WA MAGAZINE JanFeb PDF A - Flipbook - Page 14
ETF INNOVATORS
CONTINUED FROM PAGE 13
rough, the real work happens in the
periphery, where you can tell clients stories about why they own what they own.
Sometimes, those stories are purely
economic, in which case you generate
alpha and improve the client’s overall financial position. There are plenty of thematic funds to serve just about every possible narrative, slicing the overall market
by country, by industry, by commodity, by
fields of technological innovation.
Just listen to Frank Holmes at U.S.
Global Investors talk about JETS, and
you’ll probably find a client who would
love direct exposure to global aviation.
Love or hate Cathie Wood, think of what
she achieved with her “science fiction”
investment approach: hold as long as it
takes for the big future to arrive.
Or go down the food chain to smallcap funds. It’s the classic active management proposition: skate past where the
hockey puck is now to make sure you
end up where the puck will be.
This flies in the face of every argument Malkiel made. But in a world dominated by passive index funds, a bet on
uncorrelated human insight has diversification benefits.You have to trust the right
human to do better than a random walk.
ENHANCED INTELLIGENCE
HULL TACTICAL ASSET Allocation does exactly what the name
e in the portfolio as market signals
implies, shifting long/short exposure
evolve. CEO Petra Bakosova explains:
et nonpublic information. These are things
This is not some secret
the advisors could be doing themselves, but they take energy, they
take time, they take money just collecting the data and running the
models. There’ss computing power and everything else.
einventing the wheel,
And so, we think instead of everybody reinventing
e hoping to be the wheel that the advisors can use to
we’re
deploy their vehicles on.
I know everybody loves long exposure, and we do
e, but at the same time,
have a long core market exposure,
I’m sure everybody’s clients are paying attention to the
news, and everybody’s clients are concerned about
different indicators. Our HTUS ETF gives advisors a
chance to put something in their client’s portfolio that
will pay attention to what’s going on in the world.
Science makes the humans smarter.
Everyone has a favorite metric, a promising factor, a way to shift exposure as
the market winds change. If nothing
else, bringing in an active share lowers
your correlations. What else is diversification all about?
FRESH IDEA 5:
CONCENTRATION FOR ENGAGEMENT
Now, however, there’s new focus on slotting these funds into client portfolios to
NEW FRONTIERS
GRAYSCALE ESSENTIALLY invented the mass-market crypto portfolio and then
helped the regulators embrace the future. David LaValle runs their ETF operations.
Here’s what he says about digital assets:
Historically, there was an asymmetric risk for wealth managers and advisors to
suggest an allocation to digital assets. And now, we’ve seen that asymmetric risk invert
completely, wher
where if you are a wealth manager and you don’t have a strategy on digital assets, you have an asymmetric risk to the futur
future of your
franchise.
We’re not her
here to say that every portfolio needs an allocation to
W
digital assets. We’re
here to say that you need to have a strategy and
her to help educate. We know we’re the expert in the
Grayscale is here
that’ something that we like to champion.
space, and that’s
pr
This process
has gone through three presidents at the NYSE.
thr
This has gone through
several administrations at the SEC, and
tr
it takes perseverance, and it takes a tremendous
amount of
commitment to the asset class and certainly a commitment
to the product wrapper and a desire to push this over the
finish line, We feel really proud about that. We’re here to
stay. We have been here through market cycles. We’re
dedicated to the asset class.
14 | JAN/FEB 2025
help meet specific investment objectives
and help advisors boost engagement.
If you think AI is hype, I don’t blame
you. But the periphery is where highimpact binary bets go. The ones that
don’t pay out don’t move the overall
needle much to the downside. The ones
that do pay out are transformational.
And your clients will cheer “their”
stocks like a favorite sports team. I never
forget the story of the hedge fund manager who bought a toy store so it would
be easier to show the kids exactly what
the family owned and what dad did.
It was a tiny slice of the overall portfolio, but it was the one people could talk
about. That’s the thematic piece. Find out
what your clients are passionate about.
Get them in it so they can cheer.
But what about noneconomic investment goals? Conscience funds are making a comeback outside the controversial
ESG category. If your clients would
respond to that kind of experience for
their own portfolios or for philanthropic
activity, I think they’d thank you for it.
FRESH IDEA 6:
THE EXPANDED UNIVERSE
Whole asset classes emerged out of nowhere. Others got the technological and
regulatory lift they needed to make the
leap from institutional environments to
the ETF format.
Think private equity and private debt.
Think derivatives. Think classic hedge
fund strategies: all of the return characTHEWEALTHADVISOR.COM
