Articles tagged by hedge funds
In addition to more
volatile markets, hedge fund managers are facing the additional challenge of
more active investor behaviour according to Credit Suisse’s mid-year Hedge Fund Investor Sentiment Survey.
The survey, which
polled over 200 global institutional investors representing almost $700 ...
One line in the
midweek column tweaked some interest among the readership, my mention of the
“juniorisation” of the sales role in the banking world.
I must confess I
hadn’t thought about it too much, it has very much ...
Hedge fund managers are becoming more innovative and open to negotiation over fees in return for the ability to lock in assets for longer.
According to a survey conducted by the Alternative Investment Managers Association (AIMA), managers are changing their business models and “exploring a broader set of arrangements designed to improve the alignment of interest between themselves and their investors”.
The study, In Concert, is, AIMA claims, the most extensive undertaken by the association into the design of manager remuneration, investment terms and other methods of deepening the relationship with investors.
Hedge fund managers are increasing their investment in technology to create competitive advantages and address regulatory and operational concerns, according to a new study by KPMG International, the Alternative Investment Management Association (AIMA) and the Managed Funds Association (MFA).
The study polled more than 100 global hedge fund managers representing approximately $300 billion in assets under management (AUM) and found that 90% of these firms are investing in technology to improve controls and compliance. A similar amount, 88% of respondents, said that efficiency objectives were their top reason for investing in technology.
Managed futures traders gained 0.71% in February according to the Barclay CTA Index, which is compiled monthly by BarclayHedge. Year to date, the Index has decreased 0.02, however in February, Five of the eight CTA indices had gains. Meanwhile, hedge funds were up 0.99% in February according to the Barclay Hedge Fund Index, which is now up 2.38% after the first two months of 2017, its best start since 2013 when it had gained 2.77% by the end of February.
The major liquidity providers in FX are looking at their client tail - and the sharper, or smarter, traders are being cut. Part of me thinks these traders should take their chances with the other professionals, but I am worried that some - as evidenced by a recent conversation - have this view about asset managers and corporates. Of course tensions exist in relationships between provider and consumer but the solution should be simple and not to the detriment of the wider world.
Speakers at the Alternative Investment Conference earlier this week spoke out in defense of hedge funds after years of muted performance from some of these firms.
According to the Barclay Hedge Fund Index, which looks at reported data from over 1,000 hedge funds and averages out performance, indicates that the industry has only produced double-digit returns once in the past five years. Over the past three years, the index shows returns of 2.88%, 0.04% and 6.10%, respectively.
Yet speakers at the New York event, hosted by AIA Group, insisted that there is still value to be found by investing in hedge funds.
The retail FX sector has long bothered me, as regular readers can attest, and my distaste for many providers in the sector was only heightened when one offered me “expert comment” on what will likely to happen to the euro in the wake of Sunday’s French election result…on Wednesday. This is so detached from the reality of the modern FX market that it makes me wonder how this firm thinks it is providing good service by offering “commentary” almost four days after the results?
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.
It feels like the trend of bankers leaving the industry to start hedge funds could be accelerating with two senior figures apparently leaving to do just that. It’s an interesting time to make a change because while there are plenty of incentives for traders to leave banks, there are just as many challenges in the hedge fund world – albeit of a different nature.
The perception is that hedge funds are struggling and losing assets thanks to that under-performance and that may be the case across the industry, however I suspect it’s just a few headline big names that are creating that perception.
CTAs have, generally, not been doing well in 2017, judging by the major indices that track their performance. Profit & Loss deputy editor, Galen Stops, relays a conversation that he had with a portfolio manager at one alternative investment firm (with AUM of over $10bn) to illustrate why some investors are very negative about the outlook for investing in these firms right now, even beyond the immediate problem of low returns.
For a more in-depth look at some of the challenges facing CTAs and the trends that are shaping this segment of the market, see Profit & Loss' previously published piece: CTA Performance: Decline or Dip?
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%.
In a new survey conducted by BarclayHedge, two thirds of the hedge fund respondents said that are not planning to invest in cryptocurrencies, despite the current hype around these digital assets.
The survey of 119 hedge fund managers and CTAs was conducted between September 11 and September 29, 2017.
Managers were asked if they currently invest in or plan to invest in cryptocurrencies. In total, 68% answered “No,” while 24% responded that they either currently invest or plan to invest within the next six months. A further 8% replied, “We’re studying the situation.”
Following the improvement in performance in October, the Societe Generale Prime Services CTA Index continued its positive run as it was up +0.30% in November, increasing gains for the year to 1.77%.
Trend followers also made further gains, as the SG Trend Index posted the strongest performance in November, up +0.59% and now +0.75% for the year.
However, short-term strategies continued to face challenging market conditions and ended on average, down -1.07%, pushing losses this year to -6.23%. Performance was mixed across all CTA strategies, as approximately half of trend following, and non-trend CTA managers generated positive returns in November; and despite the dip in index performance, three out of the 10 short term strategies ended the month positive.
