Kettera Strategies Heat Map - January 2025
For the month of January, the following summaries highlight five of the ten style categories that we track.
Global Macro - Discretionary Managers
In January, discretionary global macro funds faced a complex environment roiled by U.S. policy shifts and geopolitical tensions. These programs tend to focus 3-6-12 months out, and January’s whippy announcements pushed and pulled markets quickly. Managers who positioned for U.S. tariff announcements on China, Mexico, and Canada generally fared well, with long U.S. equity/equity index positions benefiting from protectionist sentiment. Some programs, however, were caught wrongfooted in the last week on a sharp selloff in Nvidia and other AI-related stocks - after Chinese AI startup DeepSeek revealed a model that spooked tech investors. On the other hand, programs long defensive assets such as gold and the Japanese yen saw gains from rising uncertainty. In fixed income, managers who bet on a steepening U.S. yield curve struggled early in the month, as rate hike fears drove short- and medium-term yields higher, but recovered in the second half as inflation concerns waned. Energy was a mixed bag as the petroleum complex rallied early in the month on trade and geopolitical tensions, but retreated all the way back as inflation fears waned and global demand remained tepid.
Systematic Trend Programs
Longer-term trend followers showed mixed results in January, and market selection seemed to be more informative of a positive or negative outcome than length of holding period. Programs overweight commodities outperformed, as long positions in coffee, cattle, precious metals (gold, silver, platinum, palladium) and grains (corn, soybeans) lended themselves well to most price-based systems. Most programs also fared well in global equity indices – with predominantly long positions - as several indices hit all-time highs (e.g. the S&P, German DAX, UK FTSE, and French CAC). If a systematic program was negative, it was probably overweight fixed income bonds and rates as trading was tricky and whippy due to mixed expectations on inflation, tariffs, and economic strength or weakness across the US, Europe and Asia. FX trading was generally flat as the US dollar slightly backed off December highs against several key currencies. The Japanese yen defied that generalization by strengthening vs. USD after the BoJ raised rates, while the Canadian dollar and Mexican peso weakened after tariff threats.
FX Specialists
Currency specialists faced a challenging month, with systematic programs struggling with the choppy price action, while discretionary programs did better to navigate the bigger macro forces including tariff threats, inflation, and Central Bank rate cuts. Bolstered by tariff announcements and robust U.S. consumer numbers, the strengthening US dollar was the main story coming out of the holiday season into the new year. But USD backed off some of that strength, most notably vs. the Japanese yen after the Bank of Japan raised rates, while the Euro weakened on soft economic data, ultimately leading to another ECB rate cut on Jan-30th. EM currencies, particularly the Mexican peso and Chinese yuan, weakened due to U.S. tariff policies. Overall, currency managers who adeptly navigated the interplay between U.S. policy decisions and global economic indicators profited on the month, while those who misjudged these dynamics likely faced setbacks.
Commodities Managers – Industrial Specialists
Industrial commodities covers a wide sector including energy (gas-petroleum-power) specialists in N. America and Europe, carbon trading (credits-allowances on both continents), shipping programs (freight derivatives), and metals traders (precious, base, mixed). Gas trading is more localized, while petroleum and products trading is global and geopolitical. Metals trading is global with many opportunities for location arbitrage (LME vs. COMEX, Chinese exchanges, etc.). January was generally very good for discretionary metals traders, whether using directional strategies, options, or arbitrage. The four primary precious metals all rallied strongly (gold, silver, platinum, palladium) and traders caught the strength. Base traders did well to catch a rally in copper, and an advantageous opportunity in copper arbitrage (LME vs. COMEX). Energy traders were mixed, with N. American gas and power traders performing poorly, while European gas and petroleum focused programs were flat to slightly negative.
Commodities Managers – Agricultural Specialists
In January the returns of most agricultural traders were heavily influenced by grain and soft commodity markets, with notable divergences in outcomes. Long positions in corn and soybeans were major profit drivers, following the USDA’s unexpectedly sharp reduction in 2024 U.S. production estimates, compounded by dry conditions in South America. Several programs we track garnered the bulk of their profits from long corn and soybean positions. Trading activity in wheat was mixed, as short positions in the first part of the month from record global inventories, but late-month buying from Middle Eastern importers reversed prices sharply. In softs, while coffee continued on its bullish trend, the cocoa market was much more challenging, as positioning was predominantly short when a supply scare from West Africa reversed the market mid-month. In livestock, gains were recorded by traders long U.S. cattle futures, supported by record-high cattle prices amid reduced feeder cattle imports from Mexico and Canada. However, some managers were cautious, citing weaker beef packer margins and concerns over U.S. immigration policy changes impacting consumer demand.
Kettera Strategies Heat Map - January 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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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.
Copyright © 2025 Kettera Strategies, all rights reserved.
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