- Advertisement -
- Advertisement -

Related

Mixed Performance for Estlander & Partners Strategies in August

Industry Report

- Advertisement -

Stockholm (HedgeNordic) – The family of Estlander & Partners (E&P) strategies posted mixed performance in August, with the firm’s Presto strategy topping the list of the best-performing Nordic commodity trading advisers (CTAs) in August.

E&P currently manages approximately $381 million in assets under management through investment programs Estlander & Partners Freedom, Estlander & Partners Alpha Trend, and separate customized mandates. All the firm’s programs represent systematic CTAs designed to capitalize on fluctuations in global asset prices and changes in risk appetite. The performance of the Freedom strategy and Alpha Trend strategy has been shadowing the broader trend-following industry, which recorded two consecutive down years as measured by the HFRX Macro/CTA Index.

Estlander & Partners Alpha Trend, a medium-term systematic trend-following strategy, returned a negative 0.96% in August, widening the year-to-date loss to a disturbing 9.73%. Meanwhile, the Freedom strategy, E&P’s most diversified program that combines the investment models employed in the firm’s other programs, gained 1.16% in August, reducing the CTA’s year-to-date loss to 1.61%. Should the Freedom strategy fail to crawl into positive territory by the end of the year, the strategy will score a hat-trick of down years.

Meanwhile, Estlander & Partners Presto, which follows a systematic short-term trading approach in liquid futures and forward markets globally, recorded a gain of 5.15% in August, extending the year-to-date return to 7.22%. This follows a gain of 4.64% in 2016, when the broader CTA industry lost 2.93%.

Despite the underwhelming performance experienced by most trend-followers, including the CTAs under the umbrella of E&P, the feature that the returns of trend-followers tend to move independently of other markets continues to make these vehicles valuable to institutional investors. At the end of the day, institutional investors may well be ready to tolerate dismal returns as long as trend-followers help them build diversified and crisis-proof investment portfolios. One can simply look at the performance figures reported by Estlander & Partners strategies for the year of 2008 to grasp the benefits of investing in CTAs. For instance, the Freedom strategy gained 30.96% net of fees in 2008, while Alpha Trend returned an even more impressive figure of 37.87%.

Although the global trend-following industry was among the biggest beneficiaries of investor inflows in 2016 at the expense of traditional mutual funds and other hedge fund categories, the poor performance of 2015, 2016, and 2017 will likely sour investor appetite. Indeed, the role of trend-followers in providing diversification and uncorrelated returns is well recognized, but CTAs may experience a declining role in return chasers’ portfolios should poor performance persist.

A fresh letter to investors issued by Estlander & Partners writes that “many risk assets are becoming progressively inflated” and “there will be little valuation cushion when the next recession hits.” Moreover, E&P anticipates that “all kinds of bad economic decisions are going to be made and capital is going to get misallocated” as no one can price risk anymore, reflected by the minimal yield difference between European junk bonds and US Treasuries. An eventual correction in the valuations of risk assets will surely benefit trend-following managers like E&P.

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

Latest Articles

Rising Adoption of Quantitative Investment Strategies Among Nordic Investors

From a high-level perspective, there is a clear trend of increasing adoption of quantitative investment strategies (QIS) among Nordic institutional investors, either through the...

EU Plans Stress Test for Hedge Funds and Non-Bank Firms

European regulators are planning a stress test to identify vulnerabilities beyond the traditional banking sector, focusing on less regulated entities such as hedge funds,...

ALCUR Fonder Continues Hiring Spree

Following two earlier additions this year, ALCUR Fonder continues to expand its portfolio management team at a notable pace. The Stockholm-based hedge fund boutique...

Nordic Private Markets Modernize with Data-Centric Trade Lifecycle Automation

By Anders Stengaard Jensen at Indus Valley Partner: In recent years, asset managers in Nordic countries have accelerated efforts to modernize trade operations, particularly...

Norwegian Hedge Fund Industry Sees Major Boost with New Launch

The Swedish and Danish hedge fund industries remain closely matched in size, with Denmark recently edging ahead of Sweden. While still less than half...

Atlant Funds Hold Up in May Despite Mistimed Market Call

Macroeconomic and market forecasts are notoriously difficult, even for experienced hedge fund managers. What matters more than being right, however, is ensuring that incorrect...

Allocator Interviews

In-Depth: High Yield

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.