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Alternative Market Briefing

Trend followers find new opportunities in 2021

Monday, February 01, 2021

Bailey McCann, Opalesque New York:

2020 was a big year for trend followers. As the pandemic took over global markets and economies the market regime that dominated the past decade faded away. That created a unique environment for trend followers - one that is likely to continue this year. A new paper from Katy Kaminski, Chief Research Strategist and Portfolio Manager at Alpha Simplex looks at the trends that dominated last year and speculates on what investors might prepare for in 2021.

Dollar strength fades

Apart from the pandemic, the big theme throughout 2020 was a weakening dollar. According to the paper, dollar weakness first emerged in the second quarter of last year and continued through the end of the year. In an interview with Opalesque, Kaminsky suggests that dollar weakness is likely to be a persistent trend.

"The amount of stimulus that the US has put out in response to the pandemic sort of predictably led to a weakened dollar," Kaminsky says. "Over the near term, we expect that more stimulus will be forthcoming and that will keep downward pressure on the dollar. That's not a bad thing, the US had to respond to the pandemic. But it is a fundamental change from where we have been in markets."

For 2021, a receding dollar is likely to provide cross-asset trends in currencies, commodities, and fixed income. Investments in emerging markets could also benefit.

Commodities volatility

Another theme from 2020 that is likely to......................

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