Host Ryan Nauman welcomes Paisley Nardini, Head of Investment Strategy at Tema ETFs, to discuss how calm index-level markets are masking narrow leadership, rising dispersion, shifting rate expectations, and concentration risk in both equity and bond indexes. Nardini explains her multi-asset background and why today’s macro regime and stock-level volatility may create a more favorable backdrop for active management. They cover 2026’s “whiplash” move from expected rate cuts to hikes, subdued VIX versus spiking bond volatility, resilient earnings, and why investors often overemphasize midterms despite historically positive fourth-quarter seasonality. Nardini outlines where AI spending is expanding beyond semiconductors into infrastructure, power, data centers, networking, and healthcare, and emphasizes “prudent participation,” intentional diversification, and rethinking passive exposure that may no longer deliver true diversification.

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00:00 Welcome and Setup

01:56 Meet Paisley and Tema

04:46 Why Thematic Active

09:01 2026 Macro Whiplash

14:03 Consumer Resilience Puzzle

18:02 Midterms Market Impact

22:37 Credit Spreads and Bonds

30:06 Index Concentration Risk

34:44 Calm Index Hidden Dispersion

37:08 Next Wave AI Spending

42:15 Advisor Portfolio Playbook

46:12 Wrap Up and Resources

Ryan Nauman Host Views from 6,230: Welcome everyone to Views from

6230.

I am Ryan Nauman, your host.

Markets may look calm at the index level, but beneath the surface, investors

are navigating narrow leadership, wide performance dispersion, shifting rate

expectations, and questions about whether the enormous investment in AI will

ultimately produce attractive returns.

At the same time, the AI opportunity is expanding well beyond semiconductors into

power, data infrastructure, networking, healthcare, you name it, and the

other parts of the physical build-up.

Well, joining me to make sense of this envi- environment is Paisley Nardini.

Paisley is the head of investment strategy at Temah ETFs.

We'll discuss what the headlines may be hiding, where capital is flowing within

the AI ecosystem, why today's market could favor active management, and how investors

can pursue emerging themes without losing sight of their core portfolio.

Paisley, welcome back to Views from 6230.

Such an honor to have you on.

We talked some time ago.

It was a fantastic conversation.

We got along for being you from Wis- Minnesota, I'm from Wisconsin, made

it through the whole conversation.

Let's see if we can do it again.

It's a big hurdle, especially during football season

Paisley Nardini, CFA, CAIA: I'm optimistic.

So cautiously optimistic at that good old investing

term, cautiously optimistic.

Well, thank you so much for coming on.

Really, it's an honor.

I'm glad I didn't scare you away after the first episode.

Can you just tell us a little bit more about yourself and Tema ETFs?

Paisley Nardini, CFA, CAIA Head of Investment Strategy Tema ETFs: Yeah, no, thanks for having me back, Ryan.

Really enjoyed our first conversation.

It felt more like fun than business, so always

back, like chatting amongst friends.

My background before I joined Temma, I've spent most of the last

decade in a multi-asset construct.

What that really means is we're talking stocks, we're talking

bonds, we're talking alts, and we're talking all of them together.

And I think that's what offers a lot of investors or clients that I work

with an advantage is not only have I sat on the allocator side of the table

at one point in my career, I've worked with advisors for really the last ten

plus years to understand, like how to build better portfolios, how to put the

pieces together, and what risks loom.

And not to say that in a, scary way, but there's a lot of opportunity out there.

And frankly, I think a lot of the industry really touched their

portfolio in the last decade.

I think the portfolios that we're sitting on today are the same ones that worked for

us back in the, you know, the 2010s, and we're in a very different macro regime.

So like my goal is working with advisors and investors to understand what is

the macro regime today, what does it mean for how you allocate assets?

And then within each asset class, whether it be stocks, bonds or alts, are you

really thinking about taking on risk?

Are you getting rewarded for it?

Are you doing so in a prudent fashion?

So yeah, really happy to be here today to talk about some of those

themes that you just mentioned.

But I'm also excited to have joined Temma during the third quarter this

year to lead investment strategy.

We have a lot of really great strategies as it relates to active

management and really thinking about the thematic parts of the market that

are driving a lot of the excitement that I'll share with you today.

Yeah.

Fantastic, Paisley.

And just to go back, it, the content you create, I follow your content a lot.

It's great, great insight research.

I learn a lot from it.

I think our audience does too, just about like you said, it's interesting

how portfolios probably are the same.

You know, maybe you shift a little bit from 60/40, but at the end

of the day, it's been working.

We've had this fantastic bull market.

It's working, so it's probably like, why change?

Why, why fix w- if it's not broken?

Paisley Nardini, CFA, CAIA: Exactly.

Yeah, so I think a- again, it's not calling anybody lazy or

complacent, and I think you, you hit the nail on the head, Ryan.

It's like it has worked for the last 10 or 15 years, I think what we've seen in the

last couple years is a lot of investors are discounting some of the noise.

Rates obviously backed up.

That hurt bond performance the last couple years.

I think a lot of people are saying, "Okay, the pain trade is over in bonds.

We're fine now."

AI trade, it makes sense.

