And welcome everyone to another Smart Money Circle episode.
I'm Adam Sarhan. With me today is Octe Kavrak,
who's the Director of Communications and Strategy at
Leverage shares with approximately 2 billion in AUM.
Octe, thank you so much for taking the time and welcome to
the Smart Money Circle. Thanks a lot for the invite
Adam, really happy to be here. So Octe, I always like to begin,
can you please tell us a little about your story and how you got
to where you are today? Yeah, sure.
Absolutely. So actually leveraged shares was
my first, let's say, foray to the ETF space, right.
So I studied finance in college. My first job outside of
university was, you know, working for IBM.
So I was working within their corporate finance department.
I spent about a year and a half there.
So it was a lot of stuff regarding like, you know,
financial statements. And, you know, I realized at
some point that that part of, you know, the entire finance
industry isn't very interesting for me.
So I mean, I got, you know, exposure to a lot of different,
a lot of different, you know, things that you can do within
the company. And then you with huge
corporations like that, you almost realize that it's almost
little entities or smaller versions of that entire giant in
different countries and different geographies.
So after I spent some time at IBMI, realized that maybe, you
know, I should try something else.
And then I went into sort of the brokerage business.
So I joined a company called the Jiro, which is one of the
biggest pan European brokers in Europe.
And I joined that firm when they were still, I would say at the
startup stage. So it was about, let's say 50
people at the time. They were just getting started.
I don't even think they had like a proper like business plan in
place in terms of where they, you know, found their niche or
where they wanted to be within a few years.
But, you know, Fast forward a few years, you know, it caught
on like wildfire and they were taking on clients left and
right. And it turned out the brokerage
business, especially in Europe was really interesting because
if you're, let's say, a retail investor right in the US, you're
very accustomed to things like, you know, fractional trading or
being able to open up a brokerage camp for just a few
dollars. And in Europe, that wasn't the
case. I would say for, you know,
probably up until five years ago, you know, you had to have
at least 10K to open up like a brokerage account.
There was like just a lot of hoops you had to go through to,
to make an account. So these types of neo brokers
sort of started proliferating, I would say all across Europe
probably about five years ago. And then it really took off
after COVID. And I, I basically saw that
entire growth phase and I saw how more and more retail
investors, you know, on this side of the continent, we're
getting more involved in active of trading.
And yeah, ultimately the company made an exit.
They were brought out, they were bought out by a, a German firm.
And after that I joined a bank, which was an Italian bank, so
unit credit. So it's like going from a big
corporation to a startup and then going back to a big
corporation. And then at the bank, that's
where I got my ultimate confirmation that, you know, I'm
not a big fan of like the big corporate sort of environment.
I like, you know, helping build things.
I like, you know, being able to do multiple tasks.
I'm, I'm not the kind of person that's, you know, keen on doing
the same thing every single day and being like a specialist just
in one thing. And during my time at the bank,
I, you know, I was contacted by who's now the CEO of the
company. And, you know, I saw a job ad
for an up and coming ETF company at the time.
They just had a few employees. They just had a few, you know,
products already listed on the London Stock Exchange.
I wasn't really, you know, familiar with the entire ETF
space, especially in Europe. So I was like, OK, this sounds
pretty interesting. Had a few conversations, had a
conversation with the CEO and and yeah, I guess the rest is
history. Wow, what a great story.
I love that. So I love also the fact that you
knew what worked for you and you also learned what didn't work
for you. So you did more of what works
and less of what didn't. That's a great way of of getting
there. Yeah, I mean, I guess it took a
second try at a big corporation to sort of confirm the fact
that, you know, it's not the right environment for me.
But ultimately, I think I, I know the kind of environment
that I want to work in that's, you know, so important for
anybody, you know, that's willing to progress in their
careers within a certain firm because, you know, certain perks
and certain items are nice to have us.
But if you don't ultimately enjoy where you work and what
you're doing, then all else you know at some point becomes
pointless. Yeah, I couldn't agree with you
more. All right, let's talk about
leverage shares. Please tell us about your
business, what you do and some of your competitive advantages.
So leveraged shares is best known for a concept called
leveraged ETFs. So leveraged ETFs basically
multiply whatever a normal ETF does by a factor of two or
three, right? So, you know these have existed
for the better part of two decades in the US, let's say the
NASDAQ 100 goes up 1%. The leveraged version of that
would go up either 2 or 3%. So we took that concept and
applied it to single stocks, which had never been done
before, right? So we're the first company
globally to launch what's called single stock leveraged ETFs.
