Webinar Audio Replay: Generating Alpha With Managed Futures

On January 26, AltsDb co-founder Jimmy Atkinson hosted Andrew Beer, co-founder at Dynamic Beta investments (DBi), on a live one-hour webinar for financial advisors. The webinar detailed how to generate alpha with managed futures.

This podcast includes an audio version of the webinar, including a short introduction by Andy Hagans.

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Episode Highlights

What is the Managed Futures asset class? (In straightforward terms.)
How and why do Managed Futures generate alpha? (The obvious answer.)
How Managed Futures can diversify a portfolio of stocks and bonds.
The two big drawbacks for advisors, and how to avoid them.
How to invest in Managed Futures (the pros and cons of different mutual funds and ETFs).
How much you should invest in Managed Futures.
How to position the allocation with clients.

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Official Webinar Replay Page (AltsDb)

Today’s Guest: Andrew Beer, DBi

About The Alternative Investment Podcast

The Alternative Investment Podcast is a leading voice in the alternatives industry, covering private equity, venture capital, and real estate. Host Andy Hagans interviews asset managers, family offices, and industry thought leaders, as they discuss the most effective strategies to grow generational wealth.

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Show Transcript

Andy: Hi, everyone. This is Andy Hagans, Co-Founder of AltsDb. On January 26th, my fellow Co-Founder at AltsDb, Jimmy Atkinson, hosted Andrew Beer of Dynamic Beta Investments for a live, one-hour educational webinar. The webinar detailed how to generate alpha with managed futures and this podcast is an audio version of the webinar. If you’re new to managed futures or if you’re wondering how they might fit into a client portfolio or maybe even your own portfolio, Andrew’s content really is the very best introduction that I’ve ever heard to this asset class. So, I hope you enjoy Andrew’s presentation and remember, you can always check out our show notes at altsdb.com/podcast.

Jimmy: Welcome to today’s AltsDb webinar, “Generating Alpha with Managed Futures”. And today’s webinar is sponsored by Dynamic Beta Investments, also known as DBI. I’m Jimmy Atkinson, Co-Founder of AltsDb. Happy to be joined today by Andrew Beer, Co-Founder at DBI. Andrew, welcome. Thanks for joining us. How are you doing today?

Andrew: I’m doing great. Thank you. Thank you very much for having me on today.

Jimmy: Absolutely. Great to have you here, Andrew. And before we tee up your presentation, I had a couple of questions that I wanted to ask you about managed futures. I frankly don’t know a whole lot about this topic, about this asset class. So firstly, to kick us off today, there’s obviously really great interest in the managed futures asset class right now. Last year was a bear market for most asset classes. Broad equities were down, broad bond markets were down as well but managed futures bucked the bear trend. Can you characterize the broad performance of the managed futures asset class in 2022? How did managed futures do overall?

Andrew: So, I mean, the way that I’ve described it in a sentence is that managed futures funds, they just…they nailed the inflation trade. They got in very, very early. I mean, the inflation trade was really interesting in that it was very contrarian for a long time. You know, back in early 2021, I wrote a paper about the possible resurgence of inflation and it was based upon what a legendary hedge fund investor had talked about the possibility of inflation coming back. And I spoke to dozens and hundreds of people about it over the course of the next year or two. And the fascinating thing was that most people just…it was very, very hard for most people to position to the new world, that people with 60-40 portfolios, with real-estate portfolios, what they bought at low single digit cap rates, you know, the low rates bet was infused through so many different aspects of traditional portfolios.

And so, what happened is in… you know, we’ll talk about managed futures as a strategy, is that starting in 2021, they really started to detect the signs of it. And so, they ended up making money. So, the strategy overall was up about 20% last year which was really…it’s almost a… it’s a historically good year given how much both stocks and bonds were down. And it was because, you know, they got…they were long crude oil at the right time when crude oil went up. They were short treasuries at the right time as the rates were going up. They were long the U.S. dollar when…during that period of time when people were talking about king dollar. So, it was a series of trades that really went in their direction. And, you know, you get these periods once every half a decade or a decade where there’s just big disconnect between what some people in the market are doing, what they’re seeing as a big change in the world and the difficulty that most investors have been actually adapting to it.

So, 2023 is gonna be really interesting as anybody who’s building an asset allocation model is gonna look at the strategy and say, “What did well, you know?” It wasn’t TIPS. It wasn’t REITs. It wasn’t, you know, a lot of things that people had in their portfolio. It wasn’t gold that people thought was gonna do well. But this is a strategy that did. So, it’s, you know, a pleasure to be here to talk about it today.

Jimmy: Yeah, most everything was down in 2022, right? And in many cases, down double digits. And so, for managed futures as an asset class to be up 20%, that’s quite a year. I think that’s why it’s become such a popular asset class these last few months here. And you wrote an op-ed in “Barron’s” earlier this month titled “Why More Advisors Should Consider Adding Managed Futures to Portfolios”. And I know that you and Andy Hagans discussed this a bit on a recent episode of the “Alternative Investment” podcast. It seems like so many advisors and their clients are underinvested in managed futures. Why is that?

Andrew: Well, I think there are a couple of obvious reasons. One is it’s complicated, right. It’s more complicated than saying, you know, we’re just buying a portfolio of stocks and bonds. But I think that’s always true with alternatives. I think in the managed futures space, though…and, you know, part of what I’m excited about today is it’s not just educating the advisor community about what managed futures is but there’s actually a lot of disinformation or misinformation. And so, people are often starting with assumptions about what these funds are, how they work, the level of risk that they take, all sorts of things. And I think the space overall was not geared…was never built to talk to the advisor community. It was built to talk to a pension plan and family office that’s been invested in hedge funds for 30 years. And so, they were always talking to people on the other side of the table and they share a common language around, you know, complex trading strategies and how they’re supposed to work, you know, ways portfolios are constructed. And I don’t think the industry has done a terrific job of trying to understand that an advisor who’s looking at the space has very different considerations when they’re thinking about whether this makes sense in their portfolio.

Anyway, so what I’m trying to do and, you know, the opportunity to be here today is really to try to both educate but then also reeducate and then demystify the space that…to the point that I was making in “Barron’s” is it arguably should be in every portfolio but a tiny, tiny, tiny fracture of advisors actually use it. And so how do we kind of bring…particularly in a decade like the 2020s where if rates stay where they are, stocks and bonds are probably gonna be positively corelated. And so, people really need things that march to the beat of a different drum. And this is an obvious one but we’ve gotta find a way to bring more people into the tent through education, discussion, understanding, you know, the strengths and weaknesses of putting this in a portfolio.

