True North

“True diversification is my moral compass,” Doug Reich muses. Founder of Anthony Capital Management (“ACM”), Reich’s approach to trading and developing investment strategies is built upon the belief that truly uncorrelated investments, even with modest returns, could meaningfully strengthen a portfolio. Driven by diversification and avoidance of popular or crowded markets, Reich has no interest in trading common stocks; rather, he seeks niche markets and strategies to deliver true diversification. In an industry often crowded around the same trades, Reich has spent decades moving in other directions.

“True diversification is my moral compass.”

Researching, studying, conversing, and backtesting all play important roles in Reich’s investment process. For example, Reich has a close-knit group of friends that all trade, and they share ideas and research with one another, even with discretionary traders he says are “the complete opposite of me.”

Although Reich holds deep respect for discretionary traders—and counts several among his close peers—he is candid about his own limitations. “I’m a terrible discretionary trader,” he says. “Like everyone else, I fall into the same cognitive traps.”

A Different Route

Reich did not set out to become a money manager. Trained in physics and mathematics, he originally planned to pursue graduate studies in physics. His introduction to financial markets came almost by chance, after a friend joined the Monroe Trout Organization in the mid-1990s. Reich recalls, “At that point, I didn’t even know what trading was. I had to go to the library and get a book on futures and options.”

Monroe Trout, as one of the new market wizards, was operating large, systematic futures strategies around the clock. Reich eventually followed his friend and spent several years there, gaining firsthand experience inside a large quantitative CTA. “That experience was really formative,” Reich recalls. “Not just in terms of how they traded, but how they thought about the business, risk, and discipline.”

Just as influential was Trout himself, whose approach left a lasting impression. “He was super rules-based. He never deviated from his system. Ever,” Reich says. “Whatever the rule was, that was the rule. You didn’t violate it.”

“He was super rules-based. He never deviated from his system. Ever. Whatever the rule was, that was the rule. You didn’t violate it.”

Given Reich’s quantitative and statistical background, Trout’s approach resonated with him. “Systematic trading relieves me of all those biases I don’t want to worry about,” Reich notes. “Everything is determined by the system. If I want to change something, it has to be done with a test and a rule.”

That discipline extends beyond trading decisions to research itself. Reich looks not just at whether a strategy makes money, but at the character of its performance over time. “I want to see how it behaves across independent periods,” he says. “If it only works in one specific window, it’s probably overfit. The best strategies tend to look similar across different environments.”

Reich’s investment and risk approach was shaped by his quant background and years immersed in manager analytics. At Trout, much of his work centered on fund of funds and portfolio analysis—evaluating managers and helping build portfolios. That experience gave him the guardrails and analytical lens he’d later apply to his own strategies – but it was his own philosophy to follow his compass toward true diversification that led to his launching Anthony Capital Management.

Anthony Capital Management

Reich had been building and trading strategies since the 1990s, which eventually, prompted by a specific client need, led to Anthony Capital Management launching in 2012. A hedge fund investor approached Reich looking for an alternative to traditional credit hedge fund strategies that often performed well for years, only to suffer catastrophic losses during periods of stress, giving all gains back and ending up with an illiquid portfolio.

“They wanted a liquid alternative to hedge fund credit exposure,” Reich remembers, “we built the risk-on, risk-off strategy using credit derivatives where we could get in and out of credit very quickly. We could do it cheaply, and we could do it with leverage.”

The solution was a strategic, tactical allocation with a risk-on, risk-off framework, built using liquid instruments and driven by signals derived from both credit and equity markets. This model is used by ACM to manage equity index futures managed accounts and also to sub-advise a mutual fund – the Optima Strategic Credit Fund – which focuses on high yield credit exposures.

Rather than remaining permanently invested, the strategy dynamically allocates between risk assets and cash. “That’s really the core idea,” says Reich. “It’s less important to pick a particular stock than it is to know whether you should be in stocks at all.” In other words, avoiding catastrophic participation matters more than maximizing upside participation.

Reich argues that the difference maker is most evident during major drawdowns. “In the worst drawdowns for the S&P, we’ve had some of our best performance. Over a full cycle, we’re achieving equity-like returns with negative or zero correlation.”

