Hedgeweek Interviews
How AI can help demonstrate hedge funds’ ESG edge to investors
The way in which hedge funds can demonstrate the value of ESG indicators within their portfolios is becoming a key task for managers of all stripes and strategies. A recent webinar, jointly hosted by FIS Global and Hedgeweek ,examined how AI technology can help firms rise to the assortment of challenges arising within this sphere.
The discussion heard how ESG funds have attracted some USD340 billion of net inflows from investors over the past two years, and recent studies suggest up to three-quarters of ESG funds’ outperformance is down to quality metrics.
Against that backdrop, the webinar considered how managers can better utilise data analytics and data tools to demonstrate to investors how they can generate outperformance and boost returns using ESG indicators. This includes not only ramping up their investment frameworks to better screen companies, but also strengthening the ways in which they track and report ESG factors in their portfolios.
Observing how ESG factors should form part of the investment hypothesis when entering into a trade, Trevor Headley, VP, product management, hedge funds at FIS Global – who has worked in technology offerings for hedge funds’ front, middle and back office functions for some 15 years – said accessing timely information is key.
While a “rich ecosystem of data providers” allows hedge fund managers to utilise technology to bring data into their platforms and develop insights, this should be complemented by certain unstructured and alternative datasets.
“That unstructured data, or alternative data, is what is really going to give you the edge in terms of performance,” he explained, adding that AI can serve as an enabler in this area. “Having that real-time view of how sentiment is potentially changing as it relates to some of these factors is incredibly important.”
The discussion also explored how allocators’ assessments of managers’ research and screening processes is rapidly evolving beyond the standard measurement of sustainability factors within company practices.
“As fund selectors, we’re always looking for outperforming funds and looking for why a fund is outperforming,” said Sophie Outhwaite, head of equities and responsible investing at London-based Stanhope Capital. “Our starting point is that we are desperate for ESG-integrated or ESG-focused long/short funds.”
Expanding on this point, Outhwaite believes that AI will become an invaluable tool in the drive for outperformance particularly within the short-selling component of hedge fund strategies.
“It may be a bold statement, but I think it’s relatively easy to put together a long book of companies that you think will help the future arrive. The stock selection may be hard, but you know the themes – we have a very good idea of some of the sustainable, future-oriented, responsible themes now,” she observed.
“But on the short side, the difficulty with most ESG factors is timing - you don’t know when regulation is going to suddenly heat up, you don’t know when investor sentiment is suddenly going to turn. AI gives you the tools to be nimble.”
Arnaud Langlois, portfolio manager of the 1798 TerreNeuve Fund at Lombard Odier Investment Managers in London, has been exploring sustainable investing for some 15 years, having earlier led the ESG research team at JP Morgan in 2005.
“The desire to demonstrate how ESG research can play a big role in delivering alpha has been at the centre of what I’ve been doing both on the sell side and the buyside for the last 12 years running money in the hedge fund space,” Langlois said. “We’ve built our proprietary dataset that captures that. Effectively we can demonstrate that our stock selection based on our model would have probably played a big role in delivering the alpha we generated last year.”
Elsewhere, the discussion touched on greenwashing, ESG integration and exclusion within portfolios, and some of the potential hurdles arising out of the explosion of datasets over the past few years. Both Outhwaite and Headley highlighted the enhanced reporting capabilities of AI.
“Longer term, we will see technology – specifically AI, and not just related to ESG – moving up the value chain from data aggregation and helping present data towards presenting more detailed insights as to how things are moving and trending,” said Headley.
Langlois added: “I don’t consider myself to be an expert in AI, but I can see the role that can play in the future. Our work has been centred on a few things: we continue to pursue the objective of having a net long exposure to the thematics around decarbonisation, so we’ve done a lot of work internally on net zero targets by 2050, developing some proprietary tools that allows us to calculate the trajectory and footprint of companies.”
Headley said that while the AI-based tech capabilities have evolved, he also cautioned that there are risks, noting there are trading algorithms which often all point in the same direction.
Langlois meanwhile warned that datasets by their nature are often backward-looking, adding: “You can’t rely too much on data providers to tell you what the future will look like.”
FIS delves deeper into understanding how leveraging new technology and streamlining infrastructure will help you overcome the challenges hedge funds are facing as demand for sustainable investment strategies continues to soar.
Broaden your knowledge even further by clicking here.
Like this article? Sign up to our free newsletter Author Profile Related Topics Technology & software solutions Robotics & AI WebinarsEEX Group reports monthly volumes for July 2021
July volumes for EEX Groiup's Intraday Power markets grew by 12 per cent y-o-y, with Spanish Power Futures up by 22 per cent.
As of 27 September, EEX will extend calendar year expiries for this market as well as for German and Italian Power Futures to 10 years, to facilitate long-term hedges
EEX has also reported a continued increase in the UK (+77 per cent), Nordics (+94 per cent) and Austrian (+155 per cent) Power Futures, while Japan Derivatives Power is still extremely bullish with 362.5 GWh.
European Natural Gas Spot and Derivatives are up 27 per cent and 9 per cent respectively with Dutch TTF hub as main growth driver.
Double-digit growth rates have been seen in spot trading across majority of market areas: Austrian CEGH +44 per cent, German GASPOOL and NCG +25 per cent and +26 per cent, Dutch TTF +32 per cent.
New EGSI Futures meanwhile have reported increasing interest since launching in June, reaching 128.0 GWh last month.
