Podcast Summary: Top Traders Unplugged

Episode: SI387: The Cost-Benefit of Being Trendy ft. Andrew Beer & Tom Wrobel
Host: Niels Kaastrup-Larsen
Guests: Andrew Beer (DBi) & Tom Wrobel (SocGen)
Date: February 14, 2026

Episode Overview

This week’s Systematic Investor episode brings together Niels Kaastrup-Larsen, Andrew Beer, and Tom Wrobel for a deep dive into trend following, recent market dynamics, and the shifting global investment landscape. The conversation spans the growing influence of AI in asset management, structural changes in investor behavior post-2025, performance breakdowns in trend following, critiques of the liquid alternatives space, and the very philosophy underpinning systematic trading.

Key Discussion Points & Insights

1. The Impact and Future of AI in Asset Management

(01:47 - 06:43)

• Andrew’s Observations:
  • AI’s capabilities and its accelerating pace will bring profound disruption to financial markets and the investment industry.
  • Andrew shared a personal anecdote about his PR firm using AI-generated voice and content to create a video that even he found remarkable:

    “It’s my voice, but it’s my AI generated voice...there’s something very, very profound in this.” (02:41)

  • While embracing AI’s efficiency, Andrew stressed the enduring value of human relationships and connections in asset management.
• Niels’ Take:
  • Conferences like iConnections may either be upended or even more valued due to technology, depending on investor preferences for personal contact.
• Tom’s Input:
  • The proliferation of AI-driven asset allocation tools is making investors savvier and highlighting trend following as a core portfolio element.

2. Changing Tides: US Exceptionalism & the Dollar

(06:52 - 09:21)

• Tom’s Notes on Investor Sentiment:
  • 2025 marked a shift away from US dominance; non-US investors suffered from a weaker dollar, even with strong US equity gains.
  • Returns in USD mask weak performance for non-USD investors (ex: S&P 500 up 16% USD, but only 2.5% in EUR).
  • There’s a re-evaluation underway:

    “It’s just a rethinking of what assets investors are holding and a real analysis of US risk…” (08:31)

• Discussion on whether global asset flows can leave the US entirely, especially outside tech, and whether investors can find similar opportunities elsewhere.

3. Hedge Funds vs Private Equity: Evolving Dynamics

(13:14 - 17:25)

• Niels revisits points from a Verdad article:
  “Why hedge funds got better while private equity just got bigger.”
• Andrew’s Analysis:
  • Hedge funds improved due to liquid markets and competition. Private equity returns often resemble levered equity, benefitting from the lack of mark-to-market pressure.
  • Over-allocation to private equity has caused liquidity strains as distributions slowed.
  • Shifts in macro environment questioning long-term US outperformance are favoring the hedge fund space again.

    “The attitude used to be FOMO about the US markets and now has... come to people saying...this used to be the global bastion of... rule of law... and clearly things have changed.” (15:20)

• Tom’s Macro Context:
  The environment for global macro and tactical hedge funds has never been stronger—rising inflation, commodity resurgence, geopolitical tensions, and higher (but reasonable) rates.

4. 2025–2026 Trend Following Performance: Nuance, Drivers, and Lessons

(17:25 - 26:48)

• Performance Recap (Niels, 17:25 - 19:23):
  • Trend following indices and barometers started 2026 strong, cementing the trend friendliness from the previous year.
  • Key: “Consistency” has been notable—trend barometer stable, strong numbers for SocGen CTA, Trend, and Short-Term indices.
• Tom’s Review of 2025 (“The Report”):
  • Outperformance was driven by select, often non-core markets: precious metals (gold, silver), certain equities (especially non-US), and unique soft commodities.
  • Selection and risk allocation mattered more than broad diversification.

    “Your selection of asset classes and the way you allocated risk and managed risk was really, really important because there weren’t opportunities broadly across all equity markets and all currencies and all bonds.” (20:23)

  • Successful managers spotted and held key outliers (metals, select indices).
• Andrew’s Characterization of Trend Following in 2025:
  • Alpha came from being early, contrarian, and right—especially in rotating into non-US equities and gold.
  • Trend followers ignored bearish macro narratives—an advantage of systematization.
  • “People have been talking about a fundamentally driven rotation into non-US equities for 15 years and it hasn’t worked...but it’s been happening for the past couple of years.” (22:57)
• Gold and Outlier Trading (29:49 - 36:19):
  Discussion about the dynamics of risk management—holding vs adjusting positions, concentrated vs broad portfolios, and the trade-offs involved.
  • Notable Quote by Niels:

    “Last year, even though we made most money in precious metals, we were selling precious metals all year, right? So our largest exposure was a long time ago in precious metals. And then you could say, well, that’s not great when the trend is so strong, you should just have stayed with it. You would have made a killing.” (32:30)

  • Andrew’s View:
    Very concentrated, “let winners run” approaches can create unpalatable risk/return profiles for allocators (36:00).

5. Short-Term vs Long-Term Trend Models

(29:49 - 41:15)

• Across the episode, there’s a strong critique of short-term trend following:
  • Shorter-term/“modern” overlays for risk management actually detracted from performance in 2025.

