iiinova — where your digital self keeps evolving

Brian Jacobs @jacobsbrian.bsky.social · 12/12/2024

In today’s challenging fixed-income environment, structured ETFs shine as liquid alternatives: -Greater return potential than cash-plus strategies. -Lower costs and complexity than hedge funds. -Transparency and liquidity that hedge funds lack. Structured ETFs might just be Hedge Funds 2.0.

110

Brian Jacobs @jacobsbrian.bsky.social · 12/12/2024

Enter structured (i.e. return stacked) ETFs. These innovative products combine alpha generation, market beta, and sometimes leverage, all within a tax-efficient wrapper. Think about layering the Eurekahedge Hedge Fund Index’s returns on top of core market beta.

100

Brian Jacobs @jacobsbrian.bsky.social · 12/12/2024

Why do hedge funds lag? -They’re judged against absolute returns rather than their intended goal: alpha with low correlation. -High fees erode performance. -Sacrificing core market beta for alpha often misses the mark.

100

Brian Jacobs @jacobsbrian.bsky.social · 12/12/2024

This isn’t a one-off story. The Eurekahedge Hedge Fund Index, tracking 3,000+ funds, has underperformed the S&P 500 by over 7% per year over the past decade. The result? Underperformance + higher taxes + hefty fees = frustrated investors.

100

Brian Jacobs @jacobsbrian.bsky.social · 12/12/2024

Blog Post: ETFs as Hedge Funds 2.0: A Better Way to Capture Beta and Alpha? Hedge funds often fall short. Case in point: Warren Buffett’s 2007 bet. He wagered $1M that an S&P 500 index fund would beat a selection of hedge funds over a decade. The S&P 500 crushed all five hedge fund portfolios.

130

Brian Jacobs @jacobsbrian.bsky.social · 04/12/2024

More a reflection of Greece's improved standing than France's deterioration (at this point at least), but this wasn't an outcome that would have been deemed possible a decade ago

020

Brian Jacobs @jacobsbrian.bsky.social · 04/12/2024

The CAPE uses index level earnings, which equates to earnings by share ownership. Normalizing for buybacks would help, but the other flaws listed (as well as others such as foreign CAPE shown in local vs a normalized currency) would remain.

000

Brian Jacobs @jacobsbrian.bsky.social · 04/12/2024

Investors need a more nuanced approach. As markets evolve, so must our tools for understanding them. Don’t let outdated metrics lead your investment decisions astray. Full post here (and a way to sign up for future blog posts) aptuscapitaladvisors.com/beware-cape-...

010

Brian Jacobs @jacobsbrian.bsky.social · 04/12/2024

3) CAPE cannot be compared across markets US Fundamentals have simply been better. If a market grows EPS by 10% annually, CAPE rises even if the trailing P/E stays constant. Meanwhile, a market with flat or negative EPS growth could look "cheaper" on CAPE despite weaker fundamentals.

100

Brian Jacobs @jacobsbrian.bsky.social · 04/12/2024

2) CAPE ignores the impact of buybacks, which boost EPS by reducing share counts. CAPE ignores the impact of buybacks, which boost EPS by reducing share counts. Two identical companies: A: Pays dividends B: Does buybacks CAPE values B as "more expensive," even if their businesses are identical.

100

Brian Jacobs @jacobsbrian.bsky.social · 04/12/2024

1) The U.S. market has evolved dramatically CAPE’s numerator reflects CURRENT market caps of today’s leaders, but the denominator uses decade-old EPS when those stocks were much smaller. Example: NVDA price now reflects massive growth, but CAPE uses earnings from when it was 0.06% of the index.

100

Brian Jacobs @jacobsbrian.bsky.social · 04/12/2024

There are at least three critical issues with CAPE in modern markets. 1) The U.S. market has evolved dramatically. 2) CAPE ignores the impact of buybacks, which boost EPS by reducing share counts. 3) CAPE cannot be compared across markets

110

Brian Jacobs @jacobsbrian.bsky.social · 04/12/2024

What is the CAPE ratio? It divides the current market price by the average inflation-adjusted EPS (not earnings... more on that) over the last 10 years. CAPE = Current Price / Avg. Real EPS (10 years) The idea: smooth out earnings over a business cycle to avoid short-term noise.

210

Brian Jacobs @jacobsbrian.bsky.social · 04/12/2024

The CAPE ratio, introduced by Robert Shiller in 1988, is a popular tool for assessing market valuation. But its track record shows consistent underestimation of U.S. equity returns—missing by 5-10%+ over many periods. aptuscapitaladvisors.com/beware-cape-... Let’s explore.

