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.