As we write, front month oil futures are back near the highs, north of $100 a barrel. The Iran conflict is disrupting energy flows, and trend strategies are long oil and refined products, short bonds. Direct exposure to markets at the forefront of concern.

We have long written about the benefits of portfolios broadening the tools in the toolbox of diversification into trend following strategies as they give systematic exposures to a genuinely different risk premia, historically uncorrelated most of the time and negatively correlated in equity and bond crises. While the only perfect hedge is in a Japanese garden (although my now 80 year old English father may stake a pretty good claim), when building out diversified portfolios, this is a good combination. Long and short exposures in commodities, currencies and fixed income.

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