Alejandro Garza

Alejandro Garza comes from the world of active stock-picking in emerging and developed markets , his firm started as an SMA service provider with a 50/50 client base split between Mexico and the U.S. The AZTD ETF represents the quantitative, rules-based version of their flagship global developed market stock selection strategy. It's an interesting case study in how an active manager translates two decades of fundamental research into a systematic framework , and why that SMA-to-ETF path matters for credibility.

From Active Stock Picking to Quantitative Rules

The origin story goes back 20 years. Alejandro's firm developed a proprietary quantitative model with six factors , five fundamental and one technical. The vision was to identify, within a quantitative framework, which specific fundamental variables work best at selecting stocks that compound value over time.

The six factors, in Alejandro's words:

Free cash flow is "first and foremost" , they look at free cash flow yield, free cash flow margin, and trends in free cash flow generation. "We firmly believe based on experience that free cash flow generation is the variable that really allows companies to create value and compound value over time."

Return on equity measures business quality and the ability to sustain returns over time. Earnings growth captures the growth component, including top-line growth for economies of scale. Earnings revisions have become increasingly valuable as consensus data has improved , "when we started 20 years ago, there wasn't as much information as we do now. But now there's just good information in order to build a solid factor around earnings revisions." Value ensures they're buying quality companies at reasonable prices, using price-to-earnings and earnings yield. "We want to buy high-quality companies that grow and compound capital at high rates over time, but at a good price." And finally, momentum serves as a confirmation factor , "that final confirmation that says, okay, yes, this is going in line with the fundamentals."

Scoring and Selection

The model generates scores across all six factors for every company in the investable universe, ranks them, and selects the portfolio systematically. The weighting of each factor and how they're combined was calibrated over the firm's 20-year history of active stock selection , not from academic backtesting but from real-world portfolio management experience.

The SMA-to-ETF Path

The progression from SMA to ETF is one Brad finds particularly relevant , THOR followed a similar path. Running the strategy as an SMA first gives you a live track record and real-world experience managing the portfolio through different market environments before taking on the additional complexity and cost of an ETF wrapper.

Alejandro's firm maintains both businesses. The SMA remains their primary flagship with the full active, fundamental due diligence approach , meeting with management teams, deep company research. The ETF (AZTD) is the quantitative translation: same investment philosophy captured in rules-based form. The two products serve different client needs , the SMA for investors who want active management with manager discretion, the ETF for those who want the systematic version at lower cost with daily liquidity.

Emerging Markets Expertise

With a significant Mexican investor base and two decades of experience in international equities, Alejandro's firm brings genuine on-the-ground expertise to global stock selection. This isn't a U.S.-centric firm bolting on international exposure , it's a firm that was built international from the start, with boots on the ground in both Mexico City and the United States.

The quantitative process applies globally, but the fundamental factors are calibrated to work across different market structures. Free cash flow matters everywhere, but how you measure it and what constitutes attractive levels varies by market. That calibration comes from 20 years of actually investing in these markets, not just backtesting data.

For advisors evaluating international equity strategies, AZTD offers something relatively rare: a rules-based approach built by practitioners who've been actively investing in these markets for two decades. The SMA business validates the underlying philosophy; the ETF makes it accessible and tax-efficient. It's the kind of story that takes a long time to build, which is exactly why it's hard to replicate.

The earnings revisions factor deserves special attention because it captures something that's genuinely changed over 20 years. When Alejandro started, consensus data was sparse and unreliable. Today, the depth of analyst coverage and the speed of revisions make it a powerful predictive signal. A company seeing upward earnings revisions across multiple analysts is telegraphing fundamental improvement in near-real time. Combined with the confirmation from momentum , which ensures the market is pricing in those revisions , the six-factor model captures both the fundamentals and the market's recognition of those fundamentals. The SMA track record through multiple market cycles validates that this combination works in practice, not just in theory. For advisors who often hear about factor-based investing from a purely academic perspective, AZTD represents a rare case where the quantitative framework was derived from and validated by 20 years of active investing with real capital at risk.

Key Takeaways

• Alejandro Garza comes from the world of active stock-picking in emerging and developed markets , his firm started as an SMA service provider with a 50/50 client base split between Mexico and the U.S.
• The AZTD ETF represents the quantitative, rules-based version of their flagship global developed market stock selection strategy.
• It's an interesting case study in how an active manager translates two decades of fundamental research into a systematic framework , and why that SMA-to-ETF path matters for credibility.
• Alejandro's firm developed a proprietary quantitative model with six factors , five fundamental and one technical.

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