# At The Money: Better Results By NOT Investing with Dictators!

An episode of [Masters in Business](https://invisiblenetwork.ai/podcast/730188152), 14 Jan 2026, 17 min.

Audio: https://podtrac.com/pts/redirect.mp3/traffic.omny.fm/d/clips/e73c998e-6e60-432f-8610-ae210140c5b1/4e4cd910-40a1-4619-a5f3-ae2b0012ffff/72e7abdf-bf62-4f10-9264-b3d2016b5f7b/audio.mp3?utm_source=Podcast&in_playlist=5873a3cb-298f-40bc-b71f-ae2b0013000d

Do fundamentals or narratives drive market valuations? That is the question so many are wrestling with in today’s 24/7 algo-based platforms and AI-driven mediascape. Perth Tolle is the founder of the Life and Liberty indexes and the creator of the Freedom 100 EM Index (symbol FRDM). She was named one of 10 to watch in 2020 by Wealth Management Magazine and one of the 100 people transforming Business by Business Insider in 2021. Each week, “At the Money” discusses an important topic in money management. From portfolio construction to taxes and cutting down on fees, join Barry Ritholtz to learn the best ways to put your money to work. See omnystudio.com/listener for privacy information.

## Transcript

[0:02] Speaker 1: Bloomberg Audio Studios, podcasts, radio news. There are many problematic
[0:15] Speaker 1: countries on the world stage. Not only are their political
[0:20] Speaker 1: behaviors bad, but they're also unhealthy for your investment dollars.
[0:25] Speaker 1: Most emerging market indexes, however, invest broadly across all of
[0:31] Speaker 1: these countries, regardless of their political activity. If only there
[0:36] Speaker 1: was a way to avoid authoritarian regimes, dictators, and other
[0:41] Speaker 1: bad actors that destroy your investing capital. As it turns out,
[0:47] Speaker 1: there's a fund to do just that, investing in emerging
[0:52] Speaker 1: markets without steering money to the worst countries on the planet.
[0:56] Speaker 1: Pine Barry ridults that on today's edition of At the Mind,
[1:00] Speaker 1: we're going to discuss how to avoid those countries that
[1:03] Speaker 1: are dangerous to your wealth. To help us unpack all
[1:07] Speaker 1: of this and what it means for your portfolio, let's
[1:10] Speaker 1: bring in Perth Toll. She is the founder of the
[1:13] Speaker 1: Life in Liberty indexes and the creator of the Freedom
[1:17] Speaker 1: one hundred EM Index ETF symbol FRDM. She was named
[1:23] Speaker 1: what of ten to Watch in twenty twenty by Wealth
[1:25] Speaker 1: Management Magazine and one of the one hundred people Transforming
[1:30] Speaker 1: Business by Business Insider in twenty twenty one. Her Freedom
[1:34] Speaker 1: one hundred EM Index ETF now manages over two billion
[1:39] Speaker 1: dollars and has beaten the S and P five hundred
[1:43] Speaker 1: over one two and three years. In twenty twenty five,
[1:48] Speaker 1: Freedom was up sixty seven percent versus the S and
[1:52] Speaker 1: P five hundred up almost eighteen percent. So, Perth, let's
[1:56] Speaker 1: just start with the basic concept why emerging market companies
[2:02] Speaker 1: for a concept like freedom, how is screening out dictators,
[2:05] Speaker 1: authoritarians and other bid actors impact market performance?
[2:11] Speaker 2: Yeah? Thanks, Arry, So I think the problem we're trying
[2:14] Speaker 2: to solve here is that emerging markets investors previously did
[2:19] Speaker 2: not have a way to get a diversified emerging market's
[2:24] Speaker 2: allocation without funneling money to autocracies. So traditionally the way
[2:30] Speaker 2: induses are weighted is by market cap, and so the
[2:34] Speaker 2: largest autocracies in the emerging market space like China, Russia
[2:40] Speaker 2: and Saudi Arabia historically has gotten the biggest weights. Those
[2:44] Speaker 2: three countries prior to the war were all in the
[2:47] Speaker 2: top ten of most em indusies. During the height of COVID,
[2:52] Speaker 2: China was forty one percent of the MSCI Emerging Markets Index,
[2:58] Speaker 2: and now it is, you know, upwards of close to
[3:02] Speaker 2: thirty percent. So some of these large autocracies get a
[3:07] Speaker 2: very large weight in the emerging markets indices, and so
[3:11] Speaker 2: that's really the problem that we're trying to solve by
[3:14] Speaker 2: freedom waiting instead of market cap waiting.
