(This is an excerpt from an article written on Substack by Mark Bunting. You can read Mark's full bio below).
South Africa, Malaysia, Emerging Market Bonds, Gold, British Pound, Small Cap Japan.
Does your portfolio look anything like that?
Those are just six of the 32 ETFs recommended (as of October 21) on the ETF Pro Plus product list of Hedgeye Risk Management.
There are also six ETFs on the short side, including Mexico, Denmark, and U.S. Retail.
The list of long ideas in ETF Pro Plus is a replica of Keith McCullough’s holdings in his long-only portfolio or “Mucker Family Office”.
It’s an eclectic collection of investments and represents the beauty and range of the “Go Anywhere” strategy of the company’s Founder and CEO.
McCullough has said that gold is the single best asset allocation during the current U.S. Quad 3 of slowing economic growth and rising inflation, and posted this tweet on X that gold has been the single best asset allocation since 1999.
The assets on the ETF Pro Plus list are from anywhere in the world. They all fit into the current Global Quad 2 setup of accelerating economic growth and rising inflation, and the U.S. Quad 3 environment. Plus, they all have positive signal strength and are bullish trade and trend.
Portfolio Managers vs. Hedgeye
Most discretionary portfolio managers (PMs) or investment counsellors in Canada and the U.S. have a mandate to make investment decisions for their clients’ accounts and, I’m generalizing, stick close to home in the stocks they select.
If they want some international exposure, they’re likely going to choose a large, multi-national company to eliminate the perceived risk of owning a foreign stock.
While there are some managers in Canada who have international mandates and look further afield, most are more comfortable, as are their clients, owning assets that are in their own backyard - financials, energy, materials, and industrials along with large-cap U.S. stocks - Microsoft, Home Depot, Visa, etc.
There’s nothing wrong with this home bias approach, but that strategy can hurt returns in the short and intermediate-term if the PM insists on holding onto a position despite it being in the wrong Quad, with no positive signal strength, and showing bearish trade and trend.
PMs are also often reluctant to sell a position because they don’t want to trigger capital gains for their clients. Fair enough.
McCullough has said he holds on to certain investments, as well - houses, physical gold and silver, and wine - but he’s happy to pay capital gains tax on a stock or ETF especially if it means getting out of a winner that has broken bullish trade and trends levels.
The Hedgeye way has investors keeping it simple, following the process, getting rid of losers and buying something that’s in the right Quad with positive signal strength and is bullish trade and trend.
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ABOUT MARK BUNTING This is a Hedgeye guest contributor piece written by Mark Bunting and reposted from his Substack publication. Mark is a seasoned financial journalist with 25 years of experience in the industry. His career includes 15 years as an anchor and reporter for Business News Network (BNN Bloomberg), where he also served as London Bureau Chief for three years. He currently is the host of RCTV for Red Cloud Financial Services, focusing on interviews with CEOs and leaders in the metals and mining sector. Mark also plays a significant role at Red Cloud’s conferences, where he conducts keynote interviews and moderates panels. Additionally, he is an on-air host of sponsored content for BNN Bloomberg Brand Studio and has previously been the publisher and host of Uncommon Sense Investor and Capital Ideas Media. Mark started his career with The Sports Network (TSN). He has been a Hedgeye subscriber for three years.. View all posts by Bunting on his Substack. X (Twitter) handle: @MarkBunting_ LinkedIn: Mark Bunting |
