When Regimes Shift, So Should Portfolios
For decades, investors have leaned on a familiar comfort: when equities stumble, bonds will catch the fall. It’s the failsafe that underpinned the traditional 60/40 portfolio. But as the AFR recently highlighted in this article, https://www.afr.com/markets/equity-markets/how-a-regime-change-threatens-to-upend-an-investor-failsafe-20250924-p5mxkz, picking up on insightful work by NAB’s Chief Economist Sally Auld, a regime change is threatening to upend this assumption. Rising rates, stubborn inflation, and shifting geopolitical sands have eroded the very diversification investors once relied upon.
The danger isn’t just financial; it’s psychological. Anchored to the past, many investors cling to strategies that no longer work, exposing portfolios to concentration risk, blind spots in diversification, and costly behavioural biases.
At ECCM, we see this moment differently. For systematic trend followers, regime change isn’t a threat. It’s opportunity.
Concentration Risk: When Safety Nets Fail
In 2022, both equities and bonds fell together, breaking the old model wide open. Investors discovered that a portfolio concentrated in traditional assets was far less diversified than it appeared.
Trend following offers a different safety net. Because we trade across nearly 100 global futures markets, from equities and bonds to commodities and currencies, we aren’t tied to one economic narrative. When bonds fail to diversify equities, currencies or commodities may step in. That breadth allows us to adapt as correlations change.
Diversification Gaps: Beyond Equity Proxies
Private equity, venture capital, and private credit are often pitched as “alternatives.” Yet beneath the surface, they remain highly tied to equities, real estate, or interest rates. In a regime where those links break down, many investors find their “alts” weren’t alternative at all.
Our approach is different. By systematically trading markets as diverse as copper, feeder cattle, the Japanese yen, or U.S. treasuries, we access return streams truly distinct from traditional asset classes. That’s real diversification: the kind that matters when regimes shift.
Behavioural Biases: Fighting Human Nature
When conditions change, investors often make the wrong move at the wrong time. Buying what feels cheap, selling what feels expensive, or clinging to past frameworks that no longer hold. These biases are magnified during regime shifts, when uncertainty drives emotional decisions.
Trend following replaces instinct with process. Our rules cut losses early, let winners run, and respond to what markets are doing, not what we wish they would do. In other words, we don’t argue with the wind; we set our sails to harness it.
Why This Matters Now
NAB Chief Economist Sally Auld is right: regime change is here. Inflation cycles, policy reversals, and geopolitical fragmentation are rewriting old assumptions. But investors don’t need to be caught off guard.
At ECCM, we believe the solution lies in systematic, adaptive strategies that thrive across regimes. For more than five years, our ECCM Systematic Trend Fund has delivered double-digit compound returns net of fees, with consistently low correlation to traditional assets.
For investors, the choice is clear: continue relying on an old failsafe that may no longer work, or embrace strategies designed for the uncertainty ahead.
In the video below, Trend Following’s Edge as an Alternative Investment Strategy, ECCM’s Founder and CIO Adam Havryliv, and Strategy Ambassador Richard Brennan, talk about trend following’s non-correlation with traditional markets, its adaptability, and risk management.
Conclusion
Our purpose is simple: to help investors protect and grow wealth in every market condition. Regime changes may unsettle the old order, but with discipline, breadth, and expertise, they can be transformed from threat to opportunity.
At ECCM, we’re ready to help wholesale clients build portfolios resilient enough to weather storms, and strong enough to thrive in what comes next.