Kettera Strategies Heat Map - April 2025

For the month of April, the following summaries highlight four of the ten style categories that we track.

Long Term Trend Programs

Long term trend programs had a very difficult April. The announcement of tariffs on “Liberation Day” by the U.S. administration on April 2nd triggered a sharp repricing of risk across many sectors and markets which resulted in broad-based price reversals across equities, fixed income, certain commodities, and the U.S. dollar - moves that ran counter to the prevailing trends and positions established by longer term trend programs. Stock indices produced losses as a dramatic sell-off was followed by a gradual retracement by month’s end. The US dollar was battered as global participants unloaded US dollar-based assets and rotated into other currencies such as the Euro and Japanese Yen. US interest rates were also sold off (yields higher), at least initially, following “Liberation Day” as US treasuries were sold aggressively to reduce foreign entities’ US exposure. Some programs did well to be long short-dated G10 interest rates. Some commodities were punished, most notably crude and petroleum products, and base metals such as copper and aluminum, on global growth worries and lowered demand expectations. Of note, long gold was clearly the best performing market/position.

Short Term Trend Programs

Short-term programs did well, overall, in April as quicker holding periods helped navigate the turbulence and heightened volatility following the April 2nd “Liberation Day” triggered by unexpectedly high tariff increases by the US administration on much of the trading world. As is expected from such an uncorrelated group, different programs performed well in different sectors and no two programs looked the same, but some generalizations can be made. Equity indices were positive for those programs that caught the initial US sell-off then switched to long as markets calmed and retraced losses. In commodities, long gold was a consistent positive contributor, short crude and petroleum products was profitable for some programs as the energy sector sold off dramatically on weaker global demand, and short industrial metals positioning, such as in copper and aluminum, was positive for a few programs. Short US dollar vs. Euro and Japanese Yen was profitable for some programs. And finally, some programs traded fixed income well primarily by being long short-dated rates on the expectation of lower rates on the short end of the curve going forward.

FX Programs

April saw a clear distinction between longer-term, more fundamentally-driven currency specialists and their shorter-term (e.g. intraday to 3-day) counterparts. Two of the larger longer-term quant-based fundamental managers we follow suffered setbacks primarily due to their models’ bias toward a strong USD which weakened significantly vs. G10 currencies. So-called “quantamental” models – which blend quantitative analysis with fundamental inputs - were also wrongly long USD based interest rate differentials, inflation figures and policy statements.  But unexpected geopolitical events, primarily tariff uncertainties and growing skepticism about U.S. economic policy, threw these assumptions out the window.  These events severely undermined the USD as global flows reallocated reserves away from U.S. fixed income instruments into euro and yen-denominated assets. Conversely, many shorter-term, price- and sentiment-driven traders thrived in April by capitalizing quickly on emerging volatility and shifting market sentiment.  Several programs we track benefitted from short USD/long JPY positions and successful short-term moves in gold (vs USD) - as these more rapid-fire, price-driven models were highly responsive to sharp market movements, leveraging breakout and trend continuation setups rather than fundamental assumptions.

Commodities Managers – Metals and Energy Specialists

Metals and energy specialists were mixed in April, although in the overall aggregate it was a positive sector. These markets experienced significant volatility due to geopolitical tensions and shifting supply-demand dynamics. Crude oil prices plummeted by -18%, influenced by OPEC+'s unexpected output hikes and concerns over weak global economic growth, leading to cautious trading strategies among traders while, conversely, natural gas markets saw big gains on short positioning using spreads and outright. In the metals sector, gold reached an intraday all-time high of $3,500 per ounce on April 22, amid investor flight to safety, while base metals like copper (down - 8.4%) and aluminum (-10.5%) faced pressure - exacerbated by U.S. tariff threats that diverted supplies to the U.S. at the expense of continental Europe.  The volatility in metals markets had many programs reducing risk and shifting to more spread trades and out-of-the-money- options hedges.

Kettera Strategies Heat Map - April 2025

Past performance is not necessarily indicative of future results.  See notes at end of this document for details on the construction of the Hydra "baskets" and the benchmark used for each style class.  Also note that some baskets may contain managers that have not yet reported by this date. 

