Factbox: Trend-following funds head for third down year
NEW YORK (Reuters) - Long-term trend following funds are headed for a third straight year of losses unless the underlying commodity and financial markets they trade settle into a more predictable pattern, which does not seem likely given the Federal Reserve's mixed signals on the U.S. economic stimulus.
Many trend followers were whipsawed in the first half by market gyrations over whether the Fed would cut its bond buying this year. More volatility seems likely; last week, the Fed said it needed more time to decide.
Details on the performance and asset size of some CTAs, and comments from their managers:
DOWN
-- Quantum Leap Capital, Sugar Land, Texas --
* Down 14 percent through August, according to data from funds-tracking portal Altegris.
* Has about $450 million under management and trades 15 markets, including commodities.
* Comment from manager Juan Carlos Herrera
- "The essence of succeeding as a CTA is having the opportunity to enter and stay in a market. You really need continuous movements and in one direction. If only three or four of the markets you're in are doing that, then it's going to downsize your returns."
"We kept getting stopped out of our trades by mixed signals in July. We have very tight stops, tighter than most CTAs. We got chopped up on gold, soybeans and copper."
-- Abraham Trading, Canadian, Texas --
* Down about 0.58 percent for the year through August, with about $234 million in assets, according to Altegris.
Comment from founder Salem Abraham
- "In the years CTAs really made money, markets moved 30 to 50 percent over 6 to 12 months. This year's moves are much smaller and too short."
UP
-- M6 Capital, Germantown, Tennessee --
* Up 7 percent through August by following a run-up in soybean prices, and manages nearly $50 million
Comment from manager Chris Myers
- "There is no lack of opportunity in agricultural markets in coming months. M6 Capital's analysis continues to point to these opportunities being in both bull and bear markets."
-- Campbell & Co, Baltimore, Maryland --
* Manages more than $3 billion
* Flagship fund rose nearly 10 percent through August, about 7 percent of that coming from commodities, particularly gold.
Comment from business development manager Tracy Wills-Zapata
- "I would certainly say that metals have been a strong contributor for us, both industrial and precious."
-- Novus Investments, San Ramon, California --
* Manages $120 million firm-wide
* Precious metals-focused trend following fund up 4 percent on the year. Gained more than 11 percent in August alone, erasing losses from earlier months.
Comment from managing director Don Davis
- "We're far from perfect, but we did catch the recent move up in gold."
(Reporting by Barani Krishnan; Editing by David Gregorio)
