2024 has been a mixed but generally challenging year for trend-following strategies. The early months of 2025, particularly March and April, have been equally, if not more, difficult. A noisy market environment with few sustained directional moves and frequent reversals has made it difficult for models to latch onto persistent trends. Yet amid this turbulence, Mandatum Managed Futures Fund stood out, delivering strong performance in 2024 and an even stronger showing in early 2025, with a return of more than 6.0 percent year-to-date.
Its success highlights a key differentiator in its approach: the use of meta-models – including regime models – that enable the fund to dynamically adjust to shifting market conditions. While the fund is built to navigate challenging environments for traditional trend-following, it also performs well when classic trend-following comes into favour, as seen in 2022. Trend-following remains a central component of the Mandatum Managed Futures Fund, but it’s far from the only one.
Beyond Traditional Trend-Following
“Trend-following is a core strategy for the fund, but we also incorporate other risk premia such as mean reversion, seasonality, and carry,” says Ville Rantanen, Portfolio Manager at Mandatum Asset Management. These additional components, he explains, have helped the fund stand apart from more traditional trend-followers in 2024 and early 2025. “We aim to diversify our strategy universe rather than rely solely on trend following,” he elaborates. “While trend following remains an important component and we can capture trends efficiently, we also use other strategies to reduce dependence on a single style.”
“While trend following remains an important component and we can capture trends efficiently, we also use other strategies to reduce dependence on a single style.”
The fund’s systematic approach is designed to identify and capture persistent behavioural patterns across global markets, with a focus on delivering absolute returns and crisis alpha through multiple, diversified return streams. “To achieve this, we have designed a strategy that is both robust and adaptable, using a diversified set of signals and models that respond to changing market conditions,” says Rantanen. Over time, this design has resulted in a return profile that exhibits low correlation not only to traditional asset classes, but also – at times –to other CTAs.
Since its launch in late 2019, the Mandatum Managed Futures Fund has delivered an annualized return of about 6.0 percent, exhibiting a low correlation of 0.23 with the MSCI World and 0.30 with the SG CTA Index, a key benchmark for the managed futures space. Despite this modest correlation, the fund retains the “crisis alpha” traits typically associated with traditional trend-following strategies, gaining 8.0 percent in 2022 – a year when most asset classes posted losses. “While the Mandatum Managed Futures Fund shares some similarities with conventional trend-following strategies, several key characteristics differentiate our approach and contribute to the relatively low correlation with the SG CTA Index,” confirms Rantanen. “We aim to diversify our strategy universe rather than rely solely on trend following, yet we still capture trends efficiently.”
Meta-Models in Practice: From Reactive to Adaptive Investing
A defining aspect of the fund’s design is the integration of proprietary meta-models into its systematic framework. “Our proprietary meta-model frameworks enable us to dynamically adapt to changing market environments, further lowering correlation with conventional CTAs,” explains Rantanen. “Meta-models are models that provide critical information to the system, guiding decision-making across strategy selection, risk allocation, and portfolio adaptation.”
“Meta-models are models that provide critical information to the system, guiding decision-making across strategy selection, risk allocation, and portfolio adaptation.”
Regime models are one type of Mandatum’s meta-models, aggregating information from multiple sources to guide both model selection and risk-taking decisions. “These models can react swiftly to significant market movements, allowing us to adjust risk exposure more rapidly than traditional methods and identify where to deploy capital most effectively,” explains Rantanen. Another type of meta-model in its framework follows a model hierarchy approach, where capital is dynamically reallocated to strategies based on pre-defined conditions. “This allows us to adjust exposures according to each model’s relevance and effectiveness in the prevailing market regime, further enhancing the system’s adaptability.”
In essence, these meta-models allow the Mandatum Managed Futures Fund to shift from a reactive to an adaptive investment process – one that Rantanen sees as crucial for maintaining consistent performance across a broad range of market environments. “The meta-models are closely tied to market regimes, as their purpose is to help system position the portfolio in the most suitable way for the prevailing environment,” he explains. While they continuously monitor shifting market dynamics, their influence on the portfolio remains steady and flexible, enabling the fund to respond with agility without overreacting to short-term noise.
“The meta-models are closely tied to market regimes, as their purpose is to help system position the portfolio in the most suitable way for the prevailing environment.”
“Rather than having a minimal impact during stable periods, they are constantly guiding the system—shaping allocations, adjusting risk, and influencing strategy prioritization,” notes Rantanen. “Their role is not limited to rare overrides but is an integrated and ongoing part of our decision-making framework, with their level of influence naturally evolving with the market context,” he elaborates. At key market turning points, their impact becomes more pronounced, driving timely and decisive adjustments that respond to evolving conditions and dynamics.
Peer Differentiation: Market Focus, Speed and Model Flexibility
Trend-following managers often distinguish themselves by factors such as the breadth of markets and instruments they trade, the speed of their models, and the balance between trend and non-trend strategies. Mandatum Managed Futures Fund clearly goes beyond a sole focus on trend-following, harnessing the diversification benefits of carry, mean reversion, and seasonality.
The fund’s approach also defies simple categorization based on model speed. “Our trend-following orientation isn’t fixed to a single time horizon—it shifts depending on the prevailing market regime,” explains Rantanen. “In more stable, directional environments, we may lean into medium- or long-term trend signals,” he adds. “In contrast, during choppier or more volatile periods, shorter-term models may take on a greater role. This flexibility is core to our approach.”
“Our trend-following orientation isn’t fixed to a single time horizon—it shifts depending on the prevailing market regime.”
Some trend-following managers focus exclusively on the most liquid futures markets – equities, fixed income, and currencies – while others extend their reach to commodities or even more exotic, though often less liquid, instruments. Mandatum’s strategy centers firmly on financial futures, with a particular emphasis on equities, fixed income, and currencies. “These markets form the core of our investment universe because they offer deep liquidity, broad diversification potential, and reliable trend and other risk premia dynamics,” says Rantanen. Commodities, by contrast, are not currently part of the fund’s investment universe.
This combination of features – including the use of meta-models, a range of model speeds, and a focus on financial futures – creates a product that “serves as a versatile component that fits well alongside traditional equity and fixed income allocations, providing valuable diversification and reducing overall portfolio volatility,” according to Rantanen. Additionally, due to its unique and distinctive return profile, the fund is a strong fit within hedge fund portfolios, “offering institutional-quality alternative exposure that both complements and diversifies traditional hedge fund strategies.”
“We recognize that markets are constantly evolving, and we are committed to continuous research to build new models and study new features that could impact and further develop our strategy.”
Despite delivering peer-beating performance on multiple occasions – earning the fund the title of Best Nordic CTA at the Nordic Hedge Award for two consecutive years – the team at Mandatum Asset Management remains focused on evolving its managed futures strategy. “We recognize that markets are constantly evolving, and we are committed to continuous research to build new models and study new features that could impact and further develop our strategy,” concludes Rantanen. “Our research is multidisciplinary, drawing on various fields to identify insights that enhance our models.” The team is exploring the inclusion of new markets to further diversify the investment universe, for example, by adding equity sector futures. “Through this ongoing innovation, we aim to maintain and improve the fund’s ability to deliver consistent, absolute returns across changing market environments.”
This article features in the “Systematic Strategies and Quant Trading” publication below:
