The Derivative - Pivotal Perspectives: Decoding the Modern Hedge Fund Landscape with Jon Caplis

Episode Date: June 5, 2025

In this episode of The Derivative, Jeff Malec sits down with Jon Caplis, CEO of Pivotal Path, to dive deep into the world of hedge funds. They explore current performance trends across strategies like equity quant, global macro, and multi-strategy funds, unpack the challenges of hedge fund data collection, and discuss how sophisticated investors are approaching alternative investments. Caplis shares insights from tracking over 3,000 hedge funds representing $3 trillion in capital, revealing surprising trends in performance, investor interest, and the evolving landscape of hedge funds. Plus a look at talent, capacity, and changing dynamics in multi-strat funds .. SEND IT!Chapters:00:00-00:55= Intro00:56-06:48=Bridging the Gap: Exploring Pivotal Path's Unique Approach to Hedge Fund Research06:49-22:18= Performance Trends and Correlation Complexities: Navigating Hedge Fund Strategies22:19-29:13= The Evolution of Multi-Strategy Funds: Talent, Capacity, and Changing Dynamics29:14-42:44= Separate Accounts and Portable Alpha: Unlocking the Future of Hedge Fund Investing42:45-58:37= Talent, Capacity, and Global Expansion: Insights into the World of Multi-Strategy Hedge Funds58:38-01:02:21= Going down the rabbit hole in PakistanFrom the episode:Where’s the Non-Correlation?The Derivative with Joe Kelly of CampbellFollow along with Jon on LinkedIn and X @JCaplis and be sure to check out pivotalpath.com for more information!Don't forget to subscribe to⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠The Derivative⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, follow us on Twitter at⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠@rcmAlts⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and our host Jeff at⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠@AttainCap2⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, or⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠LinkedIn⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ , and⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Facebook⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠, and⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠sign-up for our blog digest⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠.Disclaimer: This podcast is provided for informational purposes only and should not be relied upon as legal, business, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM Alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make specific trade recommendations, nor reference past or potential profits. And listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. For more information, visit⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠www.rcmalternatives.com/disclaimer⁠

We track about 3,000 hedge funds, which collectively represents over 3 trillion in hedge fund capital. Just to give you an idea of how these numbers can be all over the place, if you look at prequens data, they'll tell you there are 30,000 hedge funds. We would argue that's off by an order of magnitude. Welcome to The Derivative by RCM Alternatives. Send it. I'm John Kaplas, CEO of Pivotal Path, and I'm here to talk hedge fund data investor interest on The Derivative. John, how are you? I am good, Jeff. Nice to see you.

You too. I'm a little bit of a allergy. Cubs game yesterday induced cold. So bear with me, but the show must go on. But we've bumped into each other a few different panels over the last few months and Enjoyed everything you've had to say so wanted to have you on and talk through kind of the overall hedge fund picture If you will and get into kind of some of the trends you're seeing in performance and investor interest But yeah, let's start with kind of your background and and why anyone should care to listen what you're gonna talk about

Sure. Well, I'll let them decide if they care but I founded Pivotal Path back in 2013. So just to give a little overview, we're coming up on our 12-year anniversary. Pivotal Path is a hedge fund research firm that has grown to what our clients call us, which is a trusted hedge fund industry expert. So we're neither a consultant nor a database. And our clients, which are exclusively allocators, they range from groups like Goldman Sachs and J.B. Morgan, Blackstone to sovereign wealth funds and public pension plans and global family offices across the world. They collectively invest about $500 billion in hedge funds. And just at a high level that even though they're all unique,

three kind of key reasons or themes that they all work with us. The first part is that we've built out the most complete set of hedge fund information that goes far beyond returns. The second part is that we produce unbiased research. We have raw data information and the tools to analyze strategies and funds and scale.

And then thirdly, our indices, which are really starting to gain traction as most accurate and reflective benchmarks in the hedge fund space. And prior to founding Pivotal Path, just very briefly, I worked for three different hedge funds. Most recently, where I was at Campbell, which is a large CTA and I co-ran the risk team there, was also on their investment committee. And so I've been able to really see kind of both from a fun side and an allocator side, how these groups interact with each other and Pivotal Path is really there to help create a bridge between those two and increased productivity. All right. We had Joe Kelly has been on the podcast from Campbell. So did you mean to end up where you are instead of a database or a consultant?

Or did it happen that way? No, it was actually pretty intentional. We saw a couple of issues and this was wearing a hat that I wore both at Campbell, but also with philanthropic endowments where I sat on investment committees. And I saw that on one side you had the consultants and the consultants certainly have good businesses, but their business is really about creating scale and having approved lists of managers that can scale across their client base and Not necessarily approved menu model, correct, correct Yeah, and nothing wrong with that But for those that have their own investment teams, sometimes you want to dig down a little deeper and and understand

Well, how did you come to the this approved list? And if you're recommending three managers in the multi-strat space, what about the other 75 managers? And so, we saw that not only did you have consultants, which would give a little bit of information and really sell you their advice. And again, that's a perfectly good business model. But the flip side of that coin were the databases themselves, where they were all trying, laudably trying to create transparency and organization in a relatively opaque space. But unlike the consultants, they didn't really have access to quality data. And so what I mean by that is a lot of hedge funds historically, and then the problems actually gotten worse. They just chose not to provide their data because there was very little incentive to do so

and they also knew that if they did so it would essentially be public. And so that means that everybody including their competitors, including media and anyone else could see their data and maybe lose control of the narrative. So you had these two bookends in the industry where both were providing information but no one was doing it for in the industry where both were providing information, but no one was doing it for the allocators where they were fully transparent and in a fully complete way as well to give them, again, the tools and the data to analyze for themselves. Neither had the full picture basically, but from two different reasons why? Exactly. That's exactly right. So with Pivotal Path and having this more complete picture, would you go so far to say

you have the full picture? Is that the ideal golden goose you'll never quite get to? Yeah, I'd say that we have as close to the full picture as you can possibly get. There's always going to be a few relatively, let's call them difficult or just funds that are hard closed, extremely hard closed and really have no interest in sharing information at all. That being said, you get to 99.9% of the funds that are out there and all of them, whether they are actively raising capital, replacing redemptions or considering raising capital in the future, they also all have clients and to the extent that many of them are also our clients, we

knew that it would always, as long as we protected that data and knew that we were only representing the allocators themselves, we would be able to build really strong direct relationships with those managers and the trust of them. And that's what we've been doing over the last 12 years. I love that could be a whole podcast on itself of the closed, hard closed, extremely hard closed. We're close. You sure? Here's a check.

