Trend Following

Geopolitical events, disruptive technologies and global supply/demand imbalances will continue to generate trends in global public markets. Furthermore, human emotion and investment mandates are likely to exaggerate some of those trends. Aeon believes that both typical and outsized trends are exploitable because neither people nor computer models can value the unknown -- some trends will continue simply because new information continually emerges. By applying trend following algorithms, Aeon seeks to participate in continuing trends. And, as discussed in the Risk Management section, Aeon strives to contain losses resulting from trend reversals with a suite of risk mitigation routines. The resulting goal is above equity market returns with below equity market risks.

Trend following is a process for identifying and participating in performing assets. The word "following" connotes a reactionary approach as opposed to a predictive one. In other words, this approach focuses on what is as opposed to what "should be"; as a result, it more easily stays in sync with "irrational" markets as compared to strategies in search of "mispriced" investments.

Aeon applies trend following algorithms that carefully monitor price movements and make investments only after a trend has been established. Holdings remain in the portfolio for as long as the trend remains in tact. Positions are liquidated once the trend has reversed. Profit potential stems from continuing trends that are significant enough in frequency and magnitude to outweigh losses from trend reversals.

The primary advantage to trend following over the more rigid "buy and hold" investment philosophy is the ability to continuously adapt to changing market conditions. Being adaptive enables clients to enjoy increased exposure to stocks when markets advance and reduced exposure to stocks when markets decline. This helps investors to achieve the returns they seek in stock markets with fewer risks than traditional mutual funds and index funds.

 
Alternative investment products involve a high degree of risk, often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. Alternative investment performance can be volatile. An investor could lose all or a substantial amount of his or her investment. Often, alternative investment fund and account managers have total trading authority over their funds or accounts; the use of a single advisor applying generally similar trading programs could mean lack of diversification and, consequently, higher risk. There is often no secondary market for an investor's interest in alternative investments, and none is expected to develop. There may be restrictions on transferring interests in any alternative investment. Alternative investment products often execute a substantial portion of their trades on non-U.S. exchanges. Investing in foreign markets may entail risks that differ from those associated with investments in U.S. markets. Additionally, alternative investments often entail futures and options trading, which involves substantial risk of loss. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition. PAST RESULTS ARE NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
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Aeon Funds is a division of Aeon Capital LLC, a Registered Investment Advisor with the State of California and Commodity Pool Operator with the National Futures Association
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