So yeah, the more that we can shed light on how to more thoughtfully construct a

portfolio, I think we'll all be better off

Fantastic.

Let's go back to you just started at Thema ETF, so congratulations.

What was behind that decision to move to join the team at Thema?

And what- and how does the firm approach thematic investing differently than

maybe some other firms out there?

Paisley Nardini, CFA, CAIA: My philosophy is that we're in a once in a generational,

boom really in technology and innovation.

If we look back at, past periods where, the computer was introduced

and the internet I don't want, I don't wanna get too archaic and mention the

railroad and the electricity, but in s- in some respect, what we're looking

at right now, I absolutely believe will change the trajectory the world.

And I know that's a bold statement, but from these companies that are

developing these innovations, these technologies, and what we're starting

to see now is this trickle-down effect with the launch of even AI agents.

I'm excited to get my Christmas Tamagotchi of the Muse AI agent.

The millennial in me really appreciated that, so thank you, Mark Zuckerberg.

Exactly

Paisley Nardini, CFA, CAIA: all kidding aside, no way that in five or 10 years

you and I are, operating in the same way that we are today on this podcast.

Just the way that we dial into this podcast, the way that we prep

for this podcast, the way that you publish this podcast is gonna be

light years beyond where we are today.

And so this gives us, as investors, this opportunity to really say, like,

how can we lean into this and take advantage of this, the earnings growth

that we're seeing from these companies?

so all of that aside, why did I wanna join Temma?

Temma's at really the forefront of a lot of this innovation.

They're not taking a passive approach.

They're leaning into this full on and saying, where are the

opportunities in this market?

Where can we add alpha for our investors through, bottoms up fundamental research

of a stock selection perspective?

And I know that many of you are listening and it's I didn't think

active management worked anymore.

And you're right.

For the last, 10 or 15 years with the rise of passive, it's been really difficult

in active management to source alpha.

I would say the backdrop today is just starting to ramp up, and it is so ripe

for active management because of the dispersion that we're seeing at the

stock level in a lot of these indices, and we can get into that as well.

But- TEMA is thinking about not only like the Mag Seven AI-related

trades that so much have been focused on over the last couple years.

What are the offshoots of that?

What are the verticals, the supply chains?

Where are the bottlenecks that feed into those, you know, larger companies

that we're all very familiar with?

That's where the alpha opportunity is, and really understanding like

where we have supply dynamics that are constraining the production and

the purchases of, these chips, these softwares, whatever these tools are that

feed into this mega pool of AI demand.

And so whether it be, initially at the enterprise business level, we're starting

to now see trickle down into the consumer.

And you mentioned this in kind of your opening, Ryan, is like we've moved past

like the Nvidias and the Oracles and the Apples, and now we're thinking about like

who's actually processing these chips?

Where are the materials that go into these chips from a commodity perspective?

Are we thinking about the infrastructure build-out?

Are we thinking about the data centers?

Are we thinking about how all of these speak to each other?

And so these are themes that TEMA has launched and is looking

to actively provide alpha for investors in, and so that's what

got me so excited to join the firm.

I love it.

That's fantastic, Paisley.

And I agree.

So much to talk about there in terms of just the active side, active management.

I'm a firm believer doing some research.

There might be some spaces in the equity side where you just go passive

and you let it ride, but there's a lot of spaces that active approach,

you can get-- find some alpha.

It's hard.

That's why you gotta go to a good asset manager to find alpha, but it's

out there, and you can locate it.

And we're gonna talk about AI here shortly, but I think it's fascinating.

We, we talked so much about NVIDIA and think that's the AI

trade, but there's so much more.

If you're looking long term, who are the adopters of AI?

Maybe that's a longer term play, but a lot to talk about there.

I can't believe I'm about to say this, Paisley, but we're looking back at 2026.

I can't believe we, we've only have, like, three months left to go.

So now is that time to look back, review 2026 and where we

started, where we're at now.

How would you characterize the market's transition from changing

expectations of the Fed and interest rates to corporate earnings?

They're now doing most of the supportive valuations.

How would you characterize this transition of 2026?

Paisley Nardini, CFA, CAIA: I would summarize, if I were to say like

what really encapsulates where we've come from and where we're at today,

we went from starting 2026 with rate cuts on the table Two, three quarters

in, we're experiencing rate hikes.

And if that doesn't summarize exactly what's been going on, I would say if I

had to choose one word to describe this year, it's absolutely, it's whiplash.

And as an investor, that's taken us on this, this bumpy journey, right?

We started beginning of this year, like the 10-year Treasury was closer to 4%.

Now we're above 5.25%

as we record this.

Like that has meaningful implications.

Just bringing in a new Fed chair as well.

As we know, the US stock market and investors broadly have been

so tethered to monetary policy in the US since the financial crisis.

And the fact that now the rug has gotten ripped out from under us from a forward

guidance communication perspective with Warsh taking the helm, that invokes a

lot of volatility, and we're seeing that play out from bond market volatility.

We're always talking about the VIX, which is the implied volatility of

the S&P 500, which we can come back to that, but it is quite subdued.

It is not reflective of anything of cause concern under the surface, where bond

volatility has spiked in recent weeks.

