Mastering Diversified Carry with Adam Butler
Overview
In this exclusive interview hosted by Advisor Analyst, Adam Butler dives deep into the mechanics of diversified carry strategies, cross-asset risk management, and return stacking.
Key Topics
Carry Strategies, Cross-asset Risk Management, Return Stacking, Managed Futures
Introduction
In this exclusive interview hosted by Advisor Analyst (advisoranalyst.com), Adam Butler dives deep into the mechanics of diversified carry strategies, cross-asset risk management, and return stacking.
Adam unpacks the technical and practical definitions of carry, explains how the strategy operates across currencies, bonds, equities, and commodities, and explores how combining carry with trend following and managed futures can provide stable, risk-adjusted returns across economic cycles.
Topics Discussed
- The technical versus colloquial definitions of carry and the traditional carry trade
- Dynamics and risk considerations in currency carry trades
- Application of carry concepts across multiple asset classes such as bonds, equities, and commodities
- Benefits of cross-asset diversification and risk-adjusted carry strategies
- The integration of carry signals with trend following and managed futures strategies
- The return stacking approach that overlays diversified strategies onto core portfolios
- The impact of economic cycles, inverted yield curves, and negative carry scenarios
Summary
The global financial landscape is undergoing significant transformation as investors seek ways to enhance returns while managing risk across diverse market conditions. In this context, Adam Butler explains that the concept of carry—defined technically as the expected return on an investment if its price remains constant—extends far beyond its traditional application in currency trades. He outlines how classical carry trades have historically involved borrowing at low interest rates in funding currencies to invest in assets yielding higher returns, and he warns of the fat-tailed risks that can emerge in downturns. The discussion broadens to include carry strategies in bonds, equities, and commodity futures, emphasizing that these instruments pay yields through dividends, coupons, or convenience yields. He highlights the critical value of cross-asset diversification, which helps balance performance across different economic cycles by simultaneously capturing various types of risk premia. He also illustrates how combining carry signals with trend following can mitigate extremes and improve overall portfolio efficiency. The conversation frames return stacking as a novel solution that adds diversification layers to core asset allocations without forcing investors to abandon traditional holdings. Additionally, the conversation addresses real-world issues such as negative carry exposure during inverted yield curves and the micro versus macro inefficiencies in global markets. Overall, the episode situates these strategies within a broader trend of seeking risk-adjusted performance improvements amid evolving market dynamics.
Topic Summaries
1. The technical versus colloquial definitions of carry and the traditional carry trade
Adam Butler begins by clarifying that “carry” can be understood in two distinct ways. Technically, it is the return an investor earns from an asset’s yield—be it dividends, coupons, or rents—assuming no price change. Colloquially, however, carry often brings to mind the traditional currency carry trade, where investors borrow money in low interest rate environments (such as with the yen or U.S. dollar) to invest in higher yielding currencies found in emerging markets. He explains that while these strategies historically have worked well during periods of risk appetite, they bear the risk of steep losses when markets reverse. Butler uses the example of borrowing at 2% to invest in assets yielding 4% to illustrate the principle. He also notes that the conventional view of carry involves a statistically skewed return profile: steady gains interrupted by occasional, severe downturns. This discussion sets the stage for understanding how carry applies across various asset classes. The explanation underscores the importance of rigorous risk management when deploying such strategies. Ultimately, he stresses that a clear distinction between the technical yield and the associated market risks is vital for any investor considering a carry strategy.
2. Dynamics and risk considerations in currency carry trades
Focusing specifically on currencies, Butler details how the currency carry trade operates by exploiting interest rate differentials. He explains that investors borrow funds in low-yielding currencies and invest in those with higher local rates, often in emerging markets like Brazil or Mexico. The strategy typically yields positive returns during pro-cyclical market periods when risk appetite is high. However, he highlights the inherent risk: a sudden shift in market sentiment or an unexpected currency movement can cause steep losses, creating “fat negative tails” in the return distribution. He further examines scenarios where global liquidity conditions or geopolitical events trigger rapid deleveraging. The discussion makes clear that while the currency carry trade can be lucrative, it requires careful calibration of exposure and ongoing monitoring of macroeconomic indicators. By acknowledging these risks, Adam emphasizes the necessity of robust risk controls and diversification within the trade itself. The analysis also touches on the balance between expected premium returns and the possibility of sudden reversals, informing investors of the true risk-return profile of the strategy.