[3:16] Speaker 1: I'm really fascinated by the origin story of the Freedom
[3:20] Speaker 1: Index and the ETF. What made you decide traditional emerging
[3:26] Speaker 1: market benchmarks were broken?
[3:30] Speaker 2: Yeah, So I grew up in both China and the US.
[3:33] Speaker 2: I was born in Beijing, and I came to the
[3:35] Speaker 2: US when I was nine, and then I worked in
[3:38] Speaker 2: Hong Kong after college for about a year, and there
[3:41] Speaker 2: saw the difference between the US market, the Hong Kong
[3:44] Speaker 2: market at the time this was two thousand and four,
[3:47] Speaker 2: and the mainland Chinese market, and saw that policies impacted
[3:53] Speaker 2: the future of a society in the future of markets.
[3:56] Speaker 2: You know, one policy that really struck me was the
[3:59] Speaker 2: one child policy under which I, you know, was born
[4:02] Speaker 2: and grew up in China, and that policy has caused
[4:06] Speaker 2: the biggest demographic crisis in the world today and probably
[4:12] Speaker 2: we won't recover from that in our lifetimes. So that's
[4:15] Speaker 2: one of the things that made me realize that governance
[4:19] Speaker 2: on the country level actually has an impact on society
[4:22] Speaker 2: and markets, but also coming back to the US. I
[4:27] Speaker 2: worked at Fidelity for ten years as a financial advisor,
[4:30] Speaker 2: and I had clients, you know, in the LA and
[4:32] Speaker 2: Houston markets who said I don't want it. For example,
[4:36] Speaker 2: I had a Russian client that said, I don't want
[4:37] Speaker 2: to invest in Russia because it's like funding terrorism. And
[4:41] Speaker 2: that was in twenty fourteen. So you can see how
[4:44] Speaker 2: pression that was. And this is kind of why I
[4:48] Speaker 2: wanted to have a way for allocators to always have
[4:52] Speaker 2: that emerging markets allocation without you know, funding autocracies, which
[4:57] Speaker 2: is usually not the intention of most investors.
[5:00] Speaker 1: Really really interesting. So you created this Freedom Index with
[5:05] Speaker 1: some of your partners. Define freedom for our audience in
[5:10] Speaker 1: market terms. When we say this is a freedom weighted
[5:14] Speaker 1: portfolio as opposed to a market cap way to portfolio,
[5:18] Speaker 1: what exactly is being measured? How does that translate into
[5:21] Speaker 1: an index?
[5:22] Speaker 2: Yeah, So the first thing is we need those quantitative
[5:25] Speaker 2: metrics for freedom, and so we use a third party
[5:29] Speaker 2: index and data set called the Human Freedom Index and
[5:33] Speaker 2: data set by the Cato Institute and the Fraser Institute.
[5:36] Speaker 2: And these are two think tanks that are completely privately funded.
[5:40] Speaker 2: They don't take any government money, not even from the
[5:43] Speaker 2: US or Canadian governments where they're based. And they look
[5:47] Speaker 2: at eighty seven different variables for freedom, and that includes
[5:52] Speaker 2: things like civil freedoms, includes political freedoms and economic freedoms,
[5:57] Speaker 2: So you're looking at both personal and economic freedoms, which
[6:00] Speaker 2: was important to me coming from a country that had
[6:03] Speaker 2: issues with both. So things like terrorism, trafficking, torture are
[6:09] Speaker 2: like in the civil freedom's category, freedom of speech, media expression,
[6:13] Speaker 2: civil procedure, criminal procedure like political freedom category, and then
[6:17] Speaker 2: economic freedoms are things we're all more familiar with, like taxation,
[6:20] Speaker 2: business regulations, private property rights, rule of the law, soundness
[6:24] Speaker 2: of monetary policy, freedom to trade internationally, the higher the
[6:27] Speaker 2: free trade the better, and the freedom to hold you know,
[6:32] Speaker 2: off room, make accounts, and so forth. So all of
[6:34] Speaker 2: these things added together eighty seven different variables and sub
[6:39] Speaker 2: variables combine into the composite country score, which we use
[6:44] Speaker 2: as the main input into our methodology. So with that
[6:48] Speaker 2: country score that measures freedom by a third party, we
[6:54] Speaker 2: turn that into country weights and allocations and then invest accordingly.
