Michael Greenberg: Rebalance? Yes, but where?


Michael Greenberg, Vice-President and Portfolio Manager, Franklin Templeton Multi-Asset Solutions joins us to talk about his perspective on COVID-19 shocked markets, his thoughts on behavioural risk, rebalancing, and opportune investment areas, as we navigate this uncertain period.

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Full Transcript

Pierre Daillie: Hello, and welcome to the Insight is Capital Podcast. My name is Pierre Daillie, Managing Editor of AdvisorAnalyst.com. Our guest is Michael Greenberg, Vice President and Portfolio Manager for Franklin Templeton Multi-Asset Solutions. Michael is a member of the Franklin Templeton Multi-Asset Solutions Investment Strategy and Research Committee specializing in fixed income strategy and has core portfolio management responsibilities for all Canada based managed programs, including Franklin Quotential and Franklin LifeSmart.

He also manages institutional mandates in North America and Asia. Michael Greenberg joined Franklin Templeton investments in 2006, without further ado, our conversation with Michael Greenberg, Michael, welcome to the show.

Michael Greenberg: Hi Pierre. Hi everyone who's joining us today. Thanks for having me on the on the show.

Pierre Daillie: Great to have you.

Michael, the last nine weeks have been to say the least tumultuous, the COVID-19 pandemic, economic shutdown and shock fastest bear market on record, seizure and dislocation in bond and credit markets followed by massive Fed and government intervention, also bank of Canada intervention, and at least for the time being what appears to be a V-shaped bounce off the March low, what are some of the big conversations you're having with advisors and investors?

Michael Greenberg: Yeah, I mean, I think you, I think you summed it up pretty well. You know, one thing we're just trying to remind people is we do need to separate the stock market from the economy. So, clearly, it was unprecedented how quickly the market collapsed. really record-setting but as well, the, the recovery or the, the bounce back from the bottom has also been somewhat unprecedented. So, that, in that sense that the V-shape. down and up, is, is a great analogy.

I'd say from an economic standpoint, though, we've only seen kind of that first part of the V the down part. We haven't really seen the economic V-shape recovery and, and we don't expect that. So that's one thing we're just reminding investors and advisors and their clients is that, look, the market is going to be volatile. it's probably not, signaling the all clear, so do expect a little bit more volatility, and, and do look at, you know, asset allocation, look at, look at allocations and things like that to see if there is some opportunities to maybe, you know, rebalance into some weakness.

Cause you know, as we do look out a little bit longer term. We're a little bit more positive on the ability of, of stocks out perform bonds and cash. But that being said, because of that more, I guess I would call it more of a U shaped recovery on the economic front. We would expect a little bit more volatility, you know, going forward.

I'd say the other thing we're kind of talking about and are getting asked a lot is when we look a little bit longer term, what our expectations are, what kind of expectations do we have as far as the return potential of, you know, the traditional 60/40, you know, balanced portfolio. And I think, you know, there, it's quite interesting times because obviously a big component of a lot of those portfolios is government bonds.

You know, develop market government bonds, whether it be Canadian government bonds, or even us treasury bonds, and clearly with the, really unprecedented decline in yields that we've seen, in those markets that's really taking away from forward returns. So that, that part of the portfolio is going to be challenged going forward.

That being said, you know, we've had a bit of a reset on credit. We've had a bit of a reset on equities, and that probably increases the expected returns going forward. So I would say. You know, what we're saying to advisors at least is, you know, you might want to take down the return expectations of that sort of 60/40 portfolio compared to what we've been able to experience in the past 10 years, just given it's been such a good environment for stocks and bonds but definitely not all is lost. You know, it's still going to be a, you know, a good, a good place to be for kind of that more moderate, moderate investors. So that's just some of the things we're talking about outside of the, you know, the typical, questions on the CAD, energy prices.

And of course, what a, what Donald Trump might tweet next?

Pierre Daillie: What kind of stories are you hearing back from advisers?

Michael Greenberg: Yeah, you know, it's funny. you know, we're obviously not going to see advisors face to face anymore. but when we used to, you know, when you look on, on the, the typical advisors wall, there's a, you know, a CFP, maybe some might have a CFA or some of the programs from the CSC or the diplomas on the wall and whatnot. And we always joke that there should be a psychology degree up there as well, because the best there's a big part of, of, of dealing with, with kind of face to face clients is of course the, the sort of behavioral finance sort of psychology part of investing.

And, and that's a big challenge in a lot of advisors we talk to are facing that, in the sense that typically, when, things go really badly and there's volatility in markets and, and headlines that are horrible in the newspapers and whatnot. That's typically after we've already seen a pretty big decline in markets, to be honest, but that's the time when a lot of people become very risk adverse and, and want to, you know, not only kind of stay firm in the market, but, but actually take money out of the market and go to cash or go to more conservative investments. And a lot of times it's the wrong time to do that. So one of the things that we're really talking about to advisors is how to kind of deal with the behavioral finance part of, of investing the kind of emotional part of investing.

And I don't mean that at all in a disrespectful way to, to investors because even professional investors, even institutional investors suffer from some of those behavioral finances. And I think what's important for groups like us is to create an investment process that tries to help us be a little bit more analytical and a little bit more emotional when it comes to investing.

And I'd say, secondly is then you know what to actually propose to a client as far as what to do at this point in this juncture. and, and on that front, you know, what we're typically saying is look, you know, typically, you know, a good financial advisor will have a financial plan for their clients.

So they stick to that plan. If they're a little bit under invested, you know, I would take some opportunities here. If you see some weakness to potentially add a little bit. to markets to not get too conservative, within portfolios. I don't think I'd be overly aggressive at this point either. just because we think there will be some, some fits and starts here, from a, from a stock market perspective, but to take some opportunities to sort of, you know, by the, by the dips, you know, I'd say six to eight months ago, we were suggesting to sell the rallies.

You know, we were, we were a little bit more conservative in our, in our asset allocation, a little bit more concerned on our outlook. And that was probably the time to maybe take a little bit off the table. Now that we've seen kind of a drawdown. and we know to be honest, we've seen a 50% retracement of that drawdown so that, you know, we're not picking the lows at this point by any means, but you're, you're still at a lower point than you were, you know, a number of months ago.

So cautiously, adding a little bit back to risk on dips, we think is a, is a decent strategy. But again, sticking to the plan, you know, a lot of, the financial planners that we deal with their clients are not looking at markets, right. On a month to month basis, it's really more of a multi-year approach where they're looking to either preserve capital or, or build, you know, build that nest egg, whether it be for retirement or for education or for whatever.

