Hedgeweek Interviews
BSO becomes fastest provider to B3 connecting international traders to Latin America’s largest exchange
BSO, a global infrastructure and connectivity provider, has become an approved international network provider for Brazilian stock exchange B3.
B3 (Brasil, Bolsa, Balcão), headquartered in São Paulo is the largest exchange in Latin America and BSO is now the lowest-latency vendor registered with the exchange and connecting international traders to the Latin American hub. By strengthening its Latin American offering and widening access to the region, BSO is providing international traders with faster, more cost-effective access to one of the world’s most promising financial services market.
The connection is bolstered by BSO’s recent introduction of a direct ultra-low latency connectivity route between Brazil and Europe, in partnership with express optical platform EllaLink. The route, the first direct connectivity route between the regions, cuts latency in half making it easier than ever for institutional traders in Europe to connect to the major Brazilian trading hub. The route also opens up a wider range of possibilities for proprietary trading firms, capital banks, hedge funds and other market participants, across multiple asset classes.
“We are so thrilled to be working with B3 at a strategic level, to put in place ultra-low latency connectivity and infrastructure to help it succeed in its drive to extend its international reach. With our experience in delivering connectivity around the world, BSO is well-placed to help trading participants globally access the B3 exchange and capitalise on the immense opportunities that it offers,” says Michael Ourabah, CEO of BSO.
“B3 is a strong, thriving market and we are especially delighted to be able to help more European traders access it with the lowest latencies available between the two continents, as they seek to discover alpha strategies for achieving the highest returns” said Tony Jones, BSO’s Head of Low Latency. “With this partnership we are now going further establishing direct links between B3 and other exchanges around the world including London, France, Singapore and Turkey.”
“BSO, with all its connectivity capacity and ultra-low latency infrastructure, will help B3 expand its operations with international investors, who, in turn, can access assets available on one of the most important stock exchanges in the world”, says Claudio Jacob, International Business Development Managing Director at B3. “Bolsa do Brasil is committed to providing a necessary experience for its clients and, therefore, understands the need to continue investing to stay ahead in performance, security, scalability and transparency. This partnership further strengthens our range of connectivity products,” reinforces Jacob.
EEX to launch new WECI indexes
The European Energy Exchange (EEX) has launched the EEX Weekly European Cheese Indices (WECI) which will bring further price transparency to the European dairy market.
Published on Wednesdays and based upon price contributions from physical dairy market participants, the indices will cover four of the major European “commodity” cheeses: Cheddar Curd, Mild Cheddar, Young Gouda and Mozzarella.
The launch of the WECI indices is the result of an extensive pilot programme that has been supported by a cross-section of Europe’s leading companies from the dairy supply chain. EEX has developed the index specifications and price reporting methodology to accurately reflect spot/nearby prices in the underlying physical market.
At the time of launch, the indices will be supported by companies from eight different European countries representing the dairy supply chain, ranging from dairy co-operatives and processors through to traders and food manufacturers. Going forward, the WECI aims to attract further participation with EEX actively encouraging interested parties to participate, thereby increasing transparency in the European dairy markets.
Peter Blogg, Agricultural Commodities Expert at EEX, says: “The launch of ‘EEX Weekly European Cheese Indices’ is another positive step in our ambition to bring further price transparency and new hedging opportunities to the European dairy market. The design and launch of these innovative new indices has been supported by some of Europe’s leading dairy companies and organisations. We look forward to their continued support as we move forward to make the WECI indices the principal reference for wholesale cheese prices in the European market.”
At the time of launch, the “EEX Weekly European Cheese Indices” will be based entirely upon data contributed by individual companies. In the future, EEX may also consider the possibility to include additional price sources.
Like this article? Sign up to our free newsletter Author Profile Related Topics Commodities & Resources Indexes InvestmentsEmissions-focused hedge fund reaps rewards for Trium in battle against climate change
Launched in September 2019, the Trium ESG Emissions Impact Fund uses a market neutral long/short investment strategy to target high-emitting companies in hard-to-abate sectors – such as energy, mining and chemicals – where successful transformations in the form of decarbonisation and lower CO2 emissions can offer attractive long-term returns.
The Fund is led by portfolio manager Joe Mares (photographed above), a financial markets veteran of almost 25 years, who previously managed a global long/short equity portfolio at Société Générale. That followed stints at high-profile hedge funds Moore Capital and GLG, where at the latter he had been lead equities and commodities analyst for star manager Greg Coffey. Mares began his career at Morgan Stanley in 1997, specialising in equity research for the energy and shipping sectors.
So far this year, the Trium ESG Emissions Impact fund – which manages around USD100 million in assets in a daily liquid UCITS format – has generated uncorrelated returns in the face of stock market volatility and soaring energy prices. Since launch, it has had a -0.29 correlation and a -0.06 beta to the STOXX Euro 600.
The Fund is one of a number of liquid hedge fund and alternative investment offerings from Trium, a family office-backed asset manager based in London, which also include quantitative equity, macro and market neutral funds.
Starting from scratch
Reflecting on the early days of the strategy, Mares says that while there was a sizable amount of ESG long-only product at launch, the amount of market-neutral strategies focused on ESG was, and still is, limited.
He believes that most hedge funds, regardless of their strategy – be it global macro, convertible arbitrage or merger arbitrage – find it tricky to retrospectively incorporate ESG or climate change as the main driver of what their strategy is trying to accomplish.
“We decided we were going to start from scratch and set up a fund that actually has ESG as its core purpose,” Mares tells Hedgeweek.
