Miami Hedge Fund week Panel 2024 Part II: Increasing Accessibility of Alternative Investments

Join us for the second half of our panel discussions during this year’s Hedge Fund Week in Miami as we explore increasing accessibility of alternative investments through new ETF products and strategies. We’ve got Rodrigo Gordillo (@RodGordilloP) taking reigns from the quantitative perspective, Jerry Parker (@rjparkerjr09) talking trend following, Bob Elliot (@BobEUnlimited) on replication and Jay Pestrichelli (@ZEGAFinancial),  options guru, guiding us through hedge fund strategies, discussing their day-to-day responsibilities and tasks, highlighting differences in their approaches despite operating under the broad financial services umbrella.

We dive into challenges around educating investors on sophisticated strategies as well as recent regulatory changes that allow new product structures that are making alternative approaches more accessible to a wider range of investors. Topics discussed include quant fund management processes, trend following across 400 markets including single stocks, and harnessing options decay in a new ETF. Challenges of communicating performance during periods of potential underperformance are being addressed such as election year impacts and whether strategies position based on outcomes, capacity constraints of highest Sharpe strategies, and limitations of full replication, along with democratizing diversification strategies through return stacking ETFs.

Sit back and gain knowledge on the expanding opportunities and accessibility in the alternatives space, with room for continued advances as innovation progresses, SEND IT!



In case you missed it, Check out Part 1 featuring our Miami Hedge Fund week Commodities panel podcast episode!



Check out the complete Transcript from this week’s podcast below:

Miami Hedge Fund week Panel 2024 Part II: Increasing Accessibility of Alternative Investments

Jeff Malec  00:06

Welcome to the derivative by RCM Alternatives, where we dive into what makes alternative investments go analyze the strategies of unique hedge fund managers and chat with interesting guests from across the investment world. Hello there. Yes, we’re back on the Star Wars line and off the Star Track after the brief one week hiatus. And speaking of hiatuses or high AD, AD, how do you say that anyway, we’re back this week with the second panel ran down in Miami around hedge fund week. You can go back and hear the first one on this channel two weeks ago talking commodities. This panel was a great one with trend following legend Jerry Parker of Chesapeake return stack and quant Rodrigo Gordillo of ReSolve, hedge fund replicator Bob Elliott of Unlimited and options guru Jay Pestrichelli from ZEGA, which was hosted by our friend Kevin Davitt of NASDAQ, this panel dives into increasing accessibility and bringing sophisticated investment strategies to more investors. The panelists talk through their day to day work, how the market is changing and how regulatory changes have allowed new products to make alternative approaches more accessible. Go get them. They also get into election year impacts benchmarking alternatives and challenges of educating investors. So screw your air pods in tight and hear how innovation is broadening investor opportunities and helping more people access tools to diversify their portfolios. Send it This episode is brought to you by our CMS clearing and execution group, which helps mutual funds and ETFs like the ones run by today’s guests efficiently access and trade exchange traded futures and options markets. Visit our Sam to learn more. And now back to the show.


Kevin Davitt  01:51

Thank you all very much for for joining us this afternoon for this panel discussion. I look forward to it. Thank you to our CME for putting this on and all the sponsors including NASDAQ who I work for, I’m here to help support the NASDAQ 100 ecosystem. Our primary focus is the NASDAQ 100 index options. That about covers my promotional push. But if you do have questions, any interest on index options, we’re going to talk a bit about that, at least in some part with Jay later. Let myself or John black. No, I am Kevin dabit. And I’m super excited. I like how I’ve worked with Matt. Brad Bard, who’s at RCM for years and kind of the wrapper was sort of a pun intended that he put around this conversation was ease of access. And I think there has been tremendous outgrowth in derivatives, where they have become increasingly accessible to a much broader audience. And I think the topics that we’re going to touch on today are going to include in some way that accessibility and particularly the ETF wrapper that we’ll talk a lot about today. But I want to come back to that. And what I’d like to start with is a little bit different to sort of kick off this conversation, I’d like to focus on something that sounds a little bit cliche, like kind of a day in the life. But I want to know a bit more about like the day to day grind for our panelists. And I know that everybody in the room is kind of broadly interested in capital markets, and we all kind of work under this finance umbrella. But that sort of catch all term doesn’t necessarily shine a light on what gets done day to day, week to week, and how that might apply to you as an advisor or to your clients. So I also think it’s a good way to sort of close that mental gap that we have. When you hear something like a quant fund manager for Rodrigo, right? You have some picture of that a trend trader like Jerry next to me, a hedge fund replicator. I don’t even know if replicator is a word but I’m gonna go with it. Or longtime options guru, like Jay, like, what does that mean day to day? And I think we have a tendency to romanticize ideas or terms like that. But if you’re an advisor, you’re an allocator. You need to know what the hell does that mean for me or for my clients? So we’re going to do brief introductions. And what I want to do is focus on what you do at the firm and how that kind of distinguishes your practice. This is not a point of competition. I want to give the listeners a better understanding of how different the emphasis can be despite working under this broader financial services umbrella. So let’s start like I mentioned with a quant fund manager, I’m going to take a guess right like the roadmap sized. I assume you have junior colleagues running data all day. You’re banging out Bloomberg messages and you’re a scratch golfer?


Rodrigo Gordillo  05:12

No, I mean, I have five, stretch golfer, psychologists on the, on the roster to help emotionally with my just like brilliance more than anything. The fact that my data scientists spend 90% of their time scrubbing data. And actually 10% of the time doing work with it, right? Like it is a, it is the least sexy job you can imagine. But there is a a nugget at the end of it. That means that differentiated return streams that can help advisors and allocators across the world. And yeah, we have a lot of developers we have a lot of we have a PhD on the dock a you know, my background is in statistics and finance. My father was a math professor at the University of Lima and one of the first software developers in Peru. So I had no choice, I was never going to be a warren buffett looking for value investing and hope for the best. I was trying to figure out the market with numbers. And so the way we do it is we just everything that we do everything, every anomaly that we try to find doesn’t have a big edge. It’s like the 50 to 53% win rate. And so what we try to do every day, and we go through the All we do is really long cycles of research, when there’s a new idea, it takes about 12 months, 18 months to work through the process of hey, this is an idea. Let’s start work on it. Let’s start programming. Let’s get the right data. Let’s clean the data. And six months later, we have clean data that we can work on, see what the effects are. Is it different? Does it correlate to everything else? What are the trading costs where the transaction costs like this? These are the small minutia that actually does it survive transaction costs? Does it? Is it non correlated to the rest of the things that we do? Or is it the same strategies we discover five years ago? Did we already do research on this? Is there some data that we looked at five years ago that we already spend five months on it. So that’s that’s how a quantum life is. And then slowly, but surely, you start eking out a little bit of magic, that you tack on to other non correlated return streams over time, in hopes of doing a good job, and then making sure that you’re not screwing up along the way. So the other side of the coin is trading. But


Kevin Davitt  07:26

so what what’s the last idea that made it through that gauntlet? Just to give some sense of kind of the hit rate for ideas? So


Rodrigo Gordillo  07:37

yeah, that’s a great question. I’m not going to tell you what it is. Yeah.


