Advisor Behavioral Trends, Strategas Macro Momentum ETF

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On this week’s episode of ETF Prime, host Nate Geraci was joined by VettaFi Chief Digital Product Officer Saleem Khan to discuss VettaFi’s latest behavioral intelligence data for the month of March. Later, Geraci was joined by Chris Verrone, Strategas’ head of technical & macro research, to talk about the Strategas Macro Momentum ETF (SAMM).

Behavioral Intelligence Explainer

To begin, Geraci asked Khan to explain what behavioral intelligence is and how it’s compiled. To summarize, Khan referred to behavioral intelligence data as “the digital body language of what advisors are doing on the web.” Khan explained that the data collected consists of actions, activities, and habits that individual advisors or advisor groups are exhibiting while online. He added that this data can include metrics like webpage visits, attending webcasts, social media engagement, or podcast listens, and can signal what asset classes investors are interested in at the time.

“We’re able to delve in at the asset class level, but then also very granular levels as well, down to energy, gold, crypto, thematic, or the individual sector. And we’re able to see exactly what advisors are engaging with from a digital standpoint,” Khan explained.

U.S. Equity Interest

The first trend Khan noted in the month of March was the popularity of U.S. equities. While they have been in a bit of a downturn in April, Khan noticed strong engagement signals toward U.S. equities in March. Specifically, they made up 35% of the exposure for content engagement in March, and the second highest asset was international equities, at 20%. Between domestic and international options, equities as a whole comprised nearly 55% of content engagement.

“Advisors were quite interested in the asset class, as you saw in March. I think of both the SPY and QQQ, and you saw the continued run-up in both Nasdaq and the S&P 500. So that continued in March, and it wasn’t abating,” Khan said.

Volatility At Play

Moving on, Geraci asked Khan to discuss another major trend that VettaFi research found, that being evidence of investors embracing dynamic allocation strategies. To measure this, Khan shared that his team analyzed the fluctuations of engagement across different asset classes. As an example, he noted that U.S. equity engagement, while strong in March, saw a standard deviation of over/under 16%.

Khan added that March’s volatility may lead to increased interest in different asset classes or investment sectors. Looking at these large fluctuations, he said, “It starts to beg the question: Are advisors starting to rethink their strategies, and are they starting to get either dynamic or tactical?”

Leveraged and Inverse Products

Geraci then asked Khan to explain the third trend that the VettaFi research uncovered. He prefaced this by noting that this particular trend came as a surprise to him. In March, Khan noted that investor interest in leveraged and inverse products began to peak. While noting that leveraged and inverse products do not typically form a core portion of the portfolio, Khan said that advisors saw a “potential opportunity here to maybe allocate a little bit to these leveraged and inverse products.”

Early April Findings

Wrapping up the discussion on March’s data, Geraci asked Khan if there are any growing April trends that are particularly noteworthy. Khan observed that “some of the risk-off strategies and cautious strategies are coming back in vogue.” Additionally, he noted that advisors are becoming more interested in commodities and alternatives in April.

Khan reiterated that fluctuation remains significant, with U.S. and international equities seeing “even more dramatic” fluctuation in April. He explained the fluctuation trend, stating that advisors are “clamoring for as much information as they can” regarding what is going on with equity markets. This fluctuation comes as advisors display more interest in commodity and fixed income products, according to Khan.

Leadership and Momentum

To close out this week’s podcast, Geraci was joined by Chris Verrone, Strategas’ head of technical & macro research. Geraci asked Verrone to discuss the Strategas Macro Momentum ETF (SAMM), which Verrone is a portfolio manager on. Verrone expressed that Strategas wants to provide advisors, retail investors, and wealth managers options to invest with Strategas analysts. He highlighted the fund’s active management, and Strategas’ experience in technical, momentum, and trend-following investment strategies.

“We’re ahead of the benchmark. We’re in the right groups, we’re seeing relative leadership. And that’s really at the heart of what we’re trying to accomplish with SAMM. The pursuit of leadership, and the pursuit of momentum, no matter where it exists,” Verrone added.