Hedge funds were shaken up in the second quarter of 2015 as commodity trading advisor (CTA) funds tanked, after a successful 2014.
The computer-driven CTAs are down 1.8% in 2015, after a 6.28% fall in the second quarter, according to data from Hedge Fund Research. In 2014 the funds had a 10.7% gain. The hedge funds industry is up an average 2.5% year to date in 2015.
“[CTAs] are getting slammed,” says Bartt Kellermann, CEO of consulting firm Global Capital Acquisition. CTAs benefit from clear trends, such when they identified the dollar on the rise and oil dropping at the end of last year, he says. Right now, nothing is really trending. “Oil is kind of bumping along the bottom. The dollar is strong but hasn’t really done much,” says Kellermann. “When there’s no trends, there’s no profits.”
CTAs are steadily gaining in popularity as they’ve proven they can profit when others are in a rut. Last November CTAs gained more than 4% when most other funds were in the red, according to HFR. But many investors are still hesitant to put their money behind a computer. “There’s still a tremendous amount of investors that still won’t invest in CTAs because they won’t invest in what they don’t know,” says Kellermann.
Kellermann says most CTA investors will ride out the poor performance as a blip in the markets. And, he adds, July is already looking like a better month for the funds.
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