Trend-following hedge funds outperform S&P 500 through Q3

Trend-following hedge funds, often referred to as commodity trading advisors (CTAs), have significantly outperformed the broader market through the third quarter of 2026. The Societe Generale SG CTA Index, a primary benchmark for these strategies, returned 15.7% in the nine months ending in September, surpassing the 11.7% gain recorded by the S&P 500 during the same period.

These returns were driven by large, persistent macroeconomic shifts. Managers successfully navigated market volatility by taking short positions in U.S. Treasurys during the September bond sell-off. Additional profits were generated from bullish dollar positions and long exposure to crude oil, which began in January prior to increased energy prices resulting from conflict in Iran.

Market analysts noted that the ability to short bonds and short-term interest rates provided a distinct advantage as equities and bonds became positively correlated, reducing the traditional diversification benefits of fixed-income assets. While systematic trend-following strategies saw strong results, discretionary equity managers faced challenges due to volatility in AI-related positions and rising yields.