So when you think about a product like 3 times Tesla or
inverse 2 times NVIDIA, this concept basically started out in
Europe. You know, we were the first
company to to do this. And we initially started out
with about 8 products, I believe.
And they were on relatively, I would say stable companies, but
you know, not so volatile names. So think of names like Walmart
and McDonald's. And I would say initially it was
a very slow burn, right? So the uptake was quite slow.
People didn't know how the products work.
There's alternative versions of, you know, trading with leverage
in Europe. So a lot of people thought that
there wasn't really a need for these kinds of products.
But ultimately, you know, as as time went on, people started to
realize that it's really an effective way to get a certain
type of exposure if you understand how the products
work. And, and we've been building the
business since then. So we started out with eight
products listed on one exchange. Fast forward six years, we have
over 180 products listed on the biggest exchanges in Europe.
We currently have the most traded ETF on the London Stock
Exchange, which is triple leveraged Tesla.
And honestly, I'm sure nobody could have foreseen this like 5
or 6 years ago when people were, you know, calling these
products, you know, pointless or, you know, they, they thought
there was no need or no niche for such products in the market.
So it's it's been a ride. I love that, I love the vision
too and being able to see something and test it and if it
works, great. And like you said, you never
know how high or how strong it can be.
So let's talk about attic and income.
I know you do some other things as well.
If you don't mind, please share all that.
Yes. So we have AI would say pretty
strong pedigree in terms of ETF background.
So the CEO and the owner of the company is José González.
So he is no stranger to the ETF game.
He was one of the Co founders of a big thematic ETF issuer called
Global X. So that was ultimately sold to a
Korean asset manager and leverage shares was, you know,
along with the Co founders, Dobermar Kumborov and and Tracy
Grant. This is basically their first
European venture. So we started out with the
leverage products and you know, over time we realized that we
sort of, you know, we've we've specialized in being able to
launch a lot of products and we have a lot of flexibility in
terms of what kind of products we can bring to market and the
speed at which we can bring them to market.
So after the leveraged products, we introduced income options
ETFs in Europe, which was also first for the continent.
And then we introduced a white label offering, meaning we would
launch exchange traded products for other asset managers that
didn't want to go through the the hassle of launching their
own entire ETF business. So in Europe, those are, I would
say the core businesses that we're focused on.
And then in the US just a few years ago, we have a sister
company that launched a bunch of thematic ETFs.
So, you know, if you think of anything from cybersecurity to
generative AI, it has I think one of the widest ranges of
thematic ETF offerings. And the differentiator there is
the management fee, which for a lot of the different, you know,
themes or categories, it's the lowest management fee in the
category for many of them. And we also, you know, just a
year ago, we started launching 2X leverage single stock ETFs as
well. And you know, I'm really happy
to say that that a few of them have really caught on quite
well. And with such launches, you
know, you do need a bit of luck, right?
So with the certain decline of stock prices of certain stocks
like UNH, especially as of late, I know there's been a lot of
chatter on Twitter. And as soon as we launched it,
the uptake was like nothing we've seen before.
I mean, I think it got to 100 million in AUM in something like
under 2 weeks, which, you know, for us was unprecedented.
It's a proven concept. So at this point, we know what
we're good at. We know what people know what's
best for. So ultimately, we're just going
to keep addressing that demand in the market.
And you know, I think there's no better signal of demand than
people voting with their money or them investing into your
products. And we've only seen, you know,
that those investments go in One Direction that's up over the
last few years. And that's been really promising
to see because I can tell you the first few years were not
very pretty. And it's only, it's only, you
know, taken off probably the last few years.
So it's really satisfying to finally hit that inflection
point and and see the business really grow.
I love that. So let's talk about risk
management out there. What are some lessons you've
learned about risk management? How do you handle risk?
And anything you want to share about risk management, please?
So risk management from an ETF issuer's perspective is even
more important when you're involved in the kind of business
that we have, which is leveraged ETFs, right?
Because the more exposure you offer to the end investor, the
more careful you have to be on your side to make sure that the
product is functioning properly. So there's a few perks with
leveraged ETFs, which is this thing called daily rebalancing.