Hedge Funds gained 1.21% in December according to the Barclay Hedge Fund Index compiled by BarclayHedge. The index was up 10.44% at the end of 2017.The Barclay Fund of Funds Index gained 0.66% in December, and ended the year with a positive return of 6.20%.Overall, 2017 was a good year for hedge fund performance, with the strongest annual return since an 11.12% gain in 2013 and 10.88% gain in 2009. All 17 of Barclay’s hedge fund indices ended the year in positive territory.
The flash estimate for the Barclay CTA Index, compiled by BarclayHedge, indicates a 0.54% gain in December. The CTA Index ended 2017 with a 0.69% gain.
“December’s 1.11% rise in the S&P 500 Index extended its unprecedented winning streak to 14 consecutive months and helped push trend traders’ returns a bit more into the black for 2017,” says Sol Waksman, founder and president of BarclayHedge.
He adds: “Continuing uptrends in energy and base metals were the main profit contributors from the commodity sector.”
Diversified traders gained 0.93% in December, systematic traders were up 0.40%, discretionary traders added 0.36%, and agricultural traders rose 0.23%.
Hedge Funds gained 2.11% in January according to the Barclay Hedge Fund Index compiled by BarclayHedge, continuing a strong end to 2017 and extending the Index’ winning streak to 15 months.
The longest consecutive streak of profitable months for the Index was the 18-month period from October 2002 through March of 2004. The current streak has produced a gain of 14.9% for the Index versus 25.7% during the record 18-month streak.
All 17 Barclay hedge fund indices started the year in positive territory.
Hedge funds have produced more consistent and steadier returns than equities or bonds over both the short term and the long term, according to new research by Preqin, the data provider, and the Alternative Investment Management Association (AIMA), the global representative of alternative investment managers.
The organisations found that hedge funds have out-performed equities and bonds on a risk-adjusted basis over one, three, five and 10-year periods. Risk-adjusted returns, represented by the Sharpe ratio, reflect the volatility of the returns as well as the returns themselves.
The Alternative Investment Management Association (AIMA), has published a position paper entitled Brexit and Alternative Asset Managers: Managing the Impact.
The paper offers a detailed assessment of what will need to be addressed during the transition period that has recently been agreed between the UK and the EU. AIMA says it believes that addressing these points will minimise disruption for UK fund managers and EU investors when the UK leaves the EU.
The analysis is based on the assumption that the UK will leave the EU’s single market and that many existing cross-border provisions in EU legislation will cease to apply for UK firms.
Some of the most senior men and women in the global hedge fund industry have put forward their collective vision of the hedge fund firm of the future in a new report published by the Alternative Investment Management Association.
The paper, Perspectives: Industry Leaders on the Future of the Hedge Fund Industry, is sponsored by Aberdeen Standard Investments, the global investment company and is based on what AIMA terms “candid and wide-ranging conversations” with 25 of the leading figures in the industry.
Citi’s Ayesa Latif, EMEA head of institutional e-FX sales and global head of LM e-Rates distribution, and David O’Byrne, FX global product head – Citi Velocity, talk about building a hedge fund-friendly platform.
Profit & Loss: Broadly speaking, what do hedge funds want from a single-dealer platform?
Ayesa Latif: Efficient use of limited desktop real estate is a key concern, which is why they require a full product offering so they can have everything they need up on the screen at the same time.
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.
Thus far, despite the hype and excitement around cryptocurrencies, most CTAs haven’t exactly been in a rush to start trading these assets. However, as Galen Stops reports, this might be about to change.
As Cboe and CME both prepared to launch bitcoin futures contracts in December 2017, the price of a single bitcoin roared upwards to peak at over $19,000.
For retail investors, the attraction of this particular cryptocurrency was that the price had been going up all year, having traded at around $985 per bitcoin in January of last year. For professional traders, the attraction of bitcoin was that it was an asset that was actually moving, it was uncorrelated to other assets and therefore offered diversification benefits and, on top of all this, was almost exclusively being traded by retail punters.
The increasing use of AI technology is likely to create incumbent firms that dominate markets, said panellists at the Profit & Loss Forex Network New York conference. However, they also said it might not be the biggest firms in the markets today that become these incumbents.
“I think [AI] is changing the landscape quite a bit,” said Andrej Rusakov, a partner at Data Capital Management, a hedge fund that uses AI tools to develop trading strategies. “People who are missing the wave are going to be left behind, I don’t think there’s any question about it. I think that human day traders will be wiped out, if they’re not already.”
Despite a decline of investment into actively managed FX funds in recent years, speakers at the Profit & Loss Forex Network New York conference expressed optimism for these funds.
Chris Solarz, a managing director at Cliffwater, a firm that provides investment advisory services, explained that hedge fund strategies in general have struggled to outperform indices since the financial crisis, both on an absolute and relative basis.
“Someone mentioned on an earlier panel that it’s not fair to compare hedge fund strategies, hedge fund indices, to the S&P - but in the industry 10 years ago, that’s not at all how we were selling it.