*=Less than 75% reported.

**=Less than 75% reported and absence of a core manager's return

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Kettera Strategies

Footnotes

The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Kettera Strategies. The information set forth herein has been obtained or derived from sources believed by the author to be reliable. However, neither Kettera nor the author make any representation or warranty, express or implied, as to the information's accuracy or completeness, nor do Kettera or the author recommend that the attached information serve as the basis of any investment decision. This is provided to you solely for informational purposes only and does not constitute an offer or solicitation of an offer, or any advice or recommendation, to purchase any securities or other financial instruments, and may not be construed as such.

Kettera Strategies LLC is a Member of the National Futures Association and registered as a Commodity Pool Operator and only provides services to Accredited Investors who are Qualified Eligible Persons as defined in section 4.7 of the Commodity Exchange Act. This document, any attached document and cover email are being furnished to you on a confidential basis and may not, without prior written consent of Kettera Strategies LLC be (i) copied, photocopied or duplicated in any form, by any means, or (ii) distributed to any person that is not an employee, officer, director, or authorized agent of the intended recipient of this email. This document, and any related documents or emails, are neither offers to sell any securities, nor solicitations of an offer to invest in any fund or product.

For the “style classes” and “baskets” presented in this letter: The “style baskets” referenced above were created by Kettera for research purposes to track the category and are classifications drawn by Kettera Strategies in their review of programs on and for the Hydra Platform. The arrows represent the style basket’s overall performance for the month (e.g. the sideways arrow indicates that the basket was largely flat overall, a solid red down arrow indicates the basket (on average) was largely negative compared to most months, etc.). The “style basket” for a class is created from monthly returns (net of fees) of programs that are either: programs currently or formerly on Hydra; or under review with an expectation of being added to Hydra. The weighting of a program in a basket depends upon into which of these three groups the program falls. Style baskets are not investible products or index products being offered to investors. They are meant purely for analysis and comparison purposes. These also were not created to stimulate interest in any underlying or associated program. Nonetheless, as these research tools may be regarded to be “hypothetical” combinations of managers.

Further notes on Hydra Emerging Manager Basket: Weightings among managers were rebalanced every year, with exceptions for extraordinary events (e.g. the Covid market collapse). Weightings are not discretionary. Manager weightings were not increased over time except for going from a “pending” to a fully “approved” program; weighting reductions only occurred if the manager was de-listed or shut its doors – otherwise the managers stayed as is regardless of performance. Weightings are equal for any approval category: e.g. all fully approved managers may get a X% weighting, regardless of volatility/exposure levels or correlation with other strategies.

Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any product or account will achieve profits or losses similar to those shown. In fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk in actual trading. There are numerous other factors related to the markets in general or to the implementation of any specific trading program which cannot be fully accounted for in the preparation of hypothetical performance results and all of which can adversely affect actual trading results.

Benchmark sources:

1-            With Intelligence Systematic Macro Hedge Fund Index

2-            With Intelligence Macro Hedge Fund Index

3-            The Societe Generale Trend CTA Index

4-            The Societe Generale Short-term Traders Index

5-            The Barclay Currency Traders Index

6-            Blend of Bridge Alternatives Commodity Hedge Fund Index and BarclayHedge Discretionary Traders Index

7-            The Barclay Agricultural Traders Index

8-            The Nilsson CTA Commodities Index

9-            Blend of With Intelligence Volatility Arbitrage Index and With Intelligence Long Volatility Hedge Fund Index

10-         Blend of With Intelligence Institutional Equity Hedge Multi Strategy Index and BarclayHedge Multi Strategy Index

Indices and other financial benchmarks shown are provided for illustrative purposes only, are unmanaged, reflect reinvestment of income and dividends and do not reflect the impact of advisory fees. Index data is reported as of date of publication and may be a month- to-date estimate if all underlying components have not yet reported. The index providers may update their reported performance from time to time. Kettera disclaims any obligation to verify these numbers or to update or revise the performance numbers.

Past performance is not necessarily indicative of future returns.

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The views expressed in this article are those of the author(s) and do not necessarily reflect the views of AlphaWeek or its publisher, The Sortino Group