Let's Talk ETFs

After years as an index fund evangelist at top ETF firms like BlackRock and SSgA, Dodd Kittsley did a 180 of sorts, becoming Director of active manager Davis Advisors. Still opposed to the “closet indexing” that marks many active managers, Dodd was drawn to Davis’ unique approach to active management: High-conviction, low turnover, low cost, tax-efficient and fully transparent. He joins the first Let's Talk ETFs of 2021 to go under the hood of Davis’ four ETFs, which now have more than $1B in AUM between them: DWLD, DUSA, DINT and DFNL, and discuss why his firm is currently overweight the Financials sector.
Show Notes
·  3:00 - How did Dodd end up in the ETF space and why did he choose join a small firm after so many years at behemoths like BlackRock and State Street?
·  9:00 - What is Davis's approach and what makes it unique? What's the research process like?
·  14:15 – Other active managers cite things like front-running and protection of intellectual property as major concerns. Why is this not the case for Davis?
·  22:15 - Do you have plans to go the semi-transparent active management route in the future?
·  25:15 – Going under the hood of Davis’ four ETFs:

The $330M Davis Select Worldwide ETF (DWLD)

The $310M Davis Select U.S. Equity ETF (DUSA)

The $270M Davis Select International ETF (DINT)

The $150M Davis Select Financial ETF (DFNL)


· 28:00 - Is Davis’ approach entirely a “bottom up” one?
· 30:15 - How much turnover is there? How do the funds look from a tax perspective?
· 38:45 – DFNL and the case for Financials: Given the current historically low rate environment and flat yield curve, why is Davis currently overweight Financials?
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The Coronavirus economy has created a clear dividing line between winners and losers, resulting in wildly divergent market returns for different sectors in 2020. One of the pandemic's biggest winners has been the online sports betting and iGaming space, with people forced find ways of entertaining themselves from the safety of their own homes. One of 2020's hottest fund launches, the Roundhill Sports Betting & iGaming ETF (BETZ) has handsomely rewarded early investors, returning 66% in just over 6 months. With California and Texas starting to seriously consider legalizing sports betting, Roundhill Investments founder Will Hershey re-joins Let's Talk ETFs to explain why he thinks massive growth lies ahead.
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2020 has been a banner year for grain futures specialist Teucrium ETFs, with its assets under management more than tripling. Leading the charge since the COVID-19 late March lows have been the Vermont-based ETF issuer's SOYB and CORN funds - powered by record Chinese soybean and corn imports. Teucrium founder and CEO joins Let's Talk ETFs to explain why even with strong recent returns, this may be just the beginning of a prolonged leg up in grain prices.
Show Notes

3:45 - Why have grain funds resonated so much with investors this year?

5:30 - How has the pandemic affected the productions and consumption of grains?

7:30 - A look at the underlying fund structure and taxation

10:30 - Selecting the right futures contracts: It's all about contango and backwardation

22:30 - Will a weakening dollar continue to benefit grain prices?

25:45 - Under the hood of the Teucrium Corn Fund (CORN)

33:30 - The hand sanitizer boon has been good for corn prices

40:00 - The Teucrium Soybean (SOYB) and Wheat (WEAT) ETFs

43:00 - SOYB's banner year: It's all about China

47:00 - The global outlook for wheat

50:30 - The Teucrium Sugar ETF: Why has sugar cane lagged other grains?

51:30 - Four in one: The Teucrium Agricultural ETF (TAGS)

55:30 - How should investors think about the seemingly high expense ratios on Teucrium's ETFs?

58:15 - Climate change and the outlook for grain production and prices


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ALPS' Senior Investment Strategy Advisor Paul Baiocchi was early to the ETF party. Before joining ALPS, he was Vice President of ETF Business Development at Fidelity Institutional Asset Management where he helped build and grow the firm’s ETF lineup for six years. Prior to that, Paul worked at ETF.com, building an ETF analytics platform, writing about the ETF industry and moderating panels at Inside ETFs conferences. In the latest episode of Let's Talk ETFs, Paul reflects on the industry's evolution while pondering its current direction. And of course, he also takes a deep-dive into ALPS' current ETF lineup.
Show Notes

3:00 - What drew you to ETFs originally?

8:15 - Why is it that Mutual Fund assets still dwarf ETF assets?

17:30 - The next stage of ETF growth: Are semi-transparent actively managed ETFs actually good for investors?

25:00 - Has the ETF industry done enough to protect investors from exotic products?

30:00 - A top-down view of ALPS' ETF lineup?

