For recent work, go to: thinkadvisor.com
From Investment Advisor/ThinkAdvisor.com:
Bitcoin is drawing attention and drama. J.P. Morgan’s Jamie Dimon first saw it as another tulip bubble, but has since retreated from this assessment. Lloyd Blankfein, CEO of Goldman Sachs, reportedly is behind the start of a cryptocurrency desk. Blackrock’s Larry Fink thinks Bitcoin is “an index for money laundering,” while Peter Thiel’s Founders Fund has invested in it full throttle.
Brokerage firms like Charles Schwab and Fidelity have taken a wait-and-see view, while TD Ameritrade began a pilot project in which some retail clients can trade CBOE Global Markets’ Bitcoin futures. Kind of like the price of Bitcoin, the interest in it and other cryptocurrencies is all over the map. More
1500 and Counting (Shining a Light on Bitcoin sidebar)
Hedge Funds, PE Could Get Helping Hand From Hot Market in 2018
Foreign Stocks Seen as Hot Investment in 2018
TD Ameritrade Jumps Out of Gate with Bitcoin
10 Most Tax-Friendly States for Retirees
Theo Epstein: What Baseball Can Teach Advisors About Failure
8 of the Worst Market Calls Since 1929
Edward Jones Aims High with Bridge Diversity Program
No Slowing of ETF Growth, Just New Areas to Grow Into
Six ETF Questions Advisors Ask Most
A Walk Through Richard Thaler’s Mind
What Studies About Robots Replacing Workers Get Wrong
Top 10 Real Estate ETFs and Mutual Funds
ETFs: Why They Keep Growing On Advisors (IA)
Where Are Advisors Spending Their Tech Dollars?
Top 10 Best Performing ESG Funds of 2017: Morningstar
25 Best Cities for Retirement (slideshow)
Millionaires Loves these 10 Small Towns (slideshow)
The Long Game: 2017 SMA Managers of the Year (IA)
31 Worst Paying College Majors: 2017 (slideshow)
30 Best Paying College Majors: 2017 (slideshow)
ESG Investing: No Longer Optional, but Essential
What Advisors Should Know About Liquid Alts
Beyond DOL Fiduciary Rule: 4 Retirement Policy Areas to Watch
Michael Lewis: A Warning for Index Investors from the Oakland A’s
Fintech Isn’t Taking Over Advisory Business…Yet
Will Robo-Advisors be Terminated?
A Silver Lining of Compressed Fees: Alts are Thriving
12 Worst Financial Advisors In America: 2016
Businesses Salivate Over Trump’s Tax Ideas, But Will They Happen?
Tech Winners, Losers Under Trump Administration
Collectibles Market: More than a Labor of Love, Potentially very Lucrative
Organized Crime has Gone Online and Hackers are Looking at You
REITS Poised for More Gains, Driven by Demographics
Farmland: An Increasingly Popular Alternative Investment
Bad News for Energy Bulls: Slowing Demand and Increasing Supply
From Morningstar ETF Conference 2016:
Mstar: ETFs: An Easier Way to Roll Into Retirement
Mstar: Pundits see More ETF Growth; Less Active Management
Mstar: Emerging Markets are Definitely Remerging
Mstar: Learning to Love Smart Beta
Mstar: 8 Facts & Fictions of Momentum and Value Investing
REITS are Outperforming, but some Sectors Stronger than Others
How Long Can this Gold Rally Last?
E*Trade’s OptionsHouse Buy Might be Right Timing
Why a Falling Dollar doesn’t always mean Big Gains for Commodities
11 Medicare Mistakes to Avoid (slideshow)
Real Estate to become its own Sector
15 Worst Cities for Retirement: 2016 (slideshow)
15 Best Cities for Retirement: 2016 (slideshow)
Perez Shrugs off Fiduciary Rule Lawsuits
Here’s Why Advisors Should At Least Consider Managed Futures
Persian Rugs: Still Priceless or a Magic Carpet Ride to Nowhere?
