February proved to be another favorable month for Nordic CTA managers, leaving CTAs as the best-performing sub-strategy in the Nordic Hedge Index so far this year. Performance was primarily driven by profits in fixed income and soft commodities. With only a few exceptions, most managers and sub-strategies finished the month in positive territory.
Last month, time-series momentum (TSMOM), as measured by RPM’s Market Divergence Index (MDI), initially fluctuated above long-term average levels before increasing significantly towards month-end as the existing trend environment continued, albeit with somewhat weaker momentum, while new trends began to emerge elsewhere.
In equities, U.S. stocks initially rallied to new record highs on strong growth expectations before reversing course. The shift came amid growing concerns about the sustainability of the artificial intelligence boom and new tariff threats issued by President Donald Trump, after the Supreme Court overturned the initial round of tariffs introduced during “Liberation Day” last year. Accordingly, the resulting uncertainty prompted a notable rally in fixed income markets, as investors sought safety in government bonds. In foreign exchange markets, the U.S. dollar lost ground against most major peers.
In commodities, gold recovered after last month’s selloff amid a weaker dollar, increasing geopolitical tensions, and Trump’s defiant reaction to the court’s decision, but the path was significantly more volatile than in previous months. Elsewhere, crude oil prices fluctuated wildly amid the waxing and waning of US-Iran tensions and the course of their nuclear negotiations. Finally, soybean prices surged amid optimism surrounding U.S. biodiesel blending volumes and better-than-expected export sales reports, while the cocoa market experienced a dramatic price reset, with futures plummeting to their lowest levels since 2023 driven by recovering West African crops and significant demand destruction.
Sub-Strategies and Constituents in the NHX CTA Index
Against this backdrop, all trend-following managers in the Nordic Hedge Index posted positive returns for the month. Calculo Altus, Estlander & Partners Alpha Trend, Lynx, Mandatum Managed Futures, and SEB Asset Selection all generated positive performance, primarily driven by profits in bonds and soft commodities.
Beyond traditional trend-followers, most non-trend-following managers in the Nordic Hedge Index also finished the month in positive territory. Short-term-oriented Epoque and machine learning-driven Lynx Constellation both finished the month in positive territory. Meanwhile, Lynx Systematic Macro and Volt Diversified Alpha ended the month in negative territory, whereas Estlander & Partners Freedom produced strong performance. The multi-manager program RPM Evolving CTA Fund also advanced, largely reflecting underlying managers’ profits in fixed income and soft commodity markets.
Outlook
Looking ahead, the U.S. economy continues to surprise on the upside as economic divergence is slowly but surely increasing. At the same time, the possibility of a renewed tariff escalation similar to the events of 2025 remains a potential source of volatility. The market turbulence triggered by the ongoing U.S.-Iran conflict will likely become a more prominent theme in next month’s commentary.
