The Evolution of Trend: The Hunt for Positive Convexity

July 2026

Trend following has anchored institutional diversification for more than two decades. Its appeal rested on positive convexity, the tendency to help portfolios when equities move sharply. In our view, that convexity has quietly eroded. As assets have grown and signals have slowed, much of the trend complex now protects less than it once did, even after a strong recent recovery in returns.

This webinar examines what that means for allocators and where managed futures convexity can be found today. Luke Hinshelwood of Middlemark Partners speaks with Versor’s DeWayne Louis and Nishant Gurnani about why the loss of convexity appears structural rather than cyclical, and how a cross-sectional, market-neutral view of equity index futures can rebuild it. The discussion stays practical. It focuses on how to build around trend rather than replace it, and on the characteristics that define a genuine complement.

What We Cover

  • Why the convexity that once justified trend allocations has declined over roughly two decades, and why the recent rebound in trend returns does not restore it.
  • The two structural drivers of that decline: a drift toward slower, long-horizon signals as assets have grown, and a rising equity beta built up through a long bull market.
  • How positive convexity has migrated rather than disappeared, and where a cross-sectional, market-neutral view of equity index futures can capture it.
  • The three characteristics allocators should look for in any complement to trend: low correlation to trend, genuine convexity, and enough liquidity to sit in the same sleeve.
  • How to frame a diversifying allocation for an investment committee, including the common error of selling it as an insurance premium that carries a persistent cost.

Key Takeaways

  • Convexity, not returns, is what made trend valuable. Trend earned its place by helping portfolios during sharp equity moves. The property to judge is convexity, not the latest run of returns.
  • The decline in convexity looks structural, not cyclical. At scale, short-term signals grow costly to run, so programs drift toward slower ones. A long bull market has also lifted embedded equity beta.
  • A recovery in returns can mask a decline in convexity. Trend can rebound strongly and still protect less than it once did. Returns and convexity are not the same measure.
  • Positive convexity has migrated, not disappeared. Dislocations between bottom-up single-stock investors and top-down index investors tend to widen under stress. A cross-sectional, market-neutral view can harvest that convexity.
  • A true complement to trend meets three tests. It should stay uncorrelated with trend, deliver genuine convexity, and remain liquid enough to sit in the same allocation. Diversifying the diversifier builds resilience.

The Presenters

Nishant Gurnani, Partner, Quantitative Researcher

Nishant leads futures and FX research at Versor Investments working closely with the Investment Committee in driving the investment research agenda across all strategies. Based in New York, Nishant operates across the full spectrum of strategy development from alpha signal generation to portfolio construction. Additionally, he plays an integral role in the Firm’s efforts in alternative data sourcing and the applications of machine learning.

DeWayne Louis, Founding Partner, Capital Formation

DeWayne Louis joined Versor Investments as a Founding Partner and is based in New York. DeWayne has over 20 years of experience in quantitative investment strategies, investment banking, private equity and hedge funds.

Luke Hinshelwood, Managing Director, Middlemark Partners

Luke moderated the session. He advises institutional investors on manager selection and portfolio construction at Middlemark Partners.

Disclaimer: Past performance is not necessarily indicative of future results. Participation in this webinar is limited to Qualified Eligible Participants (QEPs) as defined under applicable regulations. For informational purposes only. Not an offer to sell or a solicitation of any type with respect to any securities or financial products.

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