Perth Tolle, founder of Life + Liberty Indexes, has made waves in the investment world through her management of the Freedom 100 Emerging Markets ETF. Since its inception on May 23, 2019, this unique investment vehicle has demonstrated notable growth, rising over 43% since its first trading day. In the current year alone, the ETF boasts a 9% increase. Unlike many of its counterparts, the Freedom 100 Emerging Markets ETF has consciously avoided investing in China, a decision rooted in Tolle's personal and professional experiences.
Tolle's journey in finance began in 2004 when she started at Fidelity Investments as a private wealth advisor. During that period, she observed a strong client demand for exposure to China's market. Despite this trend, Tolle refrained from investing in China herself, driven by insights from her upbringing in Beijing and an intuitive understanding of geopolitical risks. Her approach was further influenced by clients from Russia who equated investing in their home country with funding terrorism.
The Freedom 100 Emerging Markets ETF's strategy starkly contrasts with other market players like the iShares China Large-Cap ETF, which tracks major Chinese stocks and has gained 19% this year. Tolle's steadfast exclusion of China from her portfolio aligns with her belief that China's capitalist model is unsustainable.
"I think the thinking used to be that their capitalism would lead to democracy," remarked Perth Tolle on CNBC's "ETF Edge" this week.
Her perspective is shared by industry figures such as Tom Lydon, former head of VettaFi, who acknowledges the risks associated with Chinese investments.
"If you look at emerging markets… by not being in China from a performance standpoint, it's provided less volatility and better performance," noted Tom Lydon.
This cautious stance toward China is not without reason. Tolle argues that without democratic reforms, China's economic growth faces inherent limitations.
"Without that, the economy is going to be constrained," said Perth Tolle.
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