In a recent episode of “Behind the Ticker,” Taylor Krystkowiak, co-founder of ThemesETFs, shared insights into his career and the innovative strategies behind ThemesETFs. Krystkowiak, who has worked at various firms ranging from Fortune 500 companies to boutique asset managers, brought his extensive experience in macroeconomic analysis and investment strategy to ThemesETFs. The firm, founded by Jose Gonzalez, focuses on providing thematic and fundamental investment strategies at competitive price points, offering a range of ETFs that cater to current market demands.
About Taylor Krystkowiak and ThemesETFs
ThemesETFs aims to differentiate itself by offering niche investment strategies at about 40% lower fees compared to the category average. Their first batch of ETFs includes sectors like artificial intelligence, cybersecurity, cloud computing, banks, airlines, and European luxury brands. Krystkowiak emphasizes that their goal is to provide investors with targeted exposure to specific market sectors while minimizing fees to enhance overall portfolio performance. By offering a variety of investment options, ThemesETFs seeks to cater to investors’ diverse needs and preferences.
Investment Strategy and Approach
A focal point of the discussion was the Global Systematically Important Bank ETF (GSIB). GSIB targets the 28 globally systemically important banks, often referred to as “too big to fail” institutions. These banks are held to higher regulatory standards to ensure financial stability, making them more resilient during economic downturns. Krystkowiak highlights that GSIBs have outperformed other banks and the broader market, especially during rising interest rate environments. Since January 2022, GSIBs have shown a return of over 35%, compared to a 7% decline in the broader banking sector and modest gains in major indices.
Krystkowiak explains that GSIB’s success is attributed to their lower exposure to commercial real estate, higher capitalization, and better liquidity. These banks have also benefited from increased customer deposits and diversified income streams, such as investment banking and wealth management fees. With a quarterly rebalancing strategy, GSIB maintains an equal-weight exposure to all 28 banks on the Financial Stability Board’s list, ensuring a balanced investment approach.
Portfolio Construction and Implementation
In terms of positioning within a portfolio, Krystkowiak suggests that GSIB can replace broad financial sector exposure or even serve as a core equity growth component. The ETF offers a way to diversify growth beyond tech-heavy names, providing stability and performance amidst market volatility. ThemesETFs employs a lean business model, utilizing artificial intelligence for efficient outreach and distribution, which allows them to offer lower fees to investors.
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Taylor Krystkowiak covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
And we saw that this was an opportunity to lower that price point for investors, since we all know that over the course of the long run, those fees are going to eat into your total returns. And in an environment where total market returns may be a little bit more muted going forward, and that's going to ultimately give you a windfall in the terms of the overall portfolio performance you can expect from some of the strategies, but ultimately at the end of the day one of the things that we're trying to do is provide a menu of options of buffet bar of sorts.
And then separately to your point, the other thing that we've tried to look and see if there are any novel strategies that have not been implemented yet, that may have potential one of which will discuss it later today, but looking at a combination of both where existing assets are and where we might be able to offer a similar strategy at a lower price point, or offering a strategy that has not yet been brought to market because we believe that there is some credibility to that investment methodology that has potential for total return that may not yet be tabbed by current issuers.
Market Context and Positioning
We're able to I think get in front of more people with fewer heads at our organization. So Taylor I really appreciate your time before I let you go where can people learn more about your ETFs and learn more about you. We are found on bingsetf.com so just as just like the mathematics themes ETFs.com is where you can find all of our ETFs more information about each one of the strategies top reasons to invest as well as the performance of the funds and their costs relative to the overall competition.
Today we have on Taylor, Chris Koviac. And if you saw how that was spelled, you might be mildly impressed with me. He is from themes ETFs. We are talking about G-sib or G-S-I-B. They're global, systemically important bank ETFs. So think about too big to fail. There are 28 of those banks. We talk about the most recent performance of which it's done well. We talk about some of the systemic risk that are actually taken out of the portfolio by removing some of the commercial bank and regional exposures that are kind of in traditional financial ETFs.
Notable Insights
"And when we put all of this together, what we really seen is that these banks are actually posting performance that is rivaling even the biggest tech stocks, magnificent seven stocks and many of which are actually up higher than those magnificent seven stocks."
"The IMF has labeled it as one of the biggest financial risks to stability and the thing that everyone I think fails to, I think really appreciate in terms of how the interest rate dynamic currently impacts."
Key Takeaways
- The firm, founded by Jose Gonzalez, focuses on providing thematic and fundamental investment strategies at competitive price points, offering a range of ETFs that cater to current market demands.
- ThemesETFs aims to differentiate itself by offering niche investment strategies at about 40% lower fees compared to the category average.
- Krystkowiak emphasizes that their goal is to provide investors with targeted exposure to specific market sectors while minimizing fees to enhance overall portfolio performance.
- By offering a variety of investment options, ThemesETFs seeks to cater to investors’ diverse needs and preferences.
- GSIB targets the 28 globally systemically important banks, often referred to as “too big to fail” institutions.
- The ETF offers a way to diversify growth beyond tech-heavy names, providing stability and performance amidst market volatility.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Taylor Krystkowiak 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 market outlook 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 Taylor Krystkowiak, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.