US environmental markets posted a 57 per cent volume increase, with volumes from REC contracts on Nodal Exchange continuing to drive growth. A total of 8,998 contracts were traded in July, up 37 per cent y-o-y. REC open interest topped 20 per cent market share for the first time in July.
Hedge fund manager Florian Court Capital partners with Abu Dhabi Investment Office
London hedge fund manager, Florin Court Capital, is expanding into the UAE by partnering with the Abu Dhabi Investment Office (ADIO) under its USD545 million Innovation Programme.
As part of the deal, Florin Court will establish its new trading, research and operations hub in the Abu Dhabi Global Market (ADGM), the Emirate’s international financial centre and expand their international footprint from Abu Dhabi. This follows the UK’s post-Brexit investment partnership deal with the UAE, announced earlier this year and demonstrates a further strengthening of ties between the UK’s leading asset managers and the Gulf state.
ADIO is looking to emerge as a global financial hub by assisting in Florin Court’s global expansion. Already home to three of the largest sovereign wealth funds in the world and with two thirds of the world’s population within a four hour flight, Abu Dhabi sees itself as as being uniquely positioned to assist UK companies looking further afield in a post-Brexit landscape.
Juma Al Hameli, Chief Strategy & Business Development Officer at ADGM says: “ADIO’s partnerships with Florin Court is testament to the strength of ADGM’s holistic business ecosystem which enables business to thrive through a collaborative approach. With our progressive regulatory and licensing regime, we are proud to make tangible contributions to the realisation of Abu Dhabi’s great investment potential. We look forward to seeing the new partnerships flourish and will continue to develop pathways for companies and entrepreneurs to achieve their aspirations."
Dr Douglas Greenig, CEO and Co-founder of Florin Court, says: “At Florin Court, we strive to innovate – applying the best techniques from data science to alternative markets that are off the beaten path to give our investors better returns and superior risk control. Abu Dhabi was the first choice for our new technology, research and trading centre. It is an outstanding place for innovation and growth. It is a city on the move. We want to be part of Abu Dhabi’s success story as a global financial hub. We are grateful for the strong support of ADIO and look forward to taking the next steps in our growth in one of the world’s most dynamic cities.”
Like this article? Sign up to our free newsletter Related Topics Deals & TransactionsHorizon Software expands presence in the Middle East with the support of Business France
Horizon Software, a provider of electronic trading solutions and algorithmic technology, has partnered with Business France Middle East, to expand the range of services on offer to clients based in the MENA region.
The choice to collaborate with Business France is strategic, and fits into the wider business goals of Horizon, supporting the growth and development of their global presence. Business France will play a major role in strengthening client relationships and facilitating business opportunities for Horizon in the MENA region. This will allow Horizon’s technology to be deployed on a larger scale, providing sophisticated services to a wider range of clients.
For the past four years, Horizon Software have invested a tremendous amount of energy in developing the region, led by Damien Jenner, Managing Director and Head of Sales. Becoming the FinTech provider of reference in the MENA requires dedication, professionalism, commitment, and values which are at the heart of Horizon. As such, Horizon has chosen to collaborate with Business France to enhance their presence in the region. This decision works in conjunction with the next key milestone, which will be to open an office to support clients on a local basis.
Headquartered in Dubai, Business France Middle East is part of a national agency that supports the international development of the French economy through fostering expert growth of French businesses, and facilitating international investment.
Anne-Laure Bouhadef, Key Account Manager at Business France, says: “We are delighted to begin collaborating with Horizon Software, and are excited to work together to support their regional expansion. Horizon’s expertise has already contributed significantly to the growth and dynamism that we see in the financial technology sector in the MENA Region.”
Damien Jenner, Head of Sales at Horizon, says: “We are honoured to work with Business France Middle East and we look forward to exploring how our technology services can benefit our clients based in the MENA region.
“Understanding the challenges of the financial markets in Middle East is our top priority, and working with Business France will ensure that we address them efficiently.”
Aries I Acquisition Corporation appoints hedge fund veteran as new director
Aries I Acquisition Corporation (Aries) has appointed Andrew Lester to its Board of Directors, and Chris Perry to serve as an adviser to the Board.
Lester has over 40 years of experience building and managing businesses. Along with his brother Mitchell, he built a 10-person team at Donaldson, Lufkin & Jenrette (DLJ) that specialised in providing research coverage to hedge funds, family offices, and managing retail capital for 17 years. After DLJ was sold to Credit Suisse, the Lester Brothers’ team moved to ABN-AMRO where Andy was Managing Director and Co-Head of Hedge Fund Sales and Research.
Subsequently, Leser was COO of Sigma Capital, a division of SAC Capital Advisors, and later a Portfolio Manager at the firm responsible for investing in syndicate deals globally. Lester has also served as COO of Convector Capital, was the co-founder of two hedge funds, and was Co-Head of Origination & Investments at ShareNett, a multi-family office investment platform.
He earned a BS in Accounting from Brooklyn College, a MBA from the State University of New York at Albany and is a Certified Public Accountant in the State of New York.
Perry is a highly experienced CEO, digital entrepreneur and digital marketer. Currently, he is Co-Founder of Machine Capital, an investment and incubation company focused on building the leading quantum and artificial intelligence ventures that apply advanced technologies to solve previously intractable human and business challenges.
