BLNDX/REMIX CEF: intriguing performance, high risk for key people

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setthaphat dodchai

A reader recently suggested I take a look at the Standpoint Multi-Asset Fund (MUTF: BLNDX). I’m always interested in looking at new and alternative funds, so here’s my unbiased two cents.

I think BLNDX’s strong returns since inception worth watching. However, I don’t think it’s actually an “all weather” fund as advertised. Looking at the portfolio’s strategy and holdings, I think it’s more of a 50/50 mix of an equity fund and a managed futures fund. Given the relatively short track record and small portfolio management team, I would be hesitant to commit large amounts of capital to the fund.

Fund Facts

The Standpoint Multi-Asset Fund uses an “all-weather” approach to managing investments. The fund’s objective is to provide investors with stable returns across a diverse set of economic conditions, particularly those where traditional asset allocations struggle to generate returns. As of April 2022, the fund had $319 million in net assets, although Seeking Alpha and Morningstar show the fund had $470 million in assets under management.

The fund has two classes of shares: BLNDX is the institutional class, with a minimum investment of $25,000 and REMIX is the investor class, with a minimum investment of $2,500.

Strategy

Standpoint markets the fund’s “all-weather” strategy as being diversified across geography, asset class and investment styles. BLNDX’s strategy is to hold long positions in equity ETFs in order to replicate exposures that resemble a global market capitalization-weighted index of developed markets such as the US, UK, US, UK and US. Germany and Japan. The fund also invests in the purchase or sale of futures contracts in seven sectors: stock indices, currencies, interest rates, metals, cereals, commodities and energy. Finally, the fund may invest up to 25% of its assets in a wholly-owned subsidiary that acts as a CTA hedge fund.

Figure 1 lists the investment universe of BLNDX. As we can see, the fund’s investment universe is quite broad, encompassing most asset classes that have liquid futures markets or ETFs.

BLNDX investment universe

Figure 1 – Investment universe of the Standpoint multi-asset fund (standpointfunds.com)

When I hear someone talk about the “all weather” strategy, it always reminds me Ray Dalio and Bridgewater, the pioneers of all-weather investing. The basic concept of Ray Dalio’s “all weather” investment strategy is to design a portfolio whose components will work in all market conditions. For example, Figure 2 shows a simple “all-weather” asset allocation according to Bridgewater.

all-weather asset allocation

Figure 2 – Simple all-weather asset allocation (bridgewater.com)

Portfolio holdings

Figure 3 shows an overview of the Standpoint Multi-Asset fund’s current positions, as of August 31, 2022. As we can see, the fund is currently long equities via ETFs, short agricultural commodities, short currencies such as the yen and the euro, short bonds, long energy commodities and short industrial commodities.

BLNDX August Holdings

Figure 3 – Standpoint Multi-Asset Fund Portfolio Positions as of August 31, 2022 (standpointfunds.com)

Note that, unlike the “set and forget” idea of ​​a traditional “all-weather” strategy, the Standpoint Multi-Asset Fund appears to be a frequent futures trader. If we look at the April half year report, the fund had been long some commodities in April that it is now short in August (i.e. wheat), and is now long or short some commodities commodities for which it had no positions in April (i.e. Gold, Aluminum, Copper, etc.).

april long futures

Figure 4 – Standpoint Multi-Asset Fund Futures Long Position, April 30, 2022 (standpointfunds.com)

Being a frequent trader isn’t necessarily a good or bad thing, but it’s just not an “all-weather” portfolio in the traditional sense.

Come back

The Standpoint Multi-Asset Fund is a young fund, with an inception date of December 30, 2019. Its performance over a short period has been exceptional, with an annualized return of 16.8% since its inception for the institutional category. Importantly, it has been in positive performance territory for 2022, a difficult task for many investors (Figure 5).

BLNDX Performance

Figure 5 – BLNDX performance (standpointfunds.com)

BLNDX also shows impressive performance compared to many of the best alternative funds in the market. Figure 6 shows a comparison between BLNDX and the top 20 alternative mutual funds for the period January 2020 to July 2022. BLNDX has above-average annualized returns (16.3% vs. 6.1%) and a ratio above average (1.24 versus 0.64). ), with a below-average maximum drawdown (9.3% vs. 10.9%).

BLNDX vs Hedge Funds

Figure 6 – BLNDX vs. Top 20 Hedge Funds (standpointfunds.com)

Costs

In terms of fees, the Standpoint Multi-Asset Fund charges a management fee of 1.24% and a total operating fee of 1.94% for the institutional category (Figure 7).

A few things to mention about fees. The investor class charges an additional distribution fee of 0.25%. The expenses of the fund for the wholly-owned subsidiary are grouped under “other expenses”, which seems high at first glance. Finally, the fund manager waived portions of fees through February 2023 to keep overall operating expenses lower as the fund continues to ramp up.