Kevin Davitt  07:40

But how long ago,


Rodrigo Gordillo  07:42

it started, I would have started three years ago, okay. And it’s gone through different iterations, different cycles, different markets, you know, you we were going through a period of of trading end of date, and then having to rewrite the whole infrastructure to do more do more intraday trading. Right? Some of the magic actually want as you get bigger, as we have, is less about trying to find signals that tell you where the markets gonna go, but rather, how do you get in and out of those markets without the market feeling. And so you can use your same alpha signals intraday, not to eke out alpha, but to get the price that you want it originally. And so that’s some of the work that has taken a ton of writing ton of infrastructure development, a ton of back and forth. And now you mentioned dealing with service providers in our trading floor to help us do better, right. So that’s, that’s how long it actually takes if it were, we’re putting out one a week we wouldn’t be here to fly. So I


Kevin Davitt  08:39

want to make this interactive too. So if people have questions that that are specific to some, some point one of the panelists may please feel free to bring them up. I’m gonna move on now to Jerry who’s next to me. You’re a trend trader, you were one of the original turtles which if anybody’s read about Richard Dennis and the the trading legends, he sort of germinated. It’s fun to be sitting next to one of those from what I understand you follow or the company follows 400 markets and it includes a bunch of single name equities, which to me is unusual. So one How the hell do you follow 400 markets and why are you including single name equity equities?


Jerry Parker  09:31

know obviously you have to follow the 400 markets with computers and programs and their global markets 200 futures 200 stocks all all around the world foreign exchange as well. So yeah, we took that route to try to put the best foot forward for trend following make trend following as successful as it can be, it’s because it’s it’s pretty much all we do is just try and find Hello so that the stocks are really a good addition, they offer quite a bit of diversification to the portfolio in general, it’s not that difficult to find 200 stocks around the world that offers some diversification and don’t act like the s&p. And the stocks need trend following as much as the other markets do. The stocks need a trailing stop and a stop loss. And so this is our sort of niche where we wanted to combine all those great futures markets and add the 200 stocks as well and create a the trend following has a little bumpy performance, sometimes in big draw to draw downs and volatility. So our route was let’s go the diverse let’s go crazy on this diversification route, in order to, you know, real robust way. Keep the smoothness without getting rid of the follow up letting the profits run. So


Kevin Davitt  10:55

you hinted at it already. And I work for an exchange where things like tickers matter, or at least there’s a belief that they do, and and what is your ticker? And what’s that stand for?


Jerry Parker  11:07

It’s funny. Yeah, well, no, it’s funny you asked that, because I’m probably gave you these questions to ask me. But you know, I thought you were going to ask me the name of the ETF, which I can’t think of what the name of it is. It’s a long as long it’s blueprint Chesapeake, blah, blah, blah. Yeah. But I do have the symbol. And that’s probably why I forgot the name. But I came up with the symbol. And it’s TFP and trend following plus and nothing like


Bob Elliot  11:35

that. Yeah. So I was wondering about that what that was, that’s cool.


Kevin Davitt  11:43

I’m curious how, like, what is the criteria, you sort of alluded to it? For the equity names like not correlated to the basket not behaving like the SNPs? Without giving it away? Do they change, like a little bit more on the equity side, if you don’t mind?


Jerry Parker  12:05

I believe that we’ve always chosen the markets that we trade in the trend following markets. For diversification only, we don’t really go back and optimize the past, you know, if we would have optimized the markets, we would have never included cocoa, because it probably hasn’t made money in 10 years, and but it’s one of the biggest trends going now. And that can be said for all the markets commodities as well until, let’s say 2020, they were in the doldrums. So it’s really just seeking that diversification. So we, we want, we want the markets to trend. But we don’t really believe that trying to optimize over the past and choose the stocks where the futures that have trended the best are going to be a good way to go forward. So we’re just strictly choosing the stocks based upon their ability to add diversification. And if there were 5000 commodities, we trade, half the portfolio would be commodities, but there’s not. And within those 1000s of stocks, we think we can find some that truly add diversification to stocks deserve to be 3040 50% of a portfolio. But it’s not unfortunately, most of the time was not going to look a lot like the s&p. That’s good from sort of a trend following philosophical point of view, but not as great when the s&p is doing really great.


Kevin Davitt  13:23

If you feel like comparing some of these things to the NASDAQ 100, though I imagine this varies, but trend following from what I’ve read, I’m curious what a typical holding period is.


Jerry Parker  13:41

That’s a tough question, because it’s pretty long.


Kevin Davitt  13:44

But that’s what I heard. And that sort of surprised me.


Jerry Parker  13:48

Well, look, everything is is subject to the, to the back test to the computer research, analysis, back test, whatever you want to call it. So if we could trade short term and make the same amount of money, we would really like to do that you should trade as short term as you possibly can. As long as you can maintain the required profitability. And so we trade fairly long term because that’s what the computer tells us to do. And we don’t really have any desire for pain and suffering and all this psychological torment when you have these big draw downs, but a lot of the times the draw downs, you have them and then they markets go right back to the highs again. So if that wasn’t the case, the computer was wouldn’t say to do it. And so I’m trying to delay the answer to this question, which is a holding period, I would say is about about a year.


Kevin Davitt  14:43

I’m gonna move on to Bob now and I’ll get to you, Jay shortly. Bob, we talked about a little bit before this started, but you worked with Ray Dalio at Bridgewater you probably get this a lot. So what what we expect or what I expect here is radical transparency. All right, get weird. I need to know what what what your day at unlimited fun looks like you. And then I want to know more about like AI, particularly NASDAQ 100 has been a huge focus for 18 months, how are you using AI to, to replicate portfolios?