No, we're hard closed. Are you sure? Here's a bigger check. We're extremely hard closed. Tell us a little bit of what you're seeing in terms of the data and your research of kind of trends in performance in the different hedge fund categories. We could dip into a little bit of like whether you, where you kind of land on hedge fund categorization. Do you guys come up with your own or you stick with what metrics do you stick with there? But yeah, assuming we answer the categorization problem, where are you

seeing trends and performance there over the last 24 compared with Q1? Yeah. I mean, so even there, I'll just start very high level. Let's talk about defined hedge funds for a second. So these are managers that can accept institutional capital, at least this is how we're defining them, and very likely they have a fund structure in which they're charging management fees and performance fees. So it's a very simple definition. That being said, just to give you a sense of the size of it, we track about 3,000 hedge funds, which collectively represents over $3 trillion in hedge fund capital. Just to give you an idea of how these numbers can be all over the place, if you look at prequens data, they'll tell you there are 30,000 hedge funds. We would argue

that's off by an order of magnitude. And the reasons why even simple things such as the total number of funds are up for debate to some extent is the fact that a lot of the managers out there, it's very easy to kind of tick a box in SEC filing and say, you're a hedge fund. That being said, that's how the databases kind of work backwards. They start with typically what might be publicly filed and then what they're going to do is they end up kind of double-counting, triple-counting in a number of different ways because a fund might be a hedge fund, but they might also have private credit or funds of one or offerings that are different share classes. And so by the time you get through all of that, you can end up with what seems to be an overwhelmingly daunting set of funds when in reality it's really closer

to 3,000 funds. So let's just start there. Yeah, there's some semantics in there, right? Because take Campbell probably has whatever, 25 different share classes or actual structures. So is that one hedge fund or 25 Fun, it's gonna actually are 25 different so I can see both sides of the coin there, right? I'm like, well, there are 25 different structures and classes So that's like if I'm looking at performance and whatnot, it's gonna be the same performance They're either gonna be peri-passu or very close to it, or they're not going to be open for investment, right?

It may be, again, a fund of one that was created specifically for a very large pension fund that is not going to allow another investor in. It could be a strategy that the firm is incubating, and maybe they're incubating a number of different strategies to see which one ends up being marketable. Those strategies themselves are not open for public investment. It also ends up counting a lot of long-only vehicles. It counts funds that are private credit that might just kind of have that rough label of a hedge fund because they check off a lot of different boxes. Or it could be funds that are extremely small that no institutional investor and even most family offices wouldn't consider a fund,

but they might show up on a database. So there's lots of different ways to cut it, but the point is at least the way that we view it is we want to count the number of strategy offerings that institutional investors are either invested in or can invest in themselves. So tell us what you're seeing in terms of categories there, what the most popular are. I was starting with performance first. So yeah, what you've seen trends in performance, who did well, 24, what 25 is looking like so far. Yeah, so you know know if we have that we've defined what hedge funds are we have our hedge fund composite index So that's the broadest measurement of all the strategies that we cover

That so far through April is up about one point one percent. So let's call it flat on the year That's not to say that there hasn't been a lot of volatility as you can imagine underneath the hood We track about 40 different strategies that roll up into that composite That's not to say that there hasn't been a lot of volatility, as you can imagine, underneath the hood. We track about 40 different strategies that roll up into that composite. So we're looking at a very similar breakdown to how probably most investors think about it. We have credit strategies that break down into six subcredit strategies. We won't go through all of them, but we have equity long short strategies that break down globally and also are differentiated between what's quantitative and discretionary or fundamental. We have equity quant strategies and then equity sector strategies as well, which are those

that focus on obviously sectors within like healthcare or TMT or financials. And then from there, more of the broader kind of macro strategies within global macro, we have a number of different sub-strategies from those focused on commodities to those that are more multi-manager approach to manage futures, which is a separate strategy, and then multi-strat volatility strategies as well as the event-driven space. So, sorry to kind of list off a lot of strategies, but wanted to just give you kind of an idea of how we break those down. And who would you say is your main competitor on that overall index,

the HFR hedge fund index or is like outside of yours, what is a good benchmark or is there none? I Mean what has the industry used historically? Yeah, so look HFR is certainly, you know Probably the well-known name in the space. They've been around for a long time And whether it's HFR Eureka hedge or Barclay hedge or even Morningstar and Bloomberg a number of them have their own indices the problem with all of them and it's really not to pick on one of them, comes back to, you know, do the key contributors, do the key performing funds actually provide their data to these databases? And while the answer historically was not really, the answer is actually becoming more of an emphatic no. And what's happening is not only do you see hedge fund indices that have different performance, so even if you look at the composite level and you look at

again an HFR composite and they have a number of them, you're going to see that our indices tend to systematically outperform and systematically outperform by anywhere from 200 to 300 basis points per annum. You're also going to see that almost all of that is going to come in the form of alpha, especially if you're looking at it relative to something like equities like the S&P 500 or Barclays high yield or a 60-40 portfolio. And so what that means is a lot of funds that are really the high quality names, the institutional names and the key performers, they're not part of these indices, which skews the performance lower.

