How to Invest In Emerging Markets
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This show is a proud member of the retirement podcast network. Perth toll was born in beijing, china. SHE came to the U. S. At the age of nine, and after graduating from trinity university in san antonio, texas, SHE went back to china to live with her father for a year and reconnect with her chinese roots.

During her time, their purse met a twenty three year old name, magi, while both through the same age they had wild the different. Uh, ines. Maggie didn't have school records.

SHE didn't have hospital records. SHE didn't even have a birth certificate to the chinese government. Maggie did not exist. And that's because, along with tens of millions of other kids, SHE was a victim of the communist parties. One child policy.

The one child policy was in effect from one hundred and eighty three, two thousand and fifteen, and was implemented to curb the population growth in china. Since Maggie's parents already had a child, they had to hide her existence from the government. Perth told forbes in twenty two quote, that policy changed the culture of my generation and the effects of the demographic disaster in china are irreversible.

Unlike the united states and other developed countries, china is not a free nation. And perth time with Maggie made her realized that growing up in america, growing up with freedom, made a giant difference in her life. This realization also LED her to hypothesize that freedom likely made a difference in the markets as well.

Freer markets have more or sustainable growth. They recover faster from dropping wes, and they use their capital and labor more efficiently, perth told forbes. Perth was a guest on this podcast in twenty nineteen, right around the time of the launch of her new fund, the freedom one hundred emerging markets fd.

Take her F R D M short for freedom. Since the etf launched five and half years ago, IT is produced a total return of fifty two percent. Meanwhile, the ultra low cost vanguard emerging markets fund ticker vw o returned just thirty one percent during the same time period.

Strong performance of a fund is one thing, actual dollars committed is another. Since perth was last on the show, her fund d has grown to nine hundred and fifty million dollars of assets under management, nearly one billion dollars. It's important note here that perth is not actively trading emerging market stocks every day to try and beat the market.

When SHE launched the fund, SHE partner with the cato and frasier institute, which developed an index called the human freedom index, scoring one hundred and sixty five countries based on how free they are. The index rates economic and personal freedom on a scale of zero to ten, using eighty two variables, covering everything from jail journalists to international trade policy. In short, the emerging markets with the highest freedom scores get the highest waiting in the index that SHE created, the life and liberty freedom one hundred emerging markets index.

In other words, perth does not personally decide which emerging countries are included in her fund or the allocation weighings. The life and liberty index does. And as you might imagine, a country like china, which typically has a very high allocation in most emerging market funds, is not included in her fund due to their incredibly low freedom scores. Now, while the freedom one hundred fund is passively tracking the life in liberty index, much like a fund might passively track the S M P five hundred index, you could argue that it's algorithm is actively choosing to include and exclude certain countries based on their freedom scores.

And any time active decisions are being made, and we fear from major broad based index, is that own everything, the odds of under performance go up, that being said, actually be decided to overweight the freest emerging market countries and underweight t or even exclude countries with low freedom scores and the worst human rights records has LED two sizable outperformance since the launch of the freedom one hundred fund. Will the outperformance continue? Time will tell.

Investing emerging markets and specifically emerging markets with high economic and personal freedom scores is important to you. You're going to enjoy today's episode. Welcome to stay off the podcast.

I'm your host tailor shelty, and today i'm talking about investing in emerging markets specifically. I'm joined by perth toll, founder of the freedom one hundred emerging markets index, and we discuss three important things. Number one, what emerging markets are and why retirement savor should consider including an allocation to them in their portfolio.

Number two, how traditional low cost emerging market funds are constructed and some of the potential issues that investors may want to take in the consideration. Finally, number three, the pros cons of excluding countries like china and russia from an emerging markets fund. We also discuss perth expectations for her index going forward and what changes SHE might make to the methodology in the future. To view the research and articles supporting today's episode, just head over to use effect com ford d zaslow two three zero.

In the investing world, as far equity, there's basically three different categories for international socks. So you have developed markets, which are the bigger countries such as japan, germany, france, denmark. Those are of the countries that are quite developed, a very open trade, very open capital markets and so forth.