[6:58] Speaker 2: So the higher freedom country get a higher weight, the
[7:01] Speaker 2: lower freedom scoring countries get a lower weight, and the
[7:04] Speaker 2: worst offenders are automatically excluded as part of the freedom
[7:08] Speaker 2: waiting process.
[7:09] Speaker 1: So twenty four merging market countries, how many companies do
[7:15] Speaker 1: you look at? And then how many end up in
[7:17] Speaker 1: the index? And in the index once it's freedom scored,
[7:22] Speaker 1: I'm assuming it's also market cap weighted. Is that right?
[7:25] Speaker 2: So on the country level it is one hundred percent
[7:29] Speaker 2: freedom weighted before we embark on freedom waiting, though, we
[7:33] Speaker 2: do have a screen for market size and liquidity, so
[7:38] Speaker 2: markets that are too small or too ill liquid are
[7:41] Speaker 2: not part of the eligible universe. So we do have
[7:43] Speaker 2: a twenty four country initial universe and then about an
[7:47] Speaker 2: eighteen country eligible universe because countries like Czech Republic, for example,
[7:52] Speaker 2: are very free but not big enough, Peru very free
[7:55] Speaker 2: but not liquid enough, so those are not included in
[7:58] Speaker 2: the freedom waiting process US. So about eighteen countries are
[8:02] Speaker 2: left once you have that eligibility process down, and those
[8:07] Speaker 2: are one hundred percent freedom weighted within so the highest
[8:11] Speaker 2: freedom countries have the highest weight, and the way the
[8:13] Speaker 2: methodology works is that you have to be above average
[8:17] Speaker 2: among those eighteen peer countries in your score to be included.
[8:23] Speaker 2: So we are providing the freest emerging market countries in
[8:29] Speaker 2: the eligible universe, and there are some very borderline countries
[8:33] Speaker 2: that go in and out.
[8:34] Speaker 1: Every year are examples.
[8:36] Speaker 2: So India is a borderline country. That is, the score
[8:40] Speaker 2: for India is just about average among all the eighteen
[8:43] Speaker 2: country peers. So this is including countries like Taiwan, Chile,
[8:47] Speaker 2: poland South Korea on the freer side, and then countries
[8:50] Speaker 2: like China, Saudi Arabia, Egypt, Turkey on the less free side. Right,
[8:55] Speaker 2: So India is about right in the middle, and so
[8:58] Speaker 2: sometimes it's in and sometimes it's out.
[9:02] Speaker 1: Really intriguing. And then once you have this list of countries,
[9:06] Speaker 1: how do you screen through all of those companies within
[9:10] Speaker 1: the favored top nine top ten countries to put together
[9:15] Speaker 1: the index and how many companies go into the index.
[9:19] Speaker 2: Yeah, so once we have the freedom weighted country weights
[9:22] Speaker 2: within each country, we take the ten largest most liquid
[9:26] Speaker 2: constituents and those are market capitalization weighted within their freedom
[9:32] Speaker 2: weighted country weights. We do exclude state owned enterprises and
[9:36] Speaker 2: that's just to bring the economic freedom theme all the
[9:39] Speaker 2: way through. So the less government interference in private markets
[9:42] Speaker 2: the better, and that's the only thing we do on
[9:46] Speaker 2: the security level. So we wanted to really isolate the
[9:48] Speaker 2: freedom factor. It's mostly a top down, country level strategy
[9:53] Speaker 2: on this on this product.
