Bear Market in US Stocks Still in Its Infancy Versus History

Reuters

Market turmoil a boon for trend-following hedge funds

Trend-following hedge funds are capitalising on market disruption and geopolitical unrest, with funds such as Graham Capital Management, Aspect Capital, AlphaSimplex and AQR Capital Management all near or over 40% higher for the year. Trend strategies work best when volatility levels are high, says Yao Hua Ooi, principal and co-head of macro strategies at the $143 billion hedge fund AQR, which has one trend fund set for its best year so far, up 70%, according to a source with knowledge of the matter. “This is the type of environment where trend-following strategies historically have tended to thrive and provide valuable diversification benefits,” said Ooi, referring to how large investors sometimes use hedge funds in a portfolio as an alternative source of revenue to traditional investments.