Ulysses resists the sirens – Oil painting by Herbert James Draper 1909

Trend Concept’s fund managers compare their role to that of Ulysses’ companions: They plug their ears with wax so they can row without being distracted by the siren calls of the markets. Like Ulysses, investors can hear sirens but remain bound to the mast at their own request and thus withstand the temptations of the markets.

INVESTMENT FUNDS

Investment strategy

Characteristics of the system

TrendConcept uses trend analysis to create safety-oriented fund products all of which without exception are based on the principle of tactical asset management – without any emotional input – and give high priority to preserving capital.

Consequently, this approach does not focus on fundamental data on individual companies and the related analyses and forecasts. Instead, it looks at market movements that can be measured by objective, statistical methods. In this investment strategy, all decisions are focused exclusively on the equity or bond price. No judgement is made on the basis of forecasts.

To ensure daily availability and be able to respond promptly to market conditions, TrendConcept invests in the most liquid equities in major global indices or the corresponding futures. Trend-tracking systems can be used to secure a variety of different investment models. All types of investment are possible and are basically offered by the TrendConcept Group. Naturally, we provide individual advice for institutional investors and retail clients who are interested in asset management.

Advantages for investors

High transparency and objectivity are key benefits of the TrendConcept investment strategy. At the same time, fund management is largely independent of the fund manager and is not sensitive to phases of extreme under- or overvaluation of the market.

The TrendConcept funds are all separated from the company’s own assets. Investors therefore remain the owners of the securities in the funds in which they invest. They are not owned by any company in the TrendConcept Group or by a custodian bank. This means the assets are therefore protected against insolvency. Investors decide when they wish to invest in TrendConcept funds and when they want access to their cash.

Benefits of the TrendConcept stop-loss strategy at a glance:

  • The fund participates in the majority of each rally (2/3 to 3/4).
  • Major downtrends are largely avoided (2/3 to 3/4)
  • Low drawdown
  • Low volatility
  • Higher long-term return

Trend-tracking systems for every investor

Trend-tracking systems are suitable for everyone: as a basic investment for conservative investors who are saving for their retirement or wish to protect their assets, for pension funds, life insurers, family offices, foundations, banks and asset managers. TrendConcept recommends investing 25-50% of the portfolio in TrendConcept products, depending on the investor’s risk tolerance. In some cases, the proportion of TrendConcept products can be even higher.

How the trend-tracking system works

Day-to-day implementation of our investment approach is a dynamic process. A regular trend analysis is carried out for all assets, stop-loss limits are calculated and the overall investment level of the fund is managed.

As long as the objective trend analysis gives the “green light", the fund invests in the relevant markets. However, as soon as a trend reversal is identified, the assets are sold and the proceeds are placed in safe alternative investments (money market). If the price of a share remains above its signal level, the fund remains invested (grey shaded areas). As soon as the stop-loss limit is reached, the security is sold and the proceeds are invested in the money market (white areas).

The high liquidity of blue chip equities and sovereign bonds enables us to switch into the money market without difficulty whenever our trend analysis indicates that this is necessary. If the fund is appropriately structured, the investment level can also be managed via index futures. Economically the result is the same but transaction costs are far lower.

Moreover, an objective, trend-based approach can be applied more efficiently to widely spread blue chips than to small caps. This is partly because general factors influencing market trends have a more pronounced effect on the price of blue chips and bonds issued by major countries. By contrast, company-specific factors tend to have a greater influence on the price of shares in smaller companies. Secondly, the widespread analytical coverage of blue chips ensures faster information flows and more transparent and efficient pricing.