3. Application of carry concepts across multiple asset classes such as bonds, equities, and commodities
Adam Butler expands the discussion by demonstrating that the carry concept is not limited to currency trades. In bonds, for instance, the yield difference between long-dated debt and short-term instruments can be seen as carry. He similarly explains that dividend yields in equity markets function as carry for investors holding stocks. With commodities and futures, he introduces the notion of a “convenience yield” as a form of carry that compensates investors holding physical assets or derivative positions. This broader application illustrates how different asset classes have built-in yield differentials that investors can capture. He compares these elements to renting out property where the rental income exceeds borrowing costs, drawing a parallel across diverse investments. The explanation makes it clear that while each asset class presents its own risk factors, the underlying principle of earning a return by holding an asset remains the same. This multi-asset perspective reinforces the potential for creating balanced portfolios that benefit from diverse yield sources. Moreover, it underscores that a careful calibration of positions in each asset class can optimize the overall risk-adjusted return.
4. Benefits of cross-asset diversification and risk-adjusted carry strategies
The conversation then shifts to the advantages of diversifying carry trades across multiple asset classes. Butler argues that by investing in currencies, bonds, equities, and commodities simultaneously, investors are less exposed to the volatility of any single market. He highlights how the best and worst returns across these asset classes often occur under differing economic conditions, helping to smooth the portfolio’s overall performance. According to him, this cross-asset approach minimizes the likelihood that all positions will perform poorly at the same time. This diversification is particularly valuable in mitigating abrupt market downturns, as gains in one segment can offset losses in another. He also explains that such a strategy does not require forcing a trade-off between risk and return; rather, it seeks to capture the optimal yield differential available at any given time. In effect, the strategy emphasizes maximizing risk-adjusted carry by capitalizing on market dislocations and inefficiencies. Butler’s discussion makes it clear that a diversified carry portfolio can provide a more stable and predictable return stream than investing in a single asset class. Overall, the segment reinforces the practical benefits of applying a multi-dimensional approach to achieve long-term investment objectives.
5. The integration of carry signals with trend following and managed futures strategies
Another significant aspect of the discussion is how carry signals can complement trend following techniques. Adam Butler points out that while managed futures have traditionally relied on trend following, recent developments show that incorporating carry signals enhances diversification. He explains that during periods when trends become extreme, the addition of carry can temper volatility and reduce the risk of sharp reversals. By blending both approaches, investors benefit from the steady yield of carry while still capturing the momentum provided by trend following. This integration not only lowers the overall correlation with standard asset classes but also creates a more robust risk management framework. Butler notes that historical data supports the idea that a combined strategy often outperforms pure trend-following models during volatile or dislocated market phases. The segment emphasizes that carry and trend strategies, when properly integrated, serve as natural complements that help smooth out performance fluctuations. This insight is particularly valuable for those seeking an uncorrelated return stream that can better handle market extremes.
6. The return stacking concept and portfolio diversification without sacrificing core asset exposure
Butler introduces the innovative concept of return stacking, which involves overlaying diversified alternative strategies on top of a core equity or bond portfolio. He explains that many investors are reluctant to reduce their exposure to traditional asset classes due to both performance history and emotional attachment. Return stacking allows investors to maintain their core positions while adding diversified, uncorrelated strategies such as carry, trend following, merger arbitrage, and even exposure to assets like gold or Bitcoin. This approach addresses the challenge of underperformance during prolonged periods when popular asset classes falter. By stacking these strategies on top, investors can hedge against the inherent risks of concentrated portfolios without sacrificing the growth potential they value. Butler highlights that the resulting portfolio is designed to capture extra yield from risk premiums while keeping the familiar exposure intact. This method also reduces the need for dramatic portfolio reallocations, thereby mitigating investor regret and ensuring a smoother ride through volatile market cycles.
7. The impact of economic cycles, inverted yield curves, and negative carry scenarios
Throughout the conversation, Adam Butler emphasizes how changes in the economic cycle can alter the dynamics of carry. He cites examples such as the inversion of the yield curve, where longer-dated bonds yield less than short-term instruments, leading to negative carry exposures. In such conditions, even traditional investments like corporate bonds can underperform as their duration risk is compounded by an unfavorable interest rate environment. Butler discusses how these macroeconomic shifts force investors to adjust their positions, often favoring a shift from long duration to shorter positions to capture positive carry differentials. He explains that this adjustment is critical during periods of market stress and when central banks adjust policy rates. The discussion also sheds light on how diversified carry strategies can help offset these negative exposures by explicitly managing the bets on duration and credit risk. By strategically positioning both long and short exposures, the carry strategy can help stabilize portfolio returns during times when market dislocations are most pronounced. This segment reinforces the idea that understanding the broader economic context is essential for effectively deploying carry strategies.
