Hedgeweek Interviews
Hedgeweek Americas Awards: Equity hedge funds weather the storm
After the GameStop/Reddit short squeeze saga dealt bruising losses to several hedge funds, and global stock markets continue to be shaken by the ongoing Covid-19 pandemic, the Equities section is set to be one of the most closely-watched categories at this year’s Hedgeweek Americas Awards.
Three strategies have been nominated in the Best Equity Hedge Fund (over USD500 million) category at this year’s event, which take place in New York on 21 October: Anson Funds Management’s Anson Investments Master Fund, Malabar Investments’ Malabar India Fund and Peconic Partners’ Peconic Grenadier Fund.
Launched in 2007, Anson’s flagship strategy combines elements of long/short equity, event driven, merger arbitrage and capital structure arbitrage investing. The Malabar India Fund specialises in small-to-midsized companies in India that are leaders in their respective niche areas, trading a concentrated portfolio of names built on in-depth proprietary research. The long-running Peconic Grenadier Fund invests in global securities long and short using a range of hedging and derivatives strategies.
Elsewhere, the three managers in the running for the Best Equity Hedge Fund (up to USD500 million) award are: Atyant Capital Management’s Atyant Capital India Fund 1, Loyola Capital Management’s Loyola Capital Partners, and TAH Management/Tenth Avenue Holdings’ TAH Core Fund.
Overall, equity hedge funds overcame the tumultuous events of 2020 in style, notching up an impressive near-18 per cent annual gain. This year, meanwhile, managers have successfully navigated the coordinated billion-dollar raid by amateur online traders against short positions in GameStop, as well as continued bouts of market volatility and uncertainty surrounding the Covid pandemic.
The sub-sector has generated returns of more than 11 per cent so far in 2021, outflanking the broader hedge fund industry, which is up 9.45 per cent to the end of July, according to Hedge Fund Research data.
Looking ahead, the outlook for equity-focused hedge funds remains finely balanced, according to Man FRM. Its third quarter outlook noted that while high dispersion is a positive, short squeezes and violent factor rotations remain “vulnerabilities” for the strategy.
The categories are among 29 fund manager awards to be announced at an exclusive presentation ceremony and industry networking event held at The University Club of New York on 21 October, which recognises and honours excellence among hedge fund managers and service providers in the Americas region.
Hosted by Hedgeweek, with fund manager data being provided in partnership with Bloomberg, the Awards – which are voted for by participants within the hedge fund industry itself – represent an important mark of recognition and respect among peers, investors, advisors, and counterparties.
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 Related Topics Awards FundsHedge fund strategies show moderate performance in June, says EDHEC-Risk
The month of June was characterised by a positive trend on the stock markets, with the S&P 500 registering a rather strong performance (2.33 per cent), its fifth consecutive month of profits, leading to 15 per cent cumulative increase since the beginning of the year.
Market implied volatility decreased, for the fourth consecutive month, to 15.83 per cent, returning to the levels observed in 2019, before the coronavirus crisis. This value is also much lower than its long-term average performance (around 21 per cent).
On the bond market, a mixed situation prevailed as regular bonds posted negative return (-0.30 per cent), while convertible bonds posted positive return (1.60 per cent), the reverse of the situation observed last month. Concerning commodities market, the GSCI Commodity Spot index registered a positive return (3.23 per cent) for the third consecutive month, reaching its highest level in over more than six years.
The dollar rose quite strongly (2.59 per cent), after two months of decrease.
In this environment, most of the strategies delivered positive returns. The three exceptions were CTA Global (-0.56 per cent), Fixed-Income Arbitrage (-0.31 per cent) and Global Macro (-1.16 per cent), which was the lowest performing strategy. These three strategies, as well as Short Selling, were also those which were not at their highest index level since EDHEC-Risk hedge fund indices' inception (December 1996). This month, all strategies delivered lower returns than their average over the last twelve months.
