Alternative asset management firm Longboard is fun to write about—for one thing, it offers many metaphorical possibilities.
“We observe the oceans of opportunity and catch the wave,” Cole Wilcox, Longboard’s CEO, explained to AdvisorOne at the 2012 Morningstar Investment Conference in Chicago on Thursday. “The tool is right, because longboards are used to surf the large waves, of which we want to get out in front. Short boards are for smaller waves, and we’re not interested in them.”
In case it wasn’t obvious enough, he meant long-term cyclical trends—the average duration of one of their trades is one year, he said.
“We specialize in ultralong-term durations of managed futures in the ’40 Act space,” he said. “We bring a high level of technical expertise to the strategy. We noticed there was really no directly managed, sponsored product, so we responded to that need. It’s efficient and really takes advantages of those fat tails along the curve.”
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Much of the firm’s distribution strategy, not surprisingly, relies on advisor and client education.
“It’s an education approach first,” Wilcox said. “We want to explain to them why trend following [i.e. riding the wave] works. We want them to understand why typically there is a small minority of investment winners and a large majority of investment losers, and how they can be a part of the former.”
While Longboard has a high level of technical expertise and “pedigree” in the alternative asset space, the latest fund, the Longboard Managed Futures Strategy Fund, Class N shares, launched on Monday.