Hedgeweek Interviews

Syndicate content
Updated: 3 weeks 2 days ago

Hedge fund assets hit all-time high at end of Q3, despite USD2.5bn in redemptions in September

Fri, 10/20/2017 - 11:18

Despite redemptions of USD2.5 billion from hedge funds in September, Q3 ended with USD12.5 billion of inflows and the industry sitting at an all-time peak AUM, according to the latest Hedge Fund Industry Asset Flow Report from eVestment.

The proportion of funds losing assets in September was the highest of the year, and highest since December 2016. However, the proportion of managers who lost greater than 2 per cent, or greater than 5 per cent of their total AUM due to outflows was nowhere near the level seen in December. The proportion of all funds that lost greater than 2 per cent of assets from redemptions was almost right on the annual average, while the proportion of large funds losing a meaningful amount of AUM was well below their 2017 average.
Macro funds have been, and still remain, investors’ primary allocation target of 2017, but losses among some larger funds appear to have taken their toll. 61 per cent of macro strategies had redemptions in September, compared to only 48 per cent facing net outflows for the year. Each of the largest asset losers in September have produced performance losses YTD in 2017. Despite the elevated redemptions in September, several funds still received meaningful new allocations during the month.
Managed futures fund flows were negative for a third consecutive month as revised August data ultimately showed a slight outflow that month. Outflows in September were elevated, and nearly 70 per cent of reporting managers faced redemption pressures during the month. Performance has undoubtedly been the culprit, and while that part of the picture had improved in July and August, losses returned in September. The outlook to year-end for managed futures fund flows does not have many supporting factors at the moment.
The revival of long/short equity strategies accelerated into the end of Q3 with the strategy’s largest monthly inflow since February 2014. While the story on the strategy for 2017 had been of large, but targeted allocations to large funds, and to those with an emphasis on quantitative approaches, inflows in September were much more widespread. More than half of reporting managers saw net new money come in during September, and those with net inflows for the year improved to near 40 per cent.
Three months after four consecutive months of performance losses ended in June 2017, commodity managers faced their largest redemptions since November 2012 to end Q3. Net inflows for the quarter, and for the year, remained positive after September’s outflow, however with performance losses again in September, the future is less rosy.
After two months of light outflows, September’s EM inflow was the largest in twelve months. It appeared that, after redemptions in July and August, the resurgence of flows into EM hedge funds which had only started in May, had fizzled. September’s allocation, however, more than offset the prior two months’ redemptions. But a closer look at the numbers shows that inflows were very much isolated within a small handful of funds as the majority of products still faced redemption pressures. Allocations were greatest to products focused on EM credit markets.
About 50 per cent of reporting China-focused funds had inflows in September, which is slightly better than the overall hedge fund industry. Flows from reporting managers were net positive during the month, but only a small proportion had meaningful new allocations. 

offResults and performanceFundsFlag: alphaq

Hedgeweek Global Awards 2018 - Vote now!

Fri, 10/20/2017 - 07:35

Voting for the for the 2018 edition of the annual Hedgeweek Global Awards is now open. These prestigious awards recognise excellence among hedge fund managers and service providers around the world.

Uniquely, our awards are based on a 'peer review system' whereby our readers – including institutional and high net worth investors as well as managers and other industry professionals at fund administrators, prime brokers, custodians and advisers – are invited to elect a 'best in class' in a series of categories via an online survey.

Please make your nominations by completing this survey. 

Please note that you can self-nominate and participate in more than one category.

Award winners will be the companies with the most votes in each of the categories at the end of the voting period. The Hedgeweek Global Awards 2018 provide an excellent opportunity to highlight a company you feel has excelled during the past 12 months and provides a key marketing opportunity for winners. 

The Awards ceremony in London in March 2018, will be covered, along with profiles of the winning companies, in a Hedgeweek Awards Special Report that is distributed to investors and intermediaries globally.

We look forward to announcing the winners in due course.



