From Long-Term Thematic Trends to Short-Term Trend-Following Momentum
Trendspotting isn't just about what's en vogue. For investors, the duration of trends covers a wide spectrum – from multi-year (or multi-decade) secular themes, through to shorter-term trend-following strategies, which seek to capture alpha from equity price momentum and trend persistence.
The following list of papers covers both long-term and short-term approaches to trendspotting. The first section explores long-term thematic trends, including environmental issues, technological advances, changing business models, and shifting socio-demographics. The second section presents a selection of papers which examine how to successfully employ price-momentum strategies.
LONG-TERM THEMATIC TRENDS
Robeco approaches trend analysis and thematic investing from a long-term perspective in this publication. They focus in on three themes – sociodemographics and the changes they are bringing about, the need to preserve the Earth and its precious resources, and investible transformative technologies.
For compliance reasons, this paper is only accessible in the EMEA region
Franklin Templeton focuses in on two specific disruptive innovations: electric bicycles and biometric wearables. These are just two examples of innovations to come out of emerging market small caps in recent months.
For compliance reasons, this paper is only accessible in the United States and Canada
Janus Henderson covers the results of their recent survey on investment trends, including insight into ESG funds and other asset allocation decisions.
For compliance reasons, this paper is only accessible in certain geographies
Having 'eyes on the ground' is one of the primary ways to stay more alert to disruptive trends that are long-term in nature. This is Baillie Gifford's approach to uncovering innovative technologies in China.
NN Investment Partners explores further pandemic impacts upon the corporate landscape, consumer sentiment, and the ways that businesses operate.
This lengthy report from EY details 15 different trends and secular forces that are reshaping societal interactions across the globe.
This brief blog article from the World Economic Forum looks at technological advancements in emerging markets, some of which have been spurred on by the pandemic.
SHORT-TERM TREND FOLLOWING/MOMENTUM
Professor Subrahmanyam of UCLA's Anderson School of Business reviews the landscape of investment literature on the momentum factor within equity markets.
QMA investigates the apparent success of price momentum as an investing strategy and whether it may be the result of various behavioural biases.
In an effort to gauge market sentiment Qontigo’s 'Risk-On, Risk-Off' scores examine the current risk appetite of investors. Changes in sentiment can also indicate shifts in price momentum.
Research Affiliates examines trend breaks (turning points when trends are voilated) and whether the potential exists to repair certain trend-following strategies afterwards.
This paper presents an overview of a quantitative analysis behind short-term momentum strategies for S&P companies.