“Our view was that of the roughly USD4 trillion of hedge fund assets out there, at least some of the people invested in that, in market neutral, were going to be also interested in environmental and social goals,” he says of the strategy’s origins. Today, the Fund’s investor base comprises over 30 or so clients, diversified across a range of mostly European institutional clients.
“We felt that if climate change is going to take decades to fix, and during that time we’re going to have multiple bull and bear markets, then we should try to create a product which could actually survive a bear market.”
To successfully execute that approach, Mares and his team decided early on to focus exclusively on high-emitting industries and sectors, such as energy, mining, industrials, and agriculture, where certain hard-to-abate sectors – like aviation, steel, and chemicals and transport industries – face particularly high decarbonisation costs.
In terms of investment opportunities, the Fund looks to identify improvers and transformation stories – those companies that are able to decarbonise most effectively within their respective sectors.
“That’s where the problem is,” he adds. “90 per cent of the problem is coming out of 30 per cent of the sector.
“We may sometimes buy clean tech stocks, and we may sometimes buy ESG stocks with very, very high ratings. But generally we’re focused on companies that are transforming – we are trying to buy companies that are going to be great stocks in three or four years, from an ESG perspective, rather than today. That gives us a very different shape of portfolio.
“We will also short stocks. Sometimes we will be short oil stocks, sometimes steel stocks – we are trying to be sector neutral,” he continues.
“We’re not trying to run a portfolio that’s long utilities, short energy, or long industry, short mining. We’re trying to find within each sector those who are going to be the leaders in the decarbonisation process.”
Pathway to change
The portfolio comprises mostly medium-sized stocks, and the team looks to engage with company management where possible. While giants like Shell and Exxon have garnered considerable column inches in recent times, Mares is resolute on the strategy’s mid-cap focus.
“Transformations of companies of that scale are extremely difficult,” he observes. “We believe many of the more successful and rapid transformations can happen in more medium-sized companies.”
Expanding further on this point, he continues: “We’re not trying to find the best renewable stock, or the best electric vehicle stock. That’s probably 90 per cent of the media attention, but if you actually look at where the emissions are coming from, large chunks are coming from the sectors that are not going to get fixed by renewables or electric cars.
“Instead, we focus on steel and cement, and pulp and paper, and some of these other sectors – such as fertilizer – which we think are not as well-understood in terms of the transition pathways, and where there are higher barriers to entry, but where there are many more opportunities when companies actually do find that pathway to change.”
So as the ESG juggernaut continues to gather momentum, with an assortment of high-profile hedge fund managers now leading the impact investing charge, what sets Trium Capital’s ESG Emissions Impact strategy apart from the pack?
“We always get asked who our peers and our competitors are, and the reality is there are a handful of them and we are all doing slightly different things,” Mares says.
“One of the differences for us is that we are very focused on being strictly market neutral. Secondly, if you look at what’s in our long book, it doesn’t overlap that much with what’s in the typical ESG long-only fund’s long book.
“In general, the hedge fund industry has a very rapid turnover of positions. I’d say if there’s a very rapid turnover of positions in your book, it’s hard to argue that it’s being done with an ESG criteria, that an ESG criteria is driving that.
“We are talking about transformations that are going to take years. The hedge fund industry is generally not set up to basically underwrite ideas for multiple years.”
This approach has ultimately helped the strategy’s performance stay uncorrelated from the broader market.
Warming to this point, Mares continues: “A typical energy transition fund is focused much more on financing renewables projects. But we would argue that those will offer fixed income-type returns. To get equity returns, you have to attack some of the harder problems, which is what we look to do.
“Certainly for the companies that we’re in – those hard-to-abate sectors, whether it’s cement or steel – they're going to require a much higher carbon price and energy price to transform themselves, and I think we're starting to see that,” he says of this year’s soaring energy prices.
“All else being equal, having high energy prices – high prices for natural gas, oil and coal – is going to assist the energy transition.”
He adds: “Finally, so much of the move over the past 20 years in all investing has been about data, quants, AI. That has its place in ESG, and can be incorporated from an ESG perspective, but what we are doing is individual stock-picking,” he explains.
“We try to evaluate each company, and how they can transform themselves, and it’s very hard to get a computer to do that for you – it’s very hard to do that using historical datasets and running back-tests, because, frankly, the companies are literally changing now, and the regulation is changing as we speak.”
Here and now
Talk inevitably turns to the COP26 climate summit taking place in Glasgow, described by some as the world’s last best chance to meaningfully address the environmental crisis. While Mares is hopeful the event will dictate the direction of travel among governments and economies, he believes challenges remain around effective implementation.
Mares says his team are more focused on specific national regulations – such as the US infrastructure bill and various EU proposals – rather than the longer-term objectives at COP26, such as net zero by 2050 or 2060.
“The challenge of COP, rather than with the EU or national governments, is that it is hard for them to have an enforcement mechanism,” he notes. “Ultimately what matters is the action, not the commitments, and they need at least all of the largest economies to work together to achieve those goals.
“We’re much more focused on the here-and-now, rather than on long-term goals, because you’re not going to get to the long-term goals without the here-and-now.”
Over the long run, Mares maintains the Fund stands to benefit from “tremendous regulatory tailwinds”, pointing to the range of ways the EU and US are driving investors towards decarbonisation.
“Regulators want to do it with new technologies, with new products, and with new arrangements with customers on how they pay,” he says. “We’re trying to capture what I would describe as a tailwind, which is occurring over years, but in the short-term, you often have hurricanes going in the other direction.”