8. Challenges and opportunities in making sophisticated carry strategies accessible to retail investors
Finally, Butler addresses the traditional inaccessibility of carry strategies, which have historically been the domain of institutional investors. He explains that the complexity of executing a diversified carry portfolio—requiring extensive data, advanced futures pricing, and intricate risk management—has limited broader adoption. Innovations in technology and data management, however, have allowed for these sophisticated strategies to be repackaged into more accessible formats. Through the concept of return stacking, his team is democratizing access by offering these strategies at non–hedge fund fees to retail investors. He also notes that while many hedge funds and institutional players have long operated currency and carry books internally, the modern approach relies on robust diversified solutions that are easier to implement across asset classes. This shift is critical for investors who want the benefits of alternative risk premiums without the associated high fees and complexity. In summary, Butler’s discussion on accessibility highlights both the challenges of data and infrastructure requirements and the significant opportunity for retail investors to benefit from what was once an exclusive strategy.
Transcript
But the idea is that you’re, let’s say you’re borrowing at 2% to invest in a currency that, where the cash rates are 4% and you’re going to earn that 2% return as long as the price of the currency doesn’t change against you. And so during pro-cyclical periods, which is 80% of the time, when the, when markets are, risk seeking investors are deploying their capital, hoping for a return on investment.
Those carry trades tend to be highly profitable and historically in the currency carry trade, kind of 10 to 20% of the time, when investors are more concerned with return of capital during risk-off periods, they tended to go against them. So the currency carry trade was often associated with having these fat negative tails where most of the time you’re doing really well, and then some of the time you give back a lot of the returns that you earned while you were doing well. And that’s, just one kind of narrow expression of a broader concept of carry.
We like to think that carry, as a technical definition, is just the return that an investor expects to get on an investment if the price of that investment doesn’t change, right? So if you buy an apartment building, you’re going to rent out the apartments in that building. You’re going to borrow from the bank in order to buy that apartment building, and you’re going to collect rents.
Presumably, the total sum of the rents is going to be higher than the interest that you need to pay the bank, or the cost of capital on that investment. That difference is the carry on that apartment building. In a stock portfolio, the carry is the dividend yields that are paid out by the companies. So even if the value of the stocks in the portfolio don’t go up, then you’re still earning this constant income from the dividends that are getting paid.
This is perhaps most familiar for bond investors. Obviously you invest in a bond, you can borrow cash to invest in bonds. Typically, bonds have a higher yield than cash, either because they’ve got credit risk, or because you’re having, you’re looking to lend money for a longer horizon, like cash.
You can get your money back right away. You know exactly what the value’s going to be. But if you lend your money for, out for 10 years, interest rates may change. In the meantime, inflation may change in the meantime. And so typically you need to be compensated with a higher yield to lend money for 10 years than you would just to lend money overnight in the cash markets, right? So that is also a carry trade.
And then there’s also a carry investing in commodity futures. And it’s a little more nuanced that requires a little more explanation, but the idea here with the carry trade, or carry strategy that we’re big fans of is that we’re not just investing in currencies and absorbing that kind of pro-cyclical risk. Rather, they’re investing in a wide variety of different asset classes. And because those asset classes tend to have their best and worst returns in very different economic environments, they tend to balance each other out. And while it’s far from a risk-free strategy, you do get an enormous amount of benefit from that cross asset diversification.
So you’re picking up dividends, coupons, and convenience yield from commodities and this positive carry yield differential from currencies, all in one broad portfolio. And they just, you never have, you never all jumping on one section of the trampoline. Rather, you’re jumping at different times at different sections of the trampoline and it’s a much more comfortable ride.
In order for markets to entice you to come out of cash where you know the value of that cash is going to be tomorrow, you can use it for consumption today, in order for the markets to entice you to invest your money in something risky where you don’t know what the value is going to be tomorrow, where there is some price risk.
If you try to redeem before maturity, then typically the markets need to pay you higher expected returns, right? Stocks pay you dividends, bonds pay you a coupon in excess of the cash rate. Higher risk currencies, or currencies that are experiencing higher inflation or higher inflation risk, will often have a higher interest rate, right?
So investors need to be compensated for putting their money in those different areas, and that compensation is carry. The primary bet that we’re making is that on average investors would prefer to put their money in higher yielding equity markets than lower yielding equity markets, higher yielding bonds than lower yielding bonds, on a risk adjusted basis.
