Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Any opinion on this group of funds? They are managed futures, which behaved beautifully during the last year. In particular, EQCHX gained 58% during the last year. Of course this fund has almost no history (it started trading on 09/07/2012, with the total gain 69% since that time) but such a success is hard to ignore.
Thanks a lot, I understand that it works only when there is a trend. Perhaps like in health care now, but also with everything else, like currencies etc. What is surprising is how high this fund jumped during a single year. But then of course Equinox funds use many strategies, not all of them are doing well, so one of them could jump just by chance.
Managed Futures is a strategy that will do well at times, then people will jump in and be disappointed when the strategy does not provide consistent performance. The performance of MF funds last year was unusually good; basically I'd expect a consistent single or double in good times and bad (it was one of the few strategies to do well in 2008), but there can be stretches where it does not do well. I've also not been a fan of managed futures in mutual fund form, but some of the latest funds have improved.
Equinox has quite the stable of alt funds, most of which are managed futures, but they're not all 100% trend following. See, for example, the BlueCrest fund: they show a spiderweb illustration of the each of their funds' "trading style," and EBCIX is a combo of "trend following," "spread," and "contrarian." They also have a pretty good description of their funds' strategies as a whole, which I wish more MF fund managers would adopt.
With Equinox, you're getting the same investment that a hedge fund investor would be getting directly with the hedge fund these mutual funds access. They're not sub-advised like so many mutual funds; the investment is a total return swap directly on the returns of the hedge fund, less the hedge fund fees and less the fees of the mutual fund, which unfortunately means you're paying through the nose for these funds. See this M* article for a good explanation on their fees.
Equinox does have a variety of managers and approaches represented. The Chesapeake fund EQCHX has a good record so far, but there are others to consider too that may be a little more risk-averse.
Generally, the idea of these is to include in the portfolio a source of return that's less correlated with the usual major asset classes. No guarantee though - in the most recent, fairly minor equity downdraft, every single MF fund I have on a 'watch and learn' list was down in synch with equities, and some were down more than equities. If your portfolio is on the lower deviation & risk side (say, low volatility equities and a balance of credit- and rate-risk fixed income), some of the MF funds of this "new era" type could turn out to be the most volatile investments in the portfolio.
If the Bluecrest Equinox fund is invested in the Bluecrest Bluetrend fund (feeder fund, in other words), that is one of the biggest and most successful managed futures hedge funds. I believe it was up something like 40% in 2008.
Hey Scott, it's the same company, maybe not the same hedge fund (?), and actually BlueCrest, as of the first of the year, no longer has anything to do with the mutual fund. A woman named Leda Braga developed a trading system at BlueCrest and then split from BC to start her own company, Systematica Investments. That's whose investment vehicle EBCIX followed before the split, and continues now with the new company.
Hey Scott, it's the same company, maybe not the same hedge fund (?), and actually BlueCrest, as of the first of the year, no longer has anything to do with the mutual fund. A woman named Leda Braga developed a trading system at BlueCrest and then split from BC to start her own company, Systematica Investments. That's whose investment vehicle EBCIX followed before the split, and continues now with the new company.
It's a tangled web the hedgies weave.
Bluetrend (Braga's fund) is available on the London market as a feeder fund (an "investment trust", sort of like a CEF in the US), as is AllBlue (although I haven't looked to see if that fund still has exposure to Bluetrend after the break off) Interesting that this fund is also a feeder fund for Bluetrend. London also has Third Point Offshore and a few others (the Brevan Howard funds, for example) and RIT Capital Partners (aka Rothschild Investment Trust.)
RIT Capital Partners has investments in a number of private funds.
Ackman's Pershing Square feeder fund is also available in Amsterdam, but there is a pink sheet share in the US.
Edited to add: AllBlue still invests in Bluetrend.
Okay, so Bluetrend is Braga's fund. That fills out the picture; thanks for the info.
Just from watching and reading about EBCIX, I'd been thinking that'd be the Equinox fund I'd pick if I had to invest in one.
If EBCIX acts as a feeder fund to Braga's fund, then that would be the one that I would choose without any hesitation whatsoever if I had to pick from their offerings.
Since this tread seems to reference managed futures in general, I hope the following question won't be off topic: I own three managed futures funds as part of my group of non-traditional diversifiers. Yesterday, the best performer was down 3 1/2%.