Apex Fund Services to acquire Deutsche Bank’s Alternative Fund Services business

Fri, 10/20/2017 - 06:03

Apex Group’s Apex Fund Services is to acquire Deutsche Bank’s Alternative Fund Services (AFS) business, a deal that will add USD170 billion in AUA and make Apex the eighth largest fund administrator in the world, and the largest independent administrator.

The deal reveals the rapid expansion of Apex since the company was recapitalised by Genstar Capital and simultaneously acquired Equinoxe Alternative Investment Services. The purchase of the AFS business is the most recent significant step in Apex’s movement towards its stated goal of being a top five global fund services business.
Apex’s global reach and connected operating model opens up an additional 18 investment jurisdictions to AFS clients, with local expertise available through the Apex network of offices. The combination of AFS and Apex will also enable a broader range of products and services to be offered to clients. Apex’s local service delivery model, coupled with AFS’ management, staff and platform, will ensure client service continues at the highest level. It is this service model and the global network of offices that has enabled Apex to achieve one of the fastest organic growth rates in the sector. Terms of the agreement are not being disclosed. The transaction is expected to close in the second quarter 2018.
“This is another significant step in the evolution of the Apex Group. This transaction complements the existing Apex business and further strengthens our position as the leading independent provider of fund services globally,” says Peter Hughes (pictured), Founder and CEO at Apex. “This acquisition is consistent with Apex’s ongoing commitment to continued strategic investments and to developing our product offering to become the most complete partner in the sector.”
“The Apex team is working closely with Deutsche Bank to ensure a seamless transition and we are committed to providing our new customers with the same high level of service our current Apex customers have come to expect and delivering additional and tailored services to the AFS clients. Apex’s philosophy for delivering tailored and client-centric service on a local level remains the same. We are delighted to welcome the AFS management and staff to Apex and look forward to continuing to develop our global team as we step closer to our target of becoming one of the world’s top five largest fund administrators,” adds Hughes.
Tony Salewski, Managing Director of Genstar Capital, says: “We are excited to continue supporting Apex’s growth trajectory through the acquisition of this high-quality business. AFS expands Apex’s sophisticated private equity and real estate servicing offering, and adds complementary banking products to Apex’s global client base. The combination yields benefits to the clients of both Apex and AFS.”
“A key goal with this transaction was to find a partner that will continue to deliver high quality services to our Alternative Fund Services clients. We feel we have achieved our objective with Apex, with whom Deutsche Bank is looking forward to working closely over the coming months,” says Satvinder Singh, Global Head of Securities Services at Deutsche Bank.
Macquarie Capital acted as exclusive financial advisor and Willkie Farr & Gallagher provided legal counsel to Genstar and Apex. Deutsche Bank acted as financial advisor and Freshfields, Bruckhaus Deringer provided legal counsel to Deutsche Bank.

offDeals and TransactionsAcquisitionsServicesFund administration

JonesTrading appoints head of capital introduction

Fri, 10/20/2017 - 03:00

JonesTrading Institutional Services has appointed Bob Becker as a Managing Director, Head of Capital Introduction based in New York.

In this role, Becker (pictured), will be responsible for building the firm’s Capital Introduction offering – the focus will be on alternative investment managers, institutional investors, and family offices. Becker has held similar senior roles at other firms including Jefferies. He has also previously worked in the outsourced COO/CFO industry and on the buyside including launching and managing his own hedge fund.
JonesTrading is a relatively new but rapidly growing player in the Outsourced Trading and Prime Services businesses after recruiting industry veterans Jeff LeVeen (KCG/CITI) and Andrew Volz (Wells Fargo/Merlin Securities) to lead the offerings. 
Alan Hill, CEO of JonesTrading, says: “Bob’s appointment is the next key step in our strategic plan to build our leading institutional brokerage platform offerings in prime services and global outsourced trading. Bob’s extensive network and experience in capital introductions adds tremendous value to our existing services. His experience will complement our approach in prime and outsourced trading for our emerging and mid-sized manager client base.”

