Financial advisors searching for tactical exposure to the S&P 500 while managing volatility can choose from a wide range of products, many of which promise superior returns but offer little clarity on how those outcomes are achieved. Hull Tactical, on the contrary, is committed to transparency. Its flagship Hull Tactical U.S. ETF (ticker: HTUS) combines a disciplined, data-driven approach with a focus on exploiting market inefficiencies while avoiding the common behavioral pitfalls that can compromise investment outcomes.
The fund’s team, including Euan Sinclair and Aishvi Shah, brings a perspective grounded in both academic rigor and real-world trading experience. In a recent conversation with The Wealth Advisor’s Scott Martin, the financial engineers shared insights into Hull Tactical’s quantitative methodology, market-timing strategies, and philosophy around behavioral finance—revealing how HTUS seeks to position itself as the rational actor in an often irrational marketplace.
The Evolution Beyond Behavioral Finance
Sinclair traces the trajectory of behavioral finance from its early promise to its current limitations, explaining how the field initially excited investors by identifying systematic mistakes. Over time, however, he says, it “became a zoo of biases.”
“It went from being five or six problems to being 100, and then it got to the point where people could explain the same effect using several different biases,” Sinclair explains.
Rather than attempting to catalog every bias, Hull Tactical focuses on positioning itself rationally in markets where collective human irrationality creates opportunities. While individual behaviors may be unpredictable, the aggregate impact of investor psychology forms patterns the team can measure and act upon.
“For us, the fact that other people make mistakes in a systematic way—I mean, that’s perfect for what we’re trying to do,” Sinclair says.
Combating the Narrative Fallacy in Product Development
Advisors know how easily investors are drawn to compelling stories over hard data—a tendency Sinclair calls the “narrative fallacy.” Hull Tactical, by contrast, focuses on strategies built for clients’ long-term success, guided by data and disciplined analysis rather than appealing narratives.
“It’s not the evidence; it’s how you present the evidence,” Sinclair says. “The less scrupulous investment advisors have taken advantage of this by catering to people’s biases and selling them products that really aren’t particularly good for their long-term account values.”
The rise of buffer products illustrates the danger of story-driven marketing, he believes. Sinclair notes how easy it becomes to sell downside [risk management] by asking investors if they want “a downside loss of 10%”—but points out that investors often feel differently “in five years, when they found they’ve underperformed the market.”
Hull Tactical takes a different path that requires more difficult conversations but is designed to seek potentially better outcomes. “We think, with behavioral finance, you can either be the adult in the room—take advantage of these things and try and maximize returns for people, which is what we do in the ETF—or you can say, ‘People want this stuff. Customer’s always right.’ But the customer might not be right,” notes Sinclair.
Being the adult in the room sometimes means confronting uncomfortable conversations when client preferences clash with sound investment principles—but the team sees that as part of their responsibility.
“It’s your job as an advisor to give good advice, not pander to the customer’s mistakes,” he adds. “It’s easy to give in, but in the investment world as professionals, it’s our job to do the best for the customers and to educate them and hold their hands when you need to.”
Tactical Adaptation in Options Markets
Hull Tactical’s responsiveness to market changes is especially evident in options trading, where product flows and pricing anomalies might create opportunities for nimble managers. Sinclair believes that the growing availability of covered-call ETFs has fundamentally changed the pricing landscape for options.
“There’s a proliferation of covered-call products right now, particularly in the short dates,” he says. “As a result, we’re seeing a lot of options that are normally overpriced and now very [undervalued].”
The recent changes in option pricing create inefficiencies that HTUS can actively navigate. The fund’s approach to zero-day-to-expiration (0DTE) options reflects a commitment to responding to current market data rather than relying solely on historical patterns. “Daily options used to be overpriced, and now they’re not. They haven’t been for about a year,” Sinclair points out.
Hull Tactical also sees opportunities arising from mechanical strategies that other market participants deploy. When market players implement rigid options strategies, inefficiencies emerge—spaces for more adaptive managers to capture value. “You wouldn’t ever have a business where you sell something at any price no matter what,” Sinclair says. “But this is one of the things people are doing, and we’re taking advantage of it.”
Quantitative Discipline Without Static Thinking
For its part, Hull maintains flexibility within its systematic framework—a core principle underlying HTUS’s construction. “I would say we are algorithmic, and we are quantitative, but we’re not static,” Sinclair says. The team’s investment process demonstrates a willingness to abandon previously profitable positions when evidence suggests market conditions have shifted.
“I don’t know, call me old fashioned, but if something’s not working, I stop doing it,” he observes.
This quantitative discipline extends to the daily execution challenge that many systematic strategies face—the psychological difficulty of following signals when they conflict with market sentiment or recent experience.
