At The Money: Investing in Freedom

The freest countries generate the best returns for investors. That is the thesis underlying the Freedom 100 EM Index ETF, and its proven itself over the past 1, 3, and 5 years. Perth Toll is the founder of the Life and Liberty indexes and the creator of the Freedom 100 EM Index (symbol FRDM). She was named one of 10 to watch in 2020 by Wealth Management Magazine and one of the 100 people transforming Business by Business Insider in 2021. Each week, “At the Money” discusses an important topic in money management. From portfolio construction to taxes and cutting down on fees, join Barry Ritholtz to learn the best ways to put your money to work. See omnystudio.com/listener https://omnystudio.com/listener for privacy information.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

  At Brookfield, we believe you can own wealth that's measured in generations. Because true ownership looks beyond today and beyond cycles. For 125 years, we've built long-term wealth through expertise, discipline, and a clear vision for the future. Providing investors access to alternative strategies built for what's next. Brookfield. Own what's next. Learn more at Brookfield.com/own. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital. Past performance is not indicative nor a guarantee of future results. Please review performance and offering materials before investing.

• 0:38Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 1:21Speaker 01

  But according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 2:03Speaker 01

  Bloomberg Audio Studios. Podcasts, radio, news.

• 2:25Barry Ritholtz?

  I'm Barry Ritholtz and on today's edition of At the Money, we're going to discuss how to avoid those countries that are geopolitically dangerous to your wealth. China, Russia, Saudi Arabia, Egypt, and Turkey. To help us unpack all of this and what it means for your portfolio, let's bring in Perth Toll. She's the founder of Life and Liberty Indices and creator of the Freedom 100 Emerging Market ETF, stock symbol FRDM. She was named one of 10 People to Watch by Wealth Management Magazine, one of 100 People Transforming Business by Business Insider. Her ETF, the Freedom 100 EM Index, manages over $2 billion

• 3:09Barry Ritholtz?

  and has beaten the S&P 500 over one, two, and three years. In 2025, FRDM was up 67%. That's double the MSCI Emerging Market Index, which was up about 33%, 34%, which itself was double the S&P 500, which was up 17.9%. So Perth, before we get into the details, remind us about the Freedom Index. What gets excluded and why?

• 3:40Speaker 03

  Yeah, so the Freedom Index is basically a freedom-weighted emerging markets strategy that uses third-party quantitative freedom metrics to weight countries instead of using market cap. So with market capitalization-weighted indices, you get a high weighting to autocracies and some of the world's biggest autocracies have a very concentrated weight. With freedom weighting, instead, you get a higher concentration to the freest countries in the world because we believe that's where we're going to find the best growth stories going forward.

• 4:12Barry Ritholtz?

  Makes sense. So I know the index looks at three broad categories to screen out different countries: civil, political, and economic concerns. Explain how you ended up on those three items.

• 4:28Speaker 03

  Yeah, so we felt it was extremely important to encompass all different kinds of freedoms, not just personal freedoms, not just economic freedoms, because all freedoms work together. One of the authors of our, you know, the data set that we use has said that freedoms work together like parts of an automobile. You can't have the steering wheel without the transmission, the car still won't run. So you have to have both personal freedoms, like civil and political freedoms, encompassing things like terrorism, torture, trafficking, women's rights, freedom of speech, media expression, assembly of religion, civil procedure, criminal procedure, judiciary independence, and things like that. And also the economic freedoms that we're all more familiar with as investors, things

• 5:12Speaker 03

  like taxation, rule of law, private property rights, business regulations, soundness of monetary policy, and freedom to trade internationally. So all of these things added together give us a composite country score from our data think tanks, the Cato Institute and the Fraser Institute, and we use that composite score on the country level to derive our country weights.

• 5:34Barry Ritholtz?

  So I want to dig deeper into those three broad subjects, but before we do, you know, there's been a lot of pushback on ESG-type investing and, you know, morality-based investing. When I hear names like the Cato Institute and the Fraser Institute, these are very conservative entities, not the sort of groups you think of as, oh, this is just another woke way of moving money around. Investing in freedom really is a fairly well-defined way to screen out risk, bad players and increased risk, isn't it?

• 6:14Speaker 03

  Yeah, so the Cato Institute and the Fraser Institute, I don't know what you mean by very conservative, however, these are, these are... For example, the Frazer Institute is known for their economic freedom data. The Cato Institute more so for the personal freedom side of it, more political freedoms and civil freedoms. And these are both entities that take no government grants. So they don't take any grants from, you know, even the US or the Canadian governments where they're based. That was important to me because we all know the World Bank debacle a few years ago where because they took money from China and they, you know, under Chinese coercion, changed some of their scoring.