And while that may seem like a good thing for an individual manager saying, well, we beat all of these indices handily and you very rarely meet a manager whose fund isn't outperforming the benchmark, which is quite difficult. Not everyone can outperform the average. But on the flip side of that, a lot of investors are using these indices or at least the underlying data as inputs into their asset allocation models. So especially if they're multi-asset portfolios, they are using the expected returns and the expected volatility and all of the other characteristics like alpha and correlation statistics and things like that to determine, number one,

whether they invest in hedge funds or that hedge fund strategy at all, and number two, how much. And so those are the areas where, again, I wouldn't want to pick on any one of them individually, but there are systemic biases toward the downside, which have negatively affected the industry for many years from that allocation perspective, just being lower due to less performance. Which is a bit of a hot take, maybe not, because the research is always right, that there's survivorship bias, that there's all this stuff that over inflates the performance of the

index. Right? So you're saying instead, no, it's survivor, it's whatever the term is, it's exclusion bias. Yeah. Selection bias is actually the key data. Like self-enforced selection bias. Yeah.

I mean, just to give you an idea, I mean, 300 of the largest hedge funds are over that do not report to any databases. And we cover all of them and they're going to, each one of them is above a billion dollars and most of them significantly more than that. So it ends up being over half a trillion dollars in hedge fund capital that databases just don't cover. And it turns out that those performers, just over the last 10 years actually have about double the performance of the average fund. And almost all of that in the form of alpha. And these come particularly from the multi-strat space, from the global macro space, and then the equity quant space. Those are three areas where typically managers play a little bit closer to the vest and they do not publicly report for numerous reasons that I mentioned before, just kind of the fact that many of their competitors are probably looking at that data as well. And so those are the ones that are missing. And so that's the biggest bias. And that overwhelms to your point, all the other things you mentioned are correct. Many of these databases also have survivorship bias, meaning that funds that they actually have on their platform, they may backfill. So survivorship bias and backfilling bias are very much related, but just to give a very simple example, let's say there's a multi-billion dollar fund that decides today to start reporting to any database. They could take that data and just, you know, it has a 20-year track record, fill all the way back in time, change all of the performance because technically that fund was around or that manager was around.

That being said, they didn't have access to that data. And you're not gonna certainly find, there's no fund that went out of business three years ago that's gonna say, hey, by the way, you should now add my data back in from 2021 and going back. So that happens as well. And what ends up happening, it's not just that the performance is lower, but it's that the indices are not representative and they can often

be misleading. So even trying just to determine as an allocator, what a strategy is supposed to do, what environments it might thrive, you know, is it going to do well if inflation is rising or steady or interest rates are going to remain above 4%, those are questions that investors are asking and utilizing often these indices to help make those decisions. And unfortunately, all these index providers have really had misleading indices at best over the years. We still haven't gotten to the trends yet of what's happening.

Yeah, no worries. Given the background. But that's always a weird thing to me. You're using the index to decide on a manager, and then the manager is going to have, by definition, it's not going to match the index, right? It's going to have variance around that index. So at some point, to me, the investor should switch to using the manager data in those models instead of using the allocation or the index.

It's a really good point and it's kind of a subtle one and this is also just depends on your philosophy, but a lot of the sophisticated investors that we work with, they will start with a strategy. And so they're starting with asset allocation. They're determining, do we want to be in global macro discretionary as an allocation? And they might use, depending on how they do it, they could sample a group of managers, they could use our index, which would get around survivorship bias and the other biases as well. But to your point, once they do that, that's just to kind of at a baseline say, do I want

exposure to this strategy? And then the step beyond that, then comes the manager selection. And so oftentimes the question is, look, I know I can't pick the best manager every single year in that strategy. But what I think I can do as a sophisticated allocator is I can select the manager or group of managers that essentially best affect that strategy that I like the characteristics of and execute that strategy. And so it's not necessarily, especially if you're working with high quality data, you don't have to outperform the index by three, four, 500 basis points per atom for it to be compelling.

You actually just need to be in the top half. And even if you kind of hit that at average, it's still going to be compelling. You actually just need to be in the top half. And even if you hit that at average, it's still going to be compelling when you're using a complete set of data. But to me, it's a weird thing. It leads to the managers trying to not be as diverse as the index and getting... It leads to lowering their vol and matching the index,

and then also leads to replication of the index. Someone eventually goes, wait, why am I trying to pick these managers and whether to outperform the index or not, just to be around the index with the risk of them massively underperforming it? Why don't I do this model that replicates the index? So we're way off the script here, but yeah. We could also continue down that path for a long time. But no, I think it's an excellent point. What I would say is many, not all, but many of these hedge fund strategies are not easily

replicable or certainly not replicable in a very liquid fashion. And so, you know, when you're talking about multi-strat and the infrastructure that's required not only to bring in a large number of highly talented portfolio managers, but also size those managers, provide funding to those managers, the risk management around it. I mean, significant investment in infrastructure is required to do well in that space. And in fact, you can see it in the numbers where in that strategy alone, the larger managers tend to outperform the kind of midsize and smaller managers significantly. Not every strategy is like that, but I think your point is a good one that, look, you still need to

be able to select the managers. And so you need to at least have the menu with a complete set of managers to know, am I even making a good decision? How can I do that if I don't even have all the options? So you got to start with a complete data set and then every investor is going to have a slightly different perspective on how they decide how much capital and where to allocate it within that strategy. And I haven't seen it yet, but I guarantee, here you go on the podcast here, guarantee someone's going to come up with an ETF, like a multi-strat replication ETF. Oh, absolutely. They're not going to spend all that money.

