One, and welcome everybody to another smart money Circle show.
I'm Adam, Sarah. And with me today is Christopher
J. Day, who's a founder and CEO at
Days Global Advisor. And Christopher,
congratulations, you also just launched the DGA Absolute Return
ETF. The ticker symbol is HF.
Combined with the wealth management and the ETF and
everything else Christopher's involved with, he manages over
500 million in assets under management.
Christopher, thank you so much for coming on the show.
Absolutely. Pleasure to be here.
So I always like to ask Christopher, can you tell us a
little about your story and how you got to where you are today,
please? Sure, sure, absolutely.
It actually started back in college.
You know, I did a went to Northeastern University and
instead of having. I guess internships, they have a
mandatory Co-op program. So I was introduced to a fintech
startup there and it was actually backed by you know a a
person in the mutual fund industry, Michael Lipper.
And you know, through that I kind of learned about mutual
funds and. And things like that.
And when I graduated, I went down and worked for a family
office in Palm Beach and I was kind of trained in how to manage
their portfolios in absolute return.
And that's really where my story starts.
And I've been doing absolute return portfolios on and off
ever since. I love that.
So let's educate the audience a little bit in case if they're
not familiar, can you please let us know what exactly is absolute
return? Exactly.
Absolute return, it is a way to look at your performance that is
a little different than what's called a relative return.
So relative return would be. So hey, the S&P was up 15% this
year. I was up 16%.
So you beat it by 1%. That was your relative return to
the to the S&P. So if the S&P was down like last
year 22%, but you were only down 21%?
Technically you beat the SNP and you had a relative return, but
you're still down 21%. Whereas an absolute return talks
about exactly what your return is.
Your return is what you get. It's not relative to any
benchmark. So you if you lose 22% you are
down 22%, if you are up 10%, you are up 10%.
It's it's very straightforward, you know, I love that I'm a big
fan of absolute return for what it's worth.
And Full disclosure out there, I think it's just a cleaner,
easier way of, you know, having measuring returns and and all
that fun stuff. Because absolute return is it's
just dollars in, dollars out. Hey, I'm up or I'm down.
It's binary type of a thing where it's much cleaner.
All right, beautiful. Let's let us know a little about
your investment strategy, please.
Sure, sure, sure. My investment strategy kind of
comes from, you know, my my time in family office and.
It basically is a global macro strategy.
So it's not it takes out that unsystematic risk of individual
companies. So it is a portfolio that you
can use as core. But what differentiates it is
there is a hedging overlay and it's not people think of hedging
as in your timing the market, but that's not really what's
happening. It's a systematic, systematic
hedging overlay that we use and it's incrementally manages the
risk, so it decreases risk. If the market's performing badly
and it increases risk, if the market's performing well and it
does that systematically, I love that.
So let's shift gears and talk about risk management.
What are some rules or how do you handle risk and what are
some mistakes you see people make with respect to risk
management? I see people risk management
definitely either new traders or even new portfolio managers.
I think they over position their their.
Each position they they allocate too much to anyone position
because that can really mess up returns.
I know there's some studies out there about concentrated risk
and you know having, you know if you have 20 positions it's the
same thing as being diversified over a certain amount.
But I I've never adhered to that because it only takes one or two
companies that that perform very badly to to really detract from
your performance as a portfolio engine.
No, I love that. So you're saying be careful,
don't get, oh, even if you're really bullish or really believe
on the quote UN quote story, you know, Curb Your Enthusiasm type
of a thing, you don't get too bullish on it because otherwise
you get too lopsided in the portfolio.
Is that correct? That is correct, yes.
I love the Curb Your Enthusiasm. Yeah, that's a good visual.
Big, big fan of Larry David for fullest photo again.
OK, beautiful. So what are some timeless
lessons you've learned along the way that you'd like to share
with the audience? I I think timeless lessons would
be one of the things that is differentiated our performance
over you know a long term and with different what happens in
family office versus what other people are doing.
So say you have a 401K, you're in maybe a 6040 allocation of
stocks and bonds. The thing is, is that's kind of
a passive asset class of investing and so therefore
they're kind of like in 2022 when the Federal Reserve was
raising interest rates. They took a long time and they
telegraphed. They told you exactly what was
happening. So they gave you a lot of times
to reduce your exposure in bonds.
And just by avoiding bonds for for 2022 you've you avoided a
lot of downturns. I mean a lot of people don't
know this and if you go and you look long duration treasuries,
treasuries, which are supposed to be the most stable things,
right? Yeah, they had basically the
equivalent of a 2008 crash. So if that was in your
portfolio, that definitely drag, you know was a drag on your
performance that that is so, so powerful.
And how about the other side of the coin, Timeless mistakes?
Oh, timeless mistakes I would say.
I I would say one of the largest mistakes would be when you just
let your let your portfolio go like you don't watch it.
I mean, I understand passive investing to a point.
But you do still need to watch your portfolio and a lot of
people don't, A lot of people don't, a lot of people and they
don't rebalance the portfolio. Rebalancing is a is a very it
can add a lot to the return over time by rebalancing.
Because there are times. Oh, go ahead.