Pierre Daillie: Yeah, I think this idea that that market timing somehow is possible, you know, there's much greater chance that you're either going to be too early or too late. And then for advisors and for portfolio managers like

yourself, that involves career risk as well. Right? often the problem is that the decisions are, are discussed almost in a black and white way.

Like market timing is, is, am I inequities or out of equities? And, you know, and I think that's where I think that's where things really have taken a long time to evolve in terms of. Discussion. And even the idea of staying the course with a structured portfolio or an optimal portfolio, and then making fine tuning moves when the time is sort of determined that it's right.

Like we've, you know, we've had a, a market that's been rising. We had a market that was rising with a few interruptions for 11 years. Right. I mean,

Michael Greenberg: absolutely.

Pierre Daillie: And, and it probably took a lot of investors a long time to get back in. Within those 11 years, following, you know, 2009.

Michael Greenberg: Yeah. And I'd say not even, not even, you know, not even kind of, you know, mom and pop retail investors, but we saw that even at the professional level, even at the mutual fund level where, certain managers or certain management teams made a great call to go to cash or to get really defensive kind of, as, as you know, we had the crisis and obviously did fairly well in the downtime.

And that's one good decision, but then there's a very difficult second decision that has to be made about when to get back in. So you need to be right twice and you need to have fairly decent timing. And, and what happened in a lot of those cases is they were right on the way down, which, which helped their relative returns and absolute returns, but then stayed way defensive, you know, way too long and then really gave up a lot of those relative and absolute returns on the other side.

And, you know, there's the saying in investing is, is, is a lot of times, you know, you can be right. But you may go broke before. You're right before you're proven. Right. And you know, one good example is many heads funds for many years were, were pretty aggressively shorting Japanese government bonds. In the view that the amount of debt that was being issued by the government would eventually force yields to go way up.

To attract investors into that, into that government bond paper. And of course, higher yields means lower prices. And we saw actually completely the opposite. The theory was sound, but that the timing was way off and we still haven't seen that actually play out. So, you know, many of those hedge funds went broke before they were proven.

Right. Same example in, in, in the tech wreck, you know, there was many, you know, more value oriented investors or whatnot that really, you know, arguably way too early, avoided technology or even more aggressively shorted technology. Now, eventually they would have been right, but their timing was off and they probably went out of business well, before they were able to prove themselves.


So, you know, we, there's not, there's not one perfect way to invest. I mean, there's different investment cells out there. We have our own. Most of most of our advisors that we were with and most of their clients do tend to be more medium to long-term investors. They tend to be more like pension style investors.

So, you know, the way we kind of tackle it is you want to start with a really good strategic long-term asset allocation. That's something that is going to have a good. probability of meeting whatever outcome you're looking for, whether that be a capital preservation outcome, an income outcome, a growth outcome, or some sort of mix of those three, but then around the edges.

We believe that it, it, it does make sense to be a little bit dynamic with that asset allocation. So not market timing, but I would say more shifts. So, you know, when things went, valuations are getting a little bit more extreme. Maybe when the cat is getting a little bit more cheap when credit spreads are really wide, you might want to lean against that a little bit and sort of take the other side a little bit, just, just as a, you know, there's potential higher returns in doing that.

So, you know, I think there's nothing wrong with being a little bit dynamic with the asset allocation, shifting around. allocations within reason, but, but the whole, you know, market timing, as far as, you know, going a hundred percent sent to cash one day, a hundred percent into equities, the next for us, for us, it, it just, it does, it does, doesn't, it doesn't really work.

And, and that's sort of how, you know, kind of how we're looking at it. I think that's, you know, probably a good way for most people to, to kind of, position themselves and position their kind of, you know, philosophy around how they want to build portfolios for the bulk of their clientele.

In most adviser, client relationships, the, the, the trust component where the client says, you know, whatever you think is best and then emotional aspect comes in.

And it's I think it's the emotional aspect for the average investor that makes the work even more challenging for advisors and money managers. Which is the, you know, I don't care. Just get me out. I don't like what's happening. I'm scared.

You know, my retirement is in three years and, you know, that sort of thing is very hard to overcome.

I mean, that's the advisor's job, right. Is to make sure that their client doesn't make that Supreme mistake of possibly getting out at the right time, but then never getting back in subsequently and every decision increases the odds of failure.

And so, yeah, I mean, you know, a lot of that is, is, is it's probably comes down a lot to trust.

So if, you know, if there's that trust between the advisor and the, and the client, they're more, they're probably more open to hearing advice that maybe doesn't feel right, but at the same time, You know, we have to take emotions into it. Like if, if, if there's an investor who clearly can handle more risks, they have a long time horizon.

There's no cash needs, et cetera, et cetera, but is, is for lack of a better word, a worry wart, you know, it maybe doesn't make sense to, to put them through the stress and gyrations of markets going up and down.

Pierre Daillie: A problem arises around possibly clients who, whose risk tolerance was not determined properly in the beginning.

And then something like COVID-19 or any sort of exogenous event happens and, and the market tanks, and then they panic and they say simply, you know, the, the, the conversation is. I don't care, just get me out. And that's where advisors earn their keep is as to whether or not they're able to prevent their client from making those behavioral mistakes.

How do you overcome that situation where we're a client panics and no matter what you say to them, that's that? They may be right in panicking given that, you know, we've experienced markets like 2009, but the long-term outcome of that is where things go terribly wrong.

Michael Greenberg: The worst thing you can have is an unhappy client that doesn't tell you they're unhappy, right?

It's , it's sort of that, worst case scenario where you have someone who's unhappy with your service or your, the outcomes or whatever, and then rather than saying anything, they just leave. You just get that form that tells you that they're transferring your money out. So it's actually a good opportunity.

You know, it's actually a blessing in a way when the client comes to you with, with something like that, because it allows you at least the chance to try to steer the ship back on course. So, you know, taking that as an opportunity to review the financial plan, to sort of remind the client of what they are trying to achieve within their portfolio as part of a larger financial plan that of course involves tax planning and insurance planning and the state and planning and all that kind of stuff and

taking the time to, just to review that plan and then, you know, then suggesting a way to, to kind of write the ship now at the end of the day, you can't, you, you know, you can't, I can't force someone to do something they don't want to do and, and it may be a, you know, a learning lesson for them where they, they just absolutely do not feel comfortable going into the markets.

