Tuttle Capital Embraces Role of ETF Disruptor

You might not know it by his social-media activity, blogging or ETF filings, but Matthew Tuttle believes the best investing opportunities are found in politically neutral companies. 

The founder of Tuttle Capital Management in Greenwich, Connecticut, Tuttle appears to relish the idea of challenging the status quo, especially if that means pushing against popular political and social trends. 

 “Without a doubt, I want to be disruptive,” he said. “I’m on the back nine now, with more life behind me than in front of me, and I really want to make a difference, which means taking on things that piss me off when nobody else has the guts to.” 

The general temperature of Tuttle’s passions can be measured by his GoWokeGoBroke Twitter account and his daily blog, The Woke Street Journal. But he puts rubber to road with his ETF business that includes such offerings as the Tuttle Inverse Cramer Tracker ETF (SJIM), which bets against stocks favored by CNBC host Jim Cramer. 

He launched and then sold the AXS Short Innovation Daily ETF (SARK), which shorts the ARK Innovation ETF (ARKK), and the AXS TSLA Bear Daily ETF (TSLQ), which provides inverse exposure to electric-car maker Tesla's stock. Among Tuttle’s 12 filings currently before the Securities and Exchange Commission, you’ll find the Tuttle Capital Inverse Social Conscious ETF (GWGB), the Tuttle Capital Self Defense Index ETF (GUNZ) and the Tuttle Capital 2X Inverse Regional Banks ETF (SKRE). 

“Tuttle has certainly ruffled a few feathers with products such as SARK and the Cramer ETFs, but I actually appreciate the creativity needed and gumption to launch these types of offerings,” said Nate Geraci, president of The ETF Store. 

“Without entrepreneurial operators such as Tuttle, who would be pushing the envelope on product development?” Geraci added. 

“I’m an advocate of upstart issuers attempting to innovate and push the industry forward.” 

Tuttle’s a Fledgling Operation 

At less than $350 million across seven exchange-traded funds, Tuttle Capital Management is still very much a fledgling operation, but one with big aspirations. 

Tuttle, 54, has worked in financial services since 1991, formed his own registered investment advisory firm in 2003 and launched his first ETF in 2015 at the same time he shut down his advisory business. 

As one might expect with an ETF issuer trying to make a mark, Tuttle typically swings for the fences and has had some hits and some misses. Eric Balchunas, ETF analyst at Bloomberg Intelligence, lists SARK among the hits. 

“At one point, that fund had $620 million as it captured the fall of ARKK,” he said. “When Tuttle hits, he doesn’t need a lot of assets to be profitable because his fees are so high.” Balchunas said issuers like Tuttle that live on the fringes of the mushrooming $6 trillion ETF industry can survive and experiment because they live in a “Vanguard-free zone.” 

“I look at Tuttle as someone who’s really trying to cook up stuff that appeals to the day trader mindset,” Balchuna said. “Whether you like him or hate him, what he’s doing is making something convenient, and he has launched stuff that hasn’t worked, for sure.” 

Betting for and Against Jim Cramer 

Among the misses, there’s the Long Cramer Tracker ETF (LJIM), which liquidated last week after attracting just $1.3 million since its March launch. The inverse version, SJIM, is still around even though it has attracted just $3.4 million. 

Balchunas said both the long and short versions missed the mark by offering long/short exposure inside each fund. Instead of just going long Cramer’s picks in the long fund and shorting his picks in the inverse fund, Tuttle got creative by offering long and short exposure of Cramer’s likes and dislikes inside each fund. Balchunas said the strategy effectively watered down both the long and short exposures. 

“He was trying to isolate the Cramer factor by going long and short in each fund, but no one cares about low volatility in the ETF space,” Balchunas said. 

It would be rude to suggest that Tuttle is throwing everything against the wall to see what might stick, but he is moving fast in a few different directions. For starters, that advisory business he shuttered in 2015 is being reopened with a tidy platform of model portfolios that will be available to both individual investors and other financial advisors. 

Three New Strategies

As an unabashed critic of buy-and-hold investing, Tuttle is inviting investors behind the curtain to access any of his three new models. 

The Shareholder First Index is a passive strategy that will be offered as a separately managed account. The index, which will be rebalanced quarterly, will be populated by what Tuttle deems to be “politically neutral companies.” 

The next strategy is an ETF model portfolio that will be actively managed and borrow a few pages from the endowment model that Tuttle wrote about in his 2009 book, “How Harvard and Yale Beat the Market: What Individual Investors Can learn From the Investment Strategies of the Most Successful University Endowments.” 

Tuttle said that model is currently in a strong defensive position that includes a 33% weighting in Treasury ETFs, 33% in equity ETFs and 33% in trend following strategies. 

The third strategy, which will start off as a separate account and could also be launched as an ETF in the future, is a macro focused swing trading strategy. “It will be agnostic between long and short,” Tuttle said. 

“We’re going to be looking to buy dips in stocks, and short things that are over extended,” he said. 

The swing trading strategy is the theme of the book he is currently writing. 

“I see what’s going on in portfolio strategy and without bonds as a ballast, which they haven’t been, the outcome really sucks,” he said. “I think there’s something different beyond buy and hold. The key is, you want to be agnostic between long, short and cash, and you want to be nimble.”