I could. I couldn't agree with you more.
No, by all means. Oh yeah, yeah, yeah.
Because because there's times when you know value stocks are
are are I guess in in season and there are times when.
Growth stocks are in the season and depending on when those
cycles are you want to, you want to be able to rebalance and have
that exposure. So let's let's go in and go back
for a second. You talked about your investment
strategies, global macro that means you look at the entire
market, well the universe capital markets, you look at
stocks, bonds, currencies, commodities etcetera and then
you have a systematic approach for coming up with I guess
stocks that are or areas of the market that are undervalued
versus areas that are overvalued.
Is that correct and? Then you go that way.
Yeah, it's similar, but it's it's not really a value
investing strategy. It's really based off
statistical correlation. So what we're looking at is
we're looking at correlations between different asset classes
and based on those correlations, the model will determine you
know whether or not those asset classes are in favor and then
help determine the exposure. So if you go and you look at all
the math. Equities have outperformed every
asset class inflation adjusted. They they they really have.
I mean even if when you look at gold, the inflation adjusted
it's, it's gold. So really equities are the best
asset class at you know if you want to take full on risk but if
you want to start to hedge then you want to reduce that exposure
in you know in equities or kind of control it with a with a long
short. Approach and then there's
certain times when commodities are are in favor as well and
start to show those correlations where they're where they start
to outperform equity. So then that's when you add some
commodities in. So it's more more of a tactical
approach versus a passive asset approach.
Wonderful. That's was my question.
How do you actually position it? Because when you say growth and
value and they change and then Treasury's 2008, so it's more of
a tactical approach to investing.
So you're going to look at the entire universe, find areas that
you feel are attractive and then allocate to those areas and then
take away from the areas that are not attractive.
Is that is that a good way of somebody?
Correct, Correct. Wonderful.
And that helps you because you don't necessarily have to know
how an area is going to perform, you just have to have.
A nice measured exposure. And then when that area starts
to outperform, you say, OK, well, you know, my job is to
manage the risks. So I take off those profits and
I add to areas where you know, they're there, you know there's
potential to catch up. Got it.
OK, wonderful. And that's the rebalancing that
you spoke about earlier. So the audience can can follow
along. Correct.
Yes, I do, beautiful. All right, Christopher, the next
question for you. What's the best piece of advice
you'd like to share with the audience or give your 30 year
old self? Oh, if I could go back and give
my 30 year old self, I would definitely shy away from
excessive consumerism. And you know I would have
definitely, I think not necessarily saved more but
actually invested more. I mean that would be for anybody
I'm sure because time is what matters in investing.
You know the best time to invest is yesterday, the next best time
is is now. So that is really what I would I
would focus on and also I would have.
Started to look at things besides you know 6040
portfolios. I mean there's a reason why
these models have existed in four O1 KS for a long time.
I I guess yes in some way instances they're time tested
but you got to kind of think for yourself because when globe when
when things hit like 2008 and you have different you, you have
global volatility. Now all assets classes start to
converge in correlation. So you know.
So that would be, yeah, no, that makes perfect sense.
So let's talk about the ETF because I know that's very
exciting news and congratulations for ticker
symbols HF. Again, tell us about how you
that came to mind and and the journey and how you brought it
to life, please. Absolutely, absolutely.
That goes all the way back to the first family office that I
worked with and I was trained by them and.
He was actually a former specialist of spear leaves and
Kellogg. I think they're they're Goldman
now but but they taught me kind of a framework and how to look
at the market and this is and I was doing it manually with
spreadsheets and on a ready plus platform and you know and
pulling my hair out but over the 20 years we've refined it to
where it now runs you know in the in a virtual cloud and the
models there and. And that's really how it kind of
evolved. So it's it's really a way to
look at the market that's not a passive asset class investing
and to look at it as a framework of correlations between
different asset classes. I love it.
And that's available. Anyone can buy that.
Whether a financial advisor, a big institution, individual
investor, it's open to everybody.
Absolutely. And and that's really the reason
why I did it. Normally somebody would take a a
strategy like this and you know do a 2 and 20.
And, you know, call it a day, but I, I, one of the things I'm
very passionate about is global financial inclusion.
And that's why I, you know, went and went through the regulatory
process and to have it come out as a ETF for everyone.
Got it. I love it.
Yeah, I love it. Thank you so much for that.
And then what is the best way for people to get a hold of you?
Or do you have a website that you want to share with the
audience? Absolutely.
My website is www.daysadvisors.com and there
you can learn about the the firm, you can learn about the
ETF. There's an education section
that kind of goes over the absolute return kind of basics
of the math. You know, it's because really
it's it's it's elegant math that works in your favor over time.
That's what it is. I love it.
There's a great book called The
Slight Edge Christopher, where the guy talks about just getting
a slight edge a little bit everyday.
Small wins and adds up something really, really big over time,
but compounding effect. And it sounds like exactly what
you're doing from the numbers and math.
I love it. Well, Christopher, thank you so
much for coming on the show. This has been very delightful.
Thank you. Oh, thank you so much for having
me. All right.
Take care, Adam.