There are larger markets as well. And then you have the second category, which is emerging markets, and this is what we're talking about here, and that is the less developed markets. So these are markets that are societies transitioning from typically, uh, authority, an type of government, to a more free market oriented economy.

So they have increasing economic freedom, increasing integration with the global marketplace and expanding middle class, improving standards of living. So these are markets that are familiar with, like china, russia used to be in here, saudi arabia a those are the less free ones. There's more free ones like taiwan's, south korea, chillen.

And some of those that I just mentioned are candidates for graduating into developed suit. So that's the second category. And in the last category, in international investing, as far as classification is frontier markets.

And these are the tiny st markets that have stocks at all. And they are even smaller than emerging market as these are countries like vietnam, kuwait, nigeria and so far. So these are even smaller than emerging.

So you developed emerging and frontier markets. And emerging markets are those in the middle. They're not fully developed, but they have transition from unless free to a more free market or .

into how often do these countries hop around from index index? How often does the country move from a frontier market into an emerging market or from an emerging market into I developed international market? And maybe the Better question is, what's the last country you can recall that move from frontier to emerging, from emerging to international development?

There are some countries that just keep popping around, like greece. For example, a greece went from emerging to developed back to emerging. And then there's countries that go to stand alone, like argentina, I believe, has gone to stand alone.

And the people that determine this is the big indexes like msci, who set these classifications and footy. So it's not the world, bang, or I am math, that determines in the investment world what is considered a emerging versus developed market. It's M.

S. I. So it's their criteria and their committee that typically determined these these things.

Sometimes you'll have a market get event that forces their hand like a russia invading ukraine, and then their market basically becoming completely untreatable. And they obviously are now no longer in the emerging category. They are penalty. So IT depends on the situation. But there are movement, however, in the emerging market is face in the last five years, it's gone from twenty three to twenty seven to twenty five after twenty four as far as msci classifications and each index there will have their own class locations. So for us, it's typically around eighteen that are emerging markets in the investment .

category is IT fair to some. The stop to say the frontier markets, the countries in the frontier markets are the smallest of the smallest emerging markets, a little bit bigger and then you're developed international or even bigger. And as IT, maybe fair to drop parallel to microcap stocks in the united states, to small cap stocks, to large cap stocks, be a way to think about front here, emerging and developed.

Yes, that's a perfect way to think about IT. And in addition, because right now, emerging markets and even international developed are so much more favorably value, so their valuations are so much lower than s socks. You can also think of that as value verses versus even the U. S. Dogs, which would be more I gets growth y in this comparison.

It's nice. Good way to my next question, which is like, why would a retirement saver want to include an allocation to emerging markets in their already diversified portfolio of stocks and bonds? c. What's the benefit of adding a meaningful allocation to emerging markets to a portfolio? And maybe what are some of the risks and draw acts that in investor or should .

take in consideration? So the diversification benefit is absolutely there, especially if you are using the site that are listed on the local exchanges, in the local currencies and each these markets that you would not have access to just investing in U. S.

Listed stocks. So some of the biggest emerging markets companies like T S M C, for example, that's time one. So I conductor manufacturing company that does have a listing, A D, R.

Listing on the U. S. exchange. Most of the emerging markets stocks are not listed on U.

S. exchanges. And those are markets that are contributing to basically sixty percent of the world's GDP. So sixty percent of GDP does come from the emerging eighty five percent of population.

World population lives in emerging markets, but the emerging markets only account for about ten percent of market catalist ation in global indices. So those ads, I think, mab favor out recently. So he likes to stir up the controversy with these emerging markets tweet because he's very into diversifying a team.

Merging markets will shed out and met there. But yeah, that's one reason. The other reason is right now, as we mentioned, it's just extremely cheap compared to both developed and U.

S. Markets, especially U. S. markets. So yes, there is some diverse of fiction that you will have exposure to by investing just in U.