So, give me time. Hopefully it won’t…hopefully I’ll be able to make a dent in changing that.

Jimmy: No, that sounds great. And, you know, it starts or it continues at least with today’s educational webinar. So, with that said, Andrew, I’ll let you take it away with your presentation and we’ll dive into managed futures, generating alpha with managed futures, why it should be a consideration in a portfolio for certain types of investors.

By the way, again, for those of us who just joined in the last few minutes in case you missed my earlier announcements, we are gonna save some time at the end of live Q&A so if you have any questions for Andrew, please use the Q&A tool in your Zoom toolbar and we’ll get those questions answered or as many of them as we can before the hour is up. But Andrew, I see your screen is being shared so it looks great. Please dive in.

Andrew: So, thank you. So first of all, thank you, everyone, for taking the time to join today. And I’m really gonna…I’m gonna cover four things today and obviously this is designed to be educational. Just by way of background, we manage an ETF in this area. I’m not here to talk about that today but we approach this space in a very, very different way than most people in the space in that we…back in 2015, we were trying to find a way to bring a lot of diversification. We called it diversification bang for the buck into a portfolio that we were building. And we…I’ve been in the hedge fund industry since the 1990s. We knew a lot about managed futures and we looked at it but there were certain things we didn’t like. There were certain things, certain issues that we had with the strategy and so we really set out to try to solve those issues and find a way to get exposure in the space.

That’s a different story. The purpose of this is for you as an advisor to be able to walk away in 40 or 45 minutes with a better understanding of this space than 90% of professional allocators who’ve looked at it. And the way that we’re gonna get there is we’re first gonna talk about the space and try to demystify it a little bit but then we’re also gonna talk about in really, really concrete terms why it makes sense to be in portfolios. And everybody has a different practice, everybody does things differently but I’ll lay out the different arguments for it really from a much more practical perspective than you’ll normally read about.

But then we’re gonna hit on probably the two…the most significant part of this for you from your perspective is hitting on what are the big landmines in this space because when you look across the advisor community, a very small percentage of advisors have ever used this as a strategy. And even those who have, most of them are unhappy with the experience. And so that, I think, is because there are some landmines. And so, we’re gonna educate you on that and give you the questions if you decide you wanna have this in your portfolio to make sure you avoid making those same missteps. And then lastly, you know, we’ll talk about the investment options and talk about the pros and cons.

So, with that, let me just explain managed futures. So managed futures is an investment strategy that if you had to boil it down to a single sentence, it hunts for trends across commodities, rates, currencies and equity markets. So, as we talked about earlier last year, when oil’s going up, these guys wanna be long oil futures contracts on oil. When treasury yields are going up, they wanna be short futures contracts on treasuries making money. When the dollar is going up, they wanna be short something like the Japanese yen. So, what they’re looking for are kinda big moves. It’s very, very different than when you hear a macro strategist tell you what the state of the world is gonna be in a year and how they’re gonna be positioned for it. Managed futures funds are basing their decisions by analyzing the price moves of dozens and sometimes hundreds of underlying contracts. And in a sense, it’s the modern-day equivalent or a much more sophisticated version of technical analysis. They’re not making macro calls. Rather, they’re looking for the bread crumbs in the markets as to how the world is changing.

And so, for a long time, the strategy in the second bullet point was only available in hedge funds and managed accounts. So, the people who used it were family offices, institutional investors. Starting in right after the GFC, there was a wave of mutual funds and now we’re seeing new entrants into the ETF world that now are potentially making the strategy more accessible to a typical advisor who doesn’t have a lot of clients who will meet the accreditation requirements of a hedge fund. When we talk to people about it, we boil it down into four key terms and our general view on managed futures is that how they build and run their portfolios is quite complicated. But like a lot of investment strategies, the core ideas are actually pretty simple. So managed futures, where does that term come from? You also may have heard the term CTAs. That’s more of a regulatory term of art. But on the upper left managed because it’s dynamic and tactical.

So, you know, a typical managed futures fund was long oil when oil was going up. When oil stopped going up, eventually they got out of oil and, you know, they were short the Japanese yen and then they eventually got out of their position. So, what they do will change over time so it’s very different than saying, “I wanna own gold because I think gold is gonna look like this over the next 20 years.” The futures…these funds…funds in this space go long and short futures contracts. They don’t go buy barrels of oil and put them into their garage. They buy futures contracts. If they think oil’s gonna go down, they will sell futures contracts to bet on them going down. And the idea of going long and short is that sometimes you wanna bet that something is going up and sometimes you wanna bet it’s going down. So, it gives them a lot more flexibility. And then when I said you’ve got commodities, rates, currencies and equity markets, the idea is that if you can go long and short and look across all these four different markets, you’re usually gonna be able to find something interesting or a few interesting opportunities.

On the lower left it’s a quant-based strategy. So, you don’t have people, you know, pointing to a candle chart and telling you that they think something’s going through a breakout. These are sophisticated funds with a lot of PhDs who sit around and try to say, “You know, statistically, are we seeing things that make us confident that this is gonna go up?” Ultimately the models decide what the buyers sell. That’s a huge advantage a lot of the time because the models are completely dispassionate. They will like something tomorrow. If the data changes, they will not like it in a week. So, they have a big advantage in a period like to the 2021 and 2022 when the world is changing a lot and people who are much more nimble did much better. These are very nimble models.

And then the last is, you know, sort of where does the money come from, how do these guys make money over time. So, like, when people say, “You know, why does private credit earn more than normal…than liquid bonds?” So well, there’s an illiquidity premium that, you know, most investors are…demand a premium associated with investing in a liquid asset. These guys make money from trends. So, in standard economic theory, there should be no evidence that trends…if you follow trends, you make money over time. In the real world, which we all live in, you actually can make a lot of money over time. So, there’s a ton of research that basically says, you know, when something’s going up, it often keeps going up more than expected.

And so, we really boil it down. And so, if you have those four terms in mind, it gives you a pretty good idea of what the strategy is. Now when I say strategy, this is a really important point on the bottom. When we say managed futures, we mean an average of all the guys who were invested in this space. There is no easily investible index product. You cannot say, “I want managed futures and therefore I’m gonna buy the Vanguard equivalent of a managed futures strategy,” because what the strategy consists of are dozens or hundreds of guys, each of whom have their own ways of trying to skin this cat. And so, all the data that I’m gonna talk about today is an index of hedge funds. And going back to 2000, SocGen, a French bank has collected data and basically said, “These are the 20 largest hedge funds in a given year and on average, this is how these guys have done.” So that is gonna be a really important point when we talk about implementation.

