Episode 13 features Adam Eaglston, the Chief Investment Officer of Formidable Asset Management. Formidable is an active and adaptable financial services company. They employ a disciplined process and build client portfolios and develop financial plans. The Firm also manages a hedge fund the 'Formidable Fund' which is a multi-strategy fund. In this episode we discuss their Formidable ETF, ticker FORH. The fund is an active multi-strategy equity portfolio that also deploys a hedging component to help protect during market declines. The fund is rooted in the OODA Loop Framework: Observe, Orient, Decide, Act which allows them to identify attractive investment themes and exploit market inefficiencies via top-down framework. For more information on Adam and the firm please visit formidableam.com
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Adam Eagleston covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
We've seen people bucket it in two ways. One would be, as it was designed, which is the one-stop alt-sleeve for portfolio, and depending on the overall asset allocation, that could be between 5% and 20%. The other way that we've seen some people use it is because it's categorized as mid-blend, and because you do have relatively the reasonable portion of the portfolio that is small and mid-cap, we have seen some people use it for more small, mid-cap exposure, but you would have, you would certainly have some basis risk there because it's just not going to track that in next particularly.
To be perfectly blunt, it doesn't track any index particularly well, which is a blessing in a curse. So certainly a blessing in 2022, when you had during a down market, I think incredibly good performance versus a pretty large drawdown, and then obviously, less good this year, but I think that speaks to essentially our ability to deliver uncorrelated returns here, despite the fact that the portfolio tends to be majority equities. Right, and I always find that question funny when I'm talking to an advisor about a model that we're running or our ETF, and they're saying, well, the tracking air is really high.
Market Context and Positioning
Like it's just if you're only spending five hours a week doing that, you're just not going to be able to do it as well as you probably want or that your clients probably want. And I think there's actually a pretty big disconnect too between the relative value that clients place on investment performance and unique portfolios and how much value the advisors place on those based on the studies I've seen. So I think that disconnect is really an opportunity for you and for us to find some of these advisors who might be willing to take a step back and to be perfectly fair.
Today we have Adam Egelston, the Chief Investment Officer at Thor Medible. They run the Thor Medible Fund, which is Ticker F-O-R-H. They also have Kong, K-O-N-G, but today we primarily talk about F-O-R-H. They run an RIA, they also run a private fund, and they also have another ETF coming here in the future. So you're going to learn a lot about the firm, you're going to learn a lot about for age, in particular, and how that could fit well inside your portfolio, I think specifically something that's a little bit uncorrelated and more as an alternative to fit a holistic model portfolio.
Notable Insights
"So again, if you think back to that hub and spoke model, what we found is that as we were putting models together for the advisors to use, that the more traditional pieces of it, you could find solutions there for the most part."
"But what we found is that when you got to the alternative sleeve, that often you had very small pieces of the eradicating, and it just became administratively a little bit of a headache if you had a 1.5% weight in REITs and 2% in listed private equity and 2% merge arms."
Key Takeaways
- The fund is rooted in the OODA Loop Framework: Observe, Orient, Decide, Act which allows them to identify attractive investment themes and exploit market inefficiencies via top-down framework.
- The conversation explores important themes in portfolio construction relevant to today's advisor landscape.
- The conversation explores important themes in etf structure relevant to today's advisor landscape.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Adam Eagleston highlights important considerations around income investing. 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 income investing and portfolio construction 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 Adam Eagleston, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.