E3: Music Royalties with David Vankka from ICM Asset Management

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This podcast is brought to you by Gensler Wealth. The information discussed today is meant to be general in nature and not tailored to your specific investing circumstances. This means that you should talk to your regular Gensler wealth advisor or your own advisor before acting on any information we discuss today. Nothing in this podcast is intended to be a solicitation and past performance does not guarantee future returns. We will discuss Taylor Swift on this podcast and Gensler wealth loves Taylor Swift, but you are under no obligation to love her as well. Today on Unlimited, we welcome David Banka, president and CFO partner and portfolio manager of ICM Investment Management, and more specifically portfolio manager on the ICM Crescendo Music Royalty Fund. We're going to talk about music royalties. What are they and why you want to know about them. Welcome, David, to the Gensler Wealth Unlimited podcast. Delighted to have you join us. Obviously, you and I go back 15 plus years back, back at one of our previous firms and fantastic to reconnect with you over the last number of years and learn about what you're doing here with icm, which is an interesting asset class that I don't think a lot of folks are aware of. And that's why we wanted to have you on and just talk a little bit about it. So before we get into it, just thanks and looking forward to the chat.

Thanks, Brian. And looking forward to being the leadoff hitter to your podcasting career and, and the great things Gensler is doing out there on the wealth management side. So, so happy to chat.

Thank you very much. Well, we'll see how this goes. This is a learning experience for all of us. This is our first live guest podcast after a few that we've done just summarizing some of our quarterly letters. So let's go way back to basics. You are running right now a music royalties fund or music royalty strategy. Can you just take us like, to, you know, Music Royalties 101. Like, how do songs generate revenue? How does music generate revenue for somebody and then ultimately for you? And how does this work as a start?

Great, great question, Brian. And I think a lot of people are genuinely unaware or just starting to learn about the industry a little bit. And if we take it way back, there was an era of the music space which was in rapid decline. We had a lot of piracy, we had Napster, we had people who had perhaps fixed CD budgets buying their CDs and then ultimately stopping. And. And what we saw was that industry losing revenue year after year. And then all of a sudden, along came a new idea. Which was streaming. And second with that was the initiation and proliferation of the smartphone and bandwidth. So nothing changed about how the industry gets paid. But it used to be one time payments, and now we get payments every time things are played. So since streaming has been growing so much and additional services are being provided out there, which we all own, that is creating more and more revenue sources for the industry. So with that backdrop, your question about how you generate money from music, it really comes down to the owner of the copyright or the intellectual property. And when a song is created, say Brian and I write a song together and then we record the song together, we have effectively two copyrights. There's one for the actual writing of the song, the music, the composition, and there's a second for the individual sound recording. And you'll hear the word masters kicked around. It's effectively a master sound recording. So the composition, or sometimes known as publishing, can be copied many times, covered many times, and each sound recording, though, is unique. And from those, what happens is anytime a song is played in this day and age, whether it's on your phone, on Spotify, on Apple Music, anything else, or if it's in the background of a restaurant, or perhaps it's in a movie or in a public performance, or it might be on your peloton at home, royalties are being created for this revenue, and that gets centralized and acquired by a couple of different organizations or groups, depending on the nature of the royalty. And they collect these royalties and then distribute them out to the owners of the royalties, which could be funds like ours, but can often be the individual songwriters or labels or the like. So that's the general genesis of it. And as you can imagine, there's, you know, hundreds and hundreds of pages of payment sources from all over the world from some of these services for any individual catalog. So it's not something that, that people could keep track of on their own, but because of decentralized collection agencies, which include performance rights organizations for the, for the writers, it makes it easier to administer and get paid your royalties over time. So that's kind of the high level of it. I hope that answers your question.

Yeah, no, that's great. And then maybe just dive into that collections piece. Like, you know, as you said, you've got all these different streaming services, movies, restaurants, elevators, the famous elevator music, like who's aggregating all the streams or the number of times a song is played and making sure that the pennies or the dollars get to the right spot and eventually down to the owners of that.