But the key thing is that managed futures, it’s a technically based strategy, quantitative, flexible, nimble and in the right circumstances, that could be a huge competitive advantage.

So, the real question is why would you want this in your portfolio. And when I put these three charts up, people generally are very surprised. And they’re not surprised by the two things on the right. So here is a strategy…and again, looking at these guys on average, that since 2000, we say it’s had more diversification bang for the buck relative to stocks and bonds than private equity, private credit, infrastructure, REITs, commodities. I mean, it is three characteristics that at least on my side, I really haven’t seen in many assets. You’ve got 75% of the returns of bonds and… excuse me, 75% of the returns of stocks and 120% of the returns of bonds going back to 2000. You have near 0 correlation to both stocks and bonds over 22 years and you have the trifecta of gains in that it was up 20% last year. It was up during the GFC and up during the dotcom crisis.

So, if you’re building a long-term financial plan for a client or an asset allocation model, it’s very, very hard to find these three characteristics together. And what it also means, though, if we enter a world where 60-40 portfolios aren’t working as they should because they’re both…those skis are pointed in the same direction, then this is gonna be even more valuable than it was. And I think our clients who invested last year were really, really happy that they have this in their portfolio.

When you take this and add it to the portfolio, the question becomes how much of an impact does it have. And again, you know, our perspective is always starting with let’s start with the basic 60-40 portfolio. So, if you’d added an allocation to this index back in 2000, it would have materially improved your risk adjusted returns. And what these charts show you are on the left is just the 60-40 portfolio in green. And then if you take that and add a 5% allocation and then a 10% allocation, a 20% allocation to managed futures, it does what you wanna diversify or to do which is that your returns are preserved. Remember, the returns have been between stocks and bonds over time and that was during the great bull market in bonds and a bad period and a great, extraordinary period for equities. But it reduces your standard deviation, reduces your risk and therefore improves your Sharpe ratio, a measure of risk adjusted returns.

And so, the reason we say bang for the buck is because, you know, some…a lot of diversifiers…you get these sort of risk reduction benefits but it can also impact your expected returns over time. We don’t see that in this space in general.

So, diversification has different meaning for different people. The one that I just showed you is the long-term. You know, that’s sitting with the client and saying, “You’re gonna retire in 20 years. We add this into your portfolio. We think you’re gonna have a smoother ride over the next 20 years. You know, you’re introducing something that will be a buffer at the right time.”

But that buffer is most pronounced during the very worst times. So, allocators like it because in this business, a lot of your outperformance is concentrated into particular periods. I don’t think anyone’s found a way to say, “We can consistently outperform a 60-40 portfolio by 100 basis points a year.” Rather what happens is you have to kind of make decisions in it to pull money away from 60-40 to find things that’ll do better, do at the right time. So, what these show is again…the green part is the drawdown of the 60-40 portfolio. The next one to the right is if you had a 5% allocation of managed futures, then a 10% allocation and a 20% allocation. And the answer is that the more managed futures you add to a portfolio, the better your risk adjusted returns go…become. And so, if you look at 2022 for instance…and this is not through year end. This is through the trough because when they measure drawdowns, it’s…you know, if we go back down, then we’ll extend the data. But basically, if a 60-40 portfolio was down a little more than 20% and if you had a 10% allocation in the space, you’re only down between 15 and 16. Now you’re still down but that’s a… but if you’re competing with advisors across the street who are just with a 60-40 portfolio, it’s an enormous competitive advantage. That’s 500 basis points of outperformance, you know, during the critical period where you’re trying to basically show that you’re doing things to protect capital more than what a Vanguard or a robo-advisor will do with their less flexible portfolios.

Now so we’ve talked about kinda the very long-term diversification benefits. We’ve talked about kind of the…what Katie Kaminski at a firm called AlphaSimplex coined as crisis alpha. But on the advisor side, the actual…the most significant benefit I’ve heard from advisors is this idea of having a beacon of green in a sea of red. And what this shows you is that up 20% on the left…that’s the average of the managed futures space in… of those hedge funds back in 2022. And then you see equities and… I’m sorry. It’s impossible to read because the fonts are so small but, you know, S&P was down 18, Nasdaq was down 32. If you made a huge pivot into value, well, you’re only down eight. If you stop with growth, you were down closer to 30. But everything was down.

Meanwhile, unlike the dotcom crisis or the GFC, everything on fixed income was down too. In the second one in…so Bloomberg AG was down 13% but right next to it is TIPS. I mean, TIPS were down 12%. And then in the column on the right you see basically the other category. So, commodities of 26%. That was the standout performer. I thin by the time we got to early ’22, a lot of people had given up after the commodities had a really rough decade in the 2010s. I think a lot of people had given up but if you had dialed up your commodity exposure, it really, really helped. But that is a very difficult thing to hold for very long periods of time. Golds didn’t go up so we had a great return with inflation and gold didn’t do anything. The REIT index in the U.S. was down 27%. The average liquid alternative hedge fund strategy was down 6 and then Bitcoin, for anybody who jumped into that pond, was down 64.

So, and we have this big regime shift with inflation and very, very, very few things participated because of what I described as the fact that we all had inflation low rates bets in our portfolios. Almost no matter what we owned.

So, what advisors have told me about this is that…you know, and we have the saying about when people are using diversifiers and you kinda keep stripping away why are they adding it to their portfolios etc., one of the things that we realize as we talk to people is that on the advisor side, when you have this, you know, 15 or 20 different line items and you’re sitting with a client, really the idea is to be able to talk about things that you wanna talk about on the portfolio. You wanna talk about the successes much more than being dragged into conversations about things that aren’t working. And so, you know, for clients who even had a five…I’ve mentioned kinda the 10% allocation to managed futures last year. You were still down. I mean, you had…everything else you had was down unless you had, you know, like, some exposure to…direct exposure to commodities. But the point was that you’re sitting down with a client and you’re pointing to this beacon of green in the sea of red.

And the conversations with advisors that from a practical perspective that actually really helps to weather those more difficult periods. And so, I think what you’re hearing here is that there are different ways…the statistical benefits of this strategy are very clear but the practical side of it as an advisor has nuances associated with it that we’ve tried to really talk to you guys to understand where the rubber meets the road as it relates to your businesses, your interactions with clients and as you can imagine, everybody has different businesses and different considerations. But I think if we lay it out for you, what we’ve learned, it helps people to construct a strategy to…in terms of how they want to approach the space.

So, one of the things…and Jimmy in your question about, you know, why don’t people have more of this…on the surface, this sounds like a really scary strategy, right. You say, “Okay, so we have black box quants that are going a long and short derivatives contracts. They often use leverage to get there.” I mean, it just…it screams blowups, that something horrible is gonna go wrong. And again, that goes back to this idea of it’s, you know…even though we might build an asset allocation model with an expectation that it’s gonna work for 20 years, we’re dealing with clients and investors on a much more regular basis.