And so monetary policy, bond markets, interest rates have really been

driving a lot of the volatility this year, even more so than equities.

And then of course, with all the geopolitical risks, the Strait

of Hormuz closure, oil price volatility as well it's still here.

It's not as front and center.

For some reason we've just become complacent with a, h- $100 barrel of oil.

It cost me $130 to fill up my gas tank.

I live in Southern California, so that's on me.

But it's crazy.

And so where have we come from and where are we today?

I think we've just this…

we talked a lot about last year, the K-shaped economy.

I think we've tried to push that nomenclature out 'cause people were

fatigued from hearing about it.

But it is this bifurcation in both the consumer level, the

hard data versus the soft data.

A lot of the hard data looks okay.

I know we had a weak employment report here recently for the month of September.

But for the most part, employment data has been pretty resilient this year, which

is w- is what has allowed the Fed to hike rates 'cause inflation has been sticky.

A lot of that driven by oil, however, so that might be transitory.

But from a broader picture, the hard data says, "Hey, it's not too bad."

Index returns, and we're up, double-digit returns for US equities this year.

But the soft data is horrific, and we, whether it's confidence or

sentiment, we're hitting historic lows.

And so you start to take a step back as an investor and question, "Who's right?"

And maybe neither side is going to be 100% correct.

It's somewhere in the middle, but somewhere in the middle causes

something to change, right?

I doubt the fact that, everybody who feels horrible was just making it up, right?

And so the pressures that we're feeling on the consumer level, the

concerns around employment, the concerns around of obviously inflation,

now we have the midterms as well.

And so I think ultimately what we're doing is we're giving way from-- There

was a lot of sector dispersion earlier this year, software versus semis.

They keep playing the tortoise and the hare game with each other.

I think all of this is gonna go to the wayside here in the rest of the

fourth quarter as we lean into the midterms and what that means from a

longer term investment perspective.

So it's a lot.

But I do think the one lining in all of this is that fundamentally

speaking, many sectors within the S&P have seen resiliency and a

continued growth in their earnings.

And that's why today we can sit here with all of this noise and

uncertainty and volatility and say, "From a valuation perspective,

these sectors are not, overbought.

They're actually quite attractive."

And that becomes an increasing-- increasingly important technical

indicator to look at bond yields start to rise, 'cause that goes back

to my asset allocation background, is with bond yields rising, equities

start to look less attractive.

But from a valuation perspective, 'cause their growth is so strong,

they still look pretty good.

So I'll pause there.

That's a lot, but it's been a whiplash of a year is how I would summarize it.

I think that's a perfect summary there, Paisley.

There's so much to unpack there.

I'm really glad you brought up the macro side first.

It's so interesting to me that, yeah, confidence, that soft data that you said,

consumer confidence is, earlier this year was at its lowest point in decades, maybe

ever, yet consumers continued to spend and markets continued to rip higher.

It, it, which really doesn't make sense.

A lot of times you think, well, consumer confidence is tanking,

consumers are gonna stop spending.

But that's not the case.

They continue to spend, they continue to be resilient.

Markets continue to be resilient.

Yeah, so how do you…

And we're gonna get to this more, but how does an investor or financial advisor

look at that and say some of the data is sell- saying a completely different story?

Paisley Nardini, CFA, CAIA: Yeah.

So this goes back to, and this is not meant to be a cop-out or just a, a lazy

way to think about how to allocate assets, but we're in the midst of, like I said,

a massive renaissance as it relates to upside and growth potential within the

stock market, just due to the AI theme broadly across sectors and industries.

But you marry that with where mortgage rates are today and where interest

rates are and where gas prices are and food prices and all of these things

that are pressuring the consumer.

You can't have the economy do really well all of us suffer.

At some point we're gonna stop spending, and I think a bit of what's causing--

'cause I have this conversation every weekend, every restaurant's full,

every flight is full or oversold.

So people are traveling, people are dining out, people are entertaining

themselves, they're going and having fun.

I think a bit of that is the wealth effect, because portfolio values continue

to go up Housing prices, even if they've gone a little bit sideways, have had a

massive rally over the last, 10, 20 years.

so I think a lot of people are saying, "I have credit cards that I can use at my

disposal, but I have this wealth backdrop from my house and from stock market."

And if you look at the share of households' investment within

equities specifically within the market is at historical highs.

So that kind of gives us a little bit of reasoning perhaps why people keep

spending, is like they're looking at their portfolio values and they keep going up.

So to them, that means they have money if they need to access

it, at least they think they do.

So I don't know.

I would say there, there's a lot of uncertainty ahead of us.

And so the, the way that I think about it is, again, going back

to how do you allocate then?

Paisley Nardini, CFA, CAIA Tema ETFs: How do you make an investment

decision with all this noise?

I like to coin this prudent participation.

How can you participate in a way that's thoughtful, you know

what you own and why you own it?

And that's goes back to that message on active.

And when I say active management, it doesn't always have to mean, I hold this

uber-concentrated bottom-up portfolio.

You can be active in how you're thinking about even getting factor exposure.

Paisley Nardini, CFA, CAIA: I'll give one example.

