Trowbridge Capital offers a twist on long-only

At a time when many investors are thinking about how to reposition their portfolios away from long-only strategies and into more defensive options, a new fund is coming to market with what it considers to be a unique twist on long-only.

Trowbridge Capital Partners has created two trend following programs that are designed to avoid momentum volatility and help investors limit losses through dynamic risk management.

"The thing we do differently from everyone else is that we view risk management as part of our alpha generation," says Trowbridge Capital Partners President Brett Golden in an interview with Opalesque New Managers . "That's really not how risk management is viewed elsewhere and it helps us focus on capital preservation and outperformance when market conditions are well aligned with our strategy."

Trowbridge Capital has created two systematic strategies that are designed to capture mediumterm counter trend opportunities in the market - Trowbridge Aggressive Growth and Trowbridge Dynamic Low Volatility. The strategies attempt to tamp down momentum volatility and also de-risk portfolios as market conditions shift. "We argue that everyone is looking at momentum as a factor in the same way, which leads to a greater potential for momentum crashes as a result of overcrowding. We are opting to diversify our portfolio away from the buy and sell signals generated by the crowd of momentum traders," Golden says

The average holding period for both trading programs is 70-100 days, with a relatively high rate of portfolio turnover. The models will put large portions of the portfolios into cash if market conditions aren't aligned with the strategy. Ahead of October's volatility, the low-vol strategy was more than 35% in cash. As volatility goes down, the strategy will add to its positions. If volatility remains high, the strategy could move even mor......................

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