Bob Elliot  15:24

Yeah. And Unlimited, what we’re focused on is, is replicating how hedge fund managers develop their strategies and position and then put that in, much more friendly package for the everyday investor in an ETF lot lower costs, tax efficient, etc. What that looks like day to day, in a lot of ways is not that much different. From you know, what it looks like for a quant, the way that we do it is we have a systematic technology, essentially, which is a systematic investment process that uses machine learning to infer that positioning. And so sort of the day in the life in terms of what we’re doing is a combination of, you know, running the money in the day to day making sure that our systematic approaches are our taking out things that make sense and are consistent with, with our understanding, looking at that, and continuing to do research and evolution on the process. With with an appreciation of how hard that is to do, to consistently be improving the way that we’re doing it, and then the reality is a lot of what we’re also doing at Unlimited, what I’ve spent my day to day doing is working with advisors of all kinds to think about, you know, what are the best assets in their portfolio? What are the best ways that they can improve their portfolio outcomes for their clients and, and really sort of partnering with them to think about it, you know, people who might have just tiny starter positions in our, in our products, who, you know, where 85% of the conversation is not about our product, it’s about thinking through what are the biggest challenges they have in their portfolio? How do they think about solving those? Maybe our products is the right thing for them? Maybe it’s not, but you know, really just partnering with them on that. So that’s actually I think about it, it’s actually, you know, a fair amount of the day to day, if you if you want to know the reality and fair amount of it is that is that partnership. So


Kevin Davitt  17:28

products, totally what what are the pain points that they bring to you? What is the thinking process on kind of the other side of the table for lack of a better term?


Bob Elliot  17:38

Yeah, I mean, I think I think there’s a couple different challenges. I think a lot of advisors that I talked to face, the classic challenge of pure risk being a big issue for them. I think those particularly with longer time horizons, your experiences in the market are not necessarily as as into, you know, yellow NASDAQ 100, as maybe, you know, retail folks and have trailed the market as a, as a function of that. And so thinking through, you know, how do they how do they think about that problem? How do they structure portfolios? How do they, and a lot of a lot of times, it’s, it’s, it’s a process of also helping them see and understand that, you know, maybe in the last few years, maybe in the last year, you know, being highly concentrated in the most volatile stocks has been the winner. But if you really want to start to think about there’s a wide range of different macroeconomic outcomes that could exist when it comes to portfolios. And that your your, you know, they see their job as a fiduciary is to help put investors in a position their clients in a position to be able to handle a wide range of different outcomes, and so strategizing about that, and where are the incremental portfolio elements that can help improve that I think we’ve got something that I think is beneficial along that lines, but there’s a lot of different things that can be


Kevin Davitt  19:02

done. Awesome. I want to come back to everybody after we talked to Jay about where in your conversations, advisors feel like they can bucket your product. Well, we’ll talk more about that. But before we do for a product like yours, what sort of benchmark would be appropriate for a hedge fund replicating ETF?


Bob Elliot  19:26

Yeah, I mean, what we’re trying to do, Israel at some level, relatively straightforward, which is there a hedge fund indices, you know, are probably best benchmark is the is the hfri Aum weighted basket of hedge fund performance is basically what we’re trying to do. We’re trying to do better than that because hedge funds charge two and 20 and we charge a lot less than two and 20. And so that’s what we’re trying to do is to beat them, you know, is to basically bring fi alpha to the market as essentially like an index product. Just charging a lot lower fees. So that’s what we’re focused on. And hedge funds have been a lot more conservative than all in on the NASDAQ over the last, you know, since we launched 15 months ago, but that’s okay. If we were if we were vastly outperforming what the hedge funds were doing, that would be that would reflect that we would not be meeting our mandate. Right. And that’s one of the things that is always so important to understand is an issue or you have a mandate. I mean, you have a prospectus and you have a mandate. And the question is not, you know, did you make whole bunch of money? It’s a question from what you’re trying to do is, you outlined a mandate, are you fulfilling your mandate as effectively as possible? And is that mandate? Do you expect that mandate to deliver high quality returns that are beneficial for investors over time, I think, look at hedge funds, over over a 25 year timeframe, return better than stocks with half the monthly volatility and a third of the drawdown. So that’s a good that’s a good return stream, that if we can, you know, deliver that on a consistent basis, a lower cost, I feel, you know, it’s a good compelling part of the overall that you know, the overall portfolio of any client, but you got to, you got to think about what your mandate and sticking to your mandate. So that’s, that’s what we do. Cool.


Kevin Davitt  21:11

Last, but certainly not least, we’re going to go down talk to Jay. So you’ve been running Zega, you do a handful of different things. And you can kind of take this a couple of different ways. But you’ve been running Zega for like 13 plus years, something like that. You have a handful of products with with longer track records, there are longer they’ve been in existence much longer, recently launched, I have to focus a little bit of attention on QQ q y an ETF that, that does use NASDAQ 100 index options, we’d like that. So I’d like to know more about your kind of day to day grind, and with some emphasis on that newer product.


Jay Pertichelli  21:52

Yeah, thanks, Kevin. So yeah, the day at Zega really revolves around who our clients are, which are ultimately retail clients, right? So we are a registered investment advisor, actually show of hands, how many RAs in the audience, like for not many, right, five. So, for us, most of the products that we put out are designed for the retail investor, which means, you know, you could be right for a long time and get fired for being right in the long run, right. And so it can be a very touchy business. And so the products that we manage, whether it’s the newer product, QQ q y, or even longer term products are designed to kind of around options in a way to kind of capture, like ever present trends, right, some things that we know, selling time decay, usually a pretty good thing until the day that it’s not. Yep. markets generally go up right large cap has been the trade of the decade. So it’s a safe thing to be stuck in there us why nobody’s talking about the NASDAQ 100. Does anybody want to compare to 50%? Last year? I don’t I don’t think so. So most people say, the s&p, but generally speaking, right, these longer term trends, help you communicate to the end advisor or sorry, the end investor, which gives you kind of the ability to keep them involved, because philosophically, you can give them something to believe it, the longer based strategies that we’ve run, can have a longer term time horizon one to three years out based on you know, creating synthetic stock or creating synthetic markets with protection, or even you know, capturing the most rapid time decay of options, like the QQ q y product, so that, let’s talk about that one for a second. Because you brought it up. This is a newly released ETF, we use zero DT options in an ETF wrapper. I mean, I guess technically they are because we put them on it 4:01pm And they go to the next day, and for right, we’re in the market for 24 hours, and we’re just harvesting time value, right? We’re just settling basically in the money puts slightly in the money, they have some extrinsic, and it lets us communicate that, hey, we know options will decay over time, and you get the most rapid amount of time decay with one day to go for at the money options. And so in those scenarios, this fund itself is designed not to be the equity markets, but to be kind of an alternative income product right where we can harvest this time decay each day, and then kick it out in the form of a dividend each month. Now for anybody that follows the volatility markets, right options are always a reflection of that. Right now we’re in a low vol environment, but in the past there’s high vol environments this product is selling on average, about 25 basis points of time decay each day. So what that does to a yield right times 250 days a year, like the actual time decay were earning in that fund is like 60 plus percent so it looks very very attractive to the retail client. Ultimately, you know you’re capped on the upside and in the money put is like a covered cost. Adeje where you can only earn so much on the way up, but you have full exposure on the way down, that kind of product is meant to kind of hit a different niche, right? Again, the retail, I think it’s pretty much mostly retail at this point that’s investing in that kind of a product. Because they see these, you know, my compliance guy was here, he was gonna say this, but they see these nosebleed yields of 4050 60%, because that’s what that time decay end up kicking out. And so, education is such a big deal for us. I think, today, on the way here, I had three calls with investors, right, I was driving down from West Palm driving down, and it just people need to understand the plusses and minuses of this. So for us, it’s not only coming up with those products that kind of give you the philosophical long term, explainable, repeatable characteristics. But then it’s also the education around options, like options always require education. And so it’s something that we talk about fairly frequently, probably takes up 10 20% of my week, just talking to people about how to use these kinds of products, just because it’s an ETF wrapper, doesn’t mean everybody should buy this kind of a product, right? It means you should know when to use it, how to use it, and what to expect out of it. And your


