Sam Rahman and John McNamara joined Brad to discuss the launch and philosophy behind the HGRO ETF. Hedgeye, originally built on delivering institutional-quality macroeconomic research to a broader audience, has now extended into the asset management space with active ETF offerings.
About Sam Rahman & John McNamara and Hedgeye Asset Managment
Sam, who previously managed public equity investments for the Fidelity family office, explained how HGRO fills a gap in the ETF landscape: it offers a concentrated, actively managed large-cap growth portfolio that emphasizes risk-adjusted returns. He emphasized that most large-cap growth ETFs are either over-diversified and benchmark-hugging or overly concentrated and thematic, leaving little in between. HGRO aims to provide thoughtful portfolio construction and institutional-quality research to everyday investors.
Investment Strategy and Approach
The strategy focuses on three core themes: deep moat compounders, innovators and disruptors, and special situations. Sam described the selection process as conviction-driven but bounded by disciplined portfolio risk constraints, with max 3% active weights on both stock and sector levels. Sell decisions are typically driven by fundamental deterioration or technical breakdowns.
John shared that HGRO is intended to be a core large-cap equity position in diversified portfolios and is gaining early traction among large RIAs. He also confirmed that Hedgeye has more ETF launches in the pipeline and plans to build on its highly engaged research community and media platform to drive continued growth.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Sam Rahman & John McNamara covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
Today we have on Sam Ramen and John McNamara. They're from HGIS at Management and we are talking about their newly issued ETF, the HGI Quality Growth ETF, ticker, HGRO. It's really a concentrated large cap portfolio. They're looking at risk adjusted returns. Most large cap growth ETFs are either over-deversified or two benchmark hugging. This focuses on three core themes, which is kind of those deep-mote compounders innovators as well as some special situations.
So, I've been in the industry for over 30 years now. Of that 25 years, actually, managing portfolios. So, over those 30 years, I've only been at two firms. The first firm was a British investment firm called bearing asset management, which is part of the old bearings bag. A very backpack, maybe knows her history. But it goes back like almost a couple of centuries back to the Napoleonic Wars. When they were like funding trading for the British Empire, and it was the queues back for many, many years.
Market Context and Positioning
So, it was a pretty blue blooded place when I joined there in 1993. But for that 15 years, I was there. I got a great education, because I spent my first year or two with the Chief Investment Officer there. So, he was in charge of all global investments and not just equities, but bonds, half-ax commodities and emerging markets. So, sitting next to him and listening to how he was talking to other portfolio managers across different regions, it was a great way to learn about the global markets, macro investing, how all these pieces fit together, how bonds and equities and currencies work.
And if Tesla works as great, it's going to be the driving force of the performance of that fund. But if it doesn't work, then everything else is irrelevant because that one stock is dictating. So, I never want to be beholden to one stock no matter how much I liked or how good I thought I understood the business. So, I kind of had these own built-in risk parameters, both on the stock levels, plus or minus 3%. But also the sector level, plus or minus 3%.
So, that was fantastic for me. But always know, I knew I want to be like a stock investor. So, as I was writing research for the global investment strategy team, it caught the eye on the then-head of the U.S.
But also, they keep deepening at one time. So, as they generate three cash flow that they're compounding every year, they're not just always just giving it back to shareholders and reinvesting it back. It's the business to deepen those modes to strengthen those superb advantages, so that I'm also investing in innovative areas that keep extending their reach in their mode. I mean, I'll be honest with you. It's kind of an obvious category. But if you look at everybody's growth portfolio in large-cap, they own their own design.
Notable Insights
"So, if you look at the large cap growth equity universe, now in the ETF space you have the really, really big players that have ETFs that I don't have, like 75, 100, 100, plus stocks in them."
"You know, that's the key thing, it's the basically be able to, to be in all weather pool fully, and it also's a market, and that diversification gives us the opportunity, also to find good ideas, where people on this field I was looking."
Key Takeaways
- Sam, who previously managed public equity investments for the Fidelity family office, explained how HGRO fills a gap in the ETF landscape: it offers a concentrated, actively managed large-cap growth portfolio that emphasizes risk-adjusted returns.
- HGRO aims to provide thoughtful portfolio construction and institutional-quality research to everyday investors.
- The strategy focuses on three core themes: deep moat compounders, innovators and disruptors, and special situations.
- Sell decisions are typically driven by fundamental deterioration or technical breakdowns.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Sam Rahman & John McNamara 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 active management 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 Sam Rahman & John McNamara, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.