A: Again, like you asked before, what are the advantages of an ETF? There's a section of the code that allows an ETF to take appreciated securities, and give it to something called an authorized participant when somebody buys or sells and get rid of ... they eliminate taxes. They defer taxes. So if you buy an ETF at $10, they can buy and sell and you don't get dividends. You get some dividends, but you don't get a return of capital. So your basis, 10 years from now, is going to be $10, which is very helpful.
They're basically reducing the amount of money going to the government. But ETFs under this 852(b)(6) code, ETFs and open-end funds can do the same thing. But the practical part is for me to give a company like Aerojet Rocketdyne, that cost us $8, which is being taken over by L3Harris at $58, I can give it out of a mutual fund to somebody redeeming. I can't do it because Merrill Lynch will take it. And so the playing field is unfair. So we said, well, for half of our clients and the mutual funds are taxable. And so to be fair to those taxable clients, what we're going to do is start ETFs. There's a big tax advantage.
Secondly, column A, column B, every money manager who has over $100 million has to file a 13F every 45 days. So whatever we do is in a public domain. Third, anytime we own over 5% of a company, for whatever reason, we file a 13D, and people think we're activists.
There are a lot of benefits to being an ETF... There's no negative to having it semi-transparent or non-transparent.
But more importantly, we're not charging any fees and paying 100% of the expenses on our ETFs. It's zero cost to everyone. And so as a result of that, we'll keep that up for a period of time.
The problem is getting shelf space. I can have the best tomato sauce. Unless I get it on a shelf space in the center aisle, I'm not going to sell it.So that's the rationale behind it. We have different teammates that do this. We understand the mechanics. And basically, this is a long journey. Over the next 20 or 30 years, we'll figure out how to try to get the regulators to be more fair and level the playing field between ETF only, and help the Main Street investors do the tax advantage that the ETFs have.