Our weekly newsletter is out, and we’re taking a closer look at the bread and butter of the managed futures world: trend following. It was back in June that we said the coming month was make or break for managed futures. The trend decidedly down across stocks, commodities, and the rest of the “risk on” crowd; and we saw the asset class (and trend following in particular) at risk of losses should there be a “risk on” reversal.
Maybe we should have kept our mouths shut, because a trend reversal was just what happened â€“ with a 10%+ rally in US stocks (S&P 500) over the next few months and similar “risk on” rallies across other markets. Next thing anyone knew, the ups and downs of the summer were over and managed futures, per the Newedge CTA index sat down nearly -3% for the year as of the end of October.
It’s all led to more than a couple people we’ve talked to recently uttering those words we actually love to hear: “is trend following dead”?
These are fighting words in most managed futures circles, but every now and then, this bandwagon starts up. Everyone has a different reason for the proclamation. The space has gotten too crowded, they’ll argue, or the biggest players have become too dominant. Others will say that high-frequency trading has killed traditional market dynamics, while others point to government intervention and the always-on monetary printing press as culprits in underperformance. But has the strategy really lost its luster? Click through to read the full piece.
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Forex trading, commodity trading, managed futures, and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors.
The entries on this blog are intended to further subscribers understanding, education, and â€“ at times- enjoyment of the world of alternative investments through managed futures, trading systems, and managed forex. Unless distinctly noted otherwise, the data and graphs included herein are intended to be mere examples and exhibits of the topic discussed, are for educational and illustrative purposes only, and do not represent trading in actual accounts.
The mention of asset class performance is based on the noted source index (i.e. Newedge CTA Index, S&P 500 Index, etc.) , and investors should take care to understand that any index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices: such as survivorship and self reporting biases, and instant history.
Managed Futures Disclaimer:
Past Performance is Not Necessarily Indicative of Future Results. The regulations of the CFTC require that prospective clients of a managed futures program (CTA) receive a disclosure document when they are solicited to enter into an agreement whereby the CTA will direct or guide the client’s commodity interest trading and that certain risk factors be highlighted. The disclosure document contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA.