20 Apr 2026 - Quarterly State of Trend report - Q1 2026

In this update, we present the quarterly State of Trend report for Q1, 2026. 

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 Q1 2026, traditional risk assets delivered negative returns, with the ASX200 and a 60/40 portfolio both finishing the quarter in the red amid escalating geopolitical risk and a sharp energy shock. Trend-following systems delivered strong positive returns, benefitting from equities and metals in the first two months of the quarter, and from the energy surge in March.

Key market movements in Q1 2026

• Markets navigated a quarter defined by escalating geopolitical tension, with the outbreak of the US-Iran conflict in March triggering an energy shock that sharply repriced inflation expectations and growth prospects

  • Equity markets fell broadly as risk-off sentiment intensified through the quarter

  • Fixed income markets also declined, with both Australian and US 10-year bonds finishing in the red as markets priced rate hikes in response to rising inflationary pressures

• Commodities provided the most dramatic moves this quarter

  • Energy markets surged on supply disruption fears following the effective closure of the Strait of Hormuz

  • Precious metals delivered positive returns despite a sharp sell-off in late March

• Trend-following strategies saw strong results early in Q1, driven by sustained momentum particularly in global equity markets. March brought whipsaw conditions as the energy shock triggered rapid reversals across several markets. Despite this, trend-following outperformed traditional assets for the quarter, demonstrating the benefits of a diversified rules-based approach

Featured chart - Crude Oil

• Crude Oil dominated the quarter, up 80% as the US-Iran conflict triggered fears of sustained supply disruption through the Strait of Hormuz. The rapid and sustained nature of the move created a strong trending environment across energy markets

• The scale of the energy shock raises the prospect of a broader shift in market regime. Trend following systems are designed to identify and adapt to such transitions, repositioning systematically as new trends emerge across asset classes

See the full report at our website.