At The Money: At The Money: Investing in Freedom (March 25, 2026)
The freest countries generate the best returns for investors. That is the thesis underlying the Freedom 100 EM Index ETF, and its proven itself over the past 1, 3, and 5 years. Perth Toll 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.
Full transcript below.
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About this week’s guest:
Perth Toll 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.
For more info, see:
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Masters in Business
LinkedIn
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TRANSCRIPT:
Barry Ritholtz: On today’s edition of At The Money, we’re going to discuss how to avoid those countries that are geopolitically dangerous to your wealth: China, Russia, Saudi Arabia, Egypt, and Turkey.
To help us unpack all of this and what it means for your portfolio, let’s bring in Perth Tolle. She’s the founder of Life and Liberty Indexes and creator of the Freedom 100 Emerging Markets ETF, stock symbol FRDM. She was named one of 10 people to watch by Wealth Management Magazine, and one of 100 people transforming business by Business Insider. Her ETF, the Freedom 100 EM Index, manages over 2 billion dollars and has beaten the S&P 500 over one, two, and three years. In 2025, FRDM was up 67%. That’s double the MSCI Emerging Markets Index, which was up about 33–34%, which itself was double the S&P 500, which was up 17.9%.
Perth, before we get into the details, remind us about the Freedom Index—what gets excluded and why?
Perth Tolle: The Freedom Index is basically a freedom-weighted emerging markets strategy that uses third-party quantitative freedom metrics to weight countries instead of using market cap. With market-capitalization-weighted indices, you get a high weighting to autocracies, and some of the world’s biggest autocracies have a very concentrated weight. With freedom-weighting instead, you get a higher concentration in the freest countries in the world, because we believe that’s where we’re going to find the best growth stories going forward.
Barry Ritholtz: Makes sense. I know the index looks at three broad categories to screen out different countries: civil, political, and economic concerns. Explain how you ended up on those three items.
Perth Tolle: We felt it was extremely important to encompass all different kinds of freedoms, not just personal freedoms and not just economic freedoms, because all freedoms work together. One of the authors of the data set that we use has said that freedoms work together like parts of an automobile. You can’t have the steering wheel without the transmission—the car still won’t run. So you have to have both personal freedoms, like civil and political freedoms, encompassing things like terrorism, torture, trafficking, women’s rights, freedom of speech, media expression, assembly, religion, civil procedure, criminal procedure, judiciary independence and things like that.
You also need the economic freedoms that we’re all more familiar with as investors—things like taxation, rule of law, private property rights, business regulations, soundness of monetary policy, and freedom to trade internationally.
All of these things added together give us a composite country score from our data think tanks, the Cato Institute and the Fraser Institute, and we use that composite score on the country level to derive our country weights.
Barry Ritholtz: I want to dig deeper into those three broad subjects, but before we do, there’s been a lot of pushback on ESG-type investing and morality-based investing. When I hear names like the Cato Institute and the Fraser Institute, these are very conservative entities, not the sort of groups you think of as, “Oh, this is just another woke way of moving money around.” Investing in freedom really is a fairly well-defined way to screen out risk, bad players, and increased risk, isn’t it?
Perth Tolle: The Cato Institute and the Fraser Institute—I’m not sure what you mean by “very conservative.”
The Fraser Institute is known for its economic freedom data, while the Cato Institute is more focused on the personal freedom side of it—more political and civil freedoms. Both are entities that take no government grants, so they don’t take any grants from even the U.S. or Canadian governments, where they’re based.
That was important to me because we all know the World Bank debacle a few years ago, where they took money from China and, under Chinese coercion, changed some of their scoring. They had to scrap a very useful index, which we used, the Doing Business Index. The community is still trying to replace that.
This independence was important to me—they are independent from government coercion. Another thing I noticed working with them over the years—and by the way, we’re completely independent from each other, so I have no influence on their country scoring, and they have no influence on our country allocations—is that having permission to use their data set has given me some insight into how they work.
One thing that really impressed me was that going into 2016 and going into 2024, a lot of the more conservative voices were kind of going along with the political environment, whereas these groups never did. They called out the dangers that they saw in the American political situation before 2016.
In my opinion, this is a group that is extremely unbiased toward any government, partly because they are completely privately funded. I’ve seen their third-party independence firsthand through this work and this data set, which is completely third-party for them. We are using their third-party measurements, so there are two layers of third-party objectivity. I’ve been really impressed with how unbiased and neutral they have been, and I would even say centrist, when it comes to looking at the government and political situation both in the U.S. and outside the U.S., and in their commentary there.
Barry Ritholtz: We’ll talk a little bit about the U.S. later. I want to dive into these three broad subject matters that drive the index, some of which seem a little obvious, some of which not so much. Let’s start with the civil freedoms, where you’re looking at violent conflict, organized crime, disappearance, detainment, torture, and terrorism. All those things sound like they’re not related to economics, but they also seem to create a terrible environment in which to do business.
Perth Tolle: If you can’t walk down the street without being concerned about being shot, then you can’t really be doing business. That’s the idea there. If you want a more colloquial way of looking at it, it’s the right to life, the right to liberty, and the right to property. If you don’t have life, you don’t have anything else. That is the basis of all the other freedoms, and I put that right to life in the civil freedoms category.
