Andrew Beer, managing member of DBI, joins Forward Guidance to discuss the need for drastic fee reduction in hedge-fund like return vehicles. Beer and Farley explore in depth the mysteries of trend following (also known as CTAs or managed futures) strategies, which provide investors with positive carrying uncorrelated return streams that can be very beneficial in years such as 2022, when stocks and bonds both suffered a severe drawdown. Filmed on September 6, 2023.
Timecodes:
(00:00) Introduction
(00:04) Alpha & Beta
(02:25) What Hedge Funds Do Well
(11:17) Paying High Hedge Fund Feeds Is Like "Shooting Yourself In The Foot"
(14:31) The Strategy of Managed Futures (or Commodity Trading Advisors)
(29:40) The Rise of the "Pod Model" In Multi-Manager Hedge Funds
(39:00) Picking Hedge Fund Managers Is A Largely Hopeless Task
(44:29) Many Hedge Funds Have Missed The 2023 Tech Rally
(50:24) Optimal Rebalancing Between Strategies
(57:53) History Of Bad Ideas In Creation of New Investment Products: "Alternative Risk Premia"
(59:42) A Lof Of Academic Finance Is Insane
(01:01:20) The "Value Factor" As We Once Knew It No Longer Exists
(01:16:36) Ark & Cathie Wood
(01:25:51) China Was "Adored" By Hedge Fund Community