President, Hoffman Asset Management
Program(s) Developed: Modified Global Trend Program
Interview Date: March, 2011
Interviewed by John F. Gallwas - Founder of Striker Securities
Dean Hoffman is President of Hoffman Asset Management, Inc. ("Hoffman"), a registered Commodity Trading Advisor (CTA), with offices in Hampden, PA, located a little over 100 miles west of Philadelphia. Mr. Hoffman founded his CTA in 2004, after spending almost 20 years as a leading developer of computerized trading systems. He was a key speaker at the 2003 Striker's "Chicago Trading System Focus Group" event. The Hoffman managed account program uses a multiple non-correlated technical strategy that is spread across 72 markets, covering all US, and eight international futures markets. The Modified Global Trend Program is offered to investors interested in alternate investments through the Hoffman disclosure document February 15, 2011.
BarclayHedge (2011 BarclayHedge, Ltd) was founded in 1985 and actively tracks more than 6,000 hedge funds, funds of hedge funds, and managed futures programs. Each month Barclay provides updated performance rankings for 38 Hedge Fund categories and 16 CTA categories.
John Gallwas: 2010 performance was much better than 2009 for Hoffman as well as for many other systematic managers. What factors went into the improvement and what is your expectation for performance in the future?
Dean Hoffman: There is a rather straightforward explanation for the performance differences in 2010 compared with 2009. Specifically, we saw some decent trends throughout 2010. Most systematic CTAs are trend followers, and by definition only do well during periods of significant market trends.
John Gallwas: Hoffman is one of the 457 systematic Commodity Trading Advisors listed in the BarklayHedge index that publishes program performance. Within this classification there are many different programs offering various degrees of risk. How does and investor narrow the field to managers that fit their individual requirements?
Dean Hoffman: The best way that I have found for investors to narrow the field is by using some form of screening software. The best one I have ever come across is Barclay Hedge's own "MAP" software. It allows investors to plug in all their requirements, such as minimum account size, maximum drawdown, returns and trading style (just to name a few) and quickly screen over 1000 CTA programs within minutes.
We own the Barclay Hedge screening software and use it for various purposes such as finding the best program combinations and for doing competitive analysis. We recently even created a demonstration video of the software with an example of my favorite screening criteria that can be seen at http://www.hoffmanassetmanagement.com/?p=147
John Gallwas: Managed futures continue to gain as a sensible way for overall portfolio diversification. What is the basic profile and risk tolerance of the investors that have hired Hoffman to manage their futures trading program?
Dean Hoffman: Indeed, the explosive growth of managed futures over the last decade confirms the widespread acceptance of managed futures as a lasting portfolio diversification alternative.
The basic profile of Hoffman's clients tends to fall into one of two areas. Either, high net worth individuals looking to diversify their current portfolio, or more aggressive investors who want the higher return potential that managed futures can offer verses other less leveraged investments.
As far as risk tolerance, we believe we have positioned Hoffman Asset Management on the conservative end of the spectrum. Unlike some managers who will use 20-60 percent of a clients funds for margin purposes, we only use an average of about 10%.
In my opinion, this significantly cuts the likelihood of large drawdowns. For example, during the bad markets of 2009 some of the aggressive managers saw drawdowns of more than 50%, but Hoffman's 250k program only had a maximum drawdown of just 12.55%.
John Gallwas: Is there anything in the "what's new" department you can share with our readers at this time.
Dean Hoffman: We are always in a state of research, continually looking to improve what we do. So in some regards every day tends to bring something new, but we usually only see something worth putting into effect maybe once or twice a year on average.
We also recently split Hoffman's track record into small and large account sizes for reporting purposes. Previously we merged these various sizes into one record and investors were seeing a composite of the two. Now the performance reporting is much more precise for a given account size.
Also, as I mentioned previously, we have just finished a new video on how to screen the managed futures universe. This helps investors to sort through the dizzying array of programs and statistics within minutes. Once again that video can be seen at: http://www.hoffmanassetmanagement.com/?p=147
This interview is for informational purposes only and is not intended to be
a solicitation of any kind. Trade only with risk capital. The risk of
trading can be substantial and each investor and/or trader must consider
whether trading systems are a suitable investment.
There is a risk of loss in trading. It is the nature of commodity and securities trading that where there is the opportunity for profit, there is also the risk of loss. Commodity trading involves a certain degree of risk, and may not be suitable for all investors. Derivative transactions, including futures, are complex and carry the risk of substantial losses. Past performance is not necessarily indicative of future results. Please read additional risk matters on our web site, www.striker.com. It is important you understand all the risks involved with trading, and you should only trade with risk capital. This communication is intended for the sole use of the intended recipient.
About this report The information and links on this website are for informational purposes. The risk of trading can be substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Striker is a member of the National Futures Association ("NFA"), the Managed Funds Association ("MFA"), and the National Introducing Broker Association ("NIBA"). Striker is registered with the Commodity Futures Trading Commission ("CFTC"), and was formerly registered with the Securities Exchange Commission ("SEC"). Additionally, Striker is a former member of the Financial Industry Regulatory Authority ("FINRA"), and the Securities Investor Protection Corporation ("SIPC"). FINRA is the largest non-governmental regulator for all securities business in the United States. Please read Striker Disclosure Statement for the additional disclosure.
The trading performance cited throughout our web site is based on actual trading history, unless otherwise noted. The starting account balance is based on the system developer recommendation. Striker tracks actual performance by recording and maintaining each trade ticket for each system generated. The performance information assumes that no additions or withdrawals have been made. The rate of return for all systems disclosed in the Striker Report is cumulative from the day the system actually started trading at Striker. We maintain a "life" track for all 3rd party systems. We do not necessarily base our records on any particular client account. No one particular customer has achieved these results. The percentage returns reflect inclusion of commissions and fees.The actual percentage gains/losses experienced by investors will vary depending on many factors, including, but not limited to: starting account balances, market behavior, the duration and extent of investor participation (whether or not a client takes all signals for a system) in the specified system and money management techniques.
Striker is a revolutionary concept in action: an international, professional team of brokers dedicated to trading only for clients. It bears repeating: unlike most other brokers, Striker does NOT trade futures for itself or any of its employees. This policy has been in place from the start in order to guarantee that our entire focus remains on the interests of our clientele. Striker believes that when brokers are allowed to trade for themselves (or have in-house trading practices) there is a strong potential for conflict of interest, as the broker may place more importance on his own trading activities (or that of his firm's) than on those of his clients. Finally, Striker has no financial ties to system developers, so there no bias or pressure on how we report the actual trading results posted in our client section. This section is designed specifically for Striker's clients, so they may audit their results on a daily, weekly, monthly, or annual basis.