Unhedged Performance

January 2022 - June 2022 🎉

It seems we’re of the parenting type that shoves our hatchlings out of the nest to plummet off a cliff to see if they can fly or, well, go crunch into several pieces. We launched Unhedged algorithms into what has been the worst stock market start in 50 years.

That being said, all three of our algorithms have outperformed market benchmarks over the last six months since launch. Below, we’ll take a closer look at each algorithm’s individual performance and give you some catchy visualisations.

Sector Rotation Algorithm

We’ll start with our star performer for the period, Sector Rotation. It’s in the green for its 6-month performance up to the 30th of June 2022 at +1.15%, while its benchmark (iShares Core Growth Allocation) is down -11.45% over the same period. That’s a whopping +12.60% overperformance for those who don’t want to do maths.

Sector Rotation H1 2022 Performance

Sector Rotation’s max drawdown for this period was -7.27%, while its benchmark went to -15.88%. This means that the algorithm didn’t fall as far or as hard as the market did.

A cool item of note, when many other investors were tricked by the bear market rally, Sector Rotation responded to market conditions and held in defensive positions. This enabled it to weather the heavier fall better than any investors who may have bought into the bounce.

Did you know? Sector Rotation follows its namesake and rotates between sectors. In the beginning of the year, it moved into defensive positions including Bonds, Gold, and Cash.

Industrial Activity Algorithm

Industrial Activity has been on the rise since early April. It’s down -7.97% for the six month period leading up to the 30th of June 2022, but it’s still beating its benchmark (S&P 500), which has a -16.35% performance over the same period. So even though it’s negative, it’s +8.38% above its benchmark.

Industrial Activity H1 2022 Performance

Industrial Activity’s max drawdown for the period was -15.09%, while its benchmark dropped to -21.68%. So even at its lowest time, it still stayed +6.59% above the benchmark’s lowest low.

An interesting move by Industrial Activity during this period was its decision to invest in FolioBeyond Rising Rates ETF (RISR). A choice that performed well as the ETF is built to profit from rising interest rates.

Did you know? Industrial Activity trades on signals from metals, such as gold and copper, to determine the direction of the market and which ETFs and bonds to invest in. You might know that an increase in gold price signals a down market; Industrial Activity reads it the same way and moves into defensive assets.

Momentum Algorithm

Momentum has more or less followed the market, but it did close out the first six months of 2022 with a slight overperformance. It’s down -14.88% for the six month period leading to the 30th of June 2022 with its benchmark (S&P 500) at -16.35% over the same period. So it still made the finish line +1.47% above its benchmark.

Momentum H1 2022 Performance

Momentum’s max drawdown during this period was -20.24%, while its benchmark dipped to -21.68%. So at least at its lowest low, it wasn’t as low as its benchmark.

Momentum’s spotlight moment during these six months was when it performed a full sell down and held in USD Cash (without us signalling for it to do so). This saved it from the heavier fall in the market that other investors may have had to take on the chin.

Did you know? Momentum trades on lagging indicators, so it’s not a surprise that it’s not massively outperforming the market. It selects the stocks that have the highest chance of going up given their recent momentum. So when all the stocks are going down, it doesn’t have much to choose from.

2022 Halftime Overview

It’s been a rough start to the year for most people in trading, but our algorithms have performed exactly as we expected they would. Two of the three have protected against deep market downtrends and smoothened returns. And more, they’ve all beaten their benchmarks.

The exciting part for us is that they’ve done much of this without our direction. You can read more about their independent moves in our blog post: Does algorithmic trading work?

Another point we’d like to highlight with this 6-month review is that even though the algorithms all beat their benchmarks overall, our customers only paid success fees in January. That’s because we only charge success fees when our algorithms actually succeed, which with us, means they not only beat their benchmarks but also an all-time high watermark.

Our purpose here at Unhedged is to bring equal wealth opportunities to everyone. So if you’re ready to start investing for the long term, then download the app and start with us. And if you’re already with us, thank you for being part of the journey. We hope this 6-month performance review confirms your trust in the algorithmic way of trading.

Past performance is not indicative of future performance. The information in this report has been compiled from sources we believe are reliable and we make no warranty in respect of its accuracy.