He points to the stock market fluctuations over the past 18 months, which ultimately had little to do with decarbonisation, and was more driven by a once-in-a-lifetime pandemic.
“Yes, there was an environmental component to that, but clearly it wasn’t the dominant driver of the government response,” he concedes.
“So while we have a tailwind for many years in this strategy, we’re like anyone managing money – in the short term, ESG is not always the dominant driver of what makes stocks go up and down every day. It’s not going to just be a straight run for the next 30 years in terms of decarbonisation.”
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics ESG & Responsible Investing Impact Investing Long-short investing Investing in Hedge FundsBestEx Research appoints algorithmic trading veteran to expand futures business
BestEx Research Group, a provider of algorithmic execution and measurement solutions for equities, futures, and foreign exchange trading, has appointed industry veteran Hector Robles as Managing Director of Business Development to expand the firm's futures business.
Robles will report to Founder and CEO Hitesh Mittal as BestEx Research aggressively expands its footprint in the futures market.
"Hector is arriving at a pivotal time in our growth," says Mittal, "and we are confident that his deep knowledge of the complexities of algorithmic futures execution and his diverse experiences in senior roles at institutions large and small will help drive our expansion across markets and deliver our best-in-class solutions to a broader audience."
Robles brings over 15 years of electronic trading and transaction cost analysis (TCA) expertise and joins BestEx Research from RCM-X, where he headed distribution of its algorithmic and quantitative trading products. Earlier, he was responsible for the distribution of UBS's algorithmic execution strategies in futures, foreign exchange, and fixed income across the Americas and served as Global Head of Electronic Trading for futures at Mizuho Securities. In addition, Hector has held senior sales and product roles at Quantitative Brokers.
"I am thrilled to join Hitesh at BestEx Research, a company I've admired for its commitment to research, innovation, and data-driven solutions to algorithmic trading challenges," says Robles. "There is significant demand for BestEx Research's advanced algorithms in the futures market. I look forward to working with this client-centric team and the most sophisticated trading platform available for futures."
Like this article? Sign up to our free newsletter Author Profile Related Topics Moves & AppointmentsDigital asset investment funds see 12th week of inflows
Digital asset investment products saw inflows totalling USD174 million last week, marking the 12th consecutive week of inflows, according to the latest Digital Asset Fund Flows Weekly report from Coinshares.
This brings year-to-date inflows to USD8.9 billion, significantly greater than the USD6.7 billion seen in 2020.
Bitcoin inflows in this eight-week bull-run now total USD2.8 billion with year-to-date inflows now at a record USD6.4 billion.
Tron, a digital platform focussed primarily on hosting entertainment applications, has seen inflows totalling USD79 million over the last seven weeks making it the eighth largest by AuM.
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital AssetsCrypto hedge fund Tyr Capital ramps up offering amid soaring investor interest
Cryptocurrency hedge fund Tyr Capital is tapping into growing investor appetite for digital assets with the launch of a new long-only fund next year, after its main multi-strategy vehicle increased assets and scored double-digit returns this year.
Its main multi-strategy fund, Tyr Capital Arbitrage, is now on track for a 25 per cent gain this year, with a Sharpe ratio above 3.5 since inception for its investors.
Launched in 2019, the strategy – which aims to generate alpha through a diversified set of arbitrage and relative value strategies – has quadrupled its AUM in 2021 thanks to surging investor demand, Tyr Capital said on Monday.
Tyr Capital’s chief investment officer Ed Hindi pointed to a “significant shift in gear” in digital assets this year, with a cryptocurrencies now on a “clear trajectory that institutions can no longer ignore.”
The London-based firm is preparing to roll out a second fund, Tyr Capital Venture, in January next year to capitalise on booming allocator appetite. The new strategy is an actively-managed long-only fund targeting the longer-term returns of a portfolio of cryptocurrencies and early-stage projects.
“Governments and corporates such as Tesla are switching fiat holdings for cryptocurrencies. Not only this, but we might also begin to see more countries follow El Salvador’s lead in recognising bitcoin as a legal tender,” Ed Hindi said.
“Talk of the Russian central bank potentially diversifying away from USD assets into crypto might also prompt a much larger push by others to at least consider this as an option.”
He added: “Blockchain businesses have also received a record USD17 billion worth of venture capital this year – and we don’t think it’s going to slow down any time soon. Tyr Capital’s second fund, Tyr Capital Venture, will be working closely with early-stage blockchain and crypto project advisors to put early-stage capital into blockchain businesses, as well as taking long positions on the top cryptocurrencies.”
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics Digital Assets Bitcoin Blockchain Investing in Hedge FundsGlobal crypto market cap soars by 255 per cent YTD to USD2.75tn
After a rocky September and the crypto price crash wiping out hundreds of billions of dollars from the entire market, digital currencies quickly bounced back, driving the global crypto market cap to new record highs.
According to data from MejoresApuestas.com, the global crypto market cap soared by 255 per cent YTD to USD2.75 trillion last week, or nearly USD230 billion more than the previous record in May.
As the world's largest and most expensive digital currency, bitcoin accounts for 42 per cent of the global crypto market cap. The CoinMarketCap data show the combined value of all BTC coins more than doubled since January, despite two massive price crashes in May and September.
In the three weeks of October only, bitcoin's price jumped from USD55,300 to an all-time high of USD66.800 and then slipped to USD61,700 at the end of last week, helping its market cap reach USD1.17 trillion.
However, the latest boost in the crypto market has been equally driven by impressive Ethereum growth. In January, the combined value of all ETH coins amounted to USD83.4 billion. This figure soared to USD498 billion in May and then halved in the next two months after the crypto price crash.
