HEDGEYE
Etf Pro
User Guide
Dear ETF Pro subscriber,
Unlike most of our competitors, our analyst team actually has a proprietary,
repeatable risk-management process for selecting the top ideas featured every
month on ETF Pro.
The difference between “us and them” could not be more striking. Wall Street relies
on the “feel” of supposed market gurus, or “valuation” or the maxim that “this time
is different.”
Our process is anchored by financial market history, math and behavioral
psychology.
ETF Pro is a monthly newsletter which boils down the Hedgeye Macro team’s latest
economic outlook into 10 to 20 of our favorite ETF ideas. If something happens that
alters our outlook for specific ETF ideas, we send special “add or remove” alerts
ahead of monthly scheduled updates.
Getting Started: How To Use ETF Pro
How It Works
As a professional investor, you’re constantly scrutinizing your portfolio to proactively
prepare for the next big market move.
ETF Pro is designed for you. It clearly expresses our Macro team’s current global economic
outlook via a handpicked selection of our favorite ETFs inside each individual
asset class. All of this investing insight is delivered to you each
month in an easy-to-use newsletter.
In short, ETF Pro is designed to help you better understand how an
intelligent portfolio might best be positioned and exactly why.
What You Get With ETF Pro
Subscribers receive a total of twelve monthly newsletters for the
year. These monthly newsletters include:
What ETFs We Like & Why
We explain how our Macro team’s fundamental research helped us
elect the 10 to 20 ETFs we like (and don’t like) within each of
the seven individual asset classes (from Equities, domestic and
international, to Fixed Income, and Commodities).
Keeping Track of Our Favorite ETFs
To help you keep track of any and all changes, we provide a
detailed table highlighting the current list of our favorite ETFs
along with separate tables highlighting what’s been added to and
removed from the list (if any).
Monthly Outlook
This deep-dive section is written each month by an analyst from our Macro team. It digs into the latest economic data and contextualizes how the data fits within our broader global economic and market
outlook for the quarter. This thorough and in-depth investing summary helps explain exactly why we like our favorite ETF ideas in the newsletter.
What’s Moving
We provide a brief update on any fundamental changes to our macroeconomic outlook for the quarter,
along with any changes (adding or removing) to our list of favorite ETFs. (Note: If something happens
that drastically alters our economic outlook, we’ll send special alerts ahead of scheduled updates.)
Our primary goal is to give you a roadmap for portfolio construction, backed by a rigorous
macro process that signals what ETFs we like and don’t like.
If you have any questions whatsoever, please do not hesitate to email us at
support@hedgeye.com.
We look forward to working together!
About Hedgeye
Hedgeye Risk Management is an independent investment research and online
financial media company. Focused exclusively on generating and delivering
thoughtful investment ideas in a proven buy-side process, the firm combines
quantitative, bottom-up and macro analysis with an emphasis on timing. The
Hedgeye team features some of the most highly-regarded research analysts on
Wall Street, all with buy-side experience, covering Macro, Financials, Energy,
Healthcare, Retail, Gaming, Lodging & Leisure (GLL), Restaurants, Industrials,
Consumer Staples, Communications, Cannabis, Housing, Materials, Technology,
Demography and Washington policy analysis.
Etf Pro
User Guide
Analyzing Global Economies
Our Macro analyst team – led by Hedgeye founder Keith McCullough –
actively tracks global economic and financial market data throughout the trading day.
They are closely monitoring the following risk management tools to assess
any fundamental changes to exposures on ETF Pro:
1. Keith’s quantitative-driven Risk Ranges. These dynamic levels are used
to make sure ETF Pro tickers don’t “break” their current bullish or
bearish trend.
2. We measure and map economic data across countries around the world
to identify key inflection points via our proprietary Growth, Inflation,
Policy (GIP) model and predictive tracking algorithm. (We run our GIP
model for the U.S. and also the top 50 economies around the world covering
90% of global GDP to produce growth and inflation forecasts for each.)
