At The Money: Investing in Freedom

Episode Summary

Executive Summary: The transcript combines Bloomberg show promos with a substantive interview on "freedom-weighted" emerging market investing. Perth Toll argues that civil, political, and economic freedoms are not moral add-ons but core drivers of business stability, data reliability, contract enforcement, and long-term returns. Her FRDM ETF excludes autocratic, high-risk countries and has outperformed major benchmarks.

Main Topics: Bloomberg weekend/news programming promotion (Priority: 2/5): Promotional segments introduce Bloomberg This Weekend, Bloomberg News Now, and Leaders with Francine Lacroix, emphasizing on-demand news, weekend context, and interviews. Freedom-weighted emerging market investing (Priority: 5/5): Barry Ritholtz interviews Perth Toll about the Freedom 100 Emerging Market Index and FRDM ETF, which weights countries by freedom metrics rather than market capitalization. Civil freedoms as investment risk factors (Priority: 5/5): The discussion links violence, organized crime, torture, terrorism, and disappearances to basic safety and the ability to conduct business, framing civil liberties as foundational to economic activity. Political freedoms and data integrity (Priority: 5/5): Toll argues that freedom of speech, press, due process, and judicial independence improve transparency, independent verification, and the reliability of government and corporate data used by investors. Economic freedoms and market performance (Priority: 5/5): The interview stresses property rights, rule of law, monetary stability, free trade, and limited government interference as prerequisites for entrepreneurship and long-term investment returns. Independence of the data providers (Priority: 4/5): Toll defends using Cato Institute and Fraser Institute data because they are privately funded and not subject to government coercion, which she contrasts with the World Bank's past index changes.

Key Arguments: Freedom-weighted indices avoid overexposure to autocracies that dominate market-cap-weighted emerging market benchmarks. Civil, political, and economic freedoms are interdependent; weakening one undermines the others and harms investability. Without press freedom and expression, investors cannot reliably verify data from governments or companies. An independent judiciary and rule of law are essential because contracts must be enforceable for business relationships to function. Economic freedom is the basis of entrepreneurship; if governments control occupation and commerce, people are not truly free. The Freedom 100 EM strategy is presented primarily as a return-seeking approach, not just an ethical screen, because freer countries are expected to outperform over time. The ETF's live performance is cited as evidence that the freedom premium can translate into real outperformance versus major benchmarks.

Data Points: FRDM ETF assets under management: over $2 billion - Toll describes the scale of the Freedom 100 Emerging Market ETF. FRDM performance in 2025: up 67% - Cited as evidence of strong recent outperformance. MSCI Emerging Markets Index performance in 2025: about 33%-34% - Used as the main emerging market benchmark comparison. S&P 500 performance in 2025: 17.9% - Used as a broader equity benchmark comparison. Freedom Index variables: 87 variables - Toll says these feed into the country-level composite score. Client usage of the strategy: 95%+ - Toll says most clients use the fund as a pure return-seeking strategy. Bloomberg This Weekend start time: 7 a.m. Eastern - Promotional segment for the weekend program.

Pivotal Quotes: "all the freedoms work together like parts of an automobile" — Perth Toll: Explaining why civil, political, and economic freedoms are all included in the index. "without freedom of press or freedom of expression, there's no independent verification for where any data... is accurate or complete" — Perth Toll: Arguing that political freedoms are essential for trustworthy investment analysis. "if you don't have the freedom to conduct business... then you don't really have freedom" — Perth Toll: Defining economic freedom as the foundation of broader liberty and investability.

Implications: For investors, the segment argues that freedom metrics can be a practical risk filter and alpha source in emerging markets. It suggests autocracy, weak rule of law, and poor transparency are not just ethical concerns but measurable portfolio risks.