Wayne Penello - NextGen EMP

In a recent episode of Behind the Ticker, Wayne Penello, founder of NextGen EMP, shared the fascinating journey that led him to launch the NextGen Efficient Market Portfolio Plus ETF (ticker: EMPB). With over 40 years of experience as a commodity trader—including a decade on the floor of the New York Mercantile Exchange and years advising global trading firms—Penello developed a deep understanding of risk management. He later patented the Performance Risk Management System, which earned his clients over $13 billion in hedging profits and was detailed in his book, Risk as an Asset. After selling his firm, Penello turned his attention to equities, frustrated by the industry’s overreliance on diversification and lack of active risk management, ultimately leading to the creation of EMPB.

EMPB is a long/short equity ETF designed to actively manage systemic market risk using a proprietary, statistically driven methodology Penello describes as a “foggy ball”—an imperfect but highly effective algorithm that identifies the weakest sectors (“nags of the market”) and shorts them to dampen volatility. Rather than attempting to predict market direction or time the best 90 days, the fund focuses on avoiding the worst periods, which historically have the most destructive impact on long-term performance. The ETF holds about 16 sector or thematic ETFs, balancing long and short exposures to achieve a Sharpe ratio above 2, with the aim of consistently outperforming the S&P 500 while maintaining a maximum drawdown of less than 10%.

A key differentiator for EMPB is its accessibility: Penello was determined to build a sophisticated hedge-fund-like strategy for everyday investors, not just accredited institutions. By launching as an ETF rather than a private fund, NextGen EMP made the strategy available to anyone with $25, offering hedge-fund-caliber active management in a tax-efficient, low-minimum format. Despite an advertised expense ratio of 2.21%, Penello explained that the effective net cost to investors is closer to 1% or less when accounting for the offsetting interest income from short positions and dividends on long holdings. The fund is rebalanced monthly.

Penello positioned EMPB as a core equity exposure solution rather than an alternatives sleeve, emphasizing its potential appeal to both young investors seeking equity growth with controlled risk and retirees who cannot afford major portfolio drawdowns. With a disciplined, systematic process that removes emotional decision-making and a structure that works efficiently within tax-advantaged accounts, EMPB represents what Penello calls the “next generation” of equity investing.