Perry founded one of the first UK digital marketing agencies in 1996 and built it into one of the largest UK specialists, which was later acquired by Razorfish. When Razorfish was ultimately sold to Microsoft, Perry was retained by Microsoft to lead the enterprise sales team across their key clients.
Subsequently, Perry created one of the first joint venture startups with WPP and Fabric, which built digital marketing automation platforms and data unification capabilities for WPP’s top ten clients. He also led the UK office of Wunderman. He is also an active investor and advisor to both early and growth-stage companies in the data-centric/AI/ Machine Learning sectors.
Aries Founder and Chairman Thane Ritchie says: “We have assembled a phenomenal team that combines deep understanding of the complex, interconnecting, and overlapping dynamics of emerging technologies with exceptional expertise in the financial markets. We are thrilled to have the benefit of Andy’ and Chris’s insight and advice as we continue our search for exceptional investment opportunities that are well positioned for outsized growth and sustainable profits.”
Like this article? Sign up to our free newsletter Related Topics Moves & AppointmentsB Riley Financial acquires 272 Capital
B Riley Financial, a diversified provider of business advisory and financial services, has acquired the investment advisory business of 272 Capital.
Led by Wes Cummins, the growing registered investment advisor employs an in-depth primary fundamental research approach to its long/short investment thesis, specialising in small cap equity securities. This addition closely aligns with B Riley's focus on active small cap management and serves to complement both firms' investment offerings for institutional and individual high-net-worth clients.
Bryant Riley, Chairman and Co-Chief Executive Officer of B Riley Financial, says: "Expanding our asset management base remains one of our highest priorities. Wes and the talented team at 272 Capital have established a successful small cap investment strategy that has yielded strong returns in its first year. This combination represents an important area for growth on our platform, and an equally exciting opportunity for the institutional and retail investors we serve. We have known and worked closely with Wes for over 20 years and could not be more pleased to welcome him back to the firm."
In addition to managing 272 Capital, Cummins will serve as President of B Riley Asset Management, helping to oversee the investment strategy of BRC Partners Opportunity Fund, a private fund that leverages the insight, expertise, and resources of B Riley's affiliates. The fund has had a strong track record of performance since its inception in 2015. Together with its existing funds, and as sub-advisor to B Riley's private fund, 272 Capital manages over USD270 million in assets.
Cummins has held several positions of increasing responsibility at B Riley during an earlier nine-year tenure with the firm. He previously joined in 2002 as a publishing equity research analyst covering the technology hardware sector, became B Riley's Director of Research, and eventually served as President of the firm for several years. Prior to forming 272 Capital in 2020, he spent eight years as a senior investment professional at Nokomis Capital focused on the TMT sectors and led several of the firm's structured investments, special situations, and shareholder activist positions.
Cummins says: "This combination reflects the core focus of both our firms: fundamental research and small cap value. Having followed the development and trajectory of the firm over the past several years, B Riley has truly distinguished itself as the leading small cap platform in the US Growth in passive investing has created even more opportunity for the diligent active manager, and joining B Riley allows 272 Capital to benefit from an expanded capital base and additional resources offered by a broader platform. I look forward to working closely with Bryant in growing our asset management business and in contributing to B Riley's continued success."
NorthRock unveils hedge fund platform for “high potential” emerging managers
Alternative investment platform NorthRock Funds has unveiled a multi-manager vehicle which aims to offer institutional investors access to what it calls “high potential” emerging hedge fund managers running a range of innovative and niche investment strategies.
The new vehicle will provide access to capital, operational infrastructure, and global distribution for hedge fund managers in their early stages, with track records of between two and three years, average annual returns of 20 per cent annual returns, and 7-10 per cent annualised volatility.
Amin Naj, head of NorthRock, believes the scientific innovation in asset management is taking place predominantly in smaller firms, particularly systematic and quantitative investment fields. But he said the risks and challenges of direct investment in emerging managers have proved to be barriers to institutional participation.
“Over the past few years, we’ve come across a lot of managers that we felt we could work with, but it’s always been difficult for investors to access these managers,” Naj told Hedgeweek on Wednesday.
“It’s difficult for these mangers to raise institutional capital considering that most institutional investors and allocators are looking at funds with probably USD1-2 billion before they write a cheque. It’s a combination of operational risk and access to resources and infrastructure.
“What we are trying to do is address that challenge. Northrock is designed to solve that problem.”
The platform, which will target managers in the UK, Europe and Asia, is preparing to launch four sub-funds later this year, spanning a diverse mix of managers and strategies with low correlation to equity and bond markets.
These comprise a global macro strategy, an equity-focused market neutral fund, one manager running an equity-based arbitrage strategy, and a trend-following CTA.
The funds, each of which feature elements of quantitative, AI, and machine learning investment processes, have assets under management ranging between USD30 million and USD120 million.
London-based NorthRock will provide resources and infrastructure built around four key pillars – strategic partnership, performance, liquidity, and risk management.
The Cayman-based vehicle has several different segregated portfolios, Naj explained, adding managers on the platform will benefit both from overall governance and risk management oversight, as well as access to NorthRock’s network of service providers.
“What we do is streamline and standardise the entire lifecycle of the investment,” he said. “Investors can access a selected number of managers and strategies, they can invest in a portfolio that’s completely flexible, and they can manage their entire investment from one centralised platform.”
