Nate Conrad of LifeX - A New Approach to Retirement Planning

Orion's The Weighing Machine

Today, Rusty and Robyn are joined by Nate Conrad, Head of LifeX at Stone Ridge. Nate formerly served as the Head of Markets at Stone Ridge and as the President of NYDIG. Prior to joining Stone Ridge in 2016, Nate worked at Goldman Sachs as a vice president in the Interest Rates Trading business. Nate received his BSE in Computer Information Science from the University of Pennsylvania.

Key Takeaways

• [03:03] - More on Nate’s career and his current position at Stone Ridge Asset Management.
• [04:19] - What is the philosophy behind Stone Ridge Asset Management and what sets them apart as a firm?
• [05:51] - What is the elevator pitch for LifeX and why might it be a real game changer for financial advisors and investors?
• [08:55] - How do LifeX ETFs convert accumulated assets into predictable, monthly distributions?
• [10:31] - What types of government bonds do LifeX ETFs invest in and how does this strategy support reliable, monthly payments?
• [11:06] - There are other bond ladder solutions, so what makes this franchise of ETFs different?
• [13:43] - How can inflation protected ETFs address the persistent concerns around rising prices?
• [16:00] - LifeX ETFs have a fee structure that decreases overtime. What are the long-term benefits of this approach for investors?
• [18:18] - What types of investors would benefit most from incorporating LifeX ETFs into their retirement planning?
• [21:05] - How might LifeX help advisors actually grow their business as a result of the great generational wealth transfer?
• [24:45] - Other unique implementations or use cases of the LifeX products.
• [27:00] - What are the tax implications of investing in LifeX ETFs and how does this compare to other retirement income solutions?
• [29:26] - How are advisors making their allocations with these funds?
• [31:24] - What are some of the common questions or concerns that Nate hears from advisors and investors about LifeX?
• [34:37] - What resources and support does LifeX provide to financial advisors to learn more about these ETFs and help them integrate them into clients’ portfolios?
• [35:52] - What is currently Nate’s favorite investment idea?

Quotes

[03:44] - "Innovation is really at the core…[of] what we do at Stone Ridge. It all starts with hearing the problems that people have in their portfolios. What are the things that keep them from feeling financially secure? And, when you hear those problems, asking questions about the root cause and then trying to solve them with a little bit of an engineering mindset." ~ Nate Conrad

[04:42] - "If you’re not somebody in our country who is an ‘accredited investor’ or ‘qualified purchaser,’ which are standards based on wealth and not intelligence, which we really don’t like, then there’s a whole set of investments that you’re not allowed to have access to. A lot of the most diversifying assets out there tend to be in private structures that the majority of Americans can’t get access to, and that doesn’t sit well with us at Stone Ridge." ~ Nate Conrad

Links

• Nate Conrad on LinkedIn
• “Under Pressure” by Queen
• Wade Pfau White Paper
• Stone Ridge on LinkedIn
• LifeX Funds
• Stone Ridge

Connect with Us

• Meet Rusty Vanneman, Orion’s Chief Investment Officer
• Check Out All of Orion’s Podcasts
• Power Your Growth with Orion
• For important risk disclosures, visit the LifeX website: LifeX Funds

Disclosure(s) - Orion Portfolio Solutions, LLC, an Orion Company, is a registered investment advisor.

Compliance Code: 3120-OPS-12/4/2024

Important Risk Disclosures for LifeX ETFs

Definitions:

1. Distribution Yield: Distribution Yield, or Distribution Rate is calculated as the intended annualized distribution per share divided by the net asset value (NAV) of the fund. A portion of each fund’s monthly distribution is expected and intended to include return of capital.
2. TIPS: Treasury Inflation-Protected Securities (TIPS) is a type of government bond issued by the U.S. Treasury where the principal amount adjusts based on inflation.
3. CPI: The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. Indexes are available for the U.S. and various geographic areas. Average price data for select utility, automotive fuel, and food items are also available.

Footnotes:

1. The tax discussion herein is general in nature. Investors should consult their tax advisers about the effect that an investment in Stone Ridge Longevity Income ETFs could have on their tax situation. Please refer to the prospectus for a discussion of tax risks. Holdings of the ETFs in a qualified retirement account may not benefit from a tax-advantaged distribution.

Risk Disclosures:

Stone Ridge Term Income ETFs (Stone Ridge 2035 Term Income ETF, Stone Ridge 2040 Term Income ETF, and Stone Ridge 2045 Term Income ETF), Stone Ridge 2064 Longevity Income ETF, Stone Ridge 2064 Inflation-Protected Longevity Income ETF, Stone Ridge 2065 Longevity Income ETF, and Stone Ridge 2065 Inflation-Protected Longevity Income ETF.

These funds have filed a registration statement with the Securities and Exchange Commission, but it is not yet effective. An investment in the funds cannot be made, nor money accepted, until the relevant registration statement is effective. An investor should consider the objectives, risks, and charges and expenses of the funds carefully before investing. The relevant preliminary prospectus, which contains this and other information about the funds, may be obtained by calling 855-609-3680. The information in the preliminary prospectuses is not complete and may be changed. The relevant final prospectus should be read carefully before investing, and when available may be obtained from the same source. This communication is not an offer to sell or the solicitation of an offer to buy securities and is not soliciting an offer to buy these securities in any state in which the offer, solicitation or sale would be unlawful.

