In this episode, host Brad Roth interviews Patricia Lizarraga, CEO of Hypatia Capital and portfolio manager for WCEO, an ETF that invests solely in women-led companies. Patricia discusses how her experience in investment banking and private equity led her to create the ETF. She also explains how Hypatia Capital started as an advisory shop serving senior women executives and the meaning behind the name. Hear from Patricia as she explains her strategies outperformance and process for bringing the ETF to market, including the lack of a historical database of female CEOs. She also explains why she chose to partner with established service providers rather than creating her own trust, allowing Patricia to focus on her expertise in promoting gender diversity in investment portfolios. Brad and Patricia close out with the challenges of distributing a new ETF, including getting listed on major distribution platforms and marketing strategies. To learn more about Patricia and her mission, please visit https://www.wceoetf.com/
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Patricia Lizarraga covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
So because energy, but because we are equally weighted, we correlate most closely to a small cap stock index. So the WCO ETF is supposed to fit in that small cap allocation. So we took our benchmark, which is the FTWILser small cap index, because we correlate to small cap index. And we matched their industry weightings. And therefore, when we did the, so for example, if the FTWILser small cap index has 6% of energy, our fund will also have 6% of energy.
We wanted to focus on what we know, which is isolating the female factor. And second of all, getting the world to understand what the female factor is and why it outperforms. And because today, the only place where you are, you have more money right now, going into early stage female focused funds, then you have money going into gender lens products. And that is upside down, right, because in, in your portfolio allocation, your publics should, your public investments should be a much larger piece of your portfolio.
Market Context and Positioning
I'm Brad Roth, Chief Investment Officer of Thor Financial Technologies, and portfolio manager of THLV, the Thor Low Volatility ETF. Behind the Ticker, uncovers the inner workings of the ETF industry. We will interview portfolio managers and ETF service providers to dive deep into their work lives and their businesses. We will learn the inner workings of their strategies and what drives them as they can to grow their company. Many of these individuals are entrepreneurs and will have unique and compelling insights to share as much goes on behind the Ticker.
But we don't have 6% female CEOs in the energy sector. So we have to overweight them. So we made it industry-neutral vis-a-vis its benchmark and that gives us our weightings. So how often are you running a new screen and how often are you rebalancing the index?
So we're permanently looking at what's going on in our portfolio, because we have the discretion to, to, to, to, to, to, to, to, to the, from, we don't have, we're not benchmarked to the WCO index. The WCO index is calculated after the ETF decides what it's due, right? So, so because of that, we're constantly monitoring what's going on, but we rebalancing every month. So every month, we, so, so anytime a company no longer has a female CEO or, on the reverse, if a company, a, a points of female CEO, we will buy or sell that stock that same month.
Key Takeaways
- The conversation explores important themes in portfolio construction relevant to today's advisor landscape.
- The conversation explores important themes in energy relevant to today's advisor landscape.
- The conversation explores important themes in portfolio construction relevant to today's advisor landscape.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Patricia Lizarraga highlights important considerations around portfolio construction. Understanding the strategy behind each fund—not just the ticker—helps advisors make more informed allocation decisions and better communicate the rationale to clients.
The themes of portfolio construction and energy discussed in this episode are particularly relevant in the current market environment, where advisors are increasingly looking for differentiated solutions that go beyond traditional benchmarks.
Listen to the Full Episode
This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with Patricia Lizarraga, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.