The Derivative

A Four-Stack Pod, talking stacking assets with Return Stacked ETFs

Mar 20, 2025
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.
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INSIGHT

Return Stacking Unlocks Diversification

  • Return stacking allows layering alternative returns on top of core holdings without selling stocks or bonds.
  • This structural portfolio upgrade unlocks diversification and potential benchmark outperformance.
ADVICE

Use Return Stacking to Free Cash

  • Use return stacked ETFs to generate cash without selling core exposures.
  • This acts like a portfolio loan replacement with cheaper leverage using futures markets.
INSIGHT

Managed Futures Provide Crisis Alpha

  • Stacking uncorrelated managed futures on equities adds return with only a modest increase in volatility.
  • It can lower maximum drawdowns compared to holding equities alone.
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