Stock Picking is more than Numbers Game – Morningstar 2016
Vanguard’s McNabb: DOL Got It Right, Get Used to Shrinking Fees – Morningstar 2016
Using Behavioral Goals to Help Clients Discover Goals and Set Priorities – Morningstar 2016
High-Yield Bonds: Only for Long-Term, Non-Squeamish Investors – Morningstar 2016
Market Timing Costs Investors Big: Dalbar
Private Equity: Greater returns, Greater risks
Why China’s slowdown won’t crush commodities markets
Timber: A sustainable investment that should not be overlooked
Industrial Metals: Often more precious than gold
How to invest with the best and brightest commodity traders
Collectible cars are no joke. Just ask Jerry Seinfeld
Will SEC Crash Liquid Alts Party?
Energy crash: Is it time for investors to jump in?
Putting the Hedge Back in Hedge Funds
A China Play Far from the Volatile Stock Market: Collectibles
Why Investors Shouldn’t Ignore the Power of the Sun
Land Ho! Real Estate can Thrive as Even Rates Rise
Diamonds truly are Forever, and a Good Long-Term Investment
Managed Futures: How to Get Exposure to Commodities Without Taking Delivery
Water Investments are Everywhere and Run Deep
How Investors can Grab ‘Return Gap’: Research Affiliates’ Hsu
ETF Experts: Hedging Currency is Cheap, Prudent and Getting Easier
China: Short-term Gamble, Long-term Necessary Investment
Bleak Energy Picture to Brighten in 2016, but Volatility to Remain
The Future of ETFs: Volatility, Rate Hikes and Robos
From CTA Intelligence December 2017 (Paywall)
Bitcoin Futures: When will CTAs jump in?
The frenzy around bitcoin and other cryptocurrencies shows little sign of abating, the price perhaps goosed by the announcement by three US derivative exchanges that they would launch futures on these products. These launches not only paint a veneer on bitcoin as a legitimate market, but are set to add new traders.
Many have been watching from the sidelines for entry in a bigger way, with futures products bringing bitcoin exposure under US regulatory authority to protect them in way not available in the spot market. (more)
From CTA Intelligence November 2017 (Paywall)
Ridgedale Advisors build new fund on solid foundation
One thing bothered Mark Rosenberg while he learned about the financial markets as a young man: why did markets fall faster than they went up? Rosenberg figured out the answer when his father gave him a paper written by Jane Goodall, the British primatologist, known for her lifelong study of chimpanzee social and family life.
He saw how close human behaviour was to the chimp – humans have about a 99% DNA match to chimps – and he realised why markets dropped so fast: “Greed is learned and fear is innate.”
That’s when he knew he needed to build a system that dealt with both the rational and irrational parts of the brain. It became the convergent/divergent system that drives the trading programs of Ridgedale Advisors, a recently formed investment adviser based in Rye Brook, New York. (more)
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From CTA Intelligence September 2017 (Paywall)
Is There a Place for Discretionary Traders In an Algo-Mad World?
In a world of nano-second technology, billion-dollar investments and systematic algorithmic trading, do discretionary CTAs still have a place? The number of discretionary traders as a proportion of all CTAs in the benchmark BarclayHedge index, excluding a small number of hybrids, has declined from around one third to one fifth in the past 25 years. The number of systematic CTAs rose quickly in the mid-2000s, most likely due to growing computer power.
BarclayHedge shows that of the 522 traders in its CTA index today, only 105 of them are defined as discretionary, while 409 are defined as systematic (the rest are a hybrid). Both peaked in numbers in 2012 with 160 discretionary traders to 488 systematic traders. The discretionary CTAs’ dilemma mainly arises from money flows. Although the total number of CTAs has dropped, according to BarclayHedge, the amount of money under management has grown to $348bn in early 2017. Of that amount, discretionary traders have only $27.7bn, just a bit above their 2011 high, versus systematic traders, who have $279bn. Many allocators have said (and shown) that they now prefer systematic traders, but overall performance should make them think twice. (more)
From CTA Intelligence August 2017 (Paywall)
In September 2016, a small New York futures fund, Tillage Commodities Fund, sued one of the world’s largest fund admins, SS&C, alleging “gross negligence and breach of contract” when a cyber-security breach caused “looting” of almost $6m of the fund’s assets, leading it to shut down. The case is still being thrashed out in court, with SS&C denying all liability and hitting back with a counter lawsuit, but it highlights how fund admins, often seen as a routine but essential part of the business, need to be vetted by CTAs on everything from overall fees to technology to cyber-security defences, all which could make or break a fund.
