How to Invest With the Best and Brightest Commodity Traders

Usually investing in CTAs such as Winton, Man AHL, Transtrend, Systematica and Altis would take über deep pockets, but in 2011 Quest Partners designed the Quest Tracker Index (QTI), which replicates top CTA programs, without some of their style drifts.

Since its start, the QTI has had a cumulative total return of 22.13%, an annualized compounded return of 4.63% and an annualized standard deviation of 12.99%. Its correlation to the S&P 500 is -0.11. This year through February the program is up a whopping 11.51%, after a loss of 8.11% in 2015 (in 2014 it gained 20.97%).

Nigol Koulajian, founder and CEO of Quest Partners in New York, notes that although they "replicate the main component of each of these CTAs," QTI has less  exposure to fixed income and fewer long-only positions and includes more short-term trades. What it does not include are carry trades, mean reversion, spread trading and fixed long equity exposure.

All this contributes to QTI having less volatility during equity corrections, providing better protection for investors. "We wanted to maintain the purity of momentum trading. We've done something more valuable: It's for when someone is looking for protection during equity corrections. When the S&P is down, we do better, and when it is up we underperform slightly." He says QTI has an 86% correlation to the BTop50 Index (top global CTAs measured by BarclayHedge).

How to Access QTI

Quest Partners has its own QTI fund, which can be accessed through managed accounts and charges fees of 50-90 basis points per year. Koulajian says the formula for the index is available for those interested; it isn't "a black box, but transparent."

Investors can also access QTI through the Equinox Mutual Hedge Futures Strategy Fund or through the DB Select platform that is part of Deusche Bank's Private Wealth Management Group or the Morgan Stanley UCITs platform, with minimums in the $250,000 range.

Why would an investor or investment advisor be interested? "People come to us because they see the performance and the low fees. Some are just interested in the formula," Koulajian says. "But if I told you over the past four years you could have outperformed the largest CTAs with a high correlation and total model transparency, you can see why people are interested."