S. Markets to emerging markets because some of these companies to Operate overseas. But there is a lot more out there that can benefit investors as far as diversification in the local markets themselves.

Now the risks to that, obviously, in emerging markets, you're gona have a lot more political risk. So this is why, for a lot of investors, emerging market IT seem very scary or an unnecessary risk because there is just too much. For example, autographs risk is something that we address in some of these markets like china, russia, sady arabia, egypt, turkey.

There is a lot of uncertainty due to the compress ously of government actions, the infringement into private market activity by the governments. All of these things are very bad for investors, and that makes them more difficult to capture the returns in the markets even if there is very real growth on the ground. So for example, in china, the last four decades, we saw very real growth on the ground.

However, investors were unable to capture any of that growth. If you look at the M C H I index, which is the msci china onshore offshore index, the returns during that same time in year since nineteen ninety two, the inception of the index are basically worse than treasuries. So for all of that risk and for all that actual growth on the ground, investors did not capture any of that.

This is that autocrat acy risks that we're talking about is that some of these markets is very difficult, even if there is real growth on the ground to capture IT in the financial markets, in stocks. So we want to avoid places like that where the government can high enough returns to players other than foregone investors in the way that the structures are set up in the non transparency of accounting standards and so forth. And also, we want to be in places where companies are free to act in their own best interest verses in the best interests of the government, always putting the government's interest before their own. So those are some of the risks we are investing in, in emerging markets that you encounter these types of very authority political systems that eat into your returns or prevent companies from being everything that they can be if they can have a free market. So this is something that we try to avoid in our strategy as well.

Yes, strategy. There are potentially so moist to mitigate some the risks that you just mentioned. But setting that aside, just investing in these smaller emerging countries IT just does contain more risk.

And in return, you should expect a higher long term return for taking that extra risk. You're not going to get that premium, that extra return without that risk. You had mentioned the two benefits of why you might consider including an allocation being current valuations.

So when we look at just the global markets, there's asset classes like the U. S. Market that have been an upwards.

Then there's asset classes like emerging markets have been pretty beaten up for a while least compared to relatives to some of y's other asset classes. So is potentially a valuation opportunity here to buy an asset class with lower valuations and higher future expected returns. And then you also to diversity benefit.

I've talked a lot here on the show about the lost decade from two thousand and the two thousand and nine and emerging markets during that time period was a great saver for portfolios, for diversified portfolio, for those that had an allocation to emerging market. So from a diversification standpoint, especially for retirees who are relying on their portfolio for a guar withdraws, this sort of diversity benefit is really important if an investor is convinced or maybe partially convinced, ed, that they should have an allocation to emerging markets along with their developed international stocks. Let's talk a little bit about how these typical low cost, broad based emerging market funds are typically structured.

So these are your market cap waited funds, and i've done episode market awaited funds and what that means. But how these traditional low cost, this is called the vanguard low cost emerging markets etf or mutual fund, how are those typically structured? And then let's talk about how you can maybe change that structure to improve how you invest in emerging markets .

the way that most indexes are structured, their market cap ied, like he said. And this just means, as you know, the largest market cap companies and as a result, countries get the biggest weight in the index. Now in the developed markets, these are the markets like germany, japan, the biggest markets.

This strategy works really well because IT gives you the most tradable type of universe for investors, and it's just a highly efficient way to capture those markets. Now those markets are all the developing markets, typically pretty free, pretty homogeneous and their freedom level. So you don't have the issues that you had an emerging markets where if you market cap weight in the emerging markets, what you're getting is a massive overweight to some of the biggest autocracies.

So china, for example, has about thirty percent in the market capture emerging market indexes at is height in August of twenty twenty one, IT was forty one percent. So that's a lot of concentration in one country and whatever country is, but especially in a country with all the risks of the autographed rise that china has. Russia was in the top ten before I was kicked out, and sadi abia is still in the top ten in most market capable. So an investor who has these market capitated industry and their products in the emerging market space is basically a lot of times unintentionally funding money to autographed. And that's something that my investors are typically .

trying to avoid. If you go by the vanguard emerging markets etf, V W O S cost basically nothing to own this fund. Thirty percent of your money in this fund is being allocated to china as of today.