They're going to be like, oh, we can replicate this if we sell euro dollar calls or something. They'll just come up with some strategy that when you run it backwards and it's 0.9 correlated with the multi-strat index, and this is what we're going to do. Last thing I'd say on that is oftentimes, especially in replication, it's somewhat easier to replicate the beta

or have a high correlation. The hardest part is replicating that alpha. And if that's coming in the form of 3, 4, 500 basis points per atom, which a lot of these strategies it is, that's the part where it usually doesn't work out so well in a replication strategy. Agreed. But they'll be like, well, if the alpha was equal to just selling those call or doing

whatever strategy for that period, next time it might be something different. But for that period, I'm just going to do that. Through all those categories, what stood out to you from both a good perspective and a bad perspective over the last two years with bonds being crazy and volatility in April? It has been. There's really two key areas that have been, I wouldn't say unbelievably consistent, although maybe one of them has been, that has garnered the attention of a lot of our investor clients. So equity quant, typically these are

market neutral. They don't have to be, and historically they've had a little bit of positive data. But one thing that we're seeing, and you mentioned the volatility, so you could argue that technology has certainly improved and we've seen the oncoming of AI, but a lot of these managers have been running machine learning strategies, going back to kind of the 2015 and before that. And so what we're seeing is these equity quant managers,

they've been able to take advantage of a lot of the volatility even in the underlying factor space. So, it's not just that value came back versus growth, which we saw during the COVID time period where value had been kind of dead or dormant for a long period of time, but you've seen a tremendous amount of volatility in value, growth, momentum has been something that has been really strong for the last couple of years up until the beginning of this year and now you're starting to see it come back in vogue. But it's been in that factor space that they've really been able to systematically find value or generate returns where many other strategies didn't work quite as well, even in years like 2022, where almost every strategy

outside of CTAs and global macro were losing money. These strategies were hanging in, as I mentioned. Can you see on the platformer, do you have insight into, are they just long NVIDIA basically on that whole time, or they're actually doing the alpha is in the actual trading back and forth and inside and out of these. Yeah, I mean, that's the key thing. So no, when we track over 300 global risk factors, we're always looking to see, you know, is something that looks like alpha really just

in the way you said it, just unspecified beta, like you just didn't realize, oh, they're really just investing in Nvidia and it happens to be different than the Mag-7, which is different than the NASDAQ. And so you don't really see it. We track a lot of different risk factors. And in fact, for the most part, although I will say to your point, that has picked up

a little bit on the positive side in the last six months or so, but it's been almost not neutral, but very low and statistically insignificant exposure to almost every global risk factor that we cover. And so that's been the case for equity quant. That's been the case for multi-stratas as well, which we can talk about a little bit more that we always say internally, they correlate to almost nothing except each other. And then that's also been global macro, which is interesting because typically discretionary macro and managed futures, which is, we always think of them as almost first cousins as a space, you know extremely well. They tend to have higher correlation with each other and that's really diverged dramatically where trend followers, especially in that medium long term space that had done extremely well in 2022, have really given back ever since and have been struggling, especially in 2024 and

year to date in one of their worst drawdowns in history. So while discretionary global macro macros don't know. We just talked through that on the last part. So dig into that a little bit if you have, why do you think that is? And macro, you're saying discretionary global macro, or does that include systematic? So just to give you an idea, I mean, year to date, global macro in general is up 2.7%. If you look at all of our global macro strategies, so yeah, global macro in general, 2.7%. The only one that's down are actually the commodity managers

and that's the raper. They're down 2.6%. Global macro discretionary is leading the way up 6.9%. And so that's really the biggest component of global macro. They've definitely been able to be much more nimble around huge moves and sudden changes in both the dollar but also interest rates. And so when we're talking about trends that have been so long in the tooth that a lot of these trend followers would have been very heavily one-sided, it takes

a long time for those titanic ships to turn around. And so obviously a very choppy environment where there's significant volatility on both sides and then ends up kind of with not much. Just take the S&P 500 as an example that has been almost down almost 20% year to date and then back to up five and change and now kind of flattish, if you will. That type of volatility, that whiping volatility tends to be really difficult for that medium to long-term trend follower. And it doesn't mean that global macro discretionary managers will always get it right, but at least they have much more of a nimble opportunity to do so and they've done extremely well both like I mentioned in the dollar and

rates. And gold I would assume too. That's been a part of it, although you would think that the managers focused on commodities would have done a little bit better based on that move in gold. I'm sure they've gotten that right, but I think some of the other justice liquid in the energy space as well have been pretty difficult. I've been saying for a long time, you had macro and trend were kind of converging or macro and managed futures were converging. Right of like macro is getting a lot more systematic, trend was adding some more stuff like carry and whatnot.

So it was kind of converging. So it's interesting, yeah, that they've now diverged in specifically this period. So I in specifically this period. I'll give you a really interesting stat. So right now, over the last 12-month period, so over the last year, our managed futures index is down 14.8%. Again, that's one of the largest drawdowns that we've seen in history. And then you compare that to global macro discretionary over that same time period, it's up 11.5%. So that divergence of over 25% and we're talking about two sides of essentially the same trade is take a look at the data itself, but it's almost unheard of in history.

Yeah. The question is what, yeah, my brain will go to what are they giving up in order to to get that out performance in terms of another 22 or extended drawdown? Do they somehow add some trades there because it worked this time that don't work the next time? But so given that, where are you seeing the investor interest? Is it flowing lots of flows into equity quant, lots of flows into macro, or just talk flows overall and where are we at in the whole hedge fund space? Yeah. So, I'd say that this is a time, and maybe not too different than history, but I'd say it's pretty pronounced right now where the interest has been, I'd say, very sincere and very strong from most of our clients

for the last year and change. And so we're seeing a lot of work in macrospace. Yes, we're seeing definitely work in the equity quant space. We're seeing a lot of meeting takes place in credit for sure. What I will say is there's this other elephant in the room that I'm sure you've talked about probably on previous podcasts, and I'm certainly not an expert in private equity, but the liquidity, the expected distributions that have come historically obviously just haven't been coming, and maybe that's improving a little bit, but that's the type of liquidity that a lot of

