Lead-Lag Live

Fear and Fundamentals: Brad Barrie on Global Macro, Diversification, and the Market’s Next Big Test

• Michael A. Gayed, CFA

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In this episode of Lead-Lag Live, I sit down with Brad Barrie, Co-Founder, Managing Director, and Chief Investment Officer at Dynamic Wealth Group, to unpack how global-macro investing helps investors prepare for uncertainty — not predict it.

From his Halloween-candy analogy on diversification to the risks hiding behind record valuations, Brad explains why hope isn’t a strategy, why true diversification means non-correlation, and how the Dynamic Alpha Macro Fund aims to thrive when others panic.

In this episode:
– Why diversification today often means being “badly diversified”
– How global macro can hedge against high valuations and volatility
– Why the Dynamic Alpha Macro Fund (DYMAX) is built for flexibility
– How technicals and fundamentals work together in a macro framework
– Why investors need multiple drivers of return, not just hope

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SPEAKER_00:

Yeah, the current macro setup couldn't be better, right? With with again, with valuations stretched as high as they are, historically speaking, again, anything can happen year by year, right? And I'm not here to say that equities are going to do four this year or even four next year. We're not big on predicting the future, right? Nobody can accurately predict the future at all times. But what I think investors should focus on and advisors should focus on is preparing for the future, regardless of what happens.

SPEAKER_01:

Stocks are trading near all-time highs, but underneath the surface, many investors are tightening risk controls as global growth forecasts move lower, and uncertainty over policy remains elevated. The latest global outlook from the International Monetary Fund sees growth slipping and flags rising risks of a disorderly correction. My guest today is Brad Berry, co-founder, managing director, and chief investment officer at Dynamic Wealth Group. Brad and his team manage the Dynamic Alpha Macro Fund, a global macro strategy built for times exactly like this. Brad, it's great to have you here.

SPEAKER_00:

Thank you, Millie. Pleasure.

SPEAKER_01:

So let's start on a theme. Many have just celebrated Halloween. You've said that there are lessons from Halloween that actually apply to investing. What do you mean by that and how does it connect to how you run money?

SPEAKER_00:

Very much so. Yeah, and appreciate the question. Um, first off, I would start with creating analogies with investing to things that everyone is familiar with is a great way to take away the scariness, if you will, of investing, right? Because in our industry, we can use a lot of jargon and a lot of mumbo jumbo, and it can it can scare investors. And as an investor, in general, you don't want to be scared, right? You don't want to have a scary portfolio, even though it is Halloween season. Um, so using analogies is a great way for investors and advisors in general to put things in perspective so that they can understand it. I think one of the key lessons with um Halloween and investing that that it can teach us is diversification. You know, if you think about it, if there was only one type of candy in the world, it wouldn't be a great world, right? I mean, it's you need to have a variety of candy. When you go trick-or-treating as a child or as an adult to each his own, you want to get a variety of different candy. And that's part of the fun, right? And and investing is the same way. You want to have a variety of different types of uh uh of investing. We run a global macro fund. It's definitely uh one of the flavors we think investors should uh uh should have in their their portfolio basket, if you will.

SPEAKER_01:

Yeah, and to get a little bit more into that, you've uh compared diversification to a bowl of chocolate. I love the analogy. Can you walk us through what real diversification looks like? Because it's it's more than just mixing large caps and and bonds.

SPEAKER_00:

Absolutely, right? It's it's again, we like labels in our industry, but when it boils down to it, the the technical term is correlation, right? How similar are other things, right? And and I was a financial advisor for 20 years and I had many conversations with investors, and I would say if everything in your portfolio is going up at the same time, it usually means everything will go down at the same time. And my clients would would, they're smart, they figured that out. They would finish that sentence with me. And so we think true diversification is having non-correlated investments. And again, if I we tie it to Halloween, one of the great combinations in candy is Reese's peanut butter cups. Taking something that's sweet and yummy and combining it something that's salty and yummy, peanut butter, the two together make each better, right? And that's the same thing with investing is having, you know, not just stocks, because in a from a global macro standpoint, if there's a pullback, it largely won't matter if it's if it's what sector of stock are large or mid or small, if there's a global pullback, they're highly correlated. Um and and having something that's non-correlated, like a global macro strategy, can really help to add that diversification and make the end, the end deliverable, um handy in this case, uh, even better with kind of the salt and the sweet kind of combined in one.