I guess, against the advisor's advice. at some point you, you know, I guess you have to accept that, and then revisit, you know, one, two know, three years later to see how that turned out for them. and then take that opportunity to sort of re retest again. And in a way, you know, I know in, you know, some of the anecdotal evidence that, that sort of we heard is those advisors in Oh nine that, you know, suggested clients stay the course, or even add more money.

Those clients that didn't of course regretted it, but that actually solidified the bond a little bit between the advisor and that client and that trust actually grew. So, you know, in a way there's two courses of action, you know, one is, you respect the client's wishes and you, you know, maybe keep them out of the market against what you think is best and just make sure that that's documented and clear.

You know, I think that that's the opportunity is, is you've got someone who's quote, unquote, maybe unhappy, that's actually coming to you rather than. They're not coming to you, not telling you about it. So it's just taking that opportunity to kind of sit down, revisit the plan again, you know, we've got some materials at our firm that we use with advisors to show clients, just some of the risks and potential negative outcomes of allowing some of those emotional behavioral biases to slip into your decision making and, and show those consequences on more of a numerical standpoint.

You know, here's, here's the opportunity cost of missing out on, you know, X number of the best days of the year, et cetera, you know, stuff like that. So, you know, there's ways to kind of build a quote, unquote presentation or client facing, messaging. A deck around that to sort of help people with those types of conversations.

Pierre Daillie: Ideally, that would have been a conversation that would have been happening during those great 11 years.

Michael Greenberg: Yeah, absolutely. Right. Yeah. I mean, that's the ideal and, yeah we, we definitely know, there's more experienced advisors and less experienced ones. so Those that have been around a while, they've definitely set some, some expectations with clients and vice versa and have been able to kind of achieve those and respect them, you know, end of the day, no one can really control what the markets can be, but we can't, but we can control, you know, expectations.

Again, that the advisors that we see that are the most successful, it's reminding them that you know, the piece that I work with day to day, which is the actual portfolio and the, and the rate of return that's of course an important component, but it's only one component of what that overall nest egg will look like for that client at the end of their time horizon, whether it be at the end of the savings for education or a, you know, an RRSP or whatever the account is, don't want to downplay the importance of building a good portfolio and getting a reasonable rate of return.

But there's a lot of other things too, that that have to happen.

Pierre Daillie: Absolutely. so, Given the downturn, the equity portion would have dropped to about 39%. Right? So 60 would have become a 60% allocation inequities would have become about a 39%. After a 35% draw draw down the bond portfolio, assuming there was some moderate duration would have increased in value as well.

Given, given the fallen yields that occurred subsequently. So it would have been some mild offset from the bond slave of the portfolio and a substantial draw down on the equity slaves in the traditional 60/40 portfolio. And the ideal situation there. If you can get your clients on board, the ideal situation there is to actually rebalance into equities.

Michael Greenberg: That's right. Yeah. And I guess a couple of things, I mean, one, you know, when you look at kind of the, the peak of the, the high to low in the S&P 500 or the, the stock market, whatever, you know, to your point down, you know, down, you know, high thirties percent, the 60/40 was not unscathed in that environment.

You know, many 60/40 is kind of the average 60/40 was down, you know, high teens. Which is a pretty big negative number for a 60/40 portfolio. So absolutely the bond part of the portfolio was there to absorb some shock, but it was still a downmarket. Now coming out of that, that same portfolio was up almost 10%, I think almost 15%, you know, from the bottom, those sort of a 60/40 portfolio.

So again, it fell, but it rebounded so on an absolute return perspective, especially just given the timing that first quarter statement for many people was, was a little bit, surprising to say the least I'm sure. now they probably haven't looked at April yet. And of course we've, we've, we've retraced some of that, so it's a little bit better, but yeah.

You know, that's, something that, that we do, you know, within our portfolios, I know advisors do that as well as making sure you're kind of thoughtful about rebalancing and, and that was a, it's your point? That was a great example. So, you know, as March was kind of. Rolling along. And we were seeing some pretty devastating, returns in markets.

You know, that was definitely, something that we were doing was not only kind of rebalancing back to where we were, before in portfolios, but actually even adding a little bit, you know, we were, a little bit underweight risk in the portfolios going into it. I could. Can talk about that later, if you like about why, but, you know, we were a little bit underweight risk in the portfolios, but, you know, after that kind of reset it for us, it was an opportunity to actually add a little bit.

So we, we kind of were we're adding to, to risk, but, absolutely. I think, you know, that was an opportunity again, very, very emotionally. Difficult to do, to be buying back equities, which were down 37% and selling some of your fixed income that did fairly well. but that's the discipline I think that that's needed in, in, in, in investing.

The other thing I'd say too, and again, we can also hit on this a little bit more. I feel like after, I'd agree with you that the fixed income side was, was there to hold a UN, but it really depended on what kind of fixed income held. You know, if you, if you were kind of over your skis within the fixed income part of your portfolio, With a lot of credit risks, a lot of high yield bonds.

You were, you were smashed pretty, pretty good because a lot of those markets sold off quite a bit. again, I can talk about what we were doing. We were a little bit more conservative, so, you know, the government bond, the developed market government bond part of the portfolio definitely did very, very well as a yields.

You know, you know, our. Very very low levels now at this point. So that was a positive return. But yeah, I just didn't want a blanket statement that fixed income did really well. Cause there was definitely a lot of dispersion within fixed income over that. And again, I think that that actually does create some good opportunities going forward.

We think. But, yeah, that's, I think it's an important distinction to make as well.

Pierre Daillie: Given that that investors, have been, there's been really a dearth of, in terms of traditional, developed government fixed income, there's been really a dearth of yield there.

I mean, it's been really hard to, to get any kind of meaningful income from those assets. And even now with the drop in yield, there's been a gain in valuation, which is where the offset comes from. But now that that's happening now that yields if you had governments in your portfolio, as, as a core fixed income holding around now would probably be a decent time to look at rebalancing into some of the more opportune areas like credits like high yield, like investment grade.

Michael Greenberg: Yep. I agree. I mean, that's, you know, when we look at, the rebalances that we were doing in our portfolios, you know, we talked

a little bit about what we were going into, and that was a little bit of equity and even a little bit of credit, but the source of those funds was, was developed market government bonds.

Now, to be clear, we would not abandon those completely in portfolios. We still think that that developed market government bonds, although yields being at fairly, historic flows, suggesting fairly muted returns going forward. Tufts still do play a role, as far as that diversification capital preservation component within the portfolio.