Becker, Managing Director and Head of Capital Introduction, says: “JonesTrading is the perfect platform for my background and relationships. Given the long history of the firm and the quality and diversity of the current client base we can identify relevant managers and investors efficiently, while adding value to both.”

offMoves & Appointments

Man Numeric expands UCITS offering with launch of Man Numeric European Equity fund

Thu, 10/19/2017 - 04:25

Man Numeric, Man Group’s quantitative equity investment manager, has launched the Dublin-domiciled Man Numeric European Equity fund, its fifth UCITS-compliant vehicle for the European market.

The Man Numeric European Equity fund provides investors with access to Man Numeric’s European Core strategy, which launched in 2002. The investment strategy aims to outperform the MSCI Europe Index and provide consistent returns over time through quantitative, bottom-up stock-selection from a broad stock universe of about1,300 names, via a fundamental, systematically implemented, investment process.
Overseen by portfolio managers Greg Bunimovich, Ori Ben-Akiva and Mickael Nouvellon, the strategy utilises a combination of proprietary Valuation and Information Flow models to select stocks. The disciplined portfolio construction process is designed to capture alpha while managing sector, country and stock-specific risks.
Shanta Puchtler (pictured), President and CEO of Man Numeric, says: “The launch of the Man Numeric European Equity fund further expands our range of alpha-generating strategies available to European investors. The fund provides investors with access to our European Core strategy, one of Man Numeric’s longest running strategies. As Man Numeric continues to grow and develop as part of Man Group, the launch of UCITS-compliant vehicles is an important step in our increasingly global and diversified offering for clients.”

offFundsLaunches & Fundraising

September gain of 0.42 per cent takes hedge funds to +5.33 per cent YTD, says Eurekahedge

Wed, 10/18/2017 - 03:39

Hedge funds were up 0.42 per cent in September, with 2017 year-to-date gains coming in at 5.53 per cent, according to the October 2017 Eurekahege Report.

Total hedge fund assets grew by USD157.52 billion over the past nine months with USD83.1 billion attributed to investor inflows while managers posted performance-based gains of USD74.4 billion. The industry's total assets currently stands at USD2.38 trillion.
Long/short equities mandated hedge funds led the table for the month with gains of 1.46 per cent. On a year-to-date basis, long/short equities hedge fund managers also topped the tables gaining 9.00 per cent. Year-to-date investor allocations for long/short equities hedge funds currently stand at USD18.9 billion, the highest year-to-date net inflows among strategic mandates this year.
CTA/managed futures hedge funds declined 1.37 per cent this month and down 0.76 per cent year-to-date, the mandate's worst year-to-date returns on record with its sub-group of commodity focused strategies down 1.22 per cent while trend following strategies declined 3.10 per cent. CTA/managed futures managers posted performance-based losses totalling USD7.1 billion this year while net inflows totalling USD12.7 billion were recorded over the same period.
nsurance-linked securities (ILS) hedge funds registered losses of 5.08 per cent in September and down 3.29 per cent year-to-date as managers portfolio was affected by US hurricane exposure. While some funds have already posted losses in August and September, the full degree of damage from Harvey, Irma and Maria would only truly reveal itself in the coming months. For details see our latest Strategy Profile on ILS Hedge Funds.
New fund launches activity has been slowing down, with 421 launches over the first three quarters of 2017 which compares to 543 and 658 launches over the same period in 2016 and 2015 respectively. Meanwhile pressure on fees remains with the average new fund startup charging 16.9 per cent of performance fees, down from 18.2 per cent last year as increasing competition within the hedge fund industry continues.
The USD543.0 billion European hedge fund industry grew its AUM by USD37.1 billion as of September 2017 year-to-date, following a steep contraction in AUM of USD27.0 billion in 2016. Managers investing with a dedicated European mandate were up 5.89 per cent for the year following a flat gain of 0.25 per cent in 2016.
As of September 2017 year-to-date, Asian funds have recorded a growth in AUM of USD16.23 billion, with USD10.8 billion accounted for by performance-based gains while the remainder, roughly USD5.4 billion has come through net investor allocations. Asia ex-Japan managers are up 14.87 per cent for the year, leading the table among strategic mandates with underlying Greater China and Indian managers up 22.16 per cent and 19.36 per cent year-to-date respectively. Japan focused funds are up 8.83 per cent over the same period.
Strong investor inflows were recorded since the start of the year for the USD1.59 trillion North American hedge funds industry with total investors allocations for 2017 year-to-date stood at USD51.2 billion. A total of USD4.1 billion outflows were recorded on the same period last year ending September. For more details, please refer to the North American Hedge Funds report.