SPEAKER_01:

So to carry a little uh on that point a little further, uh, for viewers, I mean, who might not live and breathe this every day, what exactly is a global macro strategy and how is it different from a traditional balanced or tactical allocation?

SPEAKER_00:

It's a great question, right? And in global macro is thrown out there. I like to keep things very simple. Break it down into two words, global and macro. Global means anything and everything in the globe. It could be stocks, it could be bonds, it could be commodities, it could be precious metals, it could be agriculture, anything and everything, but it's not as the name of that recent movie, everything everywhere all at once, right? So with our approach, we're very selective. And it's not having everything in the portfolio, it's understanding where are the supply and demand imbalances in the macro picture and being able to identify those and take actions or exposure when appropriate. So we don't have to be in everything everywhere all at once. You don't want to do that, um, uh obviously. Um you want to be able to get into things and take kind of that macro picture. And again, that's global. So what does macro mean? Macro means big picture. So we're not focused on stock by stock. Is Apple better than Google, better than Microsoft? It's looking at the big picture themes, if you will. Um example of a theme uh could be the growth of the need for electricity in the world, whether it's because of electric vehicles, because of AI, data centers, population development, you name it, right? A micro uh focus could be picking winners and losers, right? Is it going to be this electric company, this electric vehicle company, this you know, AI company? But it a macro pitcher would say, what do all those need? All those need electricity. Well, what do you need to transfer electricity? You need copper, right? So long term, we're optimistic on copper. We don't currently have a position on copper because we also take technicals and and price moves and other things into um the equation. But long-term thematic copper uh is something uh something that we like. That's a macro example of uh of what we're talking about.

SPEAKER_01:

Right. So my next question, you've touched on this just a little bit right now, but why should someone consider adding a global macro component to their portfolio right now? Talking specifically about you know what what problems does it solve in today's environment?

SPEAKER_00:

Great question. Uh high level, it solves two main problems. One is diversification, which I touched on. You know, uh traditional diversification, or sometimes we also call it basic asset diversification or B A D for short, um, tends to be a portfolio that might look like a bunch of pretty little colors. Um, but in reality, when you look at the correlation over the last 15 years, it's really two main colors. And then if you look at 2022, when we really needed diversification, it was really one color, right? Global macro, on the other hand, can provide diversification over that 14, 15 year timeframe, as well as years like 2022, when both stocks and bonds and international all went down. Global macro was was was non-correlated, performed very well. So the need for diversification is one, but also again, we're Halloween season, the market is scary valuations, right? We have very scary high valuations. The chiller PE cape ratio is a cyclically adjusted uh valuation metric. We're at about 40 right now, which is historically extremely high. And when you look at the analysis um uh on this type of scatter plot, what you see is when you start with high valuations, the SP 500's future five-year returns are very muted. We're near zero. Um, but when you compare that to global macro as a strategy, global macro as a strategy, when you start with high valuations in equities, tends to perform very well. If you look at midline uh valuations, normalized valuations, what you also see is global macro does in line with stocks. Um and yes, if you look at the chart and you see that all the way to the left, that when equity valuations start really, really low because quite honestly, they had the snot beat out of them, yes, equities will outperform global macro. Um, but that's why in our uh mutual fund, the dynamic alpha macro fund, ticker symbol dymix, dymix, um, everything we do is macro, but we have a macro exposure to stocks at all times, and we have the global macro long short futures exposure as well to try to take advantage of uh of all sides uh of investing from a macro side.

SPEAKER_01:

Okay, and um you've talked about why now matters. The timing the market isn't about guessing direction, but recognizing cycles. What can you tell our viewers about the current macro setup and and what that tells you about the moment for uh global macro?