Especially given that even though, you know, a 60/40 portfolio is fairly diversified. When you look at where your risk is coming from, a vast amount of your risk is equity risk. You know, we know that the equity part of that portfolio dominates the risk, component of the portfolio. So, you know, Going forward.

We still think government bonds will, be there for you as far as diversifying that equity risk, but it's not going to be like the last 25, 30 years where not only did we get an asset class that is a good correlation benefit in a portfolio to the equity risk that you're taking, but you were also getting a really nice return out of it.

It was sort of the best of both worlds. You're being basically being paid to take on an insurance policy and, and that's, we know, for those that deal with insurance, that's generally not how it works. So that that's been a great environment. I don't,

I, you know, I don't think it's dead. I don't think that's over but I think we have to reset a little bit the return expectation side and the amount of diversification benefit that we're going to get. We think it's still there, but it's a little bit weaker. So, from a Canadian's perspective, You know, we have to look at what are some other things that we can hold in portfolios that help diversify equity risk that don't cost very much, or potentially even give us a small, positive return.

And that's, really a big part of, some of them were strategic research that we're doing at their firm. You know, the, the PhDs and propeller heads at the head office are, are really looking at some of the different asset classes that are out there. you know, in Canada, currency's a great way to kind of offer a bit of diversification, you know, inflation, protected bonds, gold. There's other asset classes that we can look to to compliment that government bond exposure. And, you know, going back to your yield question in a way, this is all by design, right? The whole financial repression narrative is very much, you know, for the central banks to get yields very, very low.

Which forces investors to get out of the safe stuff, the government bonds or cash or whatever, and to go up the risk spectrum a little bit, whether it be investment grade credit, or high yield bonds or emerging market debt or dividend paying equities. And that whole, you know, portfolio rebalance effect in essence is meant to help kind of stimulate a bit of an economic recovery.

We'll see how that works out, but, you know, so that that's sort of by design. So, you know, from, from a yield perspective, to be honest, we definitely have some portfolios that are more focused on yield and generating a certain income.

In which case, you know, we look at different parts of the fixed income market. We look at different parts of the equity market. There's ways in the options market to create synthetic income as well without taking too too much risk.

There's emerging market debt, selectively as well. So there's ways to kind of, be a little bit, proactive and dynamic about trying to keep the yield up in, in those portfolios.

But in many of our portfolios where it's really more of the total return that we're most concerned about, we're a little bit agnostic on whether that return comes from income or whether that comes from, you know, capital gains. And obviously generally it's a, it's a combination of, of both, but. Know that that's definitely a going to be a challenge for those that are relying on income for, to fund, you know, day to day living because you can't just go by, you know, you can't just go and ladder, you know, 10 year government bonds and expect to get, you know, two, 3%. In fact, you're getting. You know, 0.5% now, and then after taxes and inflation, that's probably actually a negative yield. So, yeah, I think for kind of an income investor, again, we can go into more detail, but for an income investor, I think there's ways to, to still try to generate a decent income, but it's going to require being a little bit more dynamic.

And I think to one of your points earlier, when you look at kind of that. that payment or that income you're getting on a government bond. you know, you've gotten a good capital appreciation from those government bonds because the yields have gone down the price has gone up again to rebalance into stuff like investment grade, corporate bonds.

We wouldn't be too aggressive just yet, but maybe at some point going into things like high yield bonds or bank loans or things like that, which now are, are yielding 7%, 8%. You can get some pretty good deals off of off some of that stuff.

Of course, you're getting return on your money, but the return of your money is more risky.

So you have to be careful, but you know, I think there's some opportunities still to, to, to be a little bit more dynamic and proactive in a portfolio to still generate, you know, a decent income for people, but it is going to require a little bit more, you know, a bit more activity that being a bit more active.

Pierre Daillie: I want to say that the decision making landscape is far more complex than it appears. I'm listening to our conversation. And what is the

trend? You're you're part of the multi-asset solutions team at Franklin Templeton. What do you see is a trend in terms of advisors slash investors, going from individual solutions into managed solutions.

For example, you guys run Quotential. You have a LifeSmart, which you're, you're part of running. Do you see advisors and investors wanting more of that?

Michael Greenberg: Yeah, I guess in a way, I'm lucky because I am I'm in Canada. I'm proud of the Canadian part of our global, solutions team, but by I'm part of this, this global solutions team.

So it's interesting. Cause we get to see the trends in other markets like the U S or UK, Europe, Australia, et cetera, even Asia. And I think. Th the, you know, the definite trend that we're seeing and it's coming from the bottom up and top down, it's coming from advisors wanting to move in this direction, but it's also coming from the firms that they work.

Also wanting them to move in this direction. That is a little bit more of the delegation of the portfolio construction and investment management side of, financial planning. Because going back to the earlier reference of, of the pie, you know, the, the portfolio construction, the, the security selection and all that is, is just one piece.

You know, there is, insurance, there is estate planning. there, there is marriage counseling. I mean, advisors do a lot for their clients. the investment, the actual investment management being one piece of that pie. And to your point earlier about trust and relationship building, Hey, there's a lot of very smart advisors that can build very, very good portfolios.

There's no doubt about that. No, one's suggesting that they can't, but when you look at where that, that hour is best spent during the day, is it best spent, you know, behind a spreadsheet tinkering with, should I buy, you know, us equity fund a or us equity fund B, should I be overweight Canada or underweight Canada?

You know, those are all important decisions. But is that the best spend of the time or is it making sure you're out front in front of clients, making sure that you're, you know, a business building, but also taking care of those clients that you have, et cetera, et cetera, planning for the next generation, all that kind of stuff.

And the trend that we're definitely seeing, I'd say it's further along in the U S is definitely more delegation. So whether it be, you know, kind of your traditional fund to fund portfolio, whether it's a more, you know, advanced multi-asset portfolio, like we run, the model business is very big in the U S it's just starting in Canada.

Various various different ways of delivering portfolio solutions to advisers is definitely the trend that we're seeing and actually quite a big growth area for us in

other markets and starting to be in Canada. So. You know, that's, one of the trends that we definitely see at the advisor level.

There's obviously some hesitancy to do that for some advisors, because a many people like doing it. You know, if they're like me, I really enjoy reading about economics and markets and all that kind of stuff. And it's fun. So for me, it's fun. And, and the advisors enjoy that. the other challenge is many advisors believe that that's their sole value add to the client and of, of.

Of generating them a certain rate of return like them is the portfolio manager for the client is why the client is paying the money. And of course the goal for many advisors is to transition that way of thinking from, you know, I'm the portfolio manager. I will get you in and out of good stocks. And that's why you pay me to.

