There's so many problems with these kind of drawdowns, right?

Because I think that a lot of investors, they really can't stomach.

Probably once you start going much beyond 15% drawdown, certainly 20.

I think a lot of people get very uncomfortable.

I would say that I would also get rather uncomfortable because it's not really sort of what I would be expecting, right?

You know, you've got to have a certain type of investor and a certain type of manager who is able and willing to keep going,

even if you're experiencing 25, 30, maybe even 50% drawdown.

And I'm not sure how many managers and how many investors, you know, really sort of can

pull that off successfully.

Most new CTA benchmarked themselves against the B-top 50 index, comprised of the some 20 firms

in possession of more than 50% of the industry assets.

These are the largest and most successful firms in this particular category.

The question is, how does an emerging manager compete and break in knowing 80% or more of the available investor capital flows to these few firms.

The good news is that all of these firms at one stage was also an emerging manager.

Of the 20 firms in the index, 19 of them started with AUM less of $5 million.

Interestingly, each of these firms had their best annualized returns for the first three to five years in business returning on average 20% per year.

Once the AUM grew beyond $500 million, their annualized return settled around

10 to 12 percent and their correlation converged.

Welcome back to Top Traders Unplugged, where the best traders in the world come to share

their experiences, their successes, and their failures. Let's rejoin the conversation with your host, veteran hedge fund manager,

Niels Kastrop Larson.

And currently we're allocating 50%, 50% across the two timeframes where we want to move to an allocation about a third in each time frame.

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