He believes the perceived delineation between the haves and have-nots will work to his advantage.
“I believe we’re going into a golden era of stock picking,” Tuttle says. “I believe that by being tactical with active management and having an overweight to the haves, you can really crush the market on an absolute basis, and then throw in risk management with Treasurys, gold, volatility and some inverse things."
Take, for example, the equity positions in the $56 million Trend Aggregation U.S. ETF, the largest of Tuttle’s suite of four trend aggregation funds. Three of the top four stock positions are Centene Corp., Danaher Corp. and Adaptive Biotechnologies Corp. All of them are involved in the life sciences and/or health-care fields.
Other so-called haves in the portfolio include Amazon.com and Twilio Inc., a cloud communications platform.
But the fund’s second-biggest stock position is Allegiant Travel Co., an integrated travel company. The portfolio also includes United Airlines. Tuttle considers these two companies to be operating in a have-not sector, but he said he likes having a little exposure to such companies as contrarian plays in order to capture their reversion to the mean after their share prices have fallen.
On the non-equity side, this fund’s holdings include the VanEck Vectors Gold Miners ETF (GDX), as well as other ETFs that either invest in Treasurys or take inverse and/or levered positions in various asset classes or in the VIX volatility index.
“Gold, like Treasurys, is a place money goes into when the market is going down,” Tuttle explained. “We use VXX [iPath Series B S&P 500 VIX Short-Term Futures ETN] for volatility. I love volatility because it has an asymmetrical return stream.”
In general, Tuttle is a fan of inverse and levered ETFs. He likes to employ funds that provide 3x, or three times exposure—either bullish or bearish—to the S&P 500 or other indexes on a short-term basis with the aim to create certain portfolio results with less money upfront, freeing up more cash to buy equities.
“We’re not going to be tax-efficient; we’re going to be very nimble,” he said. “We tell people you don’t want the tax tail to wag the dog.”
Other ETF Efforts
Tuttle, who is based in Riverside, Conn., said he has been doing tactical asset management since 2008, and that his current trend aggregation model took shape in August 2011 when, he said, “the wheels almost fell off the world.”