34:30 - ALPS funds that are relevant to the current market environment (AMLP) (ACES) (SBIO)

43:30 - Searching for yield in the current environment (SDOG)


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XOUT Capital CEO David Barse spent nearly 25 years running active value shop Third Avenue Management before embracing a passive, rules-based indexing approach. His new firm, XOUT Capital, is the indexer behind the GraniteShares XOUT U.S. Large Cap ETF (XOUT). So when David speaks about active vs. passive management, ETF investors should take note, as he comes with a deep-seated knowledge from both sides of this issue.
Show Notes

4:00 - David's metamorphosis from active stock picker to passive indexer

7:00 - The XOUT methodology: Using a rules-based approach to determine which companies are likely to cause tech disruption

13:00 - Different kinds of passive investing: Rules-based vs. committee-selected indexes

19:00 - Re-opening the active vs. passive debate

29:00 - Should "seeking alpha" still be a goal for passive indexers?

33:30 - Passive as the new active: What about rules-based indexes with 2,000% annual turnover?

38:00 - Is there a risk that too much passive indexing can blunt the market's "price discovery" mechanism, leading to less efficient markets? 

50:30 - Where active has outperformed passive: Reviewing the recent SPIVA data on mid-cap growth, small-cap growth, real estate and investment-grade intermediate bonds


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On the latest episode of Let's Talk ETFs, long-time contributor to Seekingalpha.com, Chaim Siegel, aka Elazar Advisors, takes listeners through his unique bottom-up approach of stock picking in the tech space. Before setting out on his own and launching his Nail Tech Earnings investing service, Chaim spent years honing his craft, working directly with Steve Cohen as an analyst at SAC Capital as well as serving as a portfolio manager at Morgan Stanley and JLF Asset Management. His proprietary tech sector earnings estimates - available to subscribers of Nail Tech Earnings - are included in consensus Thomson Reuters and FactSet earnings estimates.
Chaim believes that based on his current growth projections for his favorite tech names, investors should continue overweighting the sector despite what appear to be frothy valuations on a historical basis.
Show notes:

4:30 - Chaim's unique investing backstory

10:45 - Chaim's proprietary earnings models: How does he arrive at his projections

16:30 - 2 top tech sector ETFs go head to head: The Invesco QQQ ETF (QQQ) vs. The Technology Select Sector SPDR ETF (XLK)

22:30 - Hedging tech sector downside via ETFs: Shorting outright vs. inverse leveraged ETFs vs. ETF options

27:10 - Using momentum/trend following as a secondary decision-making factor

33:15 - Bottom-up analysis of top picks: Why Tesla (TSLA) and Zoom's (ZM) current valuations are besides the point

47:00 - Are we in a tech bubble? Why the current period is not a late 90's redux


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With the global robotics and automation space expected to quadruple in size over the next five years, it seems like an obvious theme for ETF investors to be over-allocated to. But with the proliferation of funds offering exposure - there are six funds with the word "Robotics" in their names - choosing the right one can be challenging. ROBO Global was first to market in this space, launching its flagship ROBO Global Robotics and Automation Index ETF (ROBO) all the way back in 2013. ROBO's Director of Research Jeremie Capron joins the podcast and offers an in-depth look at the Robotics space - and the painstaking research process he believes sets ROBO apart from its competitors.
Show Notes

3:00 - Defining the robotics and automation space: What makes it such a compelling investment opportunity?

7:00 - What's the current market size of this space? What are reasonable growth estimates?

9:15 - What still has to be overcome technically to achieve real growth in this space?

16:15 - Will the current pandemic supercharge robotics growth across a wider range of industries?

20:45 - Are there concerns about robotics, job loss and the human toll that is likely to take. Do these concerns enter into the company selection process?

25:45 - What is the selection process of the ROBO index?

28:45 - Passive indexing vs. active management: How much human bias is in the ROBO index selection process?

31:30 - Under the hood: Weighting methodology, sector breakdown, reconstitution frequency

36:00 - Why is the expense ratio a relatively high 95 basis points?

38:45 - Breaking down the key differences between ROBO and BOTZ

43:45 - Beyond ROBO: The ROBO Global Artificial Intelligence ETF (THNQ)

46:30 - The ROBO Global Healthcare Technology and Innovation ETF (HTEC) - Underlying methodology and how it differs from other Med-Tech ETFs?

