Man Group: Trend Following and Drawdowns – Is This Time Different?

The year 2025 has presented challenges for trend investors, prompting questions about whether markets have fundamentally changed. Man Group's analysis suggests that while some previously profitable strategies have lost their edge due to increased competition and technological advancements, historical data indicates resilience in trend-following approaches over the long term.

Capital management firm Man Group notes that certain systematic strategies that were once profitable have seen their effectiveness diminish. This is partly attributed to a greater number of investors exploiting the same market inefficiencies. Strategies focused on short-term trends have been particularly affected, as technology allows information to be priced into markets more rapidly.

Man Group's research, which includes analysis of historical return distributions, crowding, and opportunity costs, suggests that trends remain persistent. The firm believes the current period of negative performance is consistent with a long historical track record and does not represent a permanent shift in market dynamics.

More traditional strategies, such as selecting stocks based on fundamental characteristics, have demonstrated greater resilience. Investors like Benjamin Graham identified the long-term outperformance of undervalued stocks as far back as 1949. While these strategies can experience significant drawdowns, they have proven beneficial over extended periods.

Man Group emphasizes adhering to its established process. Trend following has historically rewarded investors who remain committed to their strategy through challenging periods. The firm continues to follow its systematic approach.