Like this article? Sign up to our free newsletter Related Topics Funds InvestmentsTalos combines crypto and FX with latest platform addition
Talos, a technology provider for the institutional trading of digital assets, has launched a new feature on its platform that allows its clients to define and trade synthetic pairs that include FX and crypto “legs.”
As a result, Talos’s clients can now trade or provide prices in pairs like BTC-EUR by automatically combining the FX (ex EUR-USD) and the digital asset (ex BTC-USD) legs to derive a cross rate with a tighter spread.
Non-US clients looking to trade between their home currency and crypto will typically encounter wider – if any – spreads. This forces them to trade via more liquid pairs like BTC-USD. Talos’s new functionality significantly streamlines the FX leg, reducing the operational burden and the associated market risk for such scenarios and improving execution costs considerably.
“Digital assets are traded worldwide by the retail sector and institutions alike, but the majority of the liquidity remains in USD-denominated pairs,” says Anton Katz, co-founder and CEO of Talos. "Given the rapidly increasing number of non-US institutional clients we’re now seeing, the ability to trade seamlessly from any fiat currency to any cryptocurrency should significantly reduce trading costs and bring further international players to our platform.”
By marrying FX and digital assets, Talos delivers an efficient, end-to-end solution that effectively gives an investor direct access to a global pool of both FX and crypto liquidity, as well as the ability to move efficiently from asset to asset. Additionally, through Talos’s digital asset trading platform, investors can see all active trading counterparties along with available quantities across all supported FX and synthetic markets. Using the platform’s FX capabilities, the system will arrive at a single cross-rate price based on the quantity required and will then concurrently execute both the FX and crypto components of the transaction.
Katz adds: “We believe that the rise of initiatives like DeFi, Central Bank Digital Currencies, and the tokenisation of traditional asset classes will benefit from a unified technology supporting all of them. The addition of the synthetic crossing functionality is yet another example of our commitment to help institutions interact with this new world through a familiar lens.”
Publicly launched at the beginning of October after a year of live trading with clients, the Talos platform is built exclusively to support end-to-end trading of digital assets – from onboarding to price discovery, execution and settlement – including bilateral access to liquidity providers. Talos offers solutions to meet the needs of both investors and financial service providers, including prime brokers, OTC liquidity providers, lenders, custodians, and exchanges. Clients access the Talos platform via API or GUI, and it is highly configurable to their unique workflow requirements.
DTCC launches enhanced CDS Kinetics platform to provide increased transparency in credit default swaps market
The Depository Trust & Clearing Corporation (DTCC) has launched an enhanced DTCC CDS Kinetics platform to support growing demand for more transparency into the credit default swaps (CDS) market within the over-the-counter derivatives space.
DTCC CDS Kinetics provides position data on credit default swaps sourced from DTCC’s Trade Information Warehouse (TIW), offering notional outstanding, net notional, and trading volume metrics on securities including single-name, index, and index tranche. TIW is a centralised infrastructure for reporting and asset servicing on approximately 98 per cent of all credit derivative transactions outstanding worldwide.
Recognising that credit default swaps are a critical data source for understanding market risk, the DTCC CDS Kinetics service has been enhanced to support increased analysis and understanding of the CDS market. The service, which previously featured point-in-time snapshots of credit default swaps data, has been upgraded to provide over 10 years of historical and time-series data, a new user interface with graphical representations, and the ability to search for CDS instruments by a range of attributes including underlying reference entity, market sector, market type, and geographical region.
“The new DTCC CDS Kinetics platform provides unparalleled transparency into the credit default swaps market, offering unique insights on credit risk that will not only inform trading strategies, but will also help banks better prepare for potential market dislocations,” says Tim Lind, Managing Director of DTCC Data Services. “Now more than ever, it’s critical for firms to begin drawing upon more robust and higher-quality data sources to heighten their risk preparedness and response, as well as their overall business resilience.”
The DTCC CDS Kinetics platform will also be made available in DTCC’s API Marketplace, as part of a planned future platform update. The API “App Store” allows direct programmatic access to DTCC processing functionality and includes comprehensive documentation and training materials to help developers use the APIs.
Lind adds: “We worked closely with clients to develop the new API capability, which will allow users to leverage DTCC’s technology to suit their own business needs.”
Copper.co to open new US East Coast office
Copper.co, a provider of digital asset custody and trading solutions, is expanding its operation in the Americas with the senior appointment of Glenn Barber as Head of Sales & Business Development, and the opening of a new East Coast office.
The London-headquartered startup, founded in 2018, has raised USD84.3 million of funding to date, most recently via a USD75 million Series B, which included a USD25 million extension led by Alan Howard.
Barber joins US-based Business Development Directors Doug Bilyk and Betty Sharples. Together, they will lead the efforts to make Copper the number one choice for US institutions engaged in crypto trading, to safeguard their digital assets securely, and to make the most of trading opportunities via ClearLoop, Copper’s unique exchange clearing network.
Prior to joining Copper, Barber led sales as a consultant at FalconX, an institutional digital asset brokerage, where he built out a global network of clients. Previously, he was the Chief Institutional Officer at Voyager Digital, a publicly-traded holding company whose subsidiaries operate a crypto-asset platform to trade crypto assets.
Barber's blend of experience from over 25 years in global capital markets and three years in digital assets places him well to face the rapidly maturing era of crypto trading and custody, in which institutions previously occupying the traditional finance space are now engaging, but need to do so securely and efficiently. Copper offers a unique trading solution to address these demands via the ClearLoop network.
