On Super Bowl Sunday, hundreds of advisors will gather at the Exchange conference. The conference does not officially kick off (had to do it) until Monday morning. However, many will join VettaFi and industry friends for an ETF study hall Sunday between 1-5 p.m.
The goal will be to get up to speed on ETF due diligence with help from experts. Two of them are John Davi of Astoria Advisors and Katie Stockton of Fairlead Strategies. I caught up with them before Exchange to learn more.
Can you tell us a bit about how your firm fits into the ETF ecosystem?
Stockton: Fairlead Strategies acts as subadvisor and portfolio manager for the Fairlead Tactical Sector ETF (TACK ), which launched in March 2022. The fund’s advisor is Cary Street Partners, a longtime client and friend of Fairlead’s. Fairlead was founded in early 2018 as an independent research provider focused on technical analysis. Fairlead continues to provide research and consulting services to institutions and individuals under a subscription model. The ETF was a natural addition to Fairlead’s research business, providing an investable product driven by our technical methodology and aligned with client needs.
Davi: Astoria’s servicing as an OCIO has a unique vantage point compared to other ETF sponsors. We are one of the few, if not only, OCIO firms that has an ETF offering. We issue ETFs because there is a gap in the ecosystem, and strongly believe other advisors will also find value in our products. That’s why our funds typically garner good assets upon launch. One example is the Astoria US Quality Kings ETF (ROE ), an equal-weighted U.S. high-quality ETF. ROE launched on August 1, 2023 and surpassed $50 million within eight trading days.
See related: Rosenbluth on CNBC Talking About Exchange
Why are you excited to be attending Exchange 2024?
Stockton: Exchange brings together seemingly everyone in the ETF ecosystem, including providers, vendors, and end users. The content is highly relevant and informational for us at Fairlead, and the programming is dynamic and fun. We’re excited to contribute to the content by sharing our experiences, and to educate others about the benefits of TACK, while soaking up a lot of knowledge and a little sunshine.
Davi: It’s the best-in-class conference where the entire ETF community gathers together. For intelligence, idea sharing, top-notch thought leadership, and to connect on a personal front. In short, it’s also a lot of fun!
What's one thing advisors need to know about building a portfolio using ETFs?
Stockton: We believe that it’s essential to approach investing in ETFs from a systematic perspective, with a consistent methodology backing up investment decisions. The methodology does not need to be complicated, but it should have some element of trend-following and the support of a backtest. We recommend a long-term strategy, but either way, it should be aligned with the general time horizon and risk tolerance of the clients.
Davi: Don’t look in the rearview mirror when building a portfolio. Just because an ETF went up over the past one year doesn’t mean it will continue. Don’t be obsessed with low expense ratio products. Products with higher active share and fees can be a nice complement to your core, low-cost ETF holdings.
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