Kevin Davitt  26:14

compliance person likes that part.


Jay Pertichelli  26:16

I like it too, right? Nobody wants to get that phone call from an investor who goes explain to me why this thing, you know, goes down once a month by 5%. That’s the next dividends, the X date, right? And it’s just not seen, right. So these are kind of new products out there that I’m not sure the world is is used to yet but we’re doing our best to get people ready for it. So a lot of our day is talking to retail clients talking to retail investor, and then hopefully advisors will start to incorporate this into their overall,


Kevin Davitt  26:45

I feel like what we’re doing today is starting that that evolution, we’re going to talk more about that ease of access, because everything you guys are touching on has been a handful of years ago would have been inaccessible, at least to my knowledge to the retail community. And I think that is a huge benefit access broadens opportunity to give, you know, like not getting super philosophical, but the education component is critical. Just really quickly, if it is a relatively quick answer, how to get fired for being right.


Jay Pertichelli  27:23

Yeah, you could be fired for taking risk off when they asked you to take risk off. And let’s start with the beginning of last year, everyone was scared, right? 27 out of 28. Economists predicted the recession. But when you stay, okay, we’re bullish, generally right? Longer term investing. But okay, we’ll take off risk for you. And then the year comes by and you’re like, great, you made 12%. But the market made 24. But you would have made five if we rolled you to treasuries at the beginning of the year, right. That’s kind of the challenge you have with kind of a moving target with, with with people that could be Hanzi with their investments, right? Touching the retail investor can absolutely do that harder to communicate a philosophy of book long term, you want to be investing your 65 you can handle a 2008 scenario. So we got to hedge you, right? That’s what you’re solving for. But you’re constantly in competition, we all are with the indexes, including the NASDAQ 100. And they go, why don’t I just buy those seven stocks? And because not everybody knew to buy those seven stocks, right? Like, I don’t know what seven


Kevin Davitt  28:25

to pick for next. Right? And had you done that in 2022 would have been very painful year, right,


Jay Pertichelli  28:31

that you would have been early? Oh,


Kevin Davitt  28:39

language matters, and language sort of back to this ease of access, and how, how different and exciting it is now to have these types of products available when when they’re well understood. I think I get a little bit some into history. And I liked the philosophical side of these conversations. And I think there’s so many examples of how accessibility leads to success. I think the US economy has transformed a handful of times because of access, whether you think about originally by sea than the railroad automobiles, airplanes may be spaces next. So I know I’m getting a little philosophical here. But historically, it was access to resources. And I think that certainly still plays a role but in the, you know, the hearin. Now the 21st century, it’s often access to capital. And that is to sort of plug where I get paid a spot where NASDAQ is a critical part of that system. I think about Southeast Asia. In the 90s. I think about Ireland where my dad came from I heard you In a previous talk, talk about sort of your your roots in Lima and seeing that evolution. It is amazing what happens when sort of the spigots of capital get turned on and people have access. So products, I think industries and economies that a grand scale succeed when they’re accessible. If you think just about in consumer terms, the most valuable space on the grocery floor is that I level for the the average person, right? Those are the most accessible products. If you think about soccer, it’s the most popular sport in the world, because it’s pretty accessible. All you need is a ball. If we take it back to capital markets, this group around us today has made a whole bunch of different markets, different little slices, widely accessible, to RAS to retail investors to everyone. So just a handful of years ago, I think it’s fair to say none of these would have been nearly as accessible as they are now you guys can elaborate on how and why? Some of that, so there’s been a confluence of events, you can talk about them much better than I could. But we’re talking about non vanilla approaches. And I’m not an expert on the regulatory side of things, but there have been changes. Beyond that. I’m going back to just consumer behavior at a broad level. I think vanilla is perfectly fine. In some situations. There’s broad appeal, but like to make a sort of corny analogy, there’s room for Rocky Road or mint chocolate chip or what have you and your products, right. I’m not I’m not trying to be dilutive. But could sort of be viewed that way. There are like new flavors of ice cream becoming more broadly available, where historically retail had access to like chocolate and vanilla, right. But you got to understand what’s in that butter pecan to go back to your your compliance point. On this on this one, I want to start with Bob because we’re talking about hedge funds, which is kind of like the the least accessible mentally I think for for most people and looking at your your firm’s mission to bring sophisticated investment strategies to every investor. What What led you to do this what changed two years ago or whatever, before you kick this off, and give us a little lay of the land for how this access point has sort of changed and where you see it gone?


