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Managed Futures 2016 Strategy Review – Trend Following

By now, everyone has crunched the data for the 2016 returns of Managed Futures. Across the indices that track the asset class show it ending the year in the red. Nothing to induce panic and mass outflows (actually quite the opposite), but nothing to write home about either.

But what went on in the Managed Futures world behind the numbers? Which markets made or broke trends in 2016 that led to the collective index performance numbers that symbolize thousands of programs? For that answer, we will point you to our “Managed Futures 2016 Strategy Review.

We don’t see the asset class as just the big names or the most popular managed futures mutual funds. In the unique world of managed futures, those programs which make up the asset class can be doing quite different things, as different as short volatility and long volatility, short term and long term, Corn focused or Gold focused. The asset class is like all of our brains in that regard, with the different strategy types all part of the whole (the asset class brain, if you will), with the component strategies making up how the whole responds to market action (what the body is saying to the brain).

Managed Futures

Managed Futures

In this whitepaper, we outline each of the different types of strategies listed above, delving into the what market factors played a large role in their performance. Here is a preview of the most talked about, the arguably largest sector, trend following.

Trend Following

Unlike other years where the lack of trends contributed to the downfall of performance from trend followers, there appeared to be plenty in the way of trends in 2016. Indeed, there was a rally in Crude from $35 to $55, the U.S. Dollar having its biggest up-trend in recent history, and Hogs dropping from $72 to $42 in five months. Not to mention great follow through to the downside in the British Pound following Brexit.

So where were the trend followers? They were there, and they were participating, but 2016 was a year full of high volatility of volatility, not just increased volatility.

What’s that mean?

Download our “Managed Futures 2016 Strategy Review” to read the rest of the Trend Following review as well as the other sector reviews.

Article by RCM Alternatives