Trend-following hedge funds start 2017 in the red

CTA hedge fund strategies, often described as ‘trend followers’, started the year struggling due to currencies and commodities pressure – though hedge funds as a whole began 2017 with a “strong” return.

CTAs, or ‘commodity trading advisers’, lost over 1%, according to two indices that track their performance.

CTAs generally use futures contracts to invest in various underlying assets, not just commodities, and are computer-driven.

The indices include the Societe Generale Prime Services’ SG CTA Index, which lost 1.13% in the month.

Tom Wrobel, director of alternative investments consulting at the firm, said: “CTAs haven’t had an easy start to 2017, and it is interesting to see that short term traders have struggled most in the current environment. The reversal of trends in the currency sector, and lack of trends in commodity markets, has proved particularly challenging, not helped by growing uncertainty around how the [Donald] Trump presidency will impact on markets.” 

The difficulties faced by CTAs appeared to reflect problems in the wider ‘macro’ hedge fund sector in which HFR, a hedge fund index firm, groups them.

HFR’s Macro: Systematic Diversified/CTA Index fell 1.2% and the broader macro index fell 0.5% in January.

However, hedge funds overall returned 1.2% in January, led by equity hedge strategies, according to HFR.

Kenneth J. Heinz, president of HFR, said: “Hedge funds produced gains to begin the new year, as global equity markets posted mixed performance and the US dollar declined with financial markets focused on new policies of the Trump administration regarding strategic impact on immigration, trade, manufacturing, national security, market regulation and infrastructure.”

©2017 funds europe

HAVE YOU READ?

THOUGHT LEADERSHIP

Innovative US companies are providing some of the solutions to the climate crisis and transition to a more sustainable economy. We see potential opportunities in areas including renewable energy and…
FIND OUT MORE
This white paper outlines key challenges impeding the growth of private markets and explores how technological innovation can provide solutions to unlock access to private market funds for a growing…
DOWNLOAD NOW

IRELAND SPOTLIGHT

Visit our dedicated Ireland channel for all the latest news and analysis on the country's investment industry.
READ MORE

PRIVATE MARKETS FUND ADMIN REPORT

Private_Markets_Fund_Admin_Report

LATEST PODCAST