I have a general understanding of how managed futures funds operate, but was surprised, yesterday, to see such large one-day losses across the board. Can anyone offer an explanation for this? Thanks!
Bitzer, imho, the best shot at figuring out why an MF fund loses or gains a ton on a given day/week is to look at the last portfolio data disclosure and see if the long and short exposures explain it. But of course the disclosures are infrequent and sometimes really sketchy, depending on the outfit, so good luck with that.
I came to the conclusion after a couple of tries at MF investing in Q4 2014/H1 2015 that they're just not worth it for the "alt" use I had in mind - mainly an investment less correlated with equity that at least partially sidesteps FI duration and credit risk. There were just too many days when equity and MF losses coincided, including some (apparently like yesterday?) when the MF losses were way worse than equities ...
Fwiw, back when I was giving MFs a trial run, one of the biggest drivers of their gains and losses was currency exposure.
@AndyJ I think you are spot on, at least as far as yesterday's results are concerned. The WSJ states that the euro had the biggest one day percentage gain against the dollar in six years. My MFs presumably have positions in favor of the dollar.
I knew my MFs had currency exposure, but not to the degree presumably reflected in yesterday's results. Leads me to wonder whether I want to be this exposed to currency fluctuations...
Bluetrend (the London-traded fund that I mentioned earlier in this thread, which was also a feeder fund into the Systematica strategy) has been liquidated as of early December (even the website is already gone.) May not mean anything for this fund but just FYI.
Comments
I had a lot of luck with PQTIX in 2014, but less so in 2015. I am having better luck with AQMNX in 2015.
I watch my positions in these two funds very closely.
Mona
Thanks a lot, I understand that it works only when there is a trend. Perhaps like in health care now, but also with everything else, like currencies etc. What is surprising is how high this fund jumped during a single year. But then of course Equinox funds use many strategies, not all of them are doing well, so one of them could jump just by chance.
More on this fund can be found at http://globenewswire.com/news-release/2014/02/14/610535/10068444/en/Equinox-Chesapeake-Strategy-Fund-Provides-Mutual-Fund-Investors-With-Access-to-Expertise-of-Legendary-Turtle-Trader-Jerry-Parker.html
See also http://equinoxllc.com/sites/default/files/Chesapeake_ProdBro.pdf and http://www.chesapeakecapital.com
Finder
With Equinox, you're getting the same investment that a hedge fund investor would be getting directly with the hedge fund these mutual funds access. They're not sub-advised like so many mutual funds; the investment is a total return swap directly on the returns of the hedge fund, less the hedge fund fees and less the fees of the mutual fund, which unfortunately means you're paying through the nose for these funds. See this M* article for a good explanation on their fees.
Equinox does have a variety of managers and approaches represented. The Chesapeake fund EQCHX has a good record so far, but there are others to consider too that may be a little more risk-averse.
Generally, the idea of these is to include in the portfolio a source of return that's less correlated with the usual major asset classes. No guarantee though - in the most recent, fairly minor equity downdraft, every single MF fund I have on a 'watch and learn' list was down in synch with equities, and some were down more than equities. If your portfolio is on the lower deviation & risk side (say, low volatility equities and a balance of credit- and rate-risk fixed income), some of the MF funds of this "new era" type could turn out to be the most volatile investments in the portfolio.
It's a tangled web the hedgies weave.
RIT Capital Partners has investments in a number of private funds.
Ackman's Pershing Square feeder fund is also available in Amsterdam, but there is a pink sheet share in the US.
Edited to add: AllBlue still invests in Bluetrend.
Thanks for your reply.
Just from watching and reading about EBCIX, I'd been thinking that'd be the Equinox fund I'd pick if I had to invest in one.
I have a general understanding of how managed futures funds operate, but was surprised, yesterday, to see such large one-day losses across the board. Can anyone offer an explanation for this? Thanks!
I came to the conclusion after a couple of tries at MF investing in Q4 2014/H1 2015 that they're just not worth it for the "alt" use I had in mind - mainly an investment less correlated with equity that at least partially sidesteps FI duration and credit risk. There were just too many days when equity and MF losses coincided, including some (apparently like yesterday?) when the MF losses were way worse than equities ...
Fwiw, back when I was giving MFs a trial run, one of the biggest drivers of their gains and losses was currency exposure.
I knew my MFs had currency exposure, but not to the degree presumably reflected in yesterday's results. Leads me to wonder whether I want to be this exposed to currency fluctuations...