Second Guessing the Wintons of the World
By Attain CapitalOur weekly newsletter is out, and this time we’re tackling the question of size. After all, we live in a world where bigger is always better. Our Hummers may not be fuel efficient, but they sure look sharp. McMansions are the only way to keep up with the Joneses, off-brand is off-color, and you best not mess with Texas. But to what end is this obsession with “more” a function of base psychology, and to what extent does it push us to act against our best interests?
Don’t worry- we’re not about to bombard you with a Zizek-esque critique of consumerism, but we have found ourselves asking this question around the office a lot more these days. The past couple of years have been rough for managed futures- there’s no way around it- but many of the smaller managers we work with have done well during this time period, and far better than their titanic counterparts. Of course past performance is not necessarily indicative of future results, but why do the very large programs tend to see performance flatten out over time?
This is not to say that some of the largest CTAs aren’t quality programs. They are the best of the best across almost every quantitative and qualitative measure. But, their past performance really hasn’t been indicative of future results. After all, the giants of the managed futures space were once well known for double and triple digit returns. Today? Not so much.
Some of them will rebound from the current slump. Others may not. But why are they in a slump in the first place? Why aren’t they 100 times better than a smaller manager when they are 100 times their size? Are they delivering smaller results on purpose? Are they getting too big to access the necessary markets and trades? What we found may surprise you.
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To read more Managed Futures research pieces, visit Attain’s Managed Futures Newsletter archive and our Managed Futures Blog.
DISCLAIMER
Forex trading, commodity trading, managed futures, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.
The entries on this blog are intended to further subscribers understanding, education, and – at times- enjoyment of the world of alternative investments through managed futures, trading systems, and managed forex. Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts.
The mention of asset class performance is based on the noted source index (i.e. Newedge CTA Index, S&P 500 Index, etc.) , and investors should take care to understand that any index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices: such as survivorship and self reporting biases, and instant history.
Managed Futures Disclaimer:
Past Performance is Not Necessarily Indicative of Future Results. The regulations of the CFTC require that prospective clients of a managed futures program (CTA) receive a disclosure document when they are solicited to enter into an agreement whereby the CTA will direct or guide the client’s commodity interest trading and that certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA.
Copyright © 2011 Attain Capital Management, licensed Managed Futures, Trading System & Commodity Brokers. All Rights Reserved. Reprinted with permission.