Obviously if a market is perceived to be much higher risk, then it needs to pay a higher return, and the risk adjusted expected return might be the same as a lower yielding market that has lower risk, right? So, really what we’re trying to do is emphasize markets that are getting paid more, or that are paying investors more for the same level of risk, de-emphasizing markets that are paying investors less for the same level of risk.
And importantly, sometimes markets actually are paying, are giving negative expected returns. So you can imagine, from 2022 until some point in 2024, we had an inverted yield curve. So investors were actually willing to lend money for 10 years at lower rates than where the Fed was holding cash rates, right? So in that case, you’re able to get better returns on cash. You’re actually better to borrow at the 10 year rate and invest in cash. And so sometimes you want to be actually short bonds. Sometimes the dividend yield on equity markets are way below the dividend yield on 10 year Treasuries, or even on cash.
And so you want to be short equities and long cash, or long Treasury bonds. And sometimes commodities have inverted curves as well, which means that you get paid for being short instead of being long, right? So this is a long/short portfolio that really is just trying to position into markets to maximize the absolute level of risk adjusted carry, whether that carry is long or short.
Let’s call it an uncorrelated strategy, because sometimes people perceive absolute return as being very low risk. Like you expect that the portfolio is just going to go up almost every month. Carry strategies, depending, you can set them to any sort of risk target you want.
The diversification does an enormous amount of work in order to manage that level of risk. But you still definitely get a ride, as you wait for markets to settle into and or find equilibrium, moving towards markets that pay higher risk, adjusted carry. But, markets move in the short term for a variety of different reasons, and investors are not always only concerned with seeking the highest carry differentials.
Sometimes they’re fleeing risks. Sometimes they’re in high speculation mode and they don’t really care about what the yield is because they think there’s got to be a buyer or buyers who come in soon after and continue to push prices even further away from equilibrium.
There’s a variety of different reasons that markets can dislocate from the direction that you’d expect if carry was the only thing that investors cared about all the time, but they don’t. And therefore, you absolutely do get these fluctuations.
Investing in corporate bonds is a carry strategy. Investing in high yield bonds is a carry strategy. Investing in duration is a carry strategy. Investing in dividend stocks is a carry strategy, but they end up being these highly concentrated portfolio bets, right? So what we try to do is we say, we’re going to use futures markets to invest in the global equity indices with the highest risk adjusted yields, the global government bond markets with the highest risk adjusted yields, the global currencies with the highest risk adjusted yields and the global commodities with the highest risk adjusted yields, in the direction that they’re currently paying those yields.
And as a result, because we’re, sometimes we’re long and short different equity indices, long and short different government bond indices, long and short different currencies, and long and short different commodities, it ends up having a very, a diversified global carry strategy ends up having a very uncorrelated return stream, relative to traditional allocations, to equities or bonds, that most investors would have in the portfolio. To answer your initial question about how accessible these strategies, carry has traditionally been, the currency carry strategy was traditionally an institution only, institutional only strategy, right, invested in by pension funds, by hedge funds.
Eventually many institutions brought that in-house. They made them a little bit more sophisticated. So to this day, many institutions do run large currency carry books. Many institutions though, probably a much smaller number, run diversified carry strategies. But it has traditionally been very difficult for retail investors or smaller investors to get access to the global carry style strategy that we offer in the Return Stacked® family, but they could get some exposure to it by investing in managed futures funds, or managed futures indices, typically.
Managed futures are known for their deploying trend following strategies, and it’s still true to this data, the vast majority of the returns to managed futures are explained by trend following. But what we’ve observed in our own research, and there’s been other studies that confirmed this, is that over time many managed future strategies have also begun to add in carry signals into their trend following strategies, because carry is a really nice natural diversifier to trend.
Trend typically tends to chase into the extremes of trends, and often at the extremes of trends, the carry gets quite negative. The market gets quite extended away from the natural kind of economic equilibrium.
And so adding some carry to a trend strategy can do a nice job of balancing out the most extreme elements of trend. And in fact, if you look over the very long term, a diversified carry strategy and diversified trend strategy end up having a relatively low correlation, in the neighborhood of kind of 0.3, 0.4. So they’re just really nice complements for one another.
As an example, if you are an American investor or Canadian investor and you invest in European stocks, and Euro cash rates are substantially lower than Canadian cash rates, you implicitly are expecting a negative carry on the currency, even while you’re investing in your European equities.