Barry Ritholtz: Now let’s talk about political freedoms. Some of these make a whole lot more sense: rule of law, due process, independent judiciary, multiple political parties and not single-party rule, freedom of the press, freedom of expression. How do all of these things translate into better investment returns?
Perth Tolle: I’m going to focus on freedom of the press and expression for a moment. Without freedom of the press or freedom of expression, there’s no independent verification of any data, whether it comes from governments or companies. There’s no way to know whether any of that data is accurate or complete. You see that in some autocratic countries—they’re no longer publishing some of their economic data because they don’t want third-party scrutiny from other countries, and in their own countries they’ve already quashed it.
Without third-party verification of data—which is what investors use to measure the impact of their investments—there’s no way to measure the true impact of your investments or whether your analysis is even correct.
Barry Ritholtz: Let’s stay within political freedoms and talk about the rule of law and an independent judiciary, given the sanctity of contracts and how important it is to maintain that. How significant is an independent judiciary to this index?
Perth Tolle: There are 87 variables that go into the country-level composite score, and an independent judiciary is one of those. It’s just as important as all the others. As I said, all the freedoms work together like parts of an automobile. I would say it is of utmost importance, especially in business, because if you don’t know if your contracts are going to be upheld, how do you even enter into contractual agreements? How do you even start that business relationship?
On the more extreme end of that, in emerging markets where there is no independent judiciary and no real rule of law, anyone can be arrested, disappeared, or detained for political reasons that have nothing to do with their actual business. We saw this when Jack Ma disappeared—again using China as a prime example—because he said something at a conference that the government didn’t like. His IPOs were scrapped and many other tech entrepreneurs have disappeared since then.
In countries without rule of law, judicial independence, and due process, you see things like China’s 99% conviction rate.
Barry Ritholtz: That’s a pretty substantial conviction rate, isn’t it?
Perth Tolle: They must have some great prosecutors over there. Those are very basic, fundamental things that you need in order to conduct both life and business, and I think most of Wall Street overlooks them.
Barry Ritholtz: Let’s talk about the third leg of the stool: economic freedoms. These include property rights, sound monetary policy, independent central banks, free trade, business, credit and labor regulations, and then the degree of government interference in private markets. All of these are obviously significant to operating a business and investing in publicly traded companies. Tell us about economic freedoms in the emerging-market world.
Perth Tolle: I think economic freedoms, of all the freedoms, get kind of a bad rap because capitalism has its critics. But if you don’t have the freedom to conduct business and you don’t have the freedom to use your own resources as you see fit to contribute to the world, then you don’t really have freedom. If the government tells you what your occupation is to be or whether you can sell fruit on the street—as we saw in the Arab Spring—whether you can provide a living for your family, and you’re dependent on the government to give you that fundamental right, then you’re not really free. Without economic freedom, you have no freedom.
As for the other things you mentioned in the economic freedom data set—private property rights, free trade, soundness of monetary policy—all of those are things that I think Wall Street has traditionally taken for granted because we usually work in countries that already have them. That’s how we can be myopic to the freedom premium in emerging markets, because in emerging markets these things cannot be taken for granted; not all of them have these freedoms.
Barry Ritholtz: How do you think about the Freedom Index—is it a values-based fund, a risk-management tool, or simply a pure return-seeking strategy?
Perth Tolle: I would say 95-plus percent of our clients are using it as a pure “freedom premium” strategy. They believe that freer countries will outperform in the long run. We do have some investors who came in during the early days when ESG was a big thing, and they have ESG portfolios. But I think that’s going away a bit. Most of our clients use this because they believe it will outperform.
Of course, now after the outperformance that we’ve had in the out-of-sample, live performance of the fund, most people are using it in that way—as their core emerging-markets strategy.
Barry Ritholtz: Here’s the pushback I’ve heard: markets are very efficient. When it comes to things like political risk, state ownership, capital controls, and rule of law, people will say, “Hey, the markets have already priced that political risk in.” How do you respond to that?
Perth Tolle: At the height of China inclusion during COVID, in 2020 and 2021, the MSCI Emerging Markets Index had 41% allocated to China. In 2021 and 2022, the China tech inclusion happened and a lot of investors lost a lot of money. At the same time, Russia invaded Ukraine, and Russia’s market went to zero. Nobody saw any of those things coming—the war, COVID—all of these events that exacerbated autocracy risk in many countries around the world.
I would say that the metrics we’re using for both personal and economic freedom are traditionally overlooked by investors, and people are only now becoming more aware of them. That’s due both to the outperformance of the freer countries and the drastic declines in the unfree countries. Even now, investors are asking, “Where can we find pockets of value in China?” There’s still a lot of blind investing into these countries as if all these basic foundational freedoms are in place, completely ignoring that they’re not. So I would say these risks are far from being priced in, and we see that in the performance gap as well.
Barry Ritholtz: Really amazing. To wrap up: if you’re a U.S. or Canadian-based investor and you’re interested in getting exposure to emerging markets via an ETF—and you don’t want to funnel money to autocrats and dictators—and you want to invest in the freest countries, whether that’s a values-based decision, a risk-management decision, or simply because it has demonstrated over the past few years to be a return-seeking strategy, then take a look at the Freedom 100 EM Index ETF, symbol FRDM. I’m Barry Ritholtz. You are listening to Bloomberg’s At The Money.
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