David Dziekanski- Quantify Funds

Thanks so much for having me, Brad. So before we get started, why don't you give everybody a bit about your background and how you ended up here at Quantify Funds?

Absolutely. So my name is David Jakanski. I'm the founder and CEO of Quantify Funds. I've been in the investment and ETF world for, gosh, about 17 years. The last 11 years, I was a partner and portfolio manager at Tidal Financial Group, a platform to help institutional managers bring ETFs to the marketplace. Took the jump and moved over to the client side, and I'm now partnering with both Tidal and another client of Tidal's, the Return Stack ETF folks, to bring you this stacked lineup we have here with our first offering being the STKD Bitcoin and Gold ETF ticker BTGD.

Yeah. And we're going to get into the ETF for sure. Before we do that, though, I always like to ask, any hobbies? What do you like doing when you're not working?

Gosh, I love hiking in the mountains, escaping two beaches. I'm a born and raised New Yorker, so I like doing the exact opposite of everything you can find in New York City. Find a beach without a person for a mile or the middle of a mountaintop is heaven for me.

Yeah. I think I'd take a beach right about now. It's snowing already, and I'm not ready for it. Yeah.

New York has not really felt the true effects of winter yet, but I'm sure it is coming.

Yeah. I was just there a couple of weeks ago, and it's always worse when you turn down the one street that's just an absolute wind tunnel, and it's just brutal. You can't get out of it. Yeah.

Winter is no fun in cities. You get the wind tunnels. You get the dirty snow. You don't get the glistening white effects of the snow everywhere. It's no fun to be in the city during this time.

So let's get straight into the ETF. this is a really interesting product. I'm glad we were able to connect. I think it's timely, right, with everything going on. Bitcoin breaking $100,000. So the ETF, as you mentioned, is BTGD, which is the STKD Bitcoin and Gold ETF. So first, give me a high level of what this fund is and really what it's trying to accomplish.

Absolutely. So STKD is short for stacked. This is a stacked ETF. We stack two different assets on top of each other. In this case, we were stacking Bitcoin on top of gold. So for every dollar you put in the ETF, you get a $1 exposure to Bitcoin and a $1 exposure to gold. Alternatively, you can also think of it as a portfolio that is a 50-50 mix of Bitcoin and gold times two. So this is a new way to do leverage ETFs where we're not just leveraging the same asset on top of itself, which allows for what we like to call leverage for the long run, leverage with less path dependency and potential for decay, leverage that can be structurally implemented into your model portfolios.

So let's talk about how you kind of manufacture the product on the back end. So what type of investments are you using really to drive or derive your underlying exposure? I'm assuming you're using futures as well as some other things?

Yeah. Currently, we're using futures and the exchange-traded products in both the Bitcoin and gold space. We use the futures to get the most optimal form of leverage on these two asset classes. And then we use the ETFs to allow us to have a cost-effective way to rebalance on drift between the two allocations of Bitcoin and gold so we can stay on target to that one-to-one ratio between the two assets.

So let's talk about that rebalance schedule. Are you bringing this portfolio back for any drift on a daily basis? I'm assuming with the volatility that Bitcoin brings, you're going to have to be kind of pulling these back in line fairly often.

Yeah. So this is an actively managed portfolio. So we have no specific mandate on that. We are targeting about a 5% to 7% rebalance drift and will oftentimes rebalance more frequently with creates. But it's a game of rebalancing versus trading costs and minimizing the drag that overtrading a portfolio could have. So we very much like that 5% to 7% range, which ends up resulting in usually about a trade, maybe a trade and a half a week.

Got it. So let's talk about the overall rationale, right? Like what is the rationale behind combining Bitcoin and gold within a single investment vehicle?

Yeah, it's so funny. Some people struggle to see the connection and some people see it instantaneously. And we found actually the lack of correlation between the two assets sometimes makes it difficult for people to conceptualize them as a similar concept. The concept here is these are two assets that are deemed scarcity assets. Gold has been a store value for as long as history has been around. Bitcoin in its simplest form is digital gold. These are two assets that mine at a rate that is much smaller than the rate at which paper currencies print. Developed nations print about 7% to 9% of currencies in circulation each year.