This has come up a lot recently because a lot of comparisons in

the market are j- always the market cap versus the equal weight, and so

many investors invest in the S&P 500 equal weight as a way to diversify

their large cap concentration risk.

great in theory, but in practice you're picking up a midcap value

tilt and you're weighting American Airlines the same as you are Nvidia.

As someone who's recently been a passenger on American Airlines, if I

had a dollar to put to work, I'm giving it to Nvidia, not American Airlines.

So again, being thoughtful and intention- intentional in how you allocate is another

way to just think about being active.

So I think you, you stay in the market.

There are plenty of fundamental reasons that we are not in

the ninth inning of this game.

but you do so in a way that you're just, again, you understand

what you own and why you own it.

That, that's fantastic.

That's great advice, piece of- especially the equal weight

versus cap weighted argument.

It's a

very…

And I haven't thought of that way putting it that way, so that's very eye-opening.

It's a good way of thinking about it.

So let's talk real quickly about the midterm election.

Unless you're living under a rock, you see it every day, headlines, commercials, ads.

They're coming up whether we like it or not.

How much weight do you think investors should place on the current

environment and the midterm elections?

Do we put too much weight into it?

Does it…

Should we just kind of, it's like a blip?

And how do we focus on the long term?

Paisley Nardini, CFA, CAIA: We put too much weight on it from a negative sense.

Investors, whether it be elections, politics broadly, geopolitical risk,

war, it's not to under- under things on their own, but as it relates to

the performance of the stock market, we historically place way too much

emphasis, weight, and thought on these being catastrophic for our portfolios.

I would say actually the opposite is true for midterm years.

So we actually have some tailwinds, at least what history would tell

us as it relates to the midterms.

So

negative returns, while the fourth quarter has been quite positive.

So I preface that with we've actually had a pretty strong year

thus far, so maybe take what I'm about to say with a grain of salt.

But historically speaking, the fourth quarter in a midterm year

has been positive almost 90% of the time going back to 1940.

So seasonally speaking as well, irrespective of midterms,

fourth quarter tends to do well.

Small caps, for what reason, tend to do well also at the end of the year.

So we have a lot of seasonality and tailwinds, I would say, at our back

as it relates to this, and then you pile on the midterm as well.

And we're looking at right now at least what some of the prediction

markets are pricing in is a g- expected to be a gridlock.

And so a lot of people might hear gridlock and think that's

of course gonna be negative.

There's uncertainty, there's people, fighting, different views.

Oftentimes what that means is that it just does-- there's not gonna be any

massive legislation, regulation that's put forth between now and the election.

so what that can actually mean is positive for stock market.

And so there's some other people out there that have dug way more into this from a

data perspective, and I encourage you guys to all go out and read that, especially

if you have clients that are calling you that are concerned about midterms.

"We gotta get in the market, we gotta get out of the market,"

whatever their views are.

Historically speaking, from around this time through the end of the

first quarter is pretty strong.

So I think, again, going back to your question, Ryan, we're

placing too much emphasis on the midterms in a negative light.

We should actually be looking at this as an opportunity to say, given

all the strong fundamentals behind us and given the fact that we're

likely headed for a gridlock it might be a good time to actually put

some capital to work before year-end

Yeah, I agree.

I don't necessarily think gridlock's a bad thing.

It kinda keeps everything maybe obviously in balance so we don't go off

the rails one way or the other, which,

Paisley Nardini, CFA, CAIA: The other thing I might mention, though, is I

would expect a lot of volatility the technology sector because there's

so much scrutiny right now on both sides of the aisle around regulation

on AI and technology broadly.

Also a lot of scrutiny around data center build-outs.

So those two topics are gonna be front and center, and they might impact stock

prices throughout the next couple weeks.

I think overall it's kind of a bipartisan agreement that technology is here, and

it's here to stay, and we need to be competitive with other countries, i.e.

China.

and so I think everybody wants to do this, but they want to do

it correctly and appropriately.

And so there might be some volatility within that sector or industry.

And then healthcare is actually a, a sector that we are quite bullish on,

especially coming into this time of the year from the midterm perspective.

There's opportunity, especially as it relates to AI advancements in

drug discovery therapeutics and we actually think that this is a sector

that's been maybe oversold the last couple years and is pretty ripe

for some change in the next couple.

So that's a, a sector that we're focused on.

I'm glad you brought that up because it, volatility, yes, it can add some angst

to investors, but also opportunity, and it goes back to what you were talking about

being prudent, prudent participation.

You might be able to participate and, you know, give you some opportunity to

buy in maybe on some of these expensive AI names with the volatility, so

Paisley Nardini, CFA, CAIA: Volatility should be seen as an

opportunity within reason, of course

Yes.

Fantastic.

Lastly here, real quickly about the, finish up the talk on the economy.

Credit spreads, you talked about yields.

We're at, you know, as we record this, over 5.25

on the 10 year, and we've…

Doesn't look like it might be slowing or, or a ceiling there anytime soon.

But credit spreads have remained relatively contained despite

all the angst out there, all the chaos, all the uncertainty.

Credit spreads don't really seem to be signaling anything on the horizon.

What do you think they're telling us about the underlying health of the

economy, and what kind of movement would cause you to become more concerned?

