Brian Jacobs
@jacobsbrian.bsky.social
ETF strategist | Investment nerd | Dad x3 | Trying to simplify the complex | Baseball, basketball, and big / weird ideas
Blog post link: aptuscapitaladvisors.com/etfs-as-hedg...
ETFs as Hedge Funds 2.0: A Better Way to Capture Beta and Alpha? - Aptus Capital Advisors
Hedge funds have long been a polarizing topic in investing. Though they date back to the mid-20th century, they’ve come to represent sophisticated strategies often associated with the ultra-wealthy. C...
aptuscapitaladvisors.com
December 12, 2024 at 7:02 PM
Blog post link: aptuscapitaladvisors.com/etfs-as-hedg...
In today’s challenging fixed-income environment, structured ETFs shine as liquid alternatives:
-Greater return potential than cash-plus strategies.
-Lower costs and complexity than hedge funds.
-Transparency and liquidity that hedge funds lack.
Structured ETFs might just be Hedge Funds 2.0.
-Greater return potential than cash-plus strategies.
-Lower costs and complexity than hedge funds.
-Transparency and liquidity that hedge funds lack.
Structured ETFs might just be Hedge Funds 2.0.
December 12, 2024 at 7:02 PM
In today’s challenging fixed-income environment, structured ETFs shine as liquid alternatives:
-Greater return potential than cash-plus strategies.
-Lower costs and complexity than hedge funds.
-Transparency and liquidity that hedge funds lack.
Structured ETFs might just be Hedge Funds 2.0.
-Greater return potential than cash-plus strategies.
-Lower costs and complexity than hedge funds.
-Transparency and liquidity that hedge funds lack.
Structured ETFs might just be Hedge Funds 2.0.
Enter structured (i.e. return stacked) ETFs.
These innovative products combine alpha generation, market beta, and sometimes leverage, all within a tax-efficient wrapper.
Think about layering the Eurekahedge Hedge Fund Index’s returns on top of core market beta.
These innovative products combine alpha generation, market beta, and sometimes leverage, all within a tax-efficient wrapper.
Think about layering the Eurekahedge Hedge Fund Index’s returns on top of core market beta.
December 12, 2024 at 7:02 PM
Enter structured (i.e. return stacked) ETFs.
These innovative products combine alpha generation, market beta, and sometimes leverage, all within a tax-efficient wrapper.
Think about layering the Eurekahedge Hedge Fund Index’s returns on top of core market beta.
These innovative products combine alpha generation, market beta, and sometimes leverage, all within a tax-efficient wrapper.
Think about layering the Eurekahedge Hedge Fund Index’s returns on top of core market beta.
Why do hedge funds lag?
-They’re judged against absolute returns rather than their intended goal: alpha with low correlation.
-High fees erode performance.
-Sacrificing core market beta for alpha often misses the mark.
-They’re judged against absolute returns rather than their intended goal: alpha with low correlation.
-High fees erode performance.
-Sacrificing core market beta for alpha often misses the mark.
December 12, 2024 at 7:02 PM
Why do hedge funds lag?
-They’re judged against absolute returns rather than their intended goal: alpha with low correlation.
-High fees erode performance.
-Sacrificing core market beta for alpha often misses the mark.
-They’re judged against absolute returns rather than their intended goal: alpha with low correlation.
-High fees erode performance.
-Sacrificing core market beta for alpha often misses the mark.
This isn’t a one-off story. The Eurekahedge Hedge Fund Index, tracking 3,000+ funds, has underperformed the S&P 500 by over 7% per year over the past decade.
The result? Underperformance + higher taxes + hefty fees = frustrated investors.
The result? Underperformance + higher taxes + hefty fees = frustrated investors.
December 12, 2024 at 7:02 PM
This isn’t a one-off story. The Eurekahedge Hedge Fund Index, tracking 3,000+ funds, has underperformed the S&P 500 by over 7% per year over the past decade.
The result? Underperformance + higher taxes + hefty fees = frustrated investors.
The result? Underperformance + higher taxes + hefty fees = frustrated investors.
Blog Post: ETFs as Hedge Funds 2.0: A Better Way to Capture Beta and Alpha?
Hedge funds often fall short.
Case in point: Warren Buffett’s 2007 bet. He wagered $1M that an S&P 500 index fund would beat a selection of hedge funds over a decade.
