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We just need some volatility: top-rated PMs' plea

We just need some volatility: top-rated PMs' plea

A lack of volatility in the market is making it tough for both traditional and alternative investors to unearth new ideas, two rated managers have told Citywire Selector.

Garraway Financial’s Darran Goodwin, who is Citywire A-rated and manages the Garraway Financial Trends fund, said there hasn’t been many managed futures managers able to make money this year.

‘What we want is for events to happen and for markets to move. Last year there was a big fall in equities in the first six weeks. Then we had Brexit and Trump.

'These are all events which obviously gave us some volatility, which is what our strategy is focused on, the spikes in volatility,' he told Citywire Selector.

‘This year there has been nothing happening and it has become quite eerie in the sense that it doesn’t matter what asset class we look at, the volatility of all of them is very low.’

Vol evolves

The fund has a target of 15x volatility, which is a three-year target. Over the past three years the fund has managed to hit this, however Goodwin (pictured) said it is becoming more and more challenging to achieve.

‘Over the last 12 months we have done about 8% volatility, there haven’t been enough opportunities to make big outside gains. If you look at the downside volatility it’s probably not that dissimilar to the last three years but overall the number is low.

‘Although this year we haven't had any major events and volatility has been really subdued across all asset classes that we trade, we have recently begun to see some signs of a change, which has helped contribute to performance.’

Shake it out

But it’s not just the managed futures industry that is struggling with the lack of volatility the market is producing.

Artisan Partners’ Jason White, who manages several funds at the firm including the newly-launched Artisan Global Discovery fund, said it’s been hard to find new ideas due to the lack of volatility.

‘A little volatility would be great to be honest, it would allow us to get more capital behind our best ideas, and it would give us opportunities for entry points for a long list of ideas we are monitoring but have not yet initiated.

‘We want volatility too. Because of how we run these funds we want to get our best ideas in that top 20 and we want to do it in an opportunistic way. When the market goes up a little bit every day, it becomes more challenging to do that, so some volatility would be great.’

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