Core Insights - Trend-following strategies, typically seen as safe havens during market turbulence, faced significant challenges in 2025, marking one of the worst performances since 1998 [1][2] - Quantitative funds employing complex algorithms to capture and follow asset price trends reported an average loss of 9.6% in the first half of the year, contrasting sharply with the hedge fund industry's average return of 4% and the S&P 500's total return of 6.2% [1] - Major hedge fund firms, including Man Group, experienced substantial pressure, with its flagship AHL Alpha fund down 7.8% as of June [1][3] Industry Challenges - The extreme market volatility, particularly due to unpredictable tariff policies and sudden market reversals, is identified as a core reason for the strategy's failure [2] - Trend-following strategies perform best in sustained directional markets, but the current environment of frequent and unclear "choppy markets" has rendered them ineffective [4] - The lag in algorithmic models, which require days or weeks to confirm market direction changes, makes them vulnerable to rapid price reversals [4] Company Performance - Man Group, a pioneer in trend-following strategies, is facing severe challenges, with its AHL Evolution fund losing over 10% and a 61% drop in performance fee revenue reported in its latest financial results [3][6] - The company's stock price has declined by over 20% this year, reflecting investor disappointment amid prolonged poor performance [3][6] - Despite the challenges, Man Group's management remains confident in the strategy's long-term viability, emphasizing that trend-following strategies have not failed [3][6] Historical Context - Trend-following strategies have a storied past, having proven their value during critical market events, such as the 2008 financial crisis and the downturn in 2022 [6] - The total assets managed by trend-following strategies have more than tripled over the past decade, currently standing at approximately $318 billion, accounting for about 7% of the hedge fund industry [6] - Investor sentiment has soured due to over 18 months of stagnant returns and significant drawdowns, yet some believe the rationale for investing in trend-following remains unchanged [6]