Credit Suisse has launched a UCITS-compliant fund focused on trend-following, a strategy commonly used by hedge funds using rule-sets that react to trends in the price and volatility of stocks, bonds and currencies.
Led by quantitative investment specialist Yung-Shin Kung, the new fund, dubbed ‘Multi-Trend’ will invest in index or currency futures in a bid to profit from a mix of rising and falling asset classes.
Experts within the Swiss bank's asset management unit said they wants to “provide an alternative for this particular market environment,” in which bond prices are likely to fall due to rising rates while equity valuations are already record highs.
The Luxembourg-domiciled vehicle receives its buy or sale signals by observing market trends over short, medium and long-term time horizons, a strategy described by Kung as an “ideal portfolio component in uncertain market phases.”
“It has become increasingly likely that we will see further increases in borrowing costs and accordingly falling bond prices in 2017,” he said.
“This presents investors with the challenge of achieving sufficient risk diversification for their portfolios, with many key equity benchmarks already at record highs.”
The process has been used by Credit Suisse for many years and the firm manages around $400m invested in trend-following strategies out of a total $10.5bn in alternative investment strategies
The new 'multi-trend' fund has been approved for distribution in Switzerland, Germany, Austria, Italy, France, the Netherlands and the UK.