Trend-Following Fund Captures Waves Amid Iran Conflict, AI Rout

Need to Know

Published: March 4, 2026

As geopolitical headlines over the Iran conflict enter their fifth day and AI-related software names face heightened volatility, some systematic managers remain positioned to capture sustained market moves rather than react to noise. Longboard Asset Management follows a trend-following approach that processes data from every publicly traded Russell 3000 company, measures persistent trends and executes rules-based trades across equities and related markets.

"We try to capture the waves that markets are constantly supplying," says Chief Investment Officer Cole Wilcox, summarizing a process built around objective signals rather than headline-driven discretion.

How Longboard's Trend-Following Strategy Works

• Universe: The strategy ingests price and volume data for all Russell 3000 constituents, giving coverage across large-, mid- and small-cap U.S. equities.
• Signal generation: The program measures multi-horizon trend indicators (short, medium and long lookbacks) and combines them into composite trend scores for each security.
• Execution: When composite scores exceed pre-set thresholds, the system initiates positions; when scores reverse, positions are reduced or closed.
• Risk controls: Trades are sized within a firmwide risk budget and diversified across the full Russell 3000 to avoid concentration risk and single-stock shocks.

Key structural features:

• Data breadth: Coverage of the Russell 3000 expands signal diversity and reduces idiosyncratic reliance on a handful of names.
• Systematic rules: Objective thresholds remove discretionary reaction to intraday headlines.
• Time-horizon mix: Combining short-, medium- and long-term trend signals favors capture of persistent moves while filtering transient spikes.

Why This Matters amid Iran Tensions and an AI/Software Rout

Trend-following strategies are designed to respond to sustained directional moves rather than headline bursts. When geopolitical events, like the Iran conflict, inject uncertainty, or when sector rotations drive an AI or software rout, a systematic trend model has three practical advantages:

1. Cross-asset and cross-stock diversification: By operating across the full Russell 3000, the strategy can shift exposure away from sectors showing tactical weakness and toward sectors exhibiting clear trending behavior.

2. Objective rebalancing: Rules-based entries and exits remove emotional bias that can amplify losses during headline shocks.

3. Time-horizon adaptability: Multi-horizon signals allow rapid capture of short-term momentum while maintaining exposure to longer trends when they persist.

In volatile episodes that affect AI-related equities (ticker: AI) and broader software groups, a trend-following program can reduce exposure to weakening sub-sectors while adding to nascent trends emerging elsewhere in the market.

Practical Implementation Notes for Institutional Investors

• Portfolio role: Trend-following strategies are typically used as a diversifying sleeve within a multi-strategy allocation, offering low correlation to long-only equities when implemented consistently.
• Governance: Institutional adoption should include clear rulebooks, regular audits of signal generation code, and out-of-sample validation to prevent overfitting.
• Liquidity and execution: Managing a Russell 3000-sized universe requires robust execution infrastructure to minimize market impact, particularly during stressed markets.
• Stress testing: Simulate scenarios that combine geopolitical shocks with sector-specific routs to confirm the strategy’s risk limits and drawdown behavior.

Signals, Tickers and Market Behavior

• Ticker context: References to AI (ticker: AI) reflect investor focus on the AI software segment; trend models that include these names will capture the same price momentum that drives headline volatility.
• Market regime awareness: Trend-following benefits when markets enter directional regimes; it underperforms in extended sideways ranges. Effective implementations therefore incorporate regime detection and dynamic position sizing.

What Institutional Traders Should Watch Now

• Trend breadth: Monitor how many Russell 3000 names show consistent trend signals — rising breadth supports trend-following performance.
• Sector rotation: Watch capital flows between technology/AI-related groups and defensive sectors; persistent rotation creates tradable trends.
• Volatility spikes: Short-term volatility can create false signals; robust models adjust filter sensitivity during regime shifts.

Bottom Line

Longboard Asset Management’s approach emphasizes systematic capture of market trends across the full Russell 3000 universe, prioritizing objective signals, diversification and disciplined risk controls. In an environment of geopolitical uncertainty and sector-specific routs—such as those affecting AI and software names—this type of trend-following program aims to identify and trade sustained market waves rather than react to headline noise.

This strategy is not a guarantee of outperformance; institutional investors should evaluate fit, governance, execution capability and historical behavior across multiple market regimes before allocating capital.