I'm going to make sure that your financial plan is sound that we've done the proper planning on the insurance side and the will and estate side and all the other stuff that comes around that, that it's not, you know, the client is not hiring a portfolio manager, they're hiring a financial planner and that, and everything that that comes with of which just the, the investment management is just one piece of that puzzle.

Pierre Daillie: You know, I mean, firms. Firms like yours. You literally have hundreds of people doing this work every day, full time. Having been an advisor in the past and then having been visor facing as well. What I discovered is that the more, the more I'm, or the more time I was in this business, the more I discovered how little I knew as an individual.

And that's, you know, that's something to come to terms with at some point, like, I think what you're saying, you know, I think the trend towards an increase in delegation. Markets have become more complicated with the end of this very long term mega cycle that we've been in for 40 years.

Michael Greenberg: Yeah. And it's not going to get, it's not going get easier.

Pierre Daillie: No. Exactly.

Michael Greenberg: You know and I want to be clear too, that it's not black or white. It's not, you build your own portfolios or you fully delegate. There's a lot of in between. And, you know, we kind of see a few models out there. One is of course the full delegation, you know, they might pick a one or two or maybe three, suppliers or partners and then, and then really build, portfolios for clients really a hundred percent using more managed solution type.

Programs like Quotential or LifeSmart, or the fund of ETFs that we've launched or whatever, have you. There's also the, in between, you know, using a managed

solution as a core part of your portfolio, let's call it 50 to 70%, but then just building a couple of, you know, using a couple of your favorite active mutual funds or your favorite ETFs around the edges to, to sort of give it, you know, your own piece of flair is another.

Is another delegation model. It's not all the way there. You know, you still have some skin in the game, but you, you are delegating the bulk of your portfolio. And the core part of your, your, your portfolio is in something that is probably a little bit more predictable. you know, a little bit more, diversified, et cetera.

The other way is for advisors that...

Pierre Daillie: It adds a layer of satisfaction for the advisor, implementing some of their own personal ideas into their relationship with their client, into their portfolios, but also given the long run, it adds to the, you know, the advisor's satisfaction in terms of the potential success of their own ideas for 50 to 70%, why not put the hat down, you know, take that hat off and make.

Michael Greenberg: And I want to be really, really clear, but something where we're at by no means suggesting that they're not advisors out there that are building great portfolios on their own. And in fact, I would, I would hazard a guess at some of them are building portfolios that are outperforming ours. There's probably many that are building portfolios that are vastly underperforming ours as well.

So it's not a "we're better than you, or you're better than us" type of a thing. It's really more of an efficiency thing. It's really more of a business decision is it is it's where your time is best spent. And, where your expertise lie, you know, Again, you know, to your point earlier, you know, we have a team of about 50 people, that, that help us build these portfolios.

So it's not just myself in an office in Toronto putting these things together. We have a, a manager research team that help us select the different funds and ETFs. That's a team of 10 people. We have an asset allocation committee, which I'm a part of, of, of the senior leaders within our group that helped make those sort of dynamic asset allocation decisions.

We have risk management professionals that run the risk management, the risk data. That did pop into our inbox every morning to see the different bets, the different risks in the portfolio. We have portfolio construction analysis, et cetera, et cetera. So there's a lot of people behind the scenes that go into building these portfolios.

Again, I'm not suggesting that there's not advisors out there that don't build a great well-diversified, portfolios that meet the meet the outcome needs of their clients. it's more for the potential extra few basis points that you may be able to

earn, or maybe under-performer, you know, who knows what the outcome ends up being versus ours, but is that where the time is best spent?

And definitely the trend in the U S is from the bottom up. Many advisors feel that that's not where their time is best spent. But I'd say also even more harshly, the firms that it worked for are, are pretty much mandating that they don't spend time there because they've, they've acknowledged that, or they've understood that that's not the best time for, you know, advisors to spend.

So anyway, no long story. I think that, I think that's the trend, you know, we definitely see it in Canada. I think after we typically see after periods like this, where we've had. A lot of market volatility where arguably, a lot of people were caught probably offside with too much credit. you know, maybe with, with too much commodity exposure or whatever, we tend to see a bit of an upsurge in people moving more to, to, to less do it yourself and more to more of a, you know, a partnership with someone like ours.

So, but bottom line, I think it's a trend that we're seeing in other markets. And I think it's a trend that we continue to see here in Canada as well.

So, let me ask you a macro question. Now, when do you think we get out of COVID-19?

Sure. And I could give you the, sort of the assumptions in our base case, but, but do bear in mind and, and we are not medical experts and, and we do get a little bit concerned when there's a lot of people coming out with views on how this virus breaks one way or another, that.

You know, I've never been to medical school, or taken a science class since grade 10 high school. So we have to acknowledge our own limitations in that. Now that being said, we read a lot, we get a lot of experts on the phone and we definitely are trying to form some opinions. You know, I think for us, you know, from an econ, starting with the economy again, it's , probably more of a, of a, U, than a V in the sense that, it looks like at this point, the worst is behind us. As far as the acceleration of new cases and deaths and hospitals being overwhelmed. It seems like that is on the downturn. The risk of course, is that if, if we kind of declare victory and, and everyone goes back to work tomorrow, the likelihood of a second round is, is very high.

In which case it's one step forward, just to take two to three steps back. And in fact would force, these social distancing measures to last, even longer. So. You know, our view is it's a bit of a slow return to a new normal, in which case, you know, as testing becomes more prevalent, as, you know, maybe treatment methods become more prevalent, we're allowed to release more and more people back into, into work.

Now that exciting it's gonna be slow. You know, if, if the government tells me tomorrow that I can go back to work. My firm is probably going to be a little bit more conservative and keep us home for an extra couple of weeks. Because to be honest, there's not been really any disruption from our business as far as working from home or going into the office.

So I take the risk, but that means I'm not taking public transport. I'm not eating out and not going for drinks after with my friends and, and consuming. So, you know, I think it's a little bit of a slow economic recovery, but in our view, there's a little bit of light at the end of the tunnel. But there are some risks to either side.

Things could go a lot better. I mean, there are many PhD doctors, people at various universities, health people, whatever, all over the world, working full time on this. There's hundreds of different tests going on on vaccines and treatments. If some of those start to prove effective. And testing becomes more prevalent.

We might be able to get out a lot quicker than we think at which case. there's a bit of a stronger recovery and, the economy gets back to sort of a better state quicker. The opposite is also true. Of course, if we go out too early and maybe this virus is worse than we thought or more contagious or whatever, there's more long-term health implications than we think.

