Investors want yield but worry about excess market volatility. New ETF issuer VistaShares may have found the answer.
Its solution: a portfolio modeled on Berkshire Hathaway's top holdings, but enhanced with a 15% target yield. This combination fills a long-standing gap for Buffett-style investors who've traditionally missed out on income.
Founded in 2024, VistaShares is backed by decades of industry experience. Its team includes former Tesla President Jon McNeill. CEO Adam Patti previously founded and led IndexIQ, an ETF issuer known for its hedge-fund replication strategies. New York Life acquired IndexIQ in 2015.
VistaShares' product lineup includes highly differentiated strategies. Among them is its VistaShares Artificial Intelligence Supercycle ETF. This ETF applies a rules-based approach to select pure players in the AI infrastructure space. Many of these tend to be underrepresented in typical investor portfolios. The strategy uses a proprietary "bill of materials" process that looks at corporate investment throughout the AI supply chain.
The firm's two other ETFs focus on quality stocks with a 15% income objective and a high-beta strategy that captures short-term momentum based on real-time investor behavior.
Patti discusses the rigorous selection criteria behind each fund. He shares insights on long-term structural trends such as AI infrastructure. And he outlines the firm's philosophy and what sets VistaShares apart in a crowded ETF space.
What's Driving VistaShares?
IBD: What is the main premise of VistaShares?
Adam Patti: VistaShares builds institutional investment solutions that help investors in all market conditions. We create funds that don't currently exist yet have clear use cases for building better portfolios.
IBD: How does VistaShares differ from other young ETF issuers?
Patti: We are a relatively new entrant to the ETF space. We bring decades of collective experience. I have been involved in ETFs since 2001 and built an innovative ETF issuer which was sold to New York Life. My partner, Jon McNeill, is the former president of Tesla, COO of Lyft and current board member at General Motors among other boards and executive positions. He brings a unique perspective on servicing investor needs and creating the highest-quality investment solutions. We have many such people involved with VistaShares. Each of them brings valuable insights to building this company into a market leader.
Plugging ETFs Into The Market
IBD: How do your funds fit within the current market environment?
Patti: We specifically designed VistaShares' product roadmap to have different products for different market conditions. We focus on three categories: growth equity, options income and tactical alpha. Our Artificial Intelligence Infrastructure ETF is our first fund within the growth equity category. This is designed using our patent pending "bill of materials" investment process with a goal to provide pure exposure to AI Infrastructure (data centers and semiconductors). This is where the hundreds of billions of dollars in (capital expenditures) are being deployed.
VistaShares Target 15 Berkshire Select Income ETF and VistaShares Target 15 USA Quality Income ETF are our first products within the options-income space. OMAH is designed to give investors an opportunity to invest in Warren Buffett's top picks but with a 15% target income annually, paid monthly. Similarly, QUSA offers the same 15% annual target, paid monthly. Yet it provides an equity portfolio designed to capture "quality" USA-based companies. (The ETF) is focusing on those companies with high profitability, low debt and stable earnings growth.
Lastly our more recent launch is our "animal spirits" leveraged strategy, VistaShares Animal Spirits Daily 2X Strategy. This product takes an institutional approach to offering traders and investors "high beta" exposure. Each month we identify the five "hottest" companies by analyzing investor sentiment and momentum by digging into asset flows and total assets under management deployed into specific names. We then put those five companies into a portfolio and lever them up two times, resetting that leverage daily. Each month the portfolio changes based on where investors' dollars are being deployed. Currently WILD holds Tesla, Meta Platforms, Super Micro Computer, Palantir Technologies and MicroStrategy.
Following The VistaShares Flagship
IBD: Please discuss your flagship fund.
Patti: In conversations with investors, the fact that Berkshire Hathaway has such a massive investor base yet doesn't pay a dividend kept coming up. We felt there should be a way to "invest like Buffett but with income" so we designed the VistaShares Target 15 Berkshire Select Income, which can be a core equity holding. It holds BRKB plus the top 20 publicly traded holdings of Berkshire. And, for those investors who already hold Berkshire stock, (it is) a pairing opportunity to create a "synthetic dividend" while retaining very similar equity exposure.
IBD: How do you select a theme that translates into a fund?
Patti: For us, a fund idea needs to check three key boxes. It needs to solve a problem, it needs to be thoroughly researched and stress tested, and we as a management team have to be in position to add value through our active approach.
While we use rules-based methodologies to bring transparency to the core of our portfolios, we always layer on a world-class investment committee to identify risks and opportunities within the portfolios.
The Rest Of The VistaShares Lineup
IBD: Briefly discuss the other funds?
Patti: VistaShares Target 15 USA Quality Income follows a quality factor investment approach, selecting companies by weighting for high profitability, low debt and stable earnings growth with 15% target income annually, paid monthly.
VistaShares Artificial Intelligence Supercycle provides pure exposure to AI infrastructure, specifically the companies in the supply chain building data centers and semiconductors. VistaShares Animal Spirits 2x Daily Strategy is a leveraged tactical trading fund designed to generate alpha from the top five traded securities based on investor sentiment and momentum. The stocks are rotated monthly and the fund provides two-times daily levered exposure to their performance.
VistaShares Looking Toward The Future
IBD: What is your general economic outlook and where do you see opportunities?
Patti: I am bullish in the mid- to long-term but I believe that volatility will remain a fact of life in the short-term. But I would advise against making rash portfolio moves based on that volatility. Stick to your plan and be patient.
One specific area where we certainly see opportunity is AI Infrastructure. We are early in the development of the AI industry. Hundreds of billions of dollars being deployed is virtually all being used to build the (computing power) required to increase the utility of AI models. The companies building high-performance AI data centers and semiconductors are the primary beneficiaries of this massive investment over the next three to five years. Our AIS ETF was designed to provide exactly this type of exposure.
