Our flagship strategy, ECCM Systematic Trend Fund (ECCM STF), seeks to exploit directional price trends across a portfolio of over 80 diversified and liquid global futures markets including equity indices, foreign exchange, fixed income and commodity markets.

Our approach aims to deliver returns with a low correlation to traditional asset classes.

Actual performance data of the ECCM SGM Fund (ECCM STF’s predecessor fund) after fees from inception 1 January 2020 through to 30 June 2023, and the ECCM STF Wholesale AUD Class from 1 July 2023 to date. Past performance is not a reliable indicator of future performance.

WHAT IS TREND FOLLOWING?

Trend following is an investment strategy that involves identifying and capitalising on prevailing market trends in futures markets. The strategy relies on the underlying belief that price trends tend to be a persistent feature of financial markets. Price signals are used to generate the entry and exit points for entering into prospective trends. Once in a trade, risk management is crucial, with the use of stop-loss orders to limit potential losses if the trend reverses. Overall, trend following is a systematic and disciplined approach aimed at profiting from sustained market movements.

HOW CAN TREND FOLLOWING WORK IF MARKETS ARE SUPPOSED TO BE EFFICIENT?

Trend following trading in futures markets, also known as “time series momentum”, is an investment phenomena that has strong academic support. Noble Prize winners such as Robert Shiller and Richard Thaler have documented the persistence of trends in financial markets. Both laureates posit that psychological and behavioural factors such as cognitive biases and heuristics can influence investors’ behaviour giving rise to sustained price trends. In essence, the cycle of “fear and greed” (and the resultant price trends) provide a theoretical foundation for trend following strategies. Even the author of the Efficient Market Hypothesis, Eugene Fama, has had to acknowledge that momentum is an anomaly that cannot be easily explained by his Capital Asset Pricing Model!

WHAT IS UNIQUE ABOUT ECCM’S APPROACH TO TREND FOLLOWING?

ECCM’s approach to trend following is one that is firmly grounded in a rigorous statistical approach to identifying and exploiting trends in markets. Our research process begins with the accumulation and processing of the largest set of historical futures data possible, including the inclusion of some commodity prices series extending back to the 1950s. Back adjusted time series for hundreds of assets are used to simulate trading strategies in a process known as backtesting. Our in-house statistical expertise allows us to maximise the power of our statistical analysis consistent with our sample size constraints. Every day we update our financial database enabling us to exploit price trends as they unfold. 

WHY ENGAGE A PROFESSIONAL INVESTMENT MANAGER?

Professional managers have specialised knowledge and extensive experience in designing and implementing strategies. The world of trend following can be an overwhelming style of trading for individual investors due to the need to obtain quality historical market data, utilise sophisticated statistical techniques in strategy design, monitor futures markets in a 24/5 environment, and execute a strategy efficiently and manage risk effectively. Entrusting your investment to a seasoned professional can provide peace of mind, knowing that your portfolio is being managed with a high level of expertise and strategic insight.