A Four-Stack Pod, talking stacking assets with Return Stacked ETFs
Mar 20, 2025
auto_awesome
Corey Hoffstein, known for his insightful research on return stacking, joins financial wizards Adam Butler and Rodrigo Gordillo, along with Mike Philbrick, to explore innovative investment strategies. They discuss enhancing portfolios without disrupting core holdings through layering alternative assets. The group examines sophisticated strategies like managed futures and merger arbitrage, highlighting their potential for diversification. Plus, they engage in a playful round of 'Choose Your Fighter,' revealing their unique strengths and camaraderie.
Return stacking enables investors to enhance portfolio diversification by layering alternative assets without selling core stock and bond holdings.
Incorporating managed futures within a return stacking strategy can enhance portfolio performance while providing a stabilizing effect during market stress.
Merger arbitrage strategies, when paired with bonds, capitalize on acquisition price discrepancies, offering competitive returns and diversifying risk exposure.
Deep dives
Understanding Return Stacking
Return stacking is a strategy designed to enhance portfolio diversification and returns without requiring investors to sell their core holdings in stocks and bonds. This concept allows for the layering of alternative assets on top of existing positions, mitigating the difficulties often associated with adding diversifiers to a portfolio. Rather than having to question which asset class to sacrifice for diversification, investors can maintain their preferred allocations while incorporating alternative investments. This method aligns well with the trend of keeping core portfolio components intact while still seeking additional sources of return.
Stocks Plus Bonds
The strategy of combining stocks with bonds through return stacking emphasizes a balanced approach to investments that retains core assets while adding value from diverse sources. This combination allows investors to harness the benefits of market rebounds while still holding established assets. The Return Stacked Global Stocks and Bonds ETF is an example that facilitates this approach, enabling investors to keep their traditional stocks and bonds while effectively allocating a portion to alternative strategies. The efficiency of this model supports better cash flow for investments, enabling ongoing participation in both stock and bond markets.
Adding Managed Futures
Including managed futures within a return stacking strategy highlights the potential for enhancing portfolio performance while reducing risk. Managed futures allow investors to capitalize on price movements and trends within various asset classes, including equity, bond, commodity, and currency markets. This asset class is often uncorrelated to traditional investments, meaning it can provide a stabilizing effect in times of market stress. By integrating managed futures, investors can gain access to broader market trends while minimizing vulnerability to volatility in their core holdings.
Merger Arbitrage Explained
Merger arbitrage strategies offer an intriguing addition to a return stacking framework by capitalizing on the price discrepancies during acquisition announcements. When a company is acquired, it typically trades below the buyout offer until the deal closes, allowing investors to capture the spread as profit. The risk involved in this strategy stems from various factors such as regulatory approvals and market conditions, which can affect deal completion. By pairing bonds with merger arbitrage, investors can achieve competitive returns while diversifying their risk profile beyond standard bond exposure.
Navigating Risk and Returns
The risk and return profile of return stacking strategies is constructed to enhance performance without radically increasing risk exposure. For instance, while traditional equity markets may experience significant drawdowns, the integration of managed futures or merger arbitrage can offer not only stabilization but also potential upsides. This layering technique allows for a nuanced balance between risk and return, focusing on assets that are often inversely correlated with standard equities. It highlights an evolving investment landscape where traditional strategies are redefined through the combination of innovative approaches.
Behavioral Considerations in Portfolio Management
Behavioral finance plays a significant role in the acceptance of return stacking strategies, as it addresses the psychological challenges investors face when diversifying. By retaining core stock and bond positions, investors may feel more secure and are less likely to sell when market conditions shift. This bolstered confidence enables a smoother investment experience, which is crucial for long-term success in portfolio management. Ultimately, ensuring that investors can maintain their preferences while exploring new opportunities can lower the barriers to accepting alternative strategies.
This episode of the podcast piles on the knowledge about "return stacking" - the investment approach that lets you layer alternative assets and strategies on top of your traditional portfolio, like a perfect investment sandwich.
Jeff Malec has stacked the deck with FOUR financial heavyweights - Mike Philbrick, Rodrigo Gordillo, Adam Butler, and Corey Hoffstein - each showcasing a "return stacking" ETF. We’ve brought together this team of experts to give you the blueprint for this innovative investment method.
So, what’s the deal with return stacking? Think of it as the ultimate portfolio hack—layering alternative asset classes and strategies on top of your traditional stock and bond holdings. No need to shuffle things around or ditch your core positions—just stack those extra return streams like the ultimate investing sandwich.
We’ll dig into the risk/return profiles and how these stacked strategies can take your portfolio to new heights. But wait, there’s more! To keep things light, we’re making our guests put their friendships on the line in a spirited round of "Choose Your Fighter"—because who doesn’t love a little friendly fire?
Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visitwww.rcmalternatives.com/disclaimer
Remember Everything You Learn from Podcasts
Save insights instantly, chat with episodes, and build lasting knowledge - all powered by AI.
