The Last Mutual Fund Manager Standing | How Eric Crittenden Defied the ETF Boom to Build a $1B Fund
Monetary Matters with Jack Farley
Deep Dive
How has Eric Crittenden's Stand Point Asset Management managed to grow to over $1 billion in AUM in less than 5 years?
Stand Point Asset Management grew to over $1 billion in AUM by focusing on all-weather investing within a mutual fund structure. The strategy combines global macro/trend strategies with tax-efficient, fee-efficient global equities and a fixed income overlay. The firm targeted small to medium-sized financial advisors across the U.S., building relationships and offering a diversified, low-volatility product that retains assets over time.
What is the investment philosophy behind Stand Point Asset Management's mutual fund?
Stand Point's investment philosophy revolves around all-weather investing, which includes global exposure to commodities, currencies, equities, bonds, metals, and energy. The goal is to provide a smooth ride for investors, compounding wealth at a reasonable rate over time while minimizing downside risks. The fund combines macro/trend strategies with global equities and fixed income to create a diversified, standalone portfolio.
Why did Eric Crittenden choose the mutual fund structure over other fund wrappers like ETFs or hedge funds?
Eric chose the mutual fund structure because it offers flexibility and control, especially for a global macro strategy involving futures contracts. ETFs, while tax-efficient, require reliance on market makers, which can be problematic for global portfolios with markets closing at different times. Additionally, mutual funds allow for direct relationships with investors, unlike the anonymity of ETFs. Hedge funds, on the other hand, involve higher operational complexity and geographic limitations.
What challenges did Stand Point face when launching the mutual fund during COVID-19?
Stand Point faced significant challenges during COVID-19, including the inability to execute their planned travel-based marketing strategy. The firm had to pivot to virtual outreach, using software and databases to target financial advisors. Additionally, getting the fund onto major platforms like Schwab and Fidelity was delayed due to back-office disruptions, which slowed initial growth.
What is the typical allocation of Stand Point's mutual fund in investors' portfolios?
Most investors allocate between 2% to 7% of their portfolio to Stand Point's mutual fund, typically placing it in their alternatives (alts) bucket. The fund is designed as a true diversifier, offering downside protection while maintaining equity exposure, making it a complementary piece to traditional stock and bond portfolios.
What are the key considerations for Stand Point when deciding to launch new products like ETFs?
Stand Point considers launching new products like ETFs primarily in response to demand from model portfolios, which increasingly prefer ETFs. The firm would evaluate the workload, market maker dynamics, and tax efficiency. While mutual funds remain the core focus, future ETF offerings could be explored if they align with business scalability and client needs.
What is the capacity limit for Stand Point's mutual fund strategy?
Stand Point's mutual fund strategy has an estimated capacity of $12 billion, based on its focus on the 75 most liquid futures markets globally, a laddered treasury bill portfolio, and market-cap-weighted global equities. Position limits in agricultural commodities may become a factor around $4 billion, but the majority of exposure is in deeply liquid markets like energy, metals, and currencies.
How does Stand Point's strategy perform in a highly volatile market environment?
Stand Point's strategy is designed to perform well in volatile markets by combining trend-following macro strategies with equity and fixed income exposure. While the fund may underperform in strong bull markets, it provides significant downside protection during market downturns. This approach aims to deliver consistent, long-term returns with lower volatility compared to traditional equity portfolios.
What lessons has Eric Crittenden learned from his experience in the fund management industry?
Eric has learned that true diversifiers are often hard for investors to hold during periods of underperformance, but they are crucial during market downturns. He also emphasizes the importance of systematic, rules-based investing to avoid emotional decision-making. Additionally, he values scalability and simplicity, focusing on liquid markets to maximize capacity without sacrificing alpha.
How does Stand Point differentiate itself from other alternative investment funds?
Stand Point differentiates itself by offering a holistic, all-weather investment strategy within a mutual fund wrapper. Unlike traditional alternatives that require layering on top of existing portfolios, Stand Point's fund combines macro/trend strategies, global equities, and fixed income into a single, diversified product. This approach simplifies portfolio construction for investors while providing downside protection and reasonable returns.
- Mutual funds still control over $20 trillion in AUM.
- Smaller managers face challenges raising capital in the current market.
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