The following extract is a Top Traders Unplugged summary of a conversation between the podcast hosts Niels and Alan with Ryan O’Grady, CEO and Co-Founder of ROW Asset Management.
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ROW Asset Management was founded in 2010 by Ryan O’Grady and Jeffrey Weiser, both veterans of the quantitative investment industry. The firm is based in Newport Beach, California, and manages capital for institutional investors worldwide. Its flagship Diversified programme has earned inclusion in the SG CTA Index, placing it alongside the most recognised names in global systematic futures trading.
What distinguishes ROW in this conversation with Niels and Alan is O’Grady’s framework for thinking about diversification. He draws a clear distinction between diversification across markets and diversification across model types, arguing that both are essential but that they carry different risks if pursued without discipline. His view on the mathematics of adding uncorrelated markets is precise: the theoretical improvement in Sharpe ratio from expanding the market universe follows a well-understood curve, and the practical benefit diminishes as correlations between markets increase over time.
O’Grady is also candid about what he does not believe in. He rejects drawdown management approaches that mechanically reduce risk below a high watermark, arguing that the empirical evidence for such approaches is weak and that a better answer lies in model diversification rather than top-down risk modulation.
For serious students of portfolio construction within systematic trend following, ROW’s approach offers a thoughtful counterpoint to the approaches taken by longer-established firms.
Related reading: Read: The Diversity Dividend: How Variety Creates Resilience