Michael Loukas, Chief Executive Officer, TrueMark Investments, TrueShares ETFs
ETF.com: What’s your investment philosophy?
Loukas: TrueShares specializes in thematic, actively managed ETFs. The nascent asset classes of the “new economy” offer investors the most favorable environment in which to pursue capital appreciation.
The combination of competitive inefficiency and eye-popping growth potential that exists in these dynamic segments makes them well-suited targets for our active, alpha-seeking investment strategies. We strongly believe that expert navigation of these landscapes is a must, and it’s this belief that represents the backbone of our investment philosophy.
ETF.com: What’s unique about your value proposition? What sets you apart relative to your competitors?
Loukas: Two main things. First, concentrated portfolios. TrueShares constructs concentrated portfolios that are specifically designed to capture the potential alpha of a secular growth story. Relying on our research process, the goal is to choose the winners and avoid the losers in each of the industries we invest in, and in doing so, potentially deliver better long-term results to our investors.
We strive to buy and hold companies with a competitive edge, deepening concentration in the “category winners” as they assert themselves. In our view, long-term concentration in these companies is the most efficient method of capturing alpha in hypergrowth industries.
Secondly, industry-specific subadvisors. TrueShares will only enter an asset class in which we have identified an appropriately capable investment manager. We marry highly credentialed, experienced and industry-specific portfolio managers with deeply knowledgeable industry advisors.
This creates credible and effective investment teams with the knowledge and reach to understand real-time trend shifts in these quickly evolving industries. The integrity and thoroughness of this manager selection process is vital to delivering the true, targeted, actively managed exposure to the modern economy asset classes that our clients have come to expect.
ETF.com: How do you start your day? Coffee?
Loukas: A survey of our portfolio managers will reveal one common theme: Read. Essentially, absorbing information comprises the first couple hours of any given trading day—everything from sell-side research, industry trends and the overnight news cycle to company-specific developments.
The most productive time of the day can be the 1 ½ to two hours leading up to market open. While we prefer secular growth stories that possess long-term growth trajectories, and therefore require less trading, active portfolios are never on auto-pilot. Our portfolio managers need to breathe with the market.
Quick description of ETFs:
TrueShares Technology, AI & Deep Learning ETF (LRNZ) – $12 million in AUM, 0.68% expense ratio. LRNZ invests in companies that its subadvisor, Black Hill Capital, believes have a competitive advantage with respect to the development and use of artificial intelligence, machine learning or other deep learning technologies.
Companies within LRNZ reflect the subadvisor’s belief that the most significant AI corporate growth or hypergrowth opportunities will develop in one of four areas: data, hardware, algorithms, sophisticated AI users (such as cloud computing, cybersecurity, medical research, etc.)
Portfolio construction also revolves around Black Hill Capital’s core philosophy that technology sectors are a “winner take all” environment and new tech cycles will eventually produce one segment “winner.”
TrueShares Structured Outcome ETF Series (AUGZ) (Next Month: SEPZ) – $7.5 million in AUM, 0.79% ER. This series of ETFs uses a “buffer protect” options strategy that seeks to provide investors with returns (before fees and expenses) that track those of the S&P 500 Price Index while seeking to provide an 8-12% downside buffer (with the advisor targeting 10%) on the first of that index’s losses over a 12-month investment period.
The strategy is implemented through the purchase and sale of options on the S&P 500 Price Index or an ETF that tracks the S&P 500 Price Index. While there is no guarantee the fund will be successful in providing these outcomes in any period, the goal is to provide uncapped equity market upside participation (subject to options pricing) with a measure of downside risk mitigation.
TrueShares ESG Active Opportunities ETF (ECOZ) – $5.2 million in AUM, 0.58% ER. ECOZ is a portfolio of large U.S. companies with attractive investment profiles that have also been screened for environmental, social and governance (ESG) standards, including a particular emphasis on carbon footprint.
The portfolio will generally target 75 large cap positions across all sectors, screened for proprietary ESG characteristics that the fund’s subadvisor, Purview Investments, believes are signify attractive long-term opportunities. This evaluation process adjusts for both company- and sector-level ESG characteristics to identify industry champions in ESG parameters.