Josh Brown, counting on a new momentum strategy, thinks investors want more than index funds

Josh Brown , one of Wall Street's most recognizable financial advisers, 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 the premium cut of steak and built to hold what he considers the market's best opportunities. The rules-based momentum strategy, run in partnership with Franklin Templeton, favors companies with strong earnings growth and persistent share-price strength. "Everybody's got broad equity market diversification. It costs three basis points, one click and you can own the S&P 500," Brown said in an interview. "There are people who are in search of the literal best stocks in the market. The best stocks today won't be the best stocks tomorrow, necessarily." The launch comes after years of advisers steering clients toward low-cost index funds popularized by Vanguard founder Jack Bogle. Brown said broad market exposure remains the foundation of most portfolios, but argued some investors want a more selective approach that can adapt as market leadership changes. "Historically, buying the largest market-cap company is actually a terrible strategy," Brown said. …