April's strategy of the month

If you have been wondering how TPP stand out from the crowd, wonder no more. So far this year, our long/flat strategies have been ticking over nicely with regular monthly gains and they are all still up above their benchmarks.

However, April’s market collapse was just what our active strategies have been waiting for. Holding a short position in the market can take some patience. Despite what you might think, it isn’t an easy trade. We always feel an imminent market drop, but it nearly always takes time.

Being short when the market is going up is even harder on the emotions than being long when it goes down! It can be months before the trade works, and this is what we’ve seen in the market recently and TPP have been able to capitalise where no other asset managers can.

So, how does it work?

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Stocks have been rallying since October. Our active strategies started selling into them towards the end of 2023 and early 2024.

Regular profits were taken on shorter-term trades as the markets oscillated, and the shorts were subsequently put back on higher up with better average fills.

Our traders are never sitting idly, they are always improving the long-term position through short-term trading. This active trading lowered the losses during the opening months of the year while they waited patiently for what they believed was an inevitable drop.

As Q1 ended, Q2 began with a different theme. On the last trading day of April, the S&P 500 closed at 5,035.69 taking losses of around 4.2% for the month with the Nasdaq posting similar moves ending down4.4%.

The Dow Jones Industrial average fared even worse falling 5%, wiping out all its gains for the whole year. As of the close of play on the 30^th of April, the Dow had added only 0.27% to its value in 2024.

However, both the S&P and the Nasdaq are still up on the year due to the incredible rally in mega-cap tech stocks driven by an insatiable appetite to buy into the AI frenzy.

It was this frenzy that caught a number of our active strategies off guard and many shorted the market too soon – but crystal balls are always in short supply.

Tech is up in 2024, the S&P is up and our active strategies have been short since the start of the year. Surely our active strategies should be down? Absolutely not. This is a great example of how we can better understand the way our traders perform when the market is going against them.  

On TPP we have 3 basic strategies. This is simplifying it a bit, but sometimes it helps to do so.

Our most basic strategy is our 'leveraged tracker'. These are built typically to deliver 1.5 x market performance (their market benchmark). After fees, a wealth manager will tend to underperform general market performance. Our most basic strategy generates slightly more than the market performance. Of course there will always be increased volatility, but as along-term growth tool (particularly after a market pullback) they're very hard to beat. These types of strategies should underpin your portfolio.

The trackers have done well as markets on the whole have been rising so far this year. Our S&P 500 leveraged tracker is up over6%, our leveraged FTSE tracker is up an impressive 9.2% as the FTSE has shown some recent strength – it’s about time.

To complement our most passive investment we also offer our 'long/flat' strategies. These will buy the market if indicators are strong or move into a market neutral position if the markets look too high.

They're patient, they wait for the right opportunity and they buy the relevant equity index when the conditions permit. These are often less volatile than a leveraged tracker as they occasionally miss a fair portion of a 'sharp market fall'. These 2 types of strategies together will help you build very strong TPP foundations.

Our long/flats have been consistent with our most popular strategy Cambridge Futures posting an impressive 9.6% which is great for all our portfolios as most clients have this autotraded in their portfolios.

The third type of strategy however, is the one that has really outperformed this month after the collapse in the US equity markets during April.

These strategies are our long/short strategies meaning they will either be long the market, or if the equities seem high, or global geopolitical tensions are mounting (as they have recently), then these will often short the market looking to provide a hedge to portfolios and profit from a downward move in equities. They are the most speculative and most volatile, but with this often comes the strongest performance.  

It is our active strategies which take all the top spots for April. Most have done well, but some have been exceptional.

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What TPP offers is different to the standard wealth management model. Wealth managers have one tactic, they ‘buy and hold’. There aren’t really any other tools in their box. Yes, over the long term this has been proven to work and we don’t disagree with the concept, but are you really maximising the potential of your portfolio? After fees you’re typically left with less that a standard benchmark performance.

At TPP even our most basic trackers offer between 1.5x-2x market returns. Our passive strategies have been specially designed by our professional traders to track the markets at a multiple.

If you believe that over time equity indices rise, then why not invest at 1.5x or 2x the rate. If the FTSE makes 7% a year, our tracker is designed to make between 10% and 14%. The cost? £65 per month. That’s it, no other charges are applied. It’s both transparent, and cost effective.

This month our active strategies have made money by being short. Our long/flat strategies have made money by either being in the market, or being in cash waiting for the right time to be long.

Multiple strategies, multiple options means a diverse absolute portfolio designed to work no matter what the market is doing.

Of course, you know that investments can go down as well as up and that your capital is at risk, but our traders are tasked with one job, it’s not taking your money, it’s making you more. Build an absolute portfolio designed to maximise returns while keeping volatility and risk under control. It’s a job for professional traders, and that is what we offer on our platform: professional trading strategies build by professional traders.

Portfolios are linked via our autotrade software. You don’t have to lift a finger; all you have to do is subscribe and watch our traders go to work.

For more information, please do contact us. One of our experienced traders would be happy to speak to you and help build the right portfolio for you.

The information herein is based on past performance and past performance cannot guarantee any future results. Capital at risk. The value of an investment can go down as well as up and you may get back less than you invested. If you are not sure about investing, seek independent advice.

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