BLNDX Fees

Figure 7 – Standpoint Multi-Asset Fund Fees (standpointfunds.com)

Distribution and yield

Standpoint Multi-Asset Fund issues year-end distribution. In 2021, the fund paid $0.80 per unit for the institutional class, BLNDX, which equates to a 6.0% return on net asset value (Figure 8).

Distribution

Figure 8 – Standpoint Multi-Asset Fund Distributions (standpointfunds.com)

Comparison with a simple all-weather wallet

One of the ways I like to analyze asset allocation funds is to compare them to some simple asset allocation models that I can create using ETFs. For example, in Money: master the gameRay Dalio shared with Tony Robbins a simple model for the all-weather portfolio that can be replicated with 5 ETFs (Figure 9).

all the time

Figure 9 – Ray Dalio’s All-Weather Portfolio (lazyportfolioetf.com)

By comparing BLNDX and the Ray Dalio portfolio (figure 10), we can see that the multi-asset fund Standpoint has certainly outperformed on most measures for the period under review (January 2020 to August 2022). It has much higher yields (15.3% vs. 2.5%) and Sharpe ratio (1.34 vs. 0.27) and lower drawdowns (5.3% vs. 15.1%). However, it has slightly higher volatility (10.8% Stdev vs. 9.5%).

BLNDX against all time

Figure 10: BLNDX vs. All-Weather (Author created using Portfolio Visualizer)

Is it really all the time?

With hindsight, it might be fair to ask whether the Standpoint Multi-Asset Fund is truly an “all-weather” fund. While the equity position seems relatively constant (41% equity weighting in April versus 36% in August), the constant trading of futures contracts resembles that of a CTA hedge fund that uses a “futures” strategy. managed”. (For more information on managed futures and CTA hedge funds, please see my recent article on the DBMF ETF).

In fact, Standpoint may have influenced the way he sees himself. Refer to the performance chart in Figure 5 above. In the last row, Standpoint compares the multi-asset fund to a mix of 50% MSCI World Index / 50% SG Trend Index. The SG Trend Index follows traders of trend following methodologies.

Seen from the perspective of a 50/50 mix of equity funds / managed futures funds, BLNDX’s performance makes much more sense. Commodities have been in a heartbreaking bull market since the COVID-19 pandemic, particularly in late 2021 and 2022, so trend-following strategies like managed futures have largely outperformed.

In fact, with the understanding that BLNDX is more of a managed futures product, we can see its performance in the context of alternative Managed Futures funds in Figure 6, such as the AlphaSimplex Mgd Futs Strat N (AMFNX) with annualized returns of 17 .8% and 1.27%. Sharpe Ratio and the PIMCO TRENDS Managed Futures Strat I-3 (PQTNX) with returns of 14.8% and a Sharpe ratio of 1.35. BLNDX’s returns and Sharpe ratios (16.3%, 1.24), while still high, no longer look extraordinary.

Risks

The biggest risk I can think of for the Standpoint Multi-Asset Fund is the “black box” nature of its investment strategy. This is not a standard “all weather” asset allocation fund. Rather, it’s a 50/50 mix of a market-cap-weighted developed-world equity fund and a managed futures fund. Although performance has been strong in the short period since the fund’s inception, future performance is critically dependent on management’s insight and ability to adapt to changing market conditions.

Speaking of management, it is important to point out that Standpoint is a relatively young asset management company, with only 6 employees on LinkedIn. The multi-asset fund is managed by Eric Crittenden and Shawn Serikov (Figure 11), both formerly of Longboard Asset Management (a small Arizona-based asset manager with 16 employees on LinkedIn). Although Mr. Crittenden had previous experience as a co-founder and co-CIO of Longboard, Mr. Serikov’s previous experience was a IT systems analyst at Longboard (by the way, I don’t know how Mr. Serikov has 20 years of experience in risk management and systematic investing given that his LinkedIn profile only has work experience since 2011).

This reliance on Mr. Crittenden may introduce ‘key person’ risk, especially since a large part of the fund’s performance depends on timely futures trading.

BLNDX Portfolio Managers

Figure 11 – BLNDX Portfolio Managers (standpointfunds.com)

Conclusion

In conclusion, I am intrigued by the strong performance of the Standpoint Multi-Asset Fund since its inception. However, I don’t think it’s actually an “all weather” fund, at least not in the traditional sense. I see it more as a 50/50 mix of an equity fund and a managed futures fund. Given the relatively short track record to analyze and the small portfolio management team, I would be hesitant to commit large amounts of capital to the fund. I think it is definitely worth watching.

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