Investors should carefully consider the risks and investment objective of (i) the Stone Ridge 2035 Term Income ETF, Stone Ridge 2040 Term Income ETF and Stone Ridge 2045 Term Income ETF (each, a “Term Income ETF” and, together, the “Stone Ridge Term Income ETFs”), (ii) the Stone Ridge Longevity Income 2048 ETF and each other series of Stone Ridge Trust with the same investment objective and strategy that is part of the same fund family (the “Stone Ridge Longevity ETFs”) and (ii) the Stone Ridge 2048 Inflation-Protected Longevity Income ETF and each other series of Stone Ridge Trust with the same investment objective and strategy that is part of the same fund family (the “Stone Ridge Inflation-Protected Longevity Income ETFs” and, together with the Stone Ridge Longevity ETFs, the “Stone Ridge Longevity Income ETFs” and each, a "Longevity Income ETF")(the Stone Ridge Longevity Income ETFs and the Stone Ridge Term Income ETFs are collectively referred to herein as the "Stone Ridge Income ETFs"), as an investment in the Stone Ridge Income ETFs may not be appropriate for all investors and is not designed to be a complete investment program. There can be no assurance that an ETF will achieve its investment objectives.

Investors should consider the investment objectives, risks, and charges and expenses of the Stone Ridge Income ETFs carefully before investing. The prospectus contains this and other information about the investment company and may be obtained by visiting www.lifexfunds.com. The prospectus should be read carefully before investing.

An investment in the Stone Ridge Income ETFs involves risk. Principal loss is possible.

Each Stone Ridge Longevity Income ETF intends to make an identical distribution each month equal to $0.0833 per outstanding share of the ETF (multiplied, in the case of the Stone Ridge Inflation-Protected Longevity Income ETFs, by an inflation adjustment as specified in the ETF’s prospectus, which is intended to reflect the cumulative impact of inflation since the launch of the ETF) until April of the year twenty years prior to the ETF’s end year. Thereafter, to counterbalance the frontloading of the ETF’s distributions, each ETF will reduce its per-share distribution rate to a level estimated to be sustainable through the ETF’s end year, resulting in a one-time decrease of ~25% to the per-share distribution amount. This event is referred to herein as the “recalibration.” An estimate of this reduced distribution rate is provided in each ETF’s prospectus; however, there is a risk that the ETF may ultimately recalibrate its distribution to be higher or lower than this estimate.

Each Stone Ridge Longevity Income ETF is designed to support the option for members of its Modeled Cohort to continue to pursue substantially identical monthly distributions beyond age 80 by investing in a Closed-End Fund. However, the Closed-End Funds may not become available as intended, and there is no way for investors to assess the risk that the Closed-End Funds will not be launched. For example, the Adviser may determine that it is not appropriate to launch the Closed-End Funds if the Adviser believes there may not be a sufficiently diverse investor base, which is expected to be at least 100 shareholders. In the absence of a Closed-End Fund, investors may remain invested in the relevant ETF; alternatively, an investor may sell his or her shares, though investors may not have available to them an alternative investment option that provides the same level of distributions as they might have been able to receive if a Closed-End Fund were available. Shares of the ETFs may continue to be held by a shareholder’s beneficiary or may be sold at the then-current market price. However, a beneficiary of an ETF shareholder will not be eligible to invest in a corresponding Closed-End Fund unless the beneficiary is a member of the Modeled Cohort. The Closed-End Funds will be subject to different and additional risks as will be disclosed in the Closed-End Funds’ prospectuses. Unlike the Closed-End Funds, the Stone Ridge Longevity Income ETFs do not provide longevity-linked distributions and do not engage in longevity pooling. This is not an offer to sell or the solicitation of an offer to buy securities of the Closed-End Funds. A form of a Closed-End Fund’s prospectus (which is subject to revision) is included as Appendix A to each Stone Ridge Longevity Income ETF’s prospectus.

The Stone Ridge Longevity Income ETFs are subject to risks related to exchange trading, including the following:

• Each Stone Ridge Longevity Income ETF’s shares will be listed for trading on an exchange (the “Exchange”) and will be bought and sold on the secondary market at market prices. Although it is expected that the market price of ETF shares will typically approximate the ETF’s net asset value (“NAV”), there may be times when the market price reflects a significant premium or discount to NAV.
• Although each Stone Ridge Longevity Income ETF’s shares will be listed on the Exchange, it is possible that an active trading market may not be maintained.
• Shares of each Stone Ridge Longevity Income ETF will be created and redeemed by a limited number of authorized participants (“Authorized Participants”). ETF shares may trade at a greater premium or discount to NAV in the event that the Authorized Participants fail to fulfill creation or redemption orders on behalf of the ETF.

Each Stone Ridge Income ETF has a limited operating history for investors to evaluate, and new ETFs may not attract sufficient assets to achieve investment and trading efficiencies.

For additional risks, please refer to the relevant prospectus and statement of additional information.

The Stone Ridge Income ETFs are distributed by Foreside Financial Services, LLC.