How to Think Strategically About Your Portfolio

I like all three strategies. From a mystery perspective, though, I always come back to this a lot in your shows, but I love factors. You have to know how you're going to use factors. It all really comes down to this context of what am I doing here. Am I building a strategic portfolio?

I want, from a large cap growth perspective, to have a quality overlay, and I'm going to have it forever, and it's going to be a foundation of my portfolio to go with my large cap value. Or are you investing tactically because you believe this particular type of strategy fits into that? None of these three ETFs are tactical factors. In my opinion, they are core strategic allocation strategies.

You're choosing between owning large cap growth, owning the market, or owning large cap growth with the quality tilt through this free cash flow screen. I like that. I mean, I can see the benefit of finding this. If you remember three years ago, we were having conversations about free cash flow growth in the terms of value. There are a lot of those out there, and I like those strategies too, but we're not talking about them right now because they're value and they've significantly underperformed.

You kind of have to think about strategically pairing these strategies. Are you just owning beta in large cap space? I actually think that's not a bad thing, and you can do that. If you're going to do that, I think just own the market. But if you do like to pair a growth and a value, I like this quality overlay from a construct of having a dampener on draw downs and volatility.

These are not tactical strategies in the terms of a pure beta, a deep value, or a high momentum. There are markets if you're trying to rotate across factors or certain factors the economic backdrop sets up well for, and you can get much more beta to those factors through some of the older factor strategies out there that are really concentrated 50 stock, 75 stock portfolios. So just that context, that's my mystery.

My overall winner, it's tough. I'm going to go with CGRO just because it's got a longer track record, but I think QZ might prove to be the winner over a full market cycle. I like them all as long as you know why you're using it and how you're using it overall to your portfolio.