Ritholtz Wealth Launches Equity SMA With Franklin Templeton
Ritholtz Wealth Management, a national RIA with $7.6 billion in AUM, launched its first equity-only SMA in partnership with Franklin Templeton. Called Porterhouse, the SMA is an actively-managed strategy that will focus on best-performing large cap stocks. It will be available exclusively for qualified Ritholtz clients beginning June 1.
On a monthly basis, Porterhouse will screen companies in the top 50% of the Russell 1000 Index for strong earnings and cash flows to identify those with high potential for future growth. It will then generate a “buy list” of stocks that meet its specific momentum and quality criteria. The “buy list” can expand and contract depending on market conditions, allowing the portfolio to concentrate capital in high-conviction names or free up cash by selling stocks when fewer companies meet the investment criteria. That cash will then be re-invested into short-term Treasuries, according to Michael Batnick, managing partner at Ritholtz. Batnick noted that in a prolonged down market, the strategy can reduce its stock holdings to zero if necessary.
“What we want to own are the best stocks in the market today that are also good businesses,” he said. “It turns out that many times, there are fantastic stocks that are rising on hopes and dreams, and have no fundamentals to support them.”
“When walking into a great steakhouse, most people aren’t ordering a sampler platter. They’re generally there for the porterhouse,” said Josh Brown, co-founder and CEO of Ritholtz, in a statement. “It’s a deliberate choice to focus on the best thing on the menu and not dilute it with a little bit of everything. That’s the mindset here: we’re concentrating on the stocks that are actually leading, and we’re willing to move on when they’re not. Partnering with Franklin Templeton on this strategy is a natural extension of a relationship we’ve built over more than a decade.”
Franklin Templeton’s Canvas, an end-to-end platform for tax-aware portfolios, will support the SMA.
Earlier this year, Ritholtz launched its first ETF, an actively managed fund called the Goaltender ETF.