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TTU129: Trend Following Nordic Style ft. Svante Bergström, CEO & Founding Partner of LYNX Asset Management

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Feb 6, 2023

01:07:06

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INSIGHT

Trend Following's Pain Points

Trend following works well and delivers during crises, but it can be a painful investment journey.
Improving Sharpe ratio and making money during non-trending periods can ease the pain.

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ADVICE

Maintaining Trend Following Profile

Focus on maintaining a consistent trend-following profile to avoid style drift.
Consider institutional investors' expectations for stable returns and risk characteristics.

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INSIGHT

Diversification Success in 2022

Diversifying models, like machine learning and systematic macro, performed well in 2022.
These models capitalized on market moves and incorporated non-price data.

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The Philosophy of Machine Learning

04:50 • 3min

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Is Trend Following a Business Decision?

07:21 • 2min

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Is the Return From Trend Following Going to Continue to Work?

09:09 • 5min

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Do You Have a Dual Mandatory to Make Money in a Crisis?

14:05 • 4min

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Diversifying Strategies - What You Mean by That?

18:12 • 2min

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Machine Learning - What's Your Philosophy?

20:09 • 2min

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Machine Learning Models Are More Flexible Than Traditional Models

22:06 • 5min

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Why You Need a Portfolio of Models That You Can Live With

26:59 • 2min

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Adding and Removing Models From Portfolios

28:33 • 5min

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Is There Any Strength in Replicating CTA Returns?

33:14 • 2min

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How Important Is Execution for Trend Following Strategies?

35:31 • 6min

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Dynamic Versus Static Positioning

41:13 • 3min

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How to Draw on Expectations in a CTA?

44:28 • 2min

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Are the Numbers the Best Prediction of Future Returns?

46:04 • 2min

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Is Dynamic Position Sizing a Good Investment Management Practice?

47:51 • 2min

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What Are Your Thoughts on Capacity Fees and Flows?

50:20 • 6min

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How Do You Approach ESG?

56:17 • 3min

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How Do You Approach Cash Management for the Funds You Manage?

59:44 • 5min

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Top Traders Unplugged - Part 2

01:05:06 • 2min

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Today, we are joined by Svante Bergström, Founding Partner and CEO of Lynx Asset Management, for a conversation on how they incorporate trend following in their trading strategy, through the use of a multi-strat approach. We discuss why they believe trend following will continue to work for the next hundred years and how they ensure a good balance between achieving a high Sharpe while maintaining the trend following profile, what they have learned from 2022 and how they used diversifying models and machine learning to profit in 2022, their process of finding new models and replacing the ones that do not work and why they are sceptical about the returns from CTA replication. We also discuss the number of markets they prefer to trade, how they manage risk and what you should pay attention to when evaluating managers, their approach to capacity and fees and their process of finding new talent in the industry, how they implement ESGs in their work and much more.

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50 YEARS OF TREND FOLLOWING BOOK AND BEHIND-THE-SCENES VIDEO FOR ACCREDITED INVESTORS - CLICK HERE

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Follow Niels on Twitter, LinkedIn, YouTube or via the TTU website.

IT’s TRUE ? – most CIO’s read 50+ books each year – get your FREE copy of the Ultimate Guide to the Best Investment Books ever written here.

And you can get a free copy of my latest book “Ten Reasons to Add Trend Following to Your Portfolio” here.

Learn more about the Trend Barometer here.

Send your questions to info@toptradersunplugged.com

And please share this episode with a like-minded friend and leave an honest Rating & Review on iTunes or Spotify so more people can discover the podcast.

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Learn more about LYNX

Episode Timestamps:

02:18 - Introduction to LYNX

04:11 - How did they settle on trend following?

09:08 - A painful ride?

11:09 - Too focused on sharpe?

14:04 - What stood out in 2022?

16:17 - The dual mandate

18:10 - The benefits of diversifying strategies

20:08 - Why machine learning?

24:31 - The flipside of diversifying strategies

28:32 - The process of replacing models

31:36 - Their view on CTA replication

35:54 - Execution within LYNX

38:15 - The right number of markets

41:10 - How they manage risk

46:02 - What makes a good manager?

51:11 - The issue with capacity

54:29 - Finding and hiring new talent

59:41 - Is Liquidity on a downfall?

01:01:51 - Managing cash

01:02:48 - Trend following disagreements

01:04:04 - Expectations for 2023

01:05:33 - Thanks for listening

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PLUS: Whenever you're ready... here are 3 ways I can help you in your investment Journey:

1. eBooks that cover key topics that you need to know about

In my eBooks, I put together some key discoveries and things I have learnt during the more than 3 decades I have worked in the Trend Following industry, which I hope you will find useful. Click Here

2. Daily Trend Barometer and Market Score

One of the things I’m really proud of, is the fact that I have managed to published the Trend Barometer and Market Score each day for more than a decade...as these tools are really good at describing the environment for trend following managers as well as giving insights into the general positioning of a trend following strategy! Click Here

3. Other Resources that can help you

And if you are hungry for more useful resources from the trend following world...check out some precious resources that I have found over the years to be really valuable. Click Here

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