Talk Your Book: Trend Following with Eric Crittenden
Jul 15, 2024
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Eric Crittenden, CIO of Standpoint Asset Management, discusses adjusting for bias in data analysis, defining holding periods for trend following, multi-asset vs managed futures, simplifying trading processes, maximizing compounded returns, and managing risk in financial markets with a rules-based approach to trend following and portfolio allocation.
Develop a strategy investors can adhere to for long-term success.
Simplify market analysis by focusing on fundamental trends in trend-following strategies.
Prepare investors for potential drawdowns by assessing risk tolerance and running scenario analyses.
Deep dives
Eric Crittenden's Approach to Trend Following and Systematic Investing
Eric Crittenden, the CIO of the multi-asset fund at Standpoint Funds, emphasizes the importance of developing a strategy that investors can stick with through thick and thin. He discusses the significance of simplicity in systematic investing, highlighting the need for strategies that resonate with investors to ensure long-term success. Eric's approach focuses on trend following and the behavioral aspects of investing, aiming to provide a durable and robust investment experience.
Standpoint's Multi-Asset Fund Portfolio Construction
Standpoint's Multi-Asset Fund features a portfolio allocation strategy that includes global equities, a treasury bill ladder, and investments in 70 to 75 global futures markets. The fund maintains a static allocation to global equities, allowing fluctuations within a specified range. The cash piece is allocated to treasury bills, leveraging the risk-free rate of return. The remaining balance funds the macro program, focusing on trend following and risk management.
Navigating Market Changes with Simple Indicator Stacking
Eric Crittenden explains why a multitude of indicators is unnecessary for market analysis, emphasizing the simplicity of trend-following strategies. He underscores the concept that various indicators often measure the same trend, leading to indicator stacking complexities. By focusing on fundamental trends and avoiding excessive analysis, Eric's approach aims to provide a clear and effective investment strategy.
Preparing for Potential Drawdowns and Expectations
Eric offers insights into managing investor expectations, preparing them for potential drawdowns in the fund's performance. He acknowledges the likelihood of experiencing a 20% drawdown at some point and advises investors to assess their risk tolerance accordingly. By running scenario analyses and Monte Carlo simulations, Eric aims to ensure investors understand the potential challenges and fluctuations that may occur in the fund's performance.
Eric Crittenden's Mutual Fund Structure and Fund Accessibility
Eric details the accessibility of Standpoint's Multi-Asset Fund, available as a plain vanilla mutual fund on various platforms. Interested investors can visit StandpointFunds.com for more information and monthly updates. The fund structure comprises a balanced allocation to global equities, treasury bills, and global futures markets, providing a diversified and systematic investment approach for investors seeking an all-weather fund.
Final Remarks on Investment Philosophy and Fund Performance
Eric Crittenden shares insights into the fund's investment philosophy, focusing on delivering a disciplined and enduring investment experience. His commitment to simplicity, systematic investing, and managing risk underscores the fund's approach to long-term success. As the fund continues its positive trajectory, Eric highlights the importance of consistent performance and investor alignment in achieving sustained growth and success.
On today's show, Ben Carlson and Michael Batnick spoke with Eric Crittenden, CIO of Standpoint Asset Management to discuss adjusting for bias within data analysis, defining holding periods for trend following strategies, multi-asset strategies vs managed futures, simplifying the trading process when trend following, and much more!
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