So basically, if the stock goes up, you have to rebalance by
buying or getting more exposure to the underlying instrument and
vice versa. So what that means is that if,
let's say the underlying were to drop by a large amount, then you
would, you know, ultimately be on the hook if the ETF were to
lose, you know, let's say it's full value.
Because in theory that is possible, right?
So as a company, we have to make sure that we have the proper
risk management measures in place that if something were to
happen, you know, we have the proper, you know, sort of
procedures to start taking action as soon as possible to do
what's called an intraday rebalance just to try to ensure
that the product doesn't go below 0.
Or, you know, investors, obviously with an ETF, they
can't lose more than they're invested.
But at the issuer level, we also have to really have to have the
proper precautions in place to make sure that that we do
everything we can to curtail or minimize risks when an asset
might drop drastically or have like a big gap down with some of
these products. So risk is it's not part of what
we do. It's a major part of what we do,
right. And the, the good thing about,
you know, controlling risk, especially with regulated
products like ETF's and ET PS is that you have a lot of
counterparties that you have to please.
So nobody's going to allow you to do like a 5X levered version
of GameStop or something like that because the risk is just
too high, right? So the exchange will probably
have issues with it. The market makers, they won't
want to price it there, They won't want to take on that risk.
So there's, there's a lot of checks and balances within the
industry itself that you know, make sure that, you know, we're,
we're doing everything to make sure that the end investor is,
is safe with their investments ultimately.
Yeah, I love that. That's really, really powerful
because like you said, 2X3X all of a sudden now leverage could
work, you know, for you or against you.
So it's really important to to respond.
Exactly. So in the US that the latest
regulations say that you can only go up to 2X in terms of
leverage DTF offerings. But in Europe you know we can do
all the way up to 5X and we do have a few 5X leverage ETFs or
ET PS. So we have 5X NASDAQ for
example, we have 5X Magnificent 7 exchange traded products.
So it's it gets pretty wild on on on this side of the pond.
I definitely could imagine. All right, let's talk about some
timeless lessons. What are some timeless lessons
you've learned along the way that you'd like to share with
the audience? I.
Mean you pick a category and then I can share a lesson around
it. But I guess if, if we're talking
about maybe, I guess this applies to both my personal life
and, and my profession is probably just adaptability or
just being able to just adapt to different things, different
environments, right? Because just to give you an
example, you know, I remember of just a few years ago,
programming and coding, that was all the rage, right?
People were saying, if you get a job in programming, then it's
it's future proof. And then you're going to be set
for the rest of your life and things like that.
And all of a sudden you have major CE OS like like CEO of
NVIDIA and AMD coming out and saying that, you know, it's not
that important to be able to program anymore because you can
put a lot of that legwork to, to AI.
You know, ChatGPT can do a lot of it on its own.
And obviously it has a bunch of alternatives out there.
So if I were to, you know, hone down on one key message that has
really helped me over the years is, is being able to adapt.
Because if I've learned one thing over my career and life is
that the only constant is a really is change, right?
So even for me on a personal level, five years ago, I never
thought I'd be where I am right now.
Five years from now I probably, you know, will be very surprised
to see where I ended up because it could be in a different
industry, could be in a different position, it could be
a different content, who knows? Absolutely love it.
Yeah, it's evolved, you know, evolution, it's change.
It's adaptability. Absolutely love what you're
saying. All right, let's talk about the
other side of that. What are some timeless mistakes
either you've made, you've seen people make, and how do you
learn from them so you don't keep repeating them?
Yeah, I think mistakes are also equally important, right?
So because sometimes the best lesson is to make a mistake and
to learn from it, because people can give us advice and, you
know, tell us like the know hows or the best or the best
practices all day long. But until you live through it
yourself or until you make that mistake or until you put in that
losing trade, you know, until you experience it first hand and
have that feeling of regret, you never truly understand, you
know, how to how to properly learn from from mistakes.
But I would say probably my biggest mistake over the years
probably has been related to, to, to not, you know, to not
really go for it, you know, to, to be a little bit more
conservative, right? So this could be, you know, it
could be with, with your relationship with your, with
your wife, with your partner. It could be picking a certain
university, it could be quitting your job and trying to start
your own business. And it could be a lot of things.
