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[music] >>Hello I'm Greg Bonnell and welcome to MoneyTalk Live, brought to you by TD Direct Investing. Every day I'll be joined by guests from across TD, many of whom you will only see here. We we'll take you through it's moving the markets and answer your questions about investing. Coming up on today show: we will discuss the new trends in the world exchange traded funds with Ian Tam, Director of Research at Morningstar Canada. MoneyTalk Live's Anthony Okolie will have a look at new TD Securities report on gold stocks and in today's WebBroker education segment, Caitlin Cormier will take us through the resources available to you on the platform's Learning Center. So here's how you can get in touch with us: just email us at moneytalklive@td.com or Philip at viewer response box under the video player on WebBroker. Before we get to our guest of the day let's get you an update on the market. The TSX Composite Index, deeper into earnings this season, seeing a bit of a pullback in the price of crude oil today. You have the American benchmark at 77 bucks and change a barrel. Firming in the price of gold, still holding about $2000. Some push and pull among some of the commodities it 20,644. 36 points, a little shy of 1/5 of a percent. Pullback in the price of crude is hitting some of our big energy names. Let's check out Suncor holding a bit better off the lows of the session. Down a little shy of 1%. On the other side, some of the mining and materials names, Eagle right now up a little more than 1% at 76. 62. South of the border, the earnings keep coming in. The S&P 500, that broader read of the American market a little lacklustre on the S&P 500 so far. Three, four, five days into the earnings is in right now. Down about 17. A little shy of have a percent. The tech heavy NASDAQ. Let's see what's happening there. We've heard from Tesla, net Netflix this week, down a little shy of half a percent and Verizon under some pressure today. 37 bucks and change. That stock is down 3 1/2%. And that's your market update. One of the most active parts of the market is the exchange traded funds at space. With new types of ETF's constantly being launched. Joining us now to discuss some of the big trends in that sector is Ian Tam, director of investment research for Canada at MorningStar research. Great to have you on the show Ian, your first time here. It's a pleasure. >> Greg, thanks for having me. >> Since it's your first time and viewers are not familiar with you, what do you do it MorningStar? >> We will start with the MorningStar as a company. The full name is actually MorningStar research and as the name implies, we really focus on research that powers or empowers investors. In other words, how do you help investors make better decisions to reach their financial goals. Partially retail investor focused and we also find data and analytics in all sectors of the markets including buyers, asset managers, pensions as well as here in Canada. We also have some deep roots in Canada us to aside from MorningStar's own recent history. Recent acquisition of DRS, one of the agencies here in Canada as well as sustain analytics formally known as… Also formed right here in Canada. A global leader in ESG research. >> The platform that our show is on, you can find MorningStar research on here. Some will see ratings attached to that. Does that work? >> A great question. Three main things that MorningStar publishes in Canada. I will use the icon that we publish. Stars, metals, silver bronze… And globes. I think it's important to understand the difference as an investor. The star ratings are the most prevalent. They are a very objective look back at risk-adjusted returns after fees. Relative to categories. So there are very little opinion placed on it. It largely depends on the investment… That's the star rating. The metal screening is a bit more qualitative in nature. It is forward-looking. That is MorningStar's assessment of the ability to produce alpha after fees in the future. So that is based on our assessment of three pillars of funds. That is the parent company, the process, then the people that are running with the fund. Those inputs go into us deriding this rating. Finally, the Globe ratings are simply ESG risk. It's not green Nesser goodness or badness. It's the amount of material risk coming from ESG related issues. That are rolled up at the portfolio level. So those are three different ratings. Often get to know what you are looking at. >> Helpful for our viewers going through the platform. Let's talk about ETF's. A great introduction to Ian and what he does. What about some of the trends we are seeing lately? >> I think it's important to paint the picture of how much ETF's have exploded in Canada. In 2000, rather 2003 there were 13 ETF's available for trade in Canada. In 2013, there were 250. Today there are over 1300. So exponential growth rate of the number of ETF's. If you look at the last three years though, a few trends have emerged. Namely, the last 12 months, we've seen a number of covered call ETF's. As we come out of a low interest rate environment. It's kind of interesting because these ETF's are really designed to produce an income or a yield while sacrificing a