Josh Brown thinks investors want more than index funds

Josh Brown, one of Wall Street’s best-known financial advisors, said the rise of passive investing has created demand for a different kind of product: a concentrated portfolio aimed at capturing the market’s biggest winners.

The CEO of Ritholtz Wealth Management and CNBC contributor recently launched Porterhouse, a separately managed account named after prime steak, where he evaluates the market’s best deals. The rules-based momentum strategy, conducted in partnership with Franklin Templeton, favors companies with strong earnings growth and persistent share price strength.

“Everybody has broad stock market diversification. It costs three basis points, you can have the S&P 500 in one click,” Brown said in an interview. “There are people looking for the best stocks in the market. Today’s best stocks may not be tomorrow’s best stocks.”

The launch comes after advisors steered clients toward low-cost index funds popularized by Vanguard founder Jack Bogle. Brown said broad market share remains the foundation of most portfolios, but argued that some investors want a more selective approach that can adapt as market leadership changes.

“Historically, buying the company with the largest market cap is actually a terrible strategy,” Brown said. “I think it means eventually the turnaround will kick in and it won’t be that simple – Just buy Apple And Nvidia“I can’t lose”

Porterhouse grew out of Brown’s “Best Stocks in the Market” list for CNBC Pro but took a more selective approach. None, despite the strategy’s focus on momentum Magnificent Seven Stocks are among its 58 current holdings.

Momentum driven

Rather than trying to predict which sectors or themes will dominate, the strategy relies on the collective decision of investors who are already voting with their dollars, Brown said.

“The market is very smart. I believe in the wisdom of crowds,” Brown said. “100 million people around the world are trying to figure out which stocks to buy, and so momentum works as a factor.”

“What we don’t do is predict,” he added. “I have no idea what the dominant theme of the market will be in the second half of 2026.”

This approach can sometimes shift the portfolio from major market themes to less obvious beneficiaries.

Brown pointed to the network equipment manufacturer Ciena is seen as one of the strategy’s strongest performers this year. The company has benefited from the development of AI infrastructure as data centers demand more network capacity to move information between increasingly powerful computing clusters. The stock is up more than 140% in 2026.

“There are many names in industrials, materials and technology that have directly seen earnings revisions being higher and stock prices rising because of AI,” Brown said.

Brown said momentum as a strategy is here to stay because investors tend to continue to reward companies that benefit from innovation cycles and positive industry shifts, creating trends that may last longer than many expect.

“After all, companies that are doing well attract the attention of a lot of buyers,” he said. “Unless this is a coincidence, you’ll see investors continue to bid on these stocks over time, and that’s what we’re trying to capture.”

Brown also said the separately managed account structure gives Porterhouse flexibility not found in many momentum ETFs. Unlike most exchange-traded funds, which are typically fully invested, the strategy can hold cash when stocks violate selling rules.

“We would rather hold cash than hold a stock that is falling less than the market,” Brown said.

The ability to raise cash could lead to underinvestment in the strategy after major market sell-offs, but Brown said this trade-off helps avoid owning weakening stocks to stay fully invested.

Porterhouse will be available to qualified Ritholtz customers starting June 1.