Why Most Investors Fail at Trend Following | Systematic Investor | Ep.404

Summary

Andrew Beer and Eric Crittenden discuss why many investors fail to stick with trend following despite its diversification benefits. Eric explains his solution of combining managed futures with equities into a single product to address behavioral challenges. They examine the growth and liquidity of managed futures ETFs, the simplicity vs. complexity debate in systematic strategies, and how algorithmic discipline allows traders to capture trends before they become broadly accepted. Andrew introduces the reframing of CTAs as 'contrarian tactical alpha' to better communicate the strategy’s value.

• Investors often abandon trend following due to behavioral biases and relative performance pressure against equities benchmarks.
• Eric Crittenden describes his multi-asset approach that blends trend following with long equities for easier long-term holding.
• Managed futures ETFs have grown significantly, with liquidity improving for more complex portfolios and attracting large flows.
• Andrew Beer emphasizes that ETF liquidity and underlying instrument depth are critical for large allocators.
• Both guests argue that simple, blunt trend models often hold up better in live trading than complex, over-optimized systems.
• Algorithmic discipline forces entry into uncomfortable contrarian positions before they become socially or politically safe.
• Andrew suggests rebranding CTAs as 'contrarian tactical alpha' to highlight their role as a dynamic, uncorrelated portfolio component.