Got it. it makes total sense to me. So in your experience in following these two assets over time, how does the volatility of Bitcoin and then gold's relative stability interact within this portfolio?

Historically, Bitcoin is about three times as volatile as gold. What we find most intriguing in this pair is the correlation tends to range from as high as just over 50% to lower than minus 20%. And it is the swings in that that is most interesting that allows for a balancing between these two assets. I always ask, I think there's actually a lot of people that allocate to both Bitcoin and gold in their portfolio already. But I always ask them in the last like two months, have you trimmed Bitcoin at all for gold? And doing that difficult trade is oftentimes easier said in practice than it is to actually implement in reality. In terms of historical data, if you look at the last two big crypto winters, gold held up exceptionally well in both of them.

Yeah. And I have advisors ask me all the time, they're like, what is or discussions around Bitcoin's correlation. And it's funny, it was like not correlated to anything. Then it got pretty correlated to tech or large cap growth. And I just think over time, Bitcoin just really beats to its own drum. I think we're trying to figure out an appropriate correlation number to equities, to gold, to treasuries. And I just don't think Bitcoin cares about any of it. Is that a fair viewpoint?

Yeah. Correlation versus causation. If you looked at what Bitcoin did during the Silicon Valley bank fiasco, it was performing much more like a scarcity asset. And I think the real bet is not necessarily what it is correlated to today, but what it will trend towards correlation-wise in the future. And we believe that's going to be more and more in the camp of scarcity assets, especially if we ever get into another cycle where we're going to have to unleash the quantitative easing back onto the market cycle. That's when you're really going to see this thesis take off because just the mismatch between supply is going to skyrocket. And truthfully, I think a lot of this is due to the fact that most Americans until the last five years had no idea what inflation really felt like, or very few of them.

So simple question, but the more I thought about it, the harder it is to answer. If I'm an investor measuring the performance of the CTF, what is your benchmark? Are you just blending and creating a benchmark or are you benchmarking yourself against Bitcoin, but that would be unfair? How do you look at evaluating the performance of the CTF against the benchmark?

Yeah, you do have to look at each counterpiece individually and then subtract the cost of financing between the two. So unfortunately, the best benchmark is both Bitcoin and gold minus the cost of financing, which is very cost effective in today's markets through futures. But I think you could also just benchmark this specifically against Bitcoin, especially because gold is so much less volatile than Bitcoin. So in that instance, gold just really needs to outperform the cost of financing to warrant the leverage on top of Bitcoin to allocate to as well. But we also think this is something that people have in their portfolios as individual assets as well. And yes, the whole advisory space is going to need to catch up on performance tools and comparison tools to start incorporating some of these new stack products.

So, oftentimes people look at gold as a potential hedge in their portfolio. Do you think this ETF could kind of fit into that same category as an overall hedge? Or like, how do you view it in terms of where this would kind of fit in and how advisors should be talking about it? Yeah, this is a debasement hedge.

Gold could be an alternative to fixed income. Gold, as we alluded to, is very correlated to fixed income and is much more scarce than treasury bonds. They print much more treasury bonds than they do gold. But long term, we view both these assets as a protective asset. Even though Bitcoin, in this case, until recent, gold have both risen alongside the rise of the U.S. dollar this year and in past years, so many allocators have trended so far towards just a U.S.-only equity portfolio that they're actually so dependent on the strength of the U.S. dollar that we think if there's like one hedge to hedge your primarily U.S. equity portfolio against a declining dollar, which could happen for a number of reasons, we actually think this is an ideal vehicle to mix both Bitcoin and gold in one to hedge against that drawdown potential in the U.S. dollar.

Got it. So how do you, well, I read today, BlackRock had kind of come out with their one to two percent allocation recommendation for Bitcoin across a well-diversified model portfolio. But given that this has gold exposure, I think in your mind, you probably could get a little bit away with a little bit more overall exposure in a portfolio. So, like, how do you talk about allocation percentage in, an already well-diversified portfolio? Are you looking at, 5%, maybe up to 10% allocation? Like, where do you see this fitting and how?