offResults and performanceFundsFlag: alphaq

CFTC releases positive results of clearinghouse settlement liquidity stress tests

Tue, 10/17/2017 - 06:08

The US Commodity Futures Trading Commission (CFTC) has issued a report detailing the results of an evaluation of settlement liquidity at clearinghouses. All of those tested including CME Clearing, ICE Clear US, and LCH, demonstrated the ability to generate sufficient liquidity to fulfil settlement obligations on time.

The purpose of the analysis was to assess the impact of a hypothetical extreme but plausible market scenario on the ability of three clearinghouses to meet their settlement obligations on time. It is the second systemic stress testing report issued by CFTC, following its Supervisory Stress Test of Clearinghouses published in November 2016. 

The analysis encompassed cleared futures and options, and interest rate swaps. It assumed the default of the same two systemically important clearing members at each clearinghouse. Both the house accounts and customer accounts of these clearing members were analysed. It used actual positions and collateral as of August 16, 2017.

CFTC staff designed and performed the stress test internally. Staff provided the clearinghouses an opportunity to comment on the results. Each clearinghouse provided an analysis of how it would generate sufficient liquidity to meet variation margin needs. Staff contacted at least one liquidity provider listed by each clearinghouse.

The clearinghouses generated funds in a number of ways. The range of methods included: (i) using cash received from maturing reverse-repurchase agreements, (ii) selling collateral, (iii) accessing cash balances at a commercial bank, (iv) accessing cash balances at a central bank, (v) converting one currency to another, and (vi) entering into repurchase agreements. The three clearinghouses used different combinations of these methods.

In instances where multiple DCOs used the same methodology or the same firm to meet liquidity demands, staff concluded that the cumulative size of liquidity requirements in this scenario would not impair the ability of each clearinghouse to meet its settlement obligations.

The analysis does not draw conclusions as to whether individual clearinghouses meet regulatory requirements for liquidity. It also does not imply any new standards for clearinghouse liquidity, nor does it address types of liquidity other than the ability to meet settlement obligations. It therefore doesn’t address the capacity of derivatives markets to handle large trades if a clearinghouse needed to liquidate positions.  Future exercises will address these and other types of risks.

Supervisory stress tests are just one element of the CFTC’s program of oversight of clearinghouses.  Staff performs daily risk surveillance of individual clearinghouses, clearing members, and large market participants. Staff performs periodic compliance exams of clearinghouses. Staff reviews clearinghouse rules, including rules relating to margin and risk management procedures, for compliance with statutory requirements. Staff also develops and implements regulatory standards for clearinghouses and their members. CFTC staff also participates in or leads several domestic and international regulatory initiatives related to clearinghouse strength and stability.

offNorth America

So far so good for hedge funds in 2017

Mon, 10/16/2017 - 02:05

The Lyxor Hedge Fund Index was up 0.8 per cent for October, with six out of nine Lyxor indices in positive territory according to the company’s latest Alternative Investment Industry Barometer.

Global Macro funds recovered with all portfolios contributing to the performance. CTAs underperformed, hit by rising bond yields and the strengthening of the USD.
“While 2015/16 proved challenging for active investors, 2017 is offering a much better vintage for the hedge fund industry,” says Jean-Baptiste Berthon (pictured), Senior Cross-asset Strategist, Lyxor Asset Management. “Market drivers were less speculative (fading influence from politics and monetary decisions), which led assets to trade closer to their fundamentals. Firming global growth momentum spurred more directionality. Economic divergences widened across regions, offering more relative opportunities. Major central banks confirmed they will start normalizing their policies. It could lift a key barrier for alpha generation.
“This better backdrop helped hedge funds produce more sustainable alpha throughout the year. They rank favourably against most of their multi-strategy peers in risk-adjusted performance and offered more diversification with less correlation vs. mainstream asset classes and across hedge fund strategies.”  

offResults and performanceFunds

Man Group assets up 28 per cent over the third quarter

Fri, 10/13/2017 - 04:58

Man Group’s trading statement for third quarter 2017 revealed funds under management of USD103.5 billion, up 28 per cent year to date from a 30 June figure of USD95.9 billion.

