The Collapse of a Pessimist’s ETF

Photo by Micah Williams / Unsplash

I recently saw this headline “Hedge Fund Alum George Noble Shutters New ETF After 59% Plunge” and figured every part of the article was worth sharing. 

But this collapse is the end of the story.  To understand how we got here, we have to go back to June when this Forbes article came out: Star Stockpicker Finds New Crusade Raging Against The ‘Everything Bubble’. 

The article from last year lionizes Geroge Noble as a financial genius that has regained an audience on Twitter for telling his followers when and why the market will blow up. 

He says things like:

The broad market downturn so far is just the beginning. “This decline will shock,” he says. “Interest rates and yields are going higher. Equities are toast.” There will be no soft landing. “They’re not going to get inflation down until the economy breaks,” but the Fed has no choice. “If they don’t raise rates, we’re on the road to Weimar.”  

This all sounds scary, and the article goes to great pains to explain why this guy is smart, famous, and worth listening to.  So when Geroge Noble launched an ETF on September 29, 2022, he issued the following press release, ETF Space Gains Exciting New Offering The Noble Absolute Return ETF, and his followers gave him money.  According to the press release: 

"The Noble Absolute Return ETF aims to deliver positive returns in all market environments. NOPE [the fund’s hilarious ticker] will employ an actively managed, research-driven approach to capture returns from idiosyncratic investment circumstances. Security selection will be based on each security’s underlying fundamentals, technical setup, and the overall macro environment. The ETF’s highly flexible mandate allows for net exposures between -100% short to 150% long. 

Despite the enormous proliferation of ETF products in recent years, very few ETFs offer an actively managed, absolute return strategy that is designed to do well in difficult markets. NOPE seeks to fill that void by pursuing a more dynamic investment process intended to achieve positive returns across full market cycles. This approach will give individual investors access to the kinds of sophisticated strategies typically only available [to] institutional investors without the excessive fees."

Unfortunately, things didn’t work out for his sophisticated strategy. 11 months after the press release, down 59%, the fund is closing. But his pessimism about the future continues unabated, and his quest to monetize his followers will take a different path. So next time you read headlines about “sophisticated ways to protect your money” remember this ETF and go the other direction.