In this update, we present the quarterly State of Trend report for Q4, 2024. 

Our report covers the performance of Trend Following systems compared with traditional investments such as the S&P/ASX 200 Total Return index, and the Australia "60/40" portfolio. Trend Following provides exposure to a diverse pool of underlying instruments, and implements trading strategies systematically and without emotional biases.

Volatile market conditions prevail

Trend following systems offered mild positive performance in Q4 2024, ahead of traditional asset classes of stocks and bonds. Diversified asset exposure particularly across currencies and commodities (such as Bitcoin, Food & Fibre) helped stabilise returns over the period. 

Key market movements in Q4 2024

• Volatility resumed in Q4 2024

  • Equity and bond markets continued to whipsaw as markets weighed interest rate expectations, economic growth outlook, policy expectations post the US Federal election and escalating geopolitical issues

• However, commodities and currency markets saw trends extend

  • USD strength was the key theme for the quarter. Its Reserve Currency status was highlighted against all major currency pairs (including the AUD, EUR, JPY, KWY, NZD, BRL, etc), notwithstanding ongoing risks to the US economy and uncertainty around the impact of the change in US leadership

  • To the long-side, Bitcoin, some Food & Fiber contracts such as Cocoa, Coffee, Orange Juice and Palm Oil performed, along with Natural Gas. Others fell sharply, including Oats, Sugar and Cotton, along with Metals such as Platinum and Copper

• We remind investors of the power of a diversified portfolio when it comes to managing through uncertain market conditions - which can be accessed through Trend Following programs implementing the strategy across a wide pool of instruments across asset classes

Featured chart - AUD/USD

• Like other major currency pairs, the AUD de-rated materially against the USD through Q4 2024

• USD strength has been attributed to factors including:

  • reduced expectation for US rate cuts,

  • superior US economic growth compared to other jurisdictions,

  • increased potential pro-growth policies under the Trump administration,

  • Reserve currency amidst geopolitical machinations

• Trend following systems can rapidly reposition into trending markets, taking advantage of emerging dynamics as they occur

See the full report at our website.