By HedgeNordic and RPM: In January 2025, the NHX CTA sub-index in the Nordic Hedge Index edge up 0.3 percent, trailing other CTA benchmarks. However, performance varied across managers and strategy types, with traditional trend-following strategies leading the way.

Last month, Time Series Momentum (TSMOM) as measured by RPM’s Market Divergent Index (MDI) remained unchanged and below long-term average levels as trendiness in commodities was offset by reversing trends mainly in fixed-income and FX.

In financials, the US dollar rose and bond yields reached their highest levels since late 2023 during the first half of the month, as strong US jobs data led traders to reduce expectations for future rate cuts by the Federal Reserve. However, by mid-month, yields dropped, and the dollar experienced its steepest selloff since November 2023 after President Trump vowed to enact sweeping tariffs, although he refrained from announcing specific trade restrictions.

In equities, US stocks ticked higher as investors weighed tariff threats against the absence of immediate actions. However, by month-end, (tech) stocks slumped as China’s DeepSeek stoked fears over AI spending. In commodities, trends were more robust. In energies, crude reached its highest level since August 2024 as Indian and Chinese refiners scrambled to find alternative supplies after tough new US sanctions targeting Russian oil revenues were introduced. However, towards the end of the month, oil prices fell again as traders assessed the potential impact of US trade tariffs on global growth and the stockpiles outlook. Elsewhere, coffee prices hit yet another record high as traders had to digest Trump’s threats to impose tariffs and economic sanctions on Colombia.

Sub-Strategies and Constituents in the NHX CTA Index

Nordic systematic trend-following CTAs posted gains across the board in January, with Mandatum Managed Futures Fund, SEB Asset Selection, Calculo Evolution Fund, Lynx, and Estlander & Partners Alpha Trend all finishing the month in positive territory.

Less traditional trend managers in the NHX CTA sub-index had mixed performance in January. Among shorter-term trading strategies, Lynx Constellation posted a gain, while Arden xFund and Epoque saw losses due to less favorable market conditions for short-term trends. Lynx Systematic Macro finished the month in negative territory, as did the bitcoin-focused trend-following Anna Fund, which had been the top performer in the Nordic Hedge Index in 2024. Estlander & Partners Freedom, a futures-based cross-asset multi-factor vehicle, edged up 0.3 percent in January.

However, the top performer last month was RPM Risk & Portfolio Management’s multi-manager program, the RPM Evolving CTA Fund, which led the performance table with a 3.3 percent gain. Almost all of the underlying managers contributed positive returns during the month.

Outlook

From a macro perspective, the US economy is looking strong as statistics keep coming in above expectations. It is anyone’s guess what the Fed is going to do going forward. Right now, the market consensus is that it will keep rates on hold. At the same time, as expected, the new Trump administration is adding to volatility, though trendiness in commodity markets is looking less vulnerable.