One of the great things about investing is that there are so many "things" to invest in -- equities, bonds, futures, options, and physical assets, and all the various asset classes. Throw in investments from other parts of the world, and you've just multiplied all those opportunities. Large investment managers have the luxury of developing a broad-based product line, usually focusing on one security type, but the goal is to have enough products so that when investors look to rotate out of one exposure the firm can keep those assets in-house.
Smaller issuers run the risk of seeing all their assets walk out the door during asset migrations and new managers might not see any inflows to begin with depending on the timing of their flagship product launch. Existing $95 million mutual fund issuer BluePrint has teamed up with $180 million Commodity Trading Advisor, Chesapeake Capital Corporation, to launch the Blueprint Chesapeake Multi-Asset Trend exchange-traded fund (TFPN) through white label provider Tidal.
Following the Trend
TFPN describes itself as a trend following product that focuses on, well, just about everything, including currencies, commodities, bonds and equities. It also has a global scope and can employ long/short strategies when it feels it is appropriate. The fund sports a 110 basis point expense ratio (1.10%) so $1,000 invested over a calendar year will see $11.00 carved out for fees.
This fund is actively managed, so security selection and sub-advisor roles are outlined in the prospectus. Blueprint is responsible for the "cash management" strategy and Chesapeake is tasked with executing what is called the "Chesapeake Program." This approach is described as a trend-following program that is broken up into two components. The first focuses on derivatives including futures and forwards across all asset classes. The second is a long/short sleeve focusing on equity securities. The derivative sleeve takes its trade signals "based on market indicators such as current prices and moving average prices." Model inputs include observing "price action, market volatility, open interest, and daily trading volume." The Long/Short sleeve follows a similar approach, described as "analyzing a large number of market metrics from a broad range of markets to generate trend following trade signals to make long and short investment decisions." Cash is invested in a range of U.S. Treasuries with a duration of 5 years or less. Like every active manager, there is not a lot of insight into nitty-gritty of the security selection process but, there's a reason why they call it the "Secret Sauce."
Wrap It Up
Given where we are in the cycle, the days of everyone being a genius are starting to wind down. The narrow rally that has been pushing equity markets isn't going to continue forever and diversification away from equities might not be the worst thing to consider, especially considering how stretched valuations are looking these days. As with every new active fund, I don't have any recommendation here, but I will be putting TFPN on the watch list and will follow up once the fund has some history behind it.