However, ethereum quickly bounced back, with its market cap jumping to USD461.7 billion on 7 September. After a few rocky weeks and another crypto price drop, following a ban on cryptocurrency transactions and mining from China's central bank, Ethereum's price continued growing, driving its market cap to USD538.6 billion last week, a massive 545 per cent increase YTD.
Besides Bitcoin's and Ethereum's price rally, which fuelled the global crypto market growth, some other cryptos also witnessed impressive growth since January.
The CoinMarketCap data showed Solana was the fastest growing digital coin in the crypto space this year. Since January, the market cap of the cryptocurrency soared from USD75 million to USD76.2 billion, which is 186 times the growth rate of ethereum or 875 times more than the growth of Bitcoin in this period. In the last month only, the price of the ethereum competitor jumped by 55 per cent, ranking it as the fourth-largest crypto coin by market cap.
Dogecoin follows solana when it comes to market cap increase in 2021. Since the beginning of the year, the combined value of all DOGE coins has surged by 5,428 per cent and hit USD34.5 billion last week.
2021 has also been a fantastic year for binance coin, which became the world`s third largest crypto by market cap. Statistics show the combined value of all BNB coins soared by 1,826 per cent YTD to USD104.2 billion.
Besides these three cryptos, Cardano was the only digital coin witnessing a four-digit growth this year. Statistics show the combined value of all ADA coins jumped by an impressive 1,098 per cent YTD to USD66.4 billion, ranking it the sixth-largest crypto globally.
Like this article? Sign up to our free newsletter Author Profile Related Topics Digital Assets Bitcoin Results & performanceActive stock picking drives TM CRUX UK Special Situations to 44 per cent return
The TM CRUX UK Special Situations Fund has generated a 44 per cent return for investors over its first three years, underscoring the attractions of long-term capital growth through bottom-up, high-conviction investing in mispriced British stocks.
The Fund is ranked amongst the top 10 performers investing in UK companies over the last year and has grown to over GBP200 million AUM.
Launched in October 2018, the TM CRUX UK Special Situations Fund balances growth and value, investing in UK companies experiencing strong growth but are trading at attractive valuations. The Fund also backs companies where the prospects of management change and a recovery in earnings are undervalued by the market. The Fund is managed by AAA Citywire-rated Richard Penny, who has 28 years’ investment management experience including 15 years at Legal & General Investment Management.
Richard Penny, fund manager at CRUX, says: “The UK, with its lower valuations and recovering earnings, offers valuable and very necessary diversification for global equities portfolios. At the three-year mark, the TM CRUX UK Special Situations Fund has built a strong track record of value creation for investors through investments in underappreciated UK equities, which continue to trade at a discount to global competitors.”
The Fund’s standout performers since inception include Kistos PLC, the fast-growing energy business brought to market by ex- Rockrose Executive Chairman, Andrew Austin. Priced at 100p in November 2020, its shares ended September at 363p following a spike in gas prices.
The Fund has also backed Inspecs, the designer, manufacturer and distributor of eyewear frames for global retailers, which has more doubled in value in the past year. The Fund is also invested in Vistry, the house-building and design company, whose share price has also doubled over the past year as investors anticipated that strong sales and cash generation would resume with the eventual ending of coronavirus lockdown restrictions.
“A recovering UK economy and considerable activity in fund raising and corporate changes are helping to drive opportunities to deploy capital at attractive valuations in the UK stock market, particularly in small cap companies where investor appetite is strong,” says Penny. “With UK stock valuations being below those in other markets, we expect positive momentum through the rest of 2021 and look forward to expanding our investor base further.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Funds Results & performanceLinedata’s Tenth Global Asset Management Survey highlights operational resilience and lasting value in an uncertain world
Linedata, a global provider of asset management and credit technology data and services, has unveiled its tenth Global Asset Management Survey Report in partnership with financial services insights and advisory firm, Aite Novarica.
The survey of 200 asset managers, hedge funds, fund administrators, banks, wealth managers and custodians across Europe, North America and Asia, highlights the current state of the industry, operational and technology trends that are shaping day-to-day practices and how the industry will continue to evolve.
Since the last survey was conducted, in 2019, much has changed from a global, regional and industry perspective. As the world navigates the changing nature of modern day investing and ever-evolving customer needs, there are a few factors that are clearly shaping asset management – ESG, cybersecurity, transparency, artificial intelligence and machine learning.
“Over the last two years, asset managers have had to reprioritise their business operations and make a dramatic shift that focused more on innovative options, risk management solutions and creating a greater sense of transparency with employees and clients,” says Linedata’s Global Head of Asset Management, Gary Brackenridge. “As we look to continue successfully navigate the changes to come, we must focus on integrating solutions into portfolios that align with organisational and customer values.”
According to there survey, while 67 per cent of respondents have prioritised the integration of ESG factors into their investment framework, 30 per cent believe the integration into portfolios is a lower priority.
Overall, survey respondents have incorporated ESG integrations by creating a centralized ESG team (46 per cent), receiving a score from an ESG rating company (43 per cent) and becoming affiliated with sustainable investing organizations globally and regionally (42 per cent).
Additionally, respondents cited ESG integrations are a lower priority for the following reasons: lack of client demand (33 per cent), lack of industry standards (31 per cent) and two respective groups believe there is deficient training and support, and the “death of” ESG data and scoring (each totalling 29 per cent).
With threats on the rise, 35 per cent of firms reported being most concerned about how cybersecurity will impact their business, a change from 2019 where that was not a top 3 concern.