And you're saying that there is a potential risk there. You may not want to have that size of an allocation to china. You may not want to own china at all, maybe develop deep here. Why wouldn't somebody want that large of an allocation to china? Why would somebody want to maybe exclude china entirely from an emerging market allocation?

Autocracy drag is something that china is like a poster telephone right now just because in the last five years, we've seen very bad returns from this market. And also, we don't see very good potential for improvement in the near future. So china has in the past forty years, like I said, grown a luck, but investors haven't captured any that growth and a lot of that growth was dead driven government Mandates.

And some of IT is questionable as well as their actual GDP because some of that GDP is from the government commanding, essentially planned to commands to like build empty buildings or whatever IT is to basically boost GDP. And in a place where you don't have transparency of data, we don't have transparency of ownership structures and you don't have transparency of accounting standards, you don't really know what you're only only and the structure in which you own the stocks is not one that is favorable to foreign sters is just very difficult to capture growth even if there is any. And then if you have a market like china, for example, that in the near future, there's unfavorable demographics, there's unfavourable geopolitical baLances, there's more inwardly focus as far as trade and less open trade, less open capital markets and not going the right direction general far as human rights and economic crimes.

That's just not what we want to be. We believe that as as index investors, the best places to be are the ones where you're going to capture the next big grow story. You want that next, apple, google, microsoft or whatever.

The next big grow story is good to be an emerging markets. And we don't believe that those are gonna come out of the autographs. We believe the best places to find those stories are the places that have the foundations of both personal economic freedom place, the places that have stronger institutions, stronger rule of law, stronger protections for individuals and for I P.

And for private property. And so those are the places that will, in gender, the next big growth stories. And as an index investor, that's what you want to capture. So that's what we want to be.

You've a little to this a little bit already, but I want to make sure it's very, very clear for everybody listening. I want you to talk to about the relationship between freedom and investor investing decisions.

What do you mean by freedom? Can you define freedom a little bit more for us? How we evaluate freedom and how a country is maybe freer than another country and how this relates system of our investing decisions and how you've structured the freedom index.

Yeah, that's a great question because the benefits of freedom are pretty familiar and pretty intuitive to most people. So for example, freer countries have higher life experienced, lower informal ality, higher gender equality, higher GDP per capital, higher incomes for everyone. Not just the richer people, but also the poorest people in the freer countries are richer than the poorest people in the unfree countries.

So all of these things are benefits of freedom that everybody kind of intuitively knows are there. But there are a little bit nebulous. They're not something that we can see. So what we're trying to do here is be kind of a running score card for freedom in the merging markets, investing space where you can see, hey, freer countries do actually outperform third less free parts in the long run. So we're trying to be kind of a running score card for a freedom or not.

Sometimes I will under perform because sometimes some of these china being example, again, a baza of government intervention that causes a short term blip of our performance after a covet china was the top performer in the world for the first half of 2。 So there are times that a strategy like this under perform as well. And it's not just china sadi a baby.

So like if oil does well, they might have a period of outperformance. We do still believe that the freer countries do have more sustainable growth in the long run, that, that growth is more easily captured by foregone investors, that they have lower drawdowns and they have faster recovery from those drawdowns and that they use their capital more efficiently. So events, they have resources like oil. They are more diversified in their industries and not just completely dependent on one natural resource. So these are the places that are more flexible to respond to market needs, and that's what we want to be.

Not to be clear here, we talk a lot about here on the show using leveraging academic research, evidence based research to drive our investment decisions. These aren't necessarily just your opinions about investing in emerging markets.

What sort of academic data is there to support? Investing in freer countries when allocated into emerging markets is superior to just investing in these market capable, advanced where you do have a large allocation to a country like china. What are academic races are you leaning on to make some these decisions?

We do use the cade institute in the fraser institute data as far as personal economic freedoms. Those are category three categories, civil freedom, political freedom and economic freedom.