bit of the upside. So it remains to be seen how they do as interest rates are down much higher. Perhaps a different demand for yield. We have seen a lot of those. We have seen a lot of thematic ETF's. So things that kind of cross different sectors. So things like bitcoin, the idea of "big data", autonomous technology… A number of thieves themes have come up. There is an opinion on those. But there have been a number of launches in that area to date. The ones I think investors should pay attention to, a bit more boring in nature so, the balance ETF is a newer, I guess, front runner, and things to look at. As well as target date ETF's which are, again, very boring type of instruments but useful and helpful in getting to your retirement goals. >> I have noticed these balance ETF's out there being a little more prevalent, at least in terms of being in front of me. Let's talk with the pros and cons there. We talk about a balanced ETF, what it is and how does it differ from just buying your own ETF's? >> This is not new as an idea. We put the seventh ETF world now. The all-in-one concept is unique in that the underlying funds that power the all-in-one product are typically low-cost index blends which are different than your traditional balanced product which can be active or passive in combination. The pros and buying one of these balance ETF's is it's easy right? Instead of choosing 20 or 30 ETF's on your own or having to balance it once 1/4, that's a lot of work for most investors. I would imagine most retail investors probably are not thinking of all the exposures granted within all-in-one. So particularly emerging-market region, asset classes, private credit for example these are areas that most retail investors are not really actively thinking about. So buying it all in one ETF you are giving up responsibility in a way to the ETF manufacture. I think the most part, they do offer diversification, not only amongst asset classes but amongst regions as well. The prose is it's easy. One ticker, you don't have to do very much with it. The cons and, much like everything that is: what kind of all-in-one is customization. So there are, there is an argument that in less efficient markets where the information is not readily available to investors, for example, developing or emerging markets like Russia, India, China… It can be argued that active management might produce more alpha in those markets. So in an all in one ETF, you don't have a choice. The ETF manufacturer makes that call for you. It's more passive. Less intense. A more savvy investor may want to be active in certain markets. The second is that these all-in-one products tend to take advantage of economies in… The underlying funds the power the all in one or from the same manufacturer. It's not very often that the same asset manager is the best across all different parts of the asset allocation. You don't get to choose that. With the idea of customization, that's I guess, one of the costs. >> Some people might think "how is that any different then Robo advisors? " We've seen Robo advisors gain prominence in recent years. >> They are similar in that you were going to be holding a basket of ETF's at the end of the day. The features of the Robo advisor gives you is very important. It is the risk tolerance, risk/profile functions. As a new investor, let's say, most investors don't have an idea of how much risk they can take. One way to gauge that is through this risk profiling or risk tolerance. That's what a Robo advisor can do for you. They can gauge, based on your age, financial status, hear so much risk you can take on and we will match you with a portfolio that matches that amount of risk. For an all in one ETF, you kind of do on your own. Maybe not all investors can have that skill set to do it. Robo gives you that input at the start of your investment. Then over time, with the Robo advisor does this essentially, gives you a glide past. As you closing on the time that you need to withdraw your money, perhaps retirement or child education, they reduce your exposure to stocks and increase your exposure to bonds and all-in-one ETF is a static asset allocation. Roughly a static mix between stocks and bonds. So that de-risking feature, especially if you're not a very diligent investor, not everyone is. It is useful. By the time you need the money, you will have the least the least amount of risk in your portfolio which is exactly what you want. One of the pinnacles of a good investor is to get your money out when you needed. >> Interesting distinctions there and a great start the program. We will get your questions about exchange and traded funds with Ian Tam in just a moment time. A reminder of course it didn't get in touch with any time by emailing MoneyTalkLive@td.com our fellow that your response box under the video player and WebBroker. Right now, let's get you updated on some of the top stories in the world of business and take a look at how the markets are trading. Shares of Tesla are in the spotlight today after you the electric vehicle makers gross margins fell to the lowest in more than two years following a number of price cuts for several of its cars in recent months. CEO Elon musk says the company will continue to prioritize sales growth