Raymond Bridges, Bridges Capital

Raymond Bridges runs his firm from a stretch of A1A in Fort Lauderdale that he describes as the spot where the hotels end and the condos begin. The geography is the point. People arrive from the Northeast and the Midwest with a nest egg and start drawing on it, and that investor is not the one most portfolios are built for. The gap is why his fund exists.

The Same Drawdown, Two Different Problems

Start with how he frames volatility. If you are adding money every month, a selloff pays you. COVID was a phenomenal year for anyone contributing, and so was 2022, when the market fell 20 percent and every deposit bought more.

Reverse the cash flow and the same drawdown does the opposite. A retiree taking a monthly distribution is selling into it whether they want to or not, and nobody knows how long it lasts. His point is that the fear is not irrational, which is why the standard industry answer bothers him. He hears advisors say their job is to keep clients invested, and the version that goes further, that you do not need economics, you only need psychology. His counter is that a client who panics and moves the whole account into a fixed annuity has not been kept invested. They have been locked out of growth permanently. The way to prevent that conversation is to make the drawdown shallower in the first place. When the market is off 30 percent and the client is off five or six, that is a very different phone call, and by his read that is where the fee gets earned.

Two Engines, One of Which Barely Moves

The Bridges Capital Tactical ETF launched on the Nasdaq in May 2023 and runs on two processes operating at completely different speeds.

The first is a macro thesis that changes very rarely, grounded in Austrian business cycle theory. Too much money creation sends a skewed price signal, that signal pulls capital into goods, and eventually the consumer is not there to support the prices. He points at houses, boats, used cars, and now data centers and AI as the same mechanism in different decades. His read is that the market is still working through the late stages of the four trillion dollars created during COVID. He watches the three month to ten year curve and the reverse repo balance, which ran to two trillion after COVID and now sits closer to twenty billion, with the caveat that no single series tells you enough.

The second engine does the trading. Breadth gets scored across four categories: total New York Stock Exchange breadth, Nasdaq composite breadth, the top 100 of the S&P 500, and the top 100 of the Nasdaq 100. When everything is participating he treats that as froth and scales off. When the internals break down he treats it as opportunity and scales in. That works out to roughly four round turn trades a year, executed in tranches of two to three percent rather than in one decision.

The tranching is what keeps the fund from ever being all in or all out. Since launch the most equity exposure it has carried is 60 percent against 40 percent cash, and only briefly, at the tariff low. It has held 80 percent cash for long stretches. It has never been fully invested, and there is always a sleeve of at least 10 percent in T bills or box spreads.

The Buy Rule Is Price, Not Conviction

The equity core is the market cap weighted names at the top of the S&P 500 and the Nasdaq 100, the ones actually moving the index. Micron and Applied Materials have worked their way in on the back of their run. Anything smaller comes through an ETF rather than an individual name.

What decides a purchase is not whether he likes the company. It is where the price sits against its own average. A name can be a category leader in the top ten by weight and still not get bought, because it is trading well above that average. It gets held instead. He sat out AMD and Intel for stretches on exactly that basis, and is willing to accumulate semiconductors now that they have come back below the line.

The same rule governs the entry. Index prices can still be falling while the internals underneath strengthen, and he reads that as money coming in that has not shown up in the mega caps yet. So he does not wait for price to confirm, and he does not buy the whole position into a decline either. He takes a tranche, waits for the next breadth thrust, and takes another. On technicals generally he is blunt: price is a signal, the same way it is a signal at a car lot or a grocery store, and dismissing it out of hand is silly.

Sortino, Turnover, and the Wrapper

Two standard evaluation tools misread a strategy like this. The Sharpe ratio penalizes deviation in both directions, so a strategy designed to produce an asymmetric distribution gets marked down for the half of the asymmetry you want. Sortino only penalizes the downside. Turnover has the same problem: a fund holding a large T bill position racks up mechanical turnover that has nothing to do with risk taking, so a 200 or 300 percent number reads alarming and is not.

The wrapper matters for a reason beyond the usual tax pitch. Custom basket redemptions let the fund clear capital gains without pushing them out to holders, so a risk decision never has to be argued against a tax bill. He likes what the structure does to his own practice too. Clients holding the fund do not pay an advisory fee on top of it, the fund fee comes out before the gain rather than after it, and one trade now covers what used to be many accounts.

Where He Thinks It Belongs

Asked where the fund sits on a conservative to aggressive spectrum, he does not hedge. He would take it out of the long duration bond sleeve. His objection to long bonds is that they can carry equity-like volatility while leaving the holder in something considerably harder to exit, and liquidity is the thing he cares about most. He notes the fund trades on a three to four cent spread despite its size, because everything underneath it is liquid.

His closing argument is aimed at other advisors. If you have a process that works, put it in an ETF. You get a track record, you get rated, you get the tax treatment, and you no longer have to be one of the big three to be on the platform. His answer to the crowding worry is that there are more recipes than there are ingredients.

Key Takeaways

• Volatility is not one problem. It pays the investor who is contributing and punishes the one taking distributions, and Raymond built the strategy around the second case.
• The fund pairs a slow macro bias drawn from Austrian business cycle theory with a fast breadth signal scored across four categories, producing roughly four round turn trades a year in two to three percent tranches.
• Positioning has been genuinely defensive: a maximum of 60 percent equities since launch, 80 percent cash for long stretches, and never fully invested.
• Purchases are governed by mean reversion rather than conviction. A top ten name trading above its average gets held, not bought.
• He argues Sortino beats Sharpe for judging a strategy built to be asymmetric, that turnover misreads a cash heavy fund, and that the wrapper's real benefit is letting a risk decision happen without a tax bill arguing against it. On placement he is direct: this comes out of the long duration bond allocation.

Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.