In a recent episode of “Behind the Ticker,” James St. Aubin, Chief Investment Officer of Ocean Park Asset Management, shared insights into his firm’s approach to managing risk and growing client assets. With over two years at Ocean Park and a background that includes stints at Smith Barney, Wilshire, and Ibbotson Associates, St. Aubin has extensive experience in asset allocation and portfolio construction. He explains that Ocean Park’s core philosophy, dating back to its founding in the mid-1980s, is focused on downside protection and mitigating exposure to left-tail risk, particularly for retirees or those nearing retirement.
Ocean Park offers a range of solutions, including four ETFs, eight mutual funds under the Sierra brand, and packaged fund strategist portfolios for advisors. The firm’s investment strategy revolves around quantitative trend-following techniques, using banded moving averages to identify buy and sell signals in its target markets. This methodology, which emphasizes capital preservation by limiting exposure to market downturns, is particularly important for investors seeking to avoid large losses during volatile periods.
The discussion also centered on Ocean Park’s recently launched ETF, DUKQ, which focuses on U.S. domestic equities. St. Aubin explains that DUKQ applies the same quantitative, trend-based approach as the firm’s other strategies, investing in ETFs that cover a broad range of market exposures, including small cap, mid cap, and factor-based strategies. DUKQ holds around 10 to 12 ETFs when fully invested and has the ability to move entirely to cash during market sell-offs if all assets signal a downturn.
One of the key advantages of DUKQ, according to St. Aubin, is its ability to protect against extreme market events while still participating in market gains. The ETF can redeploy capital to other sectors if certain segments trigger a sell signal, rather than immediately moving all assets into cash. This flexibility ensures that the fund remains actively managed, with turnover averaging around two trades per year.
As ETFs become a more critical part of Ocean Park’s overall offering, St. Aubin emphasizes the importance of meeting advisor demand for these products. The firm’s decision to launch ETFs, including DUKQ, was driven by the growing preference for ETFs among advisors due to their tax efficiency and ease of use. St. Aubin believes that ETFs, along with the firm’s mutual funds and managed portfolios, provide advisors with flexible, tactical tools to manage client risk and return.