The unique ClearLoop network was developed by Copper to offer institutional investors the ability to trade with crypto exchanges efficiently and securely. Using ClearLoop, clients can trade directly on exchange without moving their assets out of custody, with settlement occurring on Copper’s infrastructure. This significantly reduces counterparty risk with the venues and makes trading more efficient and flexible. In July this year, FTX, one the world’s largest crypto derivatives exchanges, recently valued at USD18 billion, joined the growing ClearLoop network.
Barber says: “I’m thrilled to be joining the Copper team. Their technology offers a seamless crypto trading and custody solution. I’m particularly excited to be able to offer Copper’s flagship product, ClearLoop, to US institutions, at a time when these firms are really working out how they can securely enter this asset class and trade efficiently. I’m confident that ClearLoop is already developing as the answer that most institutions are looking for.”
Dmitry Tokarev, CEO, Copper, adds: “We’re delighted to welcome Glenn to the team. As we expand internationally in this rapidly maturing market, it is people like Glenn who are best placed to bring our technology to the growing number of crypto traders from the traditional finance space. We look forward to working with him as we further our international expansion.”
CoinShares joins Pyth network
CoinShares International Limited, a European digital asset investment platform today announced, is to contribute real-time crypto pricing data to the Pyth network, a decentralised financial market data distribution platform for aggregated data.
The Pyth network is built on Solana, a blockchain protocol well-suited for timely and effective receipt and distribution of market data used in high frequency trading operations and environments where trust, accuracy, and speed are critical to performance. CoinShares participated in the Solana token sale in Q2 2021 and is evaluating opportunities to migrate core trading and capital markets infrastructure onto the Solana network. By participating in this network, CoinShares is able to contribute its market data directly to the Pyth network where consumers of data can stream it directly from the blockchain, in real time and with a high degree of confidence rather than depending on intermediaries. or third-party aggregators.
Jean-Marie Mognetti, Chief Executive Officer of CoinShares, says: “Since launching the world’s first crypto exchange traded product (ETP) in 2015, enabling effective price discovery has been a key focus for CoinShares. A number of regulators have even cited the perceived lack of transparency related to crypto markets and pricing as a core reason to deny retail access to crypto ETPs and ETFs. Pyth network was an obvious partnership for us, as we continue to execute on our vision to unlock more transparency and establish trust in the broader crypto ecosystem using the underlying blockchain protocol to provide verifiable , trusted, real-time data to market participants.”
CoinShares trades billions of dollars in digital assets per quarter and manages over USD3 billion in assets across multiple asset management platforms for investors in Europe, North America, and Asia. The Company has built its financial technology platform and capital markets infrastructure to enable institutions and individuals’ digital asset exposure by bridging centralised and decentralised finance. CoinShares continues to explore ways of upgrading its market infrastructure through strategic investments by adding new features including staking, yield generation and exposure to new protocols and networks for a wide range of market participants. The Company’s participation in Pyth network is another step towards this broader vision on global markets migrating on-chain to be digitised, interconnected, and operating 24/7/365 in the metaverse.
“As a thought leader in the broader crypto ecosystem with a track record for spearheading innovative solutions for investors, we are grateful for CoinShares’ support and membership in the Pyth network,” says Kanav Kariya, Director of Strategic Initiatives, Digital Assets, at Jump Trading Group. “We believe DeFi will continue to scale and are eager to spur its acceleration through this partnership and many more to come.”
Like this article? Sign up to our free newsletter Related Topics Digital AssetsTwo more legal cases resolved successfully by Europe’s first litigation funding platform AxiaFunder
AxiaFunder, Europe’s first for-profit litigation funding platform, has secured GBP1.9 milliion from investors since launching in January 2019, with a 100 per cent success rate on completed cases.
Co-founded by investment banker Cormac Leech and entrepreneur Sophie Liu, AxiaFunder has fully funded a total of 13 cases via its platform so far, winning all five that have been concluded with an average investor return of 55 per cent, and as high as 94 per cent.
The other eight cases remain ongoing including a software case in Barcelona, AxiaFunder’s first international case. Two further litigation investment opportunities have recently been added to the platform.
The current cases at the funding stage include a shareholder dispute case relating to a high-value house building business, and a group litigation claim against two retail banks the funding is in the process of closing.
Cormac Leech, the London-based company’s co-founder and CEO, says one of the key attractions of litigation funding as a new asset class was the degree to which it did not correlate with the broad economic environment.
He says: “Litigation is not largely impacted by variability in economic growth in the same way traditional assets such as equities and bonds are.
“Indeed, there is an argument that litigation funding provides investors with an attractive alternative in times of economic uncertainty.
“With equities at multi-year highs many investors may think it is a good time to diversify out of equities, and litigation funding is an option for some high net worth and sophisticated investors to consider.
“With the potential high return, investors also need to be aware of the risk of capital loss in litigation funding. Investors can find more information on our website’s risk warning section.”
A multi-stage vetting programme ensures that only those cases with a strong chance of success – approximately one in every 20 cases reviewed by the AxiaFunder team – actually make it on to the platform.
The risk of loss is mitigated by After the Event insurance (ATE insurance), which help to reduce any liabilities of a failed case.
It is compulsory for all cases funded on the platform to have ATE insurance where adverse cost risk exists, and solicitors are typically paid at least partially on a CFA (conditional fee agreement) contingent basis to ensure alignment of interests and to keep costs down.
