One of the largest hedge funds in the world, BlueCrest Capital Management's BlueTrend, is trying to put its worst year ever behind it with positive returns, but it still faces challenges convincing investors to stay.
BlueTrend is up 3.34 percent net of fees this year through May, according to a person familiar with the returns. The fund swung to a gain after rising 6.32 percent last month by correctly predicting bond and stock price movements. That's already far better than the fund's poor performance in 2013 when it lost 11.5 percent—its first negative calendar year since launching a decade ago.
The problem is that many investors have decided to yank money from the so-called "trend following" strategy, also known as managed futures or commodity trading advisors. Such funds use computer models to predict trends in the prices of stocks, bonds, currency, commodities and other markets, betting that valuations tend to revert to a mean following swings up or down.