Privium and Swarm unveil novel managed futures fund built around insect colony behaviours

Bee hive

Amsterdam-headquartered Privium Fund Management and London-based software provider Swarm Technology have paired up to launch Swarm XVI, a novel managed futures programme whose trading technology and quantitative investment processes mimic behaviours seen in insect colonies.

The platform trades a portfolio of 16 liquid futures markets using a form of biomimicry, with the AI system designed to emulate a naturally-occurring phenomenon known as ‘swarm intelligence’, in which the collective behaviour of a colony of agents outperforms the sum of the individuals.

Pan Yiannakou, CEO of Swarm, said Swarm takes a “different approach” from the traditional high-frequency, split-second decision AI model used on trading floors.

“Our efficient and low-cost strategy means we only sample data and trade once a day. The system targets medium-length positions with a mix of strategies,” Yiannakou added.

The programme’s formal launch follows a 17-month live trading period and 15-year back test, during which time it has generated a compound annual growth rate of 23.5 per cent, with an annualised volatility of 18.6 per cent.

Year-to-date, Swarm XVI has advanced more than 14 per cent, compared to the benchmark SocGen CTA Index, which is down  1.6 per cent over the same period.

“Our technology harnesses the natural power of swarm intelligence to aim to make better, more efficient investment decisions. We have seen highly promising results from our blind back-test which is supported by the live track record,” Yiannakou added.

Clayton Heijman, managing director of Privium, pointed to the effectiveness of the “ambitious” trading strategy, and its performance over a long-term horizon.

“It is rare to see a strategy that has been through such different and thorough market conditions and which has achieved impressive returns.”

The platform launches with initial capital from the Shirlock family office.

Ralph Kanter, from the Shirlock family office, said: “We have been very satisfied with the returns over the past 17 months. We have geared the Swarm XVI program and despite a difficult period for markets globally, I have seen a 43 per cent gross return on my investment.”