Model Portfolios and Regime Change Risks

In this episode of Excess Returns, we sit down with Andrew Beer to break down managed futures, hedge fund replication, diversification, and what investors can realistically expect from these alternative strategies. Andrew explains why managed futures can act like a “cloudy crystal ball,” how trend strategies capture major macro shifts, why complexity isn’t always your friend, and how advisors can communicate these concepts to clients. We also explore fees, model portfolios, allocation decisions, global macro themes, and what smart-money positioning looks like heading into 2025.

Topics Covered
What managed futures actually are and how they work
How trend strategies capture big macro shifts
Why diversification is most valuable during market stress
Why investors struggle with complexity and line-item risk
The statistical case for adding managed futures to a 60/40 portfolio
Barriers to adoption and how advisors should explain the strategy
The role of model portfolios and why slow rebalancing can hurt in regime shifts
Why Andrew prefers simplicity over complexity in managed futures
Fee sensitivity, ETFs, and how this strategy goes mainstream
Indexing, replication, and building more efficient alternatives
Why manager selection is hard in this space
The “rush to complexity” and why it often hurts returns
How hedge fund replication works and what it captures
What smart money is positioned for today across equities, rates, currencies, and commodities
Macro themes: inflation, rate cycles, the dollar, yen, and global equity opportunities
Why international equities may finally be turning
How managed futures complement – not replace – stocks and bonds
What mainstream adoption might look like over the next decade

Timestamps
00:00 Intro and why managed futures matter
02:00 Explaining managed futures in simple terms
06:18 The four major asset classes trend funds trade
10:00 Why trends form and how information reveals itself in prices
11:55 Diversification and how managed futures improve portfolios
14:00 Why investors haven’t widely adopted the strategy
17:01 Communicating the “what,” not the “how,” with clients
18:55 How model portfolios behave in regime change
21:55 How managed futures can move faster than traditional allocations
24:00 Why a simple portfolio of major markets works
26:00 Making alternatives feel less risky
28:00 Performance dispersion across managed futures ETFs
30:00 Why complexity doesn’t equal value
35:20 Fees, ETFs, and what mainstream adoption requires
38:00 The real reason for the industry’s “rush to complexity”
40:35 Should managed futures exclude equities and bonds?
43:00 Why it’s so hard to handicap what will work in advance
46:00 The human side of alternatives and advisor communication
47:00 Hedge fund replication explained
50:00 How replication identifies major themes
52:00 Why replication works only in certain strategies
53:10 What smart money positioning looks like today
55:45 Inflation, rates, the dollar, and global opportunities
58:00 The path to managed futures becoming a standard allocation
59:22 Where to find Andrew Beer online