In addition to heightened focus on cybersecurity, managing risk ranked as the second biggest concern (29 per cent), followed by vendor oversight (26 per cent). All of which, can be closely tied together.
In 2019, investment performance (34 per cent), attracting new clients (34 per cent) and operational efficiency (33 per cent) were noted at the top three challenges in investment management.
Artificial Intelligence and Machine Learning see growth in deployment for operations and compliance use cases – more than 62 per cent of respondents agree AI and ML use cases have grown year-over-year.
Of those surveyed, the population with the highest adoption rate are focused on regulatory know your customer (KYC)/anti-money laundering (AML) requirements (70 per cent) and portfolio and risk analytics (69 per cent).
The path to differentiation is beginning to diversify, 20 per cent cited risk management as a key differentiator, followed by investment performance (19 per cent), transparency (16 per cent), innovation (12 per cent) and cost structure (10 per cent).
For the asset management industry, resiliency and adaptability to the shifting landscape is crucial for success. The Covid-19 pandemic has shifted demand, making the future of the industry refocus and emphasise its attention on technology that will drive forward customer and client satisfaction, as well as operational simplicity across the board. The asset management industry will continue to see a surge in environmentally focused investments and products with the emphasis on simplifying and digitising antiquated processes.
Like this article? Sign up to our free newsletter Author Profile Related Topics Surveys & researchOctober evolution: Hedge fund assets surpass USD4 trillion milestone for first time
Hedge fund managers generated further positive returns across all strategy types in October, which has swelled total global industry assets to a record USD4.04 trillion.
New October performance data published by Hedge Fund Research shows the industry on track to outperform last year’s full-year returns, while HFR described the increased asset volumes as a “historical milestone of growth and expansion.”
Hedge fund managers have now advanced 11.44 per cent over the last 10 months, with HFR’s main Fund Weighted Composite Index – which measures the monthly returns of some 1400 single manager hedge funds across all strategy types – gaining 1.85 per cent in October, reversing September’s 0.24 per cent slide. By comparison, the benchmark finished 2020 up 11.83 per cent for the year.
HFR president Kenneth Heinz said recent growth has been fueled by strong performances across high and low beta, equity, fixed income, commodity and currency strategies, and emerging and established managers.
Long/short equity hedge funds outflanked other strategies last month, rising more than 2 per cent to bring their year-to-date returns to 13.27 per cent. Quantitative directional was the standout equity strategy in October, advancing 9.21 per cent, while energy and basic materials-focused managers rose 3.55 per cent amid the ongoing oil and gas price rally.
Healthcare, tech, fundamental growth and multi-strategy equity hedge funds all advanced more than 2 per cent, with only equity market neutral strategies ending October in the red, sliding 0.23 per cent.
With two months left to go until the end of 2021, the majority of equity-focused hedge funds are in double-digit territory for the year, including energy/basic materials (26.12 per cent), quant directional (17.36 per cent), fundamental value (16.82 per cent), and multi-strategy (13.92 per cent).
Event driven hedge funds – which trade stock mispricings and other valuation anomalies stemming from mergers and acquisitions, bankruptcies, takeovers and other corporate events – were up 1.32 per cent during October, and have now gained 12.71 per cent this year.
Here, activist strategies took the biggest gains, both on a monthly (3.27 per cent) and year-to-date (16.25 per cent) basis. Special situations managers have advanced almost 15 per cent this year, aided by October’s 2.49 per cent return, while merger arbitrage’s 1.19 per cent monthly rise has pushed their YTD performance 10.26 per cent. Fund managers running distressed and restructuring remain up more than 14 per cent in 2021, despite ending October down by 0.59 per cent.
Meanwhile, macro hedge funds – which look to capitalise macroeconomic and geopolitical trends using equities, bonds, currencies, and commodities, among other assets – scored a 1.33 per cent October return, pushing year-to-date gains to 9.53 per cent.
Commodity-based macro hedge funds rose 0.78 per cent, and are now up an impressive 21.49 per cent for the year. Systematic diversified managers were the best monthly macro performers, rising 2.50 per cent in October, swelling YTD returns to more than 10 per cent. On the downside, currency-focused strategies tumbled 4.37 per cent, leaving them down 4.22 per cent YTD, while discretionary thematic macro funds also lost more than 2 per cent in October.
Fixed income relative value hedge fund strategies, which are sensitive to rate movements, posted a narrow 0.71 per cent advance in October. Year-to-date, the sector has gained 8.15 per cent, HFR’s data shows.
Convertible arbitrage managers gained more than 2 per cent in October, as asset-backed strategies just over 1 per cent, with both now up some 8 per cent YTD. Multi-strategy relative value hedge funds are up 7.45 per cent so far in 2021, despite sliding 0.28 per cent last month, while volatility managers’ 1.19 per cent October rise brings their YTD gains to almost 3 per cent.
Emerging markets hedge funds also registered gains last month, rising 0.63 per cent, bringing YTD returns to 8.12 per cent.
“The hedge fund industry surpassed a historic milestone in October, as performance-based gains across all strategies drove total industry capital to exceed USD4 trillion for the first time in history,” Heinz said.
“The milestone also marks a sharp reversal from April 2020, when industry capital fell below USD3 trillion at the beginning of the global pandemic.”
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics Funds Results & performance Investing in Hedge FundsCredit Suisse to refer hedge fund clients to BNP Paribas following prime services exit
Credit Suisse will recommend hedge funds and other clients of its prime services business to BNP Paribas as part of a referral agreement between the banks, after the Switzerland-headquartered group unveiled plans to shutter its prime brokerage operations following losses stemming from the collapse of Archegos Capital Management.