over profits. Right now the stock is down almost 10%. US homebuilder D. R. Horton has delivered an earnings and revenue beat for its most recent quarter. The company says demand for its new homes improved despite higher borrowing costs compared to the same period last year. D. R Orton is also providing an optimistic full-year forecast. American Express is putting aside more money in case of fall behind on their payments. The credit giant company hiked its provisions to $1.1 billion in its most recent quarter. A move that weighed on the profit line. American Express says it is "mindful of the mixed signals" in the economy. A quick check of the market. Let's check on Bay Street here with the TSX Composite Index. A bit of momentum with the mining names. With some energy names there some weakness down a court of a percent. And south of the border, as earnings season continues to roll forward, right now, the markets are reaction a bit to the downside. Now 21 points are about half a percent of the S&P 500. We are back now with Ian Tam taking your questions about exchange traded funds. A lot coming in already. Let's start getting through them. First one: what should we keep in mind when looking at bond ETF's? >> A great question. Maybe let's talk about risk one more time. To understand how much risk you can take as an investor when you're investing. When it comes to bonds themselves, there are two main types of risks looking at. Credit risk and interest rate risk. Credit talks with the quality, the issue of the borrower, typically government bonds will have more of that default risk than a corporate issuer. So that's one element you want to consider. When you are looking at the makeup of your bond ETF. Second of course is interest-rate risk and we have very little control as investors over interest rates. But certainly, you want to have an idea of how sensitive your bond ETF is going to be to interest-rate changes. So that is known as duration. So long duration portfolios or bond portfolios, they tend to be very sensitive to interest rates. Short duration, shorter maturity portfolios tend to be less interest-rate sensitive. So, you want to understand that when you pick your bond ETF. What's unique about ETF's versus individual bonds were also picking a manager. So again, going back to how MorningStar looks at funds, you want to look at the parent company. You have good stewardship? Are they watching a number of funds that are faddish in nature or are they actually concerned about you reaching your financial goals? That's one thing to consider. The second is people. How much tenure they have on managing the fund? Is there a lot of turnover within the portfolio management team? And the process. How are they managing for risk. Have a consistent investment process applied over time? So those are all considerations you want to look at when you buy a bond ETF. >> Now, some people may be more interested in bond ETF than they have recently because there's a piece out there, as if it gets closer to the end of its rate hiking cycle, some market pricing, perhaps they will start cutting before the end of the year or early next year. There could be an opportunity in bonds. So the gigolo can say "I'm not the kind of investor will buy a bunch of issues where the buy-in is 5000 issues, maybe I will look at an ETF". Could they expect, if that thesis plays out, that the Fed is near the end and starts cutting, they see a rally in bonds that that that will be see a rally in bond ETF's as well? >> I think the ETF is an amalgamation of individual bond issues and really up to the manager or say, a passive bond ETF, the index to pick the right bonds. So absolutely Greg, I would say that's the case. Having said that we tend to advise not to purchase ETF's or any investment based on what you think the markets like cycle the market cycles in a B. A laser sharp focus on your own risk tolerance and how much risk you can take on is really what you want to focus. >> No guarantees out there. >> Let's get to another question now (Greg reads the question). >>I think we'll return there is what has the of you were asking some questions. >> I can understand the question because perhaps the reaction to interest rates and that ETF or others like it may not be intuitive. So the underlying this type of ETF's real return bond. Just like any other bond, it is sensitive to interest rates and also sensitive to market expectation. It does have an extra future. In that it resets based on inflation. So the coupon, it can be reset based on what the reported CPI is. Which is typically reported twice a year. So here's the thing: the price of that bond is going to depend on market expectations. So, if the market believes that inflation is going to be 5%, but it ends up being 3%, you would have bought that bond expecting a 5% bond on the coupon or principal, you would've overpaid for that bond. Hence you will see some negative price action when it's released. So that is the behaviour that, they call them real return or inflation protected bonds sometimes. What they are protecting you from is unexpected. Inflation. Excuse me, expected inflation. When it's unexpected you still get negative impact on your portfolio. So that's part of it. And the second course is