You mentioned Elevator music, that actually is a quite a successful genre. People will acquire it and it just plays forever. Remarkably. But with the organizations, I'll maybe just look at the songwriting side. So there's performance rights organizations in each country. Canada's is called SOCAN in the U.S. the bigger ones are ASCAP, EMI and C. CSAC and there's A. There's a fourth as well. And once you register with these groups, they're the ones that receive all the data, they collect the royalties. There's obviously small admin fee you have to pay and distribute it out to the individual writers on a quarterly basis. So they'll collect it, you'll receive a statement. There's some lag obviously, in terms of what you're getting paid for when you get paid, and they redistribute out these royalties. Similarly, with the distribution of the masters as well, there will be distributors who work with Spotify, Apple Music, everybody else to put their music up there. And you do have to work with a distributor of some kind to have your music up there, and then they'll let you know what they played over time. And as you know, as technology integrates into the business, there's always likely to have been some slippage over time where perhaps artists weren't paid all of their streams. So we're even seeing firms pop up like BDAP out of Vancouver who are trying to help people audit the actual information that comes back from Spotify or the others. So technology's really changing the game there as well.

Yeah, I would imagine. You know, the reams of data that Spotify and Apple music and other TikTok and other streaming services have on what gets played. It must be way easier today to audit this and collect what's due than in the past.

Yeah, that's right. And it's a massive data exercise, for sure. I think one other point with it that a lot of of us don't necessarily understand is that when you're listening on your phone, for example, through Apple Music, and you download it to your phone, that's not technically viewed as a download in the industry. It's still viewed as a stream because it's part of that subscription that's in there. So unlike back a number of years ago, where people would have to purchase downloads or buy their album for 999 on iTunes, when it's downloaded to your phone, it is actually still part of the streaming universe. And that's an area we've really seen a lot of growth and are pretty excited about.

So does that mean If I download it to my phone, does that count as one stream? And no matter how many times I play it, or if I download it to my phone and play it a hundred times, is that a hundred streams?

That's a hundred streams. That's right.

So even if you get it onto your device, the behemoths of the tech world are still tracking everything you do. There's nothing you can do to get away from that.

You're absolutely correct. There is still a market for people who are actually acquiring and paying the 99 cents. But obviously it's been diminishing rapidly as consumers got access to multiple services with tons and tons of content in them now for, you know, relatively low monthly monthly fees for what you get.

Right, okay. No, I see. So. So if you actually purchase it and you own it, the streaming stuff sort of stops and they get a royalty on what you paid for it. But if you're just using Apple Music and you download it, it's just part of the stream, whether it's downloaded or not. I think I get it.

Yep, that's right.

Okay, So I spent 20 years in the industry. Our listeners may have been around stocks and bonds and other assets for years or decades or more. And then we're trying to enlighten folks on other types of asset classes that might be valuable for their portfolios. And when I talk about music royalties and full disclosure, we do invest in music royalties funds and do invest in your music royalty fund. For folks that are listening. Some people say, wow, that's really interesting. And some people go, well, that sounds really weird, strange and concerning risky. I don't know, maybe again, back to basics, like why do you. Why did you start the fund? Or in other words, why would someone want to invest in music royalties? What makes them a good investment? Talk about maybe some of the unique characteristics relative to other asset classes. Just a little bit of the story to. To help folks understand why this may be an attractive asset class if they haven't sort of gleaned that already from just your first few answers.

