Capital Fund Management (CFM) has launched a diversified and long-term trend-following trust, the CFM IS Trends Trust, with the alternative investment strategies firm saying demand was soaring for that type of product.
Stephen Robertson, the managing director of CFM distributor Winston Capital Partners, told financialobserver long-term trend following was a strategy that took advantage of trends in five global asset classes and in over 100 markets, bringing diversification to portfolios.
“It has the ability to improve portfolio returns and reduce drawdowns. The CFM IS Trends Trust is a core trend-following product available to investors at significantly lower costs than existing products,” Robertson said.
He said the product, which was dedicated exclusively to the Australian market, was a popular one in the retail investment market.
“Retail investors have over $3 billion invested in similar strategies, but these have been with high fees, usually over 1.5 per cent and performance fees over 15 per cent,” he said.
CFM head of Asia-Pacific Steve Shepherd said advisers and investors were seeking portfolio diversification in a low-cost and liquid form.
Shepherd said the managed futures trend-following trust capitalised on the fact much of the return from managed futures strategies could 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.
CFM already offered retail investors, via platforms, the CFM IS Diversified Trust, which was an alternative beta fund in Australia, he said.
He said he believed in the ability of managed futures strategies to create diversified portfolios and a research-based quantitative approach was 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,” he said.
“Our strategies are quant-based and well diversified across and within asset classes and markets, and executed with our systematic trading strategies.”