Jeff Eizenberg and John Cummings are having a great time in New York at the CTA Expo. Yesterday they saw presentations from Liberty Funds, III Associates, Cervino Capital, Dominion Capital, MSR Investments, James River, Clarke Capital, Kawaller Fund, and Saxon Investment. All of these (save Kawaller) are CTAs we track, and it was good to hear more about what they’re doing to refine their programs.
Mack Frankfurter of Cervino had a lot to say. He argues that CTAs are under attack, with most managers having under $250 million in total assets under management (AUM). In fact, 1.9% of CTAs control 60% of managed futures assets under management. Why? As he puts it, the big wigs on Wall Street realize the value in managed futures, and are expanding into the asset class at a rapid rate. The added competition is an issue for these smaller CTAs because it limits their ability to keep pace in terms of edge, infrastructure, intellectual capital, etc.
[Data Source: Cervino Capital]
On the other side of the debate, Cecilia Mortimore de Santa Cruz of Credit Suisse Securities, LLC, disagrees. She argues that while 50% of the funds are flowing to managers handling over $5 billion in assets more and more investors, family offices, financial advisors and high net worth individuals are asking, “Who’s Next?” The answer, she contends, is usually going to be a manager handling less than $1 billion, especially as time goes on and managed futures gets more exposure.
Who’s right? Your guess is as good as ours.
We caught up with Jeff and John on a break from the whirlwind presentation schedule.
Both were excited to meet with an elusive legend of a man- Michael Clarke, manager at Clarke Capital. Clarke discussed current client frustration with Clarke Capital’s Global Basic Program, assuring the guys that, while he understands the frustration (the program is down 25.16% over the past 3 years), he believes the program is doing its job, and is still a good place to invest.
By and large, the Expo is going well. At the end of the day, Jeff put it best…
“The meetings have been very full, very well attended. Not only is that a great testament to these managers and their programs, but Frank Pusateri and his group.”
We agree.