The ETF Show - How One Tactical Advantage Fund Is Managing Volatility

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  • 07 mins 36 secs
Family Dynasty Advisors CEO Mike Caffey shares how the firm’s recently launched Tactical Advantage ETF, FDAT, embraces a wide-ranging sectoral exposure. He also discusses how FDAT strikes a balance between reducing volatility and maximizing long-term return potential.
Channel: ETF
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Jenna Dagenhart: Hello and welcome to the ETF show. Joining us now to talk about a recently launched Tactical Advantage ETF with the ticker fa is Mike Caffey CEO and President of Family Dynasty advisors. Well, Mike, it's great to have you with us.

Mike Caffey: Good morning. It's great to be here. I appreciate the uh let me to join and, and visit about our, our new VF that we created. So, thank you this morning.

Jenna Dagenhart: Well, we're excited to talk about it and many investors might be new to tactical advantage. ETF S. What makes ea a distinct choice for investors in the ETF market? And can you share a little bit more about tactical advantage? ETF S in general?

Mike Caffey: Absolutely. So uh the type of a GTF particular is FDA T. Uh We pronounce that FDA for, for simplistic sake. And what we're a little bit unique in the market is we actually incorporate both tactical um and fundamental analysis within our, our, our program and the philosophy of ETF is really designed um on the fact that we believe that, you know, the, the long term growth potential of that we're all stopping for in the marketplace. Um You know, you can't achieve a long term goal without focus on the short term volatility and the negative impact the market can sometimes have. So, you know, we're really focused on the BT F when the market builds, uh it's uh kind of a annual tipper potential, we really minimize that drawdown and that will help us in the long term achieve the the long term results

Jenna Dagenhart: in what ways does this tactical advantage, ETF S method for managing volatility stand out compared to its peers?

Mike Caffey: So, you know, all active managers have a similar trade in that we all, we all rebalance our portfolios at that time, you could be a little different but we all balance. So you know, and the gist of that as, as everyone point your nose is, is really going from an asset that or asset class that maybe you, you feel more comfortable with, you gotta overweight that one and maybe you underweight something else is based on current conditions in your, in your own independent analysis. For us. We, we do all that. What's unique with, with is that we actually treat cash or money market funds, we treat cash as as its own asset class.

And so when we rebalance or based on our analysis and and market conditions, we actually will overweight cash or underweight cash and by doing that, but kind of removing some of that uh risk out of the market and or putting that risk back in the market, we're able to maximize the growth potential but also minimize the volatility. During our market drawdowns, we will have an overweight to cash. So that's a big dis distinction from us versus other members to rebalance.

Jenna Dagenhart: Now, many funds might lean towards specialization. What drove your tactical advantage ETF to embrace a wide ranging sectoral exposure in its portfolio construction. Yeah.

So for us, we, we kind of approach that problem. We, as we built this out, we wanted to have an investment that would would be um resonate with the retail investor, but also with the institutional investment. So for us, um if that does have about 14 holdings, uh 15, you can count cash and it's all us based. But the for a retail investor, we want to be the core holdings of where we think we could fit into a, a retail investor is, is got that core holding, we're diversified, we're actively managed as about 14, again 15 with cash assets in there. And so from a retail investor, we could do the core and then they can come in and, and add some other on the branches, other investments that they see are, are fit in and applicable for those risk toler rents and their goals on the institutional side. I think we also think that though because you know, on my on for their side that is a more broad based and maybe more uh diverse portfolio, we believe that f that could be the the low volatility kind of sleeve the little allocation for um lower volatility assets that might help offset other assets that may have in a diverse portfolio. So we really believe in in the design of F that was really it's fine to focus on both the retail and the institutional and kind of fill the need for for both and in a market where passive strategies are often championed for their low cost structure.

Jenna Dagenhart: What unique benefits does this tactical advantage, et F's actively managed approach, bring to the table?

Mike Caffey: Well, you know, I'm definitely, um you know, I'm definitely not a fan or belief that, you know, money, money doesn't always buy better. Um And so, but there also in certain situations where, you know, the a boat's not a yacht. So there are times and places where, you know, it's worth spending some extra value or spending some extra money to achieve that value in what we call the value proposition. And so for us, there's two things that we believe we bring in the market with, with us, you know, if you're invested in that, the first thing you're looking for is to actively manage and that's what we do. You're actually absolutely getting that valuable proposition from our strategy.

We look at our assets, all 14 of our holdings every single day, everything it's looked at to buy all of your sales strategy. And so you're absolutely getting your money's worth that active management um overlay and two, we also you're approaching the, the low volatility. So for us, uh you know, you're also involved with us because you, you want that long term growth without all the the volatility or at least minimize volatility, I should say and, and because we overweight, overweight cash, like I mentioned earlier, that allows us to normally at least the best we can minimize the volatility. So for us, the value proposition is really making sure people who invest in us who are looking for active management and low volatility, they're exactly what they're getting.

Jenna Dagenhart: How does E fa strike a balance between reducing volatility and also maximizing long term return potential?

Mike Caffey: Yeah, our, our secret sauce uh really Jenna is, is uh the flexibility. Uh we're very nimble in what we do are very focused on what we do. And so that's, that's the secret sauce we, you know, we're ever going there getting very active management. So when the market um turns and moves higher based on what fundamentals. Yeah, we're, we're right there in the market when things are kind of turn and again, the market goes a tempered, we're very nimble and flexible to, to overweight cash and and adjust a so our our flexibility to react to the market um is, is really our secret sauce

Jenna Dagenhart:: and finally any risk that investors should be aware of Mike.

Mike Caffey: Yeah, you know, typical, typical scenarios, you know, obviously uh past performance doesn't guarantee future results. You've all heard a bunch of times. But, you know, for us, uh you know, we, we strive to maximize growth. We strive to minimize uh a lesson of volatility and market declines. But obviously, uh like everyone else, we can't pick the tops and we can't pick the bottoms. So uh we, we strive to do the best we can. But obviously there is, there is a risk and, and uh and involved with managing or being invested in, at that in the market itself.

Jenna Dagenhart: Well, Mike, thank you so much for joining us. Well,

Mike Caffey: thank you very much. I appreciate it.

Jenna Dagenhart: And thank you to everyone watching. Once again, that was Mike Cay CEO and president of Family Dynasty Advisors. I'm Jenna Dagenhart with asset TV.

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