Raymond Micaletti built the MOOD ETF around a single idea: institutions consistently outperform retail traders, and you can measure the difference. After watching a relative sentiment indicator correctly call two major market bottoms while all his other signals failed, he stopped ignoring it and started building.In this episode, Ray breaks down how he uses Commitments of Traders data and sentiment surveys to construct signals across equities, bonds, commodities, and currencies. We dig into the structural advantages institutions have over retail, why his approach avoids the whipsaw problem that kills most adaptive strategies, and where it can still get you in trouble. He also makes a strong case for pairing relative sentiment with trend following—two strategies that naturally offset each other's weaknesses.Website: www.relativesentiment.com ETF site: relativesentimentetfs.com Twitter: @relsenttech
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Raymond Micaletti covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
The podcast where we go beyond the symbol and into the strategy. I'm Brad Roth, founder and chief investment officer at Thor Funds, and in each episode I sit down with ETF managers, CIOs, and industry leaders to break down how these funds are actually built, how they behave in real markets, and how advisors use them in real portfolios. Those people just see a ticker symbol, but we know much more goes on behind the ticker. Hey, Ray, welcome to the show.
So no need to make that trade. So everything you do from an allocation standpoint and waiting standpoint or rebalance standpoint, I mean, you got a checklist of rules, or is there any art that finesse that you guys are putting into the portfolio, or you just strictly created a checklist of rules, which you're going to follow, and it's a fully ruled it rules-based process. So when we started it, it was fully rules-based. And we had the equity side of the portfolio, was entirely rules-based, and I had non-row to sentiment strategies, as I mentioned, when I launched from the non-equity portion, and those were rules-based as well.
Market Context and Positioning
And just, I should have probably asked this earlier. You're investing across always different asset classes. How are you actually making those getting that exposure? Is it a fun to fund funds or how, like, what does the holdings look like if someone were to, you know, go to the website and take a look at your holding space, like, what's in it? It is a fun to ETFs. So we tried to use the the most liquid lowest cost ETFs to represent the various exposures.
And in that case, it was like long duration bonds and other things where how they're positioned in equities complimented by how they're positioned in long duration bonds or along the yield curve was what would actually give you more predicted for her. And that's pretty much what I do. One of my models looked at how investors are positioned directly in equities. So the S&P, the NASDAQ, the Russell 2000, aggregate data information, but also added to that how they're positioned in long duration bonds.
So for currently 50% equities in the target is 56 this week, I'll leave it at 50. If it goes down to 42, I'm going to leave it at 50. If it goes up to 65, won't it go into movement? Because 65 is outside that 10 percentage point range. Just to keep turn over and check and also, if it's anything less than 10 percentage points on the equity side, it doesn't necessarily move the needle over short time horizon.
Key Takeaways
- The conversation explores important themes in fixed income relevant to today's advisor landscape.
- 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 Raymond Micaletti 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 Raymond Micaletti, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.