New Detroit-based CTA seeks to take advantage of coming volatility

Benjamin Upward An emerging manager has just set up his one-man shop in the city of Detroit.

Synchronicity Futures, LLC registered with the CFTC as a CTA this year and began operating in July. It is based in Detroit, Michigan, and headed by Benjamin Upward.

Upward started Synchronicity for two main reasons, he told Opalesque. "One, I thought the timing was right with the equity market at a six-year high and the bond market just coming off a 33 year+ bull run. I thought the trends in both major asset classes were probably coming to an end or at least, we are going to be experiencing significant volatility, enough to unsettle investors who may be more apt to move away from those two asset classes, at least a little bit. I thought futures and managed futures would be the main beneficiary of that, at least for probably a three to five-year period, so the timing is really good to make the change this year."

As it happens, and in a synchronous kind of way, a bout of volatility swept the stock market in recent weeks. Stocks were hurt by global growth fears due to a slowing Chinese fears, worries about a coming interest rate hike from the U.S. Federal Reserve and a market that was slightly overvalued relative to history. As of Wednesday's close (2 Sept.), historical volatility in the S&P 500 was at the highest level since the end of 2011. Meanwhile, the Nasdaq composite saw a 2% move in seven of its last 10 sessions. The Vix, which uses option prices to gauge expectations of volatility, closed above 30 three days in a row early last week, and did the same Tuesday. It is currently trading at around 24. According to two Deutsche Bank strategists, history suggests that once volatility jumps to 30, it will stay there for several weeks,......................

To view our full article please login

This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.