Credit Suisse said on Monday it has signed a referral agreement with Paris-based BNP to support its Prime Services and Derivatives Clearing customers in their selection of alternative providers for such services “in order to ensure a smooth migration of their business, in the context of the recently announced exit from Prime Services activities.”
The Zurich-based group’s investment banking division will exit most of its Prime Services operations, with the exception of Index Access and APAC Delta One, from early next year, it said last week.
The withdrawal comes after the firm suffered significant losses as a result of Archegos Capital Management’s collapse in March this year.
Bill Hwang’s single family office back imploded after defaulting on a series of margin calls by several investment banks, including Credit Suisse. Archegos’ failure revealed a highly-concentrated, hugely-levered portfolio of stocks with exposures centred around the equity derivatives market, mainly in the form of total return swaps.
Credit Suisse’s exit from the PB business is the latest episode in the continued fallout from the Archegos debacle, which has raised fundamental questions surrounding excessive leverage, margin limits, risk management and transparency, and regulatory oversight within the prime brokerage sector.
The withdrawal is part of a wider rejig of Credit Suisse’s business structure, which will see it slash its investment bank division’s capital by some USD3 billion, or 25 per cent, with CHF3 billion redeployed towards its wealth management operations.
“Credit Suisse will support affected customers as they select alternative Prime Services providers of their choice,” the firm said in a statement on Monday.
“Should customers seek to benefit from the referral agreement between Credit Suisse and BNP Paribas, there will be a streamlined process in place to facilitate them obtaining Prime Services from BNP Paribas, under its terms.”
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics Deals & Transactions Business & ServicesEEX Group Global Power volume up 29 per cent in October
EEX Group’s Global Power volume achieved an increase of 29 per cent year-on-year to a total volume of 804 TWh.
European Power Derivatives increased by 18 per cent y-o-y to 493 TWh. Greek Power Futures registered a new monthly record with 7.6 TWh traded (+761 per cent), while Nordic Power Futures also achieved a strong increase of 465 per cent, and Japanese Power Derivatives reached a volume of 702 GWh (+530 per cent).
Nodal’s US Power Derivatives recorded 256 TWh – a new monthly record and an increase of 67 per cent against October 2021.
EEX Group Natural Gas markets achieved a new all time volume record with a total volume of 350 TWh (+86 per cent).
European Natural Gas Spot markets set a new monthly record with an increase of 41 per cent to 178 TWh, while volume increased in all hubs.
The TTF hub recorded a new record of 75 TWh (+35 per cent) and NBP hub (1.2 TWh, +1,336 per cent).
EEX Natural Gas Derivatives market also saw further increases, achieving a total trading volume of 169 TWh (+179 per cent).
Record volumes on CEGH hub (22 TWh, +335 per cent) and PVB hub (4.2 TWh, +297 per cent).
Further strong performance on both TTF (+152 per cent) and PEG hub (+288 per cent).
Like this article? Sign up to our free newsletter Author Profile Related Topics Results & performanceOver three-quarters of hedge funds say regular online meetings help develop talent in a remote working environment
The Alternative Investment Management Association (AIMA) has just published new research exploring where hedge funds are sourcing talent and the steps taken to retain employees during the so-called ’Great Resignation’ and what roles (such as ESG specialists) will be most in demand in near future.
Asked what they are doing to help develop talent in a remote working environment, the most popular answer given by hedge funds was regular online meetings (78 per cent), followed by webinars and online seminars (50 per cent) and coaching — both external and internal — (44 per cent).
The paper, “Gaining an Edge”, explores how hedge funds motivated their employees throughout the pandemic and which of the remote working environment tactics have helped hedge funds navigate the pandemic.
The survey and subsequent conversations with both large and small managers suggest that ESG specialists, in all their various forms, are expected to become one of the most in-demand hires over the next five to 10 years.
The paper also demonstrates that EMEA firms are much more likely than those in other regions to have at least one ESG staff member. Over half of EMEA-based firms have at least one member of staff in a dedicated ESG role, compared to 15 per cent in North America and 8 per cent in APAC.
The report draws on industry data from a market survey of 100 hedge funds collectively managing more than USD520 billion. To further contextualise the findings of the survey, AIMA conducted broad market research across the hedge fund industry including interviews with consultants and hedge fund head-hunters.
Like this article? Sign up to our free newsletter Author Profile Related Topics Surveys & researchExchange Data International to facilitate Foreign Marginable Securities
Exchange Data International (EDI) will provide market participants with Foreign Marginable Securities (FMS) data that determines portfolio margin eligibility for non-US securities.
Earlier this year the OCC decided to discontinue their Foreign Marginable Securities daily feed. This program will now terminate as of 12 November, 2021. The purpose of the feed was to list securities trading on non-US markets that have a “ready market” position.
EDI has been offering a feed that is similar to OCC’s to a select group of clients since 2016. This feed is now available to all market participants via EDI.
Jonathan Bloch, CEO at EDI, says: “Since 2016, EDI has provided the Foreign Marginable Securities feed utilised by brokers in the USA, the FMS feed was in addition to the program that OCC supported. An announcement was made in early 2021 that OCC will discontinue the FMS content. We are happy to step into the breach and fill this gap.”
EDI’s FMS feed is available via SFTP and built under Rule 15c3-1 covering all securities in countries eligible for the FTSE World Index which satisfy the requirements of Rule 15c3-1 namely those stocks with a market capitalisation of USD500 million and a volume of 100,000.