The S&P 500 crushed all five hedge fund portfolios.
Hedge funds often fall short.
Case in point: Warren Buffett’s 2007 bet. He wagered $1M that an S&P 500 index fund would beat a selection of hedge funds over a decade.
The S&P 500 crushed all five hedge fund portfolios.
December 12, 2024 at 7:02 PM
Blog Post: ETFs as Hedge Funds 2.0: A Better Way to Capture Beta and Alpha?
Hedge funds often fall short.
Case in point: Warren Buffett’s 2007 bet. He wagered $1M that an S&P 500 index fund would beat a selection of hedge funds over a decade.
The S&P 500 crushed all five hedge fund portfolios.
Hedge funds often fall short.
Case in point: Warren Buffett’s 2007 bet. He wagered $1M that an S&P 500 index fund would beat a selection of hedge funds over a decade.
The S&P 500 crushed all five hedge fund portfolios.
NEW POST: Bitcoin: Wealth Creation or Wealth Transfer?
A “devil vs. angel” format to explore the debate around Bitcoin’s place in a portfolio.
aptuscapitaladvisors.com/bitcoin-weal...
A “devil vs. angel” format to explore the debate around Bitcoin’s place in a portfolio.
aptuscapitaladvisors.com/bitcoin-weal...
Bitcoin: Wealth Creation or Wealth Transfer? - Aptus Capital Advisors
Bitcoin remains one of the most polarizing topics in finance. On one side, crypto enthusiasts celebrate its revolutionary potential; on the other, fundamental analysts caution against its speculative ...
aptuscapitaladvisors.com
December 10, 2024 at 4:54 PM
NEW POST: Bitcoin: Wealth Creation or Wealth Transfer?
A “devil vs. angel” format to explore the debate around Bitcoin’s place in a portfolio.
aptuscapitaladvisors.com/bitcoin-weal...
A “devil vs. angel” format to explore the debate around Bitcoin’s place in a portfolio.
aptuscapitaladvisors.com/bitcoin-weal...
More a reflection of Greece's improved standing than France's deterioration (at this point at least), but this wasn't an outcome that would have been deemed possible a decade ago
December 4, 2024 at 8:18 PM
More a reflection of Greece's improved standing than France's deterioration (at this point at least), but this wasn't an outcome that would have been deemed possible a decade ago
The CAPE uses index level earnings, which equates to earnings by share ownership. Normalizing for buybacks would help, but the other flaws listed (as well as others such as foreign CAPE shown in local vs a normalized currency) would remain.
December 4, 2024 at 7:59 PM
The CAPE uses index level earnings, which equates to earnings by share ownership. Normalizing for buybacks would help, but the other flaws listed (as well as others such as foreign CAPE shown in local vs a normalized currency) would remain.
Investors need a more nuanced approach. As markets evolve, so must our tools for understanding them. Don’t let outdated metrics lead your investment decisions astray.
Full post here (and a way to sign up for future blog posts) aptuscapitaladvisors.com/beware-cape-...
Full post here (and a way to sign up for future blog posts) aptuscapitaladvisors.com/beware-cape-...
December 4, 2024 at 6:16 PM
Investors need a more nuanced approach. As markets evolve, so must our tools for understanding them. Don’t let outdated metrics lead your investment decisions astray.
Full post here (and a way to sign up for future blog posts) aptuscapitaladvisors.com/beware-cape-...
Full post here (and a way to sign up for future blog posts) aptuscapitaladvisors.com/beware-cape-...
3) CAPE cannot be compared across markets
US Fundamentals have simply been better.
If a market grows EPS by 10% annually, CAPE rises even if the trailing P/E stays constant.
Meanwhile, a market with flat or negative EPS growth could look "cheaper" on CAPE despite weaker fundamentals.
US Fundamentals have simply been better.
If a market grows EPS by 10% annually, CAPE rises even if the trailing P/E stays constant.
Meanwhile, a market with flat or negative EPS growth could look "cheaper" on CAPE despite weaker fundamentals.
December 4, 2024 at 6:16 PM
3) CAPE cannot be compared across markets
US Fundamentals have simply been better.
If a market grows EPS by 10% annually, CAPE rises even if the trailing P/E stays constant.
