility of between 7 and 8% annualized. Which is just about two thirds of what you'd get on average over the long-term for a global 60/40 portfolio. So lower ambient volatility, lower expected peak to trough losses, and hopefully peak to trough losses that don't last nearly as long as what we've sometimes observed in a traditional global 60/40 portfolio over the years. And then our hedge fund products. Alpha component, the hedge fund products allocate to that exclusively. And we have two products, one that runs at a target volatility of around 10% and another runs at a target volatility around 15%. Obviously the 15% annualized product we expect to generate higher returns than the 10% annualized product. But we expect all of those products to vary substantially, outperform a global 60/40 portfolio over the next 5 to 10 years because the global 60/40 portfolio needs to contend with first of all, generationally low fixed income rates and over half of the global market capitalization of global equities that are valued at one, two, and sometimes three standard deviations above their long-term average with expectations of below average returns to equities over the next 5 to 15 years as well. So admittedly, a 60/40 portfolio is a pretty low bogey to beat I think over the next 5 to 10 years. But we've designed our strategies to have a good shot at delivering the returns that a typical require a retiree, or soon to be retiree, or, you know, foundation endowment, et cetera, requires in order to be able to meet their long-term funding requirements.

[00:30:31] Gavin: And without wanting to put a specific tie you down too much, as far as the actual distribution or yield what sort of range are we looking at here?

[00:30:39] Adam: I would be hesitant to say maybe the expected return, but I might be happy to sort of say the return that we might expect per unit of risk. So I think per unit of risk we'd expect the ETF to deliver between one and maybe one and a quarter units of return per unit of risk. And to have some correlation with global markets. So maybe the correlation of 0.3, 0.4 to global markets and the hedge funds to be in the range of maybe one and a quarter to 1.5, but at zero correlation to global markets.

[00:31:14] Gavin: And those hedge fund products are available through offering memorandum and presumably to sophisticated investors, but the ETF can be purchased by any individual. And therefore you're giving them the opportunity or indeed for that matter institution that doesn't have the capacity or want to get into actually doing futures itself and that's readily available. And the management expense on that?

[00:31:33] Adam: 0.85% and there is a 15% performance fee. If we deliver returns above 3%. And I would add as well that we run the ETF as a sub-advisor through Horizons and the structure that Horizons has us running the fund in has an enormous tax asset. So it is virtually impossible for the gains that we generate in the fund to create a tax liability for investors. So we feel that's an extremely accretive value add for inventors, especially for what is essentially an absolute return product. Which in most other structures would attract very high tax rates.

[00:32:16] Gavin: No, that's a very important point, indeed. Because obviously if you can actually deliver tax efficiency with the possibility of superior returns, certainly no volatility and in some cases, no correlation or very low correlation that makes it a very attractive mix. Have you been seeing a fair amount of inflows in the last 18 months or so with the good performance? Have you been seeing more people becoming aware of what results been doing?

[00:32:40] Adam: Yeah, absolutely. Especially in our publicly available mutual funds. So the 40 act mutual fund that we run with Rational funds in the US and the Canadian ETF. We're seeing a lot of really great flows. Investors are starting to become aware of what we do and how it fits into the portfolio. And the guardians at the gate at the Canadian banks and investment firms are, you know, coming to better understand what's going on under the hood and how risk is managed and where it might fit into portfolios. So really exciting to see both firms and advisors and investors start to really get behind the potential value of these products.

[00:33:26] Gavin: And are you seeing anything in the way of institutional money? You talked about foundations and endowments. Are you seeing a sort of increased interest in that space as well?

[00:33:34] Adam: We are, but as you know, institutions they turn very, very slowly. Like a battleship or an oil tanker. And so yeah, we're at due diligence process with, you know, just under a dozen different institutions in both Canada and the US and expect to be moving forward with at least a handful of those over the next year or two. So very excited to begin to that next level of our firm's maturity and pushing into the institutional space.

[00:34:00] Gavin: No, as you say, they, they do tend to move fairly slowly. If any, cause like any committee dominated organization, it has to go through several levels and to convince a large number of people. But it's obviously very encouraging that you are in due diligence processes there. Again, you've said that this has maybe the beginning major sea change in the macro economic outlook which would obviously be good use for what resolve is doing, but in general, in terms of how the average investor you know, individual or whatever, would you have any words of advice in terms of what that's quite apart from buying a wonderful product, like Resolve's, how you might position yourself? Fairly basic simple things they could do it to protect themselves in this type of environment.

[00:34:44] Adam: Yeah. So in an environment of inflation and growth volatility, the prime directive should be diversity and balance. So you want to have exposure to a wide variety of different regional markets and a wide variety of asset classes. And you want to do your best to ensure that all of these diverse asset classes have the best opportunity to express their unique qualities when the time is right. And the vast majority of traditional portfolios are, you know, like I said, designed really to primarily thrive during periods of benign inflation, abundant growth, and abundant liquidity. So, you know, for the past 10 years the global central banks have been pushing about, you know, somewhere between 50 and up to $120 billion a month of liquidity into global markets. And we are about to see that process reverse. In all likelihood the markets that have done the best over the last 10 years are going to be moved towards the bottom of the pile over the next 10 years. So while it may be emotionally difficult, I think investors would benefit from looking through some of the stuff that looks least attractive based on his performance over the last 10 years, and making sure to have a reasonable allocation to those areas of the market going forward, because they're likely to end up near the top of the pile over the next five to 10 years.

[00:36:16] Gavin: That's a very succinct and very informative way of encapsulating the trends that we're seeing. That's been extremely useful indeed. Thank you very much. Really enjoyed some of the personal stories as well. I like the Burger King crown. But then how soon the king is deposed, because again, and I think that that maybe that risk is out there and when it arrives it's very, very difficult to control, but it seems as though you and Resolve have an excellent process in place to help do that. Thank you very much and we hope we'll have the chance to talk to you again on SmartBe Investments', podcast in the not too distant future.

[00:36:46] Adam: Thanks Gavin. It's been a great pleasure.

[00:36:55] Gavin: Thank you very much for listening to The Gavin Graham Show sponsored by SmartBe Investments. If you would like to learn more about the subjects discussed today, please go to our website at smartbeinvestments.com or @smartbeinvestments on any social media platform.

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