Excess Returns Whipsaws, Drawdowns, and Disbelief | Eric Crittenden on the Best Diversifier No One Buys
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Jun 28, 2025 Eric Crittenden, CIO of Standpoint Funds and a seasoned expert in trend following and risk transfer markets, dives deep into the world of resilient investing. He shares candid insights on why many investors misunderstand managed futures and discusses the psychological challenges of maintaining client relationships during market drawdowns. Eric advocates for blending passive equities with systematic macro strategies and critiques the reliance on bonds as diversifiers. With a philosophical lens on risk and market design, this conversation sheds light on the complexities of modern investment.
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Investor Reluctance to Add Funds
- Most clients resist adding funds during trend following drawdowns despite sound logic. - Repeated 'buy the dip' messages often fatigue investors, making proactive outreach challenging.
Blending Macro with Equities
- Blending systematic global macro with passive equities creates a resilient, tax-efficient portfolio. - This combination diversifies risk better than bonds and reduces operational complexity.
Strength of Market Cap Weighted Stocks
- Market cap weighted large cap stocks perform very well after factoring in real-world costs. - Small cap and factor premiums often evaporate once taxes, turnover, and transaction costs are considered.