49:30 - A couple of examples of stocks in this index: (TDOC), (PIAHY), (LVGO), (ILMN), (CRSP), (EDIT)


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It has not been a good decade for MLP investors. Even with double digit yields, total returns on the sector are at -4% annualized going back to 2010. Alerian’s Stacey Morris believes that’s all about to change as 2021 will see meaningful growth in MLP free-cash-flow and dividends for the first time in years. SS&C ALPS' Paul Baiocchi also joins the conversation and goes under the hood of his firm’s 2 Alerian MLP ETFs, AMLP and ENFR. On this episode of Let's Talk ETFs - the first to focus specifically on MLPs in an ETF wrapper - we cover everything from why companies would choose the master limited partnership structure, the unique and often confusing tax code around MLPs (and how ETFs like AMLP and ENFR manage to largely sidestep it), differences between American and Canadian Partnerships, and how various outcomes in the upcoming Presidential election are likely to affect the broader MLP sector. 
Show Notes

3:30 - How has the pandemic affected Stacey and Paul's work lives?

8:00 - What makes a company an MLP? What are the benefits of this structure?

10:30 - How are MLPs insulated from price movements in crude oil and natural gas?

14:15 - The outlook for MLPs in 2021 and beyond: Lowering CapEx, increasing FCF

22:00 - Dealing with the tax man: How do you get around issuing K-1s in AMLP?

26:00 - How are holdings selected and maintained for both ENFR and AMLP?

28:30 - Divergent performances: Why has ENFR outperformed AMLP?

34:45 - How much overlap is there between the holdings of these two funds?

37:00 - Biden vs. Trump: How will the outcome of the upcoming presidential election affect energy mid-stream players?


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J.D. Gardner started ETF firm Aptus to attack what he terms the "behavior gap" in investing, whereby investors routinely underperform their underlying investments by "performance chasing". Aptus' flagship fund, DRSK, attacks the behavior gap frontally by limiting drawdowns through the use of maturity date bond ETFs and broad index puts. Yet, DRSK has managed to handily beat the S&P 500 in 2020 by taking advantage of the "sporadic asymmetry" offered by buying a basket of stock calls. Gardner joins Let's Talk ETFs to explain the philosophy behind DRSK and why he believes Aptus has cracked the code to tamping down risk without giving up on strong returns.
Show Notes

2:00 - Describe the economic situation in Alabama as a result of the pandemic

3:30 - Work/life balance

5:00 - What made you decide to start your own ETF firm?

7:00 - The behavioral issues facing the majority of investors

11:00 - What is sporadic asymmetry? 

12:45 - How does DRSK merge theory with reality? 

15:00 - Why is the fund constructed mostly as a "bond ladder"?

19:00 - DRSK and duration risk

21:00 - DRSK and credit risk

27:00 - What percent of the overall return of the fund does the 6% in options represent?

30:00 - Is the call buying strategy designed to replicate the broad market in terms of sector allocations?

32:00 - How did you decide on Southwest (LUV) vs. other airlines?

36:30 - Broad index puts for hedging

39:00 - How did this hedge cushion the blow in the first quarter of 2020?

42:30 - How is the fund treated for tax purposes?

45:00 - Is this ETF meant to be a core holding?


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Over the last 40 years, U.S. equities have had roughly the same P/E ratio as the rest of the world. Over the last 10, the U.S. has produced massive outperformance relative to its global peers, with valuations becoming increasingly stretched. You actually have to go back to the 1920s to find a period where U.S. stock valuations were this stretched relative to their global peers. Cambria Founder and CEO Meb Faber joins Let's Talk ETFs to explain why his firm's ETF line-up is particularly well suited to play the rotation to value and global equities that he believes is certainly coming.
Show Notes

2:30 - Work-life balance during a global pandemic

6:30 - How did Meb decide to start Cambria?

12:00 - Preview of ETFs in Cambria's pipeline.

15:00 - Playing defense, playing offense with Cambria ETFs:

16:00 - The Cambria Tail Risk ETF (TAIL) - Low-cost protection in down markets

24:45 - The U.S.-focused Cambria Shareholder Yield ETF (SYLD), The developed markets-focused Cambria Foreign Shareholder Yield ETF (FYLD), and the Emerging Markets-focused Cambria Emerging Shareholder Yield ETF (EYLD) - Yield vs. total returns

32:00 - The Cambria Global Value ETF (GVAL) - Anticipating the rotation into value

39:00 - The Cambria Global Momentum ETF (GMOM) - Using momentum to underpin a global asset allocation strategy

45:00 - The Cambria Cannabis ETF (TOKE) - Why launch a thematic fund? Why Cannabis specifically?

52:00 - Assessment of valuations of cannabis companies

57:30 - How important is federal legalization for the case for investing in publicly-traded cannabis?


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