00:00 Julie

We expect at least one more interest rate cut before the end of the year and as rates fall, many investors are seeking ETFs that capitalize on looser monetary policy. We’re joined by Will Rhind, Granite shares founder and CEO. Will, it’s good to see you. So we were just sort of explaining the concept of leveraged ETFs. You all have an a pretty broad suite of different kinds of leveraged ETFs.

00:27 Julie

And something that is in, I guess the same family but not quite a a leveraged ETF, is your yield boost product, which is linked to this idea of rates coming down. So can you first of all just explain the product to us?

00:46 Will Rhind

Yeah, thanks, first of all for having me, Julie. Good to see you again. Um, so Yield Boost ETFs are options-based income ETFs. So they’re designed to generate high income on a weekly basis. And effectively how they do that is they sell options on underlying assets. In our case, these are leveraged ETFs. and that generates a high weekly distribution for investors.

01:28 Julie

Um, and have you seen an uptick in demand because of the the rate cutting cycle?

01:38 Will Rhind

Yeah, it it’s really two things at work here. So on the one hand, it’s rate cuts or the anticipation of rate cuts and people wanting to uh generate higher yields. And the other one is that, you know, as the market ticks higher and higher, it’s people effectively converting growth into income. So maybe thinking that instead of continuing to buy the market, I’ll buy a high income fund whereby I’m not speculating on the upside of the market, but I’m changing or converting that growth into income today. And I think those are really the two most, um, pervasive trends that we see.

02:30 Julie

Will, um, as we just talked about, you know, when you’re talking about a leveraged product or something tied to a leverage product, there is an increased risk. So what do people need to know? You know, this is um, as an old friend of mine who covered the ETF industry used to say, you have sort of like green light, yellow light, red light on ETF products in terms of their sophistication and leverage probably all goes into that red light bucket, right? So, what do people need to know before they get into these kinds of products?

03:03 Will Rhind

I mean, this is a a classic, you know, tradeoff as with most investments in terms of risk and reward. So with you boost funds, you’ll see yields, annualized yields or distributions in some cases as high as 170, 180%. And so for anybody that is looking at that, they rightly will ask themselves the question, you know, how’s that possible to generate that kind of yield. And the answer is in the strategy that we provide, which is selling options on underlying leveraged ETFs that themselves uh are highly volatile. So you are able to generate high yields, but of course with that comes a higher element of risk. In other words, there’s more volatility in a yield boost ETF than there is in something like a US Treasury. And then in order to try and, you know, combat some of that volatility, we also buy uh or use bought put options to offer some downside protection as well for investors to try and insulate that. But like I said, the the basic trade-off here again is a classic risk and reward. Higher yields but higher risk.

04:22 Julie

Will, while I have you, you guys have a gold ETF too that is one of your one of your if not your biggest products. So I imagine you’re pretty busy with that one at the moment as well. Uh what kind of activity have you seen in there and what does it tell you about how sustainable this rally is going to be?

04:47 Will Rhind

Yeah, I mean, look unbelievable. I myself, you know, I’m a I’m a big fan of gold as you know, have been for for, you know, many, many years now. And even I’ve been surprised by the move uh past 4,000. I thought we would get there, but I didn’t think actually we’d get there this year. So the the velocity of that rally in gold has been something astonishing. Even more so perhaps, and this is probably something that um investors don’t know much about is the rally in platinum. Uh we have a platinum ETF PLTM, um which has outperformed gold. and I think what you’re seeing here is just a broader allocation to uh real assets or hard assets. So gold leading the way very much so, um but followed by other precious metals as well, such as platinum.

05:48 Julie

Will, great to see you. Thanks for joining us.

05:51 Will Rhind

Thank you.