That’s often an unintended bet, right, if you own a carry strategy. Then definitionally the, almost definitionally, there are some risk elements involved, but all things equal, that carry strategy would do some of the work in hedging the negative passive carry that investors would have in owning those foreign stocks.
That condition because the carry strategy wouldn’t actually be short the Euro, and long the Canadian dollar, for example, in the example that I gave, right? It does make explicit all of the bets in the portfolio and make sure that you are properly positioned to harvest carry in the right direction at the right time. You’re making explicit, many bets that were implicit, and you’re managing them directly rather than un-managing them.
I think a really, an easy example is, think back to 2022. Obviously 2022, 2023, much of 2024, a really rough ride for bond investors because even for corporate bond investors, think about the Bloomberg Barkley Aggregate Index, the corporate bond index, right, that has a duration of about eight, nine years.
And the, so you’re getting compensated for both a positively sloped interest rate curve and for the credit risk that you’re accepting for investing in corporate bonds, right? That’s nice most of the time because most of the time the interest rate curve is positive, and the credit curve, the credit yield is positive.
But for 22, 23 and much of 2024, the interest rate curve was negative. So if you own a basket of corporate bonds, then if you also want a carry strategy, what you have is, in the bond portfolio, your long credit risk and your long duration in the carry strategy, your short duration, right?
Why? Because you’ve actually got a negatively sloping interest rate curve, and so you’re, you’ve got negative carry on this duration debt, right? So in that way, you’re partially offsetting much of this negative carry exposure that you have in your normal portfolio by investing in this diversified carry strategy, because it’s just reducing the negative carry on the duration element of your corporate bond portfolio.
There’s obviously hedge funds that offer carry strategies. You can get a carry strategy if you’re an institution. You want to sign an ISDA with a bank and get access to their QIS strategies. Other than that, you’re out of luck.
We’re just trying to democratize hedge fund strategies, the trend managed futures trend. Same thing historically, a 2/20 strategy. The managed futures carry, historically a 2 and 20 hedge fund strategy, and carry is an order of magnitude more complicated from a data management architecture standpoint.
You’ve got to get, it’s not just prices, right? For trend following, all you need is futures, continuous futures prices. For carry, you need to have the forward points curve for currencies. You’ve got to have the cash curves for a variety of different global government bond, interest rate markets. You’ve got to have the, all the liquid contracts, all through the back end of the curve, for all the commodity contracts.
So there’s just a, it’s a much more data heavy architecture than most strategies, and that might explain why it’s not quite as popular. It takes a lot more work to build and deploy and then generate daily signals for a carry strategy than it does for most other strategies.
So we had already done the work many years ago for our hedge fund strategies. We just took a component of that and made it available at non-hedge fund fees to any retail investor or advisor to add to their portfolio. So we feel pretty good about that.
A big challenge over the last 10 or 15 years is that global equity markets, for example, have gone straight up. There’ve been a few blips over the, over that period, but, for the vast majority of the time, it’s been just a really nice tailwind for global equities. And so investors year in, year out, often experience this regret.
So while the advisor understands that it’s prudent to spread the investors’ capital across a variety of different prospective sources of return, where they’re not all expected to earn the returns at the same time for the same reasons. That’s why you diversify. But the investor is left feeling every year, I didn’t quite do as well as my friends who maintain their concentrated position in their global equity markets. So there’s this regret that builds up over time. And so any attempt to sell down your equities in order to make room for a diversifier ends up being egg on the advisor’s face.
So what Return Stacking acknowledges is that investors typically don’t want to sell down their beloved equity and bond allocations when they go to dinner parties. They don’t want to feel like they’re underperforming their neighbors or their friends or their family, right? So we don’t want to force them to reduce the things that they know and love, in order to take the healthy medicine of diversification.
So Return Stacking builds portfolios that give you back the full exposure to the underlying equity or bond index that you, that clients want to keep and stack a completely diversified strategy on top. So stack a managed futures trend following strategy. Stack a managed futures carry strategy. Stack a merger arbitrage strategy, soon. Stack gold and Bitcoin, for example. Just things that move to a different drummer for different reasons at different times. Stack it on top so that the client doesn’t need to give up the returns and the experience that they want capturing that, the growth of their core assets.
They do get the advantage of the diversification during those inevitable periods, which historically have often lasted many years, often a decade or more at a time, where equities have underperformed cash with a very painful ride along the way. Then they’re very happy to have this added exposure on top that in many cases, historically, has gone on to do just exceedingly well, precisely during those periods when the core markets struggle.
