In this update, we present the quarterly State of Trend report for Q4, 2025.
Our report covers the performance of trend following systems compared with traditional investments such as the S&P/ASX 200 Total Return index, and the Australia "60/40" portfolio. Trend following provides exposure to a diverse pool of underlying instruments, and implements trading strategies systematically and without emotional biases.
Trend following outperforms Australian traditional assets
In Q4 2025, Australian traditional risk assets faced headwinds as policy uncertainty, global growth concerns and persistent inflation volatility weighed on investor sentiment. Trend following systems delivered strong positive returns, benefitting from sustained momentum in metals, international equities and selective currencies.
Key market movements in Q4 2025
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Markets wrestled easing growth signals and stubborn inflation dynamics through Q4, along with persistent geopolitical flashpoints, tariff surprises and shifting policy expectations
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Equity markets were uneven with Asian and European indices rallying strongly, but more anemic performances from North American and Australian indices
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Fixed income markets suggested a gradual repricing toward future easing, but the short-end of the market continued to price near term rate hikes due to persistent inflation risks
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Commodities provided the clearest and most persistent trends
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Precious and industrial metals surged, reinforcing their role as inflation hedges amid geopolitical uncertainty
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Energy markets were mixed. Oil prices declined on softer growth expectations, while natural gas rallied, supported by supply constraints and seasonal demand dynamics
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Trend-following strategies were well positioned, and extended gains from Q3. By capturing sustained directional moves across asset classes, systematic strategies delivered meaningful outperformance versus traditional asset classes for the period, reinforcing the diversification benefits of a rules-based approach
Featured chart - Silver
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Silver delivered one of the strongest performances across global asset markets in Q4. The move was driven by a rare convergence of investment and industrial demand, as easing financial conditions, a softer USD and persistent geopolitical uncertainty coincided with tight physical supply
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Such sharp, sustained price advances are characteristic of the environments in which trend-following strategies tend to perform well, capturing momentum that is often absent from traditional equity-centric portfolios
See the full report at our website.