these investors expected to have to then redeploy back into more liquid strategies in the hedge fund space. And so we're definitely seeing, we're seeing interest, we're seeing some managers get flows. It's still a lot of them are the larger managers, but it's really managers that are uncorrelated to the equity markets. I mean, there's been a feeling for at least the last year or so that not necessarily that nobody knew necessarily the tariffs were to come and create this tremendous volatility, but there was concern that markets were at least unsustainable. And so there was a concept where they wanted to diversify away. Credit

has actually been doing extremely well where for the first time in the last probably six or seven years really since private credit kind of became a popular investment, you're finally seeing hedge fund, credit hedge funds are actually slightly more popular as these types of surveys from prime brokers. We've seen that numerous times. We also poll our clients and we see a very similar trend where the returns in the more liquid credit hedge funds have been as good if not better than what we've been seeing in the private credit space. And so the pendulum is definitely starting to swing back to again a significant amount of work in the space, some flows.

But right now, I still think, unfortunately, we're in a wait and see mode until you see kind of a huge number, a huge amount of capital flow into the hedge fund space. Which you think will be based on private equity distributions and or redemptions, but they're locked up. So yeah, that's a morass, right? That's the big problem we all have of, okay, you guys all went huge into private equity. What does that look like over the next five, 10 years? Exactly right. I mean, we don't need to see huge redemptions from or even a huge change in asset allocation to see significant inflows into hedge funds. You just

need to see kind of the normal distributions, just cash, basic cash. And I'm talking purely about the institutional investors, right? So it's a lot of pension funds that have been very heavy into private equity in particular, some private credit as well. they're the ones that in general are really looking to allocate more to the liquid hedge fund space and have just been unable to do in scale. And then another side of the coin is family offices, some of the retail side. That's where you are seeing flows into certainly liquid alts and into some of the hedge fund space as well. But you're not gonna see the needle really move until you see those institutional investors

have the liquidity to do so. Which begs the question, what will be the catalyst that makes that happen? Right, they need more IPOs, but people aren't IPO-ing anymore. They just need those businesses to throw off free cashflow, but maybe they paid too much for them and they can't overcome what they paid

to generate that cash flow? Yeah, that's a different podcast, but a lot of questions. I think all of those things are extremely relevant and probably are contributing, unfortunately, to the lack of flows right now. And what do you see in your data when you're looking at these different categories and the correlations and kind of how to investors typically that you see what look back are they using how aware are they that these things change over time like what's your view on that space on that piece of the puzzle. Yeah, I mean, it's a great question. It's something that definitely is going to change from investor to investor. But I think there are a couple of things that are kind of basic truths or at least pitfalls and like I said, it's been generating 3.5% to 4% alpha per annum for the last five years and 10-year periods.

It's been actually unbelievably consistent over the last 20 years. People kind of think of the early 2000, late 90s to 2000 and through 2007 as the heyday for hedge funds. And there's some validity to that. But interestingly enough, on a risk adjusted basis, when looking at excess returns beyond the risk free rate, hedge funds have actually continued to do pretty well and perform pretty consistently in kind of the pre-financial crisis and the post-financial crisis periods, although the overall absolute basis has been lower just because the risk free rate has been closer to zero over much of that time. But that aside, if you look at correlations of our composite index, while the exposure

might be low, meaning the beta, typically it's been below 0.2. The correlations are still reasonably high. Over the last 12 months, our composite index is close to 0.82. If you look at over the last 10 years, it's average. To the S&P or what are we talking about? To the S&P, I'm sorry, to the S&P 500. Over the last 10 years, it's been 0.77. So you know, trivial correlations. They're pretty high. In addition to that, if you look at equity strategies, as you might expect, you're seeing just overall long short equity strategies that we cover correlate point eight six. And that compares to a 10 year average of point eight eight, right. So very high. And then you can look at the flip side where you can look at strategies like volatility trading, where you've had a negative correlation to the S&P over a long creative time of negative 0.3 over the last year, negative 0.4 over the last year, negative 0.4 over the last 10 years. So what's interesting is when you look at just a correlation matrix over very one, three, five, 10-year periods, the correlations of these strategies to the S&P, high or low,

they look to be consistent. And that is where it kind of lies a pitfall, is that just because things have a high correlation to something over time, or even a low correlation, doesn't mean that that's always the case. So if you actually plot a rolling one-year period, or rolling two-year period of returns, and look at correlations through times, take something like managed futures, where, again, you know the space really well. They may average a correlation of zero over a market cycle or five year, 10 year, 20 year period, but that typically comes with huge positive exposure offset by huge negative exposure. And so these are directional strategies, at least in managed futures for the most part,

where just thinking about a zero correlation, you have to really understand kind of what you're going to live through over the period of any given year, two-year, three-year period. And that can again range from positive 0.8 to negative 0.8 and everywhere in between. So it's really important to... Yeah, go ahead. I was just going to say, we have a good blog post we'll put in the show notes of negative correlation does not equal non-correlation. Right? So investors tend to think of non-correlation as negative when they want it, but I tell

people, yeah, like, okay, managed futures is zero. Like you said, that means it was 0.75 for five years and negative 0.75 for five years and it averaged to zero. Right. Exactly. Right. So that's a really important distinction to zero. Right. Exactly. Right. So that's a really important distinction to make. You have to look, kind of peel back the onion a little bit and get a little bit more granular. The second thing is

a lot of our clients, and we talked to them about this, is thinking about what are correlations that are structural versus non-structural, right? So what do I mean by that? Let's take something in the energy complex, take crude oil and gasoline. Crude oil has to be refined to create gasoline. Now those correlations can break down over time, but there is a structural relationship that will always match both of those different raw materials together. And so it's never gonna have a negative correlation in perpetuity, it can't happen. These things are related, they'll just stop refining crude oil if that happens for long enough.

