This on-off strategy has a similar return profile to competing funds with far less risk, Miller said.
The defensive component of Miller's fund is more sophisticated. He studies different assets' momentum based on their 200-day, which shows him whether they're gaining or losing steam from a position of strength or weakness. Miller then can either take a long position to bet on upcoming upside or short it to hedge against losses.
Many investors protect against downside by buying puts on stocks or selling calls, but Miller noted that both sets of options eat into total returns by costing money or limiting possible upside. By contrast, he said his defensive tactics actively benefit when assets decline. "There are storage costs associated with commodity contracts because it costs money to store oil; it costs money to store natural gas," Miller said."And yet the further-out contracts, something that's coming out a year from now for oil or for natural gas, it doesn't really need to be stored because it's not here yet."
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