That's going to force these lockdown measures to stay a lot longer. And I think that's obviously going to cause the economy to go a little bit slower. So, you know, the truth is probably somewhere in between, we would expect a bit of a slower release, you know, as the weather gets warmer, you know, as some of these measures prove effective and the curve flattens, you know, we'll get back to work slowly,

Pierre Daillie: and steps in terms of the, and we'll get back to in terms of the markets, particularly the equity market, how do you see, like right now it appears there's a great deal of optimism.

There's. You know, and, and I guess the question is, has the market gotten ahead of itself?

The other side of it, of course, is the bond market. The bond market seems to be telegraphing a high degree of pessimism. And is that model correct? Is it correct to say that the bond market is telegraphing high pessimism right now? It looks like a bifurcation, right? I mean, it's like the stock market is saying everything's great. And the bond market is saying the opposite. But is that, is that in fact, the case or is there some alignment somewhere in between?

Michael Greenberg: Yeah, I mean, let's start, I mean, starting with the stock market, you know, I think there, we would argue that it is a little bit ahead of its skis.

I mean, the rebound that we saw was, was quite dramatic obviously. And like I said, there's a little bit of light at the end of the tunnel, but there's still a lot of uncertainty on which way this goes in. And even if things go fairly well, it's probably a fairly slow. recovery. So, you know, we're, like I said earlier, we, we took some opportunities to add a little bit of risk to portfolios, but we, by no means kind of were very aggressive in that.

Cause we do feel that we're going to see some other opportunities to, to add a little bit more risk. So we would not be surprised. To see markets pull back, again, you know, more of a, more of a zigzag, know around here for a little bit, giving us, you know, a bit of an opportunity to add, but that being said to, you know, the, the government reaction has been pretty, pretty incredible and, you know, don't fight the fed and all that, would suggest that they're really putting a bit of a flora in the market.

So, you know, for us, if you look at the equity market, it's probably, you know, I would air it's on the, or a little bit overly optimistic side. If you go into the bond market, I think you have to depends on what part of the bond market you're looking at. If you're looking at credit, it's still suggesting that there's some concerns.

If you look at where investment grade and high yield spreads are, they're definitely quite high. versus where they were, you know, before this crisis now they're well off the highs of, of kind of the peak pain part of the market. So those spreads have come down quite a bit from those extreme levels, but they're still fairly elevated.

So they're telling us that things are better, but, but not, not, not, not, there's still, so,

Pierre Daillie: so I mean, so even stepping in and widening, widening their support in the credit market and basically deciding to buy pretty much every, every corner of the bond market in order to support it. There has been narrowing of spreads from the widest, but not.

Michael Greenberg: Yeah.

Pierre Daillie: As you just pointed out, there is still a degree of pessimism in terms of what the final outcome is in the next year or two, what happens to some of these companies?

Michael Greenberg: Yeah, no, absolutely. I mean, the Fed hasn't actually bought any high yield bonds yet. Right. It's sort of more like just the, the announcement or the, the, the signaling effect has kind of caused those spreads

to, to, to go down and, you know, for us, you know, again, when we nibble, as we've been nibbling, it's been more on the investment grade side because.

I think to what you're getting at on high yield. I mean, there's still some, you know, if you look at what's happening with energy, you know, energy is a bigger part of the high yield market. And some of those companies are in, are going to be in real trouble. Now we'll see what kind of bail outs happen and whatnot, but at energy prices where they are, there's definitely some going concern, risks.

So, you know, we do expect defaults to pick up. We do expect. you know, a little bit more a pain at the, kind of at the bankruptcy level and some of those places. So we're a little bit hesitant to get too aggressive in high yield because, you know, even though, yields are higher than they've been historically they're well off the highs and they're well off the levels we saw, in, in like 2008, 2009, for example.

So there, there could be some room for spread widening still there. And hence probably pays to be a little bit patient on some parts of those markets, but, but opportunistic. You know, to your point on the government market government bond market, then, you know, when you look at where yields are today, it would suggest that we're, you know, we're getting ready for a continued and long-term recession, but that market is being fairly, I don't want to use the word managed, but influenced by, the, the fed and other central banks, you know, interest rates are at zero pretty much across the board.

So that's kind of pinning the front end of the yield curve at a fairly low level. Obviously there's a ton of issuance. That's going to happen from the treasury and other places to pay for all the programs that they've announced too, to support the economy, but the fed and other central banks have said that they're going to buy up a lot of that debt with quantitative easing programs.

So that's really kept a pin on how high yields have been able to get. And in fact is really pushed yields down to fairly low levels. So. There is some, I guess, unclear signals from that part of the market, just because there are some other kind of non market influences, you know, the price discovery is maybe not as efficient in that part of the market isn't normally is because of the influence from, from governments and things like that.

So, you know, things like, the shape of the yield curve and things like that are, are, are good signals and, and what and things we need to look at, but we have to take them with a little bit of a grain of salt as well, just given the, you know, the action that central banks are, are, are kind of partaking at this point.

What do you see as the possibly the biggest opportunity in markets right now? If you had to pick one,

The thing is I would be a bit patient, but I think at some point it's the opportunity to add a little bit of risk through equities and some of them, the, the riskier credit markets, I think it's a little bit early to be too aggressive there.

for some of the reasons I talked about, but. I think that's one area because, you know, if you look at the other side of this, and again, we talked about kind of the uncertainty on how the recovery might look and what the economic trajectory ends up being. But let's just for argument's sake. Say at some point we get through this, you know, however that looks at some point we get through this, somebody people get back to work and whatnot.

We're going to be answering an environment with, very, very low interest rates, with probably, fairly hefty fiscal measures in place to sort of support. spending and probably a little bit of pent up demand as, as people have been going a little bit stir crazy in their homes and are looking to get out and do things.

Now, I don't know if people are gonna question, but you know, there are some things that people will go out and probably do so. In a way, you know, that the other end of this looks like a pretty favorable environment for risky assets.

Assuming we don't get, you know, kind of runaway inflation out of all this, which you know, is not our base case.

So, you know, I think for many investors, it's you know, looking for, opportunities to, for those that can handle it. Of course. And this is, of course the conversation financial planners can handle. Those who can handle a little bit more risk is, is, is look at that allocation, and if you were, you know, an 80% fixed income, 20% equity person, does it make sense for you to move up to a 60% equity, 40% fixed income type portfolio? Because the, the, the likely expected returns over the next, you know, five years or plus, you know, our view is there's a pretty good likelihood that we see equities do a little bit better than certain parts of the bond market, you know, developed market government bonds and cash and things like that.