When we started the fund and was prepping to start the fund, there were a handful of larger participants but limited transparency in the information that was out there. It's getting better. But now there's a lot of headlines that your listeners are going to see or hear in the Wall Street Journal about named artists selling. And they're doing it for the same reasons that we're doing it. A couple things, couple characteristics of it. In terms of individual portfolios, this is an asset that provides great Diversification benefits. It's got really limited correlation to things like the equity markets or stock market collapse or bonds or even other asset classes like real estate and the like. And one of the reasons for that, obviously, is that the main driver of it is much more so consumers listening and absorbing content. And when Covid first hit, people weren't stopping listening to things or watching things. In fact, they started to listen to more things and watch more things. Might have been different things than they did before, but it grew throughout that big stock market fallback in March when Covid first started. Similarly, even this past week, with the unfortunate nature of what's happening geopolitically over Russia and Ukraine, people are still listening to music. And none of that is going to be impacted by the stock market. I think, you know, a piece of that is also driven by that. Consumers are treating these subscriptions more like utility bills or consumer staples, perhaps much more so than, than discretionary luxury items. So that, you know, cutting off their Netflix or their Apple Music or their Spotify subscription or one of the seven others they probably have is not something that's going to come very early in the, in the spending cutback. So, you know, really, the broader economic conditions don't necessarily impact the revenue stream. So. So having that diversification benefit is really interesting to a lot of investors. The second part of it, I would say that that when we own the royalties, we don't own the underlying operating business per se. So you don't have the incremental risks of having losses in an operating business or having a real estate project that has cost overruns or takes too long. Once we acquire it, we start to get paid from these royalty streams, usually within three months on most of the catalog. So as a result of that, you own an interest in the, in the top line revenue, which sort of delimits the risk that you're going to have in the portfolio going forward. Now, naturally, any catalog might get listened to, you know, less than you expected or more than you expected. But ultimately, you know, you're not in a position where you're going to have to kick incremental capital in to shore it up. So there is a passive attribute to having that income come in, which is really attractive. The assets themselves, they, they have a very, very long lifespan. So there's a lot of obscure copyright rules down in the, in the US Where a lot of this was based. But for practical purposes, these assets, these royalties exist for the life of the artist, plus another 70 years for those that were done after 1978. So what that means is it's almost a perpetual asset in a lot of cases and it matches if you think of a pension plan or even someone's looking for retirement and has very, very long dated expense needs, this can match up to what their liabilities or obligations could be over time. So those, those are some of the key reasons and I think the last reason is, is just driven by the industry itself growing rapidly. Like we talked a bit about the change from, you know, the real turning point from CDs to, to streaming as one thing. And in the last couple years it's continued to go up. I think the reports where it was up probably around 25% year over year and we're discovering new platforms for this music to be played on and discovered on that didn't exist a few years ago. So Brian, you mentioned TikTok and TikTok has grown, growing massively and it's almost become the discovery place for music. Some people term it as sort of a post Spotify economy where individuals are getting, you know, individuals younger than us I'll say are getting their content and their discovery for TikTok and then going to Spotify versus the other way around. So you know, that's one example. We talk, we talk about the gaming side with Roblox and Twitch and others. Peloton's been a great one and these companies have to license the use of that music which for a little while they were a bit slow to do and then did. So they'll have to pay a licensing fee to the owners and then every time it's streamed or played then there's also those fees coming off that as well. So lots of different ways to generate revenue. There's lots of pent up content creation coming out of the video side where they need to license music to stream with Netflix, Disney plus, everything under the sun. So I'm sure we'll be sitting here a year from now where there will be another platform or two that we hadn't heard of before today that is, that is continuing to drive revenue for the industry. So, so there's some, some strong tailwinds I would say and a market where we're starting to see while there's been a lot of interest certainly and take up in the US and the UK it's interesting that over 50% of the global streaming revenue comes from those two markets and there's other markets that are later adopters that are starting to, to grow in streaming. You know, the Germany's of the world and then there's the emerging Markets where there's obviously a lot of population, where they're trying to develop their user base. So, you know, we saw Spotify earlier in the year move into another 80 or 85 markets. And the intent there is obviously to gain subscribers around the world, which creates other platforms for the music to be discovered. So, you know, clearly the fees in Africa are going to be different than they are in the U.S. but regardless, we still see these markets open up.

Right. Amazing. Okay, and so. And maybe just following on that theme, so you acquire. Right. Or write to these. To certain music, whether it's a writing acquisition or the sound recordings, etc. Going back to what you said way back at the beginning, is this like a buy it? Almost like a set it and forget it, Just buy it. It's in there, you collect the stream and that's it. Or is your fund and you out there trying to enhance the amount of times these assets are being played or used in different platforms?