Like this article? Sign up to our free newsletter Related Topics FundsVoting now open for Hedgeweek Americas Awards 2021
Voting is now underway for the Hedgeweek Americas Awards 2021, which will be announced and celebrated at an exclusive awards presentation ceremony and industry networking event to be held on Thursday, 21 October at The University Club of New York.
The Hedgeweek Americas Awards – hosted by Hedgeweek, with fund manager data being provided in partnership with Bloomberg – recognise and honour excellence among hedge fund managers and service providers in the Americas.
The hedge fund categories cover a wide range of investment strategies – including Equity, Credit, Macro, CTA, Event-Driven, Specialist Sector, Relative Value, Insurance-Linked Strategies, Structured Credit and Multi-Manager – while the service provider categories span all the key areas of the broader hedge fund industry ecosystem.
This year the hedge fund manager award spectrum has been further expanded to include several additional categories – including Women-Managed funds, Emerging Manager funds, Liquid Alternative funds, Canadian funds, and Latin American funds.
The awards follow a clear and transparent methodology. For the manager categories, the shortlists are based on data provided by Bloomberg – with the candidates being selected on the basis of annualised performance by Americas-based hedge funds in their respective categories over a 12-month period from 1 June, 2020 to 31 May, 2021.
More than 80 different single-manager and multi-manager hedge fund firms have been shortlisted across the 29 fund manager award categories this year, representing a broad and diverse cross-section of the hedge fund manager universe across the US, as well as in Canada and Latin America.
For the service provider categories, the nominations are based on a widespread pre-poll survey of more than 100 managers and other key industry participants.
Voting for the eventual winners is being conducted over the next several weeks via an online poll of the extensive Hedgeweek readership, with participants invited to make their choices among the pre-selected firms in each category.
All winners are invited to attend an exclusive awards ceremony and networking event on Thursday 21 October 2021 at The University Club of New York at 17.00 EST. The results of the awards will also be covered – along with winners’ profiles – in a Hedgeweek Americas Awards Special Report that will be distributed globally.
Voted for by participants within the hedge fund industry itself, the awards represent an important mark of recognition and respect among peers, investors, advisors, and counterparties – highlighting the achievements and successes of the leaders and top performers in an extraordinary and very challenging year.
To participate in the poll, please click here. For all information about the Hedgeweek Americas Awards, see here.
Like this article? Sign up to our free newsletter Author Profile Related Topics AwardsBrummer’s multi-strategy hedge fund flagship flat for July as equity managers stumble
Stockholm-based Brummer & Partners’ flagship multi-strategy hedge fund vehicle remains flat for the year after ending July close to zero, with its equities-focused strategies suffering negative performance last month.
Brummer Multi-Strategy (BMS) fell 0.1 per cent in July in both its SEK and dollar-denominated classes, with the twice-levered BMS 2xL version down 0.3 per cent in both classes.
Overall, the BMS vehicle remains flat year-to-date at 0.2 per cent, with the twice-levered strategy returning 0.0 per cent in the seven month-period since the start of January, having ended the first half of 2021 in broadly similar territory, the Swedish fund manager said in an update this week.
Its long/short equity-based funds were caught out as US stock markets ended higher last month with concerns surrounding the Delta variant easing. Black-and-White lost 1.7 per cent in July, while Manticore was down 1 per cent. Black-and-White has now plummeted almost 14 per cent over the course of 2021, though Manticore remains in positive territory, up 3.2 per cent year-to-date.
Elsewhere, systematic equity strategy AlphaCrest remains up 5.5 per cent for the year, despite sliding 2.2 per cent last month. Long/short credit manager Observatory dipped 0.2 per cent in July, though has gained 1.5 per cent over the seven-month period.
Brummer noted that price volatility in Brent crude loomed large over commodities markets during July, while in currency markets the dollar index finished the month lower. In China markets were weighed down by concerns over Beijing’s regulatory crackdown.
Arete, a discretionary macro fund, rose 2.4 per cent by successfully navigating July’s continuing volatility and making gains with correct equity bets. It has now advanced 6.8 per cent since the start of 2021.
Systematic trend followers Florin Court and Lynx generated gains of 1.3 per cent and 1.4 per cent, respectively. Florin Court – which capitalised on power and commodities moves – has now returned 10.5 per cent this year, while Lynx, whose July gains were fueled by fixed income and equities positioning, is up 1.4 per cent in 2021.
Machine learning strategy Lynx Constellation has tumbled 8.9 per cent this year, with July’s gains muted at 0.7 per cent, while Frost – a fixed income relative value fund – has made 2.8 per cent YTD, having added 0.2 per cent last month.
Like this article? Sign up to our free newsletter Related Topics Results & performance FundsTNS launches market data and order routing services at India INX
Transaction Network Services (TNS) is expanding its presence in India with the launch of a new connection to the India International Exchange (INX) located at the International Finance Services Centre, Gujarat International Finance-Tec City (GIFT City) Gandhinagar.
This new connection delivers low latency access to India INX for both market data and order routing services.
India INX had an average daily turnover of USD 11.67 bn in May 2021 with a market share of 98.15 per cent in GIFT IFSC. The all-time high turnover of India INX has been USD30.3 billion on 10 March, 2021. A subsidiary of BSE, India INX is India’s first international exchange and has a matching engine round trip time of four micro seconds, making it the fastest in the world.
