All-Weather Investing:

  • All-weather investing combines managed futures, global equities, and treasury bills to create a diversified portfolio.
  • The goal is stable returns with low volatility and drawdowns.
  • It aims to be non-correlated with stocks and bonds during market downturns.
  • Trend following and risk budgeting are used to manage risk.

Trend Following:

  • Trend following involves tracking price movements of assets and taking long or short positions based on trends.
  • Models and rules are used to identify trends and manage positions.
  • The strategy aims to capture positive returns from trending markets while managing downside risk through stop-loss orders.

Benefits of All Weather Strategy:

  • Provides diversification across asset classes for reduced reliance on any single asset class.
  • Offers potential for high single-digit returns with reasonable volatility and drawdowns.
  • Acts as a hedge against market downturns by providing non-correlated returns during bear markets.
  • Can be used as an alternative or complement to traditional equity and bond investments.

Mutual Fund vs ETF Wrapper:

  • Standpoint Asset Management chose the mutual fund wrapper due to clarity provided by SEC regulations regarding leverage and exposures.
  • A mutual fund allows control over trading executions and visibility into inflows/outflows.
  • Concerns about giving up control over trading execution in an ETF wrapper, as well as challenges related to closed markets when trading globally diversified futures contracts.

Performance Since Inception:

  • Strong performance since inception at end of 2019/beginning of 2020.
  • Annualized return: 11.7%
  • Annualized volatility: 11.5%
  • Maximum drawdown: 9%
  • Consistent with expectations for an all weather portfolio combining managed futures and global equities.

Fit in Portfolio Management:

  • Fits between stocks and bonds, offering non-correlated returns without extreme drawdown risk.
  • Can be considered part of the alternative or other bucket in a portfolio.
  • Some advisors may use it as an equity replacement or to replace some bond exposure.

Contact Information:

  • Learn more at standpointfunds.com and sign up for the monthly update.
  • Advisors can reach out to Matt Kaplan through contact information on the website.