It depends. So our fund is trying to accumulate a diversified group of catalogs. And when I say catalog, a catalog can be anything from an album or all of the artist work. It could be a subset of the artist work. If it's a songwriter, it might go across a number of different artists. But what we're trying to do is acquire a number of catalogs in different genres with different royalty types so that we're not subject to consumer taste changing, for example, and they stop listening to a particular artist on a particular day. So that's part of how we manage the risk. Now, within that. So our catalogs are all a little bit different. We have some catalogs, for example, we own certain royalties on a number of Taylor Swift's albums. And.

Yeah, and. And we definitely need to dive into that a bit because if my daughters are going to listen to this podcast, you know, they want to maybe hear their dad is famous here on a podcast. If we don't dive into the Taylor Swift stuff, they're going to probably have turned it off by now. So we gotta. We gotta dive really deep into the Taylor Swift catalog. You have. I'm joking, of course, but actually I. You and I have chatted about it in the past, and it's an interesting situation with what you own from Taylor Swift's catalog. So maybe that's an interesting example to share. I'm glad you started there.

Yeah, well, I'll come back to answer or touch on that part. But with respect to us being able to influence, there's. There's literally nothing we can do to change the outcome of that particular catalog. In other cases, we've got smaller catalogs or more independent artists, you know, such as the Midnight, which is an electronic synthwave group where we own half of the masters who were doing quite well. And there's cases there where perhaps we can be helpful in terms of administrative support, promotion, introducing to people who can help on the sync licensing side, those sorts of things, and that can be more active. And then there's cases where we acquire a catalog and perhaps there may not be immediate licensing opportunities, but there might be the ability to change one of the distributors or administrators to, you know, reduce fees, as an example, or change it up and. And grow the value from the catalog right there. So everyone is a little bit different. And when we're out doing that, we've got some relationships with people who are best in class at some of those things, whether it's sync licensing or others who we work with and recruit, as opposed to just trying to do that in house on our own. And that's part of having catalogs. I think just across the spectrum, we get asked a lot if we're just buying one genre or one type. And the answer to that is definitively not because all the genres act a little bit differently. And. And we wanted to have something at the end of the day where strengths in one part of the portfolio might offset any deterioration and interest in another kind of music.

Right. And actually that's. That's a good segue, and we're going to get back to Taylor Swift, of course, but a good segue to portfolio composition. Like, you know, again, most folks have read a lot or in my career, analyzing stocks, analyzing bonds, discounted cash flows, market multiples, all this stuff. First of all, how are you analyzing these, you know, potential catalogs that you're buying and understanding what the expected royalty stream is going to be number one. And then portfolio composition, how do you think about, you know, the. You got a Taylor Swift on one hand, the Midnight you mentioned on the other, and I'm sure there's some other genres all in between. How do you think about putting that together? So valuation and composition maybe touch on those two things.

Yeah, valuation's an interesting one because you can't forecast perfectly in these cases. It's not that you own an office building that as a lease and you got a certain amount of space, and you just have to estimate what the rent's going to do over a period of time. This is quite different. But with a lot of things, the past can give some indications for the future. So One of the characteristics of these catalogs is that older catalogs are generally more stable and easier to predict than, than younger catalogs. You know, people listening to Elton John over the last couple of months are still going to continue to listen Elton John and probably a similar or increasing place just, just based on sort of the market condition. So you're not going to be surprised with new take up or interest or falling off of certain songs or iconic tracks like that. The newer songs, and I'll say new under probably three years and particularly the first year or two become more challenging to do that too because the hits for example, will get a lot of radio promotion and the like and that creates material revenue in the short term. But then it'll fall off when the radio airplay disappears and streaming becomes a larger part of that business. So we often see a large spike for the first couple years and then a flattening and then a very, very long tail. And that tail's typically been rising as streaming's rising. So we're trying to look at catalogs across the spectrum, but generally looking at catalogs that are probably 5 to 15 or 20 years old, with some exceptions for a few younger catalogs, where we see the opportunities and we're not buying anything that's that's sub two years old. That's certainly, certainly it. And to analyze these cash flows with, again with, with things that have some history, we certainly can look at the last three or four years of data, see how it's performing. We break out the revenue streams from how they are received. Is there stable revenue stream like streaming which is easier to analyze? Or is there a lot of one off licensing because a particular song was in a certain commercial or Netflix series or whatever the case is. And that becomes lumpier and ultimately less stable revenue than the streaming side. And then there's some genre specific work where country as an example still has quite material radio airplay. So you have to take into account the radio airplane. Country has a tendency certainly to be stickier perhaps than what it would be in, in hip hop. So with all those aligned in the genres and the likes, we try and put it together and just build cash flow forecasts like you would for other assets and discount those. And we look at the past history, we look at the age of the tracks, we analyze a lot of data we receive from industry sources that tell us how it's been streaming up to date. Is the artist going on tour or not? Is the artist collaborating with other artists? What's happening with their social media, Are they trending Upwards and accelerating, finding new followers or inactive or trending downwards. And then we basically take all that information and try and build an optimistic case, an expected case and a conservative case and run those cash flows out. And you know, one of the things we don't do in our underwriting necessarily, but are cognizant of this, there's an expectation that the industry's probably going to double between now and 2030, at least that's what the public or Goldman style research is telling you. And although we don't factor that in, we think that's going to be part of the accretion of the value of all these catalogs across the board.