At the moment, investors are making decisions that are not really guided by their short-term economic self-interest, but rather are guided by other motivations, either geopolitics or what have you, and what that means is that in some cases, the markets have become quite dislocated from their economic equilibrium, and we like to think of that as potential energy in the portfolio, right? Like the investors in the carry strategy over the last year have spent a lot of energy rolling the boulder up the hill, right? And at some point then the conditions will change and that boulder will roll back down the hill.
Historically, we see that after periods of a year or two of struggle that the carry strategies do go on to produce some of their best returns over the near term. It could be quite a prospective time to start allocating to carry strategies. It may not look as attractive over the last year or so, if you look at the chart, but that’s, carry is one of these strategies that can build this potential energy. It’s just like a value portfolio, when it goes down to companies and it just get cheaper and more attractive. Carry has this same kind of quality to it, and in many ways the carry portfolio of today is more attractive with potentially higher expected returns over the next year or two because of it, than when we launched a year or so ago. There’s something for investors to think about.
Yeah, I think that’s one of the greatest benefits of the Return Stacked® suite is that the diversification is cloaked by the underlying exposure to the core asset class, stocks or bonds. And so it’s just, it’s harder for investors to agitate or get grumpy because if the core asset class is, has had a nice rise, in all likelihood, the carry plus that asset class portfolio has also experienced a rise.
And even if the carry has had a negative return, it’s just attenuated that positive return on the underlying core allocation, rather than looking like a line item on the portfolio with a negative return. And from an emotional standpoint, that could be a world of difference in conversations with clients, and their motivation, incentive, and sustainability and sticking with it.
We can judge that by historical simulations, but which have been very strong. But in general, I think it’s healthy from an expectation standpoint for investors to think about these diversifiers as having the same approximate long-term expected return per unit of risk as equities or bonds, or other types of risk premia or strategies that they might think about allocating to?
So the long-term risk, excess risk adjusted return for global equities is in the neighborhood of .035 to 0.4. It’s about the same for bonds. I think we could probably say the same thing for a managed futures trend, or a managed futures carry, or a merger arbitrage strategy, which are some of the other strategies that we are stacking, but…
So we run the carry strategy at about a 10% volatility. So we might expect a 3% to 5% excess return over the long term from an allocation to carry, just as we would expect similar returns at that same volatility for an allocation, a stack to trend, or a stack to merger arbitrage. So an extra 0.3 to 0.5% a year on average, long-term at a 10% allocation.
The track record on stock picking is not very good, right? If you look at the SPIVA annual reports, typically somewhere between 70% and 95% of active managers underperform, and the managers that have outperformed over the past one, three, five and ten years actually typically go on to underperform over the next three to five years. So it was just very difficult to find active managers that are stock pickers, or bond pickers that have a high likelihood of outperforming. These are just uncorrelated strategies that are, in the macro space, they’re not nearly as picked over. I like to say 99% of all cognitive and computational, resources in markets go towards choosing the best stocks, or choosing the best bonds, and there’s almost no effort or resources allocated to how much WTI crude oil should I own, relative to brent crude oil, or German bunds or U.S. equities, or the U.S. equities versus the Nikkei. So this is just not nearly as picked over.
There used to be a rule called Samuelson’s Law that says that the market is micro efficient, but macro inefficient. Micro being, picking stocks within the stock market. Macro being picking which stock market, which bond market to own, or whether, how much to own in stocks or bonds or commodities or gold or currencies, et cetera, right?
So we believe that this is a much less efficient space to seek these excess returns in. Like the returns are likely to be stronger over time for each unit of risk and more sustainable, just because there are regulatory and institutional frictions to the deployment of a massive amount of capital there.
So we think it’s a really good opportunity for retail investors. It has very low average, long-term correlation to the types of things that retail investors typically invest in, and it’s just not offered anywhere else to retail investors in this form, and the structure of being able to get access to this diversification without having to give up the core stock and bond exposure that people have grown to really love, I think is the gift that keeps on giving.
The primary educational portal for return stacking is Returnstacked.com. There’s also ReturnstackedETFs.com and there’s plenty of research on managed futures diversification and carry itself, including a white paper and a long, detailed blog post on Investresolve.com on our blog.
There’s lots of videos on ReSolve’s YouTube channel, on the Return Stacked® YouTube channel. We’re doing our best to try to cover the waterfront in terms of educational material for carry, and if anyone has any questions or follow up, then we would welcome direct questions to me at adamButler@investresolve.com.