Top Traders Unplugged
SI264: The Evolution of the Trend Following Industry ft. Andrew Beer & Alan Dunne
Oct 7, 2023
Andrew Beer discusses the challenges investors face in timing managed futures allocations and the evolution of the managed futures industry. They also explore the growing appetite for trend following, the commoditisation in managed futures, and the impact of attractiveness on hedge fund managers' success.
01:01:50
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Quick takeaways
- 60/40 portfolios are becoming less effective due to changing correlation structures, leading to increased volatility and higher standard deviation.
- The managed futures industry has evolved towards commoditization, but there are still diverse trends and approaches within the space.
Deep dives
The Challenges of Traditional Portfolios
The podcast episode highlights the challenges of traditional 60/40 portfolios in the current market environment. The speaker discusses how these portfolios are no longer as effective due to changing correlation structures. They explain that the evidence shows that 60/40 portfolios have become more volatile, with a higher standard deviation compared to previous years. This poses a problem for wealth managers who need to address their clients' concerns about the increased risk in their conservative portfolios. The podcast suggests that diversifying portfolios with assets that are not correlated to stocks and bonds is crucial to mitigate the impact of the changed correlation structure.
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