Bob Elliot  32:41

Yeah, I think it probably started my my time. at Bridgewater, a lot of a lot of what I did was work with some Bridgewater its biggest clients, big sovereign wealth funds, and endowments and stuff like that. And what you’d see from most of those folks, particularly most sophisticated ones, is that they put, I don’t know, 20, let’s say 20% of their capital in hedge fund strategies. And remember, these, these are folks who could essentially invest in any assets they wanted, you know, they can open any door, right, you know, future front of Australia $350 billion, sovereign wealth fund could literally talk to anyone in the world. And what they did when they were constructing, so they put about 20% of their capital to hedge fund strategies. And what they did when they did that, is they didn’t just pick five, and pick one, or five or 10, what they did is they build a portfolio of something like 60 strategies, 60 different managers. And what they did with that, and they did it with all sorts of different this is true across both ones that are publicly reporting, and not I just use feature from for Australia, because it’s public. And, and it’s known. And what they did was, they basically said, Look, I’m going to invest in a wide range of different strategies, because some do well during some times, and some do well during other times. And because they had so much capital, they could go to each one of the managers say to 20, that’s not what I’m doing. I’m doing, I’m doing one in 10. I mean, they, you know, on the last dollar, and they were doing a lot less than one in 10. So what did they do? They basically built a diversified low cost index of hedge funds strategies to run their portfolio. I looked at that. And I said, Well, that’s that makes a lot of sense, right? The Alpha strategies have good returns, the fees are too damn high. What they do is beat down the fees, increase the diversification, and boom, they’ve got a product that is they’ve got a portfolio that is hugely complementary to their overall portfolio. And I said, Well, why don’t we just do that, but just make it available to everyone? But, you know, the challenge with that, and I could go on and on about hedge fund replication is that to be frank with you, there weren’t a lot of the techniques, the techniques have not evolved sufficiently to be able to do that effectively until relatively recently, the machine learning techniques and also the infrastructure, the regulatory effort. structure to be able to put that into an ETF wrapper had also not really been in place until relatively recently. And so we’ve got sort of this confluence of things that I think is very, you know, that really emerged really over the course of the last, you know, a couple of years, where the combination of the ability to apply more rigorous machine learning approaches because the computational capacity is improved with the flexibility that’s increased in the ETF wrapper posts, the variety of different regulatory changes that happened a few years ago, basically now makes for an environment where you can take sophisticated strategies and package them into that ETF wrapper much lower cost much more tax efficient, et cetera, and make those things widely available. So that you know, the thing that Future Fund for Australia, and all these other sovereign wealth funds we’re doing can now you know, you can you don’t need $300 billion to do it, you can have 20 bucks, and you can get the same thing. So that’s really the the idea and the vision and the evolution that’s occurred. So


Kevin Davitt  35:59

where are advisors, clients kind of bucketing you? Or where where would money be coming out of to go into your hedge fund replication? Yeah, I


Bob Elliot  36:11

mean, I think the you know, if you think about how, you know, basically, many sophisticated portfolios are mostly beta in one form or another, like 80% beta, and I’m including private equity and venture capitals, betas, not alphas. That’s basically 80% of the portfolio about 20% of the portfolio from these big institutional asset managers or allocators are sort of alpha strategies actively managed Alpha strategies. And there’s a lot of different ways you can allocate that alpha strategy set, there’s lots of good, good, different ways to do it. But in general, you know, that that’s sort of how we see the world is you should be putting about 20% of your capital or reskin in alpha strategies. And, and we’re a possible, you know, we’re one solution. There’s lots of other great solutions that are out there that you can also use that that’s nice for if you have particular managers you like or strategies that an advisor is excited about at any point in time. We’re meant to be we’re meant to be like the NASDAQ 100 of hedge fund strategies, you know, an index fund.


Kevin Davitt  37:15

I like that comparison. Roger, you looked like you were nodding your head, I saw a filing I think resolve is bringing a couple new ETFs to market very soon. What what flavor, what slice Are you making available to clients? Or what are the ones that are most in demand today?


Rodrigo Gordillo  37:37

Yeah, I think I need to kind of put a little bit background in terms of ETFs. Because like Bob said, a couple of years ago, you weren’t able to do what what this, the ETF family is called the return stacked ETFs family. And return stacking came from the frustration of speaking to advisor after advisor Corporation after Corporation foundation after foundation and saying, Hey, listen, make some room and you’re 6040. For us, you’re gonna you’re gonna want it and I can speak from experience. Because, you know, the reason I got into the business in the old side of the business is because I emigrated from Peru after my family lost all their money, up to 7,200% inflationary thrust that lasted six months. And then I got to Canada. And we put basically zero money down and real estate right before it 50% housing crash. And then we did it again during the tech crisis. And my father is a mathematician. He’s just not a very good investor. And when you look at the history of markets, you recognize that equities and bonds going up together and being non correlated, while they are doing that. It’s very rare. In fact, things like happened, what happened to Peru, happens a lot everywhere in the world happens more third world countries, but it does happen in North America. It just hadn’t happened in our careers. And so we’ve been conditioned for 40 years, almost, that, you know, if equities aren’t working bonds will pick up the slack and be fine. So it’s really tough to grab a group of individuals whose experience who’s lived experience has been, I can do no wrong with the cheapest portfolio, I can get to say, Maybe I should have some of these alts that can protect me in inflationary environments and bear markets. And so I did try though 10 years, built a decent business off of it. And at the time, also decent business in very complicated structures on offer memorandums. You know, it had to be accredited investors and so on. But when the derivatives rule came around, it was an opportunity to say yes and to the problem. Instead of taking away from your equities and bonds. We wrote a paper called Return stacked, return stacking strategies for overcoming a low return environment in 2021. When yields were at zero and valuations were at the highest they’ve ever been, and people were buying more and more equities and just leaning away from bonds just to get more yield. So the solution here was the derivatives rule allowed us to provide public product That stat the alpha, right? So instead of us saying, I want to sell my bonds and sell my equities to add my diversifier that has done low single digits for a decade when the s&p the 1640s, had to sharp and return to 12% annualized for a decade. I’m saying, Hey, listen, sell some of your equities, for example, in one of our ETFs is 100%, equities, and 100% managed futures trend replication, and sell your equities and then slice in that ETF that two for one ETF, where you’re getting back your equities, but you’re stacking the non diversified trend following strategy on top. Right, so that allows you to say, Hey, I’m not gonna miss out on my equity returns that I want. And I’m gonna get to add this diversify that stacks returns on top, even if they were middling returns, stacking them on top is pretty good. But because it’s so non correlated, it actually doesn’t necessarily stack the risk. And that was all due in the last few years that we’ve been able to do this. And we did that for one $1 goes to equities, $1 goes to trend another dollar than other ETF is $1 per month and $1 for trend. The last one we launched is $1 bonds and $1 of global equities. So that then you can choose to stack whatever you want. It doesn’t need to be our trend replication strategies. It can be anybody, anybody in this panel can now you can go to a client and say, Listen, sell some equities and bonds, put this in half of the position that you sold, and now you have an extra cash buffer then you can buy anything you want. And in essence stack it on top right. The last one that we’re launching is going to be similar equity base. And then 100% futures yield or carry strategy, diversified carry strategy in the future space and other one is going to be bonds and diversified carry, to continue to add help. Investors add diversifies without sacrificing their core stock and bond portfolios. And I think part of it has to do with the language is this is anything new, by the way. This is portable, alpha overlay strategies. It’s been around for decades institutions, you know, Buffett talks about the 20. You know, Canada teachers pension plan case, that blow teachers pension plan, oftentimes, they don’t sell their equities and bonds to get their alphas they want a hedge fund, they’re gonna go and borrow some money and stack that hedge fund return on top, they’re not going to sacrifice that return that they want from their private equity, private credit, regular equities and regular bonds, they that’s how they get outsized returns. And they’re not necessarily taking more risk for it, because the things are stacking on top and uncorrelated, right. So this is our attempt. And finally we have the tools to do it to democratize the diversification, help investors protect against inflation, help investors shake and protect against bear markets and not necessarily have to use our alpha stacks or trend stacks. You can use whomever you want. So that’s the language innovation, I think, and then the what we’ve been able to do based on the new derivatives rule, and I’m super excited about that.