So, one of the things about managed futures is it’s a lot less risky than people fear it is. And so, on the upper left in the drawdown category the S&P has had a max drawdown since 2000 of 51% but it’s had two periods where it’s gone down roughly that much. The Bloomberg AG had very few drawdowns for a long time but it’s gone down 17% recently. Over that 22-year period where we had everything from, you know, the dotcom crash to Lehman Brothers to, you know, COVID and all these incredible market…the Great Financial Crisis. All these incredible things that have happened. The max drawdown on the strategy is only 14%. And that goes back to what I was saying about one of the great advantages of the quant strategies is when something stops working, they don’t hold it. They don’t have a white-knuckle grip and say, “You know, I know it’s gonna turn, I know it’s gonna come back.”

The models are very dispassionate so they’ll say, “All right. Well, we liked…you know, we felt the dollar was going up and so we’re gonna be long on the dollar.” But when it starts to change, they’ll say, “Okay, well, it’s changing. The world is changing. We’ll move to something else.” Ironically, it’s what Warren Buffett said about a lot of investors cutting their flowers and watering their weeds. You know, hoping the weeds come back as flowers. These guys cut their weeds ruthlessly. And so, they can lose money. This year, the average fund is down a couple of percent because they weren’t positioned for this big risk on world but they don’t hold it and go through these massive drawdowns. The worst two years of this strategy on the lower left is down less than 11%. So meanwhile, the worst two years with the S&P… you can even think about rebalance was 45% and for the Bloomberg AG it was down 22. The worst month was 7.5%. November wasn’t a great month, of last year. It wasn’t. And we gave back gains. Everybody gave back gains but again, it’s…you know, you’ve had a down 16%, down 17% once for the S&P500 and the volatility of the strategy is around 9%. So, it’s somewhere between stocks and bonds.

So, if we can get past this perception of this being a scary strategy, then I think people will realize that actually it’s a lot less risky than they think and that will make people more comfortable holding it. One of the things I tell people about it is that, you know, there are a lot of great firms who’ve been running these strategies for years and years and everything I think in the back of their mind thinks, “You know, well, what if I invest with a guy and he blows up?” Two things. One is there really aren’t blowups in the space in that when you hear about hedge funds, you can’t get your money back or even things that are happening with, you know, like, Blackstone’s private REITs where people are gaining and suspending investors. That never happens in the managed futures world because they’re trading in these liquid futures contracts. There are no liquid assets…illiquid assets that get them into trouble.

The other thing that I also tell people is remember all these really, really smart guys who build and run these firms. They don’t want to blow up either. And so, when you see that they’re investing in commodities, REITs, equities and currencies and they’ve got lots and lots of underlying positions, they’re sizing those positions and looking at them constantly to try to manage their own risk. You know, they don’t want to have massive drawdowns that could jeopardize their businesses. So, I think one of the big messages here is that I think as you get into the space, you’ll realize that a lot of these fears that people have about the space are way overblown and it’ll give you…it’ll make you more comfortable including it in your portfolios.

So, what are the two big risks, right? So, a remarkable thing about this space is how few people have had good experiences investing in this space. And I’ll explain to you some of the big issues. The first big issue is this idea. It’s what’s called single manager risk. And the best data on this space comes from hedge fund land where people have been running these strategies for decades. The whole mutual fund ETF world really started about 10 years ago. So, a lot of the data…and there were far fewer funds. It’s much…there are issues with it that I’ll describe. But there’s a disconnect in this space between I want these benefits as we’ve talked about the strategy, you know, this index of funds. It’s like the S&P500 version of it. That’s that green line in the middle. And so, what the green line shows you is…this is since mid-2016. There’s a reason we start there, because that’s when we launched one of our strategies. But over that period of time what this shows you is that actually, you know, the…that it’s a relatively low risk line, that it’s kinda 9% volatility.

Underneath the hood, though, the funds that make up that index are much more volatile. So, in the same way that if you said, you know, I’m feeling that this is the right time to invest money in emerging market stocks, you could show an emerging market index that looks like this but then you put all the funds in the…I mean, the companies in the index and they’re gonna be all over the place. So, nobody would say, “Hey, I want that index line. I want this as part of my asset allocation but I’m just gonna pick this company.” If you invest with an active manager, he’s not gonna say, “Yeah, I’m investing in two stocks.” He’s gonna seek diversification.

So, the biggest problem for allocators in this space is that almost none of the individual funds that you can invest in looks like the…consistently looks like the overall space. So, they’re much riskier than this idea of making this a strategic allocation to space. And in pension fund land or family office land when they do this, they look at a chart like this and what this chart shows you…sorry, I should explain it, is the green line is the index, right. So that’s the average of those 20 guys. Those gray lines that you’re seeing are the 20 guys in the index back in the middle of 2016. So, what you see is right out of the gate some guys do much better, some guys do much worse. And as time goes on, what you’ll also see is actually some guys who have been doing worse for a while, they just drop out. They close the doors. Other guys who’ve been doing terribly, they come roaring back.

Statistically, we call those no persistence of returns and there’s a wide dispersion. So, what a pension plan says is…as an asset allocation, what I want is that green line. The only way to achieve that green line is to buy, let’s say, six of those grey lines and put them together in a way to try to accomplish that. And so, this has been a huge problem as we’ve gone into the retail space or the wealth management space for reasons that I’ll describe because it creates this disconnect between what you want as an allocator and what you get on the fund side. We’ll talk more about that.

So those are hedge funds that I’m talking about. And there are hundreds of hedge funds that do this. There are also now a couple dozen mutual funds and ETFs that do this. And just to underscore this point, that idea of I want the strategy but I have no idea if the fund that I pick is going to be similar to it, this is the Morningstar U.S. Fund Systematic Trend Category from 2022. And the very, very best guy was up 59 and the very worst guy was down 13. In fact, 20% of the funds lost money last year. If you look at the top, the SG CTA index was up 20%. So, the reason this becomes an issue in the advisor world is because I have yet to meet an advisor who, by the time you get down to whether this is a 5% or a 10% allocation…some go as high as 20%, who would say, “Okay, for my 5% allocation, I’m gonna put six individual funds in it.” Because just from a client reporting perspective, you now have this incredibly cluttered box and it means that yes, one might be doing well but another one might be doing poorly. You’ve gotta keep track of five or six funds. So instead, what people do…have done in the wealth management space is they say, “I love managed futures.” Looking at that index of returns, looking at the broad category of returns. But then because virtually every fund in this space is just like one of those gray lines, you end up having to pick one.