And so you see kind of take the opposite side of that where you have things like gold, which at times can have significantly positive correlation with equity markets with the dollar, it can go completely the opposite way. And so those are more relational and they can trend for many periods of time, but there's nothing structurally holding gold to the dollar or negative to the dollar or any of the other asset classes. And so it's very similar. And

it's very similar, maybe when it was pegged, but it's very similar in the gold standard. It's very similar when you look at something like volatility trading. So volatility trading, for the most part, these strategies are going to be long volatility. And it's very difficult to have huge drawdowns, at least sudden drawdowns in any market, but equity markets in particular, without volatility spiking. And so there is this negative structural relationship between volatility and equity returns. And so it's understandable that you would have not only a negative correlation over a long period of time,

but even at most periods within, you're gonna see that relationship hold. You take something like multi-stratics, where there are plenty of times where there's maybe zero correlation, and they're going to be much different than managed futures, where it's a lot of positive offset by a lot of negative, because these are not directional strategies. They're often very closely hedged and managed to beta neutral and dollar neutral, all of those things. But what's interesting is those correlations, if you're not looking, can also creep up on a regular basis.

So let's take just our multi-strat index. Right now, if you look over the last 12 months, and that's only 12 data points, so let's be careful about that, but it's at 0.69 correlation to the S&P. So that compares, if you look over the last three years rolling, it was 0.26. If you look at the last five years rolling, it was 0.31. But interestingly, if you look at the last 10 years, it's 0.5.

So part of this is that used to be, just after the financial crisis into the early 2010s, these multi-stratas were not nearly managed as tightly and they tended to have more positive correlation. It's really only been since kind of the late 2000, the late teens into, you know, the more recent period where these strategies have been virtually at least thought of as market neutral. But again, even that's not always the case. And it's important in our clients, you know, are looking at these things to understand

what is the structural relationship where I know I have a certain amount of exposure to the S&P, I wanna have strategies and managers within those strategies that are going to not only generate alpha, but are gonna have exposures that are gonna either offset depending on what my objective is, or are going to minimize or mitigate drawdowns in my portfolio. So those are the characteristics that our clients are analyzing when they're looking at the history of these strategies.

And again, it's really important to differentiate those structurally related ones. And again, on the other side, equity long short, for the most part, unless you're looking at market neutral equity strategies or low net strategies, predominantly, they are going to have a significant long bias. They're going to have a beta of anywhere from 0.4 to 0.6. So it's important that you understand if the equity markets sell off significantly, that part of your portfolio, even with alpha, even with stock selection and risk management, is still probably going to be down. So that's how our clients are thinking about it. Yeah. And you'd say they generally understand that, I believe, right? A lot of the allocations

come from their former equity allocation, right? Yes. They're not taking it. I mean, some are out of bonds, one up, but essentially like, hey, this is a smarter way to do equities. It's a less volatile, better risk adjusted return way to do equities. We get that less volatile, better risk adjusted return way to do equities. We get that there's that correlation there. Let's plug it into that side of the equation. Absolutely. Absolutely.

So we mentioned multi-strat there. Let's dig in on those for a little bit. First, maybe just some definitions. Do you define or should we define multi-strat versus Podshop? So it's a good question. We cover multi-strat a little bit more broadly than just the Podshop. So our multi-strat index has about 80 funds or 81 funds, about a little shy of $400 billion. It's almost everyone you could possibly think of when you think multi-strat from the big names and the most well-known names down to some of the smaller strategies that you have to be in the industry probably to know about. That being said, no, we don't limit it to just purely the pod shops. And the reason is that

whether you're a pod shop or not, while there certainly is gonna be differences in risk management and month to month, the return characteristics are still going to be relatively similar if you're diverse enough. And so we do incorporate all of those. Now, what I'll say to that is pretty interesting. Even when you ask about what's multi-strap doing, and I'll say to that is pretty interesting. Even when you ask about, you know,

what's multi-strap doing? And this gets back to the indices that we were talking about earlier in the construction of those indices. So if you take HFRI's Podshop index, which again, highly correlated to what we have, in a year like 2024, their index was up 6.8%. Okay, that beat the risk-free rate, not bad. But our index was up 11%. And when you're talking about a difference of over 400 basis points in a given year, and again, that's not an anomaly, that's the rule we typically see, especially in strategies like multi-strat where a lot of them just aren't reporting to the databases, we see anywhere from two, three, four, 500 basis points difference per atom.

And so, you know, that can be the difference between allocating, even finding multi-stratus compelling at all, to saying, you know what, you know, the risk-free rates not too far off, there's, it's fully liquid, there's obviously, there's no risk in a risk-free rate. And so, you know, how much if at any, you know, should we be locking up capital and really losing a lot of that transparency in the multistrats? And so it depends what benchmark you use.

And if you use a complete set of data, the multistrats have really been almost printing money for the last 10 years. But I'd say certainly over the last five years where we've been through, feels like, a hundred years worth of market cycles condensed into one and the multi-stratum, what you've thrown at them, they've really been able to mitigate losses and sudden reversals as well as perform well in years like 2020 and years like 2022 where they were roughly flat to years like 2024 where they were up 11 and just continue to generate not fully uncorrelated returns,

but a lot of alpha relative to the S&P and other asset classes. And do you think that's because of their style, because of the diversification or because of the center book or what's your multi-strap pitch, if you will? It's a good question. Why the investors love them so much. There was just an Odlots podcast last week or two weeks ago of why investors love multi-stratas. But to me, it's the performance, right? It's performance driven. They're chasing the performance.

