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Mesirow Expands with TCS Acquisition Mesirow Financial has agreed to acquire assets of The Cambridge Strategy (Asset Management) (TCS) a UK-based currency alpha investment firm. TCS was co-founded by Peter Henricks, CEO, and Russell Thompson, CIO, in 2003, and offers currency alpha strategies for return-seeking investors. Headquartered in London with offices in Hong Kong and Monaco, TCS has over $3 billion in assets under management in passive and active strategies. The TCS team will be incorporated into Mesirow’s existing global currency team, all reporting to Hoffman.
Survey Highlights Hedge Fund AI Usage Artificial intelligence (AI) and machine learning (ML) are reshaping the alternative investments landscape, but professional financial managers still make the most pivotal decisions, according to a new survey from BarclayHedge. In a sample of 55 hedge funds that responded to the survey, 56% said they use AI/ML to inform investment decisions, with most of the firms that use these tools saying that they do so in order to generate trading ideas and optimise portfolios. Well over half of the respondents, 58%, have used AI for three or more years, while 37% have used the technology for five-plus years. Hedge fund managers were among the earliest adopters of advanced algorithms and artificial intelligence techniques, which helps explain why a plurality of survey respondents said they have been using AI/ML for more than five years.
CTA Index Down for June; But Currency Managers Show Gains The flash estimate for the Barclay CTA Index, compiled by BarclayHedge, indicates a 0.05% loss in June. Year to date, the index is down 2.00%. “Trade war concerns sparked by economic sabre rattling shook grain markets, while US pressure on its allies to boycott Iranian oil rallied energy prices to new highs on the year,” says Sol Waksman, founder and president of BarclayHedge. Agricultural traders were down 0.59% in June, the Discretionary Traders Index lost 0.59%, and Diversified Traders gave up 0.21%.
Hedge Funds Suffer in June: BarclayHedge Hedge Funds lost 0.31% in June according to the Barclay Hedge Fund Index compiled by BarclayHedge, versus a 0.62% increase in the S&P 500 Total Return Index. Year to date, the Barclay Index is up 0.69%, while the S&P has gained 2.66%. Twelve of Barclay’s 17 hedge fund indices had losses in June, while five had gains. Emerging Markets gave up 2.55% in June, Equity Market Neutral was down 1.22%, Pacific Rim Equities lost 0.58%, the Multi Strategy Index was down 0.53% and Fixed Income Arbitrage gave up 0.47%.
Investors Withdraw Money from Hedge Funds In April With what appears to be immaculate timing, hedge fund investors turned cautious in April 2018 and redeemed $1.9 billion in assets from the industry, just in time for it to produce positive returns in both April and May. According to the Barclay Fund Flow Indicator, even as the equities markets rebounded and volatility began to calm down, investors withdrew 0.1% of industry assets, which the firm says levelled off at an all-time high of $3 trillion. In April the BarclayHedge Hedge Fund Index gained 0.49% and in May it was up 0.9%, having ended the first quarter -0.7% year-to-date.
CTAs Down in May, Despite Currency Gains The flash estimate for the Barclay CTA Index, compiled by BarclayHedge, indicates a 0.24% loss in May, although currency traders gained 0.88% last month. Year-to-date, the Barclay CTA Index is down 1.76%. “Large systematic traders were the hardest hit by trend reversals in fixed income, energy, sugar and cocoa prices,” says Sol Waksman, founder and president of BarclayHedge. The new MPI Barclay Elite Systematic Traders Index (MBEST) lost 1.85% in May, diversified traders were down 0.64%, financials and metals traders lost 0.44%, and systematic traders gave up 0.44%.
Trend Followers Drive CTA Losses in May Following a marginal uptick in April, the SG CTA Index moved into negative territory in May, down 2.41% for the month, despite being up mid-month. Trend followers were the main drivers of losses in the second half of the month, and were down, to -2.72%. Short-term CTA strategies handled the changing market conditions relatively well and ended May up, +0.39%. The SG Trend Indicator had a difficult period and was down by 3.50%, leading to a reading of 13.30% for the first five months of this year. Following a recovery in April, equity indices contributed to negative performance, and the commodities and currencies sectors took a dip as well. Meanwhile, the bond market provided some relief as it was the only sector to post a positive contribution, up 0.09%, just holding on to gains despite a mid-month reversal.
AIMA Survey Highlights Growth in Responsible Investing Hedge funds globally have allocated at least $59 billion to responsible investment (RI), according to a survey by the Alternative Investment Management Association (AIMA) and the Cayman Alternative Investment Summit (CAIS). The survey of 80 asset managers with $550 billion in hedge fund assets under management (AUM) provides evidence of an increasing level of demand for RI across the hedge fund industry, with around 40% of the respondents saying they are already investing using responsible investment principles, with total assets in such investments worth $59 billion – a little over 10% of the respondents' combined hedge fund AUM.
Record Handed AUD350m Mandate Record Currency Management has been awarded an AUD350 million mandate by Sunsuper, an Australian superannuation fund. The mandate is an active currency portfolio, the objective of which is to generate risk-adjusted returns using Record’s Currency Multi-Strategy product, a factor-based return-seeking currency investment strategy. The mandate size was approximately AUD350 million at mandate inception, as referred to in Record’s fourth quarter trading update on 20 April 2018, when the mandate was funded. While currency hedging focuses on risk mitigation, Record’s active currency strategies allocate across currency risk premia and are return-seeking in nature, designed to capture the main drivers of return in currency markets.
CTAs Register Narrow Gains in April The flash estimate for the Barclay CTA Index, compiled by BarclayHedge, indicates a 0.23% gain in April. Year-to-date, the index is down 1.42%. “New US sanctions targeting Russian oligarchs pushed aluminum prices to six-year highs, while crude oil prices rose to their highest level in four years after threats of US withdrawal from the Iran nuclear deal stoked fears of increasing Mideast instability,” says Sol Waksman, founder and president of BarclayHedge. The Currency Traders Index gained 0.71% in April, the Discretionary Traders Index was up 0.63%, the Diversified Traders Index added 0.24%, and the Systematic Traders Index rose 0.07%.