Trend following is an investment strategy based on the technical analysis of changing market prices, rather than on the fundamental strengths or weaknesses of the investments. This strategy believes that prices tend to move upwards or downwards over time. Therefore, trend followers try to take advantage of these “market trends” by observing current trends and deciding whether to buy or sell based on these factors.
Owning trend-following strategies within your portfolio may bring many benefits, such as the potential to:
Adding a trend-following strategy to your portfolio has the potential to enhance diversification. As seen in the table below, by simply allocating 20% to a trend-following strategy, the portfolio has seen enhanced returns and reduced drawdowns; therefore, providing diversification.
Bonds are represented by Bloomberg U.S. Aggregate Bond Index, Stocks are represented by S&P 500 TR Index, and Trend Following is represented by CISDM CTA Index. The referenced indicies are shown for general market comparisons and are not meant to represent a specific Fund. One cannot invest directly in an index. Sources: Morningstar, LoCorr Fund Management.
Trend-following strategies have historically shown low or virtually zero correlation to a variety of traditional and alternative investments, providing the ability to further diversify an investment portfolio.
Correlation Table
Time Period: 2/1/2019 – 6/30/2025
Trend-Following is represented by CISDM CTA Index, U.S. Stocks are represented by S&P 500 TR Index, Foreign Stocks are represented by MSCI EAFE Index, Bonds are represented by Bloomberg U.S. Aggregate Bond Index, Private Equity is represented by Red Rocks Global Listed Private Equity Index, and Private Credit is represented by Indxx Private Credit Index. The referenced indices are shown for general market comparisons and are not meant to represent the Fund. Performance for the referenced indices through 6/30/25 is as follows: CISDM CTA Index -9.24% 1-year, 5.87% 5-years, 4.97% 10-years; S&P 500 TR Index 15.16% 1-year, 16.64% 5-years, 13.65% 10 years; MSCI EAFE Index 18.33% 1-year, 11.72% 5-years, 7.03% 10-years; Bloomberg U.S. Aggregate Bond Index 6.08% 1-year, -0.73% 5-years, 1.76% 10-years; Red Rocks Global Listed Private Equity Index 19.70% 1-year, 13.63% 5-years, 9.01% 10-years; and Indxx Private Credit Index 1.89% 1-year, 14.84% 5-years, 7.66% 10-year. Sources: Morningstar and LoCorr Fund Management.
Trend-following strategies can potentially enhance a portfolio’s overall performance by producing positive returns in bull and bear markets. As the graph illustrates, these strategies have yielded positive long-term performance, even during market downturns.
Growth of a Hypothetical $1,000 investment – September 1, 2000 through June 30, 2025
Past Performance is not a guarantee of future results. The referenced indices are shown for general market comparisons and are not meant to represent a specific fund. U.S. Stocks represented by S&P 500 TR Index. U.S. Bonds represented by Bloomberg U.S. Aggregate Bond Index. Trend-Following Strategies represented by CISDM CTA Index. Source: LoCorr Fund Management.
Trend-following strategies have the ability to provide exposure to a broad range of global markets. This may include, but is not necessarily limited to, sectors such as currencies, stock indices, commodities, and fixed income. As you can see below, there are multiple markets within each sector, providing the ability for more diversification as compared to traditional stock and bond portfolios.
The above list is a partial representation of possible market exposure.
Stocks and Bonds are not guaranteed. Bonds traditionally experience less volatility than stocks. Stocks may trade with more or less liquidity than a bond depending on the number of shares and bonds outstanding, the size of the company, and the demand for the securities. Treasury notes are guaranteed by the U.S. Government and thus they are considered to be safer than other asset classes. Depending on the entity issuing the bond, it may or may not afford additional protections to the investor, such as a guarantee of return of principal by a government or bond insurance company. There is typically no guarantee of any kind associated with the purchase of individual stocks. Tax features of stocks and bonds may vary based on an individual circumstances. Consult a tax professional for additional information. The tax treatment of returns of bonds and stocks also differs given differential tax treatment of income versus capital gain.
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Diversification does not assure a profit nor protect against loss in a declining market. Correlation measures how much the returns of two investments move together over time. Maximum Drawdown is the worst peak to valley loss since an investment’s inception. Sharpe Ratio measures the amount by which a set of values differs from the arithmetical mean, equal to the square root of the mean of the differences’ squares.
Past performance is not a guarantee of future results. The referenced indices are shown for general market comparisons and are not meant to represent the Fund. Current standardized performance for the Fund can be obtained by calling 1.855.523.8637 or by visiting www.LoCorrFunds.com.
Mutual fund investing involves risk. Principal loss is possible. The Fund’s investment objectives, risks, charges and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company, and it may be obtained by clicking here or a free-hard copy is available by calling 1.855.LCFUNDS. Read it carefully before investing. The Funds are offered only to United States residents, and information on this site is intended only for such persons. Nothing on this website should be considered a solicitation to buy or an offer to sell shares of the Funds in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction. The LoCorr Funds are distributed by Quasar Distributors, LLC.
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