In this week’s episode of Opto Sessions, Noah Hamman, the founder and CEO of actively managed ETF provider AdvisorShares, reveals his outlook for US equity markets, discusses thematic funds, such as the Vice ETF [VICE], as well as an artificial intelligence (AI)-powered momentum strategy.
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With more than 15 years of experience in the fund management business, the founder and CEO of AdvisorShares Noah Hamman has weathered the ups and downs of market volatility.
As global equity markets whipsaw amid heightened macro-economic tensions, including geopolitical conflict stemming from the Russia-Ukraine crisis and recession fears, he sees all eyes on what the Federal Reserve will do next to temper a bear market.
However, while the Fed has signalled a more aggressive hawkish stance, Hamman isn’t sure whether this will have a completely negative impact on markets. Based on the yield curve, he thinks a lot of this sentiment has already been priced in.
“If the [Fed] are serious and they’re going to pull back on providing liquidity to the markets, then yes, we are in the camp of ‘we could easily be in a bear market in some meaningful timeframe’, with lots of up and down volatility along the way,” he told Opto Sessions, adding that if the central bank decides to increase liquidity instead, then it will be a great time to be in the markets.
“If the [Fed] are serious and they’re going to pull back on providing liquidity to the markets, then yes, we are in the camp of ‘we could easily be in a bear market in some meaningful timeframe’, with lots of up and down volatility along the way” - Noah Hamman
Hamman’s prediction is that the Fed will raise interest rates once or twice more — so not quite the five or six rate hikes that it proposed earlier in the year. But what will challenge this outlook, he said, is the dynamic between political pressure to increase the central bank’s balance sheet, especially as the US midterm elections approach.
For Hamman, the best way for investors to limit downside risk amid the market’s heightened volatility is to hedge their bets. “We have a couple of strategies, but one is our alpha DNA strategy, which has a unique approach of measuring digital momentum or your digital footprint of a company,” he said, adding that the strategy an investor chooses “depends on the risk tolerance that you have”.
Using an AI-powered system that scans alternative data sources such as social media and web scraping to identify companies with high-growth potential, the AdvisorShares Alpha DNA Equity Sentiment ETF [SENT] can be used as a hedge component in a portfolio.
Another one of Hamman’s favourite AdvisorShares’ funds is the Vice ETF [VICE], which invests in companies operating in ‘vice’ industries, including alcohol, cannabis, tobacco, gaming, food and beverage, restaurants and hospitality. The fund’s performance has kept up with the broader market, which he sees as being a nice complement to a thematic investor’s portfolio.
To hear more insights from Hamman about how he set up AdvisorShares and the firm’s range of funds, listen to the full episode on Opto Sessions.
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