Trader Jan de Wever has launched WholeCapital, a San Francisco, California-based commodity trading adviser (CTA) which invests in the futures market using a combination systematic and discretionary trading styles.

De Wever described the investment strategy as 40% systematic and 60% discretionary. "The strategy is positioned between the CTA and global macro worlds. I believe this hybrid approach will become more popular over time," said de Wever.

WholeCapital's Global Opportunities Program has been in development for the past five years. The program incorporates technical analysis as well as ideas from behavioural finance.

De Wever described the program as a short to medium trend following system.

The program screens activity in the futures markets and seeks to identify entry signals based on technical inputs. It aims to take advantage of recurring price patterns in the market.

"Specifically, the program looks for trades that feel uncomfortable or hard to implement. We believe that taking the opposite side of 'easy trades' is the best way to make consistent profits," said de Wever.

Incorporating systematic risk controls, the program also will have position sizes, exposures and stop losses that are locked-in and implemented automatically by the system.

WholeCapital combines the systematic aspects of the Global Opportunities Program with a discretionary element. De Wever looks at the entry signals generated by the system and selects those trades he perceives to have the highest risk/reward characteristics for execution.

The management company may also take profits or close out losing positions on a discretionary basis, said de Wever. He might bail out of a losing position before the stop loss is triggered, or take profits on a winning position if the dominant trend is thought to have expired.

De Wever believes this combination of systematic and discretionary trading will outperform a purely systematic approach over the long run. "However, systematic strategies also have their limitations. The reality of the market is so complex that a systematic trading program cannot truly even approximate it," said de Wever.

"Adding a discretionary element to the strategy provides the added flexibility required to navigate the financial markets, which are constantly changing and infinitely complex. The program is a tool but we do not want to be a slave to it. We recognize its limitations," he added.

WholeCapital will have exposure to interest rates, equity indices, currencies and tangible commodities through the futures markets. It aims to generate annual returns of over 20%.

The strategy is currently only available as a managed account. The program has a minimum nominal account of $250,000, with the option of notional funding up to 50%.

"We decided to start by offering the strategy as a managed account because this provides investors with a number of benefits: liquidity, transparency, independent custody and flexibility," said de Wever.

WholeCapital is currently offering investors a trial period during which management fees will be waived for three months. De Wever said he had invested a substantial portion of his own net worth in the program.

WholeCapital is registered with the Commodity Trading Futures Commission and the National Futures Association.

Prior to launching WholeCapital de Wever was a proprietary arbitrage trader at Flowtraders in Amsterdam. Before that he spent three years as a fixed income trader at Fortis, now part of BNP Paribas.

De Wever developed an interest in the financial markets at an early age. He bought his first mutual fund at the age of nine and his first exchange traded stock aged 12.

With the support of his family, he started trading futures at the age of 17 using concepts employed in the alternative funds world.

Those early trading efforts were not always successful. "I blew out three accounts," said de Wever. "But those experiences taught me a lot about dealing with frustration and disappointment as well as success. That is part of being a trader."

He joined Fortis in 2004 after obtaining a Masters degree in financial economics from the Belgian Catholic University of Leuven. His role at the bank involved high volume market making in liquid high grade government bonds and asset swaps.

Twin passions
He said he formed WholeCapital to pursue his passion for managing capital and to have a positive impact on society. "I made a good living working at a bank and as an arbitrage trader, but I felt there was no soul to it. The financial sector often lacks inspiration. I wanted WholeCapital to be a company with a higher purpose," said de Wever.

WholeCapital will donate 10% of its profits to specific charities and non-profits, de Wever said.

He said his aim is to do more than just make profits for investors and employees. "When we invest in the futures market our aim is to generate the biggest trading profits possible. We are not ethical or socially responsible investors. The futures market is a zero sum game. But we want to use our success in the market as a platform to influence change and progress in society," said de Wever.

He sees the social aspect of WholeCapital as an important part of its business model. "I think it will keep our employees and clients excited and motivated about the business," said de Wever.