Why Most Investors Won't Buy the Best Diversifier | Andrew Beer on Managed Futures

In this episode of Excess Returns, we sit down with Andrew Beer to break down managed futures, hedge fund replication, diversification, and what investors can realistically expect from these alternative strategies. Andrew explains why managed futures can act like a “cloudy crystal ball,” how trend strategies capture major macro shifts, why complexity isn’t always your friend, and how advisors can communicate these concepts to clients. We also explore fees, model portfolios, allocation decisions, global macro themes, and what smart-money positioning looks like heading into 2025. Topics Covered What managed futures actually are and how they work How trend strategies capture big macro shifts Why diversification is most valuable during market stress Why investors struggle with complexity and line-item risk The statistical case for adding managed futures to a 60/40 portfolio Barriers to adoption and how advisors should explain the strategy The role of model portfolios and why slow rebalancing can hurt in regime shifts Why Andrew prefers simplicity over complexity in managed futures Fee sensitivity, ETFs, and how this strategy goes mainstream Indexing, replication, and building more efficient alternatives Why manager selection is hard in this space The “rush to complexity” and why it often hurts returns How hedge fund replication works and what it captures What smart money is positioned for today across equities, rates, currencies, and commodities Macro themes: inflation, rate cycles, the dollar, yen, and global equity opportunities Why international equities may finally be turning How managed futures complement – not replace – stocks and bonds What mainstream adoption might look like over the next decade Timestamps 00:00 Intro and why managed futures matter 02:00 Explaining managed futures in simple terms 06:18 The four major asset classes trend funds trade 10:00 Why trends form and how information reveals itself in prices 11:55 Diversification and how managed futures improve portfolios 14:00 Why investors haven’t widely adopted the strategy 17:01 Communicating the “what,” not the “how,” with clients 18:55 How model portfolios behave in regime change 21:55 How managed futures can move faster than traditional allocations 24:00 Why a simple portfolio of major markets works 26:00 Making alternatives feel less risky 28:00 Performance dispersion across managed futures ETFs 30:00 Why complexity doesn’t equal value 35:20 Fees, ETFs, and what mainstream adoption requires 38:00 The real reason for the industry’s “rush to complexity” 40:35 Should managed futures exclude equities and bonds? 43:00 Why it’s so hard to handicap what will work in advance 46:00 The human side of alternatives and advisor communication 47:00 Hedge fund replication explained 50:00 How replication identifies major themes 52:00 Why replication works only in certain strategies 53:10 What smart money positioning looks like today 55:45 Inflation, rates, the dollar, and global opportunities 58:00 The path to managed futures becoming a standard allocation 59:22 Where to find Andrew Beer online