Shri V Balasubramaniam, MD & CEO at India INX, says: “With its long standing, trusted reputation and local knowledge, we are delighted to welcome TNS on board and we look forward to working with them to continue to provide our customers the best-in-class technology and services. Global investors can now get connected to India INX based in GIFT IFSC from anywhere in the world and access our market for 22 hours from any time zone.”
TNS maintains two connections to India INX’s matching engine in GIFT City as well as connectivity to the India INX DR site.
“India INX is a valuable addition to our financial portfolio,” says Jeff Mezger, Vice President of Product Management at TNS. “TNS has local teams on the ground in India and we are excited to be expanding our long-standing relationship with BSE.
“Accessing INX’s portfolio makes it the ideal gateway to India and allows a single segment approach for all asset classes. These two new connections enable TNS to offer India INX access anywhere in the Americas, Europe and Asia Pacific via our low latency, global network.”
TNS offers access to most of the exchanges across Asia and provides low-latency access and market data at a lower cost and with far less complexity than firms can do it themselves. TNS Managed Hosting provides deep expertise that virtually eliminates the commercial and administrative challenges of managing remote sites. In addition, TNS has highly specialised personnel for local, boots-on-the-ground support.
Akin Gump appoints investment funds partner in New York
Akin Gump has appointed Terence Rozier-Byrd as a partner in its investment management practice in New York. Rozier-Byrd comes to Akin Gump from Baker Botts, where he served as partner in charge of its New York office.
Rozier-Byrd advises a wide array of institutional investors in connection with their investments in private equity funds, venture capital funds, hedge funds, credit funds, real estate funds, energy funds and hybrid funds, as well as in the negotiation of separately managed account arrangements, co-investments, direct venture capital and growth equity investments and secondary transactions. His practice also includes representing fund sponsors regarding the formation and operation of private equity funds, venture capital funds, growth equity funds and hedge funds.
“We have long been known as a firm with a preeminent investment funds practice, and Terence is a terrific addition who builds on that platform,” says Akin Gump chairperson Kim Koopersmith. “He is a valued leader who immediately enhances our investor representation, secondaries and fund formation work—all areas of particular strength for us. I am truly delighted to welcome Terence to Akin Gump.”
Added Prakash H Mehta, co-head of Akin Gump’s investment management practice, says: “As we continue the growth of our team via the addition of talented, high-calibre partners, Terence represents an ideal fit. He brings deep experience across the funds industry, particularly in investor-side representations, and a substantial track record in the domestic private equity market that our clients will find exceedingly valuable. I am thrilled to have him with us.”
Rozier-Byrd says: “The breadth of Akin Gump’s market-leading global funds platform is an ideal fit for my practice. The firm has demonstrated strength on both the sponsor and LP side, coupled with a full suite of funds-focused services in areas like regulatory, tax, labor and employment, litigation and more. This is a terrific opportunity that will be incredibly beneficial for me as well as my clients.”
Rozier-Byrd received his JD from Boston University School of Law and his AB from Princeton University.
Like this article? Sign up to our free newsletter Related Topics Moves & AppointmentsBitwise Asset Management expands DeFi suite with launch of world’s first Uniswap and Aave funds
Bitwise Asset Management, a crypto index fund manager with over USD1.0 billion in AUM, has launched the Bitwise Uniswap (UNI) Fund and the Bitwise Aave (AAVE) Fund.
These two new strategies join the Bitwise DeFi Crypto Index Fund in simplifying access to the emerging decentralised finance (DeFi) space for professional investors.
“There is growing demand from financial advisors, hedge funds, institutions, and other professional investors for exposure to the fast-growing DeFi markets,” says Matt Hougan, CIO of Bitwise. “Uniswap and Aave are the two largest DeFi protocols in our DeFi index, and are the largest decentralised exchange and decentralised lending protocol in the world, respectively. Bitwise’s vision is to make the opportunities emerging in crypto more accessible, and we’re thrilled to take another step with the world’s first Uniswap and Aave investment funds.”
The Bitwise Uniswap Fund will invest directly in UNI, the native token of the Uniswap protocol, the leading decentralised crypto exchange. Uniswap’s transparent, peer-to-peer trading system has proven to be a material alternative to conventional exchanges (such as Coinbase). In June 2021 alone, Uniswap handled more than USD60 billion in trading volume, up 6,000 per cent year over year.
The Bitwise Aave Fund will invest directly in AAVE, the native token of the Aave protocol, the leading decentralised and non-custodial lending and borrowing protocol. As a transparent, programmable, peer-to-peer alternative to conventional loan providers, Aave has seen remarkable adoption: Total outstanding loans on Aave’s platform grew from USD93.7 million in July 2020 to USD6.92 billion in July 2021, up over 70x year over year.
Bitwise manages a growing suite of investment funds, including the world’s first and largest crypto index fund, the Bitwise 10 Crypto Index Fund (OTCQX: BITW), that aim to simplify access to the full range of opportunities in the crypto space. The UNI and AAVE funds will form part of a growing suite of DeFi-focused products, including the Bitwise DeFi Crypto Index Fund, which launched in February 2021 as the first DeFi index fund in a traditional fund format. The firm focuses on partnering with investment professionals, and today serves RIAs, financial advisors, multifamily offices, high net worth individuals, hedge funds, and other institutional investors.