SPEAKER_00:

Yeah, the current macro setup couldn't be better, right? With with again, with valuations stretched as high as they are, historically speaking, again, anything can happen year by year, right? And and I'm not here to say that equities are going to do poor this year or even poor next year. We're not big on predicting the future, right? Nobody can accurately predict the future at all time. But what I think investors should focus on and advisors should focus on is preparing for the future, regardless of what happens. And you prepare for the future by having um multiple drivers of return, right? And look, we all hope for the best, right? We all hope the market continues to do well, and we hope for positive trade deals, and we hope for positive government actions, right? But but hope is not a plan, right? If you're banking on hope, hope is not a solid plan. You have to be prepared for a range of possible outcomes. And that to me is what global macro investing is all about: being tactical, being flexible, looking for supply and demand imbalances. Um, and when the volatility is high and valuations are high, macro investing is ripe for taking advantage of opportunities to help investors, especially the way that we do it, which is differentiated focus on a fundamental approach. Um, we're not focused on quant or black box or trend following. It's not what we do. We complement those strategies, actually, because we're non-correlated to those strategies. Um, but with our fundamental discretionary approach, now is a you know perfect time for uh for taking advantage of strategy like that. Yeah.

SPEAKER_01:

And then so next, I wanted to talk about the the how. If an investor or an advisor wants to allocate to a strategy like yours, what's what's the practical way to do it? And how does a fund like Dynamic Alpha Macro fit into a diversified portfolio?

SPEAKER_00:

Great question. And it's really why uh why we launched the mutual fund to make this type of strategy available to retail investors and financial advisors alike, um, bringing this kind of high-level institutional type of strategy to everybody, right? Um what we see advisors doing um from an allocation standpoint, because we're a little unique in the alternative space. A lot of alternatives would be more bond-like, lower return, uh, low volatility type of strategy. Uh, our volatility over time tends to match equities. So our goal as a as a as a fund is to deliver equity-like performance or better with low correlation to equity. So we see advisors allocating from equities into our fund, allocating from multi-strategy funds, so maybe a balance fund, a multi-asset fund, other alternatives uh into uh into our fund uh dimex. Um if you look at our returns, uh, and we'll share the the results on the screen, but but our our numbers have been able to deliver what our target has been, right? Where you look at our statistics and you'll see that that our returns have matched or actually beaten the SP 500 year to date. Our since inception is slightly more than the SP, which we're very proud of. Um equally, if not more proud of, is our our our non-correlation and our risk measures. So again, our non-correlation to the SP 500 is 0.26. And again, not to get too technical, but there's something called upside-downside capture ratio, which simplistically tells us in the market goes up, how much on average do you go up? And if the market goes down, how much on average do you go down from a historical standpoint? And we're a little over 70% upside capture with about a 19% downside capture. And in the long run, if you think about it, as long as you're capturing more up than you are on the downside, that can lead to outperformance. And by protecting on the downside, it can really help to just target a smoother return experience. Um, and that's at the end of the day, what investing should be all about, right? Generating more consistent returns. They really help investors and advisors meet their goals.

SPEAKER_01:

It's a fantastic explanation. Brad, before we wrap up, for anyone watching who wants to read more, see more of uh the brochure that we have uh been showing, see the full framework for Dynamic Alpha Macrofund, where can they find the brochure? Where can they connect with you?

SPEAKER_00:

Absolutely. So you can uh you can go to our main website, dynamicwg.com. Um, you can find our brochure there. Uh I post on LinkedIn uh regularly, as well as Twitter, as well as um a Substack. We have a Substack. If you can go to our Substack, uh just search Dynamic Wealth Group on Substack, and you can uh subscribe to our regular posts. I also put out regular uh short videos once a week on LinkedIn. Um feel free to reach out. We're always happy to talk to uh to anyone.

SPEAKER_01:

Right. Thanks so much for joining me and thanks to everyone for watching. Be sure to like, share, and subscribe for more episodes of Lead Lake Live.

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Michael A. Gayed, CFA

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