Behind the Ticker

In a recent episode of Behind the Ticker, Adam Patti, founder and CEO of VistaShares, discussed the launch of the VistaShares Artificial Intelligence Supercycle ETF (ticker: AIS) and how it differentiates itself in the growing AI investment space. With over two decades in the ETF industry, Patti previously founded IndexIQ, one of the earliest issuers of liquid alternative ETFs, which was later acquired by New York Life. After spending several years outside the industry, Patti partnered with John McNeil of DVX Ventures to launch VistaShares, focusing on building high-quality thematic ETFs with a more thoughtful and targeted approach.

Patti explained that AIS is designed to provide pure exposure to the AI supercycle by focusing exclusively on the infrastructure driving artificial intelligence, particularly in data centers and semiconductors. Unlike many AI-themed ETFs that hold broad tech exposure dominated by the "Magnificent Seven" stocks, AIS takes a supply chain-driven approach, investing in companies that manufacture the essential components—such as GPUs, VRAMs, cooling systems, and fiber optic networks—needed to power AI. By analyzing the bill of materials for AI data centers and semiconductors, VistaShares identifies companies with substantial AI-driven revenue, ensuring that the fund is directly tied to AI growth rather than being diluted by large-cap tech names with only partial AI exposure.

AIS follows a rules-based, actively managed strategy that combines systematic supply chain analysis with an active overlay. The core portfolio is constructed based on a transparent, rules-driven methodology—one that VistaShares has filed for a patent on—ensuring that holdings are determined by their relevance to AI infrastructure rather than arbitrary weightings. The fund undergoes a semi-annual rebalance, but Patti emphasized that the active overlay allows for adjustments in response to new developments in the rapidly evolving AI space. The investment committee, which includes AI industry practitioners such as former Tesla president John McNeil and AI entrepreneur Sonny Madra, helps identify emerging trends, new players, and risks within the AI ecosystem before they become widely recognized.

Patti also highlighted the global nature of the AI supply chain, with AIS holding companies from the U.S., Taiwan, China, and Europe. Currently, about 60% of the portfolio is U.S.-based, with the remainder distributed across key AI manufacturing hubs. Looking ahead, VistaShares has the flexibility to expand the portfolio’s focus, potentially incorporating consumer-facing AI applications and energy solutions as the industry matures. However, for now, the fund remains centered on AI infrastructure, which Patti believes is still in the early stages of exponential growth, as evidenced by record-breaking capital expenditures from major tech firms.

For investors and advisors looking to incorporate AIS into portfolios, Patti suggested a 3-5% allocation within a core equity strategy, positioning it as a high-conviction growth satellite.

In a recent episode of “Behind the Ticker,” Garrett Stevens and Rich Malinowski from Exchange Traded Concepts (ETC) discussed the firm’s unique position as the first white-label ETF issuer and its role in supporting clients from concept to launch. ETC, which has been operating for 13 years, has launched over 100 ETFs with a combined $7.5 billion in assets under management. The firm provides a turnkey platform for ETF issuers, handling everything from regulatory filings and portfolio management to marketing and website development, while also offering individual services for established funds.
Stevens highlighted a growing trend in the ETF industry: wealth management firms launching their own ETFs based on existing strategies. This shift allows advisors to offer tax-efficient, liquid, and operationally streamlined investment vehicles to their clients. He emphasized that these advisor-driven ETFs are often not marketed publicly but are used as tools to enhance the client experience and differentiate wealth management firms from competitors.
The conversation also touched on the growing popularity of actively managed ETFs, which now account for about 75% of new launches. Stevens explained that while thematic and passive ETFs dominated early growth, the focus is now shifting toward active strategies that allow for sector rotation, cross-asset class exposure, and unique management styles. He noted that active ETFs require a longer runway for success, as they often depend on performance to attract investors, contrasting with the quicker adoption of thematic passive products.
Rich Malinowski added insights on mutual fund-to-ETF conversions and semi-transparent ETF structures. He explained that while mutual fund conversions have slowed due to operational challenges and intermediary resistance, they remain an area of interest. Additionally, semi-transparent ETFs face hurdles related to their limited visibility for market makers and custodians, but Malinowski expects gradual acceptance as the industry adapts to these innovative products.
Both Stevens and Malinowski emphasized the importance of preparation and infrastructure for ETF issuers. They advised aspiring ETF managers to secure sufficient assets at launch, target a $30 million breakeven point, and build strong relationships with service providers to ensure operational success.

In a recent episode of Behind the Ticker, Jeff Cullen, Managing Director at Schafer Cullen Capital Management, sat down to discuss the firm’s first ETF, the Cullen Enhanced Equity Income ETF (ticker: DIVP). With over 30 years in the asset management industry and experience across mutual funds, SMAs, and ETFs, Cullen provided a deep dive into how the firm’s long-standing dividend-focused value strategy evolved into an actively managed ETF. Schafer Cullen, which manages over $24 billion in assets, has built a reputation over four decades as a value manager with a strong emphasis on dividend-paying stocks, and DIVP represents a natural extension of that philosophy.

DIVP is a high-conviction, actively managed strategy that holds 30 to 40 large-cap, household-name value stocks with above-average dividend yields—typically above 3%. What sets DIVP apart is its selective covered call overlay, where the team writes short-dated, out-of-the-money call options (typically 2–4% out and expiring in two weeks to one month) on about 25–40% of the portfolio. The calls are written on individual stocks, not an index, and are chosen based on market volatility and the underlying fundamental outlook of each holding. This approach allows the portfolio to enhance income without significantly capping upside potential, thanks to thoughtful partial-position writing and sector diversification.

Cullen emphasized that the ETF is designed to deliver two sources of income—dividends from quality value stocks and call option premiums—leading to a historical yield between 7.2% and 8.3% in the SMA version of the strategy, with more than half of that coming from qualified dividend income. The strategy is intended for investors seeking higher income with equity market participation and downside resilience. While the ETF may underperform in sharp bull runs or during periods of low volatility, it performs particularly well in sideways or volatile markets where premium harvesting and dividend yield can shine.

Cullen also shared his enthusiasm for entering the ETF space, highlighting the structural benefits of the ETF wrapper, including tax efficiency, ease of implementation, and the ability to reach a broader set of advisors and investors. He noted that Schafer Cullen plans to expand its ETF offerings, potentially via ETF share classes of existing mutual funds, depending on upcoming SEC rulings.

In a recent episode of “Behind the Ticker,” Sylvia Jablonski, CEO & CIO of Defiance ETFs, shared her background in finance and the innovative strategies driving the firm’s success. Jablonski, who has a rich history in sales & trading and a decade of experience with ETFs, decided to join Matt Bielski to help launch Defiance, a company that aims to create ETFs targeting cutting-edge themes. Over the last four and a half years, Defiance has grown significantly, expanding its product lineup to include thematic, income, and leveraged ETFs.
Jablonski discusses the firm’s thematic approach, with a special focus on their quantum computing ETF, QTUM. Launched in 2018, QTUM was ahead of the curve in recognizing the potential of quantum computing, artificial intelligence, and machine learning. Jablonski explains that Defiance worked with Bluestar to construct an index that includes the top companies in quantum computing and AI, from major players like IBM and Hewlett-Packard to smaller, pure-play names like IonQ and D-Wave. The fund offers investors diversified exposure to the key sectors driving these transformative technologies.
The QTUM ETF targets companies that derive at least 50% of their revenue from supercomputing, machine learning, and AI. The fund holds around 70 equally weighted names and is rebalanced semi-annually, providing exposure to both large and small-cap companies. This includes established tech giants like Nvidia and Google, which act as a ballast for the fund, while also capturing the potential high growth of emerging players in quantum computing. Jablonski highlights that quantum computing’s ability to process data exponentially faster than traditional computers can revolutionize industries such as biotech, aerospace, and defense, making QTUM a powerful thematic play for long-term growth.
In addition to discussing QTUM, Jablonski touches on the overall strategy at Defiance, emphasizing the importance of speed, adaptability, and listening to market demands. She explains that Defiance’s ability to be nimble and respond quickly to trends has been key to their success. The firm has also built an in-house marketing and distribution platform, leveraging AI and digital marketing to efficiently promote its ETFs. This unique approach has allowed Defiance to punch above its weight, attracting attention in a competitive market without the extensive budgets of larger issuers.

In a recent episode of “Behind the Ticker,” Joanna Gallegos, co-founder of BondBloxx, shares her extensive background in ETFs and the innovative fixed income strategies her firm employs. Gallegos, who has been in the ETF industry her entire career, began at Barclays Global Investors during the early days of iShares before moving to JP Morgan to help start their ETF business. She co-founded BondBloxx in October 2021 with a team of experienced ETF professionals from firms like BlackRock, Vanguard, and JP Morgan, aiming to address the underdevelopment of fixed income products in the ETF market.
Gallegos explains that BondBloxx was created to bring more precision to fixed income investing through ETFs. The firm’s product line focuses on high-yield sector and credit rating ETFs, offering a range of tools that allow investors to tailor their exposure more precisely. The company identified a gap in the market for more specific fixed income products, particularly in the high-yield space, where traditional broad market exposures were no longer sufficient for the evolving financial landscape.
One of the standout products discussed is the BondBloxx CCC Rated US High Yield Corporate Bond ETF (ticker: XCCC). This ETF provides diversified exposure to over 220 bonds in the CCC rating category, which typically comprises about 10-11% of a broad high-yield index. Gallegos highlights that XCCC offers investors a significant yield pickup, with yields around 12%, and has shown impressive price appreciation in 2023. This ETF is designed to complement broad high-yield exposures by allowing investors to add a higher concentration of CCC-rated bonds, benefiting from their higher yields and potential price appreciation as interest rates decline.
Gallegos addresses common misconceptions about CCC-rated bonds, emphasizing that the current market fundamentals for high-yield bonds are strong, and the overall default rates are not above historical norms. She explains that the diversified nature of XCCC, with hundreds of bonds, mitigates individual default risks and offers a more stable investment compared to picking individual high-yield bonds. The ETF’s monthly rebalancing ensures it stays aligned with the ICE BofA CCC & Lower US High Yield Constrained Index, providing consistent exposure to the target credit rating.
For advisors and investors, Gallegos suggests that XCCC can be a valuable addition to an existing high-yield allocation, rather than a replacement. It allows investors to lean into the higher yield opportunities within the high-yield spectrum, especially in an environment where rates are expected to remain high for longer. This approach can enhance overall portfolio yield and performance, making XCCC a strategic tool for optimizing fixed income investments.