Top Traders Unplugged

SI299: Sharing the Trend Following Pie ft. Andrew Beer

Jun 8, 2024

Financial expert Andrew Beer discusses inflation, macroeconomic modeling, and trend following strategies. Topics include the existential crisis in modeling, trend followers as short sellers, dealing with replication model lag effect, sharing the trend following pie, money as packed anxiety, ETF industry positivity injection, and managed futures space stalling.

01:09:38

Creator website

Episode guests

Andrew Beer

AI Summary

AI Chapters

Episode notes

Podcast summary created with Snipd AI

Quick takeaways

Institutional investors underinvested in managed futures, despite higher alpha generation compared to equities.

Managed futures show consistent alpha generation and low correlation to equities, making them attractive for diversification.

Challenges in increasing managed futures allocations include higher volatility and institutional reluctance to perceived risks.

Deep dives

Underinvestment in Managed Futures by Institutional Investors

Institutional investors are significantly underinvested in managed futures, which represent only 6% of hedge fund assets compared to equity long short at 37% and multi-strategy at 20%. Despite being an underrepresented asset class, managed futures have shown higher alpha generation of 340 basis points per annum when compared to equities. This suggests a potential opportunity for institutional investors to diversify their portfolios and enhance returns by increasing allocations to managed futures.

Intro

2min

Non-Finance Topics and US Unemployment Numbers

2min

Analyzing Real Yields, Economic Models, and Predictions

5min

Challenges and Myths of Short Selling in the Hedge Fund Industry

7min

Advantages and Challenges of Trend Following in Investing

17min

Navigating Challenges in the Managed Futures Industry

24min

Shifting Focus on Benefits in ETFs

10min

Shifting Focus to Growing the Investment Pie

3min

Today, we are joined by Andrew Beer where we discuss the outlook for inflation and why Andrew believes there is an existential crisis in macro economic modelling. We then touch on the question "if trend followers might be the only true short sellers left" as well as how to deal with the lag effect when using replication models. We round off our conversation discussing why Andrew believes we should all “share the trend following pie” and why the managed futures space is stalling when it comes to AuM, why he believes that money is “packed anxiety” for most people, why the ETF space needs an injection of positivity and much more.

-----

50 YEARS OF TREND FOLLOWING BOOK AND BEHIND-THE-SCENES VIDEO FOR ACCREDITED INVESTORS - CLICK HERE

-----

Follow Niels on Twitter, LinkedIn, YouTube or via the TTU website.

IT’s TRUE ? – most CIO’s read 50+ books each year – get your FREE copy of the Ultimate Guide to the Best Investment Books ever written here.

And you can get a free copy of my latest book “Ten Reasons to Add Trend Following to Your Portfolio” here.

Learn more about the Trend Barometer here.

Send your questions to info@toptradersunplugged.com

And please share this episode with a like-minded friend and leave an honest Rating & Review on iTunes or Spotify so more people can discover the podcast.

Follow Andrew on Twitter.

Episode TimeStamps:

00:44 - What has caught our attention recently?

03:04 - Is what we thought was "normal" Real Yields actually not normal?

09:30 - Are the trend followers the only true short sellers left?

19:09 - How do CTAs react to the lower prices?

21:35 - Industry performance update

23:00 - Q1, Joe: How do you deal with the lag effect in replication models?

32:36 - Let's share the trend following pie

40:38 - The disadvantages of the institutional world

43:56 - Why is the managed futures space not growing?

49:49 - A crazy story from Andrew

56:26 - Are low-cost offers killing the industry?

01:02:39 - The ETF costs dont add up?

----

PLUS: Whenever you're ready... here are 3 ways I can help you in your investment Journey:

1. eBooks that cover key topics that you need to know about

In my eBooks, I put together some key discoveries and things I have learnt during the more than 3 decades I have worked in the Trend Following industry, which I hope you will find useful. Click Here

2. Daily Trend Barometer and Market Score

One of the things I’m really proud of, is the fact that I have managed to published the Trend Barometer and Market Score each day for more than a decade...as these tools are really good at describing the environment for trend following managers as well as giving insights into the general positioning of a trend following strategy! Click Here

3. Other Resources that can help you

And if you are hungry for more useful resources from the trend following world...check out some precious resources that I have found over the years to be really valuable. Click Here

Disclaimer