Avantis Chief Investment Strategist on Small Cap Value, International Equities

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On this week’s episode of ETF Prime, host Nate Geraci was joined by Todd Rosenbluth, VettaFi head of research, to discuss the latest polling data from VettaFi’s recent Alternatives Symposium. Afterwards, Geraci talks to Phil McInnis, Avantis chief investment strategist, about the firm’s growth in assets under management from ETF products.

Crypto Education

To begin, Geraci asked Rosenbluth about VettaFi’s polling regarding cryptocurrency. During the Symposium, VettaFi asked attendees whether they believed cryptocurrencies deserved all the attention they were getting. 29% of attendees responded with a maybe, adding that they were cautiously watching cryptocurrencies at the time. Meanwhile, 20% said yes if they learned enough about it. Rosenbluth noted his satisfaction with the data. He saw it as an indicator of room for education when it comes to cryptocurrency ETFs.

Rosenbluth asserted that growing interest in the asset class can be considered good news. This is especially true given how many investors “don’t understand how these strategies can fit into a portfolio and what they actually do.”

Geraci then asked Rosenbluth whether he considered cryptocurrency to be an alternative or not. Rosenbluth responded that he believed crypto is an alternative. He clarified that he considers alternatives “to be anything that’s not stocks or bonds.” Cryptocurrency was not a focal point of discussion at the symposium. However, VettaFi surveyed the Symposium audience due to crypto being relevant and topical to alternatives as a whole.

Attendance Data

Looking at the Symposium as a whole, Geraci asked Rosenbluth if anything stood out to him overall. Rosenbluth was happy to report that over 900 attendees registered for the event, with over 400 tuning in live. In terms of attendance, the average viewer tuned in for over an hour and a half. Given the wide-ranging nature of the topics covered, the large number of viewers tuning in for long periods of time pleased Rosenbluth.

Market Outlook

Pivoting back to polling, Geraci and Rosenbluth discussed the attendees’ outlooks on the S&P 500’s performance for the remainder of the year. While many attendees remained bullish, Rosenbluth was surprised to see so roughly 37% of attendees assert that the S&P will essentially either be flat or down for the rest of the year. Rosenbluth noted how alternative strategies, such as covered call strategies, could “protect some of the downside and offer enhanced income.”

Aside from alts, Rosenbluth also noted that investors pessimistic about the S&P may wish to take a quality-focused approach. To name specific examples, Rosenbluth highlighted the Pacer US Cash Cows 100 ETF (COWZ), the VictoryShares Free Cash Flow ETF (VFLO), and the Astoria US Equal Weight Quality Kings ETF (ROE) as equity alternatives that provide quality. “Those products can appeal to people who are looking for modest growth between the markets, or even slightly down,” noted Rosenbluth.

Covered Call Demand

Focusing on covered call strategies, Geraci and Rosenbluth then discussed VettaFi’s polling. They focused on the roughly even split between investors who utilize the strategy and investors who do not. In particular, Geraci asked Rosenbluth if he expected demand for covered call strategies could increase going forward. Rosenbluth assessed that the polling indicates strong demand for the strategies as-is, and predicted that demand could mount going forward. As an example, Rosenbluth noted that the NEOS S&P 500 High Income ETF (SPYI) is seeing strong inflows as a covered call product.

“I think people want to learn more, and they’re willing to give up some of that upside in exchange for the enhanced income. Or they’re interested in protecting as much of the downside through other strategies,” added Rosenbluth.

Celebrating Avantis

To close out this week’s podcast, Geraci was joined by Phil McInnis, Avantis chief investment strategist. Geraci noted that Avantis’ ETF assets under management roughly doubled. They went from $21 billion to $42 billion in just over a year. McInnis noted the rise of active ETFs has presented more “options and tools” for advisors and investors to create portfolios. Additionally, McInnis lauded his firm for engaging in conversations with clients. They focused on what the overall plan for their portfolios may be, in order to provide quality investment options.

“The biggest piece that I think we understand and appreciate is that baseline goal that the allocators are trying to achieve. And we come from that frame of reference as we’re speaking about what we do, and I think clients appreciate that,” added McInnis.