So civil freeing of things like tourism, trafficking, women's rights, political like freedom of speech, media expression, judicial independence, rule of law, economic trading or things like private property rights, business regulations, taxation, freedom to trade or nationally sound as a monetary policy, and of, so we use third party quantitative data to come up with our country weight and allocations, and that's the data that we depend on. However, there are other studies that have confirmed the theory that freer countries do not performing a long run. The latest nobel prize was just given to the c mogue.

Johnson and Robinson paper. The basically says countries that democratize, starting from non democratic regime, so basically going from non democratic to democratic regime, which is exactly like the definition of the emerging markets, they do ultimately grow faster than non democratic regimes. And the time frame they study was about eight or nine years that this happens IT, and it's a substantial gain. So IT is a substantial advantage for a country to have a democratic regime, to have freer markets and Better protections for individuals and for investors.

So your emerging markets fund, your freedom fund ticker F R D M, currently does not have an allocation to china and allocation to china. Do you ever see china being included in this portfolio ever? And if so, what would IT take for china to end up having an allocation to this portfolio index?

It's not only china that we exclude and is not a arbiters exclusion. And we also don't have any allocation to. We never had any allocation. Russia, even before the war, we don't have any allocation to study arabic, a, egypt, turkey cutter, U. A, E.

So all of the more autocratic, less democratic regimes in the emerging market space, we don't have allocation ents too, because the algorithm basically chooses the freest countryside in the emerging market space and then weight them according to their freedom levels. So the higher freedom level countries get a higher weight and the lower freedom countries get a lower wait. And the worst autographs are naturally excluded.

And that's a dynamic process. So if china becomes more free, IT can be included in the index. Now right now, IT is on the list.

Like second to last on the list, sorry, is a little bit worse on the scoring or depending on the scores from these third party thinkings and is the scores they start scoring higher in those eighty five categories that are scored on the different various kinds of freedoms. Then yes, they can come back into the index. And I don't see that happening anytime soon.

And they are going the wrong direction as far as the scores go on, both personal and economic freedom. So I don't see that happening anytime soon. But I would love to see that if that happened, IT would be a great market to invest.

But I don't see that I happen anytime soon. That being said, I do want to emphasize that we are not an x china index, that this is not just killing china out of a cake ied strategy. IT is a dynamic process.

IT is a natural result of freedom waiting. And it's not a subjective call that I am making. We're looking at objective third party independent data to do the other patients.

I'm really mention that I would say the same thing that since your fund is launch, maybe this isn't totally accurate.

But for my perspective, sce, you are fun launched and the success that your fund has had since launched, there's been a lot more x china etf and funds that have been launched since the I don't know they're riding on your coaches necessarily, but those x china funds are literally making a decision to never include china in the allocation. And what you're saying is, yeah, right now, we don't include china in our allocation. That doesn't mean they can never be included this, not x china fund.

So if you wanted sure that you just never own china ever, ever again, you might consider what these extra funds. But I am curious to hear from you, how do you view some of those x trina funds that have been born in recent years? How are they other than just excluding china intentionally and never including IT ever in the future? How are some of those x china emerging market funds different than yours?

So it's like he said, is an arbitrary exclusion. And so yeah, if you are looking to just not have china and that's the whole point. That's the right fund.

And I do and acknowledge that those funds have grown substantially five years ago. And I think that is generally a good direction because they are excluding china. Some of that is because of how china has done so badly in the past few years that nobody wants in.

China knows they're responding to what the market is asking for the market demand, but they're doing in a way that's a little more superficial than the way we do, is that we're excluding china because of freedom reasons we had excluded russia because of freedom reasons we did IT before. I was cool, I guess. But the x chin's strategies is kind like trying to put a bandage on cancer, like it's not addressing the root cause of that exclusion, is just addressing the very surface making of does the symptom, not the cost.

