Credit Suisse Asset Management has launched a multi-trend fund, with the aim to benefit from rising interest rates and high equity valuations.
The trend-following fund strives to generate positive returns in market environments of both falling and rising equity, bond, currency and commodity prices.
Following the first monetary tightening by the US Federal Reserve in December, it has become increasingly likely that we will see further increases in borrowing costs and accordingly falling bond prices in 2017.
This presents investors with the challenge of achieving sufficient risk diversification for their portfolios, with many key equity benchmarks already at record highs. With the launch of the Credit Suisse (Lux) Multi-Trend fund, which exploits trends worldwide on a multitude of individual markets in all important investment classes, Credit Suisse wants to provide an alternative for this particular market environment.
The Ucits-compliant mutual fund has the ability to generate positive returns in both rising and falling markets. In order to achieve its investment goal, the fund invests exclusively in highly liquid and widely available instruments, such as index or currency futures. It receives its buy or sale signals by observing market trends over short-, medium- and long-term time horizons.
This observation process allows the fund to participate in long-term – as well as to react to short-term – market developments. Long-term comparisons have shown that including a trend-following strategy in a portfolio can lead to a significantly improved risk-return profile.
The trend-following strategy implemented in the newly created fund has already been used by Credit Suisse for many years. Overall, around $400m are now invested in trend-following strategies. Worldwide, Credit Suisse manages $10.5bn in alternative investment strategies, including $2.2bn in Ucits mutual funds.
“Trend-following strategies are an ideal portfolio component in uncertain market phases, since they generate returns regardless of market movements. In this context, the Credit Suisse (Lux) Multi-Trend fund, as a daily liquid investment product with a low management fee compared to competitors, is suitable for broad investor groups,” said Yung-Shin Kung, head of Quantitative Investment Strategies at Credit Suisse.