EXCLUSIVE: TrueMark Investment CEO Reveals Strategy To Beat Markets With Actively Managed ETFs
The debate over active and passive management strategies has weathered the test of time.
The passive approach, typified by following broad market indices like the S&P 500, has its advocates, especially given its cost efficiency and simplicity. However, there’s a growing interest in the potential of actively managed funds to outperform the market.
Despite the skepticism often surrounding active management—fueled by studies like the one from S&P Dow Jones Indices, which highlighted that more than 92% of U.S. large-cap funds failed to beat the S&P 500 over a 15-year period — TrueMark Investment is making a compelling case for its model.
The investment firm offers actively managed ETFs, branded as Trueshares, focusing on sectors of the modern economy where they believe a manager’s in-depth knowledge can significantly benefit investors.
In an exclusive chat with Benzinga, TrueMark Investment’s CEO Michael Loukas highlighted that their ETFs are ‘subadvised.’ This partnership model allows TrueMark to tap into the expertise of industry experts to manage the portfolios. By delving into the nuances of a category, they aim to deliver superior returns, or ‘alpha’, to investors.
‘You Can’t Outperform The Market If You Own The Market’
A foundational belief at TrueMark is that genuine market outperformance requires a departure from the market’s broad composition.
“You can’t outperform the market if you own the market,” Loukas asserted. This philosophy is channelled through the firm’s strategy of maintaining high-conviction, concentrated portfolios.
A prime example is the TrueShares Technology, AI & Deep Learning ETF (NYSE:LRNZ), which contains only 21 carefully selected stocks within the artificial intelligence industry.
The rationale behind such a concentrated approach is that it embodies the depth of conviction typically seen in institutional investment vehicles like hedge funds. “High conviction is essential, especially in sectors where we see a ‘winner takes all’ dynamic,” Loukas affirmed.
In these scenarios, TrueMark’s strategy involves investing in a few companies poised to dominate their segment, considered as the ‘category killers’, and then capitalizing on the ‘lead horses’ to drive returns.
“We do own NVIDIA Corp. (NASDAQ:NVDA) and Advanced Micro Devices Inc. (NASDAQ:AMD), but we don’t own all the mega caps,” Loukas said regarding the composition of the TrueShares Technology, AI & Deep Learning ETF.
Loukas highlighted the tech sector’s immense potential and the importance of discernment in selecting investments. “While the benefits of AI are widespread, a strong business model is crucial for an investment to be sound,” he said.
Top-Performing AI-Related Exchange Traded Funds
In the realm of AI-related ETFs, TrueMark’s offering has distinguished itself with outstanding returns.
Over the past six months, the TrueShares Technology, AI & Deep Learning ETF secured a second place in its category, delivering a robust 20.6% return since early October. This performance places it just behind the Roundhill Generative AI and Technology ETF (NYSE:CHAT), which led with a 22% increase.
On a one-year horizon, the TrueShares Technology, AI & Deep Learning ETF maintained its second-place standing with a remarkable 41% return, trailing slightly behind the Global X Artificial Intelligence & Technology ETF (NYSE:AIQ), which saw a 43.7% increase.
While it’s essential to remember that past performance is not necessarily indicative of future results, the current success of the TrueShares Technology, AI & Deep Learning ETF offers a compelling testament to the potential of TrueMark’s focused, high-conviction investment strategy.
| ETF | 6-Month Return | 1-Year Return |
|---|---|---|
| Roundhill Generative Al & Technology ETF | 22.38% | – |
| TrueShares Technology, Al & Deep Learning ETF | 21.02% | 41.02% |
| Franklin Intelligent Machines ETF (NYSE:IQM) | 20.91% | 37.05% |
| ROBO Global Artificial Intelligence ETF (NYSE:THNQ) | 19.31% | 36.75% |
| Global X Robotics & Artificial Intelligence ETF (NYSE:BOTZ) | 19.21% | 29.80% |
| VanEck Robotics ETF (NYSE:IBOT) | 15.99% | – |
| Global X Artificial Intelligence & Technology ETF (NYSE:AIQ) | 15.17% | 43.72% |
| WisdomTree Artificial Intelligence and Innovation Fund (NYSE:WTAI) | 10.64% | 20.61% |
| First Trust Nasdaq Artificial Intelligence ETF (NYSE:ROBT) | 5.18% | 6.69% |
| iShares Robotics and Artificial Intelligence Multisector ETF (NYSE:IRBO) | 4.26% | 9.93% |
Image: Midjourney