The largest publicly listed hedge fund saw the quarterly net inflow of USD2.8 billion come into alternative risk premia and emerging market debt strategies, and a total positive investment movement of USD3.3 billion in the quarter.

FX movements driven by the weakening of the US dollar against the Euro and Sterling created positive FX movements of USD0.9 billion in the quarter. Man Group has also announced its decision to absorb research costs for the majority of Man’s business following MiFID II implementation in January 2018, at an estimated cost impact of USD10-USD15 million.

The firm also intends to repurchase up to USD100 million of shares and plans to look for further acquisition opportunities.

Luke Ellis (pictured), Chief Executive Officer of Man Group, says: “The third quarter of 2017 was a period of strong alpha generation for Man, with positive performance across the firm. As expected the pace of inflows and the level of margin compression both moderated during the quarter. Inflows remained strong overall and were focussed on some of our newer strategies, in particular alternative risk premia. We devote significant efforts to developing innovative solutions, and we are pleased to see our clients’ enthusiasm for these newer offerings.
“Looking forward we continue to see a decent level of interest from clients, with our normal caveat that flows are likely to be uneven quarter to quarter.”

inhouse contentResults and performanceInvesting in Hedge FundsFunds of Hedge FundsFlag: alphaq

Wilshire Liquid Alternative Index up 0.32 per cent in September

Thu, 10/12/2017 - 05:05

The Wilshire Liquid Alternative Index, which provides a representative baseline for how the broad liquid alternative investment category performs, returned 0.32 per cent in September, underperforming the 0.60 per cent return of the HFRX Global Hedge Fund Index.

The Wilshire Liquid Alternative Index family is a joint offering between Wilshire Funds Management, the global investment management business unit of Wilshire Associates Incorporated, and Wilshire Analytics, creator of the Wilshire 5000 Total Market IndexSM.
“While most strategies performed well this month, CTAs were the one strategy that performed poorly, given the significant move in US rates as well as the reversal of the negative U.S. dollar trend,” says Jason Schwarz (pictured), President of Wilshire Funds Management.
The Wilshire Liquid Alternative Multi-Strategy Index, which includes both single and multi-manager funds, returned 0.30 per cent in September.
The Wilshire Liquid Alternative Global Macro Index, which includes systematic, discretionary, commodity and currency funds, ended September negatively, returning -0.34 per cent, but ended the third quarter positively, returning 0.95 per cent, outperforming both the -1.03 per cent September return and 0.66 per cent quarterly return of the HFRX Macro/CTA Index. Discretionary global macro managers contributed 11 basis points of return, while currency managers contributed 5 basis points. CTAs detracted approximately 50 basis points for the month. As has been the case for most of the year, performance was driven entirely by equities. The equity return was not enough to offset significant losses from currencies and commodities as well as from interest rates. Performance within rates was mixed depending on the speed of the manager’s models in systematic CTAs. Discretionary managers have been able to manage the reversals of trends more effectively than their systematic counterparts.
The Wilshire Liquid Alternative Relative Value Index, which includes credit, convertible arbitrage and volatility funds, finished September up 0.16 per cent, underperforming the HFRX Relative Value Arbitrage Index, which returned 0.25 per cent. Third quarter performance was comparable, as the Relative Value Index returned 0.99 per cent versus the HFRX Index, which returned 1.11 per cent. Credit managers contributed over 30 basis points of return this month, while multi-strategy and convertible managers were relatively flat. Volatility strategies were the largest underperformers, and detracted over 10 basis points due to continued low levels of volatility. Investment grade and high yield credit spreads tightened to lows not seen since 2014, while US Treasury yields moved significantly, from 2.12 per cent down to 2.05 per cent before ending the month at 2.34 per cent as the Fed announced they were sticking to their plan of tightening in 2017 and 2018.
The Wilshire Liquid Alternative Equity Hedge Index, which includes long/short equity and market neutral funds, gained 0.99 per cent in September and 2.33 per cent for the third quarter in 2017, underperforming the HFRX Equity Hedge Index by 1.82 per cent and 3.21 per cent, respectively. Long-biased managers contributed 91 basis points of return while market neutral managers added 2 basis points. Long-biased strategies benefited from rising equity markets, with positive contributions from Information Technology and Energy sector investments. Meanwhile, managers with exposure to the Consumer Staples, Utilities, and REITs sectors underperformed this month, while managers focused on European equities notably outperformed. Growth-oriented strategies also continued to materially outperform value-oriented strategies in September.
The Wilshire Liquid Alternative Event Driven Index, which includes credit, merger arbitrage and special situations funds, ended September up 0.49 per cent and returned 0.44 per cent in the third quarter, underperforming the 0.79 per cent monthly and 1.88 per cent quarterly returns of the HFRX Event Driven Index. Credit strategies added 27 basis points of return, merger arbitrage strategies added 10 basis points, and multi strategy event strategists added 18 basis points. Credit risk was rewarded in September as leveraged credits gained amid spread compression, benefiting both special situation equities and lower-rated high yield bonds. Given the rally in oil this month, investments focused on the Energy sector also notably gained.


