Capital Fund Management LLP, a company of Capital Fund Management group, a global pioneer in alternative investment strategies, launches a diversified and long term trend-following trust called the CFM IS Trends Trust, a product dedicated exclusively to the Australian market.

Speaking about the decision to launch such a product, Steve Shepherd, Head of Asia Pacific, CFM, said that demand for long term trend-following and managed futures programs in Australia is growing exponentially, as advisers and investors alike seek real portfolio diversification, in a low-cost and liquid form.

This is highlighted by IS Trends Trust already being awarded the coveted “Recommended” rating by major ratings house, Lonsec. Lonsec notes that, “by undercutting the competition on fees, CFM has potential to disrupt a high margin sector”.

Mr Shepherd explained that IS Trends Trust is a diversified and managed futures trend-following trust, which capitalises on the fact that much of the returns from managed futures strategies can be explained by long term trend-following.

“Trend following has been shown to work for the past 200 years – it’s a strategy which takes advantage of trends in a large range of global assets and markets”, he said.

Long Term Trend Following is the core of many managed futures and CTA programs and is a well-known strategy amongst Australian financial advisers and investors.

According to Stephen Robertson, Managing Director of Capital Fund Management LLP’s Australian distributor, Winston Capital Partners, “CFM’s IS Trends Trust is a welcome addition to the Australian market.

Alternative beta strategies have been shown to provide strong returns over the medium to long term and are designed to perform in both rising and falling markets – all with a low correlation to traditional asset classes.

Financial advisers have been increasingly asking us for competitively priced, quality options in this space, but these have been few and far between.

And that’s where we believe IS Trends Trust may have some added value – it’s a managed futures trust that provides investors with access to long term trend-following in 5 asset classes in over 100 different markets. It is diversified and plays to the long term strength of CFM,” he explained.

With the launch of the CFM IS Trends Trust, investors will have two Unit classes to choose from. Class A has a 10% volatility target and class B has a 15% volatility target. Class A has a 0.6%pa management fee (capped MER of 0.8%pa) with 10% performance fee and Class B has a management fee of 1.125%pa (Capped MER of 1.45%pa) with 0% performance fee. Under RG97 these competitive fees will be welcomed by Australian advisers, managed account programs, wealth based multi manager funds and investors.

The CFM IS Trends Trust has already received a “Recommended” rating by major ratings house, Lonsec. Lonsec highlighted that CFM IS Trends Trust is well designed to provide a pure ‘trend following’ strategy and is “managed by CFM group’s high quality and experienced investment team which has a long and successful heritage in active quantitative hedge fund investing.”

In conclusion, Mr Shepherd said that “there is no question of the power of managed futures strategies in creating diversified portfolios, and that a research-based quantitative approach is an efficient way to access them”.

“CFM is one of only a handful of global investors to apply academic techniques to stringently test every investment strategy – and to be at the vanguard of the opportunity on offer from massive shifts in data proliferation globally.

“Our strategies are quant-based and well diversified across and within asset classes and markets, and executed with our systematic trading strategies.

“We have no doubt that our latest Australian Trust, IS Trends Trust, will provide advisers and their Australian clients with true diversification and access to the benefits of “long term trend following across multiple asset classes”.

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