Episode 11, features John Forlines III, the Chief Investment Officer of Donoghue Forlines. Donoghue Forlines is a adaptive investment firm that has specialized in risk-managed portfolios since 1986. Donoghue Forlines has a suite of ETFs that utilize technical indicators to recognize shifts in market momentum and uses proprietary adaptive signals to help preserve capital in down trending markets and potentially offer strong client-centric risk-adjusted returns over a full market cycle. John speaks mostly about their Yield Enhanced Real Asset ETF (DFRA) which provides exposure to real assets such as REITs, Infrastructure, Oil & Gas, Commodities, and Natural Resources. You can learn more about the firm and the Funds at donoghueforlines.com
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and John Forlines covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
John Forelines from Donnie Hugh Forelines. They have a really unique and diversified business. They do have a model portfolio business. They have an ETF business, and they also have a mutual fund business. John is a finance veteran. Started at some of the larger institutions until he started his 4A into entrepreneurship and running his own firms. So today we are going to talk specifically about their enhanced real asset ETF, which is Ticker DFRA. They also have a high yield ETF and a risk-managed innovation ETF that we touch on.
That's the way it is. Now, in terms of just the actual doing it, it's an allocation process where we have a lot to choose from, right? And you have percentages you can choose from. And, and that's important, too. So if you, if you decide, you so, for example, you may want to switch to an ETF in the portfolio that's in cash or treasuries, because you want to raise cash, that's how you do it as opposed to we're going to sell something.
Market Context and Positioning
So for example, it's often used in retirement portfolios where it does kick off that high yield. And yet, it doesn't have, it doesn't typically track what else is in there, which includes their typical smattering of stock and bond holdings. So as far as communicating with a advisor in a model portfolio, what ETF are holding in there would you most likely try to get them to replace or peel from to add DFRA? I think the main replacement is your typical commodity ETF.
And then the next job, of course, I had was to run with another Morgan partner technology median telecom. And so that's where I've had my technology event, which is of course one or other ETS innovation. And so after that, in 2000, I was able to get out at the market peak, it was just a good time. I mean, I think more anything else. And I helped Morgan liquidate a couple of their investments that we've made as part of the tech process and therefore I got my stock and equity and all that stuff out, which is good.
That's the way to describe it. So, for example, if they had a dividend strategy that dividend strategy, they fully invested until certain market signals materialized, and then they would switch to some type of treasuries. For a period of time, excuse me, and we brought, as I was engineered portfolios over, and it was pretty good mix, because all of a sudden, we had a different mix of broker dealers that we were serving, they were serving a different kind of broker dealer.
Notable Insights
"They were trying to get out of it because of the real estate crash high interest rates I mentioned."
"And, you know, the bottom line is that stuff runs pretty well."
Key Takeaways
- John speaks mostly about their Yield Enhanced Real Asset ETF (DFRA) which provides exposure to real assets such as REITs, Infrastructure, Oil & Gas, Commodities, and Natural Resources.
- The conversation explores important themes in quantitative investing 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 John Forlines highlights important considerations around fixed income. 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 fixed income 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 John Forlines, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.