Investors typically seek to exploit the power of diversification: it is possible to improve risk-adjusted returns simply by combining different diversifying strategies of similar risk and return. As this is an ongoing challenge for investors, we looked at whether this approach should also be applied to trend-following models. Such models are typically used by managed futures managers that apply a systematic approach to capturing trends, both upward and downward, in a broad and diversified range of asset classes and markets. In this article, Dr Stephen Wood, Senior Product Manager at Aspect Capital, explains why a single well-researched trend-following investment model can produce better results than simply relying on diversification using different models.
To read the full article, please visit Investment and Pensions Europe (IPE).
Alternatively, please visit our Insight Series page to read the full research and analysis in 'Trend Following: Quality, not Quantity'.