So just a question for you. You do the analysis, you forecast the cash flows as you say. You know, especially with some older catalogs, you can get pretty good visibility. Expected streams or expected revenues maybe I should say for many years to come in the real estate world. You know, if these were tenants paying rent, you would ultimately pay some sort of cap rate to buy that sort of, let's call it apartment building with rents that you know are going to be a certain level. I don't imagine you use the same, or maybe you do use the same term as a cap rate. Is there a comparison that could be made there? And if yes, what would be the cap rate that you would pay on average or something for a particular type of stream just to sort of give a sense of valuations relative to maybe some other assets? Is that a reasonable question?

It's a reasonable question and it wouldn't be, you'll hear the word just multiple, which is effectively the napkin arithmetic about what the catalog has earned recently and what you paid. So you'll, you'll hear, you'll hear multiple. So if a 20, if it was a 25 times multiple and splat, it would go back to a 4% cap rate in the real estate term. So what's been happening is fascinating in that we're starting to see larger investors trying to move into the industry in a material way with multi hundred million dollar catalogs, because that's all that moves the needle for them. And they're paying very material prices for these catalogs. Certainly we've heard numbers as high as potentially 30 when we've been talking about recent deals. There's nothing that verifies that, but certainly high 20s to 30, lots of deals probably around the 25 times multiple range and probably nothing under 20 on these larger Wall Street Journal headline deals that you're seeing from the iconic artists who are now trying to monetize their works and their career and maybe pay a little less capital gains taxes before the rates go up in the US but from there there's a very material gap in terms of players. So we found at our size, and we're trying to buy catalogs that are under 10 million in value, we're finding a different dynamic, although there certainly is some expectation on some, on some vendors that they're going to see Bob Dylan like numbers. They're not Bob Dylan at the end of the day. So we're trying on balance to be acquiring the portfolio in and around 10 times half the industry rates. And to date, we've paid anywhere between 5 times and 14 times using the napkin math, just based on the particular, the particular catalog and the catalog characteristics.

So if you equate that to a cap rate on a purchase of a real estate building, it's a, it's a 10 cap, 10% cash flow yield relative to, you know, buying buildings these days in major cities at three or two or, you know, very, very low cap rates, I. E. Very high valuations. So it's, it's interesting. So maybe talk a little bit, because I'm not going to let you go without talking about Tay Tay. So let's talk about, just use Taylor Swift as an example of sort of what you own and some of the dynamics going there. And then maybe one or two questions, then I'll let you get back to listening to music.

