Gold, silver curb June losses for trend-following funds

Société Générale tracked 78 systematic trend-following hedge funds, including commodity trading advisers, and recorded an average return of -0.1% for June. The sector was about 9% higher year-to-date.

Gains from trading gold and silver were among the main positive contributors in June, together with some equity positions. Those gains largely offset losses from energy, agricultural commodities and currency trades.

Energy and soft-commodity positions underperformed in June. Trades linked to crude oil, heating oil and coffee lost value during the month. The Australian dollar also weighed on returns.

Gold prices fell nearly 12% in June. Funds with short positions in the metal recorded profits from that decline. Geopolitical tensions in the Middle East and related disruptions to energy supplies persisted during the period.

The analysis identified a change in commodity trading adviser positioning from June 23. Many managers added new long exposure to cocoa while increasing short exposure to wheat futures.

Subsequent market moves produced mixed outcomes for those trades. New York cocoa futures rose more than 18% since the end of June, supporting new long positions. Wheat futures climbed over 8%, creating losses for recent short positions.

Interest rate markets remained the most crowded area of positioning across managers, reflecting investor focus on inflation and central bank policy. Rapid price swings in several commodities contributed to uneven returns across funds.

Fund-level returns for the first half ranged from roughly +11% to about -8%, reflecting different models, time horizons and risk limits used by systematic strategies. Precious metals and selective equity positions accounted for much of the sector’s year-to-date gains.