September trend-following returns boosted by gold and coffee, says Societe Generale

Gold and coffee drove positive returns for trend-following hedge funds in September, fueled by record commodity prices, rising equities, and falling interest rates, according to a Reuters report citing Societe Generale data released on Tuesday. Gold surged nearly 30% this year, hitting a record high on September 26, making it one of the top-performing assets for trend-following strategies. These strategies, which analyze price and trading volume to capitalize on market trends, were a focal point in SocGen's note to clients.

Robusta coffee futures also reached new highs in September, driven by drought conditions in Brazil, the world’s leading coffee producer. The poor weather has significantly impacted Brazil’s 2024-2025 coffee crop, further boosting prices. Societe Generale's research showed that the 96 hedge funds it tracks had an average return of around 0.7% in September, with performance ranging from gains of 7.41% to losses of -15.77%. More than half of these funds posted positive returns.

Despite a positive contribution in September, the Australian dollar has been the largest drag on returns for trend-following funds this year. Other positions weighing down performance year-to-date include the Mexican peso, silver, and natural gas. Although sterling proved profitable in September, it remains a loss for the year.

In late September, trend-following funds took new positions in assets like Hong Kong's Hang Seng stock index, sugar, silver, lean hogs, and German and Spanish stock indices, along with the Canadian, Australian, and New Zealand dollars, according to the bank’s research.