Women represent 19 per cent of alternative assets employees

Thu, 10/12/2017 - 04:13

Preqin’s latest overview of women in alternative assets finds that just under one in five employees at fund management firms is female. This rate varies widely by role, and consistently declines according to seniority.

The highest proportion of women is seen among junior employees, where they constitute 29 per cent of the workforce. However, in each asset class the representation of women falls according to seniority, and overall senior alternative assets staff consist of 11 per cent women. In the same way, women are best represented in investor relations/marketing teams, as high as 53 per cent at venture capital firms. The rate of women in investment teams is much smaller, as low as 10 per cent at hedge funds. The board of directors for an average alternative assets fund, meanwhile, only comprises 5 per cent female members.
According to Preqin’s research, women constitute an industry-wide average of 18.8 per cent of alternative assets fund management staff. This varies by asset class, from 17.9 per cent among private equity firms to 20.6 per cent at venture capital firms.
Across all asset classes, the proportion of female employees falls according to seniority. Women make up 29 per cent of junior alternative assets staff, but 23 per cent of mid-level staff and 11 per cent of senior staff.
By role type, the highest proportions of women are all in investor relations/marketing teams. Fifty-three percent of IR staff at venture capital firms and 50 per cent at private equity firms are women, with representation in other asset classes in the forties. By contrast, in almost all asset classes investment teams have the smallest proportion of women. Representation ranges from 18 per cent at natural resources firms to 10 per cent at hedge funds. 

Among senior staff, the average proportion of female employees does not rise above the 11 per cent seen at venture capital firms. Private equity has the lowest rate of senior women, at 9 per cent. This is mirrored in the proportion of women sitting on the boards of directors at alternative assets firms. Across the industry, 5 per cent of firm directors are women.
Amy Bensted (pictured), Head of Hedge Fund Products at Preqin, says:  “The low representation of women at alternative assets firms is an issue that has seen increasing attention over recent years. Traditionally a male-dominated industry, the proportion of female employees across the industry is significantly less than 50 per cent, with only investor relations teams in some asset class approaching or surpassing a rate of equal representation. It is notable that women are best represented in client-facing or finance roles, while the deal making and operations teams are the most male-dominated. Beyond this, what is most striking is that even where women are well-represented among junior staff, this is not translating to more women in senior roles. ”
“The disparity in the rates of junior and senior female staff shows that progression through the industry remains rarer for women than for men. This contrasts sharply with institutional investors; women constitute one in five senior staff at public pensions, and more than one in three at foundations. The industry has some way to go before achieving true parity between genders, and this issue will continue to be closely monitored by commentators and industry bodies over the coming years.” 

offSurveys & research