With the exchange-traded fund (ETF) marketplace crowded with thematic funds and factor-based strategies, Bancreek Capital Advisors is introducing a novel approach to active management that draws inspiration from endurance athletics. The firm’s flagship fund, Bancreek U.S. Large Cap ETF (ticker: BCUS), employs what Chief Analytics Officer Eric Pachman calls “investment endurance”—a systematic methodology for identifying companies built for long-term performance.
In an interview with The Wealth Advisor’s Scott Martin, Pachman explained how BCUS uses proprietary technology to maintain a focused portfolio of 30 stocks, selected and actively managed based on their demonstrated endurance characteristics. The ETF combines automated analysis with systematic rebalancing to identify companies that exhibit sustainable competitive advantages across diverse sectors, from technology leaders to retail operations.
Understanding Investment Endurance
At the root of BCUS’s investment philosophy is the belief that corporate success, like athletic performance, relies on sustainable habits and practices. The concept starts with a familiar analogy: physical endurance.
Pachman uses this comparison to illustrate how companies can maintain long-term competitive advantages through consistent, positive habits. “To understand what investment endurance is, we should start with what we all know, a context that we all understand for endurance, which is our own human bodies,” he explains. “You can think of that very simply: I can run, walk, hike, swim, cycle, do whatever faster and longer and not get tired.”
But just as physical endurance isn’t merely about output metrics, investment endurance focuses on the underlying habits and systems that create sustainable, long-lasting performance. Similar to how an athlete’s daily routines shape their performance, companies develop organizational habits through their management practices, corporate culture, and operational decisions.
“Let’s say you have a company that treats its employees poorly. It likely would cycle through employees really fast,” Pachman explains. “That’s a negative habit—like binging on junk food—versus a company that is really investing in its employees and creating aligned incentives.”
These corporate tendencies manifest in various ways, from employee treatment and compensation structures to acquisition strategies and execution capabilities. “Those habits within the context of a company create structural advantages for that company. Put enough of those structural advantages together, and you have endurance,” Pachman says.
A Technology-Driven Approach
Traditional fundamental analysis, while thorough, faces two significant limitations: human behavioral biases and scale constraints. As Pachman points out, when analysts spend extended time researching a company, they often become emotionally invested in their thesis, making it difficult to respond objectively to changing circumstances.
“If you spend two months of your life researching one company, and you fall in love with this company—best strategy ever, best management team—would you be in the right mind to go back and say, ‘Listen, we should sell the entire thing right now?’” Pachman posits.
To overcome these limitations, Bancreek has developed what Pachman describes as a “smartwatch for stocks.” Just as a smartwatch can estimate an athlete’s VO2 Max (the maximum oxygen a body can absorb and use during exercise) through various metrics without requiring laboratory testing, Bancreek’s technology evaluates companies’ endurance characteristics through automated analysis.
As Pachman explains, “It’s like we're strapping a watch onto the company to measure these vital signs and ultimately figure out if this company has the endurance we’re looking for.”
The fresh, technological approach enables Bancreek to evaluate thousands of companies simultaneously while removing emotional attachment from the decision-making process. When a company’s metrics deteriorate, the system can quickly identify alternatives with stronger endurance characteristics.
Portfolio Construction and Management
Bancreek’s systematic approach to portfolio management translates its endurance philosophy into a concentrated investment strategy. BCUS maintains a focused portfolio of 30 stocks selected through its endurance-based methodology. The holdings represent diverse sectors and business models—from tech giants such as Apple to retail operations like AutoZone—united by their high endurance scores.
Unlike traditional buy-and-hold strategies, BCUS actively manages its positions based on ongoing endurance metrics. “Building a product that can have the most longevity, that can last for eternity, doesn’t necessarily mean that you’re going to hold the stocks for eternity,” Pachman points out. “You have to have that flexibility to shift in and out to kind of minimize the impact of disruption.”
