Gold and Coffee Boost Hedge Funds in September

By Nell Mackenzie

LONDON (Reuters) – Gold and coffee helped to deliver trend-following hedge funds a positive result in September, thanks to record commodities prices, rising equities, and falling interest rates.

Gold has surged almost 30% this year to a record high on Sept. 26. The precious metal has been one of the best-performing financial assets in 2024 for hedge funds that use price and trading volume data to find and trade market trends, according to a Societe Generale note seen by Reuters.

Robusta coffee futures also reached record highs last month. Brazil, the top coffee producer, has suffered a drought affecting its crop for the 2024-2025 season, pushing up prices.

The mean return for the group of 96 funds tracked by Societe Generale's prime brokerage trading desk was roughly 0.7% for September, with returns ranging from a positive 7.41% to a negative 15.77%, the note said. Over half of the trend funds posted a positive return for the month, according to the bank's research.

The Australian dollar, though contributing to hedge fund performance in September, has drained the most from trend hedge funds this year, the SocGen note stated. Other losing positions year-to-date included the Mexican peso, silver, and natural gas. Although sterling was a positive position in September, it remains a losing position for trend funds so far this year.

The bank's research did not specify which currency pairs were on the other side of the currency crosses or the structure of the commodities trades.

Notable new positions trend followers entered towards the end of September included long positions in Hong Kong's Hang Seng stock index, sugar, silver, lean hogs, and German and Spanish stock indices, as well as the Canadian, Australian, and New Zealand dollars.

A long position is essentially a bet that an asset will rise in value.