Gold and coffee helped drive positive returns for trend-following hedge funds in September, supported by record commodity prices, rising equities, and falling interest rates, according to a report by Reuters citing data from Societe Generale released on Tuesday.
The precious metal has surged nearly 30% this year, reaching a record high on 26 September, making it one of the best-performing assets for funds employing trend-following strategies. These strategies use price and trading volume data to identify and capitalise on market movements, SocGen’s note to clients highlighted.
Robusta coffee futures also hit new peaks last month, spurred by a drought in Brazil, the world’s largest coffee producer. The adverse weather has severely impacted Brazil’s 2024-2025 coffee crop, further driving price increases.
According to Societe Generale’s research, the average return for the 96 hedge funds it tracks was approximately 0.7% in September, with returns ranging from a high of 7.41% to a low of -15.77%. More than half of the trend-following funds posted positive returns for the month.
However, the report noted that the Australian dollar, despite contributing positively to fund performance in September, has been the largest drag on returns for these funds throughout the year. Other positions that weighed on returns year-to-date included the Mexican peso, silver, and natural gas. While sterling was a profitable position in September, it remained a losing bet for the year overall.
New notable positions entered by trend-following funds in late September included long positions in Hong Kong’s Hang Seng stock index, sugar, silver, lean hogs, and German and Spanish stock indices, as well as the Canadian, Australian, and New Zealand dollars, according to the bank’s research.
