Episode summary
Your Perfect Portfolio: A Conversation with Discipline Funds’ Cullen Roche
ETF Prime
· · Hosts: Nate Geraci, Simeon Hyman · Guests: Cullen Roche, Todd Rosenbluth
Summary
ETF Prime opens with a 2025 market recap and a look at the ETF industry’s record inflows, then shifts to the main interview with Cullen Roche, founder and chief investment officer of Discipline Funds. Roche explains why he launched three defined duration ETFs in November: they are built to match investment risk to real financial-planning time horizons of five, 10, and 20 years, and to reduce sequence-of-return risk by adjusting both stock and bond exposure.
Roche says the core idea is to treat portfolios as asset-liability matching tools rather than static mixes. When stock valuations are high, the funds reduce equity exposure; when interest-rate risk rises, they shorten bond duration. He argues that traditional long-duration bond ladders can be poor liability-matching assets over long horizons, because stocks or even a plain 60/40 portfolio may have a higher probability of delivering better real returns over time.
The conversation also ties the strategy to investor behavior. Roche says the goal is to give advisors a clearer way to communicate time horizons and to build portfolios that people can actually stick with, rather than chase performance. The host frames the products as a way to align allocation decisions with the real dates that matter in clients’ lives, such as college funding, retirement, and other future liabilities.
Key takeaways
- Todd Rosenbluth says small-cap ETFs are worth watching in 2026 because 2025 saw about $7 billion of net redemptions even as the broader ETF industry took in nearly $1.5 trillion.
- Rosenbluth expects AI-related ETFs and adjacent themes like robotics and nuclear infrastructure to keep attracting flows if the theme remains dominant.
- He flags high yield as a risk-on trade with historically tight credit spreads, even though survey data showed 38% of advisors still viewed it as relatively attractive.
- Rosenbluth says the ETF share class structure could accelerate quickly in 2026, with more than 30 firms already approved and products likely to arrive by the end of the first quarter.
- Cullen Roche says defined duration ETFs are designed to match five-, 10-, and 20-year liabilities while managing sequence-of-return risk rather than chasing benchmark-style exposure.
Notable quotes
“The ETF industry had a record year, close to $1.5 trillion of net inflows if you round up slightly”
“These cover five, 10, and 20 year time horizons”
“the overall idea is to reduce sequence of return risk”
“there is no perfect portfolio. So, you know, I very intentionally titled it your perfect portfolio”
“what I'm really doing inside of this is I'm I'm trying to build a time horizon over which we can reasonably expect an instrument to generate real returns”
How the episode opens
The ETF industry had a record year, close to $1.5 trillion of net inflows if you round up slightly. Small caps was the rare investment style to actually incur net redemptions. Uh there was about $7 billion for the full year for small cap ETFs.
All right, joining me will be Colen Ro, founder and chief investment officer of Discipline Funds, who's an independent investment firm that back in November, they rolled out a suite of what are called defined duration ETFs. They're currently three of these ETFs in all. And in a nutshell, these are seeking to match the underlying investment approach in the ETF with real world financial planning needs.
So Coen calls these timew weighted asset liability matching ETFs. These cover five, 10, and 20 year time horizons. And I would say to think about it like this.
Obviously, saving for a kid's college in five or 10 years is different than saving for retirement in 20 years. And these ETFs seek to account for that via their asset allocation. And then not only that, if you actually dive further into the approach here, a key aspect is controlling for both stock and bond duration risk.
So in general, these ETFs will hold less equity exposure when stock valuations are elevated and then they'll shorten bond duration when interest rate risk is elevated. Uh the overall idea is to reduce sequence of return risk. I think this is a pretty unique approach.
And so we're going to walk through these ETFs in pretty good detail. And then the other topic of conversation with Colon this week, which I'm very excited about. I'm sure he's even more excited than I am, is Colon is out with a brand new book today.
It's titled Your Perfect Portfolio: The Ultimate Guide to Using the World's Most Powerful Investing Strategies.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- defined duration etfs
- portfolio construction
- investment strategies
- etf research themes
- 2026 market outlook
Companies and tickers mentioned
- Discipline Funds
- VettaFi
Watch the episode
Watch “Your Perfect Portfolio: A Conversation with Discipline Funds’ Cullen Roche” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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ETF Prime, this episode and its artwork belong to Nate Geraci. Octagon is not affiliated with the show; this page is an independent summary.
