In this episode of "Behind the Ticker," host Brad Roth sits down with Jason Hsu, co-founder of Rayliant, to discuss the integration of quantitative research with institutional investment strategies. Jason shares his journey from an academic setting into the finance industry, detailing the transition and how it led to the founding of Rayliant. He explains how his firm has evolved from focusing solely on institutional clients to offering sophisticated active ETFs that make complex investment strategies accessible to a wider audience.Jason also discusses Rayliant’s significant role in managing assets for government and sovereign wealth funds in Japan, Taiwan, and Canada. He highlights the development and strategic approach behind their Japan equity ETF, RAYJ, which aims to capture underexplored market segments through a blend of local expertise and quantitative methods. Throughout the conversation, Jason relates his personal experiences in basketball to his professional strategies, emphasizing the importance of teamwork and strategic planning in both arenas.This episode provides listeners with detailed insights into the creation and operation of innovative financial products. It is particularly valuable for financial advisors and investors interested in understanding the application of quantitative research within the institutional investment landscape.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Jason Hsu covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
It's a concentrated portfolio of 30 growth names. They use a fundamental as well as quantitative approach to build the portfolio. I think it's a unique story. I think it's a great timing with international being so depressed in terms of valuation versus the U.S. So we talk about the firm, we talk about the product, and we talk kind of briefly, they have a handful of other ETFs.
I'm Brad Roth, Chief Investment Officer of Thor Financial Technologies, and portfolio manager of THLV, the Thor Low Volatility ETF. Behind the Ticker, uncovers the inner workings of the ETF industry. We will interview portfolio managers and ETF service providers to dive deep into their work lives and their businesses. We will learn the inner workings of their strategies and what drives them as they continue to grow their company. Many of these individuals are entrepreneurs, and will have unique and compelling insights to share as much goes on behind the Ticker.
Market Context and Positioning
And so we are working with their portfolio managers to take what we think is a more interesting segment of Japan that people don't talk about. It's really the small mid-cap segment. Now, occasionally we'll have larger cabinet, but primarily we'll focus in the small mid-cap segment. They offer their deep fundamental research and we give to them the quantitative scoring of the stocks. And it's really the combination of two that then results in the final portfolio. So it's a very unique data, right?
And that Japan might be, say, 20-8% maybe close to 30% of e-fuck, but I would definitely probably bring that up to closer to 50% and then downweight, Europe. Got it, makes sense to me. So as a new fund, or I should say, as a new issue, you guys have out there. I always like to ask how you think about marketing the fund, right? It's one thing to come up with the idea, put it, do all of the work and produce good results for your clients and those who use it.
So let's talk about, you know, you have four ETFs that I've seen come to market. We want to talk about RageA, which is RA, RA YJ, which is your Japan equity ETF. So if you could, can you please just explain the strategy at a very high level and what it's trying to accomplish?
So first of all, please do find me on LinkedIn. That is the primary social media platform that I use in my firm use. So go on LinkedIn, find me and then add me as your connection and then add my newsletter, the bridge. And the idea is to bridge these less familiar markets with the US advisors. So you have a steady source of and both op-bed and research pieces coming from my firm. And then go to, you know, funds.railyand.com to get the perspectives for our different ETFs.
Notable Insights
"But the growth callous seems so obvious with the really ultra cheap yen with final inflation coming back to that economy so they can normalize your interest rate and households as a result of that are receiving a strong income to their, you know, bank deposit and to their, you know, network."
Key Takeaways
- He highlights the development and strategic approach behind their Japan equity ETF, RAYJ, which aims to capture underexplored market segments through a blend of local expertise and quantitative methods.
- The conversation explores important themes in international markets relevant to today's advisor landscape.
- The conversation explores important themes in income investing relevant to today's advisor landscape.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Jason Hsu highlights important considerations around quantitative 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 quantitative investing and international markets 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 Jason Hsu, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.