So I think that's the opportunity.

Pierre Daillie: What are you guys seeing as some of the key top- down areas that you would want to take small bites out of as, as things evolve here?

Michael Greenberg: Yeah. I mean the other one too is, and this is going to be a long-term term. I wouldn't, I wouldn't go here today, but when you look at energy and energy prices, you know, clearly we've seen a monumental decline in energy prices and you know, the cure for low energy prices is low energy prices because what we're doing now is we're getting a lot and we're going to get a lot of production cuts.

So supply is way too high. Inventories are way too high. It's definitely gonna take some time for that to get work worked out and demand is very, very low. And at some point, you know, demand will slowly creep back and that supply demand in balance will, will improve. But you know, we're not yet all driving electric cars and it's all solar energy.

I mean, there's still going to be a need for that. So I think. At some point, when you look at the valuations on some of these companies, there's going to be some opportunities. The question of course now is which ones will survive and which ones will go away. So for us, it's a little bit early and a little bit risky to kind of get too aggressive on energy or equity markets that are more, you know, focused on energy like Canada, for example.

But at some point, you know, that, that that's going to be a pretty interesting opportunity. So that's something we're looking at, but I think it's still a little bit of ways away. Cause when you look at the amount of inventory that's out there floating on giant ships off the coast of California. For example, it's going to take a little while to work that through, but that'd be an area to, to keep an eye on now.

Pierre Daillie: In terms of the earnings out and look for this year I imagine you guys have already written down 2020?

Michael Greenberg: Yeah. And, you know, that's another area where you have to be careful about some of the published data. You know, a lot of people will look at, earnings analyst, estimates and things like that. And they've been very slow to reduce earnings estimates, and that has a few effects.

It obviously makes, multiples look a lot more, right, a lot more expensive. it's sort of fools with kind of valuation metrics and things like that. So, yeah, I mean, you know, earnings, it's very much, throwing a dart at a dartboard at this point because a companies are not guiding anymore. So there's no real guidance coming out of companies.

Analysts are not really being that quick to upgrade their analyst expectations because they don't know. So they're, they're in no rush to put a number out there cause there's some career risks to that. So it's really driving a little bit blind here on earnings. We just know they're going to be bad. Like they're going to be terrible.

And then we'll, we'll sort of see how they go. But there's, you know, there's some clear distinctions. You look at an Amazon, you look at the zoom media, you look at Netflix, you know, Peloton, you know, these are companies that are probably benefiting from, from this environment. You look at carnival cruise lines or any airline, a doubt they're high tote.

Their revenue is up very much. So there's definitely a winners and losers, from an earnings perspective. And, and I, you know, you didn't ask, but I'll answer the

question you didn't ask it is, is, you know, and I think that's going to be key going forward to, to having. Some active management in portfolios, you know, there's definitely been a movement towards passive investing and we definitely, are buyers of using ETFs and passive tools to build well-constructed portfolios.

No doubt about it.

But we also want to make sure that we're allocating some money to some active managers that we think can differentiate a bit from a benchmark, because there's definitely going to be some sectors of the economy and some parts of the market that will do quite well in, in the new normal of, of kind of social distancing and virtual everything and others that maybe will be a little bit left behind.

So I think that's important as well to have a, you know, have a, have a good handle on the types of managers. You're, you're kind of in bed with. and that they're, you know, doing the job of kind of, you know, being active in the right places, I guess.

Pierre Daillie: Well, we've had an 11 year run on growth as a factor and investing in indexes where both of those have outperformed, the value factor appears to be deeply undervalued. What'd you say that investors should consider for the long-term rebalancing in the direction of the value factor?

Michael Greenberg: Yes. Maybe with a caveat.

So. I think one thing is, is when you look at what's done well, I mean, some of the, some of the parts of the growth market, especially in the U S it's going to be some of the technology and in some of those companies, You know, the, the trend there is sort of the, the winner takes all capitalism and there's a lot of great books out there that, that are kind of talking about this.

They're very interesting and it's really the sort of network effect, and all that kind of stuff. So the Amazons, the Facebooks and all that, those kinds of things have kind of a built in advantage because they own the network in a way. I mean, they're, they're, they're continuing to do quite well and, and probably in the new normal will continue to do quite well. Cause they don't have. Can have retail stores and things like that. So in a way, you know, that some parts of those markets could continue to do well. That being said, you know, when you look at value, there's some sectors that, that do look interesting, like energy, like I said, at some point will be a pretty interesting place to potentially be as a value investor, but also when you look at some of the value sectors, you have to worry about kind of the whole value trap, mentality, because. You know, if you look at some of the value in sectors like airlines or some of the industrials that that might need bailouts and things like that, it's hard to say, you know, what, what that looks like going forward.

If, if you're getting a, a bailout from the government and then that government is also taking an equity stake, that's going to limit dividend growth and buybacks

and things like that, you know? Do those companies are those companies really gonna rebound that quickly? So I think it makes sense to still have a bit of a balance in a portfolio.

If you, if you've done extremely well by being way overweight growth and momentum and portfolios, I'm trying to move a little bit more to the middle. Makes a little bit of sense, but I would be a little bit careful about just buying value, kind of passively. I talked a little bit earlier about, but our risk management team and how we look at risk.

I mean, one, one interesting way to look at. You know, to kind of x-ray your portfolio is to look at it from a factor perspective. I think maybe that's maybe more where you're going. And when you look at the factor exposures of a lot of people's portfolios, especially us equities, it's probably a lot of, a lot of growth, a lot of momentum, maybe a lot of quality.

I mean, those are the things that have done really, really well. And, and we know that did people tend to kind of, you know, move towards things that are done well. So I think maybe what you're getting at, which I completely agree with is you probably want to. Have a sense of, of kind of where you're overweight and maybe where you're less exposed on a factor perspective.

And, and I think to your point, many people are probably fairly underexposed to value. So that's one thing that we do, you know, within our equity holdings is look at those factor exposures and there's different ways to, to kind of balance that out. Of course, there's passive investing and of course, active funds, like you mentioned, there's also a lot of factor ETFs out there that, that it can give you kind of specific factor exposure.