We think anywhere from like a two to five percent allocation in Bitcoin and gold makes sense and can protect a portfolio. I saw that article that you're referencing that BlackRock alluded to a recommendation band of one to two percent in Bitcoin. I don't know if you want to take a friendly wager. Maybe we can redo this podcast in 12 months. Like, how much do you want to bet that that range is higher next year going into 2026? Yeah, I would agree with that. So this feels like the first step into that range. first and foremost, speak to your financial advisor before making any of these decisions at all whatsoever. But I do think, anywhere under a five to seven percent allocation is warranted.

And the other thing with this, too, is, you have advisors like to have the bucket conversation. Right. We've all heard it. Where are you kind of bucketing this product? are you kind of putting it in that other where where do you like to try when you're talking to advisors to kind of have them place this in that overall diversified model portfolio?

I think for some allocators, this is an alternative investment. Some look at it within like almost like an alternative commodity sleeve or as you referenced, an other sleeve. the thesis here is the currency debasement thing. And what we've seen in the ETF landscape, especially being with a platform such as Tidal for so long that while there is a huge adoption in the alt space, advisors don't like alts that don't move. Your alt needs to have some volatility. And the reason is nobody wants to put 15 percent into an alternative that may or may not work without any real rhyme or reason other than, well, the black box didn't work this year. Right. There's no economic rationale to explain why a managed futures or a long short might have performed that a client can fully understand.

Does that make sense? Yeah, makes a ton of sense. And the other thing I wanted to kind of pick your brain on, too, is Bitcoin, since me being in the industry, is the first real asset class that it seems like the retail channel has more education and understanding around than their advisor. Right. They are generally taking this idea, at least over the last handful of years, taking this idea to the advisor and saying, how do I get exposure to this and can you get me exposure to this? So the name of the game here really for people like you as well as some of the others that have come out with Bitcoin or crypto ETFs is that advisor education.

Yeah, we we tried to focus on the education of like what is stacked? How do we achieve this stacked? And that's what in truth. I don't actually think the advisors need as much education in the Bitcoin space as people think. I do think there's a lot more knowledge in the retail space than some people give credit for. But I think we've been in a political environment where advisors and broker dealers have been handcuffed and terrified away from getting anywhere close to making a recommendation to a client from on a fiduciary basis to allocate to Bitcoin. That I think, obviously, there's going to be some education for the masses. But I think it's really been lack of clarity of what they're allowed to do or not allowed to do that has really caused most of these institutions to tell their financial advisors to stay away.

Yeah, your timing here is definitely, very good. I agree with all the things you you just mentioned there. This is a fairly new ETF. I'm not sure. When did you launch exactly? Sorry. We launched on October 16th. Got it. So, again, fairly new. So, you've been in the ETF space, working with title. So, you understand, the business with any new ETF, right? The name of the game is distribution. And so, how are you guys, viewing internally, distributing the product? how are you going to try to raise as much assets as you possibly can in this thing over the next 12 and 24 months?

Yeah, we started off with some really amazing Twitter spaces. Our day of launch, we had Peter Lynch and Lynn Alden discussing and arguing Bitcoin versus gold. We plan on producing a lot more video and research content to distribute to the advisor community. Outside of that, just more traditional blocking and tackling online advertising, which we have just started to kick off in the last week or so. You'd be surprised how much of this world is really just like seeing an ad a couple times and then letting it be dispersed amongst the message boards, whether that be within an RAA or Discord or WhatsApp group. So much of this world moves on these small little chats, whether it's in Reddit or Weeble posts, etc.

Well, I think it's a cool product. I really do. And I like the idea of continually keeping these things in line. it's 50-50. It makes a ton of sense to me. And so you mentioned your website. Before I let you go, David, I need to ask, where can people learn more about BTGD and, your firm as all?

Yeah. And again, Brad, thank you so much for having us on. We are Quantify Funds. You can find more information at QuantifyFunds.com or Quantify Funds on Twitter, soon to be Quantify Funds on YouTube as well. We have a LinkedIn channel as well. So we're going to be producing a lot more content on that side. Brad, it's been a pleasure. And thank you so much for having us on.

Yeah, David. Thanks for spending some time with us. Have a great afternoon.