Absolutely. Well, we got to keep your daughter happy, so it's important. So this is an, you know, this is an example of a really interesting opportunity that came our way in part because Taylor Swift was in a bit of a public feud with, with Scooter Brown and, and you know, the original record label about access to her own masters and owning her own masters and rights. And Taylor's doing just fine. She also writes most of her songs, so she's getting paid. The writer side, a lot of artists don't have that, surprisingly. So with that, when you sign a record label deal, it's really a loan from the record label back to you saying, okay, we'll give you an advance, but we'll own your works and then you'll pay us all your money wherever you get it from, in simple terms, until that advance is recouped and then you start making some money. So this is why some of the legacy artists had, you know, complaining about, about certain things over time about the industry. And then this is also why there's been a rise in independent distribution, which is something you can, you can do now, which you couldn't do before. But having said all that, Taylor's RE recording her elbows very publicly saying, I'm going to re record my masters, even though the other masters are out there and released them within an attempt perhaps to reduce the value of our old masters or in an attempt to also get some great marketing along the way. And because of that, a chunk of the royalties off of those sort of first five albums became available to us and we ended up acquiring a reasonably long negotiation because the vendor was sort of deciding if they were actually going to sell or not. And the risk when we did that was obviously if the masters eliminated the existing rights, people didn't listen to the old music anymore, they only listened to the new. That would create declines in revenue for us. But the way we assessed that was the valuation certainly came down, I think as a result of that threat. And then the way these are played, they're really embedded in a lot of algorithms and everything else. And it's also just such iconic music that we had a view that was shared by some others that people are going to listen to the old and the new and compare and contrast and my generation sort of akin to Led Zeppelin re recording their first four albums. If they did that, you'd still listen to the original ones as well and probably the new ones. So one of the things we do with our data is we follow our major works and see how they're doing sort of on an up to date basis. And interestingly, when Taylor, she started released Love Story last year and as soon as she released that, obviously her version had a huge bump, but the original version had a bump as well. And every time she's released something or says she's releasing something, we're seeing these bumps in our catalog as well. And obviously her new stuff is taking up 20 places on the Billboard charts as soon as she released it. So we looked at the catalog and thought it was a stable, growing catalog with a lot of history. And this re recording has actually helped out. So really, really interesting time for sure.

Amazing. Okay, well, when she comes to town, I'm calling you. You can maybe help me get some tickets. So. So, you know, we talked about what I think was pretty positive color on, on what you're doing and music royalties in general. What, what can go wrong here? Like my job, our job here at Gensler wealth is to find really interesting things, but to really also understand what could possibly go wrong that's gonna, you know, pardon my french, screw up this interesting investment. So what keeps you up at night, aside from listening to Led Zeppelin 4 on repeat. Like what, what, what can go wrong with the collection of catalogs you own or individual catalogs you own that could cause major value decreases or impairments? Or just in general, what can go wrong with this strategy that investors need to be aware of if they're going to consider making an allocation?

Well, for a specific catalog, any individual catalog or song, if it doesn't perform up to the expectations or something goes, goes really awry, then it will get played less and the revenue stream will be lower. You know, take a, take a lot longer to sort of recoup your investment that I think we do balance by having different catalogs in there. So the next things are, are really driven by the industry itself. There is a reliance on digital streaming providers continuing to, to stream and distribute your music and obviously be in existence. And you know, we saw the recent example with Neil Young and Joe Rogan where Neil pressured his label Warner to take the masters down. And I think a lot of people thought Neil Young did that unilaterally. But Warner could have said no and then he would lose the revenue that would have been played off of the Spotify for those particular albums. So that's just an example you could see. I don't know how likely it is, but ultimately, if the ownership of this content tries to be bespoke with its distribution so that rather than being able to go to Spotify or Apple Music or Amazon, you can play it only in one spot and similar, this is what's happened on the video side, then that could result in music being taken off certain platforms. So if Amazon, I mean, there's no rumors of this, but if Amazon decided they wanted to go by Universal Music and say the only place you're going to listen to this is Amazon Music and we may see this with James Bond eventually, since they bought mgm, then that's going to take it off the other platforms, reduce revenue for some period of time. Obviously they'll take it up with Amazon. So not likely in the short term, but something to think about for the long term is the fascinating way this content could be owned.

What about the sort of new approach that maybe some artists are doing, releasing NFTs with their new singles or albums and almost going direct to the consumer and I think potentially bypassing some of these other services. Do you look at that? Is that a big deal for the industry or is it just going to be a small subset? Or have I got that wrong?