Paisley Nardini, CFA, CAIA: Yeah, so credit spreads have historically

been viewed as a leading indicator for deterioration in the economy.

And for many reasons, which we don't have time to get into today, the

last, five, 10, 15 years, just the composition of the credit indices at

large have evolved fairly meaningfully.

And so I would say we should take it with some grain of salt

that a credit spread widening or tightening is the end-all be-all.

So I would just preface with maybe less valid than it was, say, 10 or 15 years

ago in how we looked at credit spreads as a, an early kind of leading indicator.

With that being said, I think credit spreads are reflecting the

underlying resiliency that a lot of these stocks are experiencing

from a fundamental perspective.

Balance sheets are strong, cash ge- generation is strong, and the

margins are improving significantly.

I think that's a big part of what's driven a lot of the

recent tailwinds in performance.

And so credit spreads are not widening 'cause, as we know, credit spreads

are, have a fairly high correlation to the overall kind of equity beta.

And so because we're seeing resiliency in equities, we're also seeing resiliency

within the credit spread component.

Right now, investment grade spreads are, sub 100 basis points over Treasuries.

High yield is around 300 These are in line with kind of average levels.

They're not cause for concern.

If you have somebody listening that lives and breathes credit markets,

they're probably pulling their hair out as I say this, saying "Oh, spreads

have widened the last couple weeks."

Yeah, they've widened a bit.

They've gone from, 60 to 80 basis points or 270 to 300 basis points in high yield.

But if you back out and kinda look at what's cause for concern, it's not

really till investment-grade credit spreads maybe get closer to 150 or

200, high yield spreads maybe closer to say, four to 500, that it would

be meaningful enough for me to start saying "Yes, this is a warning signal.

There's likely to be deterioration that's now being priced in

through credit spreads."

But for the time being, I would say pretty quiet on the Western front there.

I do think the one part of the credit market that'll be interesting is, of

course, all of the hyperscaler debt that's being issued, and what that means just

from the composition of these indices.

'Cause as we know, fixed income indices are weighted by outstanding debt issuance,

and so you'll start to see some of these mega cap companies become a increasingly

large component of the indexes.

And they, as we've seen in the equity market, can drive the composition of the

indexes from a concentration perspective.

So that's something I'd be more concerned by.

And then I would just say, broadly speaking, with the backup that

we've seen in yields, income looks kinda good right now.

And I…

it's crazy to say that but there's a bit of an asymmetric payoff profile within

fixed income and bonds broadly, whereby, yes, could rates back up from five and

a quarter to five and a half to 6%?

Absolutely.

Could rates, decline from five and a quarter down to four and a half to 4%?

Absolutely.

And so the tailwinds from a starting yield perspective and a duration profile

would provide pretty attractive upside potential in holding some of these bonds.

And then you start to compare again to the yield that you're getting from

equities, not just a dividend yield, but the earnings yield on equities.

Bonds don't look too bad.

And so I would, as an investor, I would be looking at, as…

if we s- if we stay here, go a little bit lower and everything's

fine, no cause for concern.

we start to see yields, like the 10-year treasury, back up to five

and a half or even get closer to six, that's where I think we

start to see pressure on equities.

And we've already started to see over just the last two weeks a lot

of strategists and individuals in the market coming out and saying this

is a buying opportunity for bonds.

I felt that way earlier this year and look where we are today.

So maybe it's still a little bit early, but it's definitely front and center

and something that we should be thinking about over the next couple months

I'm glad you brought that up because I just wrote about it, about…

I, I agree bonds I think are attractive now at, with the, with the treasury at

over five and a quarter as we record this.

And, and the starting point, the yield starting point at five and a

quarter, it's a lot more attractive and less risk, I think, than when

it's at 2% yield in terms of duration.

So

Paisley Nardini, CFA, CAIA: the other thing I saw too, just to play devil's

advocate, is that, I mentioned some of these hyperscalers that are issuing debt.

Many of these are highly rated mega cap companies.

What are the chances that they're gonna experience default, knock on wood?

But if you're getting paid over that already attractive Treasury yield and,

an extra, 100 to 200 basis points for high quality debt, kinda feels like a

slam dunk if you can lock in, 7% return through high quality debt issuance.

So that's again, it starts to make you rethink your broader asset allocation

nearing in on these yield levels.

And like you said too, there's some opportunity there for

capital appreciation, so that total return play is definitely a, a

possibility there too, an opportunity.

And it's…

I'm glad you brought up about the, the makeup of bond indexes, like the AGG.

Usually with- I- talk about concentration.

Y- typically, the AGG is made up of all treasuries for the most part.

But that's interesting that you brought up that maybe there's a little shift there.

You invest in the AGG index, and all of a sudden maybe you'll get a

little bit more exposure to technology in the, in the corporate side.

So I'm glad you brought that up because

Paisley Nardini, CFA, CAIA: just 'cause you, you mentioned it as well now, but

the composition also this is something I posted about on X the other day, but the

composition of the ag index has drifted, and I would consider it to be meaningful.

Most listeners would probably say, "Eh, it's not that meaningful, Paisley."

But the composition meaning that there's just been a pretty large increase in

Treasury, bonds and notes within the ag versus securitized or mortgages.

