SI403: Trend Following in an Era of Geopolitical Risk ft. Marat Molyboga & Katy Kaminski

**SPEAKER_1** (0:01)
Welcome to Top Traders Unplugged. In markets, success doesn't come from predicting what happens next. It comes from being prepared for what you can't predict.
In each episode, we go deep with some of the world's most thoughtful minds in investing, economics and beyond to understand how they think, how they prepare and how they decide, and the experiences that shaped how they see the world. No noise, no shortcuts, just real conversations to help you think better and invest with confidence.

**Niels Kaastrup-Larsen** (0:36)
Welcome and welcome back to this week's edition of the Systematic Investors series with Katy Kaminski and I, Niels Kaastrup-Larsen, where each week we take the pulse of the global market through the lens of a rules-based investor. This week, we have a very special guest, namely Marat Molyboga, Chief Risk Officer, Director of Research at Efficient Capital Management, who is here to discuss some of his recent papers, as well as some of Katy's recent papers. So, there will be lots of things to dig into. But first of all, Katy and Marat, it's great to have you both here. How are you doing?
Is summer starting to set in where you are?

**Katy Kaminski** (1:13)
Sort of. I mean, we're getting there. We've had a very cold year this year in Boston. We had lots of snow and for some reason it rains every weekend, but it's beautiful on a Thursday today.

**Niels Kaastrup-Larsen** (1:25)
Remind us, Marat, where are you based?

**Marat Molyboga** (1:30)
As you know, in Chicago land, the weather is very volatile. It gets really cold in the winter, really hot in the summer, so we're fortunate to enjoy the nice two weeks of the year.

**Niels Kaastrup-Larsen** (1:41)
That's good to hear. Now, Marat, since it's your first time on the podcast, probably no surprise, I would love to see if you could just share with the audience a little bit of your journey into the CTA world, what kind of called your interest back then, and also how you ended up at Efficient Capital, and put a few words maybe to what you focus on in your current role.

**Marat Molyboga** (2:04)
Sounds good. Well, as you mentioned earlier, my name is Marat Molyboga. I'm the Chief Risk Officer and Director of Research at Efficient Capital Management.
The company has been around for over 25 years, and we have been specialized in building customized multi-manager solutions for institutional investors. We allocate about $3.5 billion to primarily commodity trading advisors. And as a firm, we believe that investment decisions that are based on rigorous research will lead to better outcomes. We also believe that we are human beings just like anybody else, and we are susceptible to behavioral biases, such as performance chasing and hindsight bias. And therefore, our CIO, Chet Martinson, designed an investment process that is supposed to mitigate a lot of those biases. So let me give you a couple of examples. One, for every single manager, we have an investment thesis that is regularly tested. Another example is that we measure, record our decisions, and we measure their effectiveness. And we also rely on data to determine whether we have edges in certain areas. For example, we've been selecting managers for over 25 years. At the same time, we recognize that we have no skill in predicting which one of 10 constituents of the SecGen Trend Index is going to outperform everybody over the last of the next 12 months.
We're also very competitive because we care about the performance of our investors. And Chad Martinson, our CIO, he always preaches about the importance of precious basis points that can help us improve performance for our clients. A couple of things about myself. You might have noticed that I have an accent. It's because I grew up in Ukraine.
So if I say something funny, it's just because I'm a foreigner. That should be normal. My background is in Applied Mathematics.
I am a nerd just like Katy. And I love talking to people like Katy and you, Niels, because you guys are always asking deep questions about what investors truly care about. So I love learning from people like you. And also I feel very fortunate to work with people at Efficient because everybody on the investment team is very competitive, but also very competent and also very humble at the same time, which is a pretty unique combination.

**Niels Kaastrup-Larsen** (4:43)
Absolutely. Yeah. Now, Gustav, it's great to have you here. It's great to hear a little bit of the background as we get into a lot of hopefully detailed and deep dives today. Now, before we get into any of this good stuff, as Katy knows and I know, Marat, we spoke about it just a few minutes ago, I actually love to start with something that has nothing to do with the topics that we're going to talk about. And that is kind of things that might have come on your radar in the last few weeks or something you're looking forward to or whatever it may be.