• 6:57Speaker 03

  They had to actually scrap a very useful index, which we used, which was the Doing Business Index. That is something that the the the community is still trying to replace. And so this is something that was important to me, that they were independent from government coercion. The other thing about them is one thing that I noticed, working with them all these years, and by the way, we're completely independent from each other. So I have no influence into their country scoring. They have no influence into our country allocations. And it's it's, you know, completely separate. But having, you know, had permission to use their dataset, having had some insight into how they work.

• 7:38Speaker 03

  One thing that really impressed me was, you know, going into 2016, going into kind of 2024. A lot of the more conservative so-called voices were kind of going along with the political environment, whereas these guys never did. And they called out the dangers of what they saw in the American political situation from pre 2016. And so this is this is a group that is extremely, in my opinion, unbiased toward any government due to the fact, partly due to the fact, I'm sure, that they are completely privately funded.

• 8:20Speaker 03

  And and I've I've seen their kind of third-party independence firsthand through this work, this dataset, which is completely third-party for them, and also we're using their third-party. third-party measurements. So there's two layers, third-party objectivity in there. So I've been really impressed with the way that they've been very unbiased and very neutral and very, you know, I would say even centrist when it comes to kind of looking at the government situation in both, the political situation in both the US and outside of the US and their commentary there.

• 8:54Barry Ritholtz?

  So we'll talk a little bit about the US later. I want to dive into these three broad subject matters that drive the index, some of which seem a little obvious, some of which not so much. Let's start with the civil freedoms where you're looking at violent conflict, organized crime, disappearance, detainments, torture, terrorism. All those things sound like they're not related to economics, but also seem to create a terrible environment to do business in.

• 9:28Speaker 03

  Yeah, I mean, if you can't walk down the street without being concerned about being shot, then you can't really be doing business. So and that's the idea there. So if you want to use a kind of a more colloquial way of looking at it, it's the right to life, the right to liberty and the right to property. So if you don't have life, we don't have anything else. So that is the basis of all the other freedoms, actually, so the right to life, which I'm putting in the civil freedoms category.

• 9:57Barry Ritholtz?

  And now let's talk about political freedoms. Some of these make a whole lot more sense, rule of law, due process, an independent judiciary, multiple political parties, not single-party rule, freedom of the press, freedom of expression. How do all of these things translate into better investment returns?

• 10:23Speaker 03

  Yeah, so I'm going to focus on freedom of the press and expression for a moment here. And without freedom of press or freedom of expression, there's no independent verification for where any data, whether it comes from governments or whether it comes from companies.

• 10:41Speaker 03

  Whether any of that data is accurate or or complete. So you see in some of these autocratic countries, they're not putting out data anymore. They're not publishing some of their economic data. Because they don't want that third-party scrutiny from other countries. And in their own countries, they've already quashed it. So without third-party verification of data, which is what investors use to measure the impact of their investments, you know, there's no way to actually measure the true impact of your investments or whether, you know, your analysis of the investments is even correct.

• 11:17Barry Ritholtz?

  Let's stay within political freedoms and talk about the rule of law and and an independent judiciary. Given the sanctity of contracts and how important it is to manage that, how significant is an independent judiciary to to the sort of index?

• 11:37Speaker 03

  Yeah, so all the variables, there's eighty-seven variables that go into the country level composite score. An independent judiciary is one of those. And it's just as important as all the others. Like I said, you know, all the all the freedoms work together like parts of an automobile. I would say that, you know, it is of utmost importance, especially in business, because if you don't know if your contracts are going to be upheld, then how do you even enter into contractual agreements? How do you even start that business relationship? So that is extremely important. And also, on the, you know, on the on the kind of more extreme level of that in emerging

• 12:20Speaker 03

  markets, where there is no independent judiciary, where there is no kind of rule of law at play, anybody can be arrested, disappeared, or, you know, detained for any political reason that has nothing to do with your actual business. So we saw this when Jack Ma disappeared, again, using China as a prime example, because he said something the government didn't like at a conference. And then his, you know, IPOs got scrapped and and things like that. I think it's it's quieting down now, but many other tech entrepreneurs have disappeared since then. So so in countries without rule of law, without judicial independence and due process, you

• 13:05Speaker 03

  know, in China, ninety-nine percent of offenders are convicted.

• 13:10Barry Ritholtz?

  That's a pretty substantial conviction rate, isn't it? Man, they must have some great prosecutors over there.

