Hedgeye’s Active ETFs Hit Major Milestones, Challenging Passive Dominance

STAMFORD, CT – July 16, 2026 – In a financial landscape long dominated by the low-cost allure of passive index funds, a notable counter-trend is gaining momentum. Hedgeye Asset Management stands at the forefront of this shift, celebrating the one-year anniversary of two actively managed exchange-traded funds (ETFs) that have not only survived their critical first year but thrived, attracting significant investor capital and securing a key distribution partnership.

The firm announced that its Hedgeye Capital Allocation ETF (NYSE: HECA) and Hedgeye Quality Growth ETF (NYSE: HGRO), both launched in mid-2025, have collectively surpassed $425 million in assets under management (AUM). HECA, a flexible multi-asset strategy, has grown to over $300 million in AUM, while HGRO, a concentrated equity fund, has topped $125 million. This rapid asset accumulation underscores a burgeoning demand for strategies that promise more than just market tracking.

"One year in, HECA and HGRO are doing exactly what we built them to do: bring Hedgeye Asset Management's disciplined, forward-looking investment process to a broader universe of investors," said John McNamara, Chief Investment Officer of Hedgeye Asset Management. He noted that the growth is "a reflection of the trust advisors and investors are placing in our team."

The Active Advantage in a Volatile World

The success of these funds taps into a wider market sentiment. While passive investing remains a cornerstone for many, the past few years of market volatility have reminded leaders and investors of the potential benefits of active management—namely, the ability to navigate economic shifts and manage downside risk. Hedgeye, which built its reputation on a proprietary research process, is leveraging this environment by packaging its institutional-grade insights into transparent, tradable ETF structures.

The performance since inception speaks to this appeal. The Hedgeye Quality Growth ETF (HGRO) has delivered a compelling price return of nearly 20% since it began trading in June 2025. The Hedgeye Capital Allocation ETF (HECA) has also posted a respectable price return of over 11% since its launch. These figures, achieved in a complex market, provide a tangible rationale for investors willing to pay a premium for active oversight. The expense ratios—1.30% for HECA and 0.70% for HGRO—are notably higher than their passive counterparts, positioning them as specialized tools for investors seeking alpha, not just beta.

Unlocking Distribution: The LPL Financial Keystone

Beyond asset growth, perhaps the most significant business implication of Hedgeye's first year is the inclusion of both HECA and HGRO on LPL Financial's platform. This is far more than a simple operational update; it is a strategic gateway to one of the largest networks of independent financial advisors in the United States.

For an emerging ETF provider, gaining access to a major wealth management platform like LPL is a critical milestone. It signifies that the funds have passed a rigorous due diligence process and provides a stamp of approval that can accelerate adoption. Advisors on the LPL platform can now seamlessly integrate HECA and HGRO into client portfolios, dramatically expanding the funds' distribution potential. This move transforms the ETFs from niche products sought out by dedicated followers of Hedgeye's research to accessible solutions for a mainstream advisory audience, setting the stage for the next phase of growth.

Inside the Engines: A Tale of Two Strategies

At the heart of the funds' appeal are two distinct but complementary investment philosophies, both grounded in Hedgeye's quantitative "Quad model" which analyzes economic growth and inflation trends to guide asset allocation.

The Hedgeye Capital Allocation ETF (HECA), managed by veteran portfolio manager David Salem, embodies a 'go-anywhere' ethos. It is designed to be a flexible, all-weather portfolio that can invest across asset classes, sectors, and geographies. The primary goal is to compound capital while strictly managing risk, with an explicit objective of limiting drawdowns. "HECA was built for investors who understand that capital allocation is not a static exercise," stated Salem. "Our job is to remain flexible, disciplined and focused on putting capital where we believe the risk/reward is most attractive." The fund's ability to pivot between equities, bonds, commodities, and cash based on its macro outlook is its core value proposition.

In contrast, the Hedgeye Quality Growth ETF (HGRO), steered by portfolio manager Sam Rahman, offers a more focused, high-conviction approach. The fund concentrates on a portfolio of 40-50 U.S.-listed companies identified as high-quality growth businesses with durable competitive advantages. "HGRO reflects a simple but powerful idea: own exceptional businesses when the fundamentals, valuation and market setup align," explained Rahman. This strategy is not about chasing fleeting trends but about identifying long-term compounders, always viewed through a risk-managed, macroeconomic lens.

Navigating the Risks and Looking Ahead

Despite the impressive start, potential investors must weigh the inherent risks. As non-diversified funds, both HECA and HGRO carry concentration risk, where the underperformance of a few holdings can have an outsized impact. The reliance on proprietary quantitative models also introduces model risk; no algorithm is infallible, and hidden biases or failures to adapt to structural market shifts remain a possibility. Furthermore, the active management itself is a risk—there is no guarantee the adviser's decisions will lead to outperformance.

Hedgeye Asset Management appears to be leaning into its model-driven, research-intensive identity. The firm recently launched another unique strategy, the Hedgeye Index Adds ETF (ADDS), which uses machine learning to predict and capitalize on companies being added to major stock indexes. This expansion signals a clear focus on creating differentiated active strategies that are, as McNamara put it, "built for the real world."

As Hedgeye Asset Management moves into its second year, its early success with HECA and HGRO serves as a powerful case study in the evolving ETF landscape. The firm has demonstrated that a clear, disciplined, and research-driven process can attract significant capital, even at a higher price point, by offering investors a compelling alternative to simply riding the market.