‘CTA hedge fund report’ summary
Our 2025 ‘CTA hedge fund report’ explores why trend-following Commodity Trading Advisors (CTAs) are facing one of their deepest and longest drawdowns in history, despite their reputation as reliable crisis-period performers. Following a standout year in 2022, CTAs are now the worst-performing primary hedge fund strategy, with large trend followers struggling to navigate sharp V-shaped reversals and volatile market conditions triggered by macroeconomic shocks like US tariffs and bond volatility.
Introduction
CTAs have been the weakest-performing primary hedge fund strategy in 2025. They have struggled in particular over the past 12 months after successfully protecting investors against tanking stock markets in 2022 with record gains. The recent rocky and volatile trading environment has been challenging for most CTA strategies.
Large trend-followers snapped a four-month losing streak in June, representing one of their worst periods of performance on record, as V-shaped market reversals triggered by the impact of US tariffs dragged on returns. Yet they are in a deep, 13-month drawdown.
Alternative market CTAs – which trade harder to access, more illiquid, and less-efficient markets – have fared even worse over the past two years. Short-term CTAs, meanwhile, have been better positioned to handle the day-to-day market volatility due to their shorter holding periods.
Still, CTAs have seen net asset inflows, likely on the back of their 2022 outperformance, though these have slowed. Overall, CTAs’ uncorrelated returns, demonstrated in extended crisis periods such as 2022, remain a valuable addition to a typical institutional portfolio, lowering volatility and edging up returns and Sharpe ratios.