• 13:17Speaker 03

  So, so yeah, that's, that's kind of base, like very basic, fundamental things that you need in order to conduct both life and business that I think most of Wall Street overlooks.

• 13:31Barry Ritholtz?

  So let's talk about the third leg of the stool, economic freedoms. These include property rights, sound monetary policy, independent central bank, free trade, business credit and labor regulations, and then the degree of government interference in private markets. All of these are obviously so significant to operating a business and, and investing in publicly traded companies. Tell us about economic freedoms in the emerging market world.

• 14:07Speaker 03

  Yeah, I think economic freedoms of all the freedoms get kind of a bad rap because, you know, capitalism has its critics. But if you don't have the freedom to conduct business, if you don't have the freedom to, you know, use your own resources as you see fit to, to contribute to the world, then you don't really have freedom. If the government tells you what your occupation is to be, or whether you can sell fruit on the street like we saw in the Arab Spring, you know, whether you can provide a living for your family. If, if you're, if you're dependent on the government to, to give you that, that fundamental right, then you're not really free. So without economic freedom, you have no freedom.

• 14:52Speaker 03

  And then as far as all the other things you mentioned in the economic freedom, you know, data set, the private property rights, the, you know, free trade. Soundness of monetary policy and all of those things are things that I think Wall Street has traditionally taken for granted because we usually work in countries that have all of these things already. So and that's how, you know, we can be kind of myopic to the the freedom premium in emerging markets because in emerging markets, these things cannot be taken for granted because not all of the emerging markets have them.

• 15:28Barry Ritholtz?

  So so how do you really think about the Freedom Index? Is it a value-based fund? Is it a risk management tool? Or is this simply a pure return-seeking strategy?

• 15:41Speaker 03

  Ninety-five plus percent of our clients, I would say, are using it as a purely, you know, freedom premium. We believe that freedom freer countries will outperform in the long run type of strategy. We do have some investors who came in in the early days when ESG was a big thing and they have these ESG portfolios. But I think that's that's going away a little bit. So most of our clients do use this as a, you know, we believe it will outperform type of strategy. And of course, you know, now, after the outperformance that we've had in the out-of-sample and the actual live performance of the fund, most I think

• 16:22Speaker 03

  most people are using it in that in that manner as their core emerging markets strategy.

• 16:27Barry Ritholtz?

  So to wrap up, hey, if you're a US or Canadian-based investor and you're interested in getting exposure to emerging markets via an ETF, and you don't want to funnel money to autocrats and dictators, and you want to invest in the freest countries because it's a value-based decision, it's a risk management decision, or it simply has demonstrated over the past few years to be a return-seeking strategy, then take a look at the Freedom 100 EM Index, ETF symbol FRDM. I'm Barry Rickles. You're listening to Bloomberg's At the Money.

• 17:25Speaker 00

  At Brookfield, we believe you can own wealth that's measured in generations. Because true ownership looks beyond today and beyond cycles. For 125 years, we've built long-term wealth through expertise, discipline, and a clear vision for the future. Providing investors access to alternative strategies built for what's next. Brookfield. Own what's next. Learn more at Brookfield.com/own. This is not an offer to sell or investment advice. Investing involves risks, including loss of capital. Past performance is not indicative nor a guarantee of future results. Please review performance and offering materials before investing.

• 18:03Speaker 01

  This is the Bloomberg Tech Minute brought to you by ChatGPT. I'm Carol Muster. Getting hired at SpaceX requires exceptional ability and may include having Elon Musk review a candidate's resume. So writes Bloomberg Business Week's Lauren Grush. She reports that the company culture is defined by Musk and job candidates must understand that a commitment to SpaceX means adhering to this culture and exhibiting loyalty to Elon Musk. To get hired, candidates must demonstrate their achievements from past jobs and hands-on experience matters more to recruiters than advanced degrees, with the company looking for people with raw innate intelligence. A spokesperson for SpaceX didn't respond to a request for comment on its recruiting and hiring practices.

• 18:46Speaker 01

  But according to recruiters, advisors, and those who've interviewed for jobs there, it's the space exploration dream that draws people to the company and Musk invokes that dream regularly to remind workers why they're there. Prospective hires are told that the job will require stamina, including in job ads that candidates, quote, "must be willing to work extended hours and weekends as needed." One major perk for all that hard work? Employees' access to equity, either the right to buy shares or payment in the form of restricted stock units that vest over time. That's the Bloomberg Tech Minute brought to you by ChatGPT. Get started at ChatGPT.com.

• 19:26Speaker 04

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• 20:02Speaker 05

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