FundTap Luxembourg Trend Fund
Investment Objective
The investment objective of FundTap Luxembourg Trend Fund is substantial capital growth with smooth, consistent returns over the medium to long term by investing at up to 200% of Net Asset Value into a select range of trend following strategies. The General Partner achieves this by employing FundTap’s proprietary Trend Analysis Program (TAP) which has been developed after years of real market experience and intensive back tested data analysis.
Trading of the underlying strategies is fully automated and is normally on a 24 hour basis across 150 or more international futures markets such as commodities, interest rates, currencies, stock indices, etc. The result is a highly diversified fund that offers the potential of strong, absolute returns independent of either any single trading strategy or traditional markets such as equities, bonds and property.
Investment Policy
Trends are present in all financial markets worldwide and they are evidence of how historic price movements influence future price behaviour. Whilst trends may vary in duration, intensity and frequency it is possible to identify a trend with sufficient accuracy and in sufficient time, to instruct the appropriate trade and make financial gain.
The method of identifying and trading the trend is quite easy to understand. Vast quantities of historic financial data are analyzed using sophisticated pattern recognition software to determine price trends. Real time market data is then fed into the software and when a pattern is recognised, futures or forward trades are automatically issued to the dealing floor. This same automated, systematic program will close out positions when it recognizes the trend is likely to end. This is a simplification of a very technical process. Highly sophisticated systems take into account the price, size, volatility, liquidity and inter-relationships of the contracts & markets traded. Testing, refinement and development forms part of an ongoing process to manage risk and maximize performance. Many of the strategies we access have been trading for over eight (8) years and demonstrate strong, consistent performance with the ability to grow even during periods of market turmoil.
In general, systematic trend following strategies benefit from some enviable investment characteristics:
- no human involvement, no emotions and most importantly, no need to take a market view
- highly diversified with little or no correlation to traditional markets such as equities, bonds or property
- potential of absolute returns through their ability to profit in rising, falling or even level markets and
- can perform even during periods of market turmoil such as the year 2008
Investing into individual systematic trend following strategies presents the following challenges:
- reliance upon the success of one proprietary strategy; Unlike equity funds, where most managers ride the rising or falling prices of equities (with only a very few talented managers able to outperform the rising market or to buck a falling one), trend following strategies are proprietary to each manager and a positive trend for one is not necessarily the same for another as no one program identifies or can exploit all price trends
- high correlation between some strategies
- some have high minimum entry requirements or maybe even closed to new accounts
Consequently, FundTap Luxembourg Trend Fund capitalises on the positive characteristics of Trend Funds whilst limiting exposure to the negatives.