interest rates, all about portfolios if it's inflation protected or not, so when interest rates go up, bond prices go down and that's why you see that type of performance on funds like X RP. >> Great answer there. Great question from the audience. Another one here. Either ETF's for short-term bonds? >> There certainly are actually. There are roughly 60 of them from Canadian domiciled fund manufacturers. Split across three categories. So there are going to be Canadian short-term fixed income. That's between one and five year maturity. There is Canadian money market and US money market which is very, very short-term, less than one year. The most recent launches we've seen for these high interest savings accounts, that also falls into that bucket. If you don't want to take a lot of risk and what your money quick, the short-term bond market, there are tons of options out there for ETF's. >> Have we seen more flows in that direction? I think of the changing environment a year ago. What are we in April right now? April of last year, the central banks are starting to make some moves depending on how aggressive they will be. So I don't think I've ever had anyone asked me about money market funds. Up until recently. Have we seen some shifts in investor attention based on yield in those months? > Well, I don't have the data off the top my head on that. But what we have seen during the pandemic is a distinct flow into money market funds. And certainly a number of distinct flows into the high interest savings, those types of products. As kind of a flight to safety. >> Interesting stuff is always at home make sure you do your own research before you make any investment decisions. We will get back to your questions with Ian Tam on exchange traded funds in just a moment's time. A reminder of course that you get in touch with us at just a moment's time by emailing MoneyTalkLive@td.com. Now let's get to our educational segment of the day. If you're new to investing, using WebBroker, the Learning Center can be a great place to get started. Joining us now with Maurice Caitlin Cormier, Client Education Instructor with TD Direct Investing. Caitlin! Walk us through! >> Hi Greg. The Learning Center is really kind of the home for everything to do with it… I was in TD Direct Investing. Let's take a couple of minutes to see what our content investors can inspect when they had there. Let's start with WebBroker. We are going to choose the very top, the last tab there that says "learn". On the right-hand side there. When we arrived, we are going to see four different categories of educational content here. So we see "video lessons", "learning classes, master classes and webinars. Rather learning paths. Video lessons are kind of our short videos. They are going to be on any different topic. From the more basic things to more complex ideas as well. When we first come in here, we can see there is quite a bit of content including longer things as well. So we can simply click on this filters button. Here on the right-hand side we can see a bunch of different options to filter down the videos we are looking at. For example, if we want to see some of those short videos and maybe we want to choose a specific type of investment, for example, bonds, GICs, fixed income : click "apply filters". We see 17 lessons appropriate for that content. So it's easy to filter through and see different lessons that might be of interest to you. If you go back to the learning centre, learning paths are kind of is similar to video lessons but they will put a whole bunch of topics together in rather on a particular topic that you can kind of work through and kind of take you from a to C on that topic. So again, lots of different options there and similar to the courses that we have available under "video lessons". Master classes. These are live classes that our instructors teach. They are daily. We typically host 3 to 4 classes per day, morning noon and night if you will. As well as on Saturdays. So lots of content available. Lots of different times of the day. Very easy to register for. For example if you want to register for this class at 3 o'clock with Bryan, we just click on the register button and it will get you to confirm your email and confirm your registration. So very quick and easy to get registered for that type of class. And finally, the last thing we have is webinars. These are typically weekly sessions that we have. We bring an expert, industry experts on a bunch of different topics to talk about different things to do with investing. Whether it's a specific product or a type of investing. All different types of webinars that you can see. These are the ones coming up including options education month. You can see lots on the options topic. But we also have past events. There is a whole host of different options available. So just take a peek there and see what piques your interest and you can go ahead and watch those sessions on demand. >> Okay. We have some people now wondering about registering for events. I've done this before. You start something thinking you have a little time on your hands and then you get pulled away. I want to come back to it later. Can you pick up where you left off? >> Yeah. Absolutely. We have some really great features