Finding Alpha in the Strait of Chaos ft. Andrew Beer | Systematic Investor | Ep.395

Summary

Andrew Beer and Niels Kaastrup-Larsen discuss the impact of geopolitical uncertainty on trend following and systematic investing, analyzing recent CTA performance and the growing CTA ETF space. They debate complexity versus simplicity in generating alpha, arguing that simpler replication strategies can outperform complex hedge funds and QIS products due to lower implementation costs. Beer also introduces a new tax-efficient CTA ETF from Simplify as a further innovation.

• Geopolitical ideology is seen as a structural regime change that may not be resolved by central bank action.
• CTAs have performed well in 2025, with the first quarter being a strong environment for trend following.
• The March reversal caused significant losses for many hedge funds and macro strategies.
• Simple CTA ETFs have outperformed complex hedge funds and mutual funds over the past five years.
• QIS trend products have underperformed live, with large drops from backtest Sharpe ratios and high dispersion.
• Andrew Beer argues that replication strategies capture alpha more efficiently through lower trading costs and simpler portfolios.
• A new Simplify ETF based on the Dynamic Beta index offers a 35 bps fee and superior tax efficiency.
• The conversation highlights the tension between active management and low-cost passive alternatives in the CTA space.