Mike Venuto, Co-founder & Chief Investment Officer, New York-based Toroso Investments:
We continue to invest in growth themes at reasonable fundamentals—ETFs like the Direxion All Cap Insider Sentiment Shares (KNOW), the Emerging Markets Internet & Ecommerce ETF (EMQQ) and the Oppenheimer Mid Cap Revenue ETF (RWK). We look to avoid the concentration in the overvalued growth names that’ve stretched market valuations.
We’re constantly evaluating new global growth themes like the Wearable Technology (WEAR) or the Global X Internet of Things (SNSR) or the Amplify Online Retail (IBUY). The key for us is reconciling the belief in the theme with the purity of the index exposure and reasonable market fundamentals.
Another concept we’ve liked for many years is characteristic-based indexes that use nontraditional financial data like insider-buying KNOW or spin-off [the Guggenheim S&P Spin-Off ETF (CSD)] to create active share and potentially alpha.
There are two new consumer-oriented ETFs in this space from Exponential ETFs that we find interesting: the American Customer Satisfaction Core Alpha ETF (ASCI), which focuses on customer satisfaction, and the Brand Value ETF (BVAL), which equal-weights unrealized brand value.
Our largest challenge is finding high-income solutions. We have described many times our barbell approach to income investing, where we are combining high-income ETPs with safety assets. Many of these ETFs have appreciated and now produce less income. We are constantly screening the universe of ETPs that produce the most income per unit of volatility.