Meanwhile, a market with flat or negative EPS growth could look "cheaper" on CAPE despite weaker fundamentals.
US Fundamentals have simply been better.
If a market grows EPS by 10% annually, CAPE rises even if the trailing P/E stays constant.
Meanwhile, a market with flat or negative EPS growth could look "cheaper" on CAPE despite weaker fundamentals.
2) CAPE ignores the impact of buybacks, which boost EPS by reducing share counts.
CAPE ignores the impact of buybacks, which boost EPS by reducing share counts.
Two identical companies:
A: Pays dividends
B: Does buybacks
CAPE values B as "more expensive," even if their businesses are identical.
CAPE ignores the impact of buybacks, which boost EPS by reducing share counts.
Two identical companies:
A: Pays dividends
B: Does buybacks
CAPE values B as "more expensive," even if their businesses are identical.
December 4, 2024 at 6:16 PM
2) CAPE ignores the impact of buybacks, which boost EPS by reducing share counts.
CAPE ignores the impact of buybacks, which boost EPS by reducing share counts.
Two identical companies:
A: Pays dividends
B: Does buybacks
CAPE values B as "more expensive," even if their businesses are identical.
CAPE ignores the impact of buybacks, which boost EPS by reducing share counts.
Two identical companies:
A: Pays dividends
B: Does buybacks
CAPE values B as "more expensive," even if their businesses are identical.
1) The U.S. market has evolved dramatically
CAPE’s numerator reflects CURRENT market caps of today’s leaders, but the denominator uses decade-old EPS when those stocks were much smaller.
Example: NVDA price now reflects massive growth, but CAPE uses earnings from when it was 0.06% of the index.
CAPE’s numerator reflects CURRENT market caps of today’s leaders, but the denominator uses decade-old EPS when those stocks were much smaller.
Example: NVDA price now reflects massive growth, but CAPE uses earnings from when it was 0.06% of the index.
December 4, 2024 at 6:16 PM
1) The U.S. market has evolved dramatically
CAPE’s numerator reflects CURRENT market caps of today’s leaders, but the denominator uses decade-old EPS when those stocks were much smaller.
Example: NVDA price now reflects massive growth, but CAPE uses earnings from when it was 0.06% of the index.
CAPE’s numerator reflects CURRENT market caps of today’s leaders, but the denominator uses decade-old EPS when those stocks were much smaller.
Example: NVDA price now reflects massive growth, but CAPE uses earnings from when it was 0.06% of the index.
There are at least three critical issues with CAPE in modern markets.
1) The U.S. market has evolved dramatically.
2) CAPE ignores the impact of buybacks, which boost EPS by reducing share counts.
3) CAPE cannot be compared across markets
1) The U.S. market has evolved dramatically.
2) CAPE ignores the impact of buybacks, which boost EPS by reducing share counts.
3) CAPE cannot be compared across markets
December 4, 2024 at 6:16 PM
There are at least three critical issues with CAPE in modern markets.
1) The U.S. market has evolved dramatically.
2) CAPE ignores the impact of buybacks, which boost EPS by reducing share counts.
3) CAPE cannot be compared across markets
1) The U.S. market has evolved dramatically.
2) CAPE ignores the impact of buybacks, which boost EPS by reducing share counts.
3) CAPE cannot be compared across markets
What is the CAPE ratio? It divides the current market price by the average inflation-adjusted EPS (not earnings... more on that) over the last 10 years.
CAPE = Current Price / Avg. Real EPS (10 years)
The idea: smooth out earnings over a business cycle to avoid short-term noise.
CAPE = Current Price / Avg. Real EPS (10 years)
The idea: smooth out earnings over a business cycle to avoid short-term noise.
December 4, 2024 at 6:16 PM
What is the CAPE ratio? It divides the current market price by the average inflation-adjusted EPS (not earnings... more on that) over the last 10 years.
CAPE = Current Price / Avg. Real EPS (10 years)
The idea: smooth out earnings over a business cycle to avoid short-term noise.
CAPE = Current Price / Avg. Real EPS (10 years)
The idea: smooth out earnings over a business cycle to avoid short-term noise.
The CAPE ratio, introduced by Robert Shiller in 1988, is a popular tool for assessing market valuation. But its track record shows consistent underestimation of U.S. equity returns—missing by 5-10%+ over many periods.
aptuscapitaladvisors.com/beware-cape-...