Today CTAs have roughly 600 fund administrators to work with, and, despite consolidation, it’s a booming business. According to HFMWeek’s latest admin survey, hedge fund admins (including those servicing CTAs), had grown assets under administration (AuA) by 4% in the 12 months to April, to $5trn globally. Although admins have historically dealt largely with commodity futures funds, today it’s common for them to also handle managed accounts, especially as institutional investors demand separate accounts. (more)
From The Trade Derivatives: Spring 2017
The Great U.S. Options Octopus
The US options market is a conundrum. Although volumes have remained flat over the past five years, the number of exchanges has expanded to 14, with the potential of another opening just around the corner. During this time, the number of market-makers has dropped dramatically, from about 60 market-makers quoting on multiple exchanges five years ago to only 15 today. Read more
From CTA Intelligence, March 2017 (Paywall)
FCMs still haunted by the past
Like the rattling chains of Jacob Marley haunting Scrooge, the ghosts of MF Global and PFG still wander the halls at futures commission merchants today and remain alive and well in the manifested actions of CTAs who diversify their funds among brokers. But realities exist: there are fewer FCMs in…Read More
FCMS piece: Reprinted in Inside Advantage, Spring 2017
Opening a new door on an old CTA business
Last year, Chris Hehmeyer got more than he expected when he went to dinner and a Blackhawks hockey game with some long-time friends from Kottke & Associates, a Chicago-based trading firm. At one point during the evening they asked Hehmeyer if he would be interested in buying their firm. Hehmeyer…Read More
From CTA Intelligence, September 2016 (Paywall)
Swimming Ahead of the Current: Profile of Bill Eckhardt
The corner of Ellis Avenue and 57th Street, which lies in the heart of University of Chicago’s Hyde Park campus on the city’s south side, now competes with The CME Group in importance for at least one trader on Jackson Boulevard. The William Eckhardt Research Center opened to UC students last year as a science hub dedicated to investigation of the deepest cosmic mysteries to manipulations of matter on the scale of atoms and molecules. Its benefactor is an alum (SM’70) who decided to gift $20m of his futures trading gains in support of advanced science at the university.
“It’s a good mixture of theory and practice and that is why I made the choice,” says Bill (William) Eckhardt, head of Eckhardt Trading Company (ETC), which has been a CTA since 1991.
He got into the business when an old High School friend, Richard Dennis, a legendary trader himself, urged Eckhardt to use those UC smarts and trade futures on the floor.Eckhardt did trade on the floor for three years in the mid-1970s, while at the same time building a business, C&D Commodities, with Dennis.But it was when he moved upstairs in 1978, that he says his real trading began. (More, Paywall)
The Trade Derivatives (Summer 2016, page 52)
US Treasury dealers may be kicking and screaming on their way to a mandated market infrastructure change, but they aren’t the only ones affected. Read more.
From CTA Intelligence, June 2016:
In February 2016, cyber thieves hacked into Swift, the global bank network used to authorise payments from one account to another, and stole $81m from one of Swift’s weakest points: the Bangladesh central bank. And that was just one attempt that was successful.
Swift is not a bunch of tubes held together with wires: it is a sophisticated network owned by the world’s largest banks and corporations who know a thing or two about protecting themselves against cyber-crime. However, this heist was done by old fashioned bank robbers who used modern technology to implant malware into a weak link within that network. So, if Swift can be hacked by modern day Butch Cassidy’s, what chance does a CTA have to keep bad guys out of their business?