IT does the job of excluding china, but IT doesn't do the job of capturing the freest emerging markets countryside. So I still has saudi arabia, egypt, turkey, cutter, U A, E. In fact, those other autocracies get a higher weight because that china weight has gone out of that index. So if you're looking for x autographs with higher weights to freer countries, that more the freedom waited strategy, that's what we do. If you just don't want china, but everything else is fine, then that's the extra and strategy.

I think of IT summarized by saying your leveraging evidence and academic research that says free your countries are more likely to outperformer have higher future expected returns than none for your countries. And so we're leveraging that evidence and research to construct the portfolio. We're not injecting our own personal opinions here in the same, just we don't like china, remove china. We're never going to include china again .

from an investment perspective to now we have five and a half years of history. So you can actually compare the returns in the freedom way to approach to the x china approach. And IT does l perform the x china approach because is not only excluding a poorly performing country in that time period, IT is also a higher allocation to freer countries that added to the positive excess return.

So countries like chilly that did very well, inflation trade, holland was best performing emerging market last year in taiwan this year with that tech allocation with companies like T S M C and that critical technology that they're offering. So there is, I think from my perspective, would benefit to increasing freedom in your allocations or as to say, exposure to the freer countryside in the emerging market space. And that has proven to do Better than just excluding china.

And looking at your fund right now, the current country, wait for taiwan is just over thirty percent. So two questions for you there. One, what's the highest waiting that a country can get inside this index? Thirty percent jumps out to me.

The next highest is chilly at seventeen percent. So taiwan a is certainly well ahead of that. What's the highest waiting that a country can get in the index? And then does that cause UI concern that thirty percent of every dollar you put into this fund is .

going to one single country? Like you, I was an adviser, and I am like you of the mindset of asset allocation, diversification as pillars of the investing process. So yes, having thirty percent and thai wa right now concerns me again.

This is an index that we're falling. A passive methodology is a rule space systematic strategy we rebaLance once a year. So we rebaLance after the human rights and economic freedom data comes out in december.

The third friday in january is a rebaLanced tes or going up towards that rebaLance date. Now because ivana has so outperform this year, it's starting allocation. The beginning the year was twenty two percent and grown to thirty percent.

So that's due to market performance, not my target allocation. So the target allocation was twenty two, and IT was the freest country in this space. So yes, sometimes that happens. This happened with chili, a couple of yours back. This this is a great problem to have.

But at the end of the year does make me but that because I come from the school of thought that you share, which is we want hire in your diversification, lower concentration. But in this case, i'm OK with IT because it's due to out performance and due to that having a Better outcome for our investors. So I am looking forward to rebaLance.

though I think we touched on this five years ago when you are on the show. But why are you so investing in is why you committed your career to not only educating investors about the freedom index and investing in free your countries, but launching this etf. Where are you so invested in this topic?

I group in both china and the U. S. Was born in beijing, and I lived there till is nine.

And then I went back to live in hong kong. G, after college. So I had exposure to both countries, U. S.

And china, and then hong kong, which is, at the time I was there in two thousand and three and two thousand four, a very different place. And that is now. And I saw the difference in these markets.

And I could tell that freedom is what made that difference, as freedom make the difference in my life as well, growing up in the U. S. Verses china.

And so I was also born in the year that the one child policy in china was instituted. And my generation is completely different. Now, then I think that would have been if that had not happened.

And that's one of the examples of extreme government overreach in china, where you told how literally you can only have one child. Now that has gone up to two and then three children. But as you can see, no one is having two or three children.

Because the entire culture of my generation changed with that policy, people in china, the Young people now, are even not having children as a form of protest because the government. So this is something that resonated with me personally, but also my time as an adviser, or as an adviser for ten years of delity. Before doing this, and I had clients, I was in the L.

A. And houston markets, a lot of non U. S. Clients, and had a russian client, for example, I told me, hey, I don't want to invest in russia because it's like funding terrorism. That turned out to be very prescient, but I felt the same way about china.

So I wanted to create a way for investors who felt like we did to be able to invest in emerging markets because I do want that diversification, and I see that is being very beneficial in the long run for investors potentially. So I wanted a way to get that allocation without lending autocracies. And I wanted to also give the freer countries a little bit higher way, just because I think those the best places defined the next big grow stories, which are gonna make a difference in the outcomes for investors.