Kevin Davitt  43:07

Any anything, either of you to potentially have to add on the what’s accessible that wasn’t? Or maybe what you see as the risk now that these sorts of strategies are accessible, like what’s what’s opening up? What what could be the old boy, you know, what did we unleash here? Yeah,


Jay Pertichelli  43:33

I’ll take a swing at that, if you don’t mind. So for options based products, you’re right, the derivatives role opened up a lot of doors, we launched 20 funds last year, they brought in $2 billion. So when you talk about accessibility on new products that are 100% options based, that really I haven’t seen that in the past, right, it’s kind of opening up new doors. But again, it goes back to the what could be the next, you know, you look at leverage that’s starting to come out right in verses and leverage there and things that happen with them arose. And like all of those things, I think are viable that money managers deal with right and manage around and then when retail investors end up using them, they may not understand all of the ins and outs of a structured product, right? I do think that’s one of the pitfalls of all of this, but they are to me, they’re catching fire, we’re scheduled to launch another 20 Over the next six months, all options based again, all of this is around. What else can you do now with the new structure that’s available that before you’d have to open up a you know, an individual account and the money manager would have to manage it. Just one more example. We see advisors and clients all the time that have apple with a cost basis at 20. Right and the client walks in the door and the buyer advisor goes I can’t really do anything with this right like it’s here. I can’t sell it. I can’t diversify him. So in the past and options manager, they could do things like hedge it overlay, you know, calls for income, that kind of stuff. Now But you could replicate that in an ETF format where you’re running it, we run a covered call strategy on Apple, just Apple, right? So that while it makes the accessibility much easier, there’s also waiting to have a conversation that, you know, Apple may get a sign that, you know, when 95 Next week, right, it’s just one of those things that you miss that manage the expectations so that people understand performance.


Kevin Davitt  45:30

Inflation year, and I’m gonna, I’m gonna tout some of my colleagues on our economic research team. So I don’t know if this applies to trend following if it gets factored in, but I’d like to know. So according to them, on average election years produce lower returns higher vol. They point that average vol picks up by about 25% Between July and November, during presidential election years. There can also be impact on like raw material outlook, so oil and gas under GOP or maybe alternatives under Democratic administration. So it’s gonna get a ton of coverage, whether whether we like it or not this year, to what extent if at all, can you factor in? Or can there be signals that are unique to an election year? Or is that a total afterthought?


Jerry Parker  46:19

I don’t think is much of a thought at all, honestly, for sort of classic trend following. I think that there are other firms out there who are trying to add some of those to improve the trend following I think we would just go on and talk about how people predict all kinds of things if they’re wrong, and everyone thought, they’re not to the election, you know, when Trump won that the market crashed, and then wait a second rally. And so all of these things are not predictable. It’s better just to follow the price.


Kevin Davitt  46:49

Fair, any, any dissent there? Is there any potentially unique opportunities in an election year, whether it is on the volatility front, do you expect there to be higher higher volume moving in later in the year or more of the same? No,


Jay Pertichelli  47:07

I for sure more of all going into the end of the year. But I agree, it doesn’t matter long term, who’s in the White House right now controls Congress, but you still need to be able to talk to it. Right? It’s it’s interesting 70% of the time on that election year, the markets are up, which is about average, right? So there’s nothing particularly you know, differentiating whereas say the third year of presidential cycle is by far the best. We saw that last year, obviously. But it’s I think it’s more of an interesting again, sorry to pound this, but talking 100% of my client reviews, this this month, have brought up the election, what are we going to see what are we going to see? And it’s your point of it’s okay, it doesn’t really matter. Yeah, we’ll be we’ll be watching for this. And we’ll take advantage of opportunities. But overall, it doesn’t matter


Kevin Davitt  47:53

to what extent to hedge funds position based on outcomes thereafter.


Bob Elliot  47:57

I mean, I think, having sat in the seat of trying to figure out what was going on, I actually very distinctly remember that night of Trump getting elected and the intraday volatility that came with it, for sure. Watching the p&l move like that. I think, you know, hedge funds in particular, are, you know, they have, there’s 10s of 1000s of hedge fund analysts that are carefully trying to figure out what the different policy stances mean for the macro economy, what they mean for the stock market, what they mean for individual equities or sectors or things like that. I think one of the things, having sat in that seat and seen what it takes to have edge in that space, and recognize just like, the vast, vast majority of people don’t have the time, the resources, the capability of the doctor, the data to do any of that in a way that you would expect to generate alpha over time. And so I think the thing at least from my perspective, that I think is, is is compelling about what we’re trying to do is instead of trying to do that yourself, which is very, very hard, very hard to do on your own, just hire the people who are spending all the money doing it, and just don’t pay them. Just don’t write I like to joke I’ve hired you know, 30,000 hedge fund analysts, but none of them know that they’re on the on the dole, right? I don’t have to pay. And that’s kind of the idea is okay. In the same way, actually, I I’m with Jerry on this basic point, which is like how do you introduce flexibility into your investment process without having to do


Jerry Parker  49:37

the work yourself without having to without screwing it up


Bob Elliot  49:41

without screwing it up? Right. And part of the way that you can do that is by finding folks who bring those sorts of strategies that agility set up agile strategies into a portfolio that you know, that have been tested and proven and managed in a in a sophisticated way over A time that Ken can help complement the portfolio to help give yourself a little relief as an advisor. Right? That that, I think is the thing that’s quite compelling.