And within a year or two, what often happens is it goes through a period of underperformance. And this is when the complexity of the strategy’s a problem because how do you explain that you’re underperforming with these strategies. So, my strong advice to anybody who’s looking at the space is to think really, really hard about this disconnect between the strategy and the availability of products. The reason almost every product in this space is a single manager product is because they’re all progeny of the institutional world. Institutions want to build their own cars with six different components and decide which ones they wanna put together. It is their job, it is their fulltime job to do things like that.

In the wealth management space, guys want the car. They want the solution. And there just aren’t many products that do that. One of them if you look fourth from the bottom is called Abbey Capital. I think they’re probably the best at doing that but as I’ll explain to you, the price you pay is that it’s more expensive because you pay them as well as…you know, basically, as well as the underlying managers.

One of the issues that people have had which is related to it is that, you know, I’ve talked to advisors and they say, “Well, I look at this space and I picked this guy. They’re a multibillion-dollar fund. You know, I look at their numbers and they’re doing great. In fact, they’re way above average.” And that is what we call camouflage over the landmine because going back to that same…what this shows basically is this is…back in July of 2016, if you look at the managed futures space at that time, these were the available mutual funds and ETFs in this space. Where it says 50%, that line is the index. And what the bars show you is have they…on a rolling one-year basis, have they been outperforming the index or underperforming the index. And the key here is that…and by the way, the black lines are the multi…you know, the billion dollar plus funds. And what you see is the gray lines are all gone. Forty percent of the funds in this space are gone. Because when they’re underperforming in the index for a period of time, fund sponsors basically say, “Well, we’re never gonna be able to market this. What’s the point? We should shut it down.”

And on the other hand, the guy across the street who has been outperforming and because of this lack of persistence of returns, when they’re outperforming, it’s usually luck, right. They happened to have been in the right markets at the right time for a year or two. Well, then they fire up the marketing team, they go out and aggressively look for new advisors and they walk into your office and say, “You know, basically, we’ve…our model is Rumpelstiltskin. We can spin straw into gold.” And it works. It works because when you’re standing there, if you don’t know this space really well, you look around and you say, “God, everybody kinda makes it look easy.” But, you know, what an economist would say is it’s like looking at the guys, you know, basically stumbling off the battlefield and say, “Oh, it wasn’t so bad. Everybody lived.” But in reality, you know, a lot of the funds we’re seeing today may not even be around in 5 or 10 years. The interesting thing is we look at AQR, you know, an incredible firm, great strategy. They have a billion and a half in assets as of yearend. Back in 2015 or so that was a $14 billion fund. And they went through…they were…basically everybody said, “I want managed futures. No one’s smarter than AQR. And so, we’ll just simply use AQR’s fund to fill our allocation, to fill our bucket.”

Then they went through a five-year period of time where over five years they were down 20% and they meaningfully underperformed everybody else. And so, advisors basically said, “You know, well…” And they would just cut it back, cut it back, cut it back. And then eventually, they lost well more than 90% of their assets and then came back and had a great year last year.

So, you’ve gotta be really, really cautious when you do fund selection in this space that you don’t get tripped up with survivorship bias, selection bias, all sorts of other things and then get back to the core principles of what you’re trying to do which is find a way to access the returns of the strategy.

The second landmine is very tricky and complicated which is high fees and expenses can…you can go through periods of time in this space if you’re invested with expensive funds with expensive strategies where every single dollar of alpha they generate goes to them and not your clients. And so, if you look at the left, this used to be an incredibly expensive area. And if anybody on this call goes back to the 1990s, you may recall, you know, some of these funds, John Henry and others literally have, like, 10-point trailers on them. I mean, they were the most egregiously expensive funds. They were also incredibly volatile. They’d go up or down 30% a month. The world has become much more institutionalized since then. But even today there are between the trading costs of these funds and their management fees and incentive fees…and again, I’m focused primarily on hedge funds. You can go through periods of time where everybody makes money but you. So, on the left, you see that if the strategy is making $10 over time, by the time you get through, you know, all the expenses, your clients may get 4 or 5.

And the way…the biggest risk there…last year, the average hedge fund in this space between management and incentive fees made about 600 basis points last year, last year alone. But they ended the year up 20%. If you have a guy who was up 20% last year, even if he made 600 basis points, nobody cares about fees and expenses, right. All you say is, “My guy was up 20% and, you know, who cares what he made.” It’s the lower return periods where it becomes a real problem. So, July…if you look at the chart on the right, July 2016 through…for about five years after that. This is a very tough period in the space. There was a lot of one step forward, one step back, one step forward, one step back. And you can see there was even drawdowns over that period of time. The Fed and Fed controlling the markets was not easy on this space.

And so, for about a five-year period of time, hedge funds made no money for clients. But before all the fees and expenses, they were making closer to 500 basis points. Now it didn’t help also that interest rates were zero which was…obviously has changed a lot. So, the point is that you have to…we think if you’re gonna have this as a strategy in your portfolio for the next 10 or 15 years, you gotta have…you gotta think through the fee and expense issue and that gets complicated because the headline fees on mutual funds often are a lot less than hedge funds. But what guys are doing in mutual funds often has a bit less alpha than you have in the hedge funds. So, you’re paying less but you’re netting around the same place.

So, when we looked at the space, we basically said, “You know, we are true believers in the asset allocation value of the space but we gotta figure out how to solve that single manager risk issue and we gotta figure out how to manage those high fees and expenses.” Now interestingly, we’re not alone in that. We’re alone in that in the mutual fund and ETF world in terms of focusing on it but in the institutional world, if you’re in a sovereign wealth fund and you have $25 billion invested into hedge funds and you’re the guy who’s been tasked with investing in this space, what I’m describing is exactly what you do. They do all the same analysis and they say, “Yeah, we’re gonna pick six guys but we’re not gonna pay headline fees. We’re gonna pay a lot less. We’re gonna do it as efficiently as we can.” So, we’re gonna get diversification and then also reduce our cost of investing. And those guys always do better than the green line that I’m showing here.

So meanwhile, those asset allocation benefits that I’ve described are fully loaded for fees and expenses. So, our view was if we can take this strategy and make it even more efficient and solve some of these landmines, it’ll be a great addition to our portfolios. So where does that leave you? As an advisor, you really have four strategies to invest in this space. Most people do what’s on the left. So, there are the four different strategies or you can invest in one of those single managers and hope it works. You can buy two to four single managers to try to get some diversification. You can buy a multimanager fund or you can do cycled replication, right. We’re the guys in that space.