Among CTAs and quant firms, the target for hackers is client data, proprietary algorithms and strategies, operational codes and other factors that are the lifeblood of these businesses. (Read more) paywall
From CTA Intelligence, May 2016:
After dealing with the massive shake-up brought upon the banking sector in the wake of Dodd-Frank and Basel III regulations, over the past year bank FCMs have not only had to work on revamping balance sheets, but review their client base too. Most significantly, bank FCMs have had to – and will continue to – deal with the constraints of efficiently using capital, and this means having to off-load unprofitable customers. Non-bank FCMs will continue to take the overflow and accept the smaller CTAs. It appears to be something of a symbiotic relationship in that despite the drop in FCM numbers, those still standing seem to be getting stronger.
Despite some outcry over the new regulations, overall the change has not hurt the largest firms in terms of segregated funds.In January 2016, the nine largest FCMs by customer segregated funds were all bank-owned, with only ADM Investor Services (Admis) representing non-bank FCMs in 10th spot, data compiled by the CFTC shows.
The total customer segregated funds held by the top ten totalled nearly $122bn, a similar figure to the 12 months earlier. Total segregated funds dropped only slightly year on year, from roughly $169bn to $167bn. The top 10 US clearing brokers now hold roughly 73% of customer funds, up from 67% a decade ago. And the number of FCMs has been rapidly consolidating, now at 72. Read more (paywall)
From CTA Intelligence, March 2016:
Coming of age for ‘smart-beta’
For years CTAs have been touted as alpha-producing systematic trend-following programs and have charged accordingly. But after much scrutiny, consultants, researchers and even other CTAs have determined that much of what makes up these strategies is actually beta and demands lower fees. However there is gold in that beta as institutional clients who previously couldn’t afford the programs are asking for trend-following exposure in a big way.
Whatever name the strategy is given: smart beta, enhanced beta, alternative beta, exotic beta, risk premia or core trend, it appears to have gained huge interest in the last few years amongst institutional investors, consultants and CTAs. Many CTAs might dismiss the thought that their “secret sauce” trading programs are being reduced to a mere trend-following model that gets paid only 50 basis points a year.
But the truth is new money that may never have entered the CTA space due to fee restrictions, has now been introduced to this asset class because of smart beta programs. Read more (paywall)
From CTA Intelligence, February 2016:
Getting Inside the Consultant’s Head
Pension funds – even the largest – are increasingly using investment consultants to help recommend and manage parts of their multi-billion dollar investment portfolios. After all, these public companies are typically minimally staffed, and some say, because of the moderate pay level, don’t attract the finest investment minds to manage the lot. Read more (paywall)
From CTA Intelligence, December 2015:
For years public pension plans, those that safeguard the retirement nest eggs of teachers, fire and police officers and state employees, have nibbled at managed futures investments.
Corporate and private endowment plans were more aggressive, finding new asset pools and management strategies that helped them push the envelope, both in garnering alpha and reducing beta.
For the most part, public fund investment committees looked on, fearful, reticent or uneducated on how to take that step.
But 2008 opened the broader public pension world’s eyes to the positives that managed futures could offer: transparency, liquidity, and yes, performance that didn’t correlate with their normal set of investments: equities and bonds…Continue Reading (paywall)
From CTA Intelligence, August 2015:
Esulep: Grinding Out Results by Measuring Risk First
Matt Peluse seeks challenges but is risk averse, and if these two traits seem at odds, they shouldn’t.
Peluse, principal of CTA Esulep in Chicago, believes in the long game, and his slow, steady methods – and returns – have produced an almost impossible result: a near perfect track record since the firm launched in April 2008, except for two negative return months in 2009.
At first this seems too good to be true, and Peluse says he spends most of his time proving his concept – and method – to potential investors. Continue Reading (paywall)
From ThinkAdvisor.com, 2015 Morningstar Conference coverage:
Sustainable Investing: No Longer a Backwater
Expect Shakeout Among Robo Advisors, but Embrace Them Now
Risks and Rewards of Frontier Market Investing
Bond Investing: Finding Opportunities takes Patience
From CTA Intelligence, July 2015:
In the managed futures community, it appears the managed account platform (MAP) is the ‘new black’. Ever since AlphaMetrix went supernova, several new players have burst onto the scene. How they differ has caused some confusion among CTAs, many of whom are now being approached by MAPs and are trying to answer the questions: what exactly is a MAP and is being on one good for my business?