That's where I got the sea for the idea. And then as I was working a fidelity, I saw the growth of indexing and E, T S, saw the benefits of E, T. S. For investors, and created this product to take a bit of that. Appreciate that.

Again, the fun is going and significantly coming up here on a billion dollars of other management. So you've had a lot of success in a short period of time, not only that, and this would be partly there a reason for the success the fund has done very well last five enough years since inception is outperformed those market capitated funds that we've referenced prety significantly. I'll share some more specific numbers in the intro to today's episode, but i'm curious as we round this episode here, what's changed, if anything, with the freedom waited index since you joined me five butter or since inception? Have you made any changes to the index, any improvements, any rural changes and then any expected future changes in the coming years?

The index committee meets media to discuss do we want to make any changes to the index. Since a five year inception date, we haven't had any like significant changes that have cause any perspective alerts or anything like that is only being small weeks. But what we have done is I don't know if we had this five years ago.

I'll just take some little tweet that we made the buffer rules. Now we include the top ten largest, most liquid companies in the index that are not stayed owned. So ten in the country that's represented.

So sometimes those will false a number eleven and we don't want is selling just because I fell one unit in the rank. So to avoid unnecessary turnover, we would have a buffer role that they have to fall to below twelve to be dropped. Basically is will be dropping those companies right at the wrong time when their Prices slow.

And also that's to avoid the unnecessary over, he said. So we have those buffer rules in place that I don't believe was in in the very beginning. We've always had the freedom moments of decline, all which is if a country that is included drops more than five points on the freedom health scale in that year, the measured year, then IT is excluded from the index.

The only country that ever triggered that rule was turkey. And that was before fund inception. That was two thousand and eight.

The fun was in seven thousand nine. And turkey never made IT back in. Other than that, I don't believe had any significant changes.

We have a eight percent cap on securities because, for example, T S M C N samsung would be like fifty percent of their respective markets. If we don't cap IT at a percent, that way doesn't become too overly concentrated in those top stocks. We may at some point, because of situations like we're seeing right now, add a buffer on the country weight. So maybe if the country becomes more than a certain weight, we will go back to target weights new year. But we haven't done that yet because so far, I don't see that helping investors because things that just needs .

to keep running. 没有。

So I don't like to place a lot of artificial constraints on what's happening naturally within the index。 I don't like to do subjective judgment calls. That's why with the strategy, we don't make a subjective call after who's included, who's excluded.

The algorithm does that naturally and IT just depends on how the scores fall. If the scores above average, es included basically. And i'm not making that call or drawing that line and said i'd like to do d of all subjectivity, be as objected as possible.

嗯， the index do is being sword so far. So i'm grateful for that. I'm grateful for the way that the market responded to IT.

And for all of you guys who invest in IT, I wouldn't expect this dark out performance every year when you tell people the numbers for the last five years, very stark out performance. We had some very extreme events covered the war. We also had some very good performance in the for your markets.

This is designed to be out performing in the long run, definitely potentially, but I wouldn't address for performance alone. So there's two types of investors that we have. One that says, I think for your countries will perform and when that says, I don't want to fund money to autocracy through my emerging markets allocation and some people are both and both but yeah, I wouldn't buy IT for performance alone or to produce the performance of your emerging markets portfolio. IT is designed to perform somewhat in line with benchMarks, but we do believe in the al performance potential of time.

Perth, I really appreciate coming back on the show. I wish we didn't wait five and years to have this conversation. All conversation.

Congratulations on all the success that you have add. I can't wait until you cross up billion dollar mark before we part ways here. Where can people find you if they want to learn more about you and or the strategy?

Yeah so the strategy can be found on freedom etf dot com. The index is life and liberty index is dot com. And I am on linked in and twitter less active on twitter than I was five years ago. I think that a big change. Yeah no, that's where you're finding awesome.

Thanks so much. Better thanks so much.

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