HedgeIndex July performance - generally on track

 

We look closely at the HedgeIndex Liquidity Alternative Beta indexes that are replications of the HedgeIndex Composite Index returns. As a liquid alternative, investors can get a quick look at performance before many hedge funds report their monthly returns. 

Returns were positive except the managed futures index, which continues to have a difficult time finding trends in the major futures markets. If there are no trends, the trend index will not make money. The other strategies continue to show positive gains. Nevertheless, the Liquid and Global Strategies are a weighted average of the other strategies and have been pulled lower in 2025 by the managed futures performance. 

While the SPX generated a return of more than 2% for the month, these liquid alternatives have a lower volatility than the market beta. The LAB indexes performed better than the low volatility index, which returned a negative 29 bps this month. These indexes are not supposed to beat the major risk factors but should add diversification to any portfolio. The equity LAB indexes performed better than the fixed income composite.

A Simple rulle of thumb on trading - the 3M's

 

"Markets always trading the 3Ms… Macro, Momentum, and Misfit trades" - Michael Hartnett BofA.

I like this short description of trading because it covers almost all you need to know. Trade the macro or at least have the macro determine the asset allocation. Trade the momentum or the trends because this is a risk factor that usually works. Trade the misfits or the outlier anomalies that are away from fair value. This is it. This is all you need to know as the base case. From there, the real work begins on how to make this work with actual trades.