within the learning centre. Just a bit of a low where we were, let's take a different option. We have what's called "my dashboard" here we have our learning path and maybe you're partly through it you can click to resume past. You can see all the events we were registered for. At 12 events I am registered for. I can view all of them. I can also save lessons. You may have noticed, for example, when I clicked in video lessons, there is this little kind of bookmark. I'll just click on that bookmark. Go back to "learn" and you can see that that is actually saved is a lesson here so I can come back and watch at any time. And then just quickly, kind of, along with that, there are system adjusted topics based on what you watched previously. We can actually hopping here and see topics relevant to what you been watching. You can see what's featured as well as what is the most popular with other investors currently to kinda give you an idea and different educational content to dive into. So a lot available. It's constantly being updated. You can see these events are constantly being added. So hop in, take a peek and register for anything you're interested in. We hoped to see what class are often are! >> Great information for viewers thanks Caitlin! >> Thanks Greg. >> Caitlin Cormier Client Education Instructor at TD Direct Investing. Make sure to check out the learning centre on WebBroker, live interactive math class of the earth. Before we get back your questions like ETF's for Ian Tam, a reminder of how you get in touch of us:Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live. >>we are back with Ian Tam taking your questions about exchange traded funds. Plenty coming in. Are there any ETF that focus on the growing artificial intelligence industry? Talking about themes, so for the big theme of 2023! >> Yeah and who hasn't logged into CHAT GPT or Google bar. It's kind of scary how this is all become. So, the thing with thematic ETF's and there are many themes… AI is certainly one. Some people call cannabis esteem, crypto currency : all these things are ways to invest that cross sector. So there are traditionally 11 sectors. Firms that MorningStar These funds tend to invest across. The thing with thematic ETF is the tell a story right? Many people can relate directly and see in their day-to-day lives what it is that they are buying. But our data shows something quite different. We have actually flagged or identified a number of these thematic ETF's around the world. We compared their performance not only survivorship over the last 15 to 20 years. We found that those that have a somatic tilt, have a far lower rather a thematic tilt, (…) Very traditional world Index. So that's something to keep in mind. Now, when you're investing in a thematic fund, you are making three bets. Maybe AI is the right team. Quite possibly. The second is that seem is not already fully priced into the market. So our institutional investors are fully invested in these companies and is already fully valued? The third is that you picked the right fund manager. Whether it's fund a, fund B, who is doing a better job exploiting that theme. So because there are three elements of that wager, that bad, the probability of success is going to be a bit lower. Were not saying it's impossible. When it does happen, your game will be extraordinary. But just know that the probability, it's going to be a bit lower. So in terms of putting an allocation to AI theme fund, maybe you want to put your eggs in that basket. >> In the end, if the theme is AI, off the top of my head I think maybe some of the companies that are just the ones making the semiconductors. Maybe other companies, Microsoft or Google because they have their AI. Maybe it's someone who likes mixed components. The fund manager has a pretty important role there and trying to figure out if you're going to play a theme, one of the companies will benefit this. They can be right or wrong. >> That's right. A lot of that and don't forget a lot of companies will have exposure to AI. You're not missing the boat necessarily. As kids call it these days. You probably still certainly invested into some part of it. >> Let's take another question here. Someone wants to know if you have any sites on the TQQQ, a triple leverage that attracts the NASDAQ. Now are talking about leverage. >> From MorningStar's perspective, whenever we hear the word "leverage", there should be some warning signs for the traditional conservative retail investor that's trying to get through to retirement. Leverage is kind of like putting gasoline on a fire. So it's going to accelerate your returns when it's going well and it's going to accelerate your losses when things are not going so well. Many of these triple leverage ETF's, they say on the fun facts sheet. They should be held for periods of less than a day. Because you're really creating tools for your daytrader. Not really necessarily for long term. >> People make that mistake that they will buy something like this or another leverage ETF and they will hold it for a long time which is not the intent here. >> Not designed to work that way and you should heed the warning. If you do use it, at that point it's not really investing. You're really making day trades at