    “Our view is there is [a] risk management tool and they’re often a costly risk management tool if you’re going to allocate a meaningful amount of money to something that has a zero sharp ratio over time...” (30:34, Andrew)

  • Evidence from multiple analyses (Tom’s report, Nick Baltas, Katie Kaminski) shows underperformance of short-term models.
  • Andrew’s Allocator Perspective:
    • Outperformance comes from catching and holding infrequent but massive trends (the “early contrarian and right” trades)—which short-term models often miss or can be whipsawed out of.

6. Product Innovation & Criticisms in Liquid Alternatives

(44:44 - 67:12)

• Andrew’s Rant: Most liquid alternative products (mutual funds, ETFs, UCITS) not managed by investment-first teams, but built by sales departments responding to fads. The resulting performance is “horrendous”—2–3% annualized over 15 years.

  “This is worse than throwing darts, right?” (45:52, Andrew)

  • Few products are designed from the perspective, “what would I want to own for five years?”
  • Most frameworks chase short-term narratives:

    “Products are created ... because there’s an audience that wants to hear, you know, wants a pitch around engineering.” (52:36)

• Tom’s Caution:
  • Many “liquid alternatives” are misclassified, often being simple multi-asset products sold as “macro” or “multi-strat.”

    “Are we talking about real hedge funds in that data or are we talking about quasi alternatives...just a GTAA tactical asset allocation?” (48:44)

• Andrew’s View on Innovation:
  • Innovation is necessary, but allocators must scrutinize model/strategy construction, especially for backtest optimism and lack of manager experience.
  • “The typical allocator does not like ... asking the kinds of questions that I’m known for asking.”
• Niels’ Sober Perspective:
  • All approaches (classic, modern, replications, etc.) face periods of under/outperformance—model risk is ever-present.

    “When you do things really differently, why would you expect to be able to deliver the same outcome?” (64:43)

• QIS (Quantitative Investment Strategies):
  • QIS can be useful for specific, tactical exposures, if the user knows what they’re doing.
  • Concern about lack of transparency and possible mislabeling as “risk premia.”

    “Labeling trend a risk premia ... implies that if the three of us design it, it’s going to look the same...and I think that’s been a narrative [mistake].” (67:12, Andrew)

7. Final Thoughts & Outlook

(70:53 - End)

• Andrew:

  “I hope this is the trendiest year we’ve ever seen.” (70:53)

• Tom:
  Wants good (not bad) volatility and persistent market trends—always a hope for trend followers.
• Both echo anticipation for continued (and hopefully positive) structural change—volatility, opportunity, and innovation.

Memorable Quotes & Moments (with timestamps)

• On AI’s Surprising Role:

  “It’s my voice, but it’s my AI generated voice...there’s something very, very profound in this.”
  — Andrew Beer (02:41)

• On Shifting US Dominance:

  “You can’t go back to the same state where American assets are all that matters.”
  — Tom Wrobel (07:36)

• On the Private Equity/Hedge Fund Shift:

  “People got out over their skis...and the money coming back didn’t really materialize while they still had the commitment outstanding.”
  — Andrew Beer (14:18)

• On Short-Term Trend Models:

  “We just don’t see really positive Sharpe ratios in it…there is a risk management tool and they’re often a costly risk management tool.”
  — Andrew Beer (30:34)

• On the Flaws of Liquid Alts:

  “This is worse than throwing darts, right? I mean if this was a sports team, you would be asking are you throwing the game on purpose?”
  — Andrew Beer (45:52)

• On Product Design:

  “Products are created...because there’s an audience that wants...a pitch around engineering.”
  — Andrew Beer (52:36)

• On Innovation vs. Model Risk:

  “When you do things really differently, why would you expect to be able to deliver the same outcome?”
  — Niels Kaastrup-Larsen (64:43)

Noteworthy Timestamps by Segment

| Segment Topic | Timestamp | |---------------------------------------------------------------|------------| | AI’s Disruption & Human Connections | 01:47–06:43| | Declining US Dominance, Dollar, & Global Allocator Mindset | 06:52–09:21| | Hedge Funds vs Private Equity, Liquidity Crunch | 13:14–17:25| | Trend Following 2025–26: Key Drivers & Risk Management | 17:25–36:19| | Short-Term vs Long-Term Trend Models | 29:49–41:15| | Liquid Alternatives Product Issues & QIS Critique | 44:44–67:12| | Final Thoughts, Hopes for Trendiness & Market Outlook | 70:53–End |

Tone & Style

Conversational, candid, and occasionally irreverent—guests don’t shy away from critique, but frame their arguments with industry knowledge and years of experience. The rapport is established and relaxed, punctuated by personal anecdotes and modest industry banter.

This episode is essential listening (or reading) for allocators, investors, and trend followers seeking nuanced insight into why trend following works (and sometimes doesn’t), how investor behavior is (and isn’t) adapting to macro regime changes, and what product innovations mean for those craving truly robust, resilient portfolios.