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38 The Real Secret Behind Trend Following and How It Works with Martin Lueck of Aspect Capital – 2of2

“If you read the Financial Times and follow roughly what is going on in the markets, then you will have a good sense of the trades that we hold.” – Martin Lueck (Tweet)

In the second part of our conversation with AHL founder and Aspect Capital Director, we dive into the details of his firm’s strategies and models. We explore how the models evolve, how he deals with risk management, and his advice for would-be fund managers. Investors and managers alike will gain deep knowledge from this episode.

Thanks for listening and welcome to Part 2 of our conversation with Martin Lueck.

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In This Episode, You’ll Learn:

  • How their model changes are very small and gradual.

    “It has remained predominantly medium-term trend following.” – Martin Lueck (Tweet)

  • What the Diversified Program of Aspect looks like today.
  • How Martin weights the portfolio between financial markets and commodity markets.

    “It’s less about the genius of the trade and more about the repeatability of the approach.” – Martin Lueck (Tweet)

  • How his model allows them to grow the company.
  • About foreign exchange markets and liquidity.
  • The 2008 crisis and how it affected their models.

    “At least we were cognizant before 2008 that a prudent managed account holder will have backup relationships.” – Martin Lueck (Tweet)

  • The real secret behind trend following and how it works.
  • How they are making the transition to a “box-to-box” execution approach.
  • How Martin defines risk and risk management.
  • About model risk.

    “I couldn’t spell risk in the early days of AHL.” – Martin Lueck (Tweet)

  • How their risk team operates.
  • Why correlations are a crucial to look at.
  • How drawdowns are different than open-ended risk and how to explain that to investors.
  • Why succession planning is not an issue for the company right now.
  • What his biggest challenge is.
  • The evolution that is going on in the managed futures industry in general.
  • How small firms are struggling but may see opportunities in the future.
  • “It is a Darwinian process.” – Martin Lueck (Tweet)

  • What Martin would ask David Harding if he were interviewing him.
  • What investors forget or don’t know to ask.
  • Martin’s advice for managers or would-be managers.

    “I am way more of a scientist than I am a trader.” – Martin Lueck (Tweet)

  • A vacation the Martin took his family on, that turned traumatic for a moment and that British Airways learned a lot from.

Resources & Links Mentioned in this Episode:

This episode was sponsored by Swiss Financial Services:

Connect with Aspect Capital:

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Call Aspect Capital: + 44 20 7170 9700

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“My business career is not predicated on my genius, it’s on being fortunate enough to work with some really talented people.” – Martin Lueck (Tweet)