Daniel Snover

Daniel Snover's ARP ETF at PMV Capital brings a dynamic twist to risk parity , a framework that took a beating in 2022 when both stocks and bonds fell simultaneously. The classic risk parity approach, born from Ray Dalio and Bridgewater's "All Weather" concept, balances risk across environments defined by changes in growth and inflation. Daniel's innovation is making that allocation adaptive rather than static, using momentum trends in underlying asset classes to identify where we are in the macro cycle and shift accordingly.

The Problem with 60/40 (and Static Risk Parity)

Daniel starts with a clean explanation of why traditional portfolio construction fails: "Take the 60/40 portfolio , stocks have four to five times the risk of bonds. So when you do the allocation on risk, stocks account for more than 90% of the risk of that portfolio. The correlation of a 60/40 portfolio to the S&P 500 is around 0.95, which is telling you you're not getting any diversification benefits."

Static risk parity solves part of this by equalizing risk across asset classes. But it has its own vulnerability: rising rate environments. "As you raise interest rates or discount rates, that in theory brings down the value of all assets. In that environment, it's hard to find positively trending things to diversify , the correlations of these assets are coming together and their returns are going down together." 2022 proved this dramatically.

The PMV Approach: Adaptive Risk Parity

PMV stands for the equation for momentum , and that's the key differentiator. "Instead of passively allocating risk between the four scenarios, we identify where we are in the macro cycle from the relationships of the assets and then use that to determine our underlying allocation."

Daniel gives a concrete example: "Over the past couple of years, broad commodities were up a lot from 2020 through June of last year. At the same time, long-duration treasuries were down close to a similar amount. If you look at the spread , the difference of those , that's telling you you're in a high-growth, high-inflation environment." As those trends shifted, the allocation shifted with them: "Right now we see the market pricing in slowing growth and slowing inflation."

The strategy performs best "when those trends are persisting and when more than one asset class is performing well." When only one asset class is working , like commodities in an isolated inflation spike , any risk allocated elsewhere becomes a drag. But in most environments, the adaptive approach can find opportunity somewhere in the asset class spectrum.

Monthly Rebalancing with a Built-In Narrative

One of the most practical selling points is the communication framework. "Every month when we do the rebalance, we send out an update that says, based on the trends in the underlying assets, here's where we think we are in the economy and here's how we're positioning the portfolios." Advisors can use this directly with clients: "We're in this high-inflation environment, we're going to diversify your account with commodities, which were up 16% last year. But these trends are changing, and if we hit a recession, you don't necessarily have to worry because long-duration bonds were up 33% in 2008."

This narrative capability , giving advisors a clear, monthly story about positioning and rationale , may be as valuable as the returns themselves. Advisors need to explain to clients why their portfolio looks the way it does. A strategy that generates its own communication framework solves a real distribution problem.

Keeping It Simple

When asked about future products, Daniel's answer is notable for its restraint: "My vision is really to keep it simple and just stick with this one ETF product. We'd like to put all of our effort into that, make it as great as we can." If there's strong demand, they might eventually launch a more aggressive version, "but outside of that, we don't really plan any other future product launches."

In an industry where issuers constantly multiply their product lineups, the discipline of running a single fund well is increasingly rare. ARP represents a specific thesis , that adaptive risk parity using momentum signals can manage changing macro environments better than static allocation , and Daniel is betting the firm on executing that thesis rather than diversifying away from it.

The educational value of ARP extends beyond the specific fund. Daniel's explanation of how asset class relationships reveal the macro environment , commodities vs. treasuries as a growth/inflation signal, equities vs. commodities as a growth signal , gives advisors a framework for understanding their own portfolio positioning. Even advisors who never buy ARP can use the monthly updates to inform their own allocation decisions. That utility creates goodwill and awareness that eventually translates into assets. The "PMV" name itself , the equation for momentum , signals the quantitative rigor underlying what could otherwise be dismissed as just another tactical allocation fund.

Key Takeaways

• Daniel Snover's ARP ETF at PMV Capital brings a dynamic twist to risk parity , a framework that took a beating in 2022 when both stocks and bonds fell simultaneously.
• Daniel starts with a clean explanation of why traditional portfolio construction fails: "Take the 60/40 portfolio , stocks have four to five times the risk of bonds.
• So when you do the allocation on risk, stocks account for more than 90% of the risk of that portfolio.
• The correlation of a 60/40 portfolio to the S&P 500 is around 0.95, which is telling you you're not getting any diversification benefits." Static risk parity solves part of this by equalizing risk across asset classes.

Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.