I would say at the expense of securitized mortgages.

Credit issuance within the ag has drifted up just slightly, maybe from 20 to 25%.

you're buying the ag today, you're getting way more Treasury exposure

than you were 10 or 15 years ago.

And I mention this because ultimately, again bond indices

are driven by total issuance.

And as we all know, the reason that we're experiencing a lot of these

higher yields is because of kind of the fiscal dominance and the increased

issuance at the Treasury level.

And so again, is this something that people are paying attention to as they're

allocating portfolios for their clients?

Probably not on a daily basis.

But it's something that we should actually be thinking about because

maybe you're, if you're pairing your ag exposure with Treasuries as well

you're probably doubling down on that.

Well, basically, it-- so we, we don't talk a lot about

the concentration in some of these bond indexes like the AGG.

We all talk about it on the equity side and the concentration, so I think that's

a perfect spot s- to talk about, you know, the top 10 companies now represent

close to forty percent of the S&P 500.

So I also feel like we should probably focus that on the bond

side too, because, you know, we don't wanna be overly concentrated

or have a bunch of overlap there.

But how should investors determine whether that concentration on the equity

side within, whether it's SPDRs or just general index, is intentional or simply

an unintended source of portfolio risk?

Paisley Nardini, CFA, CAIA: It's probably not fair of me to make this

assumption, but I'm gonna say it.

I think many investors have become very complacent because of the returns that

we've seen, and rightfully if you don't have clients calling, if every year

you're posting 15 to 20, 25% annualized return in your S&P indexed exposure,

like why fix it if it's not broken?

the concern for me is less so from a return perspective, and

it's more in that risk lens.

And so obviously being in concentrated is gonna give you more risk.

But also too, the contribution of the top 10 names, those 10 stocks

have started to see higher levels of volatility on an individual basis as well.

so I think it's helpful 'cause I think a lot of us just assume that,

concentration risk has been rising steadily over the last, 10, 20, 30 years.

It is what it is.

It's doing so in a linear measured fashion, so there's

nothing t- to be concerned by.

If you actually look at some of the visuals, the concentration of the

top 10 names in the S&P 500 kind of bounced around 20% for decades, and

it wasn't really until the last, five or 10 years that went exponential

and has now doubled from 20% to 40%.

So it was a pretty quick re-rating from a concentration perspective,

which is why I think a lot of people just haven't paused to reflect.

We hear the number, but what does it actually mean?

I do think, too, the amount of information and the changing of leadership within the

market broadly is moving faster than ever.

We've all seen that, that visual I think that shows every decade the

top 10 names of the S&P over time.

We know it changes.

We're so familiar with that changing slowly.

One name falls out, and then two years later another name falls

out, another name comes in.

I feel like the last 36 months, the leadership is changing.

We went from the Mag Seven to the Lag Seven.

We're back.

Is software in?

Is semis in?

Is it not?

The amount of information that's coming in is causing a shifting of regime.

And so you're hyper-concentrated in these names with increased volatility,

your portfolio is taking on more vol.

And I'll pair that with another topic I talk a lot about, the

correlation between stocks and bonds has been positive since 2022.

so if your vol-- if your equity sleeve is carrying higher vol than it has in

the past and your bonds are no longer reducing that vol, you're just looking

at a bumpier ride for your clients.

And so that really comes back to like, why do we need to talk

about the concentration risk?

Why does it matter?

really trying to reduce that experience, I would say, of your clients of having to

hit every bump on the road along the way.

How can we make it a smoother journey for them?

so this goes back to being intentional, being thoughtful and it's not to

say get rid of all passive exposure.

There's a reason that can be beneficial from a cost perspective.

Pay for some of the active management when you can reduce your costs in passive.

But I think clients that have completely relegated to passive

and are just saying, "It's fine, the market will work itself out."

The market's resilient, it might but really understanding what's

driving the risk within that and are you comfortable owning that?

Yeah.

It's all about that risk.

Are we getting compensated enough for the risks that we're taking on?

And it depends on the client, the investor, and who it is.

But right now, like you said, over the past 10 years or so, we have been.

It's hard to go against 20% returns, double-digit returns consistently.

Paisley Nardini, CFA, CAIA: Yep

but like you said, I think now you said it spot on about the

correlations between stocks and bonds have increased, and so you gotta

go outside those areas to get some diversification and smooth out that ride.

So at the le- you know, surface, looking at the surface, volatility,

you've talked about volatility, can appear relatively calm.

You know, it doesn't look like there's a…

You talked about the VIX.

VIX is kind of in a range here, but the individual stocks have

experienced significant swings in performance dispersion.

The gap between top performers, bottom performers has widened.

What's creating that disconnect, and why might it favor, again, active management?

Paisley Nardini, CFA, CAIA: Something really interesting is going on, and

this was not my original findings.

There's a lot of other really smart people out there that have shared some

of these stats, and find it fascinating.

Would highly encourage people to dig into this further, but it's pretty

rare what's going on right now.

So at the index level, everything looks A-okay.

Returns are in, like I said, the double digits.