2112

Brian Jacobs @jacobsbrian.bsky.social · 01/12/2024

Well… that was fun! Last week I was fortunate to be on @bloomberg ETF IQ to talk about our new ETF $UPSD You can find me starting at the 17:00 minute mark: lnkd.in/ghY-_Ag2 Feel free to DM with any questions

020

Brian Jacobs @jacobsbrian.bsky.social · 26/11/2024

Not sure we’ve seen that this cycle though. 1/2 the population said we had it worse today than during the GFC or COV-19 lows when unemployment was ~4%, but they kept spending and the economy and markets kept moving up

120

Brian Jacobs @jacobsbrian.bsky.social · 26/11/2024

Yep. Turn Twitter back to Twitter… they unfortunately all learned how to monetize social from TikTok

000

Brian Jacobs @jacobsbrian.bsky.social · 26/11/2024

But… while not cheap (by any measure) prices and even mortgage payments aren’t nearly the outlier relative to disposable income. What has changed is they aren’t historically cheap like they were even a few short years ago. Full post: aptuscapitaladvisors.com/housing-mark...

000

Brian Jacobs @jacobsbrian.bsky.social · 26/11/2024

Housing Market and Affordability… 1/2 Home prices and especially mortgage payments (given prices and rates) are clearly elevated in nominal and real terms

100

Brian Jacobs @jacobsbrian.bsky.social · 25/11/2024

Some last minute “stimulus” before budgets get pulled 👀

000

Brian Jacobs @jacobsbrian.bsky.social · 25/11/2024

Question is will he reverse course as soon as sentiment sours or will blaming Biden for it appease his base?

120

Brian Jacobs @jacobsbrian.bsky.social · 25/11/2024

If they do everything the say (massive budget cuts, immigrant deportation, tariffs) it’s going to be a wildcard as to what ends up happening on the inflation front (I can see inflation to material deflation) but hard to see this how that wouldn’t lead to economic contraction.

120

Brian Jacobs @jacobsbrian.bsky.social · 25/11/2024

We see a lot of charts showing the outperformance of U.S. vs foreign stocks as some indication that mean reversion is on the way. If earnings growth doesn’t revert, returns won’t either.

030

Brian Jacobs @jacobsbrian.bsky.social · 25/11/2024

You mean with unemployment at ~4% we weren’t in a worse situation than GFC lows?

181

Brian Jacobs @jacobsbrian.bsky.social · 25/11/2024

S&P 500 next month returns when the VIX curve is “normal” have been higher and lower risk. Check out the full blog post outlining how an investor may take advantage. aptuscapitaladvisors.com/utilizing-vo...

010

Brian Jacobs @jacobsbrian.bsky.social · 25/11/2024

Sometimes the VIX curve is like this… downward sloping as near term fears are elevated (in backwardation) such as during the GFC

100

Brian Jacobs @jacobsbrian.bsky.social · 25/11/2024

Sometimes the VIX futures curve is like this… upward sloping (in contango) signaling market risk is “normal” HT vixcentral.com

110

Brian Jacobs @jacobsbrian.bsky.social · 21/11/2024

Excited to share the launch of an ETF that's been in my mind for a decade+ $UPSD combines a low-vol core of quality large-cap stocks to manage risk while adding trend-following equity + put-writing overlays to enhance upside when markets are favorable More here www.businesswire.com/news/home/20...

businesswire.com

Aptus Capital Advisors Expands Active, Options-Based ETF Lineup with the Launch of the Aptus Large Cap Upside ETF (Cboe: UPSD)

Aptus Capital Advisors, LLC (Aptus) announces the launch of the Aptus Large Cap Equity Upside ETF (Cboe: UPSD), an actively managed ETF designed to of

020

Brian Jacobs @jacobsbrian.bsky.social · 15/11/2024

The takeaway: The VIX term structure isn’t just a chart—it’s a tool. Using it effectively helps navigate uncertainty with clarity and purpose.

000

Brian Jacobs @jacobsbrian.bsky.social · 15/11/2024

By understanding how expectations for volatility change over time, we can align our risk-taking with the market’s evolving outlook.

100

Brian Jacobs @jacobsbrian.bsky.social · 15/11/2024

The VIX term structure typically slopes upward—longer-term volatility is expected to be higher. But when markets panic, the curve inverts, signaling near-term fear. This shift can guide decisions on risk allocation. Source: vixcentral.com

100

Brian Jacobs @jacobsbrian.bsky.social · 15/11/2024

Volatility expectations can guide risk-taking, and the VIX term structure is key. It reflects how the market anticipates volatility at different time horizons—short-term uncertainty vs. long-term outlook.

100

Brian Jacobs @jacobsbrian.bsky.social · 15/11/2024

Utilizing Volatility Expectations to Guide Risk Taking aptuscapitaladvisors.com/utilizing-vo... TLDR: The VIX isn't just a "fear gauge"—it's the market's pulse, reflecting expectations about future volatility which can be used to make risk-taking decisions.

110