“[To be a true MAP] requires lists of multiple programs that give users of the platform a choice [of manager], gives a user a means to get into the investment, and operates the investment for the user and has some degree of reporting on that investment. “If you don’t fit those [qualifications], you shouldn’t be saying you’re a platform,” says Jon Stein, CEO of Chicago-based Typhon Access, which operates the Hydra MAP.
Many platforms have been developed by large banks for internal use for their clients, and many of those focus solely on hedge funds. A smaller group includes hedge funds and CTAs, and an even smaller group is CTA-centric. From there the breakdown is simpler. Behemoth MAPs include bank platforms, such as Deutsche Asset & Wealth Management’s (DeAWM) $11.4bn hedge fund platform, Societe Generale’s $7.7bn Lyxor platform and Man Group’s FRM. These host hedge funds and CTAs. Then there are the pseudo-independents: those MAPs that are developing certain niches and are more accessible to the sub-$100m in AuM, or emerging CTA. Continue Reading (paywall)
From Inside Advantage, Spring 2015
Is Pro Rata an Accident Waiting to Happen?
The New Year surprise happened fast: the Swiss National Bank announced on January 15 that the Swiss Franc would no longer be capped by the Euro and it jumped 41% in minutes. This black swan event happened just before a U.S. holiday when traders were already winding down for a three-day weekend. Those left trading included a combination of retail players, banks and some prop firms. And the market went into a frenzy. Continue Reading
From CTA Intelligence, March 2015:
Any broker will tell you it’s not an easy business and the numbers reflect it: during the past 10 years, the number of US futures commission merchants (FCMs) has fallen by 60%. Today there are 79 registered with the National Futures Association (NFA). Many factors have been at play: the drying up of interest income, mergers, acquisitions and failures, the proliferation of rules and regulations, the financial crisis that chased many a client away, and commissions dropping while exchange fees rise. Technology, which has increased the speed of trading and made the markets more accessible, has also come at a cost.FCMs spend to not only keep up with customer needs and competition, but also to meet exchange and regulatory requirements.Still, this is not a doomsday scenario. The retrenching of the business shouldn’t be looked upon as the number of firms, but the strength of the balance sheets. continue reading
From AllAboutAlpha.com, December 2014:
Case Study: Straits Gives Managed Futures a Facelift
When the JOBS Act is discussed in managed fund circles, it’s typically due to its elimination of the ban on general solicitation and advertising by capital raisers, such as hedge funds. Obviously that’s a big plus, but another part of the Act that gave a lift to private placement funds was the increase to 2000 in allowable accredited investment holders. Previously, going over 500 investors triggered onerous reporting requirements under the Securities Exchange Act of 1934. The JOBS Act was passed in early 2012, and signed into law in 2013. That timing was perfect for a team of investment experts who were looking to expand their product base. This is their story. Continue reading…
From InsideAdvantage, Fall 2014 issue:
Will High-Frequency Trading force a market redesign?
Notwithstanding the evident benefits of HFT in electronic markets, many market participants have argued that some HFT practitioners utilize trading techniques that are detrimental to the well-functioning of financial markets. Some of the trading techniques are spoofing, layering, and quote stuffing.
