Jim Bianco on Bond Index Construction, Interest Rates, & Credit Risk

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On this episode of ETF Prime, host Nate Geraci speaks with a trio of individuals discussing several different ETF-related topics. His guests include VettaFi’s Zeno Mercer, who discusses artificial intelligence in 2024, valuations of companies in the space, and more. Geraci also speaks with Jim Bianco of Bianco Research Advisors to discuss the WTBN ETF and the index behind it. To close the podcast this week Geraci talks with Academy Asset Management’s Seth Rosenthal to discuss the Academy Veteran Impact ETF (VETZ).

Artificial Intelligence in 2024

To open this week’s podcast, Geraci brings on VettaFi’s Zeno Mercer to discuss artificial intelligence in 2024. Geraci first highlights that in 2023, AI was a theme that dominated the markets and the world. However, he feels that some of the hype for the technology has begun to die down. He then asks Mercer to give his take on the current state of AI in 2024.

“AI is being used everywhere now,” Mercer says.

He points out that people aren’t just talking about artificial intelligence anymore; in the present day they are putting it to use in their everyday lives. Mercer shares that work is now also being done behind the scenes to improve AI technology overall. He believes that AI is being democratized specifically in its product services and intelligence. Ultimately, Mercer highlights that his expectations for AI in 2024 are for organizations around the globe to be focused on implementing the tech effectively into what they do.

Valuations of Companies in AI

The conversation then shifts gears when Geraci asks Mercer about the valuations of companies in the AI space. Geraci senses that investment professionals believe that the valuations of these companies are stretched in terms of their value. He asks Mercer to provide his take on it.

“You certainly see some companies that are trading at higher valuations on both a sales and earnings valuation perspective,” Mercer says.

Mercer highlights that you could see some valuation discrepancies when you compare bigger names in the space against the smaller companies. He then names Nvidia as one of these companies that have a higher valuation among others. Overall, he shares that there is a wide range of valuations among companies in the AI space. In addition, the duo discuss the future of AI ETFs, characteristics to look at when choosing among AI ETFs and more.

The Index Behind the WTBN

Geraci then brings on the President and Index Manager of Bianco Research Advisors, Jim Bianco, to discuss the index behind the WisdomTree Bianco Total Return Fund (WTBN). The index that the fund tracks is the Bianco Research Fixed Income Total Return Index.

Bianco shares that WisdomTree and Bianco Research Advisors had been having conversations for quite some time to release a product with one another, and finally launched WTBN in late December of 2023. Geraci then asks Bianco to explain what problem he and his firm are trying to solve with their index.

“We are trying to say there is a yield in bonds, we want to grab that, and then we want to say that with some proper management techniques, we can enhance that yield,” Bianco says.

Bianco shares that they plan to enhance the yield by avoiding downturns in the market. Additionally, the firm feels it can also capture some upward turns with specific moves in the bond market. Bianco says that ultimately it is important to note that the fixed-income market is significantly different from the equity market. Furthermore, the duo explore the index’s construction, interest rates, credit risks and more.


To close this week’s podcast Geraci brings on Seth Rosenthal, the Chief Investment Officer at Academy Asset Management, which is the firm behind the Academy Veteran Impact ETF (VETZ). Geraci highlights that the fund launched in August of 2023 and now has over $50 million in assets. The duo start their conversation by exploring the back story of Academy Asset Management. When sharing this story, Rosenthal highlights that at the end of the day, he and his firm are focused on two things: authenticity and capability.

“On the authenticity side, you know our mission is to mentor, hire, and train veterans,” Rosenthal says.

Rosenthal shares that he and his firm pair up Wall Street veterans and military veterans with one another. Then they have the Wall Street veterans train and coach the military veterans to help them have successful careers in the financial industry. The firm also aims to have a 50% veteran staffing level to help veterans transition out of the military. On the capability side, the firm feels that they have a significant amount of experience in the industry, in addition to the firm’s geopolitical intelligence group. The combination of both is what helps separate the firm from others. The duo close their conversation by discussing the actively managed Academy Veteran Impact ETF (VETZ) in great detail.