Volatility is exceptionally low.

then trying to understand, to your point, Ryan, like what's driving some of this and

I think a lot of it has to do with just the dispersion underneath the surface.

And if we really understand the composition of this, it's again, goes

back to that concentration risk of so few names are driving the index returns.

So why is this?

How is this?

How is that even mathematically possible?

And it really comes down to some of these higher beta names.

We talked about the leaders, the largest names have higher volatility,

and so they have higher beta.

And as we know, the S&P 500 has to have a beta of one, and the way that you

do that mathematically is that if you have high beta names that are leading

the index, you have to have offsetting names, which means negative beta names.

so when you pair something that has high beta and low beta

together, you essentially negate or you cancel each other out.

You reduce that offset.

And so what that means then essentially is you're getting an index level

that feels calm at the surface with very offsetting profiles underneath.

It's almost if you combine two assets in a portfolio, if they have

low negative beta or low negative correlation, you reduce the overall

volatility of your pro- portfolio.

Same thing here.

We're just talking about two different stocks.

and so I think that's what's really fascinating and why we're seeing like

so much noise and so much weakness underneath the surface and so much

dispersion is exactly for that reason.

So again, I think it's helpful sometimes to understand some of the

mathematical reasons behind this

Paisley, so much of the AI investment, we talk about AI, investing

in AI, and I'm afraid a lot of people just think buy Nvidia, buy the hyperscalers.

There's your AI troy- trade.

I think that's changing a lot.

We-- There's a lot of different layers to the AI trade.

Where are you seeing the next wave of spending and opportunity across the AI

trade, whether it's power, infrastructure, memory, data centers, healthcare?

You mentioned healthcare earlier.

Where do you think are the biggest opportunities there?

Paisley Nardini, CFA, CAIA: This is the most exciting part

of all of this, in my opinion.

And it's not to say some of the mega caps that have brought us to this

point in 2026 didn't deserve to.

They were wonderful, but that rising tide that lifts all boats is something of the

past, I think, because of the dispersion topic that we've discussed here.

So what's the next wave of AI spending?

This really comes down to where is there demand?

does that demand trickle down to?

'Cause as we know, there might be demand for, and I'm gonna

use an analogy here, a bike.

a bike just doesn't show up one day.

You have to put the bike together.

You need the chains, you need the handlebar, you need the

wheel, you need the seat.

And so as it relates to AI, where is there demand?

Where are these companies spending?

Where are consumers gravitating towards?

And then what are the bottlenecks down that vertical or that supply chain?

And it's those bottlenecks that become increasingly exciting as it relates to

the next wave of AI spending, because we know if there's demand up here, we need

to supply, to produce, and to deliver.

And that's where I think a lot of these companies have been kinda sitting on the

sidelines for years are getting a tap on the shoulder saying "Hey, I know we

told you last week we need, four chips.

Now we need 400 chips."

And so it's not only d- the actual production, it's how a lot of these

technologies speak to each other.

So another thing is too, another analogy is we- we're building the factories, but

we need to build the roads to allow trucks and cars to get into these factories.

And so that's a visual of how this kinda trickles out or bleeds down

into other parts of the market.

And whether it's photonics and optical, whether we're talking about the

electrification trade different parts of the supply chain itself moving

from chips into memory, all of the statistics that I'm seeing and maybe

I'm only looking at biased sources, just show continued strength and demand.

And I think, again, we're moving from what's been a enterprise business level

demand into more of a consumer demand with the launch of some of these AI

agents, and now a lot of our AI tools being at our fingertips, whether we're

opening our email or we're going into our brokerage account or we're on, any of

the online platforms that we're relying on a daily basis, AI is everywhere.

And the adoption rates are still extremely low.

I think I saw a statistic this week that globally we're

maybe sitting at 2% adoption.

We've just scratched the surface, I think from an analogy perspective as well.

I'll just stick on this theme, is thinking about, baseball innings,

and I think a lot of people are, third inning, fourth inning.

I think we're in the first inning.

Maybe we're still warming up in the batter's box.

But all of the excitement and emphasis that we're focused on today, I think we're

gonna be focused in shifting our attention elsewhere in three months, in six months,

'cause it's gonna be coming at us so fast.

And so as an investor, if you're just hyper-focused on whatever the index gives

you in these Mag Seven names, you're gonna miss so much opportunity and so

much of this life cycle and bringing this technology to market and this innovation.

So from a CapEx perspective, of course, the risk is that these

companies need to ultimately see a return on their investment, and

so that's where I would say the fear-mongering starts to take foot.

As of right now I think it's more just doom and gloom than anything

factual that should lead us to be cautious, on any part of this market.

I don't wanna say I'm, a blind AI bull, but I do think this is a once

in a generational opportunity to add crazy returns to our portfolio and just

see our lives change for the better

Yeah, I agree.

And it's also go back, it goes back to the active management piece.

I don't think it's one of those things where you can just throw,

invest in anything that is AI related.

I think you need to take an active approach because

there are risks out there.

I'm old enough to remember the dot-com era, and everything that had dot-com

shot to the moon, and then a couple months later we realized, well, maybe

that wasn't the best thing to invest in, companies that don't have earnings,

don't have cash flow, don't have product

Paisley Nardini, CFA, CAIA: That's a good analogy, not because I think we're

there, but because of it is not…

Now is not the time to have a blanket approach.