Depending upon whether you invest in mutual funds or ETFs, single managers, you can get in both areas. When you’re talking about…if you wanna do multiple single managers, there are only a few ETFs so it’s a little hard to put together a portfolio. You could do it more easily in the mutual fund space. The multimanager models have only been launched in the mutual fund world. And then replication, we…that’s our area and we do it in an ETF.

So single manager. The pros are it’s a single line item. So, you sit down with the client and you say, “You know, we’ve got 5%, 8%, 10% allocation space and here’s our guy, here’s our pick.” You have some incredibly good firms, great brand names in the space as you may have seen on the prior slide. Multiple billions of dollars just in their mutual funds and then a lot more outside of it. There are always funds that have done really well. So, you can always…if your business model as an advisor is to be able to get your clients excited by showing somebody who’s done well recently, you’re gonna have plenty of funds to pick from. And the fees range but there are plenty of funds with I think what are perfectly reasonable fees. That AQR fund that I mentioned was, you know, hugely positive for the overall space because it was basically 120 basis for an expense ratio.

The cons are you get extreme dispersion. So, you’ve gotta have a strategy for…you gotta think in advance how am I going to explain to my clients if my guy underperforms by 20% for over six-month period of time. I think you have to be very candid with yourself that if you’re picking a guy who happens to have done well, it’s most likely due to luck rather than skill which means it’s probably not gonna be repeated. And these things can make it difficult as a long-term hold. Not every advisor that I talk to is thinking about how do I put something in my portfolio for the next 10 years. So again, a lot of people, the vast majority of people end up choosing…and I think some people do it deliberately. Some people do it because they don’t realize the single manager risk issues that I’ve described.

Two to four single managers works better from a long-term perspective. You get the…you can have the same benefits, you can point to great managers. It’s gonna be a lot more diversified and a lot more predictable. The cons are you’ve got this cluttered allocation bucket in the client’s statement. It’s more difficult to track and explain what four funds are doing as opposed to one. And just in general, going from one fund to two is…having two funds is a lot better than one. Three is better than two but not as much as going from one to two. Four is probably the optimal allocation but I see very few people using four funds.

The one-step solution that makes the most sense, I think, in the mutual fund land is to pick a multimanager. And there the advantage is now you’ve got a single line item. You basically outsourced the job of selecting it to, you know, a firm like Abbey who’s been doing this for decades. Abbey itself is a brand name firm and they’re investing with brand names, more diversified, more predictable. They’re gonna give you much closer tracking to the index over time than probably picking two funds. The cons is it’s expensive. You know, it’s gonna be in the 200-basis point range.

And then our approach was…which is very nontraditional and has been sort of controversial at times, is we’ve basically said, “Well, we’ll look at what the largest funds are doing and instead of…we’re not gonna build our own strategies. Instead of investing with them, we’re just gonna use our own risk models to figure out are they long or short on oil and by how much and then we’ll just implement the trades directly and do it cheaply.” So, it’s why some people called us, like, the, you know, the Vanguard of hedge funds which is the highest praise in some quarters and pejorative in others. But basically, the idea is we want that index return but if we can cut out fees and expenses and do it in an ETF, then, you know, by capturing their poor trades, then that’s ultimately what we wanted as asset allocators.

And but the disadvantage of it is it’s…people can look at it and say, “It’s too simple. It’s a cheap knockoff, you know. I really like the really sexy stuff.” And I’ll just add with one thing which is the next step of all this is once you get comfortable with the strategy as an allocator is to think really hard through how do you talk about this in positions with clients. And this is a work in progress for us but what we’re finding is that in these strategies, people ask questions that…feel like they’re supposed to know certain things that aren’t really that important to the strategy. What is important to the strategy is where it fits in a portfolio and what it can do to a client’s portfolio. And again, as the benefits are…since nobody knows how the strategy’s gonna do in the next six months as you need to have it for a long period of time to really realize those benefits.

So, we think metaphors work much better on the client side and it obviously is different for each…different businesses but things like, you know, when you say something like stocks, bonds and managed futures for the long run, this just becomes part of an asset allocation. It’s not a trade. It’s just something you include in your portfolio because it’s gonna do things that you’re not gonna get from stocks and bonds. You know, in terms of its ability to do well in a year like last year, it’s, you know, it’s not a [inaudible 00:48:50] strategy. It’s flood insurance. And, you know, if you’re smart and you buy the right policy, then you can even get paid while you’re waiting for the storm to hit. You buy that policy, you’ll go through that dead money problem.

You know, it’s something that’s been used by family offices and institutions for decades to diversify stocks and bonds. This is a strategy that has been around longer than, you know, [inaudible 00:49:14] the bigger brother hedge fund industry and it’s…you know, you can look at decades and it’s always worked and I think it will always work. You know, other metaphors. Like, they seek to make money by riding the market waves. You know, last year there were tsunamis and that was hugely beneficial to these guys. This is…you know, this year so far, it’s been much choppier but there will always be waves. Sometimes they’ll be choppy and you won’t make much forward progress. Occasionally a tsunami will come out of nowhere. You’ll make a lot of money. But the important thing is you’ll always have opportunities. And this idea that during tough markets it can be this beacon of green in a sea of red and that’s where even having a small allocation I think makes a huge difference.

So that concludes my slides for today. I know Jimmy and those guys, you know, have them and can make them available to you. But I do wanna have an opportunity to answer any questions as well. I think I went a little bit over my time but I tried to get in… squeak it in at the end.

Jimmy: No, you’re right on time, Andrew. We’re doing good. We’ve got about eight or nine minutes left until the top of the hour. If we go a few minutes over, forgive us but I do wanna try to get to as many of these questions as we can. We’ve got quite a few good ones today. I’ll start with John’s question. He was the first one that came in right at the beginning of the webinar. He asked, “How can I explain managed futures to my fifth grader and mother-in-law?” What’s the simplest way you can explain managed futures, do you think, Andrew?

Andrew: I’m still working on it. I would say every few months I’ve gotta come up with a simpler explanation. People seem to like this flood insurance or…I’m in Florida right now on business and here, hurricane insurance seems to resonate a little bit more than flood insurance. But I think it’s a description of when they make money which is, you know, things go up or things go down and you’ve got really smart guys who are trying to figure out when that’s gonna happen. But I don’t know…I am yet to find a way to describe it that resonates with them without having the conversation and knowing what their language is. You know, if I have somebody who is comfortable with stocks…like, I told my sister I manage an ETF and then I had to kinda, like, peel back. She doesn’t know what an ETF is. She also doesn’t know what a mutual fund is. She doesn’t know what…I mean, so it’s a… but I think in this case it’s…you know, if you talk about stocks, you say there are these great companies who are doing great things. I think if you boil it down to that level, it’s…you’ve got really smart guys who are trying to make…find out how to ride the market waves, make money when things go up and down.

