July 2021 Kettera Strategies Trend Analysis
In July, the financial markets witnessed a series of fluctuations, with various sectors offering different opportunities for traders and investors.
Directional traders found solace in the rallying wheat markets, while the key for the macro crowd was getting the "risk on vs risk off" equation right. For systematic managers, the most common profitable trade was long global fixed income markets, particularly Eurozone interest rate markets.
According to the Kettera Strategies report, the top performing market sectors for systematic trend programs were energy and metals, while for discretionary global macro programs, the leaders were rates and currencies. This distinction highlights different sector exposures driving performance between the two types of programs.
Systematic trend programs generally had positive returns in July, but the returns varied greatly depending on the market sectors traded. For instance, for more diversified programs, the upside came from commodities, especially long positions in energy markets and coffee. Coffee may have been the star performer for managers that include softs in their repertoire, due to the effect of drought conditions and frosts on robusta prices.
On the other hand, discretionary global macro programs' profitable markets were similar to those of systematic managers, but they captured moves from a different angle. Relative value programs from agricultural commodities specialists capitalized on the consolidation in some markets, including corn and soybeans.
Equity indices were either slightly profitable or a mixed bag for most systematic managers, and currencies were challenging for most models. The BarclayHedge Currency Traders Index and BTOP FX Traders Index, along with the Eurekahedge Long Short Equities Hedge Fund Index, provide a snapshot of the performance in these areas.
The Eurekahedge-Mizuho Multi-Strategy Index, the CBOE Eurekahedge Relative Value Volatility Hedge Fund Index, and the BarclayCrypto Traders Index are other financial benchmarks that offer insights into the performance of various strategies.
It is important to note that these indices and other financial benchmarks are provided for illustrative purposes only. The views expressed in this article are those of the author and not necessarily those of AlphaWeek or its publisher, The Sortino Group.
In conclusion, July presented a complex landscape for traders and investors, with different sectors offering varying opportunities. Understanding these sector-specific trends can help in making informed decisions and navigating the markets more effectively.
Investors seeking opportunities in the technology sector may find interesting developments in July, as the fluctuations in financial markets unfolded. Given the top-performing market sectors for systematic trend programs were energy and metals, and after considering the profitable markets captured by discretionary global macro programs, an alternative area to explore could be the intersection of technology and commodities, particularly in the context of technological advancements impacting commodity production, processing, or distribution.