Rodrigo Gordillo  50:09

I want to make a bigger point here because we’re, obviously we want as advisors as investors to know what’s going to happen next week, next month and act accordingly. But I think the point, the major point here is, when we’re looking at asset allocation, that is the most important thing for you to do. Right? How much equity Do you want to have long term? How much bonds you want to have long term? Do you have the right risk metrics between those two? What is your alternative sleep going to look like? And why is it there? Right, it’s there to be different than equities and bonds. And the ability of that sleeve to mitigate any pain against him Election Day, let alone on election year is going to be totally random. But it is over time going to be different. Now, Bob talks a ton about global macro, and how the market dynamics are set up in such a way where we might expect a mispricing here and there. But I doubt and correct me if I’m wrong, but you’re making any direct positioning on your public product on it. No, no, no,


Bob Elliot  51:09

my personal views have no input. And the key


Rodrigo Gordillo  51:12

here is the reason that he talks about all macro when I talk about global macro, is because I’m gonna wake people up to the fact that there are risks that equities and bonds might not cover. And that we need to get rid of all of that personal experience that we’ve had in the last decade, especially in recognize that we’re in a much more dynamic environment, that all of these different factors are going to affect portfolios in ways that we might not find intuitive over the next decade. And that your best shot is to have a well diversified portfolio of alternative managers that are truly trying to be different and protect you in different ways. And I think that’s the key here. The key is to say, it’s, we won the lottery, though, anybody who has been 100 was mostly equity, some bonds, has to build, a lot of times, they hit the signal, and they got it, they nailed it low cost CTS. But really, most of us just won that lottery, we’ve all won the lottery, let’s get that winning ticket, cash it in, and then start taking some money off the table, and helping our future selves a little bit more, you know, go beyond the 1980s and see what portfolios that don’t have this type of diversity look like? And actually do something about it. Maybe even if you’re just edging in a little bit.


Kevin Davitt  52:29

Seems like we have a question back here.



It’s clear probably to everyone in the room that you guys had the investment part dialed in, otherwise, you wouldn’t be up there. So I have a question that maybe it’s for Jerry or for all of you, Jerry, you’re relatively new to the ETF business? How have you found or if you could tell us a little bit about your experience with the operational side? Because the investment side is what you know, and what you’re good at. And you’ve proven it over many, many years. And then you sort of come into a whole new channel of distribution. And so how did you have to add staff? Like, how have you found that part? It’s been a huge hassle is it been as smooth as as can be?


Jerry Parker  53:07

Well, the acid reason side, we we partnered up with blueprint. And so that was a key, you know, you’ve got to the best idea in the world, we’ve had a lot of the best ideas. Over the past 2030 years, he knows we’ve had a lot of great ideas, but without the distribution, people in creating stuff that people want to buy, it’s not going to amount to very much. So that was something, you know, obviously, you have to get right. The the day to day is a challenge. It’s a lot of work for the money. We first talked about doing an ETF with futures and securities. They told us that had never been done before and you can’t do it. And we said, well, we’re going to do it with title. And they said you shouldn’t do that title should have told you it cannot be done. And then we we did it and we worked with Jane Street. So you got to have a big team of people that lead market maker and all the administration and marketing and sales. So it’s a it’s a group effort to to pull that off.


Rodrigo Gordillo  54:10

I can speak having great partners like title absolutely is important in this ETF space. But some of the operational things that are new from you know, we came from a hedge fund side and the mutual fund side. It’s educating investors and advisors that when you’re dealing with a strategy that’s supposed to be a long term hold a lot of a lot of what we do is not about trading us intraday. All right. Jerry did well in the elections, let’s get to let’s boot him out. He’s gonna mean reversion, right? Like it doesn’t work that way. And so what happens is, you’re necessarily going to have a lower liquidity. And with that lower liquidity, you’re going to have some issues if you try to put a blog trading and market right so educating people on putting limit orders on their positions has been a huge lift and educational, you know, communicating that with advisors having the right the right brush tours and pamphlets to make sure that they’re not screwing it up. And it doesn’t really matter. You’ll see a hairy bar here and there. And sadly, oftentimes investors are like, Well, you guys are illiquid. And we’re in the future space where there was liquid and Agra falls. It’s just that that particular there’s someone like that. market makers out there at the edges, and you know, that they’re willing to take those big and they’re waiting for you to screw up and put in a big order. Right. So that’s the, the operationally it’s very, very different. But it does have its advantages. And that, that we need to recognize and that’s why we are in this space. But I think that’s that’s the major pain point. And in Canada, we have ETS in Canada as well. It’s different than it is here. And you can do a lot of day trading. So there’s there’s a wide variety of things that advisors and investors if you’re doing day trading, should know get educated on before you put a position size.


Kevin Davitt  55:59

So I think this is a perfect kind of lead into, I think, a wrap up question. And you guys will have access to the panelists after this. But particularly after a year, like the NASDAQ 100 had a blowout year last year, just fabulous 55% returns. This is something Bob, I think you brought up in our in our conversations before today. How are the panelists managing Rodrigo, you already you already spoke to that sort of human tendency to not necessarily look too far into the future? How do you manage messaging and expectations, given this period where stocks and if you stretch it out even longer have done exceptionally well? And clients have done generally very well? How do you message during periods of what they might consider underperformance? I have to imagine that’s a challenge. Who wants to wants to speak to that one?


Bob Elliot  57:08

Alright, so question. So trying to get some good ideas?


Kevin Davitt  57:11

Well, you got liquid as Niagara Falls, Niagara Falls, I’m going to use that,


Rodrigo Gordillo  57:16

like, look, it’s, I think that you have to be out there in social media, you have to be out there and video that we do a lot. We all do a lot in interviews, in our own podcasts in our own spaces. And on Twitter. I know you do that a lot. You have to get out there and educate people in recognition to help them recognize why it is okay that sometimes we Zig when the rest of the things EQ, diversification works even when you don’t want it to. Right. It’s taglines like that that actually slowly seep into the, into the subconscious and allow people to invest long term. And I think, again, being able to Yes, ended with the return stacking concept has helped a ton for people starting to lag in and say, Okay, I don’t have to sacrifice that. And I get that. Okay, that’s good. And then, you know, you want to cater to all levels. So we write white papers that are 30 pages long, and we have YouTube shorts that are 20 seconds long. So if you’re going to be in the space of ETs, you just have to keep on doing the educational grind. Try to be honest about the things that you do. And and yeah, we do brainstorm around what taglines would work. Language matters, language does matter. I


Jerry Parker  58:32

think 20 was great. 21 was great. 22 was fantastic. I think a lot of people think the trend following CTAs are back the Fed stuff of those past 10 years. That’s hopefully not coming back those zero interest rates. We people like to talk about inflation now. That’s good. That’s helpful back when I started in the business in the 90s. All the marketing material was, here’s what happens when you add your CTA to your stocks. But the CTA has had better performance and lower drawdown. And so hopefully we can get back to that level and to where the diversification the Long’s and the shorts, we just come as we enter the game we get on the playing field every day with this huge advantage. currencies, commodity stocks, bonds, Long’s and shorts, you don’t have to have 400 markets. But we are it should manifest itself and should get back to those years with less government intervention and policies that they had previously and we may see this back going back to the way CPAs and trend following did but another thing too, that we said was Well, let’s don’t let that happen again, let’s trade those darn stocks. They trend. They’re great. Let’s don’t let one person can there be one firm that doesn’t See, that doesn’t care about crisis alpha, let’s, let’s have less crisis, let’s put trend following around the stocks, and in short stocks as well. And so there’s so the crisis is not as bad, you don’t need the fabric, the small little five or 10% allocation to manage futures. Let’s create this wonderful, beautiful portfolio with all these markets with all this trend following and many stocks. So if we get into a situation again, like we did for those 10 years, where most of the time stocks were the only thing trending the best thing trendy, you can be there, but you got to trade the stocks.