Jimmy: That might be the simplest explanation. I like that. Sifala [SP] asks, “As the portfolio manager of DBMF, Andrew, what is your process for asset allocation across your identified holdings, i.e., when do you increase or decrease waiting?”

Andrew: So, we are a very odd bird in this space in that what we are really doing is saying, “There are, you know, roughly 20 really, really smart guys out there who do this that each have their own different ways of doing it. They’ve each got PhDs focused on it.” Our whole process is trying to figure out what they’re doing and copy it cheaply. I mean, some people call us IKEA, some people call us Vanguard. And the belief is that there are a lot of really smart guys out there but sometimes it’s really expensive and sort of risky to get into it. So, we can have a separate conversation about what we do on the investment side. I don’t wanna really bring that in too much on the education side. But we really…the idea where it relates to this, we really like the space. But I’m not as interested in knowing how just AQR is positioned or how another great firm in the space is. I wanna know how they’re all positioned on average because when I look at those benefits over the past 22 years, average in the space is great. Average in this space even after high fees and expenses is great.

So, if I can get average efficiently and do even better and put it in an ETF where yes, the fifth grader can buy it in their, you know, in their college account or whatever, that I think is, you know, what we wanna offer to the advisor community.

Jimmy: Good. Next question is tips for advisors. Do you have any tips for advisors who are convinced of the value of including managed futures in a client portfolio but if a client is cautious or hesitant about this specific asset class? I think you touched upon some of those metaphors to use in one of your last slides there but are there any other tips for advisors out there?

Andrew: I think I found it’s very advisor specific. So, in this whitepaper that hopefully will be out next week, it really tries to answer some of these questions. And the answer is often it depends upon what your clients are nervous about. You know, it depends upon what language, what expectations they have coming into it. You know, do they stare at individual line items? Do they look at the overall portfolio? Do they…you know, and so as I write this whitepaper…you’ve probably never seen a whitepaper before but I said we love brainstorming about this stuff. Call us. You know, I’m telling you if you reach out to me on LinkedIn, I’m more than happy to get on the phone and talk. And a lot of it is just sharing experiences that I hear from other people. You know, it’s been such a privilege because people tell me, you know, this is…yeah, I do like this space. But I went into a client meeting and I wasn’t really quite sure how to describe what happened. So again, one of the things we’re doing on our side is we’re now doing these monthly recorded performance reviews where we talk about how we did but then try to put it in language so that an advisor…if they get a call from a client that afternoon saying, “Hey, what’s going on over here,” they have to keep bullet points they need for it.

And I don’t think this…you know, when you talk about the original question about adoption, I don’t think this category as a whole has been very customer focused in that way for this community because they’ve got pension plans in family offices who have no problem picking up the phone and asking what’s going on or have…or they themselves have investment committees or whatever that are more sophisticated. It’s a unique issue with the retail world of matching client expectations with products that bring value when there is excitement about doing something new and innovative but also nervousness about it and a difficulty and people, you know…emotional levels go up or down. So, all I can say is, you know, we’re still trying to learn exactly what to say and how to frame it and a lot of it will be on follow-up conversations to things like this today.

Jimmy: Good. By the way, you mentioned reaching out to you on LinkedIn. I did post Andrew’s LinkedIn profile link in the Zoom chat. So, if you open up the chat in your Zoom toolbar, you’ll see a few different resources that I’ve linked to there. I’ve linked to DBI’s website, Andrew Beer on LinkedIn. I also linked to the “Alternative Investment” podcast episode that Andrew and other Co-Founder at AltsDb, Andy Hagans did earlier this month as well as…Andrew, I also linked to your “Barron’s” op-ed. So, a lot of good stuff in the chat if you guys wanna pull up the chat and click around on those links. But to move on with the questions here, Nick has a question. He points out that the CTAs have had some performance issues over the last two months and, you know, your ETF DBMF was not immune to that obviously. Why is that? Why have these…why has this asset class kinda fallen off in the last couple of months and how should investors be thinking about those short-term drop-offs?

Andrew: Sure. So, I think when you look at the space…so I’m a fundamental guy, right. You know, I started my career working for a value focused hedge fund manager, you know, looking at stocks and, you know, doing very esoteric hedge fund-like things. The portfolios in this space are often telling you what’s happened in the markets more so than what will happen in the markets. They’re telling you where they’ve identified trends that they think are gonna continue.

If I had to put the performance of 2022 into a word, they got inflation rates, right. And it was hitting on multiple cylinders at the same time. On November 10th, the inflation trades started to reverse. It was the first CPI print that came in below expectations and everything had been working on the managed futures side. When this is a strategy that will make $4 and in the best-case scenario, to make $4 on a trade, the best-case scenario…the trade just kinda stops and they eventually dial out of it. But that’s not really what usually happens. What usually happens is they make $4, they give back $1 and you lock in $3 of profits. And so that’s what happened last year. A lot of guys were up north of 30% or in the 30% range and ended up up 20% once the big inflation trades started to reverse.

Now what I tell people with that is if you’re looking at any asset in isolation, then for something like this, you should be looking at this in the context of the rest of your portfolio. If you have stocks that took off like a rocket ship after that happened and you already…and you have…you know, still have bond positions that have also done incredibly well, then that’s why this is always looked at in the context of a broader portfolio. And so, the…you know, for people who try to come up with a reason, you know, well, why were they in this trade and why did they lose, you know, X percent that month or why we…it’s not…it’s a very, very hard way to hold this for the long term because there aren’t great answers to it, right. I mean, when I was in… you know, when I would see people invested with value guys through this eight or nine year, you know, like, desert in the value world and… but the explanation was always, “Well, you know, they own really cheap stocks and they just got cheaper.” That was really easy. You don’t have that easy, like…it’s so much cheaper today. Don’t get out now. Instead, you’ve gotta say, “Look, this has worked for 22 years where we have really good data. We know it’s worked for decades before that.” This is just something…just size it the right way, let it be part of your portfolio and it did what it was supposed to do last year which was to go up when everything else was going down.

But if that reverses quickly as it did, we’re gonna give back some and everything else in your portfolio is gonna be up. I think that’s the best way to manage that.

