MW Man Group's trend tracking fund is having one of its worst years ever

By Louis Goss

Stock markets have surged this year in an historic rally, but that doesn't mean everyone has managed to make outsize gains in 2024 - particularly in the volatile world of trend tracking hedge funds.

Man Group, the world's largest publicly listed hedge fund, has instead seen one of its leading trend tracking funds post negative gains in the year-to-date that have put it on track for one of the worst years in its history.

Man Group's AHL Trend Alternative fund, which manages more than $783 million worth of assets, posted -7.26% returns in October and is currently down 12.77% in the year-to-date, according to figures from data provider Kpler.

The trend tracking fund which invests in everything from natural gas to palm oil has suffered in the year-to-date despite the stock market rally that has seen the S&P 500 SPX index post gains worth 24.9% over the same period of time.

Man's AHL Trend Alternative fund's losses in the year-to-date mark its worst losses in any equivalent year-to-date period running to Oct. 31 over the previous decade. The fund posted its best performance of the current decade in 2014, when it achieved gains of 31.1%.

Speaking to MarketWatch, Harald Berlinicke, a partner at fund manager Sarnia Asset Management, explained that: "Trend followers got hit by the sharp turnaround in U.S. and European bond markets during October."

Belinicke noted trend tracking funds are typically heavily exposed to bond markets in movements that countered gains in other areas. "The rise in yields led to losses that dwarfed gains elsewhere during the month," Berlinicke said.

Man Group's AHL funds are a set of commodity trading advisor $(CTA.UK)$ funds that trace their origins back to 1987 when the hedge fund's AHL division was first formed. Man's AHL Trend Alternative fund was first founded in 2009.

In the 15 years since its inception, Man's AHL Trend Alternative has achieved gains worth 33.66%, versus the S&P 500's gains of more than 530% over the same period of time. Man Group's fund is up 22.11% over the past 10 years.

Man Group's AHL Trend Alternative fund has, however, performed relatively poorly more recently, having posted losses of 5.02% over the past five years, losses of 12.68% over the past three years and losses of 17.96% over the past 12 months.

In 2023, Man group's AHL Trend Alternative fund posted a 3.39% loss having previously achieved gains of 12.4% in 2022, figures from the London listed hedge fund show.

Speaking to MarketWatch, Andrew Beer, managing member of DBi, which creates exchange traded funds (ETFs) that replicate hedge fund strategies, explained that a series of "crazy reversals" over the previous year have seen trend tracking hedge funds suffer.

"I've called this the 'Year of the Whipsaw,'" Beer said as he pointed to a series of recent turnarounds in interest rate and currency markets that have hit trend tracking funds performances.

In Berlinicke's view, the losses this year are simply all part and parcel of investing in trend tracking funds. "Managed futures is just a volatile strategy that does well at regularly frustrating its investors," Berlinicke told MarketWatch.

-Louis Goss

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November 19, 2024 05:45 ET (10:45 GMT)

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