NuWave Investment Management - Best Commodities Hedge Fund
NuWave Investment Management was founded in 2000 by Troy Buckner and considers itself equal parts asset management company and technology company, as the firm has long been a pioneer in the application of artificial intelligence and machine learning concepts to financial modelling and trading.
"Technology has always been a key differentiator for NuWave with respect to financial modelling, signal generation, trade execution and risk management," comments Craig Weynand (pictured), Chief Operating Officer. "The firm has long recognised that there exists an enormous amount of market data, all of which can be studied, tested and analysed with the aid of sophisticated technology tools. In contrast to many CTAs, NuWave looks beyond basic momentum concepts and incorporates a wide range of higher order factor analyses and advanced machine learning concepts as the foundation of its trading strategies."
The firm pursues a multi-strategy systematic approach to investing across seven systematic portfolios, all of which generated a positive return in 2016. The Combined Futures Portfolio and the Long/Short Equity (Market Neutral) Portfolio are the firm's two flagship strategies. The Combined Futures Portfolio has generated a compound annualised return of 8.35% since June 2001.
"Both of our flagship strategies – the first of which takes a multi-strategy approach to trading diversified managed futures, the second of which pursues a market neutral approach to trading large-cap US equities – posted impressive gains, whether on an absolute or relative basis, in 2016," says Weynand.
More recently, the firm launched the Short-Term Futures Portfolio in July 2016. It comprises a systematic model set that is focused entirely on intra-day and short-term directional trading opportunities; the portfolio employs a fully automated signalling and execution engine, while seeking to deliver unique correlation benefits and a more consistent risk/return profile relative to other managed futures offerings.
The firm defines a unique matrix of logical and mathematical values associated with a given time series in order to define a "profile" of current price behaviour for a specific market. Thereafter, pattern recognition algorithms are utilised to compare "profiles" – or behaviours – over time, with the goal of identifying historical analogs from which to forecast directional price behaviours going forward.
"At NuWave, our goal is to identify those combinations of relevant data sets that are indicative of such behavioural responses. By learning how market participants have responded to events in the past, we can assess the probability of similar behavioural responses (ie, directional price movements) in the future. The net effect of NuWave's behavioural approach to trading produces a decided bias towards the long-volatility (or directional) payoff, even with respect to the firm's market neutral strategies."
Through the use of increasingly sophisticated algorithms and robust technology-based solutions, the basic tenets of NuWave Investment Management's core investment philosophy are capable of being leveraged across multiple markets and multiple time frames.
On winning this year's award, Weynand comments: "We are delighted to accept the 2017 Hedgeweek USA Award for Best Commodities Hedge Fund Manager; recognition by such an esteemed publication not only serves as a testament to the risk-adjusted performance NuWave has delivered to its clients over time, but also to the quality and depth of the firm's infrastructure as a whole."