“The hardest part of trading a quantitative model is actually trading it every day—because it is inherently uncomfortable,” Shah says. “Say the market goes down 1% today, and our signal is go 150% long. No one wants to do that.”
Trading a systematic model requires overriding human instincts, particularly when signals seem counterintuitive, but Shah emphasizes that success lies in trusting the numbers.
“The main thing is trusting your numbers and trusting what the model’s saying and doing it anyway,” she says. “So, we’re not saying that we’re above all these biases and these behavioral biases that we talk about, but it’s in the fact that we know them and we acknowledge them that we try to move past them.”
Shah adds that separating emotion from investment decisions is central to the firm’s approach, and that its disciplined adherence to models—not narratives—drives decision-making. “We trust in the numbers,” she emphasizes. “You can always try to give it an explanation, but as long as you don’t let your hypothesis drive what you end up trading and you follow your numbers, that’s what helps us stand out.”
Results-Driven Philosophy
Ultimately, HTUS is about outcomes, not stories. “You can spin someone a story as much as you like, but it eventually comes down to the numbers and the dollars in someone’s bank account,” Sinclair says. “We’ll help you with the dollars—that’s what we are trying to do—you can make up your own story after that.”
With a track record spanning more than a decade, HTUS is designed to offer advisors disciplined tactical exposure that seeks to deliver “the best return for a given risk,” as Sinclair puts it.
The fund’s commitment to quantitative rigor over emotional appeal reflects a broader philosophy about what separates effective tactical management from marketing-driven products. While many providers emphasize their story, Hull Tactical’s approach centers on systematic execution and measurable results, built on transparent methodology.
“We stare at the numbers, and we seek to come up with good results,” Shah says. “So, at the end of the day, we trust in those numbers, and we go forward, and we don’t let our feelings take over. And I think that’s what sets us apart.”
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Additional Resources
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Disclosures
Carefully consider the Fund’s investment objectives, risk factors, charges, and expenses before investing. This and additional information can be found in the Fund’s prospectus, which may be obtained by visiting www.hulltacticalfunds.com or calling toll-free 1-844-484-2484. Read the prospectus carefully before investing.
There is no guarantee that the investment objectives will be achieved. Moreover, past performance is not a guarantee or indicator of future results.
HTAA, LLC serves as the investment advisor. The Fund is distributed by Northern Lights Distributors, LLC (225 Pictoria Drive, Suite 450, Cincinnati, OH 45246), which is not affiliated with HTAA, LLC.
About the Hull Tactical US ETF (HTUS) Investment Strategy
HTUS is an actively managed exchange traded fund (ETF) driven by various proprietary analytical investment models that examine current and historical market data to attempt to predict the performance of the S&P 500® Index (the “S&P 500®”), a widely recognized benchmark of U.S. stock market performance that is composed primarily of large-capitalization U.S. issuers. The models deliver investment signals that the Adviser uses to make investment decisions for the Fund. The investment models used are to anticipate forward market movements and position the Fund to take advantage of these movements. Currently, signals are combined into an ‘ensemble’ array that spans statistical, behavior-sentimental, technical, fundamental, and economic data sources. This combined signal is generated each trading day towards the close of the market and dictates whether the Fund is long/short and the magnitude of position sizing. The Adviser routinely evaluates the performance and impact of each model on the Fund with the goal of realizing a risk/return profile that is superior to that of a buy and hold strategy.
The use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. These risks include (i) the risk that the counterparty to a derivative transaction may not fulfill its contractual obligations; (ii) risk of mispricing or improper valuation; and (iii) the risk that changes in the value of the derivative may not correlate perfectly with the underlying asset, rate, or index. Derivative prices are highly volatile and may fluctuate substantially during a short period of time. The use of leverage by the Fund, such as borrowing money to purchase securities or the use of options, will cause the Fund to incur additional expenses and magnify the Fund’s gains or losses. The Fund’s investment in fixed income securities is subject to credit risk (the debtor may default) and prepayment risk (an obligation paid early) which could cause its share price and total return to be reduced. Typically, as interest rates rise the value of bond prices will decline and the fund could lose value.
While the option overlay is intended to improve the Fund’s performance, there is no guarantee that it will do so. Utilizing an option overlay strategy involves the risk that as the buyer of a put or call option, the Fund risks losing the entire premium invested in the option if the Fund does not exercise the option. Also, securities and options traded in over-the-counter markets may trade less frequently and in limited volumes and thus exhibit more volatility and liquidity risk.
The thoughts and opinions expressed in the article are solely those of the author. The discussion of individual companies should not be considered a recommendation of such companies by the Fund’s investment adviser. The discussion is designed to provide a reader with an understanding of how the Fund’s investment adviser manages the Fund’s portfolio.
