In a recent episode of “Behind the Ticker,” James St. Aubin, Chief Investment Officer of Ocean Park Asset Management, shared insights into his firm’s approach to managing risk and growing client assets. With over two years at Ocean Park and a background that includes stints at Smith Barney, Wilshire, and Ibbotson Associates, St. Aubin has extensive experience in asset allocation and portfolio construction. He explains that Ocean Park’s core philosophy, dating back to its founding in the mid-1980s, is focused on downside protection and mitigating exposure to left-tail risk, particularly for retirees or those nearing retirement.
About James St. Aubin and Ocean Park Asset Management
Ocean Park offers a range of solutions, including four ETFs, eight mutual funds under the Sierra brand, and packaged fund strategist portfolios for advisors. The firm’s investment strategy revolves around quantitative trend-following techniques, using banded moving averages to identify buy and sell signals in its target markets. This methodology, which emphasizes capital preservation by limiting exposure to market downturns, is particularly important for investors seeking to avoid large losses during volatile periods.
Investment Strategy and Approach
The discussion also centered on Ocean Park’s recently launched ETF, DUKQ, which focuses on U.S. domestic equities. St. Aubin explains that DUKQ applies the same quantitative, trend-based approach as the firm’s other strategies, investing in ETFs that cover a broad range of market exposures, including small cap, mid cap, and factor-based strategies. DUKQ holds around 10 to 12 ETFs when fully invested and has the ability to move entirely to cash during market sell-offs if all assets signal a downturn.
One of the key advantages of DUKQ, according to St. Aubin, is its ability to protect against extreme market events while still participating in market gains. The ETF can redeploy capital to other sectors if certain segments trigger a sell signal, rather than immediately moving all assets into cash. This flexibility ensures that the fund remains actively managed, with turnover averaging around two trades per year.
Portfolio Construction and Implementation
As ETFs become a more critical part of Ocean Park’s overall offering, St. Aubin emphasizes the importance of meeting advisor demand for these products. The firm’s decision to launch ETFs, including DUKQ, was driven by the growing preference for ETFs among advisors due to their tax efficiency and ease of use. St. Aubin believes that ETFs, along with the firm’s mutual funds and managed portfolios, provide advisors with flexible, adaptive tools to manage client risk and return.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and James St. Aubin covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
So we looked at all the opportunities that we could invest in during our research process and said, okay, which ones are the most complementary to each other? And that's how we narrowed it down to a smaller list of the individual ETFs that have specific market exposures that we think will be additive to the diversification of the portfolio overall.
And that happened from time to time when the markets in complete meltdown mode, the optionality to go to cash, I think, is what really gives us an advantage. We don't like to be in cash, that's not a target allocation for us, but if we need to be, we can be. And so, the portfolio can be 100% cash if all of the funds in the opportunity set are in sales, sales signals, then the fund will be 100% in cash.
Market Context and Positioning
So our research refined the list of names. So we do have a bench and a list of what, what if all the funds within our, our bench are opportunity set that's been pre-defined, have buy signals, they will all be in a portfolio, have exposure in the portfolio at a certain weight. We did, we decided what funds, now that includes broad market exposures like the S&P 500 and QQQ, or the NASDAQ 100, but also small cap and mid cap exposure as well.
Yeah, so for domestic equities, obviously, everybody with equity exposure has some exposure to domestic equities, and it really depends on an advisor or a particular client's risk version, right? Some folks have greater need, greater comfort with something as strategy with more downside protection, so this can fill the entire domestic equity bucket for a particular allocation. Now, that's not necessarily everybody's speed, so we also say it's not zero, it doesn't have to be 100%, but somewhere in there really, it's in a lot of times it's up to the advisor to determine, all right, how much protection do I want to put in the portfolio?
And that is an automatic, unemotional cell and we will eliminate that in the portfolio. Now, under certain conditions that may be redeployed to other funds that are still in bi-signals for us, if certain funds are not in bi-signals, we can hold cash. And so that, I think that's our defensive nature is to be able to hold cash during those periods of broad market declines. That has been, we think the, the value in our, in our strategy is to be able to, whether the storm, so to speak, by holding cash when markets are declining broadly.
He's from Ocean Park asset management where they do a number of things whether it's their solutions business, their mutual fund business and their growing ETF business. Today we're here to talk about DuckQDUKQ, which is their domestic equities ETF, focusing at the conversation really on the signaling process, how the ETF operates and where it fits inside an overall model portfolio.
Notable Insights
"And so, the portfolio can be 100% cash if all of the funds in the opportunity set are in sales, sales signals, then the fund will be 100% in cash."
"And that's where we came to the realization that we need to be able to deliver to those advisors and clients that want ETF exposure."
Key Takeaways
- Ocean Park offers a range of solutions, including four ETFs, eight mutual funds under the Sierra brand, and packaged fund strategist portfolios for advisors.
- This methodology, which emphasizes capital preservation by limiting exposure to market downturns, is particularly important for investors seeking to avoid large losses during volatile periods.
- The discussion also centered on Ocean Park’s recently launched ETF, DUKQ, which focuses on U.S.
- DUKQ holds around 10 to 12 ETFs when fully invested and has the ability to move entirely to cash during market sell-offs if all assets signal a downturn.
- One of the key advantages of DUKQ, according to St.
- This flexibility ensures that the fund remains actively managed, with turnover averaging around two trades per year.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with James St. Aubin 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 quantitative investing 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 James St. Aubin, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.