that point. >> Important caveat there. This question about commodity ETF's. (Greg reads the question) so you have this paper gold but is there any real gold involved? >> When you buy a physical commodity ETF, it is tied to some physical gold. But it's also important to know because many of these ETF's are labelled "gold" or "copper" or whatever. There are actually two different types of commodity ETF's. One that invest in companies that manufacture or produce commodity and one that invest in the commodity directly. There are two different types of risks. In the former case, where you are investing in a basket of companies that produce gold, for example, you are taking on the risk that each company is going to be good at their operations. Right? Producing earnings? Are they beating expectations? The advantages that, because you are investing in ETF, it's a basket of those companies. Of course some of that risk offsets. You are also exposed in that case to the underlying price of gold. So there are two elements to that. Where is in the latter case, you are investing directly in a gold or oil physical ETF. It is simply the price of that commodity that you are supposed to… It's important to understand the distinction. >> Back to your questions for Ian Tam in just a moment's time. Make sure you do your own research before making investment decisions. And a reminder that you can get in touch with us at any time. Do you have a question about investing, or what is driving the markets? Our guests are eager to answer your questions so send them to us here at MoneyTalk Live. You can send your questions two ways: you can send us an email any time at moneytalklive@td.com or you can use the question box at the bottom screen right here on WebBroker just type your question and hit "send". We will see if one of our guests can get you the answer right here at MoneyTalk Live. Investors have seen quite a move in the price of gold in recent weeks. You had declining prospects for Fed rate hikes baked into the market and then a bit of a banking crisis south of the border. Anthony Okolie joins us now to discuss why TD Securities remains optimistic on gold prices in the precious metals cycle for the year. Anthony. >> TD Securities continues to remain optimistic on the price of gold despite rate hikes in the coming months. To discourteous notes that the physical demand for gold amongst central banks continues to be strong in the first quarter. Previously, central bank buying of gold reached a multi-decade record according to TD Securities in the previous report. TD Securities does a seat near term price volatility full for gold prices related to sticky inflation. We are also seeing a stabilizing banking environment that can lead to potentially further interest rate hikes and right now, markets are currently pricing at an 80% probability of another 25 Basis Point Hike in May. That's up from 21% probability this time in March. According to the Fed watch. Of course, that aligns with TD Securities rating which is calling for 25 Basis Point Hike in May as well as an additional one in June. Now, high fed rates plus a stabilizing bank environment could push rates higher. That will of course way on gold in the near term. However, TD Securities expects the Fed will end its hiking cycle in the second half of this year. This contract is a tailwind for gold prices going forward. Finally, TD Securities says activity continues to heat up of the sector with a number of proposed deals announced recently. For example, new mount offered to acquire new Crescent. There are proves to be there appears to be improving in these deals. As a result TD Securities has revised the forecast for the average gold (is…) Just over $1900 per ounce in 2023. And from (this is…) Is Greg? >> What about some of the risks that investors are taking with some of the large Gold miners? >> They outlined a number of risks including forecasts in financial technical and political risks. These include risks related to gold and fuel prices. They also point to governing, fiscal and legislative regimes. In countries that they operate. That is also potential risk for some of these big Gold miners. Foreign exchange risk of course. Resources and reserves as well as environmental risk. All these could pose challenges to the gold and precious metals sector going forward. >> Interesting stuff. Thanks Anthony. >> My pleasure. >> MoneyTalk Live's Anthony Okolie. Coming up on Monday, Bart Melek, global Head of Commodities Strategy with TD Securities will join us. Below this box in the WebBroker platform, you will see our conversation from earlier this week. Let's check in on the markets right now. Let's see what we have in our hands. The TSX Composite Index, will call that a 38 point deficit right now, down 1/5 of a percent. We system rate weakness in crude prices. A little strength in gold today. How is it playing out among some of the names? We have Cenovus Energy off the lows of the session now, a bit weaker earlier in the trading day, down pretty modest right now. Hudbay minerals, I noticed a bit going into that earlier. Hanging in there at seven bucks and $0.28 a share. Earnings season continues to roll on south of the border. We hear from a lot of big names Netflix, Tesla, the big