[9:55] Speaker 1: So what first attracted me to this has been China.
[10:00] Speaker 1: And obviously you grew up in China, you worked in
[10:03] Speaker 1: Hong Kong, you have a whole lot of insight into this.
[10:06] Speaker 1: Whenever I discussed China with investors, they're always shocked when
[10:11] Speaker 1: I say, hey, you know, over the past thirty years,
[10:13] Speaker 1: since nineteen ninety five, China's markets essentially down a couple
[10:18] Speaker 1: of digits. If you want to include total return and dividends,
[10:23] Speaker 1: it's up, you know, about one hundred percent. The total
[10:26] Speaker 1: return for the S and P five hundred over the
[10:28] Speaker 1: same period is plus twenty seven hundred percent. China has
[10:33] Speaker 1: turned out to be a fairly terrible investment for Western investors.
[10:40] Speaker 1: Why do you think China has been such a laggard?
[10:43] Speaker 2: So the main problem with investing in Chinese companies is
[10:47] Speaker 2: that these are countries. These are companies that have to
[10:50] Speaker 2: put state interests first. So they are, you know, not
[10:53] Speaker 2: going to try to succeed the most by providing the
[10:56] Speaker 2: best value for their clients. They're going to be trying
[10:59] Speaker 2: to curry favor with the government. So when your interests
[11:02] Speaker 2: are divided like that, investors are subsidizing the cost of
[11:08] Speaker 2: putting the state's interests first. And as we know with
[11:12] Speaker 2: China specifically, the state's interests may be you know, in
[11:17] Speaker 2: contradiction with you know, American interests or interests of foreign
[11:22] Speaker 2: investors in general. So some of these companies, for example,
[11:26] Speaker 2: ten sent Right has an app called we Chat, and
[11:31] Speaker 2: you know, it was well known back in the day
[11:33] Speaker 2: when all the weaker news was coming out, that the
[11:37] Speaker 2: government was using we chat to crack down on dissidents
[11:40] Speaker 2: and on the weaker population. Of course, we Chat has
[11:43] Speaker 2: to give all the data over to the government that
[11:45] Speaker 2: they want because they're they're in their own business interests
[11:49] Speaker 2: and other interests of their stakeholders do not come first,
[11:52] Speaker 2: but the government's interests come first. So these are kind
[11:54] Speaker 2: of the dangers of investing in a country where all
[11:58] Speaker 2: the companies are more subject to the state's interest than
[12:02] Speaker 2: their own.
[12:03] Speaker 1: And when we look at an app like TikTok, the
[12:08] Speaker 1: question is how involved is China's states surveillance security and
[12:14] Speaker 1: their their version of the CIA tracking, managing manipulating what
[12:21] Speaker 1: US teenagers see. This This is really an issue with
[12:24] Speaker 1: Chinese companies, isn't it.
[12:27] Speaker 2: It is? But TikTok is a whole separate issue altogether,
[12:30] Speaker 2: where you're talking about, you know, interference in foreign interests,
[12:35] Speaker 2: in foreign governments, and so yeah, that's that's a totally
[12:38] Speaker 2: different issue that we don't even address in this in
[12:41] Speaker 2: this index. But absolutely dictatorship and authoritarianism is in a
[12:47] Speaker 2: globalized world is contagious, but so is freedom. And so
[12:51] Speaker 2: you know, we believe that the more people invest in freedom,
[12:55] Speaker 2: and especially you know here in the in the finance
[12:58] Speaker 2: world on Wall Street, you know, we are in a
[13:01] Speaker 2: position of privilege and power. You know, it's a position
[13:04] Speaker 2: of power to be able to direct assets, whether it's
[13:06] Speaker 2: your own assets or other people's assets. And in emerging
[13:10] Speaker 2: markets investing, you know, there is no neutral you're either
[13:13] Speaker 2: you know, directing assets for good or in some cases
[13:17] Speaker 2: for evil unfortunately. And so we don't want to be
[13:21] Speaker 2: in the position of directing assets to enable more authoritarianism,
[13:26] Speaker 2: and if we can, we want to be in the
[13:28] Speaker 2: places that are promoting freedom in the world.