Like this article? Sign up to our free newsletter Author Profile Related Topics Trading & ExecutionCAIS appoints Chief Marketing Officer
Alternative investment platform CAIS, has appointed Abby Salameh as Chief Marketing Officer, effective 8 November. Based in the New York office, Salameh will report to CAIS Founder and CEO, Matt Brown, and join the Executive Committee.
“We are thrilled to have Abby join our leadership team in this newly created role, as her deep expertise in the wealth management industry, and shared passion for democratising alternative investments will be integral to driving our business forward,” says Brown.
Salameh brings over 25 years of experience serving the independent advisor community, most recently as Chief Marketing Officer at Hightower Advisors, where she was named Thought Leader of the Year by WealthManagement.com for her work leading a rebrand and developing a digital content marketing platform. She also held several executive level positions at other large RIA aggregators, including Kestra and Private Advisor Group. Prior to that, she served as Chief Marketing Officer for TD Ameritrade Institutional Services and was part of the founding team of Investment News.
“I could not be more excited to join a dynamic team that’s shaping the future of wealth management and look forward to elevating and advancing CAIS’s mission of increasing access to alternative investment strategies for all,” says Salameh.
This new hire builds on CAIS’s commitment to fostering a diverse and inclusive workplace and championing female representation throughout the financial services industry. In Q3 alone, 70 per cent of CAIS new hires were women and diverse candidates.
Like this article? Sign up to our free newsletter Author Profile Related Topics Moves & AppointmentsMFA announces 2021-2022 board leadership
The Managed Funds Association (MFA), the trade association for the hedge fund and global alternative investment industry, has named new board leadership for 2021-2022.
Natalie Birrell, Partner & COO, Anchorage Capital Group, LLC, has been named Chair of the MFA Board of Directors. Birrell will serve a two-year term as MFA board chair effective 1 October, 2021. She succeeds Jon Hitchon, COO, Two Sigma Investments, who served as board chair since 2019.
Jim Rowen, COO, Renaissance Technologies, has been named Vice-Chair of the MFA Board. Kelly Rau, Audit Partner, KPMG, was named Treasurer of the MFA Board.
“I join the board in congratulating Natalie Birrell on becoming MFA chair and Jim Rowen as board vice-chair,” sasaysid Bryan Corbett, President and CEO of MFA. “We look forward to Natalie’s leadership as we continue to expand MFA’s global presence and create value for our members by advocating for policies that protect the industry’s license to operate. MFA thanks Jon Hitchon for his many contributions and partnership as board chair during a period of great transformation at MFA.”
“I’m honoured to serve as MFA board chair at this critical juncture for our industry and its investors,” says Birrell. “As the alternative investment management industry continues to grow, we are committed to meeting the evolving needs of our members and to fostering constructive engagement with all of our stakeholders, including policymakers, investors, and fund managers. Jim and I look forward to working alongside our board colleagues to provide value for our members across strategies, size, and regulatory regimes.”
MFA represents private investment funds and hedge funds. MFA’s more than 140 member firms collectively manage nearly USD1.6 trillion across a diverse group of investment strategies, including credit, long/short equity, event-driven, quantitative, and other fund strategies, including hybrid strategies that invest in private companies.
Like this article? Sign up to our free newsletter Author Profile Related Topics Moves & AppointmentsCosaic and Reformis partner to champion interoperability across the buy-side
Cosaic, a workflow solutions provider bringing smart desktop technology to the finance industry, has formed a strategic partnership with Reformis, a technology consulting firm for the investment management industry.
As a strategic Cosaic partner, Reformis will help bring interoperability to buy-sides by leveraging the power of Cosaic’s smart desktop platform, Finsemble.
“From big asset managers to smaller hedge funds, interoperability is shifting from nice-to-have to imperative across the buy-side,” says Dan Schleifer, CEO and co-founder of Cosaic. “It’s Reformis guiding these firms and spearheading buy-side interoperability projects.”
Reformis is a trusted name in buy-side tech initiatives, from data management solutions to PMS and OMS implementations. Interoperability projects connect these solutions with other core applications for smart, intelligent workflows. A smart desktop platform like Finsemble is a necessary piece to this modernised buy-side desktop.
“Our partnership with Cosaic came from a problem we see often,” says Brian Woodham, CEO of Reformis. “Clients want to integrate applications across the trading desk, but they lack the technical expertise and the tools to do this. Reformis can assist them with the implementation, and Finsemble provides the infrastructure. I’m confident the partnership will drive successful adoption of interoperability across the buy-side.”
With Finsemble, any type of application—legacy, new, in-house or third-party—can share data and connect for seamless workflows. Recently, buy-side firms have started to see the benefits of interconnected apps. Pictet Asset Management has enlisted Finsemble to overhaul fixed income and FX workflows. Buy-side IMS Charles River announced the firm is using Finsemble to enhance its partner ecosystem.
“Interoperability has proved successful for our buy-side clients,” says Schleifer. “Its value is clear. We couldn’t ask for a partner better than Reformis to bring this value to more buy-side desks.”
Like this article? Sign up to our free newsletter Author Profile Related Topics Technology & software solutionsCredit Suisse shuts down hedge fund prime brokerage services following Archegos losses
Credit Suisse is shutting down most of its hedge fund prime brokerage services following significant losses incurred as a result of Archegos Capital Management’s collapse earlier this year.
The Switzerland-headquartered group’s investment banking division will exit most of its Prime Services operations from January 2022, cutting the investment bank division’s capital by some USD3 billion, or 25 per cent, with some CHF3 billion redeployed to its wealth management operations.
