Navigating uncertain and fast-moving times with systematic trend-following investments

“Momentum has added meaningful value across many different market environments.”

Why according to our analysis, a well-constructed systematic momentum approach remains powerful in the long-term despite rapidly changing markets?

Introduction

Since a few years, financial markets are shaped by a mix of uncertainty and unprecedented speed. Geopolitical tensions, shifting trade frameworks, unpredictable policy cycles, and persistent macro volatility continue to unsettle investors worldwide. At the same time, markets are moving faster than ever before. Entire sectors—most notably AI and advanced technology—are experiencing innovation cycles so rapid that forecasting future winners using traditional fundamental analysis has become increasingly difficult. 

In that environment investors find themselves once again asking the same question: Is there any strategy that still works when the world seems fundamentally unpredictable? According to our analysis, one answer—perhaps surprisingly—is momentum. Not the simplistic version found in textbooks, but a carefully engineered, risk-controlled, fully systematic interpretation built with the aim to withstand even the kind of turbulence the world is experiencing today.

Momentum and intensifying Behavioural Biases

Momentum is the simple yet powerful observation that stock markets move in trends. Stocks that have outperformed recently tend to keep rising and those that have fallen tend to keep sliding. By systematically identifying and capturing these trends, a momentum investment strategy seeks to generate excess returns relative to the broader market.

Momentum’s appeal lies in its elegant simplicity and robust consistency. Over long periods, momentum strategies have shown an ability to outperform the broad market with remarkable persistence in various regions, as recent research (e.g. CFA Institute or MSCI) demonstrates. In short, the studies re-confirm what has already been found in many academic work before: momentum is not a temporary anomaly but a persistent return driver since more than 150 years that has added meaningful value across many different market environments and cycles. Looking at the last 50 years, momentum has consistently generated alpha relative to the MSCI World Index in every decade — remarkably under a wide variety of market conditions.