A key portion of this disruption is being created by algorithmic traders, whose growing presence in a number of markets is preventing hedge funds from pursuing their traditional approach to trading, Lochlann Toolin said.
“Hedge funds are facing turmoil from algorithmic disruptions and cannot sustain their trend-following systems as a result,” he told Metal Bulletin in an interview.
“They need to adapt and change, because with the current diminishing returns that the traditional models yield, they run the risk of closure,” he said.
“Hedge funds have reduced their risk exposure as a result of these disruptions, so when trends move temporarily back in their favour they don’t have the same weight to capture the returns of the past,” he added.
Toolin, who founded New York-based Gold Street Advisors and is also its managing partner, said that...