Fiscal Dominance Is Breaking The 60/40 Portfolio | Matt Hougan & Bob Haber

**Felix** (0:00)
Nothing said on Forward Guidance is a recommendation to buy or sell any investments or products.
All right, everybody, welcome back to another episode of Forward Guidance. And I'm very excited to be joined by two veterans of the asset management space, and who have come together. Of course, Matt Hougan, who's been on the show many times before CIO at Bitwise, and also excited to be joined today by Bob Haber, who's the founder, partner and CIO at Proficio, who have been joining together on a debasement ETF that they partnered up on this year. And it just felt like a really timely moment, because, of course, the idea of the debasement trade has gotten hot into the press again. Markets are moving, Bitcoin's been ripping, Gold's been ripping. So I really wanted to get you both on the show to unpack how to think about these debasement assets in consideration in a portfolio. So excited to have you both. Would love to just give a quick preamble on how this came together, what both of your firms do, and how you're thinking about the debasement ETF. So Matt, I'll let you start here.

**Matt Hougan** (1:08)
Yeah, absolutely. It's great to be back, Felix.
I'm really excited to be on here with Bob. Of course, Matt Hougan, CIO of Bitwise. Bitwise is a global crypto asset manager. We manage a wide variety of ETFs. And because we were early in this space, we've been focused on the concept of debasement and protecting yourself from debasement since our inception. Obviously, in crypto land, the primary way you do that is through Bitcoin, but it's not the only way you can do that. Gold has been providing that hedge for a long time. Other metals and other assets have been providing those sorts of hedges for a long time. When we met the team at Proficio and Bob will provide the background, we were just incredibly impressed by the depth of their expertise around this very topic, by the sincerity of their concern about this and the view that every portfolio needs to hedge against this exposure. And they have a strategy that allows people to do exactly that. So it was wonderful to be able to partner with them and bring Bepro, our debasement ETF, to market. I think it's an incredible tool for investors.

**Bob Haber** (2:15)
Matt, thank you. Thank you for that. And Felix, thank you for the invite on the show. Yeah, a very brief history of Proficio. We're about 12 years old. We're a multi-family in office. Started with two families, my family and my partner, Matt Lask's family. And we've grown to multi-family and have somewhere in the range of about $7 billion under management. The thing that we do differently, I think two things we do differently. We're an asset allocation shop first and foremost, although we do pick lots of securities. But it's based on my long career of running and starting balance funds and asset allocation funds for Fidelity and my own asset management firm for a while.
The other thing that we do, which is kind of unique, I think, in our space is our families get only what the partners are buying. So to Matt's point, when we come out with a product or whatever we have our families buy, it's because my family or Matt's family is investing right alongside in the exact same unit or structure. And that still remains somewhat unique in the family office business.
Just to finalize on how we got into business with Bitwise, is we've been writing about gold and Bitcoin as a complement in a portfolio. And right around the time of COVID, when interest rates hit zero and 0.5% on the 10-year, we made an internal decision looking at all the fundamentals that we would remove bonds essentially from our portfolio, but we needed a diversifier for equities. And we did a lot of study, and we came up with gold, and we came up with Bitcoin. And somewhere along that path, we became very aware of Bitwise's great expertise in the ETF space and with Bitcoin, and a marriage was conceived there.

**Felix** (4:38)
Amazing. All right. So let's get into the brunt of things that you hinted at there, which is just this idea of portfolio diversification. Of course, the gold standard for so long has been this 60-40 portfolio of 60 percent equities, 40 percent bonds. And in light of whether you want to talk about the fiscal outlook, the debt outlook of global markets, global economies, a lot of folks have started to think about what that diversification looks like. And it's really emerged around this idea of debasement, which the term really got a lot of excitement over the last year. Of course, gold's been on an absolute tear. Bitcoin's had its moments as well. Matt, maybe I'll pass it to you. Just we'd love to hear about your definition of debasement. And what do you look like to actually define and track and measure that debasement? Because traditionally, of course, this idea of just correlations like dollar lower, traditionally, equity is higher.