3. Hedgeye analysts actively track asset class Volatility and Wall Street
Consensus positioning to better understand what trades are becoming
either crowded or oversold.
All of these are carefully monitored daily to identify what we add or
remove on ETF Pro.
CLICK HERE
to read our entire “Macro Playbook.”
The ETF Pro Process: Video Series
Want an in-depth guide on how we select our favorite tickers listed in
ETF Pro? Below are 3 important videos each of the core components of our Macro research
process.
Understanding How We Model the U.S. Economy
Our Growth, Inflation, Policy (GIP) model is “one of the hallmarks of our
fundamental research process,” Due to popular demand for a primer on the
topic, we’ve produced a special video.
The key question: Is growth and inflation heating up or cooling down?
From there, we get four possible outcomes. Each is assigned a “quadrant”
in our Growth, Inflation, Policy (GIP) model along with the typical
government response as a result (neutral, hawkish, in-a-box or dovish):
Growth accelerating, Inflation slowing (QUAD 1); Growth accelerating,
Inflation accelerating (QUAD 2); Growth slowing, Inflation accelerating
(QUAD 3); Growth slowing, Inflation slowing (QUAD 4).
If you know the answers to both of those questions you can select
investments based on what works in each of the Quads. “In QUAD 1, for
instance, where growth is accelerating and inflation is slowing, that
has historically been really positive for both equity and credit data
across all sectors of the U.S. economy,”
“Whereas when you think about QUAD 4, in which growth and inflation
are slowing concomitantly, that has historically actually been quite
negative for both equities and credit.”
Understanding Wall Street Positioning & How to Track It
Just as important as vetting the fundamentals of any investing idea is
knowing the investment community’s positioning around that idea.
Namely, is this a consensus or contrarian trade? It’s another essential
tool in your investing toolkit since, if Wall Street is too bullish or
bearish, you may have already missed the move.
At Hedgeye, we measure and map the CFTC’s Commitments of Traders report,
across asset classes, to learn precisely that: What does current
investor consensus positioning look like and where can we add the most
value with a non-consensus market call?
Understanding How to Interpret Volatility
Understanding volatility is another essential tool in your macro
toolkit. At Hedgeye, we have a nuanced view about how to incorporate
this measure into your portfolio decision-making process.
“Core to our risk management overlay here at Hedgeye is using not
only the price, but also volume and volatility as
indicators of a security’s immediate-term price range".
In other words, we use volatility to get an edge on consensus in
predicting the highest probability outcome for future asset prices.
Etf Pro
User Guide
Identify The Top ETFs
The times are changing.
The proliferation of ETFs offers investors a cost-effective way to
build portfolios and beat the market.
ETF Pro was designed to distill our Macro team’s investment research
conclusions into a list of our favorite ETF ideas. This easy-to-use
monthly newsletter provides the market intelligence you need to take
your investing to the next level.
Let’s connect the dots on our process for selecting our favorite ETF ideas in four simple steps:
How We Select Our Favorite ETF Ideas
1. Macro Research
Our macro analysts track global economic and financial market data to detect key inflection points.
2. Quarterly Investment Outlook
Our team identifies the three most important market-moving trends each quarter. These form the investing foundation for all ideas selected in ETF Pro.
3. Asset Classes:
We break down the asset classes we like
(and don’t like) based on our fundamental research and quantitative
models (i.e. our GIP Model & Risk Ranges). (For more on this process,
CLICK HERE
to read our entire “Macro Playbook.”)
4. ETF Ideas:
Finally, our Macro team selects the best expression of our quarterly
investment outlook from the over 200+ ETFs we monitor across global asset classes.
In other words, each section of the ETF Pro newsletter is specifically
designed to reflect our research process, from the macro outlook update
at the top of every edition, to our favorite ETF ideas broken down by
each individual asset class.
Etf Pro
User Guide
Hedgeye's Macro Playbook
Our goal is to give you a foundational understanding —start to
finish—of the basics of how we analyze financial markets and
identify compelling risks and opportunities. We believe it will
amplify your use of all of our investing research products and
tools.