“In the worst drawdowns for the S&P, we’ve had some of our best performance. Over a full cycle, we’re achieving equity-like returns with negative or zero correlation.”

With diversification guiding Reich, he has developed other systematic, quant-based strategies for investors that bring a diversifying element to their portfolios. In speaking about the impact of ACM’s current offerings, they are all built uniquely, “Which is also why they pair together as a multi-strategy because they are completely different strategies,” Reich explains.

Metals RV Strategy

ACM’s Relative-Value Metals Strategy is a bit of a change up to the risk-on, risk-off trading methodology. Reich clarifies, noting, “That’s a completely different approach, different system, and different analysis than we use in the risk-on, risk-off trading.”

Metals markets have long been an interest to Reich, something he studied often paired with his short-term trading background. Relative Value is the structure of the strategy, where Reich looks to identify opportunities in precious and base metal spreads, especially in the 24–48-hour timeframe. “I’ve always been interested in metals,” Reich admits. “But not just in predicting where gold is going. What interested me was how metals relate to each other.”

“I’ve always been interested in metals. But not just in predicting where gold is going. What interested me was how metals relate to each other.”

Metals markets – both precious and base – share overlapping economic roles, supply chains, and market participants. They express industrial and monetary stress simultaneously, where relationships between metals reveal macro tensions, resulting in spreads containing information ignored by directional traders. These shared influences create structural relationships that tend to persist over time, even if they periodically diverge. ACM looks to exploit volatile markets created from these divergences.

The result is a short-term relative value approach, trading paired positions across precious and base metals. Every trade involves buying one metal and selling another, aiming to profit from mean reversion rather than directional moves. Reich adds, “The idea is to play relative value, so you’re not correlated to the trend in metals, and of course, you’re not correlated to the stock market.”

The Rules Are The Rules

The goal in producing a relative value portfolio is delivering a truly uncorrelated result, which can be delivered through rigorous, systematic risk management. “We’re looking at the correlation between strategies, including volatilities and how they pair. We are making sure they create a more stable, less volatile, higher Sharpe portfolio,” Reich says.

ACM’s Relative-Value Metals Strategy is not just another strategy but another manifestation of Reich’s same core philosophy. As a byproduct of Reich’s approach to strategy design and implementation, diversification is inherent as a risk management tool. The portfolio seeks to remain resilient across varying market environments through the evaluation of correlation, volatility, and performance. Across all strategies, risk management is embedded directly into the system architecture, not applied after the fact. Reich details, “All the way through, it’s looking at volatility, we’ve got constraints on volatility and at a value-at-risk level in terms of how much we can leverage per trade.”

Rolling volatility measures determine exposure at both the position and portfolio level. When volatility rises, exposure is automatically reduced. When volatility falls, exposure can increase, but only within predefined constraints. ACM measures each pair at 10% volatility, and the entire portfolio at a 10% volatility. If it varies, then the system makes the proper adjustments to pare it back or increase volatility. “There’s nothing I do on the fly or on an ad-hoc basis,” Reich emphasizes. “If volatility gets too high, the system ratchets back. That’s just how it’s built.”

“We’re looking at the correlation between strategies, including volatilities and how they pair. We are making sure they create a more stable, less volatile, higher Sharpe portfolio.”

True Diversification

“I’m so wed to this philosophy [diversification] that it’s hard for me to see it out of context,” says Reich. Across strategies and market environments, Reich’s focus remains on delivering systematically managed, uncorrelated return streams that prioritize resilience over trend. By combining disciplined research, rules-based execution, and an unwavering commitment to diversification, ACM seeks to provide investors with a smoother and more durable path to long-term portfolio performance. “The strategies produce positive returns, positive alpha, and don’t correlate to much of anything else.” Diversification is ACM’s moral compass.

AN INVESTMENT IN ANY FUND IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF RISK. THE PAST RESULTS OF A FUND AND/OR ITS TRADING ADVISOR ARE NOT INDICATIVE OF HOW SUCH FUND WILL PERFORM IN THE FUTURE. 3573-NHPAF-05272026