Monthly Review - January 2024

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January 31, 2024

Our Perspective

Whilst the US equity market continues to make new highs, other markets around the world look like they might be running out of steam. What’s more, US equities are up almost 40%, as measured by the S&P 500, since it bottomed out in October 2022. Since then, the biggest headwind in our portfolios has been our basket of trend following managed futures strategies.

This month we ask ourselves, why allocate to them at all?

The answer is quite simple: diversification.

Important to note however, not just diversification for the sake of diversification. We are big believers that unthoughtful diversification only destroys returns. What we want to diversify away is risk. Specifically, drawdown risk.

The below graphs show the four largest drawdowns of the MSCI AC World Index over the last 30 years. We also plot the returns of the SG Trend Index, a basket of the largest trend following managed futures strategies globally. The benefits are quite clear.

Add to this our ability to re-allocate capital at points when dislocation gets too extreme, and one not only diversifies away risk, but one could add significant alpha along the way. We are well aware that we will not ‘time the market’, but that is not our objective. Our objective is to deliver market beating returns in a simple way, whilst focusing on preserving purchasing power and avoid significant drawdowns.

That is in short, the beauty of trend following managed futures. Also, with the US regional banking system in a state and corporate profits set to disappoint, an allocation to trend following strategies is worth considering in our view. We discussed some of the intricacies on trend following with Richard Liddle, CEO of Bowmoor Capital, during our latest podcast. Worth a listen!

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CONTACT US

For further information on any of our services, or if you would like to arrange a meeting with an investment manager to see how we can work with you, please get in touch.

LeifBridge Investment Services
Shard Capital Partners
Floor 3, 70 Saint Mary Axe
London, EC3A 8BE
United Kingdom

Telephone: +44(0)20 7186 9900
Email: Info@Leifbridge.com
www.leifbridge.com

Disclaimer:

We try to ensure that the information provided is correct, but we do not give any express or implied warranty as to its accuracy. We do not accept any liability for errors or omissions. The content of this brochure is for guidance purposes only and does not constitute financial or professional advice.

IMPORTANT INFORMATION

LeifBridge is a trading name of Shard Capital Partners LLP. Shard Capital Partners LLP is a limited liability partnership, registered in England with registration number OC360394. Shard Capital Partners LLP Registered office:36-38 Cornhill, London, EC3V 3NG.. Shard Capital Partners LLP is authorised and regulated by the Financial Conduct Authority in the United Kingdom, reference number 538762.

This document is provided for information purposes only and is intend for confidential and sole use by the recipient. It is not to be reproduced, copied or made available to others. The information set out in this document does not constitute investment advice or a personal recommendation. The views expressed in this document are not intended as an offer or a solicitation, to purchase or sell any security or other financial instrument, credit or lending product or to engage in any investment activity.

Past performance is not a guide to future performance. It is important that you understand that with investments, your capital is at risk. The value of investments, as well as the income derived from them, can go down as well as up and investors may get back less than the original amount invested. It is your responsibility to ensure that you make an informed decision about whether to invest with us, based on your particular objectives. If you are still unsure if investing is right for you, please seek independent advice.

The information and opinions expressed within this document are the views of (the company) and are based on information we believe to be reliable, but we do not represent that they are accurate or complete, and they should not be relied upon as such. Any information provided is given in good faith but is subject to change without notice.

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