Tail Hedging & Trend Following in 2025 | Alpha Architect Round Up

Submit your questions! Email: [email protected]

Is Tail Risk Hedging Still Worth It? And What’s Up With Trend Following and International Stocks?

In this episode of the Alpha Architect Roundup, we tackle the recent market dip, the muted VIX, and what that means for tail risk hedging strategies. While investors hoping for a crash were left disappointed, the conversation turns to whether protection still has a place in a portfolio. We also dive into the struggles of trend following during whipsaw markets, the subtle resurgence of international equities, and how to think about weighting factors and diversifiers. From AI in factor research to why keeping it simple may still be the best edge, this episode offers a wide-angle lens on risk management, return generation, and investor behavior in today’s market.

We discuss:

• Why equities remain the dominant return driver—and where value and momentum fit in.
• How to think about tail risk hedging when the VIX stays muted.
• Lessons from comparing the 2020 crash to the 2025 market dip.
• How trend following performed recently, and whether it’s still a valid strategy.
• Why implementation (slow vs. fast signals) matters in managed futures.
• The nuanced role of trend as a diversifier vs. portfolio protection.
• A data-backed argument for international stocks—and whether the trend is sustainable.
• What investors are (and aren’t) saying about international allocations.
• How to think about weighting schemes in factor and diversifier portfolios.
• The pros and cons of AI in factor investing—and why simplicity and transparency still win.

Timestamps
00:00 – Intro/ Portfolio Construction: Stocks FTW!
01:19 – Is Tail Hedging Still Worth It?
05:21 – Put Monetization: Good Luck Charlie!
08:17 – Is Trend Following Dead?
16:20 – Trend Following: Diversifier or Crisis Alpha?
22:03 – International Equities: Finally Beating the US?
27:00 – International Investing Sentiment Check!
31:15 – How to Weight Factors in Multi-Factor Portfolios
33:07 – Portfolio Construction: Where to Start?
35:54 – AI Research and Factor Investing
44:07 – Outro/ The Simplicity Edge

Follow the Team on X:
Wes Gray, PhD: https://x.com/alphaarchitect
Jack Vogel, PhD: https://x.com/jvogs02
Ryan Kirlin: https://x.com/RyanPKirlin
Jose Ordoñez Jr: https://x.com/JOrdonezJr

Subscribe for more insights on diversification, market trends, and smart investing strategies!

Music License: VFX3P5IRW5LIFQAA
For more educational resources, visit:
https://www.alphaarchitect.com
Disclosures:
https://www.alphaarchitect.com/disclo...