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Astoria Interviewed by CNBC on Gold, US Quality, Emerging Markets, and Portfolio Construction

Astoria's Founder and CIO, John Davi, appeared on CNBC TV on July 22, 2019 to discuss gold, US high quality stocks, emerging markets, and portfolio construction.

Click here to watch the entire TV segment.

Here are a few talking points:

  • Astoria believes investors should shy away from cyclically orientated stocks and utilize stocks with higher quality characteristics that trade at a discount to the market multiple.

  • Astoria believes the risk/reward of owning market cap weighted ETFs has deteriorated. The firm favors quantitatively driven factor-based ETFs.

  • In our view, the opportunity cost for owning gold has declined. As recession risks have increased, gold has become more favorable.

  • Since March 2009, the S&P 500 is up 400%, gold is up 50%, and gold mining stocks are down 10%.

  • A 5-10% allocation in gold has historically produced higher risk-adjusted returns for multi asset portfolios.

  • Astoria believes active management of passive ETFs offers investors the best of both worlds.

Astoria was asked about a few ETFs which the firm currently utilizes. We will be writing about these solutions in a more detailed note in the nearby future. Note that this is not an exhaustive list of ETFs that the firm is utilizing. Please refer to our website for our in-depth holdings, as well as the appropriate disclaimers.


There is a 2-step quantitative screening process which the ETF provider utilizes:

  • 50% of the screening process is to find companies with higher long-term growth estimates.

  • 50% of the screening process is to find stocks with high ROA and ROE.

DGRW trades at 16x earnings based on 2019 estimates (source

In Astoria’s eyes, QUAL is a pure quality focused solution. QUAL selects stocks based on high ROE, low financial leverage, and stable earnings growth.

QUAL trades 1 valuation turn richer than SPY: 19x vs. 18 PE for SPY on 2019 estimates.

DGRW has a 32% overlap with QUAL.


The quantitatively driven screening process is as follows:

  • 100 stocks in Emerging Markets are selected that display the following:

  • Positive EPS over 12 months

  • Positive 3-year earnings growth

  • Stable or increasing 3-year dividend growth

  • Dividend yield must be higher than median yield for the universe

YTD Performance

  • EDIV: +12% vs. EEM +11% YTD

  • EDIV has outperformed EEM by +112bps YTD

EDIV has a 10.36 PE vs. 13.11 for EEM based on 2019 estimates.

EDIV has minimal overlap with EEM.


With rates trending lower, Astoria believes the opportunity cost for owning gold has declined.

10-year real yields have gone from 1.2% to 0.24% since Sep 2018.

As recession risks have increased, gold has become more favorable from a portfolio diversification standpoint.

Since March 2009 lows:

  • GDX -10%

  • GLD +45%

  • SPY +397%

GDX is still 50% below all-time highs in 2011.

GLD is still 25% below its all-time high in 2011.

Best, John Davi

Founder & CIO of Astoria

Astoria Portfolio Advisors Disclosure: As of the time of this writing, Astoria held positions in DGRW, QUAL, JQUA, EDIV, GDX, GLD and IAU. Note that this is not an exhaustive list of holdings across Astoria’s dynamic ETF model portfolios. Also note that Astoria maintains a set of strategic asset allocation ETF portfolios where the holdings may vary from our dynamic portfolios. For full disclosure, please refer to our website.

Photo Source: CNBC TV


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