There are so many nuances and drivers from an investment perspective,

from a capital perspective, from an actual valuation perspective

that makes each of these unique.

And so if you apply a blanket approach, you have to just be comfortable

with the fact that there, there's gonna be some large drawdowns when

this AI trade broadly starts to take a different form, 'cause it will.

I don't think this is a technology that we build it and then we

just enhance it year on year.

I think what we're talking about today is green shoots of what we're

actually gonna be, like, harvesting in the next couple years for AI

Fantastic.

All right, Paisley, you've brought such great insight.

It's been a fantastic conversation.

We've covered a lot.

So what does all this mean for financial advisors?

You mentioned that investors or financial advisors should fix the core first,

which I think is fantastic, and then use themes as building blocks around it.

Really, what does that look like?

Sounds good on paper, but what does it look like, and how should

advisors think about, you know, the sizing, the positions, time

horizon, client suitability?

Paisley Nardini, CFA, CAIA: Yeah.

First and foremost, go back to what I had mentioned earlier is be thoughtful

and be intentional with how you're allocating your client's capital.

Know what you own and why you own it, and if you can't answer that,

maybe it doesn't deserve to be in the portfolio, or if it does, maybe

it deserves to be a smaller part.

there's so many things to be excited about in the economy right now, and I think

a lot of people might say, "Gas is six, seven bucks a, a barrel or a, a gallon.

That's not very exciting, Paisley."

I mean from an innovation perspective, from technology and advancements.

So if you're not leaning into that and getting excited about that and

having stories to talk to your clients about why you're putting their capital

to work in this part of the market.

So from a construction perspective, you said rethink the core and

some of that may be passive.

Again, this is not for me to say.

There's, there, there is a role of passive in portfolios, but complement that with

things that are actually diversified.

I think a lot of times, we might allocate to a, a quality

fund 'cause it's diversified.

Actually look at the c- the top constituents in the

funds that you're holding.

Are they differentiated?

Are they aligned with the themes that you're bullish on or optimistic on?

And just be thoughtful, too, around your bond allocations.

I think a lot of people have, that up to the experts sometimes, which is great.

You can have an active allocation, but for investors out there that have

gone passive in their bond portfolio, it's a really opportune time to

think about being active as well.

And again, that stock versus bond trade-off, that's a really hard decision,

and I don't think any advisor is too excited to make that active decision.

But diversification can be your best friend in times of uncertainty.

Yeah, I think that's fantastic.

And I often tell people, like, when I go to a party or a social, everyone comes up

and they ask me what I do, and I'm like, "Well, I'm investment strateg- whatever."

And they're like, "Well, what's the best stock to invest?"

And I'm so boring, Paisley, because all I say is, "Well, just diversify.

Diversification."

But it, it, right now it's so prudent.

Right now it's w- you know, the prudent thing to do.

International has been fantastic.

Emerging markets has been leading markets.

So, you

know

Paisley Nardini, CFA, CAIA: thing I'll mention which, not to get too cute with

this, but I think the easy decision was to relegate to passive index-based strategies

'cause you knew you were getting diversification and it was low cost.

Guess what?

You're-- It's-- Maybe it's still low cost, but you're not

getting diversification anymore.

so I think that's the biggest takeaway is, again, why did you

originally buy this in the portfolio?

Is it…

Is the thesis still intact?

And I think we can say for passive management, a core reason of having

low-cost diversification, you're no longer getting that diversification.

So that's reason enough to rethink the size and the role of it in a portfolio

He's like, I think that's a fantastic way of wrapping a

bow around this conversation.

I think that's a great way of ending.

And once again, we got through a long conversation and once it did

not get into an argument about Wisconsin being better than Minnesota.

So

Paisley Nardini, CFA, CAIA: Maybe in sports are the differentiator and maybe

the investment markets are the equalizer.

So

Ooh, there we go.

I like it.

Maybe we should maybe that can be the title of this episode.

Paisley Nardini, CFA, CAIA: exactly.

Thanks for having me

Yes.

Paisley Nardini, CFA, CAIA: pleasure

Hey, it's like, thank you so much.

I know you're busy.

A lot of new things going on over there, a lot of exciting opportunities, so

thank you so much for taking the time.

Where can our audience get more information about Tima ETFs?

Paisley Nardini, CFA, CAIA: Yeah.

T-E-M-A ETFs.com,

which is temaetfs.com.

We have a lot of insights and research that our incredible portfolio management

team is putting out on a weekly basis around markets, around, our

strategies, of course, some of these themes that we talked about today.

You can find me on LinkedIn and on X.

But would love to engage and love to help you if you're an advisor

think about how to allocate your portfolio for the next couple years.

Yeah, fantastic, Paisley.

And unlike what a lot of people may think, I actually do do some research

before coming onto these calls.

You're exactly right.

Temma does some fantastic content, a lot of great information there.

Highly recommend the site, so go ahead, take a look.

Thank you everyone for listening to this episode of Views from 6230.

You can watch all of our other episodes on the Views from 6230

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Thank you very much, and have a great rest of your week