Monthly Analysis: Kettera Strategies - July 2022 Report
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July 2021 saw a diverse range of performances across various asset manager categories, with most sectors experiencing a mix of challenges and opportunities. Here's a breakdown of the general trends observed among Kettera Strategies' Systematic Trend Managers, Discretionary Global Macro Managers, Commodity Specialists (Agricultural and Industrial), and Shorter-Term Strategies.
Systematic Trend Managers
The month was generally tough for trend-following strategies, with sideways and choppy price action in equity markets and some commodities limiting the ability of systematic trend-following models to capture strong directional moves. Trends in major asset classes like U.S. equities were mixed, with indices like the S&P 500 consolidating after strong gains earlier in the year.
Discretionary Global Macro Managers
Discretionary global macro strategies had a mixed performance due to concerns around inflation, Fed policy signals, and COVID variants affecting positioning. Some managers benefited from tactical moves in interest rates and currencies, while others faced headwinds from the volatility in equity and commodity markets. Performance divergence was common, reflecting different views on growth recovery and central bank policy.
Commodity Specialists (Agricultural and Industrial)
Commodities were generally strong in 2021 due to supply-demand imbalances caused by the pandemic recovery phase. Agricultural commodities saw price strength driven by weather concerns, supply chain disruptions, and rising demand in July. Industrial commodities like copper and steel also showed renewed strength due to infrastructure spending expectations and global economic reopening optimism.
Shorter-Term Strategies
Shorter-term strategies had mixed results, with the less trending and more choppy markets in July providing both opportunities and risks. Some shorter-term managers profited from intraday or short swing trading in equities, FX, or fixed income, especially around key economic data releases and central bank communications.
Kettera Strategies' Performance
For Kettera Strategies specifically, natural gas traders caught a strong rally throughout the month, rewarding long-biased spreads and directional exposures. However, the choppiness of the markets punished long-biased spreads and outright directional exposures, with fixed income losses appearing to be the biggest detractor for most systematic managers.
Market Influences
Markets were heavily influenced by central bank guidance and rate hikes. Global recession fears and lower demand expectations kept pressure on prices from moving too much higher. Weather models imprecisely predicted hot and dry conditions in the heart of the growing region that would have led to less-than-ideal growing conditions, but the forecasts didn't materialize.
Overall Market Environment
July 2021 was characterized by a somewhat range-bound and uncertain market environment. Broad-based trend reversals occurred across nearly all sectors, with the quickest models faring well, catching the reversals in equities, fixed income, FX, and commodities. Most of the discretionary global macro managers we track performed well, correctly anticipating the strong reversals in fixed income, commodities, and currencies.
It's important to note that the views expressed in this article are those of the author and not necessarily those of AlphaWeek or its publisher, The Sortino Group. For precise data on Kettera Strategies' performance, you would need to refer to their internal performance reports or investor communications from that month.
- In the realm of technology-focused finance, investors might consider exploring opportunities in fintech solutions that leverage artificial intelligence and machine learning to predict market trends, as such tools could have proved beneficial during the range-bound and uncertain market conditions observed in July 2021.
- Given the strong performance of several commodities in 2021, one might contemplate diversifying their investment portfolio to include sports-related funds or a sports-themed ETF, as the revenue generated by these industries could potentially be influenced by the renewed strength in industrial commodities like copper and steel.