Let’s explore.
aptuscapitaladvisors.com/beware-cape-...
Let’s explore.
December 4, 2024 at 6:16 PM
The CAPE ratio, introduced by Robert Shiller in 1988, is a popular tool for assessing market valuation. But its track record shows consistent underestimation of U.S. equity returns—missing by 5-10%+ over many periods.
aptuscapitaladvisors.com/beware-cape-...
Let’s explore.
aptuscapitaladvisors.com/beware-cape-...
Let’s explore.
Well… that was fun!
Last week I was fortunate to be on @bloomberg ETF IQ to talk about our new ETF $UPSD
You can find me starting at the 17:00 minute mark: lnkd.in/ghY-_Ag2
Feel free to DM with any questions
Last week I was fortunate to be on @bloomberg ETF IQ to talk about our new ETF $UPSD
You can find me starting at the 17:00 minute mark: lnkd.in/ghY-_Ag2
Feel free to DM with any questions
December 1, 2024 at 4:29 PM
Well… that was fun!
Last week I was fortunate to be on @bloomberg ETF IQ to talk about our new ETF $UPSD
You can find me starting at the 17:00 minute mark: lnkd.in/ghY-_Ag2
Feel free to DM with any questions
Last week I was fortunate to be on @bloomberg ETF IQ to talk about our new ETF $UPSD
You can find me starting at the 17:00 minute mark: lnkd.in/ghY-_Ag2
Feel free to DM with any questions
Not sure we’ve seen that this cycle though. 1/2 the population said we had it worse today than during the GFC or COV-19 lows when unemployment was ~4%, but they kept spending and the economy and markets kept moving up
November 26, 2024 at 5:21 PM
Not sure we’ve seen that this cycle though. 1/2 the population said we had it worse today than during the GFC or COV-19 lows when unemployment was ~4%, but they kept spending and the economy and markets kept moving up
Yep. Turn Twitter back to Twitter… they unfortunately all learned how to monetize social from TikTok
November 26, 2024 at 5:20 PM
Yep. Turn Twitter back to Twitter… they unfortunately all learned how to monetize social from TikTok
But… while not cheap (by any measure) prices and even mortgage payments aren’t nearly the outlier relative to disposable income.
What has changed is they aren’t historically cheap like they were even a few short years ago.
Full post: aptuscapitaladvisors.com/housing-mark...
What has changed is they aren’t historically cheap like they were even a few short years ago.
Full post: aptuscapitaladvisors.com/housing-mark...
November 26, 2024 at 5:17 PM
But… while not cheap (by any measure) prices and even mortgage payments aren’t nearly the outlier relative to disposable income.
What has changed is they aren’t historically cheap like they were even a few short years ago.
Full post: aptuscapitaladvisors.com/housing-mark...
What has changed is they aren’t historically cheap like they were even a few short years ago.
Full post: aptuscapitaladvisors.com/housing-mark...
Housing Market and Affordability… 1/2
Home prices and especially mortgage payments (given prices and rates) are clearly elevated in nominal and real terms
Home prices and especially mortgage payments (given prices and rates) are clearly elevated in nominal and real terms
November 26, 2024 at 5:17 PM
Housing Market and Affordability… 1/2
Home prices and especially mortgage payments (given prices and rates) are clearly elevated in nominal and real terms
Home prices and especially mortgage payments (given prices and rates) are clearly elevated in nominal and real terms
Some last minute “stimulus” before budgets get pulled 👀
November 25, 2024 at 8:19 PM
Some last minute “stimulus” before budgets get pulled 👀
Question is will he reverse course as soon as sentiment sours or will blaming Biden for it appease his base?
November 25, 2024 at 3:21 PM
Question is will he reverse course as soon as sentiment sours or will blaming Biden for it appease his base?
If they do everything the say (massive budget cuts, immigrant deportation, tariffs) it’s going to be a wildcard as to what ends up happening on the inflation front (I can see inflation to material deflation) but hard to see this how that wouldn’t lead to economic contraction.
November 25, 2024 at 3:12 PM
If they do everything the say (massive budget cuts, immigrant deportation, tariffs) it’s going to be a wildcard as to what ends up happening on the inflation front (I can see inflation to material deflation) but hard to see this how that wouldn’t lead to economic contraction.