Ongoing financial market disruption and geopolitical challenges are helping trend following hedge funds to register big returns, with Graham Capital Management, Aspect Capital, AlphaSimplex and AQR Capital Management all near or over 40% up so far in 2022, according to a report by Reuters.
The report cites Yao Hua Ooi, principal and co-head of macro strategies at the $143 billion hedge fund AQR – which is up 70% YTD – as pointing out that trend strategies work best when volatility levels are high. And with stock market volatility, as measured by the CBOE Volatility Index, having risen sharply since August, and an ICE BofA index tracking US Treasury volatility at its highest since March 2020, conditions are optimal for trend following managers to thrive.
An index of the 10 largest trend-following hedge funds, compiled by Société Générale is up almost 37% this year, while data provider HFR’s broader index of hedge fund performance has seen just a 3.8% increase. BarclayHedge estimates that trend following managers account for $297 billion of the global $4.9 trillion hedge fund industry.