[13:31] Speaker 1: So let's talk a little bit about another country where
[13:34] Speaker 1: authoritarianism rules, Russia. I suspect a lot of people first
[13:40] Speaker 1: recognized the merit of your approach to emerging market investing.
[13:46] Speaker 1: When Russia invaded Ukraine and effectively their stocks plummeted to zero.
[13:53] Speaker 1: If you are holding Russian stocks, they pretty much get
[13:58] Speaker 1: marked down to nothing in everybody portfolio. Tell us a
[14:02] Speaker 1: little bit about how Russia has fared in the Freedom
[14:07] Speaker 1: Index and what's been going on in that country.
[14:12] Speaker 2: Yeah, so Russia has never been an included country in
[14:16] Speaker 2: the FRDM index. And when Russia invaded Ukraine, you know,
[14:21] Speaker 2: we were the only Emerging markets index that did not
[14:24] Speaker 2: have Russia in it for this particular reason. And when
[14:30] Speaker 2: you know, with when their market went to zero, no
[14:33] Speaker 2: one saw that coming. So this was definitely not something
[14:37] Speaker 2: that was priced in at the time as a possibility.
[14:41] Speaker 2: It was actually in the top ten country holdings in
[14:45] Speaker 2: the MSCI and the Emerging markets in decease. So so yeah,
[14:51] Speaker 2: investors got hit, you know, quite hard during that time.
[14:55] Speaker 2: And that was the time when, as I recall, most
[14:58] Speaker 2: investors woke up to all talk course risk.
[15:01] Speaker 1: So China, Russia, a lot of countries with state run economies.
[15:07] Speaker 1: Walk us through your decision to instead of just underweight them,
[15:12] Speaker 1: just totally exclude them. What's what's the thinking there.
[15:17] Speaker 2: Yeah, So you know, even if we underweight AUTOGRAZI, you know,
[15:22] Speaker 2: we would still be funneling money towards them. I mean,
[15:25] Speaker 2: our fund has two billion dollars right now in it
[15:28] Speaker 2: MSCI indices, has you know, hundreds of billions tracking them,
[15:35] Speaker 2: and so even a little bit in an autography is
[15:38] Speaker 2: really not what we want. We don't believe that's the
[15:41] Speaker 2: best place to invest. And also, you know, we believe
[15:45] Speaker 2: that there's so many good opportunities in the emerging markets
[15:48] Speaker 2: universe outside of autocracies. You know, people only think of
[15:52] Speaker 2: the bricks because of the brick acronym, but there's you know,
[15:56] Speaker 2: countries like Chili, countries like Poland that get less than
[15:59] Speaker 2: one percent weight in the cap weighted indices, but that
[16:02] Speaker 2: have the market size and liquidity to have scale in
[16:06] Speaker 2: a product like an ETF and investors can participate in
[16:10] Speaker 2: the tremendous growth that has gone on in those countries.
[16:14] Speaker 2: And you know, our investors have been able to benefit
[16:17] Speaker 2: from that. We believe those are the countries where you
[16:19] Speaker 2: can find the freer countries are the places that have
[16:21] Speaker 2: the best growth stories of the future, and that's where
[16:24] Speaker 2: we want to be.
[16:26] Speaker 1: So to wrap up, if you're an investor that wants
[16:29] Speaker 1: exposure internationally. If you want global emerging market exposure, but
[16:35] Speaker 1: you don't want to funnel money to countries that really
[16:39] Speaker 1: engage in some of the worst behaviors there are on
[16:42] Speaker 1: the international stage and have seen their stock markets perform
[16:47] Speaker 1: poorly because of it. Consider a fund that's based on freedom,
[16:53] Speaker 1: on political, civil and economic freedom to give you that
[16:58] Speaker 1: sort of exposure with out all of the downsides. Take
[17:02] Speaker 1: a look, for example, at the Freedom one hundred index
[17:05] Speaker 1: and the e T F R F R d M.
[17:07] Speaker 1: It's really a fascinating story. I'm Barry Rudolts. This is
[17:11] Speaker 1: Bloomberg's at the Money

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