This Macro Playbook explains our quantitative models – like our
proprietary risk ranges and GDP predictive tracking algorithm – as
well as how we select our top investing ideas (stocks, bonds or ETFs).
Our repeatable research process has been carefully crafted and
refined throughout our decade in the independent research business.
Armed with this framework, we are confident you will make better
investing decisions.
Click here
to read our Macro Playbook
Etf Pro
User Guide
Meet Our Research Team
We are obsessed with delivering superior investment ideas. You likely
know this by now.
Our hybrid investing approach combines:
- 1. proprietary quantitative analysis
- 2. bottom-up sector research
- 3. top-down macro research with an emphasis on duration.
The end result is an intelligent, high-octane suite of products that
draws on insights from over 40 research analysts. We cover everything
from Global Macro and Retail, to Energy, Restaurants and Washington
Policy research.
Our unique research team at Hedgeye is composed of some of the
most highly-regarded analysts in the industry. Our quantitative
models and fundamental research teams complement one another.
Here’s how.
1. QUANTITATIVE RISK RANGES
Our quantitative Risk Range model was developed by CEO Keith McCullough
during his years as a hedge fund manager.
This Risk Range model is utilized throughout the entire suite of
Hedgeye research products to augment our 40+ person research team’s
fundamental views. Think about it. All investors have some basket of
core investing ideas (stocks, bonds, ETFs or all of the above).
Identifying those investing ideas is tough enough, then you have to
deal with the uncertainty of markets.
When CEO Keith McCullough built his proprietary Risk Range model the
aim was simple: Create a quantitative risk management tool to help
investors actually
buy low and sell high.
The model uses three core inputs – price, volume and volatility – to
determine the likely daily trading range for any publicly-traded asset
class. These risk ranges are dynamic. They change as the data changes.
At its core, you sell at the top end of the range, and buy at the
low end.
Our team of 40+ fundamental research analysts pride themselves on
identifying non-consensus investing ideas. We understand that the
path from non-consensus investing idea to top-performer is far from
linear. The ultimate aim of our Risk Ranges model is to help investors
risk manage our analyst’s favorite investing ideas.
2. BOTTOM-UP SECTOR RESEARCH
Our investment research team is headquartered in Stamford, Connecticut.
It is made up of research analysts with buy-side and sell-side
experience. Our policy research team in Washington D.C. is composed
of seasoned veterans with many decades of experience. They possess
high-level experience and contacts having worked in a variety of
influential positions over the years.
Our goal is simple. Since “Day One” more than ten years ago, our
focus has been to build the most thoughtful and thorough team on Wall
Street. We seek to translate our unique, combined knowledge into
successful investment opportunities for all of our subscribers—big
and small.
Our collective investment experience includes time at Carlyle
Blue-Wave, Ardsley Partners, Buckingham Research, Morgan Stanley,
Dawson-Herman Capital, Wells Fargo Securities, to name a few, while
our combined policy experience includes time at the U.S. Court of
Appeals, U.S. Energy Department, U.S. Office of Defense, U.S. Federal
Reserve, U.S. Chamber of Commerce, and more.
3. TOP-DOWN MACRO RESEARCH
In addition to a deep bench of 19 fundamental equity and Washington
policy research teams, our Macro team measures and maps economic data
for the top 50 economies around the world, covering 90% of global GDP.
We run predictive tracking algorithms for both growth and inflation
for each of these economies to forecast the likely path for financial
markets.
Bottom Line: Our Macro team is focused on generating investable ideas
based on this research that combines their deep study of market
history, the tracking of Wall Street consensus positioning and the
volatility signals embedded in futures and options markets.
(We encourage you to dig deeper by reading our
“Macro Playbook.”
)
The combined knowledge of 1) proprietary quantitative analysis 2)
bottom-up sector research 3) top-down macro research makes your
Hedgeye subscription the best bang-for-your-investing-research-buck
out there.