Traditionally, ETFs have been constructed around themes, sectors, and indexes. But a new trend is reshaping the way ETFs are marketed to investors: funds modeled after iconic money managers themselves.
After Warren Buffett – VistaShares Target 15 Berkshire Select Income ETF (NYSE:OMAH) and Dan Ives – Dan IVES Wedbush AI Revolution ETF (NYSE:IVES), Bill Ackman is now the latest to have his own ticker. VistaShares‘ newly minted VistaShares Target 15 ACKtivist Distribution ETF (NYSE:ACKY) is based on Pershing Square’s activist approach.
For VistaShares CEO Adam Patti, this is not mere marketing sleight of hand but a means of democratizing investment strategies that have heretofore been inaccessible to regular investors. “These legendary investors have earned their reputations over many years by consistently creating value for investors,” he explained to Benzinga.
“The challenge for us is to translate that into a transparent, liquid vehicle that retains the core benefits of these legendary investors' insights. The benefits for investors are that while many may not qualify to invest directly with some of these legendary investors, through proper portfolio construction and fund management, we can offer exposure to their best thinking,” he said.
Also Read: EXCLUSIVE: VistaShares Launches Warren Buffett-Inspired ETF, ‘Filling A Gap In The Market,’ Says CEO
Why Star Power Resonates
The $8 trillion ETF market has become increasingly congested, with scores of similar products tracking the same benchmarks. Patti, in the ETF business since 2001, thinks personality-based funds enable investors to break through the din.
“The reason I decided to start yet another ETF issuer is because I see massive opportunity to create high quality products that serve a clear purpose by focusing on the ‘white space’ … by being creative with product development to bring value to investors that they can't find elsewhere.” he said.
That advice, Patti asserts, is essential to investors who want increased conviction when markets are in disarray. With benchmarks like the S&P 500 and Nasdaq 100 dominated by the same mega-cap technology names, “star ETFs” provide an alternative.
“Sure ACKY has Amazon.com Inc (NASDAQ:AMZN) and Alphabet Inc (NASDAQ:GOOG) (NASDAQ:GOOGL) as large holdings,” Patti said, “but it also holds restaurant companies, builders, investment managers and other holdings that most investors simply don't have much exposure to and may perform differently then the large cap tech companies as market leadership rotates.”
Democratizing Hedge Fund Strategies
The appeal of personality ETFs also lies in giving investors exposure to styles that were once hedge fund territory. Patti's own history is steeped in this idea, as his prior firm pioneered "liquid alternatives" in ETFs back in 2006.
“Democratizing Alternatives was something we discussed daily with investors of all sizes, the key is setting expectations and not positioning a strategy incorrectly,” he said. “It's crucial to not try to shoehorn a strategy into an ETF that simply isn't a good fit. For instance some hedge fund strategies rely on a combination of high leverage, rapid trading and significant short positions. These may not be the best fits for an ETF. However some strategies are good fits, particularly those that focus on high conviction long term holds like Pershing Square.”
The Mechanics Behind ACKY
ACKY is not a passive duplicate. It adds Pershing Square’s reported holdings with an overlay of covered calls having a 15% target annual income paid out monthly. Patti emphasized that the approach is disciplined, not yield-chasing.
“We are not seeking to maximize income each month. We only want the 1.25% which is distributed monthly to hit the 15% annual target,” he explained, adding that anything in excess is rolled back into the NAV. That makes the fund sustainable and prevents erosion of NAV, which is an issue for most higher-yielding ETFs.
“Once we hit the 1.25% on a given holding we pull that option position off, we don't hold it hoping to generate more income. We believe this is an important distinction versus other options-income ETFs that seek to maximize income and take a bit more risk to achieve that,” he said.
The fund also tackles the delay involved in following 13F filings. “This is one of the core reasons why we focus on managers, like Pershing Square, that tend to make high conviction investments and hold for longer periods of time with far less frequency of major portfolio changes,” said Patti.
“We rebalance the portfolio quarterly to take into account any changes made intra-quarter. So the worst case is we have around a 45 day average lag in making a transaction (assuming the average transaction is made in the middle of the quarter),” he added.
Risks And Expectations
Nonetheless, Patti is realistic about the constraints, and warns that no options-income ETF will return 100% of the upside. Investors can expect roughly 75% of the upside and 85% of the downside relative to the pure equity portfolio. But in volatile markets, these funds stand out. “However volatile markets work well for options-income ETFs and I believe we will be living with volatility for the foreseeable future,” Patti noted.
Beyond A Niche Trend
Though personality ETFs are nascent, Patti contends that they’re here to stay. They provide investors with identifiable strategies, differentiated exposures, and obvious narratives, something index trackers sometimes do not.
Moreover, Patti positions ACKY as a core equity diversifier, not a replacement for broad index ETFs like the S&P 500 or QQQ. The fund mirrors Pershing Square's long-term positions while staying flexible to portfolio changes, making it suitable for both young dividend-focused investors and retirees seeking steady income. Unlike Pershing Square, ACKY is accessible to everyday investors without hedge fund-level fees.
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