20 Jul 2026 - Quarterly State of Trend report - Q2 2026

In this update, we present the quarterly State of Trend report for Q2, 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 an Australian 60/40 portfolio. Trend following provides exposure to a diverse pool of underlying instruments, and implements trading strategies systematically and without emotional biases.

Modest quarterly results, closing out a strong financial year for trend systems

Traditional assets delivered modest positive returns in Q2, edging higher as geopolitical risk eased and markets stabilised. Trend-following systems also posted positive returns for the quarter, though gains were more modest amid mixed conditions across asset classes. This rounds out a strong financial year of outperformance over traditional assets.

Key market movements in Q2 2026

• Markets navigated a volatile quarter, as the sharp energy-driven moves of Q1 gave way to a reversal in commodities alongside continued strength in equities

  • Equity indices extended gains, especially in technology linked markets. The S&P500 delivered most of the last 12 months returns in this quarter

  • Fixed income markets were mixed, with Australian bonds gaining modestly while US bonds declined as markets priced diverging rate paths

• Commodities provided the most dramatic reversals of the quarter

  • Crude Oil fell sharply, reversing the prior quarter's surge

  • Precious metals also declined, reflecting the risk-on backdrop

• Currency markets were volatile in Q2, with broad US Dollar weakness giving way to a sharp reversal in June

  • The shift in currency positioning followed the June Federal Reserve meeting, as persistent inflation reduced market expectations for rate cuts under new Chair Kevin Warsh

• Trend following strategies posted modest gains for the quarter, rounding out a strong financial year, outperforming most traditional asset classes

Featured chart - KOSPI

• KOSPI futures rose 85% in Q2, the market's strongest performance since 1998. An AI chip supercycle in Samsung and SK Hynix drove record highs, and a heavy concentration in the index, with the two stocks now making up over 50% of the KOSPI's weighting.

• The move was accompanied by a sharp rise in volatility, with 20 single-day swings exceeding 5% in 2026 YTD, compared with 2 in all of 2025.

• The speed and scale of the move highlight how trend following captures major regime shifts as they unfold. Systematic strategies were positioned to benefit from the sustained uptrend, while remaining able to adapt as volatility increased sharply into quarter end.

See the full report at our website.