Stockholm (HedgeNordic) – In mid-2023, Antiloop Hedge wrapped up its journey as a multi-strategy hedge fund, setting the stage for two independent strategies that will soon operate as standalone funds. One year later, Anna Svahn and Lynx co-founder Martin Sandquist have each started managing their respective strategies – Cygnus and Atlas – within a separately managed account (SMA) structure, preparing to launch Luxembourg-domiciled funds later this year.

“The SMAs are up and running, and it feels like Groundhog Day as we emerge from hibernation,” jokes Anna Svahn, co-founder of fund boutique Antiloop. Svahn is currently focused on managing her tactical asset allocation strategy, Cygnus, while Martin Sandquist oversees his multi-asset, multi-strategy global macro strategy called Atlas. The decision to close Antiloop Hedge partly stemmed from the realization that running a multi-strategy approach within a single multi-strategy fund was not the right fit.

“The SMAs are up and running, and it feels like Groundhog Day as we emerge from hibernation.”

Anna Svahn

Antiloop Hedge originally had several managers running their own strategies within the fund. Now, Svahn and Sandquist are independently managing their strategies under the SMA structure, soon to become standalone funds. “The strategies remain largely unchanged; we simply separated them,” says Sandquist. He realized that his approach, which is inherently multi-strategy, works better as an independent product rather than being housed within a multi-strategy fund.

The Quant Library: A Core Element of Both Strategies

Sandquist, one of the three co-founders of systematic asset manager Lynx Asset Management, has developed a “quant library” over the past few decades that serves as the foundation for Antiloop and its strategies. “This library comprises around 50 or so combinations of rules and indicators that form predictions,” Sandquist explains. While each pattern is weak on its own, a machine learning overlay combines these patterns into a single signal for each market. “It’s essentially pattern recognition with an overlay of machine learning, which improves prediction quality by merging all patterns into market signals.”

For the Atlas strategy, Sandquist implements 50 percent of the signals systematically and 50 percent discretionarily. “This quant library is the backbone of Antiloop and both Cygnus and Atlas, combined with our fundamental macro views,” adds Svahn. “The signals are short-term, while our macro views provide longer-term context, making it a good combination.”

“This quant library is the backbone of Antiloop and both Cygnus and Atlas, combined with our fundamental macro views.”

Anna Svahn

Despite relying on the same quant library, Cygnus and Atlas are distinct strategies with different risk-return profiles. “Atlas, as it was before, operates as a multi-strategy that combines systematic and discretionary approaches,” says Svahn, with a targeted annual volatility between seven to ten percent. “Cygnus, on the other hand, focuses on commodities with a tactical asset allocation approach and a higher risk profile,” she explains, targeting an annual volatility of ten to 15 percent. “Both strategies apply the quant library but operate in different universes and with different risk profiles.”

Commodities Supercycle

Both Cygnus and Atlas are built on data-driven signals and fundamental macro views, sharing a belief in an imminent commodities supercycle. “We both have this focus on commodities and idea about the future of the financial structures,” says Sandquist. Antiloop’s thesis argues that ongoing money printing will drive prices for precious metals, particularly gold, higher. “Gold is hitting new all-time highs, which validates our thesis that we are entering a new inflationary regime,” notes Sandquist.

“Gold is hitting new all-time highs, which validates our thesis that we are entering a new inflationary regime.”

Martin Sandquist

He further argues that inflation is beginning to resurface, and markets are underestimating this shift. “If you look at the breakeven TIPS rate, the market is pricing in two percent inflation for the next 30 years, which we think is totally insane,” Sandquist asserts. “We’re already seeing signs of a resurgence in inflation, with gold and other commodities picking up.”

Sandquist believes this commodity supercycle is largely unnoticed by the market. “Few investors have any meaningful allocation to commodities or gold right now. We’re at the very early stages of this supercycle,” he concludes. As a result, both Cygnus and Atlas aim to provide investors with inflation protection. “Our goal for the next five years is to be a strong inflation hedge for our investors,” adds Svahn.