The ETF founders who actually change how we invest in an asset class are rare.
Perth Tolle is in that rare company.
Seven years ago, she challenged the entire premise of emerging markets investing. Today, FRDM manages $3 billion, and her conviction has paid off.
On the latest Bangers Only, I sat down with Perth, founder of Life + Liberty Indexes and creator of the Freedom 100 Emerging Markets ETF (FRDM). We've known each other since she was getting started, and it's a real joy to watch what she's built come into its moment.
A Different Question
Most EM ETFs are weighted by market cap, which means the biggest autocracies get the biggest weights. At the COVID peak, China alone was 41% of the MSCI EM Index, the same country with the weakest property rights and the most capricious regulators owning the most of your emerging markets portfolio.
Perth asked a different question. What if we weighted by freedom instead?
FRDM uses the Cato/Fraser Human Freedom Index - 87 variables spanning civil, political, and economic freedoms. Rule of law. Property rights. Judicial independence. Soundness of monetary policy. The composite score drives the weighting. No China. No Russia. Heavy Taiwan, South Korea, Chile, and Poland.
The Origin Story
The aha moment came long before Perth knew what an ETF was. At 22, she was living in Hong Kong and had a friend in Shanghai who didn't exist on paper; the one-child policy meant her parents had registered only her brother.
"That could have been me. These policies matter for the future of a country, a society, and the market."
Ten years as a Fidelity advisor later, a Russian client in Houston told her he wouldn't invest in Russia. This was 2014, eight years before the war. No product existed. So she built one.
The Performance Story
The last 5 years tell the story:
FRDM: +105% (15.09% CAGR)
EEM: +30% (5.25% CAGR)
Russia went to zero for cap-weighted funds after the invasion. FRDM had none. Meanwhile the freer countries captured every major growth story of the decade, AI through Samsung and SK Hynix, semiconductors through TSMC, Poland's 2023 democratic reset, Chile's institutions holding firm.
Hungary: The Latest Case Study
The timeliest piece of the conversation? Hungary. Orbán out after 16 years. Freedom score 7.37, above the EM average of 6.2. The peaceful transition unlocked $9 billion in EU aid.
"For 16 years autocracy was winning and creeping in. Now they've overturned it, and the ripple effects of freedom are going to be bigger than the ripple effects of autocracy. It swallowed it whole."
That's the Poland playbook repeating. And it's why this framework is only getting more relevant.
Emerging markets investing isn't just about growth anymore.
It's about who you trust with your capital.
So proud of what Perth has built. Go give it a listen.
Timestamps
(0:00) Welcome & Meet Perth Tolle
(2:15) Freedom-Weighted vs. Cap-Weighted
(3:45) Inside the Human Freedom Index
(4:50) Perth's Origin Story: Shanghai to Fidelity
(6:45) Why Removing China and Russia Mattered
(9:40) FRDM vs. EEM: The 5-Year Scoreboard
(12:35) Hungary After Orbán
(15:20) The Early Days and $3 Billion Later
(23:00) FRDM as a Risk Management Tool
(26:10) Where to Find Perth