The new funds’ custodian is Anchorage Digital Bank, NA, which became the first federally chartered digital asset bank in US history in January 2021, and today secures billions of dollars in cryptoassets.
Like this article? Sign up to our free newsletter Related Topics Digital Assets DeFi Funds Launches & FundraisingEEX starts admission process for the sell-off in the national Emissions Trading Scheme
The European Energy Exchange (EEX) is set to start the admission process for the sell-off of nEHS certificates within the national Emissions Trading Scheme (“nEHS”) in coordination with the German Federal Environment Agency.
The instrument will set a CO2 price for the heat and transport sectors at a national level for the first time with sales via EEX to be launched in October 2021.
All CO2-causing fuels, especially petrol, diesel, heating oil, liquid gas, natural gas and from 2023 onwards coal, are included in the nEHS. Those companies and organisations which place fuels on the market, for example natural gas suppliers or companies in the mineral oil industry, are obligated under the nEHS.
The obligated companies will need to decide whether they wish to access the market directly via admission to EEX and its clearing house ECC or participate indirectly in the sell-off via an intermediary.
This also applies for intermediaries. An intermediary is a Trading Participant admitted to EEX and ECC and provides indirect access to markets for third companies via its access and infrastructure. Currently 14 companies have agreed to act as an intermediary for the nEHS sell-off. EEX publishes the list of intermediaries including the nEHS services they offer on its dedicated nEHS website.
EEX will hold a webinar with focus on the admission process and access routes to the nEHS tomorrow, on 4 August 2021 (in German language) to provide more detailed information.
CME Group reports highest-ever July average daily volume
CME Group, the world's leading and most diverse derivatives marketplace, has reported July 2021 market statistics, including average daily volume (ADV) of 17.1 million contracts during the month, the highest ever recorded.
Interest rate monthly ADV increased 96 per cent, with SOFR futures ADV up 221 per cent, Ultra 10-Year US Treasury Note futures up 125 per cent, and Eurodollar futures and options increasing 121 per cent and 119 per cent respectively. Interest Rate options meanwhile grew 104 per cent, while Treasury futures rose 82 per cent and options increased 88 per cent.
Options ADV increased 55 per cent, with Copper options ADV up 235 per cent, Equity Index options ADV up 19 per cent, and International Agricultural options ADV increased 120 per cent.
Energy ADV rose 23 per cent, including 44 per cent growth in options.
Micro WTI Crude Oil futures reached an ADV of 43,000 contracts, having traded more than 645,00 total contracts since their July 12 launch
WTI futures increased 37 per cent and options rose 81 per cent
Natural Gas options rose 16 per cent.
International volumes of 4.8m increased 19 per cent, including 21 per cent in Asia and 17 per cent in EMEA.
Micro Bitcoin futures reached an ADV of 17.6K, including more than 1.4 million total contracts since their 3 May launch.
Micro E-mini futures and options represented 37.6 per cent of overall Equity Index ADV and Micro Bitcoin futures accounted for 0.4 per cent of overall Equity Index ADV.
BrokerTec US Treasury ADNV grew 30 per cent, US Repo ADNV increased 15 per cent and European Repo ADNV rose by 11 per cent.
Like this article? Sign up to our free newsletter Related Topics Results & performance MarketsLakemore Partners appoints MD
Lakemore Partners, a private credit investment firm primarily investing in control CLO equity, has named as Dan Norman Managing Director and Head of its US business operations.
Norman will focus on growing Lakemore’s investment platform globally from its recently established US office in Scottsdale, Arizona.
Norman joins Lakemore following his retirement last year from Voya Investment Management (Voya) where he most recently served as Group Head and Senior Managing Director. While at Voya, he founded the firm’s Senior Loan Group in 1995 and co-managed the Group’s global loan platform including its global CLO business, which by the end of 2020 had managed 46 CLOs with a combined size of over USD22 billion.
“Dan is a successful, highly respected and cycle-proven executive who has established himself as one of the leading experts in broadly syndicated corporate loans and CLO management,” says Mohamed Seif, Co-Founder & Managing Director of Lakemore. “With more than 35 years of global business-building and investment management experience, Dan is the perfect fit for our firm as we continue to strengthen our relationships with leading US CLO managers and look to serve the needs of current and prospective investors in the US and around the world. We are thrilled to welcome him to Lakemore.”
Throughout his career, Norman has structured and managed over 80 loan funds and accounts with total combined assets of over USD50 billion. He has created extensive distribution networks and more than 300 investor relationships around the world.
As part of his role, Norman will oversee Lakemore’s on-the-ground US presence from its newly established office located in Scottsdale, Arizona, which will further enhance the firm’s ability to seamlessly operate on a global scale. Lakemore currently has 27 professionals worldwide overseeing USD1.1 billion in credit assets under management.
“I’m honoured to join such a diverse and well-respected firm that has established a leadership role in the CLO marketplace through its sound strategic approach and commitment to client service,” adds Norman. “Lakemore’s strong culture of respect and support for its team members deeply resonates with me and is core to a successful business. I look forward to working alongside the experienced professionals at Lakemore as we continue to expand our presence both in the US and around the world.”
Norman currently serves as a Board Member of the Business Loans Coalition, the Loan Syndication and Trading Association’s (LSTA) grassroots advocacy affiliate, and as an advisory Board Member of the Maricopa Partnerships, which manages diverse business and investment interests. He previously served as Board Member of the LSTA and the International Association of Credit Portfolio Managers.