It's not a risk to the industry. It's a creation of some new revenue sources. So when we talk to some of the legal counsels down there who are dealing with artists, it's a daily or weekly topic as artists are trying to figure out whether they should be monetizing the NFTs or not and how that impacts your brand. And there's a lot of NFTs out there that aren't as successful as the ones you sound. So it results in contracts, the newer contracts being changed to a company revenues from some of those things in the case. But I don't think it cannibalizes the old business. And again with what we're acquiring and content owners are acquiring, they're acquiring existing rights and royalties and exists so not, not sort of that interest in that new business. So I don't think it cannibalizes. I think if anything it just creates more, more branding for them for, for us. We still have to be be hoven to these streaming providers existing. Clearly we think that there's going to be increases in pricing. You know, Netflix has just increased his over time but there is some saturation as to how far pricing can be pushed and perhaps some consolidation if people feel like they don't need to own as many streaming services as they do now. So that's something that we look on, on the horizon. And then in the macro side interest rates and inflation get talked about a lot. Right now we don't have heavy inflation concerns with this asset. Again, if the economy really implodes as a result and some of these utility like payments, maybe you take your services down from 12 to 10 or 9 could have some impact, but I don't think that's the primary one. And then interest rates on a day to day basis do really have no impact on the revenues we receive on the portfolio. But if interest rates rise a certain point of time, it will result in two things like every other asset class. One, if we're required to sell assets, they'll be worth less than they were in this environment. And the flip side of that is if we're able to buy assets, we likely should be able to buy them at lower valuations relative to what we see today as the industry goes. So those are some of the main things that we look at and I wouldn't say keep us up at night, but some of the potential risks in the portfolio sort of in the asset class over time.

Yeah, okay, good. Got it. So we're going to let you go in a second. You know, different topic as we sign off here. Our theme around here is Unlimited wealth, unlimited. Unlimited service, unlimited counsel. We want to help clients make their unlimited dreams and realities come true. So question for you. If all limitations are removed and don't say being a frontman in Led Zeppelin, but if all limitations were removed, you have unlimited options. You could do anything in life. What would you be doing right now other than talking to me on this podcast, which probably is right up there on the top of your list. But aside from that, what. What would, what would Dave Vanka be doing if there were no limitations to what you can do?

Oh, I think I'd be heli. Skiing somewhere deep in B.C. or maybe even Alaska.

Awesome.

I. I'd like to say I'd be playing guitar in a band, but I have, I lack. I lack the requisite skills to have anyone listen to me.

Right. That's probably what I would be doing if I could. And I do play the guitar, but unfortunately not skilled enough to do it at the level that would make me a professional. But that's why I'm doing what I'm doing here and maybe what you're doing, what you're doing there. So look, David, thank you so much. Really appreciate your time and sharing with us this interesting asset class that is new to many but obviously we've been looking at it for quite a while and wish you continued success with your fund because that will be beneficial to us as well for the clients we share. So thank you very much.

Well, thanks again and as I said, congrats on the growth of Gensler wealth and I think providing investors access to certain alternative investments and getting away from the 6040 portfolio Interesting ideas is great because a lot of the times some of these assets were really only available to large, large institutional investors. So I think you're going to find a lot lot of your opportunities have a great fit in people's portfolios. So, so keep up the good work.

Thank you very much. Wish you the best and we'll see you soon, I'm sure.

Sounds great. Take care.

Thank you. This has been Brian's conversation with David Banka from ICM Investment Management. We hope that you've enjoyed this conversation about a not very well known asset class and that you found the discussion both entertaining and interesting. Please note that Ginsler wealth has invested with ICM in the past and may continue to do so in the future, but this reporting does not constitute investment advice nor an endorsement. This has been a Gensler Wealth Audio production. The Unlimited Product Podcast is hosted and produced by Brian Gensler and edited and mixed by me, Katherine Donville if you're interested in hearing more from us, please, like subscribe and give us a five star rating and follow us on all social media. We can be found at Gensler Wealth. See you next time.