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Managed Futures Report Second Month of Gains Managed futures traders showed gains of 1.87% in August, according to a flash estimate of the BarclayHedge BTOP50. For the year-to-date period, the index is down 2.39%. “Managed futures had its best month of the year and the best returns since June 2016 in August,” according to Sol Waksman, founder and president of BarclayHedge. “It’s too early to say that the industry has turned a corner, but the signs are positive.” Systematic traders led the way with a gain of 2.63%; 13 of the 14 systematic traders in the BTOP50 were profitable in August. Discretionary traders were essentially flat for the month, losing 0.04%. Two of the three discretionary traders had small losses.
Nippon Life Settles via CLS Nippon Life Securities has become the first Japanese non-bank financial institution (NBFI) to join the CLS system via third-party access. Nippon Life Insurance Company, Japan’s leading life insurance company in terms of net profit, is now settling FX transactions in CLS via its settlement bank. CLS says the addition of Nippon Life marks another milestone in the continued growth of CLS participation across Asia. Last year South Korea’s Samsung Securities became the first NBFI to become a third-party participant in South Korea, and was joined by three more of the largest securities brokers and one fund in 2017.
Hedge Funds Cutting Fees: BarclayHedge Survey A BarclayHedge survey of 134 hedge fund managers in July has revealed that 36.6% of survey respondents currently offer reduced or no fee alternatives to their investors and a further 20% plan to offer lower or no fee products in the next three-to-six months. “The hedge fund industry has been under pressure to offer lower fee alternatives for some time,” says Sol Waksman, founder and president at BarclayHedge. “We expect that these pressures will continue and that low or no fee products will continue to grow."
Mesirow Hires Hoffman as CEO Mesirow Financial, has appointed Joseph Hoffman as CEO of its currency management business. The firm says Hoffman, “strengthens the team with his proven success of providing objective, strategic advice to implement best practice currency risk programmes for clients’ unique set of circumstances”. Hoffman joins from Russell Investments, where he co-founded the firm's Currency Implementation business in 2003, and most recently, as global head of currency, led the team responsible for hundreds of currency overlay accounts with assets under management in excess of $60 billion.
CTAs Limp into Positive Territory in July Managed futures traders gained 0.64% in July, according to the Barclay CTA Index compiled by BarclayHedge. The index is down 1.04% for the year. The BTOP50 Index, which tracks 20 of the largest CTAs, showed a modest gain of 0.6% and is down 4.2% through the end of July. “Managed futures traders were able to eke out gains last month in spite of the cross currents in commodity markets,” says Sol Waksman, founder and president of BarclayHedge. “Profits resulting from US dollar weakness against the euro and a new record high in the S&P 500 were enough to overcome losses from trend reversals in energy and agricultural products.”
Hedge Funds Up in July – BarclaysHedge Hedge Funds gained 1.11% in July according to the Barclay Hedge Fund Index compiled by BarclayHedge. The index has risen every month this year and is up a cumulative 5.48% for 2017. Emerging Markets continued their recent strong run and led all sectors with a gain of 2.65% in July. Pacific Rim Equities posted their best performance of the year with a gain of 2.12% and Technology, which is the top performer for the year to date, was up 1.72%.
CTAs Continue to Struggle in June Managed futures traders lost -0.98% in June, according to the Barclay CTA Index compiled by BarclayHedge. This was the largest monthly decline so far this year as the index is down -1.65% through the first two quarters of 2017. The BTOP50 Index, which tracks the 50 largest investable CTAs, also fell, registering a loss of -2.60% in June, and is down -4.77% for the year as well. “The first half of 2017 has been difficult for the CTA industry,” says Sol Waksman, founder and president of BarclayHedge. “The combination of low volatility and sharp trend reversals has helped to suppress returns for managed futures.”
AIMA Publishes MiFID II Best Execution Guide The Alternative Investment Management Association (AIMA) has published a guide for alternative investment managers to help them understand and implement the enhanced best execution obligations under the European Union’s updated Markets in Financial Instruments Directive (MiFID2), which will apply from January 2018. AIMA’s MiFID2 Best Execution Guide, which is only available to AIMA members, outlines the MiFID2 obligation to achieve the best possible results when executing transactions. These rules were originally introduced under MiFID1 and have now been enhanced in a number of areas.
Bigger Not Necessarily Better: AIMA Survey Dispels A new survey from the Alternative Investment Management Association (AIMA) and boutique prime broker GPP helps dispel the notion that bigger is always better regarding hedge funds’ asset under management (AUM). The survey of sub-$500 million firms finds that most are able to turn a profit and expand with considerably less than $100m in assets. The two bodies surveyed 135 alternative asset managers globally and found that the average break-even point is around $86 million in AUM, while around a third are able to break even with $50 million in assets or less.
New Study Highlights Buy Side Mifid II Concerns A new study by consultancy firm JWG shows that 90% of buy side firms believe they are at either high or medium risk of not being compliant with the Mifid II rules when they come into effect in January 2018. Among respondents to the survey, about one-third had less than £1 billion of assets under management (AUM), one-third had between £5 billion and £50 billion AUM and the remaining one-third had between £50 billion and £500 billion AUM. However, the level of preparedness was not found to be dependent on the size of the firm.