OI16: Return Stacking: Form, Function & Friction ft. Corey Hoffstein and Adam Butler
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 670 Ratings
🗓️ 4 June 2025
⏱️ 67 minutes
🧾️ Download transcript
Summary
Corey Hoffstein and Adam Butler joins to unpack the mechanics of stacking returns inside an ETF — not as a branding exercise, but as a way to navigate the hard constraints of scale, structure, and investor behavior. They break down how Return Stacked blends top-down replication with a bottom-up trend engine, why most investors misunderstand what replication actually captures, and where the fault lines lie between mutual funds and ETFs. From margin management and bid-offer spreads to the limits of liquidity in a product built for growth, this conversation surfaces what it really means to package active strategies for a public wrapper — and what gets lost, or found, in the process.
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Episode TimeStamps:
02:08 - Introduction to Corey Hoffstein & Adam Butler
09:06 - How Hoffstein and Butler see the trend following industry going forward
12:24 - The possibilities and constraints of trading ETFs
20:52 - The philosophy behind their trading strategy
27:26 - How they calibrate their model to accommodate markets changes
32:03 - How they incorporate replication in their strategy
35:50 - Their process behind capturing beta
46:42 - The benefits of adding a longer tail for markets
49:25 - How much volatility can trend followers tolerate?
54:23 - How they maintain balance in their trend following portfolio
57:37 - Implementing different types of return...
Transcript
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| 0:00.0 | They often say, well, it's totally divorced from trend following. |
| 0:10.0 | Our bottom up process, which is the majority of the weight, we wait at 30% top down, 70% bottom up, is a trend following strategy. |
| 0:18.0 | Our replication approach is truly applying trend following signals. I think a lot of people get that wrong when they talk about replication. We just find that the top down does seem to work, does seem to work just as well as the bottom up, and provides process diversification. So we find it's better if we blend them together. |
| 0:37.3 | Imagine spending an hour with the world's greatest traders. |
| 0:41.3 | Imagine learning from their experiences, their successes, and their failures. |
| 0:45.3 | Imagine no more. |
| 0:47.3 | Welcome to Top Traders Unplugged, the place where you can learn from the best hedge fund managers in the world, |
| 0:53.3 | so you can take your |
| 0:54.4 | manager, due diligence, or investment career to the next level. Before we begin today's |
| 0:59.3 | conversation, remember to keep two things in mind. All the discussion we'll have about investment |
| 1:04.0 | performance is about the past, and past performance does not guarantee or even infer anything |
| 1:09.3 | about future performance. |
| 1:15.1 | Also understand that there's a significant risk of financial loss with all investment strategies, |
| 1:20.6 | and you need to request and understand the specific risks from the investment manager about their product before you make investment decisions. |
| 1:23.0 | Here's your host, veteran hedge fund manager, Nealz Kostrup Larson. |
| 1:32.4 | Thank you. your host, veteran hedge fund manager, Niels Kostrup Larson. Welcome to another episode in the Open Interest Series on Top Traders Unplocked, hosted by Moritz-Seepard. |
| 1:38.5 | In life, as well as in trading, maintaining a spirit of curiosity and open-mindedness is key, and this is precisely |
| 1:46.1 | what the Open Interest series is all about. Join Moritz as he engages in candid conversations |
| 1:52.5 | with seasoned professionals from around the globe to uncover their insights, successes and failures, |
| 1:58.4 | offering you a unique perspective on the investment landscape. |
| 2:02.4 | So with no further ado, please enjoy the conversation. |
| 2:08.3 | Hey everyone and welcome to episode number 16 of the Open Interest Series on Top Traders on Plucked. |
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