Better than an Emergency Fund? | CAOS ETF
The video proposes the Alpha Architect Risk ETF (ticker CAOS) as a potential upgrade to traditional emergency‑fund holdings, arguing that capital reserves should not only be liquid but also capable of delivering positive returns and crisis‑alpha during economic downturns. It outlines three hallmarks of an ideal reserve: low volatility, positive long‑term returns, and the ability to generate gains in deflationary, high‑unemployment environments. CAOS seeks these traits by buying deep out‑of‑the‑money puts, employing box spreads to capture option‑market lending rates, and using put spreads to earn modest premiums in bull markets while limiting downside during crashes. Performance data shows CAOS has posted roughly 4.13% annualized daily volatility—lower than intermediate‑term Treasuries—and a 5.64% compounded annual return since its ETF conversion. The fund delivered notable gains during the 2020 COVID market collapse, the August 5 2024 Japanese sell‑off, and the April 2025 tariff‑driven drawdown, illustrating its crisis‑alpha capability. Investors considering CAOS for reserve purposes must accept short‑term value swings, possible volatility drag in slow‑crash periods, and idiosyncratic risk unrelated to personal income loss. For those in pro‑cyclical sectors, the trade‑off may be worthwhile, offering a hedge against job‑loss risk while reducing the opportunity cost of idle cash.
You're Not Diversified Enough (W/ Adam Butler)
In a recent conversation with Adam Butler, the former AQR co‑founder argues that most investors are under‑diversified, urging an “approximately equal risk allocation” across every factor or strategy they truly believe in. Butler notes that the past ten‑plus years have been...
What the H*ck Is Factor Investing?
The video introduces factor investing as a middle ground between pure indexing and active stock picking, offering a systematic, rules‑based approach to capture long‑term outperformance. It explains that factor investing starts by asking which characteristics have historically driven stock returns, such...