And those are great tools as well. To, to potentially offset or to compliment, you know, holdings that are maybe a little more growthy. So, yeah, there's a lot of ways to, to do that, but I think that, you know, our conclusion is we, we're probably not to the point where we want to kind of overweight the value factor in our portfolios or completely sell out of the growth factor in the portfolios, but

Pierre Daillie: maybe a little bit off the

Michael Greenberg: table, balancing,

Pierre Daillie: Rebalancing the growthy areas to some of the value areas, you know, in the, in the, within the equity sleeves, like adding the value factor to the equity sleeve as not replacing with value, but might provide some of that offsetting correlation as well.
Michael Greenberg: Yup. Yeah. I think that's a, that makes sense. As a multi-asset team, we're a little bit agnostic, to, to the whole active, passive debate now from a firm level.

And, and this is probably more historical many active management firms. Of course. you know, many, this is more, many years ago were obviously quite. for active investing and cautionary maybe on more passive investing. And of course, since then these same firms, including ours have launched a bunch of passive ETF.

So, you know, for us, it's just, they're just different tools. I mean, we're, trying to build well diversified portfolios, whether we get some exposure from a passive ETF and compliment it with a smart beta factory TF and a couple of active managers and maybe more of a core holding. I mean, for us, it's the sum of the parts.

That's more important and it's just, they're just tools for us to build. So, you know, we're a little bit more neutral on, you know, is active or passive better because in our mind they're both good. And, and they're, they're both kind of necessary for different reasons, in a portfolio that we're, that we're constructing.

So, You know, it's maybe a little bit of a different tack than, and if you were to go out and ask a, you know, a U S value active manager on their thoughts on active versus passive, they may be a bit more skewed in their thinking towards, you know, active, good, passive bad, but, from where we stand, they're all, they're just, you know, they're just tools to make it more efficient.

Pierre Daillie: It goes to the, the evolution of the company, right? I mean, Franklin Templeton has evolved, from the days of, of Sir John Templeton. You have the Franklin Resources part and you have the, you have the Templeton Investments part, and really it's evolved along with the market.

And, and maybe that's an idea that advisors and investors need to know more about, which is what you just talked about, which is that as a firm, you've become more agnostic about any sort of ideology.

Michael Greenberg: Yeah. You know, it's interesting in a way the firm has evolved, but in a way, and I think this is a little bit by design.

The, the sub investment teams within our firm have sort of stayed true to their philosophies and processes, right? So Templeton is a value manager. Now, do they do it the same way that they did 20 years ago? Of course not. You know there's changes in their process, but deep down philosophically, they're still looking for undervalued stocks that they think are undervalued by the market to have the potential to, to, to rerate.

The Franklin group in San Mateo is much more of a growth oriented manager looking for. High quality growth companies. You know, you've got Bisset in Calgary, which is more of a Garp manager. So the F I'd say the sub investment teams. Have evolved in the sense that they do things differently now than they did before, but their philosophy have been pretty stable.

And what the firm has done a really good job at is rather than trying to force change on some of these underlying managers that may simply be out of favor, but nothing is necessarily broken, is more through acquisition is, is build the stable of investment teams and investment options that we have within the firm to help people like myself and our team to build portfolios.

So, you know, we've done a lot of acquisitions in the alternative space, in the local asset management space. So UK Australia we've bought local asset managers, you know, having the smart beta ETFs, having the passive ETFs and a lot of the alternative stuff that we're doing, these are the, this that's really more of the evolution of the firm in the sense that the, the toolkit is, is growing.

The toolkit is a lot bigger than it was 10 years ago, five years ago, et cetera. A lot of the building blocks of not necessarily change. We don't want Templeton to change their investment style. We want to have access to a true value manager because yes, they've been out of favor, but at some point they're not going to be out of favor.

We don't want them to suddenly just jump on the growth horse and kind of ride that because it's doing well. same for some of the other managers. So I think that's the interesting evolution of the firm. Rather than seeing, you know, rather than say the individual investment managers necessarily changing their spots too much.

And again, for people like ourselves that are building multi-asset portfolios or advisors that are building their own multi asset portfolios, that gives them a pretty interesting breadth of tools to, to, to build, you know, really efficient. Well diversified portfolios with, so I think that's a, that sort of thing.

Pierre Daillie: Stepping into the role of an advisor, when I call on you, what I would want is objectivity. When I have a question, you know, is it time to invest in value? Is it time to continue on? Or is it time to rebalance? Particular direction. You know, I'd like to feel as an advisor that when I call on you or call on anybody within the company, that when I get the answer to that question, it's an objective answer and not something, not a subjective answer.

I think that has real value. And I think that's really the, the value of how Franklin Templeton as a company has evolved, is that you you're able to say yes. No, I don't think so. Or, you know, we don't think so. Or let me refer you to somebody who has, who can, who can re you know, give you a more specific view of what

you're asking. There's resources in there because of the evolution of the company.

Michael Greenberg: And I think that, you know, the, the solutions, the multi-asset solutions team is kind of uniquely positioned for that, right? Like if you were to go to a UK, Equity manager and ask them what their views are on the UK it's sort of unlikely that they're going to tell you, it's just the wrong time to be in the UK equities.

You should be selling your UK equities. Cause they're there, they're obviously a little bit biased, whereas we can very easily say, Hey yeah, you know what, UK, we wouldn't touch it right now because of this, that, and the other thing. And then tell you maybe three months later that, Hey, it's sold off, valuations are more attractive.

This is probably more of an interesting time to buy UK because again, in a way we don't care. you know, we have the flexibility to be interactive, various asset classes and markets. So we, we, we, in a sense can become a little bit more objectively, you know, to those types of types of types of things.

And, and again, it comes through to, in our portfolios, we, we clearly hold certain of our funds and we clearly don't hold others of our funds. And it's not to say one fund is good or bad. It's just, we, we know what we need that might work for us and would fit in our portfolio. And that's going to be reflected in what we hold.

We're not forced to hold anything. we don't want to and enhance that. You know, I think it does give us a little bit more credibility when we speak to advisors about our views, it doesn't mean we're going to be right. but at least, you know, I think people know that it's not coming from a place. It,

Pierre Daillie: You guys are really at the nexus.

You're, you're really able to provide that objective perspective when advisors need it the most.

Michael Greenberg: Yeah, no, I agree.

Pierre Daillie: Mike, thank you so much for your time. It's been a really valuable enlightening conversation. I hope we can do this on a more regular basis. It's been great talking to you. Thank you.

Michael Greenberg: Well, thanks Pierre.

And thanks to all your listeners. I hope everyone stays safe and, and best of luck in the markets. Thank you.


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