TRYCON: Managed futures funds shine with solid returns amidst turmoil

The picture since the end of July seems quite familiar: equity markets have been under enormous pressure globally, which leaves investors asking themselves whether their hedge fund and other alternative investments will hold out. In 2008, such expectations were profoundly disappointed.

During equity bear markets, it is particularly managed futures funds that tend to exhibit a strong negative correlation, which is to say that they can generate profits in that kind of environment. But they can also benefit from upward trends. That’s what the theory indicates.

„However, not all managed futures funds were able to capture the unusually rapid decline in equity markets since the end of July“, says Michael Guenther, managing partner at TRYCON G.C.M. AG. The Frankfurt based boutique sub-advises two managed futures funds domiciled in Luxembourg, both of which were positive in July and August. „During the sharp drop in equities, many models were unable or late at switching into short positions.” But equity markets are only one of several sectors to which managed futures strategies are applied. Usually, such funds are simultaneously taking positions also in interest rate and bond markets, currencies, and frequently also in commodities. Similarly, the TRYCON funds owe their profits of between 2 and 3 per cent during the first two weeks of August amongst others to their positions in Canadian bonds, Swiss francs, and gold.  And the strategy has already proved its worth in 2008: with profits of some 18% it was able to stabilize portfolios when most needed.

In order to make this type of investment available to more risk adverse investors, TRYCON has launched its second fund in February 2010: with a volatility of around 7 per cent, its UCITS-III compliant TRYCON Basic Invest HAIG can be included in more conservative portfolios. The underlying, purely systematic strategy can take both long and short positions in more than 30 global financial markets and benefit from different market cycles. A proprietary mathematical portfolio system generates investment ideas and is in charge of the strategy’s strict risk management.

Managed futures as popular as never before

Particularly investors who expect a rough equity environment going forward should consider investing in a suitable managed futures fund ahead of time. With double-digit volume growth since the end of 2009 – despite some lackluster performance periods in between – managed futures have come to be the most wanted alternative investment strategy[1]. And despite the ability to take advantage of falling markets, it is important for investors to realize that an allocation in managed futures is not equal to betting on a stock market crash – the usually computer based models are scanning their market universe for trends in either direction, going long or short as a result.

Primary function is to stabilize

According to the Frankfurt experts, the predominant benefit of the strategy is diversification, although their stand-alone performance is very convincing. Says Guenther: “The primary reason for people to turn to alternative investments is usually their demand for an effective diversification of their traditional investments. In that case, managed futures is the place to look first.”

 

 

About TRYCON G.C.M. AG

The independent, Frankfurt based boutique was founded in 2002. It specializes in the development of investment solutions in the area of managed futures. All of the company’s funds are based on the proprietary portfolio management software which can construct and manage portfolios across a number of different asset classes and time frames. The primary goal of the products is a low correlation with traditional markets, commodities and hedge funds – even during times of financial turmoil. TRYCON’s absolute return funds have a high degree of liquidity and transparency in common.

 

Contact information

Michael Guenther

TRYCON G.C.M. AG, Rheinstrasse 13, 60325 Frankfurt, Germany

phone: +49 69 / 979 445 60  –  fax: +49 69 / 979 445 62  –  guenther@trycongcm.com