Trend following strategies have been successfully used in the financial markets for over 30 years and collectively have well over $200 billion under management. A number of these managers delivered strong long-term returns with gains in past market crashes. In fact, trend following is now one of the largest strategies in the hedge fund marketplace.
Instead of trying to predict the future, trend following managers employ proprietary investment rule-sets that react to existing trends in the price and volatility of securities. Many investors have been unaware of trend following because it was only offered in complex investment products called “managed futures.”
However, the growth in exchange-traded funds (ETFs) has enabled innovative firms to provide ETF trend following. To learn more, visit these links:
2) Risk Parity
10) Gains in 2008