Separately managed account 3D Capital Management programs utilize a global macro, systematic investment approach to trade exclusively in the E-mini Standard & Poor's 500 futures contract. The programs have achieved profit nearly 70% of the time the equity market is down on the month, Eric Dugan, 3D Capital’s President and Portfolio Manager claimed.
In an interview, Dugan said that 3D uses multiple global markets and asset classes to identify and capture daily movements both up and down in the S&P 500. By way of example, he mentioned that the Nikkei, London, gas, oil, silver, U.S. bonds and the yen are some of the markets he uses to forecast the daily direction of the S&P 500.
He said, “Because our programs are dynamic and typically don’t hold positions overnight we are able to adapt to different trading environments. Our performance reflects our message in that we believe in daily risk management, a dynamic investment approach and great defense. This has enabled us to generate consistent positive returns that have outperformed most of the managed future benchmarks since our program’s inception and profit nearly 70% of the time the S&P 500 is down on the month.”
Dugan’s favorite quote of Paul Tudor Jones (Trades, Portfolio)’, “You adapt, evolve, compete or die,” has been central to the evolution of 3D’s programs and has enabled 3D to navigate challenging market conditions. He explained that since the 2008 global economic meltdown, the stock market has endured a financial crisis and a 50% plunge as well as a 300% rally to new all-time highs.
In order to compete, 3D Capital has had to adapt and evolve. Fortunately, Dugan said sitting in front of his screens every day for 25 years and being completely submerged in the global marketplace has enabled him to identify statistically significant patterns, behaviors and inter-market dependencies and convert them into a systematic rules-based investment approach.
“Trading my programs with real money and in a disciplined and purposeful manner has provided 3D’s investors' award-winning results, which have been the building blocks of the 3D intraday programs. 3D Capital has managed money successfully in a variety of market volatility regimes, and we look forward to continuing to provide our investors with low volatility investment vehicles that generate consistent uncorrelated positive returns,” he said.
Rewarding strategies
According to Dugan, the U.S. equity market has proven to be an important part of many investors’ portfolios. He decided to start 3D Capital because he saw the need for a product that would enable the investor to take advantage of daily downturns in the stock market rather than sit idly by and watch their unrealized gains erode during equity market retracements.
Dugan’s first investment program was the 3D Bull (Long only) launched in January 2008. It was a global macro long-only product intended to step aside at the first sight of weakness in the market. In 2008 the S&P 500 Index was -37% and the 3D Bull program (Long only) grossed +3%. Over the years 3D has taken a purposeful approach to developing programs with high statistical significance. The firm now offers two intraday long and short programs.
3D’s Intraday program uses a global macro multi-strategy approach which includes trend following, pattern recognition and mean-everting trading strategies. Its Intraday Breakout program is a pure trend-following strategy. Both programs seek to identify daily strength and weakness in the S&P 500, and both programs have been profitable since inception, Dugan explained.
He further stated, “We take great pride in providing added value and peace of mind for our investors. Especially knowing we have achieved significant profits successfully shorting one of the greatest bull markets of all time.”
The relevance of what 3D specializes in is significant, especially when you consider the amount of money invested in the S&P 500, and U.S. equities in general. A recent study revealed that investors have allocated $23 trillion to the S&P 500 Index. Dugan said, “The recent bull market has certainly rewarded the long-only investor, but protecting those equity market gains in a long-only strategy could prove difficult nine-plus years into the current record-setting bull market.”
“Not to state the obvious, but investors who allocate to long-only equity products are guaranteed to lose money when the stock market goes down. I built 3D Capital Management to change that,” he declared.