Look, I think at the end of the day, it always comes down to performance and the multi-stratas, but also think about replication. It's kind of what we talked about before. It is a place that is very difficult to replicate. You certainly can't do it cheaply. And so when you have something that generates performance that is difficult to replicate and that performance is highly coveted because it's really unique alpha and it comes at times of market strife and really all weather, people are going to be willing to pay for that. And then you throw on top of that, the larger managers and kind of the top tier, the top

three, the top five, we won't name names, we probably know who they are. For the most part, they're either closed, they're either hard closed, they're extremely hard closed, right? But they're very particular about who they let in. And I think that in itself also creates additional demand for it because people want to be part of that club. It's kind of the one remaining space that's really difficult to get into, at least the highest level. The exclusivity back into hedge funds, if you will? To some extent. I mean, I'd say that's mostly gone away, but it is there in the top few, for sure, in the multi-strat space.

So access is something that is really important. But look, I don't know, I can't say that there is a secret sauce, but I can tell you that there are certainly some consistencies in the ones that are the best. And it really comes down to, it's not just, oh, it's a war on talent and they can throw money at talent. That can happen. And you've seen a lot of big players with a lot of resources throw money at talent and try and solve the problem that way. It doesn't always work out as you expect.

So it's much more about its experience, number one. It's risk management, number two. It's portfolio construction. That center book is extremely important. And just how those center books are run at the biggest shops, I don't think anybody knows exactly other than the fact that those center books tend to always be on the right side of huge market moves or at least not getting hurt from them. So there's always going to be demand to pay for a stream of returns that you can't

generate on your own or cheaply. And I think we're seeing that in the multi-strat space and it's just going to continue until there really is a return event that is extremely negative. We haven't seen that. And multi-strat versus Podshop, we're just talking about the multi-strat netting the fees and the Podshop isn't that you're paying each manager depending on their performance? Yeah, I mean, I'll tell you why this is such a hard distinction. It's even harder distinction to make today than it was five years ago. Because take any shop that you would call a pod shop, even kind of the quintessential pod shop, and they are also investing in external managers. And so there's been an evolution in the space where you've actually seen fund-to-funds, kind of historically, some of those fund-to-funds have become much more like the multi-strat podshops.

And the multi-strat podshops, to some extent, have become more like fund-to-funds in the last couple of years. And part of that is they've been, we've talked about this on a number of podcasts, but kind of coined the term with others, I wouldn't take full credit for it. They've been a victim of their own success where these multi-stratas have done so well and the PMs inside of them have done so well that they have been able to actually, you know, spin out and start their own funds and have the working capital to do so. And because of that because of that, the multi-stratas themselves have had to make a decision. Do we want to just say, all right, well, we'll just continue to have this war on talent and bring everybody in-house or might there be a benefit to not only be okay and

maybe bless that portfolio manager for spinning out but actually seed. And if you take a look at the... Right, so stay invested in them, still have the upside. In fact, your costs and overhead are going down because you don't have to pay those significant signing and retention bonuses that are associated inside of the pod shops. And so these multi-strats have actually been the largest source of new capital, of capital for new launches over the last 12 to 18 months,

which is something that would have been unheard of three years ago, especially five years plus. So that's why, you know, building their own building here in Chicago, because one of their guys got poached in the elevator at the UBS tower. He's like, I don't want anyone else in our elevators. Right. And you think, you know, you used to hear Tiger Cubs, you now hear Citadel Cubs and Millennium Cubs and Disha Cubs. And you're seeing all of these really smart PMs that now have the wherewithal to launch and know that they might even have the work that capital behind them from the multi-stratics themselves. But you know, more constraints are kind of off. Yeah, it's so weird, right? And it just comes back into the old fund model. Like now these guys are all they're standalone funds

We want to access them. It's a fund to fund like no, we don't like fund to funds. We want to punch Okay, I'll call it a pot right. Yeah. Yeah, so some of it's it's a lot more semantics than you think So to make that distinction in an index. Yeah, it doesn't make any sense right because I think Myself and listener I'm envisioning a pod shop of like, okay, there's some big fancy building here in Chicago. And there's a P 6 p.m. on each floor of three floors. And they've got teams and one centerbook managing it all. But they're everyone's in house there and getting paid what they get paid. Yeah. So that is an interesting distinction. And you,

I heard you I think that was in Chicago Chicago maybe almost a year ago, but you were talking about a future where maybe, and maybe these are funds or maybe even the individual managers are on platforms and you could kind of mix and match from all these different places each of those managers and kind of build your own pod show. Yeah, I mean, I think the trend that you're hitting on is something that we're seeing kind of everywhere and There is there's a couple of things happening at the same time You know one of them is that the investors the allocators themselves have just gotten so much more sophisticated over the last You know, let's call it decade

But certainly in the last five years of you know exactly what they want right kind of separating beta from alpha and we can get into Portable alpha and what role that plays in this. But it's all, you know, basically boils down to investors. They're very specific about what they want in their portfolio. They're very specific about what they're willing to pay for. And that really is alpha for whatever their portfolio is, not necessarily alpha against any individual risk factor. They can kind of define it themselves. And so what we're seeing is a couple of things. One is the hedge fund industry itself is becoming much more of a solution provider, right? Managers are now sitting on the same side of the table as allocators and saying, all

right, you tell me what you need and we'll figure out a way to provide it. And oftentimes this is now done via separate accounts. It could be funds of one, but it's usually more often via separate accounts, which gives full control to the end allocator, full transparency, but also a really healthy relationship that can not only be a large dollar amount, but can scale because now they know this manager can provide a number of different solutions as we continue to evolve. And so we're seeing a lot of separate accounts. We're seeing a lot of Portable Alpha kind of making its way back in.

And the term, while maybe not the best term because it had a lot of negative connotations around the global financial crisis, you can call it stacked returns. You can call it a number of different things, kind of getting back to semantics. But the point is, again, sophisticated allocators now have the ability to say, we don't want to pay for the beta, we can get our own S&P exposure at almost for free. What we are willing to pay for is maybe the stock selection or credit strategy or whatever the strategy is, if it generates uncorrelated returns, we're willing to pay for that. And managers who years ago, and just a few, historically might have said, look, it's either you invest in the commingled fund or not.

