While investors often get swept up in the hottest themes driving innovation and chasing the big trends of today, Nomura Asset Management takes a long-term approach to innovation investing. Anthony Caruso, CFA, Head of Product Strategy & ETFs at Nomura Asset Management International sat down with Brad Roth on the latest episode of Behind the Ticker to talk the thesis underpinning the Nomura Transformational Technologies ETF (FRWD). The fund launched early this year and has already gathered over $275 million in AUM.
Anthony Caruso has seen the ETF industry from just about every angle, from JP Morgan's early build-out, Dimensional's conversion playbook, to Macquarie's public business (now absorbed into Nomura after last December's acquisition). Caruso landed at Nomura Asset Management, a firm with a hundred years of history in both Japan and the U.S., that recently expanded into ETFs and roughly a billion dollars in US assets across nine funds so far. The flagship of that lineup is FRWD, the Nomura Transformational Technologies ETF, which actually predates its own ticker. The strategy started life in 2018 as a separately managed account before converting to an ETF this past January. The strategy leans on a dual approach, first mapping out which big secular themes have real economic staying power, then drilling into the actual companies riding those waves. It narrows down a small starting universe of 60-75 stocks to a concentrated, high-conviction portfolio of around 25 names.
That concentration is the whole point, not a side effect. The top ten holdings make up roughly 57% of the fund, eschewing diversification and its dilution effect in favor of a more laser-focused approach that's generated some notable performance. Since 2018, the strategy has outperformed the Nasdaq-100 by about 200%, according to Caruso, and the team's underlying thesis is that markets consistently lowball how big, how broad, and how long innovation cycles actually run. While AI is the current example, space exploration and quantum computing are some of the next frontiers already on the radar. Caruso also pushes back hard on the idea that thematic investing should just be a tactical satellite position, instead, framing FRWD as a core growth holding (10-20% of an equity allocation), comparing satellite-only thematic bets to using Babe Ruth as a pinch hitter instead of building your lineup around him. With low turnover, a 65 basis point fee, and volatility treated as a source of opportunity rather than a threat, the fund has grown to about $260 million in just six months.
Facts Only
* Nomura Asset Management features Anthony Caruso, CFA, as Head of Product Strategy & ETFs.
* The Nomura Transformational Technologies ETF (FRWD) launched early in 2018.
* FRWD has gathered over $275 million in Assets Under Management (AUM).
* Caruso has experience across financial institutions including JP Morgan, Dimensional, and Macquarie.
* The FRWD strategy maps secular themes before selecting companies within those themes.
* The starting universe for the strategy involves 60-75 stocks, narrowed to a portfolio of around 25 names.
* The top ten holdings account for approximately 57% of the fund.
* The strategy has outperformed the Nasdaq-100 by about 200% since 2018.
* The strategy involves low turnover and a 65 basis point fee structure.
* The team suggests innovation cycles are often misjudged by market valuations.
* The next frontiers identified for innovation include AI, space exploration, and quantum computing.
Executive Summary
Full Take
The framing positions the investment strategy as fundamentally contrarian to prevailing market sentiment regarding thematic investing. The assertion that markets consistently undervalue the duration and breadth of innovation cycles suggests a deep skepticism toward conventional valuation metrics when assessing long-term technological shifts. This challenges the narrative that thematic investments should be relegated to short-term tactical plays, instead advocating for their integration into core portfolio construction, comparable to holding major sector leaders rather than peripheral bets. The concentration of holdings—where the top ten stocks dominate the performance—suggests a strategy prioritizing deep conviction in a small set of leaders over broad diversification, which forces an assumption that these concentrated leaders possess superior long-term structural resilience. The argument shifts the focus from chasing momentum to identifying fundamental economic staying power within innovation trends.
What are the specific historical or structural mechanisms that cause markets to consistently underprice innovation cycles? Does this concentration of exposure inherently create a vulnerability if the initial set of high-conviction themes experiences a systemic disruption? If volatility is reframed as an opportunity, what measures must be in place to ensure that the pursuit of growth does not lead to excessive risk concentration within the chosen themes?
Sentinel — Human
The text reads like transcribed financial journalism, employing expert commentary and narrative framing rather than pure informational synthesis.