Jimmy: Well said, well said. Sifala asks another question here that I thought was interesting. I figured we’d get to that. By the way, we are at the top of the hour. So, if anybody has to drop off, please feel free. We won’t hold it against you. But I did wanna get to a few more questions and we’ll probably go for another, I don’t know, five to eight minutes here, Andrew, if that’s all right. This next question asks, “In addition to the outperformance during crisis, how have managed futures performed during the comparable 1970 stagflation period? Were managed futures around back then? How did they do or how would they have done?”

Andrew: So, the farther you go back with data, the harder it is to answer that. And it goes back to…if you think of that survivorship bias issue that I described with mutual funds and ETFs, imagine…I mean, just to put it in context. Like, literally, I think none of those funds existed in… before the GFC, right. So now you’re saying what managed futures funds were around 30 years ago. We just don’t know. We don’t have enough solid data. Anecdotally, these guys killed it but it was a very different business back then. You know, you had funds that were literally going up or down 20% a month. And I’m sure if you got clean data and went back there, you would find that there were plenty of guys who, you know, were up 100%, 200% in a given period of time. And then plenty of guys who, you know, who were on the wrong side of it and, you know, kind of quietly went out of business.

But I think the, you know, the world today where we stand, we’ve got 4% interest rates, right, short-term interest rates. The way these portfolios are built, you start the year making 4% on cash, right. You’re starting the day…in a sense, you are better positioned for a higher interest rate environment because the way the funds are structured is you basically sit on cash and then you trade futures contracts with a little bit of it posted as margin. So, the higher short-term interest rates are, the more these guys will do better. So, when people look at the late 2010s, that period that I described where they didn’t make any money for clients for about five years but it was also because interest rates were zero at that period of time. If interest rates had been four, then they would’ve made cash returns instead of fees.

So, if the answer is we’re going into a long desert, you know, another three- or four-year period where it’s gonna be really tough, the Fed starts, you know, intervening with its put and everything else and the answer is you’re gonna make four over the next three or four years, I think people would be okay with that. I think if you…but, you know, historically, if they’ve done…before fees, you know, that plus 500, 600, 700 basis points. But it’s extremely difficult to know exactly what would happen. But in general, these changes in the markets, these market environments tend to be very good for them. We certainly think it will be.

Jimmy: Good. We’ve got time for one or two more questions. We’re not going to get to everybody’s questions unfortunately but I’ll give you a way that you can reach out to Andrew just before we log off. Andrew, I’ll let you tell people what the best way is to get in touch with you. But let’s move on to Liam’s question here. Liam asks, “AQR recently wrote a paper about how managed futures/trend following is a good complement to private assets. Do you agree and should this drive more institutional adoption given how large private asset allocations have become?”

Andrew: So AQR is…so Cliff Asness has been on a one-man haka dance about private assets. And I mean, AQR publishes the best research from an academic perspective in the industry. To me, private assets are long stocks and bonds, right. I mean, if you own private equity, you’re long the S&P500 or you’re on long equities in some way. If you own private credit, you’re long bonds in some way. He’s making exactly the same argument we’re making except he’s saying it’s a complement to private assets. I think it’s a less good…a less positive complement to private assets than…because they’re not traded. So, in last year, you know, when you look at, like, the difference between private equity and the public variance at our venture capital markets and the variance…there’s just always this huge dispersion. To me what…you know, when you see that beacon of green in a sea of red, well, if a lot of things haven’t really gone down because people haven’t marked them on the private side, the benefit is less important. You don’t have as much red.

So, part of the reason people have added so much in private assets is because…and this is what Cliff Asness rages about is the fact that the returns are smooth, that they’re not marked used to be viewed as a problem or an issue and now I think a lot of people view it as a great thing because they don’t have to, you know, look upon something and talk to people how much it’s probably down on an economic basis.

So, I agree with the general idea. I just think it’s a complement. I think it’s…because it’s not corelated to stocks or bonds, a complement to both public and private investments.

Jimmy: All right. Well, we’ll do one more question. Apologies if we didn’t get to your question but I’m gonna end here with Blake’s question from the chat. Blake asks, “All the data shown is blending risk on and risk off periods.” But he wants to know how much is the SG CTA outperforming the S&P500 during risk on.

Andrew: Oh, not outperforming at all. I mean, in risk on, if the S&P is going up, you don’t want managed futures to be keeping up with the S&P because then it means that they are way out over their skis on one trait. So, you know, what happens is they’ll underperform for years and then it can make up…I mean, last year it made up 40 points of return versus the S&P. That’s a lot of years of underperformance. But the S&P also…again, it’s a little bit weird because in the 2000s where the S&P did 0 over 10 years, managed futures destroyed it. But you also had two bear markets in one decade. Last decade you really had no bear markets, right. I mean, from 2010 through the end of 2019 or 2020, you had a brief blip with COVID. But you basically had a bear market last…and the S&P went up more than any other asset class. So, with the exception of Nasdaq.

So yeah, I mean, I think the expectation should always be…if you go into hard risk on period and that’s great for equities, I would always expect it to underperform.

Jimmy: Really good. Great answers, Andrew. Thank you for joining us today. Thank you for all of your insights. Thanks to everybody for participating. This was a really great, engaged audience we had on the webinar today. Before I let everybody go, Andrew, where is the best way that people here if they have questions that weren’t answered yet, how can they get in touch with you? How can they learn more about you and DBI?

Andrew: It’s just…so either if you google us…our firm is called Dynamic Beta Investments. The website is dynamicbeta.com. We have, you know, inquiry chat boxes that pop up and if you come in through that, it gets routed to me. And I’m very good at following up. Also, LinkedIn where if you look me up on LinkedIn and just message me…I mean, you know, invite and then message me. Look, I mean, my job is to talk to you guys. And I think you’ll be surprised that I’ll wanna also ask you questions about how you’re looking at it and your particular circumstances because that’s ultimately how I learn. And, you know, hopefully make this collective body of knowledge.

I am on Twitter but less so because it’s…I don’t…I’ve been on a little bit of a Twitter sabbatical because it’s hard to be on Twitter and actually write coherent sentences. And so, I’ve been trying to spend more time writing coherent sentences these days but you can also find me on Twitter.

Jimmy: Excellent. I just put those links in the chat if anybody wants to follow up with Andrew Beer. I’ve got his LinkedIn link reposted there and also dynamicbeta.com/contact if you wanna reach out and shoot and email over to the Dynamic Beta team and Andrew will see that and get back to you. Andrew, that’s all of our time for today. Thank you once again for joining us today and thanks everybody for participating. We’ll get the recording out to you as soon as we can. Give us a day to get that turned around. We’ll get it out to everybody by tomorrow at the latest, all right. Thank you, everybody.

Andrew: Thanks, Jimmy. Thanks, everyone. Really appreciate the time.