Key Takeaways
- • East Coast Capital Management's (ECCM) State of Trend report found traditional assets were roughly flat in Q3 as a September sell-off, driven by rising bond yields and oil prices, erased earlier gains, while trend-following strategies outperformed.
- • Over the past 12 months, trend systems returned 20% to 21%, versus 1% to 3% from traditional assets, according to the report.
- • Blending a 50/50 mix of an Australian 60/40 portfolio with the ECCM Systematic Trend Fund (after fees) returned 9.5% a year versus 5.2% for 60/40 alone, with maximum drawdown of -9.1% versus -16.2%.
- • Replacing 40% of equities with the Fund lifted hypothetical returns to 10.8% a year from 8.0% and reduced volatility to 11.8% from 15.0%, based on backtested returns since January 2020 with monthly rebalancing.
- • Trend following has shown low correlation with the ASX200 Total Return and Australian 60/40 indices over nearly seven years, per CEO Simone Haslinger.
Summary
The latest ECCM State of Trend report, authored by East Coast Capital Management CEO Simone Haslinger, reports that traditional asset classes were roughly flat in the third quarter of 2026 after a September sell-off driven by rising bond yields and oil prices gave back earlier gains. Trend-following strategies benefited from diversified exposures and outperformed traditional asset classes over the period.
Grains and oilseeds were the standout performers through the quarter, led by oats, rice and soybean meal. Selected food and fibre markets also rallied, including sugar and rubber.
The report compares systematic trend funds with Australian equities and a traditional 60/40 portfolio. Haslinger said trend following has shown low correlation with the ASX200 Total Return and Australian 60/40 indices over nearly seven years, providing diversification benefits complementary to traditional portfolios. She added that including trend following alongside a traditional stock or stock-and-bond portfolio markedly increased risk-adjusted returns and expanded the efficient frontier.
The report models hypothetical portfolios using actual fund and index returns since January 2020, rebalanced monthly. A 50/50 blend of a 60/40 portfolio and the ECCM Systematic Trend Fund (after fees) returned 9.5% annually versus 5.2% for the 60/40 alone, with maximum drawdown of -9.1% compared with -16.2%. Replacing 40% of equities with the Fund lifted returns to 10.8% a year from 8.0% and reduced volatility to 11.8% from 15.0%.
The ECCM systematic trend strategy trades more than 90 international futures markets across equity indices, short-term interest rates, long-term government bonds, currencies and commodities, and is expected to show low correlation with traditional investments in stocks, property and bonds. Over the past 12 months, the report finds trend systems returned 20% to 21%, compared with 1% to 3% from traditional assets.
Grains and oilseeds were the standout performers through the quarter, led by oats, rice and soybean meal. Selected food and fibre markets also rallied, including sugar and rubber.
The report compares systematic trend funds with Australian equities and a traditional 60/40 portfolio. Haslinger said trend following has shown low correlation with the ASX200 Total Return and Australian 60/40 indices over nearly seven years, providing diversification benefits complementary to traditional portfolios. She added that including trend following alongside a traditional stock or stock-and-bond portfolio markedly increased risk-adjusted returns and expanded the efficient frontier.
The report models hypothetical portfolios using actual fund and index returns since January 2020, rebalanced monthly. A 50/50 blend of a 60/40 portfolio and the ECCM Systematic Trend Fund (after fees) returned 9.5% annually versus 5.2% for the 60/40 alone, with maximum drawdown of -9.1% compared with -16.2%. Replacing 40% of equities with the Fund lifted returns to 10.8% a year from 8.0% and reduced volatility to 11.8% from 15.0%.
The ECCM systematic trend strategy trades more than 90 international futures markets across equity indices, short-term interest rates, long-term government bonds, currencies and commodities, and is expected to show low correlation with traditional investments in stocks, property and bonds. Over the past 12 months, the report finds trend systems returned 20% to 21%, compared with 1% to 3% from traditional assets.
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