It's a binary decision. Now are saying, let's figure this out. And so I think the world that you're mentioning, I mean, the individual PMs also can have much more flexibility because they can take capital from the managers, which also realize that it's no longer exclusive capital. Even when PM spun out before, it might be very restricted to just the multi-strat investing in you. Now it's not exclusive anymore. And so, following up on that, could we see a world where you could be part of a number of different multistrats? Absolutely, especially if you think about kind of the multistrats that are now being built really at the allocator level, where you're seeing kind of allocators get into this game,

the larger ones, but with the help of separately managed account platforms, where they're starting to kind of put together their own multistrat, if you will. And so that's exactly how they're thinking of it, is finding these different PMs and also being the portfolio construction and the center book and all of those other things that the multi-stratts are well known for. Maybe there's a race to zero, but everyone's poaching from each other's multi-strats or they're going out on their own, but there might only be X number of actual good talent out there. Yeah, I think that's a good point. I do think that there is some finite limit on talent. That being said, the limit may be much larger than we thought. And think about it this way, you know, for how many years did we hear almost every single time where a large multi-strat went from 5 billion to 10 billion?

You know, they have capped out and they're not going to be able to, if they hit 15 or 20 billion, you're going to see, you know, the industry is going to implode. And then it was 25 and then it was 30. And now we see some of the funds are at 70 billion plus. And I'm not saying that there isn't a limit, but the limit is certainly well beyond what we had thought. And then secondly, the multi-stratas themselves as they were kind of vacuuming up all of these different PMs, which would have gone out on their own at a different point in time. Now the economics were so good to go in-house under a large multi-strat where they could get their signing bonuses and they didn't have to raise capital and they could really just focus on the portfolio where they definitely, you saw a lot fewer launches over a period of five years and you thought,

oh, maybe the talent pool has dried up. Well, really it was probably just that it was being consolidated and you didn't really see it because it wasn't happening above water, it was happening below the surface. Now all of a sudden, we're seeing a lot of these PMs again spin out and capacity may be quite different on an individual level than it is as part of an individual firm where they can only have so much leverage. So you're seeing the constraints come off again. I just think it's a different formation of the industry. And again, we're still not that far from $3 trillion. And when you compare that to some of the other asset classes and a lot of the

deep markets that a lot of these managers, they're not really trading the small cap names like they used to. They really are in kind of the large cap and mega cap. There may be a significant amount of capacity that is still yet to be tapped. So I'd say capacities there, manager talent, the talent will find that capacity and or I was gonna say, or they'll go more multi for lack of a better term, right? Of like, we'll do more strategies and more markets and we're gonna go into India, we're gonna trade commodities, we're gonna do, right? Like if it's do, would you agree that it's mainly centered the multi stretch in equities right now? I say that that has been a five years ago, 100% over the last at least three years and more recently, all the things you said have been happening inside of all the firms.

And it's also more transparency. So a number of the larger firms have been maybe more in commodities than they led on for a while. Certainly some of them have been more in credit, but you are seeing different types of multi-strat that are forming that may specialize in a certain region or may specialize in a different asset class from equity markets.

And you're seeing it in the commodity space, you're seeing it in the credit space. So even kind of what you think of as defining what a multi-strat is, that's's evolving too and it's evolving all over the globe So yeah, I think we'll continue to see them, you know emerge all over the place in all different strategies and asset classes I'll ask you our fun segment of Okay, what sort of you've been down any crazy rabbit holes recently like going back to old? 80s videos or sports stats or something non work related

Hmm It's been a lot of work lately Trying to think about what I've been down. I've been watching some documentaries lately. Kind of going back to just watch the one on Ben Laden and how they caught him, which, you know, we all lived through it and we lived through 9-11, but is there a better than the Zero Dark 30 movie? Yes. I mean, this is it's not as stylized. It's a bit grittier, but you know, just talks about a lot of the decisions

that were made with not as much conviction as you might have thought. I'm even kind of getting bin Laden and imperfect information. Exactly. Exactly. I'll tell you one of the one of the takeaways or one of the interesting things from it was I can't remember who brought it to him, but it was maybe Ben Rhodes. But they said to Obama that, you know, going in and capturing or killing bin Laden, we have much less confidence than we did for weapons of mass destruction. Oh, no, during that era. So just to give you kind of, you know, the confidence level was we have much less confidence than we did for weapons of mass destruction. Oh no. You know, that error. So just to give you kind of, you know, the confidence level was quite low, um,

relative to other things that we've gotten wrong. So again, we're sending in two helicopters instead of two battalions. So that might've helped with the math there. Correct. Correct. Um, but that's, you know, always about kind of taking more of a quantitative view of things that, you know, had been much more qualitative historically is always interesting. Like, you know, all the Michael Lewis books, they're fascinating. Yeah, I hear you.

All right, John, thanks so much. We'll leave it here. Tell people where to find you. PivotalPath.com. Absolutely, absolutely and Jeff you know really appreciate the conversation and enjoy working with you and speaking to you and RCM so you know thank you so much and hopefully this will be of interest to you guys and your listeners. Love it we'll see you soon. All right Jeff. All right thanks John. All right, Jeff. All right. Thanks, Tom. You've been listening to The Derivative. Links from this episode will be in the episode description of this channel.

Follow us on Twitter at rcmults and visit our website to read our blog or subscribe to our newsletter at rcmults.com. If you liked our show, introduce a friend and show them how to subscribe. And be sure to leave comments. We'd love to hear from you. This podcast is provided for informational purposes only and should not be relied upon as legal, business, investment, or tax advice. All opinions expressed by podcast participants are solely their own opinions and do not necessarily reflect the opinions of RCM alternatives, their affiliates, or companies featured. Due to industry regulations, participants on this podcast are instructed not to make

specific trade recommendations nor reference past their potential profits, and listeners are reminded that managed futures, commodity trading, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.