We Asked an $850M Trend Manager Why Only 6 Funds Out of 10,000 Deliver What Investors Actually Want
TL;DR
Trend manager Eric Kittinden explains how his $850M fund navigated a severe drawdown during abrupt market reversals by maintaining systematic discipline across multiple timeframes, emphasizing that the best opportunities emerge during periods of maximum psychological and social pressure when most investors abandon the strategy.
🔁 Regime Shifts and Drawdown Psychology 3 insights
Best opportunities emerge under psychological pressure
Eric notes that the most fertile soil for new trends appears during drawdowns when strategies are unloved and allocators are fleeing, stating this is a recurring theme throughout his 30-year career.
Whipsaws strike when positioned for 'happy days'
The fund entered the turmoil with full risk-on positioning (long global equities, short bonds, long dollar) and suffered significant but survivable drawdowns from February to April due to trade war volatility and abrupt trend reversals.
New regimes emerge faster than narratives form
Systematic processes force participation in new trends before a thesis can be developed or approved by investment committees, which is essential during fast shifts comparable to the COVID bottom.
⚙️ Systematic Discipline Across Timeframes 2 insights
Diversify across timeframes, don't time them
Eric allocates equally to short, medium, and long-term systems rather than overweighting based on recent performance, accepting slightly lower long-term returns for smoother compounding that prevents emotion-driven errors.
Filters create whipsaw risk in new environments
Using GDP or interest rate filters to adjust positioning often fails during counterintuitive regime shifts that happen fast, whereas systematic processes force participation in new trends before a narrative develops.
🛠️ The Art of Not Tinkering 3 insights
Research actively, implement rarely
While continuously researching improvements, Eric applies extreme skepticism to new concepts, requiring that any change solve more problems than it creates across decades of data rather than just optimizing recent drawdowns.
Simple, blunt tools outperform complexity
Successful long-term managers use durable systems implementable even in the 1970s rather than elaborate modern techniques, as complexity often introduces fragility and unintended consequences.
Sitting on hands is correct 85% of the time
The hardest discipline is resisting changes during emotional drawdowns; having a team and board to check recency bias prevents destructive tinkering when thinking is clouded by pressure.
Bottom Line
Maintain equal allocation to short, medium, and long-term trend systems without macro filters, and rigorously resist modifying them during drawdowns—even when research suggests 'improvements'—because simple, durable tools compound better over decades than optimized complex ones.
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