Key Takeaways
- • Standpoint Asset Management's six-year stress test (late 2019–2026) across COVID volatility, fast crashes, violent reversals, and energy shocks validated the firm's disciplined trend-following and multi-asset approach without requiring fundamental innovation or strategy overhaul.
- • Of 11,000+ mutual funds and ETFs available at Standpoint's launch, shockingly few delivered on three core metrics advisors demand: outperformance versus 60/40 benchmarks, lower volatility, and low equity beta correlation—highlighting structural portfolio construction failures across the industry.
- • The "abandonment problem" and "bucket problem" reveal investor inability to hold managed futures through full cycles despite documented performance benefits; combining global equity beta with trend-following in a single vehicle addresses holdability and diversification challenges that separate products cannot solve.
- • Standpoint's approach favors trend-following plus cap-weighted equities over traditional bond-equity blends for long-term compounding, rejecting industry obsession with constant innovation in favor of stable, repeatable risk management that has survived extreme market conditions.
Summary
Eric Crittenden, founder and CIO of Standpoint Asset Management, returned to discuss how his firm's strategy has weathered six-plus years of extraordinary market stress since launching in late 2019. Rather than pursuing industry-standard "constant innovation," Standpoint has maintained disciplined stability in its trend-following and multi-asset process—a deliberate choice validated by real-world conditions including COVID volatility, flash crashes, violent reversals, and energy shocks. This extended period functioned as a comprehensive stress test of both the firm's risk management framework and investor behavior patterns.
A central theme emerged: the industry's portfolio construction landscape is fundamentally broken. When Standpoint launched, approximately 11,000 mutual funds and ETFs were available to advisors. Yet remarkably few addressed the three metrics advisors consistently claim to prioritize: outperformance relative to traditional 60/40 equity-bond allocations, lower volatility, and low equity beta exposure. This gap between stated preferences and available product offerings reveals systemic structural failures in how the industry builds and markets solutions.
Crittenden identified two critical behavioral barriers: the "abandonment problem" and the "bucket problem." Investors enthusiastically adopt managed futures during strong performance periods but systematically abandon positions during downturns—failing to maintain exposure through full market cycles despite documented diversification benefits. The bucket problem reflects how separate vehicles (managed futures funds plus equity allocations plus bonds) create psychological and operational friction that undermines true portfolio integration. Combining global equity beta with trend-following in a single, unified structure materially improves investor holdability and makes genuine diversification achievable.
The conversation also addressed strategic positioning within equity-based allocations. Crittenden prefers combining trend-following strategies with cap-weighted equities rather than traditional bond-equity frameworks, viewing this mix as superior for long-term compounding. This reflects a fundamental disagreement with conventional wisdom about portfolio structure. The discussion extended to replication strategies, market capacity constraints, correlation dynamics (distinguishing non-correlation from negative correlation), AI as an analytical force multiplier, and how product categorization frameworks—mutual funds versus ETFs—can inadvertently work against investor outcomes despite superficial structural differences.
A central theme emerged: the industry's portfolio construction landscape is fundamentally broken. When Standpoint launched, approximately 11,000 mutual funds and ETFs were available to advisors. Yet remarkably few addressed the three metrics advisors consistently claim to prioritize: outperformance relative to traditional 60/40 equity-bond allocations, lower volatility, and low equity beta exposure. This gap between stated preferences and available product offerings reveals systemic structural failures in how the industry builds and markets solutions.
Crittenden identified two critical behavioral barriers: the "abandonment problem" and the "bucket problem." Investors enthusiastically adopt managed futures during strong performance periods but systematically abandon positions during downturns—failing to maintain exposure through full market cycles despite documented diversification benefits. The bucket problem reflects how separate vehicles (managed futures funds plus equity allocations plus bonds) create psychological and operational friction that undermines true portfolio integration. Combining global equity beta with trend-following in a single, unified structure materially improves investor holdability and makes genuine diversification achievable.
The conversation also addressed strategic positioning within equity-based allocations. Crittenden prefers combining trend-following strategies with cap-weighted equities rather than traditional bond-equity frameworks, viewing this mix as superior for long-term compounding. This reflects a fundamental disagreement with conventional wisdom about portfolio structure. The discussion extended to replication strategies, market capacity constraints, correlation dynamics (distinguishing non-correlation from negative correlation), AI as an analytical force multiplier, and how product categorization frameworks—mutual funds versus ETFs—can inadvertently work against investor outcomes despite superficial structural differences.
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