banks at the end of last weekend through this week as well. Right now the S&P 500 down about 16 points, a little more than 1/3 of a percent. The tech heavy NASDAQ a little weaker but nothing too dramatic. Down a few basis points. Let's check on Tesla. Of course we've seen a lot of price cuts from Tesla. We had investors worried ahead of this earnings report that it would hit the gross margins. That does appear to be the story right now. Some perhaps overtures from you on mosque. They will try to keep market demand and market share and not be too worried in the near term about some of those profit margins. You have the name down right now more than 9 1/2%. >> Back now with Ian Tam of MorningStar's research. Lots of questions coming in. There is one. Why do so many healthcare stocks only have a three ESG? What is their carbon footprint? >> I'm not sure if the viewer is asking specifically about MorningStar ratings but we have a global scale from 1 to 5 globes. Perhaps they are referring to three globes. I will assume that's the case. So, one thing I want to be super clear on on this platform is that ESG risk is a type of risk. In fact, you want to be specific in finding it. The materially financial risks stemming from environment environmental social income factors. So, for a company that is in energy, Suncor as an example, they will be exposed to environmental risk as we transition to a carbon neutral or less carbon intensive economy. Where is a company that relies heavily on the labour in lower cost markets, might have more social risks and healthcare as the viewer asks. Probably more exposure to social income risk as it has to do with pricing pharmaceuticals, for example. So the way that MorningStar looks at ESG risk is not equal across the board. So a healthcare company or certain sub- industry is an enemy compared to others in that industry. Certain pillars. Perhaps the social and governance, the S and G pillar of heavyweight higher than, for example, an energy company where the "E" pillar is going to be much higher. It's important that you're not comparing the same thing. It's designed in a way that you can look at globes across multiple industries. But if not really measuring the same thing for each company. So in terms of the carbon footprint, it matters less with the carbon footprint is. I'm sure it goes into the scoring. But perhaps not related as much. >> Okay. Another question here about smart beta ETF's. If you are wants to know how they work. >> So smart beta is a generic term. We at MorningStar like to call it Strategic just to avoid the implication that they are doing something smart in the background. These ETF's, they straddle the line between active and passive management. Another word to describe them as rules-based. Many of these ETF's will create a set of rules based on fundamental investment factors. Common ones would be value growth, volatility dividends, that type of thing. They will create a set of fundamental investment rules that powered index. So there's the pros and cons of it. The pros are to be consistent because they are rules-based in your value ETF unlike an active manager who can slip and fall between value and growth depending on what's in favour, a value, I guess, Strategic ETF will always be values driven. So you're guaranteed pretty much that you will have consistent exposure to that investment factor. The con is the same as the pro. It's going to be consistent. In the US in the last 10 years in particular, your performance will suffer because of that. So it's very difficult to gauge when factors will be in favour or not in favour. But if you happen of a very strong conviction in one factor or another, perhaps dividends are volatility, these are very good consistent ways to get exposure to that factor. >> We are out of time for questions. Before I let you go I want around back to the top of the conversation. People are thinking of the ETF space in 2023. We have been so much as investors we have been through so much as investors over the past year. What are you thinking about? >> Number one is your risk profile. I hate to beat a dead horse but investors, we often get carried away. We hear a lot of great stories of investment success of others. What you really need to do is understand how much risk you can take on. How far away from retirement are you and how much do need that money and how much capacity you have to take on losses. It's fundamental for any investor to understand how much risk they can take on and then decide what types of investments. Whether it be ETF or others, to invest in. >> Ian. A pleasure to have you and I Hope we can have you back again soon. >> Takes Greg. Appreciated. >> Our thanks to Ian Tam, director of research for Canada at MorningStar research. As always be sure to do your own research before making any investment decisions. We will be back tomorrow with an update on the markets and highlights from some of our best interviews a week. And on Monday, Bart Melek, global Head of Commodities strategy and TD Securities will be our guest take your questions about commodities. The reminder you can get a head start just email us at moneytalklive@td.com. That's all the time for our show. Thanks for watching and we will see you tomorrow. [music]