The move is part of a broader group-wide overhaul and re-focus, which will see Credit Suisse restructured into four divisions – Wealth Management, Investment Bank, Swiss Bank and Asset Management – across four geographic regions: Switzerland; Europe, Middle East and Africa (EMEA); Asia-Pacific (APAC) and Americas.
The Zurich-based group’s decision to withdraw from prime services – as part of an overall investment bank scale-back – is a major shake-up for the hedge fund prime brokerage sector, which continues to feel the impact from the Archegos debacle.
The dramatic collapse of Bill Hwang’s single family office back in late March this year – triggered after the firm defaulted on a series of margin calls by several investment banks – highlighted the risks of excessive leverage in the form of prime brokerage margin lending.
Archegos built a highly-concentrated portfolio of hugely-levered positions across a range of stocks. These were taken via the equity derivatives market mainly in the form of total return swaps.
At the point of its collapse, Hwang’s firm had assets in excess of typical, mid-sized hedge funds. The disorderly unwinding of some USD20 billion of liquid capital as a result of its wayward bets heralded losses for several major banks including Credit Suisse, which reportedly took an initial USD5 billion hit, as well as Nomura.
The episode raised fundamental questions over risk management, portfolio transparency, margin limits and greater regulatory scrutiny across the hedge fund and prime brokerage sphere.
In a statement on Thursday unveiling its group strategy, Credit Suisse pledged to place risk management, and the importance of accountability and responsibility, at its core.
“As part of the outcomes of the strategic review, the bank will continue to focus on risk culture, putting risk management at the heart of all its actions, with investments in data, infrastructure, reporting capabilities, as well as in compliance,” it said.
Credit Suisse said it will exit most prime services, with the exception of Index Access and APAC Delta One, over the course of 2021 and 2022, and instead invest in businesses “where there are clear competitive advantages as well as those that are capital-light advisory-driven and/or have connectivity to Wealth Management.”
Other changes include the addition of 500 new relationship managers, and a 60 per cent increase in technology investments by 2024.
Like this article? Sign up to our free newsletter Author Profile Hugh Leask Employee title Editor, Hedgeweek Twitter Linkedin Related Topics Restructuring Results & performanceTrium Sustainable Innovators launches think tank to advocate ESG best practice
The Trium Sustainable Innovators has launched the Leonie & Norman Institute, a new think tank focused on advocating ESG best practice within the asset management industry.
Harnessing the research that underlies the Trium Sustainable Innovators Fund range, the think tank serves as the strategy’s engagement arm. It focuses on both identifying best practices among companies that exhibit high standards in the application of environmental, social and governance (ESG) criteria and engaging with other corporates to share these leading-edge approaches.
The core belief of the Leonie & Norman Institute is that engagement is critical to driving corporate change. It will work to raise company-specific concerns to management teams and make recommendations for the broader asset management industry. Based in London, the think tank will run a range of campaigns on specific ESG themes, with a particular focus on climate change, social issues and executive compensation.
Alongside the launch of the think tank, the Leonie & Norman Institute has published its inaugural research paper, which argues ambiguity around definitions of carbon neutrality and net zero must be addressed at COP26 to set corporate stakeholders on a clearer path to reducing emissions. The report also shows that transparency and comparability remain significant barriers to progress, with a wide range of reporting standards across different companies and jurisdictions.
The Leonie & Norman Institute also predicts that water emissions will be the next trend in the discourse around achieving net zero. The paper discusses how effective reuse of water represents a highly cost-effective way to reduce greenhouse gas emissions and can help the planet prepare for water supply challenges as the impact of climate change deepens.
Raphael Pitoun, portfolio manager of the Trium Sustainable Innovators Funds, says: “Meaningful engagement from asset managers is absolutely vital to drive effective long-term corporate change. However, there is currently a wide range of approaches to engagement with little consistency across the sector. This is despite growing pressure from governments to position the financial sector at the heart of progress on climate change and other major ESG-related issues.
“We believe the Leonie & Norman Institute will play an important role in driving the change that is needed to improve the quality and consistency of engagement with businesses. It is an open ecosystem that will collaborate with a wide range of groups from NGOs and charities to asset managers and corporates. Only by bringing together the collective expertise and experiences of these different groups can we move towards an effective, future-proof approach across industries.”
Like this article? Sign up to our free newsletter Author Profile Related Topics ESG & Responsible InvestingSigTech launches Data Showroom for alternative data owners
Quant technology provider SigTech has launched a new Data Showroom, which revolutionises the way data owners sell their data to fund managers and asset owners, reducing the sales cycle from months to weeks.
Responding to the booming alternative data market that is set to grow from USD1.7 billion today to USD69 billion by 2028, the SigTech Data Showroom is the first platform of its kind, making alternative data readily available for signal discovery and strategy construction within a market leading backtesting engine.
Data Showroom allows users to validate the value of alternative data within days rather than months, by providing preloaded, mapped and harmonised data, as well as signal code examples and backtesting building blocks. It also provides more transparency into how customers are using their data, making it easier to better engage prospects and to convert trial users into paying clients.
As a result, Data Showroom unlocks a broader addressable audience for data owners and helps to identify and scale their most successful market segments.
Andrew Liddle, Chief Operating Officer at SigTech, says: “Data Showroom is a game-changing new product that fills a critical gap in the data value chain. We’re excited to unlock value for the entire data ecosystem and help quant investors and traders to minimise alpha decay.
"Data Showroom presents an opportunity for data owners to differentiate their proposition and capture the huge monetisation opportunity in this market.”
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