Kevin Davitt  1:00:37

And if anything to add, or we wrap on that one, let’s list those ETFs at NASDAQ.


Jay Pertichelli  1:00:43

I will finish on one point here. And for us, for me as a money manager, as a portfolio manager, the greatest compliment we can get is doing what we said you did. Oh, you did what you said you were gonna do the challenge is getting that information out there. Right. So it’s podcasts videos, you know, the whole hiring a PR firm anymore to get on, you know, Bloomberg and CNBC. less impactful these days, and then, you know, than it used to be, so just get the message out there. That’s all we all that’s


Kevin Davitt  1:01:10

what we’re doing today. We appreciate your making the time we got time for questions. Yeah. One quick question. My


Bob Elliot  1:01:18

role is not two years old. You guys are all very sophisticated, your strategies, and I’ve heard that education is important to each one of your firms to get your products out to the masses. How far into this process? Do you think you think we are? Like, are we just we’re just starting this, we’re just starting getting out there educating folks? Or is it like, are we just given anything to? Because I think I think there’s a lot of room to grow. And education could be that 22nd video, which seems to be all that people have capacity for? And then the 30 page white paper sometimes. John,


Jay Pertichelli  1:01:54

it’s early, right? I


Bob Elliot  1:01:56

mean, it’s I mean, if you if you just, if you just think about, there’s $10 trillion of actively managed equity mutual funds, and there’s $300 billion of actively managed ETFs.


Rodrigo Gordillo  1:02:12

Yeah, we’re very, very,


Bob Elliot  1:02:13

we’re very early. So you guys are the


Rodrigo Gordillo  1:02:16

this is the cream of the crop. Bleeding Edge. We’re two years into the rule being changed. And you know, we’re six months into some really innovative maybe a year into some really innovative ETFs being out there. And we’ve been we’ve had 40 years of ETF innovation that is focused around picking better stocks and bonds. And so that’s going to take a while it’s gonna take a few 2020 twos, because everybody now it’s another V recovery. Right? Right. And that’s how we’ve been conditioned, the inflation Genie doesn’t get back into the bottle that quick. And that tends to cause a lot more pain, a lot more volatility. So that inflation volatility period is here to stay. And there’s going to be a few more lessons to learn. And that will slowly edge people more and more towards the alternatives, the high thing, but it’ll take about a decade. I’m guessing that


Kevin Davitt  1:03:14

some job security. Yeah.



Is there any aspect of these private strategies that you’ll just go out there and say, just can’t be replicated? Oh, it’s Yeah, yeah,


Bob Elliot  1:03:26

for sure. I mean, just the nature. If you go to the train execution side of things, there’s a fair amount, you know, there’s, there’s, you’re not going to be able to trade, you know, minute to minute tick trades and an ETF wrapper, right. So there’s high frequency trades that are not appropriate for the ETF. You also need to be trading liquid securities, right. So, you know, a lot of a lot of hedge funds will I can speak from that front side will be trading things that are taking advantage of illiquidity premiums on the particular securities, which are not appropriate for the ETF wrapper. And so, you know, there are things that you can’t do, but I mean, just think about it, whether you’re talking about you know, Jerry’s 400 markets are trading 65 of the most liquid markets in the world, like that represents the vast majority of assets in the world, the vast majority of exposures in the world. And so, and, and so the reality is, like, no, not every strategy, but most of the stuff like the vast vast majority of strategies can be put into an ETF style wrapper in one form or another.


Rodrigo Gordillo  1:04:36

The highs really relatively high Sharpe strategies are a capacity constraint. They’re either prop traders like we have we’ve employed prop traders, you know, they’re making ridiculous Sharpe ratios ridiculous sharper. So what are they doing? They’re laboring up 20 times for the day, and trading 28,000 times intraday to capture that 52 percent edge in a shorter period of time than weekend, we’re managing hundreds of billions of dollars. Well, we have to make our trades, you know, we’re gonna move the market if we do anything. So if you’re dealing and what are they trading the trading two and a half $3 million for any particular strategy, Max, right. So yes, you can get if you can add, if you can get a good prop trader to let you in on his trades, which he won’t. Another and as you go into the 50 million 100,000,020 million, you’ll start getting you will get differentiated returns, you hopefully do get some benefit outside of the performance fees that they charge, but you will be capped out. And if you’re an advisor, you know, I see it all the time they get access to a fund and then 20% of the clients get access to it, nobody else can and then it becomes an unwieldy. So


Bob Elliot  1:05:44

while rack rate fees, and


Rodrigo Gordillo  1:05:47

they’re paying a lot of fees, right. And so it’s not that they don’t exist, there’s a lot of there’s a cottage industry for really good traders that are spent, like even single position traders that have an edge and have been in that seat trading, lean hogs their whole life and understand it better than anybody and have all the conditions they 10 There are people like that, right. But it’s tough to get an allocation with them. And they don’t need a lot of money to earn a living. So it’s just have to get into really, really good private hedge fund managers. And the rest of the guys in the billions are are being providing differentiated returns that are non correlated and have a Sharpe ratio that’s similar to a 6040 portfolio. And that’s the type of stuff that you can kind of replicate using some sort of machine learning and get most of the paint most of it most of the benefit and then cut out the fees.


Kevin Davitt  1:06:36

All right, let’s network let’s do it. Thank you all very much.


Jeff Malec  1:06:48

Okay, that’s it for the show. Thanks, Jerry, Rodrigo, Bob, and Jay. If I had been hosting there would have been a Jay and Silent Bob reference to be sure, but Kevin did a great job. So thanks, Kevin, for running the panel down there. And thanks Jeff Burger for producing. We’ll see you next week. Peace.


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