Skip to Content
Fund Spy

Black Friday Turns November Into a Cruel Month for Trend Followers

A rough Thanksgiving weekend shows these investment strategies don’t always zig when the market zags, as many expect.

Mentioned: ,

Investors seeking protection from inflation and toppy markets have increasingly turned to systematic trend-following. The systematic trend Morningstar Category received $1.7 billion in net inflows for the year to date through October 2021, a 17% increase relative since 2021’s start, according to Morningstar Direct. These strategies trade futures and swaps contracts to profit from price trends across capital markets and try to add value in strong bull or bear markets. But these investments warrant caution; they can turn volatile when trends quickly reverse. The end of November rudely reminded investors of that risk.

Erol Alitovski does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.