Overview of At The Money: Deregulation Will Free Your Portfolio
This Bloomberg At The Money episode examines the investment case for a deregulation-themed ETF, FMKT (Free Markets ETF), which aims to profit from policy shifts that reduce regulatory friction and speed companies’ time to market. Host Barry Ritholtz speaks with Michael Gayed, portfolio manager for Tactical Rotation Management, about why deregulation may be an underappreciated market force, how the fund identifies beneficiaries, and why the strategy is active rather than purely rules-based.
Main Idea: Why Deregulation Can Be Investable
The core thesis is that deregulation can improve corporate economics by:
- Reducing compliance costs
- Increasing margins
- Speeding up approvals and time to market
- Removing operational friction
- Potentially boosting competition and earnings
Gayed argues that regulation acts like a drag on profits, and that markets may underprice the effect of policy changes that make it easier for businesses to operate.
How FMKT Was Conceived
Origin of the strategy
- The idea came from a discussion with an advisor after Trump’s election.
- The advisor suggested building an investment product around deregulation.
- Gayed partnered with other advisors and firms to create a more collaborative, actively managed fund.
Why it had to be active
- Deregulation is not static; it changes with:
- Executive orders
- Agency actions
- Political cycles
- Industry-specific developments
- Because the next deregulatory move is hard to predict, the ETF must react quickly.
Sectors and Names Seen as Beneficiaries
Gayed says the strongest deregulation opportunities tend to be in industries where regulation is a meaningful bottleneck.
Key sectors mentioned
- Financials
- Banks, brokers, and fintechs benefit from lighter rules.
- Cannabis
- Regulatory changes and reclassification could unlock value.
- Nuclear / energy / utilities
- Especially relevant given AI’s power demands and the need for faster buildouts.
- Aerospace / aviation
- Includes companies tied to new mobility and FAA-related approvals.
- Defense
- Government contracting can benefit from faster approvals.
- Healthcare
- Regulation can materially affect operations and margins.
Examples mentioned
- Robinhood
- KeyCorp
- Citizens Financial
- Blackstone
- Oracle
- Palantir
- ADM
- Palo Alto Networks
- Tilray
- Archer
- Joby
How the Fund Picks Holdings
The strategy combines human judgment, active management, and AI-based screening.
Screening inputs
- Mentions of deregulation in earnings calls
- SG&A impact from regulatory costs
- Valuation metrics
- Executive orders and policy changes
- Sector-level regulatory intensity
Logic behind selection
The team looks for companies that either:
- Benefit directly from reduced regulation, or
- Benefit indirectly because they operate in bottleneck-heavy industries where approvals matter.
Gayed emphasizes that this is more art than science, and that AI helps process the large amount of information needed to keep up with policy shifts.
Political Theme or Profit Theme?
A major discussion point is whether FMKT is a partisan product. Gayed argues it is policy-driven, not political.
His view
- Politics influences policy.
- Policy influences profits.
- The fund is designed to follow the profit impact, not to make a political statement.
He also notes that deregulation can happen under either party, depending on the sector:
- Democrats may favor areas like alternative energy or weed
- Republicans may favor oil, finance, or industrials
Benchmark Problem
Ritholtz raises the issue that the S&P 500 is not a meaningful benchmark for this kind of thematic fund.
Gayed’s response
- The fund is judged more against the broader equity universe and the investor’s own objectives.
- He argues the S&P 500 has become increasingly concentrated in large-cap growth and AI-related names, making it less diversified than many assume.
- FMKT has a value tilt, which can help in certain market environments.
Crypto and Gold in the Portfolio
The fund’s prospectus allows a small allocation to:
- Bitcoin
- Ethereum
- Gold
These are framed as assets that fit the “free market” concept because they operate with relatively less traditional regulatory encumbrance. However, Gayed says the fund has exited those positions when momentum has been weak.
Notable Examples of Deregulation in Practice
Oracle
- Seen as benefiting from reduced friction in government contracting
- Especially relevant to FedRAMP and faster procurement timelines
Palantir
- Benefits from faster movement in defense and government contract pipelines
Archer and Joby
- Potential beneficiaries of FAA and aviation deregulation
- Representative of the “flying taxi” theme
AI-related infrastructure
- Data centers, electricity, utilities, and energy are all tied to the speed of AI deployment
- The fund sees regulation here as a major bottleneck
Key Takeaways
- Deregulation is treated as an investable policy theme, not just a political slogan.
- The fund focuses on companies and sectors where regulation is a real economic drag.
- Active management is essential because policy shifts are uneven and hard to predict.
- The strategy leans on AI-assisted screening plus fundamental judgment.
- Gayed believes the market may still be underestimating the earnings impact of deregulation.
- The biggest winners are likely to be firms where deregulation improves:
- approval speed
- profitability
- scalability
- operational flexibility
Bottom Line
The episode argues that deregulation can be a real market catalyst, especially in sectors burdened by compliance, licensing, and government approval delays. FMKT is positioned as a nimble, actively managed ETF designed to capture those shifts as policy changes filter into earnings and valuations over time.