The founder of one of the country’s biggest ETF managers is launching a new firm to run a global macro hedge fund—and is pouring his own money into the strategy.
Stephen J. Cucchiaro has formed 3EDGE Asset Management, a Boston-based RIA where he will serve as president, CIO and chairman of the investment committee.
Cucchiaro said almost all of his family’s liquid net worth is invested in the firm’s strategies. “I wanted to create a better way to invest my family’s money for the long term, and since we are making our investment strategies available to other like-minded investors, our interests will be very much aligned with our clients,” he said in a statement on Monday.
Cucchiaro, who uses a scientific methodology in his investment strategy. began managing investment portfolios in 1994 and was founder, president and CIO of Windward Investment Management. The RIA was acquired by Charles Schwab in November 2010, renamed Windhaven Investment Management and grew its assets under management from $100 million in its early days to more than $19 billion when Cucchiaro left the firm in 2014.
Cucchiaro uses proprietary investment research methods, including applications of engineering, system dynamics and complexity economics concepts to analyze the relationships that drive markets.
“Our approach seeks to identify asset classes and geographies that may be undervalued as a result of the macro-inefficiencies inherent in the global markets,” Cucchiaro said. “We are looking to capture the potential for material long-term price appreciation of these undervalued asset classes and geographies over different time frames.”
The firm will apply a multiplayer game theory framework to better understand how policies by actors like central banks might influence the direction of capital markets.
“We may be at a critical juncture in the global markets,” Cucchiaro said. “The massive central bank intervention since 2008 has, in many instances, elevated asset prices. In the years ahead, attractive investment returns, particularly on a risk-adjusted basis, could be difficult to achieve as markets may be susceptible to diminishing returns from monetary stimulus. In such an environment, more passive buy and hold strategies could prove to be disappointing, while short-term trading strategies could also be counter-productive since investors may be whipsawed by market volatility.”
Cucchiaro will be joined at 3EDGE by Robert Phillips, managing partner; DeFred Folts, managing partner; Mark Szigety, managing director of research; Monica Chandra, managing director and Kristi Hilyer, director of operations.
Phillips and Foltz formerly served with Cucchiaro at Windward, while Szigety joins from Boston-based Harvard Management Company, where he was a senior vice president of asset allocation and risk analytics, Chandra joins from Cambridge, Mass.-based TurnRight Advice Solutions, where she was president and co-founder, and Hilyer joins from Atlanta-based Balentine, a wealth management firm, where she managed the client services team.