The Research to AUM Pipeline | Warren Pies on Raising $450m in an ETF in Less Than 6 Months
Monetary Matters with Jack Farley
Deep Dive
Why did Warren Pies choose to focus on institutional research over retail newsletters?
Warren Pies chose institutional research because he wanted to work with sophisticated clients who had appropriate expectations. He avoided the retail newsletter model, which he felt often feeds off bad expectations and requires constant marketing. Institutional research allowed him to maintain high retention rates and focus on delivering value to a smaller, more discerning client base.
What was the key factor behind the success of Warren Pies' ETF launch?
The success of Warren Pies' ETF launch was primarily attributed to the relationships and differentiated viewpoints built through his research business, 3Fourteen Research. Clients who had followed his Full Cycle Trend Model for years expressed interest in investing through a tax-efficient ETF, which led to significant seed capital and rapid asset growth.
How does Warren Pies' research business complement his ETF business?
Warren Pies' research business serves as a pipeline for investor interest in his ETF. By providing unique insights and building trust through research, he attracts clients who later invest in his ETF. The research business also helps establish credibility and relationships, which are crucial for raising assets in the competitive ETF market.
What is the Full Cycle Trend Model, and how does it work?
The Full Cycle Trend Model is a stock selection system that buys 20 stocks every month from a high-quality universe. It is a proprietary, rules-based model that turns over the portfolio approximately 3.5 times a year. The model's performance attracted clients who later pushed for its inclusion in an ETF for tax efficiency.
Why did Warren Pies decide to launch an ETF instead of continuing with the research model?
Warren Pies launched an ETF to provide a tax-efficient vehicle for clients who wanted to invest in his Full Cycle Trend Model. The ETF structure minimizes short-term capital gains taxes, which are significant due to the model's high turnover rate. Clients who had followed the model for years encouraged its transition into an ETF.
What is the breakeven point for Warren Pies' ETF, and how does it compare to industry standards?
The breakeven point for Warren Pies' ETF is around $40-50 million in assets under management (AUM), which is lower than the industry standard of $100 million. This is due to the fund's lean structure and lack of significant marketing expenses, as most assets are raised through relationships built via the research business.
How does Warren Pies use Twitter to market his research and ETF?
Warren Pies uses Twitter to share thought-provoking charts and insights without giving away proprietary research. This approach generates interest and leads potential clients to seek more information. He avoids detailed explanations on Twitter to preserve the value of his research for paying clients.
What challenges did Warren Pies face when transitioning from research to fund management?
Warren Pies faced challenges in managing client expectations and ensuring follow-through on commitments. While some clients initially hesitated to switch from his research model to the ETF, the strong relationships built over years of research ultimately led to significant investments in the fund.
What is Warren Pies' approach to building relationships in the fund management industry?
Warren Pies focuses on building relationships through his research business, which provides unique insights and value to clients. He avoids cold calls and instead relies on inbound inquiries and organic interest generated by his research. This approach has been key to raising assets for his ETF.
What role does tax efficiency play in the success of Warren Pies' ETF?
Tax efficiency is a major driver of the ETF's success. The ETF wrapper allows for significant portfolio turnover (3.5 times a year) without generating excessive short-term capital gains taxes. This feature is particularly attractive to clients with taxable accounts who want exposure to the Full Cycle Trend Model.
- Raised over $450 million for FCTE ETF in less than six months
- Success attributed to the research business and strong client relationships
- Utilized a full-cycle trend model for stock selection
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