And, you know, if I do have one regret, it would just be not
taking sort of that bigger leap earlier on in my career and just
playing it safe for for quite some time Before, I would say I
was a little bit more aggressive in terms of the decisions I
made. But but yeah, those, those are
the decisions that I that I learned from because ultimately,
you realize that, you know, we all have a very limited amount
of time on this planet. It's like at the end of the day,
it's like whatever you achieve, it's going to be for yourself.
And at the end, if there's somebody that's going to, you
know, live through the most amount of regrets, going to be
you if you don't actually go for it.
Yeah, I couldn't agree with you more.
That is so, so powerful. All right, let's talk about
leadership. What makes a great leader?
What are some lessons you've learned about leadership that
you'd like to share with the audience the best?
Leaders that I've worked with are are the people that sort of
empower others around them and give them responsibilities, even
if they don't necessarily believe that those people are
ready for it, right? I've never been keen on working
with people that just tell you what to do or they think they
know it all. You know, I've worked with, you
know, a bunch of, you know, very high net worth, let's say
individuals across my various careers and bosses.
And one of the key differences that I've seen is that there,
there are a lot of personalities out there, right?
Some people can be, you know, jerks.
Another person could have the exact same background, could be
a really good guy and all of a sudden it's very easy and very,
you know, there's no effort in getting along with one of them,
whereas with the other, you can't even be in the same room
with them. So I think leadership is all
about, you know, putting other people 1st and helping, you
know, push them forward or moving forward together, rather
than, you know, putting yourself on the highest pedestal, you
know, as possible and, and just trying to tell or prove to other
people how good you are, how, how great you are, what you do.
Yeah, I love that. That is really, really, really
great piece of advice. So it's, it's, it's empowering
the other folks instead of trying to push them down.
If I hear. Absolutely, absolutely,
absolutely. I mean, especially nowadays
everybody seems to have, you know, sort of their own platform
and everybody likes expressing their views, right.
And then ultimately, we really do have to, I think, give more
credit to the people out there who actually do a really good
job of, of, you know, empowering a lot, a lot of people around
them or, or many people that they might know or they might
not directly know, rather than those that would do anything
possible to just, you know, to just amplify their own voice.
So I think that's very important.
Love that. OK, next question for you is
adversity. How do you handle adversity?
What are some obstacles you had to overcome?
Anything you want to speak about that subject please?
So I think adversity is adversity builds character.
So adversity is, is something we all go through and I think for
good reasons, like that's, that's what that's what builds,
that's what builds courage. That's what you know, we have to
know, we have to know adversity. We have to know fear.
We have to have gone through certain experiences to be able
to appreciate the good and avoid the bad.
So the way I deal with adversity is, is head on, right?
I would, I would say the one quality that still holds me back
from time to time is procrastination.
So I do like to leave the things that I don't want to do right
away. I just, I'm, I keep kicking the
can down the road sometimes. But what I've realized is that
the earlier you address it, the earlier if you face the truth,
the better off you'll be. You know, whether it's good
news, bad news, whatever, knowing early on is a lot better
than, you know, just expecting or fearing the worst.
That's that's something I'm 100% convinced of.
I love it. OK, beautiful.
Final question for you today Octe, is what is the best piece
of advice you'd like to give the audience or your 20 year old
self? My 20 year old self, that is a
good question because what I would, what I would say to
anyone you know younger than me or you know, even in their 20s,
is that don't put too much pressure on yourself to to know
it all or to try to know it all within a short span of time
because things always change, right?
Don't try to pick the perfect university.
Don't try to pick the perfect job and try to pick the perfect
career because you will evolve, evolve as a person, you will
change. You're going to go through
adversity, you might get divorced, you might get fired.
And all of those are going to build your character and they're
going to lead to certain decisions.
And ultimately, you might end up in a different place than what
you initially expected expected, but that different place might
make you happier than you might have otherwise been.
So a lot of things, I would say, most things in our lives are out
of our control. So as long as you're
disciplined, as long as you're you know kind to others and you
do what you know is right, then ultimately you should be OK.
So don't stress too much. I love it.
Well, Akhte, thank you so much for coming on the show, for
sharing some timeless lessons with us.
Congrats on all your success and hopefully we'll have you on
again soon. I would love to Adam, thank you
very much for having me on It's, it's been a pleasure.