Chicago Federal Reserve paper: Recommendations for Equitable Allocation of Trades in High Frequency Trading Environments,
July 10, 2014
In late August 2014, CME Group issued a regulatory notice defining and providing examples of “disruptive practices” prohibited on the exchange. These infractions were noted in the Chicago Federal Reserve paper as well as prohibited by the Dodd-Frank Act. However, what’s key about Rule 575, is it doesn’t so much outline new rules as finally give market participants seeking to comply with all market regulations somewhat more guidance about what constitutes bad faith trades. Continue reading…
From the Horizon Cash Management Fall 2014 Focus Special Report:
To the unschooled, emerging commodity trading advisors evoke thoughts of a lone trader setting up shop, hanging out a shingle and hoping to raise assets. But that’s an old view of emerging managers, who today often have long and strong pedigrees, are well financed and surround themselves with key personnel to run the business. And these changes could be the sign of the times with billions of dollars available for investment that won’t settle for anything less than a trader who also is smart in business. Focus on emerging managers
From CTA Intelligence, October 2014:
Inside the fall of AlphaMetrix
Representatives from the Abu Dhabi Investment Authority (ADIA), including Khalif al Mehrie, executive director of alternative investments and other senior staff, were in the Fountainebleu Hotel room in MIami waiting to discuss allocating money to AlphaMetrix.
That was when the firm’s CEO Aleks Kins stumbled in late, those present say. To read more, go to CTA Intelligence.com
From the NIBA Journal:
Two Minute primer on leveraging your brand
I’ve met many traders, brokers, and introducing brokers having covered the derivatives arena for 30 years. Some have been memorable, some not. Typically why they are memorable is for a few reasons: a) performance, especially as a trader, b) what sets them apart, that is, what makes them special, especially as a broker, and c) keeping up the relationship, in other words, they continue to keep in touch even if they don’t see an immediate benefit.
From Spring 2014 issue of Inside Advantage
In-House Im-Prop-er Trading: Proceed with Caution
MF Global is one of the more blatant examples of the danger of banks and brokers engaging in proprietary trading while also servicing client trading. In that case, monies from once seemingly secure customer segregated funds on the futures commission merchant side of the business were used to fund the firm’s broker/dealer proprietary trading – at least for a while. But those pesky regulators got in the way and the business collapsed, and along with it, customer funds went missing.
From AllAboutAlpha.com
Frank Pusateri has found there are two types of emerging managers: those who are just starting out, and those who have been around, even might have a couple hundred million under management, but only a few clients and want to expand that base.
Shattering the Myth of the Emerging Manager
From AllAboutAlpha.com
No matter which side you’re on in the hyperbolic debate on high frequency traders that Flash Boys has caused, or even if you aren’t on a side, read this book. As with all Michael Lewis’ work, it’s a great read and gives a front row seat to the inner workings of Wall Street, a different take on its players and uncovers the sickness of today’s stock market.
Unintended consequences: a not-so-random walk down Wall Street
From AllAboutAlpha.com
n 2010 AlphaMetrix held a conference in Miami with Harry Markopolos as the keynote speaker. Markopolos’ claim to fame is that he told the regulators about Madoff”s Ponzi Scheme, but his words fell on deaf ears. In 2013 AlphaMetrix, which claimed to the be the transparent antidote to Madoff stood accused by the CFTC of moving money in ways it ought not and in 2014, the principals of the firm are asking for a jury trial. It is indeed a tangled web and it is unlikely to be un-weaved any time soon.
AlphaMetrix: We did nothing wrong!
Commercial releases, sponsored marketing, blogs:
How to Sell Against Amazon.com
Internet Retailer sponsored insert, featuring three case studies by firms selling against Amazon:
2016-ir-how-to-sell-against-amazon
How to Select a B2B e-commerce Technology Partner
Internet Retail published a special issue on selecting the right technology partner. Here is case study:
Sample blogs:
Sample of press releases:
Coquest purchases Mega Capital
Energy broker Coquest Inc. recently finalized its purchase of Mega Capital, an introducing broker that specializes in managed futures. What does it mean?
Other releases: Coquest Advisors
Coquest Managed Assets Launched
Speaking engagements: Have been moderator or panel guest for CTA Expo, Profit & Loss Magazine, Trader’s Expo, and The Traders Conference, as well as other global conferences.
CTA Expo
I was part of a great PR and Marketing panel at the CTA Expo in New York on April 30, 2014. My topic was how emerging managers can get the word out with better marketing through media. Presentation power point: Do’s and Don’ts of Getting Ink ctaexpopresentation