The ETF structure proves particularly suitable for this dynamic approach as its tax efficiency makes it an ideal vehicle for implementing the strategy’s frequent rebalancing needs. This efficiency allows BCUS to maintain its focus on companies exhibiting the strongest endurance characteristics while minimizing the tax impact of portfolio adjustments.
Pachman notes that this is essential for maintaining exposure to the highest-ranking endurance companies. “It is a perfect match for the type of strategy we want to execute,” he explains. “It requires a considerable amount of rebalancing based on our models, based on the heart rate of these stocks.”
Managing Disruption Risk
While Bancreek’s endurance-tracking system excels at identifying sustainable business characteristics, it cannot predict black swan events or sudden disruptions. However, the methodology’s systematic nature helps manage such potential risks.
“Our systems themselves cannot tell before things happen,” Pachman says. “But since we don’t have attachment, the good thing is that at any given moment we are assessing, it’s really just the odds that this company has endurance.”
When warning signs emerge, the fund can quickly rotate out of deteriorating positions. “If there are some jitters with a particular company, the model doesn’t know that it’s being disruptive actively,” he adds. “All it knows is that there are warning signs that the endurance may not last.”
The systematic approach to risk management helps ensure the portfolio maintains its focus on companies displaying the strongest endurance characteristics, rather than holding on to positions based on historical performance or emotional attachment.
A Differentiated Approach to Active Management
Unlike market-cap-weighted indices that have become increasingly concentrated in mega-cap technology stocks—such as the Magnificent Seven (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla)—BCUS offers broader exposure to endurance-focused companies.
“Even though it’s the S&P 500, it’s not really 500 companies anymore,” Pachman notes. “It’s top heavy because of the Mag Seven, whereas we are much more of an equal-weighted type of strategy.”
For financial advisors seeking actively managed exposure that differs from traditional indices, BCUS presents an innovative option. The fund’s systematic approach to identifying companies with sustainable competitive advantages, combined with its disciplined portfolio management process, offers a unique value proposition in the active ETF marketplace.
The methodology also extends beyond U.S. markets through the Bancreek International Large Cap ETF (ticker: BCIL), a developed markets ETF, which applies the same endurance-focused approach to a broader universe of approximately 5,000 stocks.
For advisors interested in learning more, Bancreek maintains an advisory website featuring data visualizations and analysis of market trends, inflation, and employment data, demonstrating the firm’s commitment to data-driven investment decision-making.
As markets become increasingly concentrated in a handful of mega-cap stocks, BCUS offers advisors a systematic approach to identifying companies with sustainable competitive advantages across the market cap spectrum. The fund’s focus on corporate endurance characteristics, together with its disciplined portfolio management process, provides a compelling option for advisors seeking differentiated active exposure for their clients’ portfolios.
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Disclosures
The S&P 500 or Standard & Poor’s 500 Index is a market-capitalization-weighted index of 500 leading publicly traded companies in the U.S.
Investors should consider the investment objectives, risks, charges and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please call (855) 973-7880 or visit our website at www.bancreeketfs.com. Read the prospectus or summary prospectus carefully before investing.
The Funds are distributed by Foreside Fund Services, LLC.
Investing involves risk, including loss of principal. A new or smaller fund’s performance may not represent how the fund is expected to or may perform in the long term if and when it becomes larger and has fully implemented its investment strategies. The Fund relies heavily on proprietary quantitative investment selection models as well as data and information supplied by third parties that are utilized by such models. To the extent the models do not perform as designed or as intended, the Fund’s strategy may not be successfully implemented, and the Fund may lose value. If the models or data are incorrect or incomplete, any decisions made in reliance thereon may lead to the inclusion or exclusion of securities that would have been excluded or included had the models or data been correct and complete. Read the prospectus for additional details regarding risks.
Please visit https://bancreeketfs.com/bcus and https://bancreeketfs.com/bcil for more information on the funds and associated risks.