The best performing strategy was Short Selling (3.41 per cent), far ahead of Distressed Securities (1.03 per cent) and Emerging Markets (0.96 per cent). The performance of the three equity-oriented strategies was quite low – Long/Short Equity (0.18 per cent), Event Driven (0.25 per cent) and Market Neutral (0.27 per cent) – compared to the S&P 500 performance.
Overall, the Funds of Funds strategy posted a positive, but weak return (0.35 per cent), far behind the S&P 500 performance.
First Sentier Investors integrates with Flowlinx via FlexTrade’s FlexTRADER EMS for access to liquidity data in emerging markets
First Sentier Investors, a global asset management group, has integrated with FlowLink via multi-asset execution and order management systems specialist FlexTrade's FlexTRADER EMS.
Flowlinx simplifies block liquidity search in Emerging and Frontier market equities. The Flowlinx integration with FlexTrade will allow clients such as First Sentier Investors to access local block liquidity data and make it easier to navigate the challenging liquidity landscape across Emerging and Frontier geographies seamlessly and efficiently.
Todd Prado, Global Head of Dealing at First Sentier Investors, says: “Our partnership with FlexTrade is like an extension to our development team. This integration with Flowlinx allows our team to better source liquidity in the harder to reach markets. This helps us automate workflow and communication with counterparts from within the multi-asset FlexTRADER EMS.”
Yan Gloukhovski, Founder of Flowlinx, says: “We are proud to work with First Sentier Investors, a highly regarded specialists in emerging markets equities and are delighted to be part of the FlexTRADER EMS. It’s been a pleasure working with the FlexTrade team, who are so open to innovative third-party solutions benefiting their clients.
Our data connectivity network aggregates and streamlines pre-trade information from local brokerages across more than 30 Emerging and Frontier markets. All contributions are automated, eliminating manual input and bringing reliable, actionable information to the surface. Information is delivered via a unique relationship-based protocol leading to meaningful and actionable conversations.”
James Hammond, Vice President Business Development – APAC at FlexTrade Systems, says: “This project demonstrates the engineering-driven culture at FlexTrade and the collaborative relationship we have with our clients. We are delighted to support First Sentier Investors by integrating directly with Flowlinx. This workflow provides easy access for traders to participate and consume data via the FlexTRADER EMS. When technology is built with openness in mind it helps to remove the friction that often comes with third party integration.”
Like this article? Sign up to our free newsletter Related Topics Trading & ExecutionMicro WTI Crude Oil futures surpass one million contracts traded
CME Group, the world's leading and most diverse derivatives marketplace, has announced that Micro WTI Crude Oil futures volume surpassed one million contracts on Friday, 6 August, 2021.
“Since launching just a month ago, we continue to see strong interest across the globe for our smaller-sized Micro WTI Crude Oil contract,” says Peter Keavey, Global Head of Energy. “Our benchmark WTI futures have always been the market’s choice for managing crude oil exposure, and the uptick we are seeing in new customers utilising the Micro WTI Crude oil futures demonstrates the value in the robust transparency and price discovery that our markets offer for traders of all sizes.”
“TradeStation is proud to have offered customers Micro WTI Crude Oil futures since day one of the launch,” says John Bartleman, President of TradeStation Group, Inc. “We send our congratulations to CME Group for surpassing this latest milestone and helping us meet strong demand from our clients. Our collaboration continuously allows us to offer our customers the latest futures products and technology.”
"Smaller sized futures contracts with smaller financial requirements have enabled more retail participation in futures markets,” says Steve Sanders, EVP of Marketing and Product Development at Interactive Brokers. “The strong demand for Micro WTI Crude Oil futures is evidence of this, and we are pleased that more of our sophisticated individual investors and active trader clients can trade in the global oil markets."
“The rapid growth of Micro WTI Crude Oil futures further reinforces the building demand from self-directed traders for smaller, more flexible contracts,” says Martin Franchi, CEO of NinjaTrader Group, LLC. “This increased accessibility to such a dynamic market has clearly resonated with both our NinjaTrader user community and new retail traders discovering the benefits available through futures.”
Centaur appoints Head of Business Development
Independent fund administrator Centaur Fund Services has appointed Michael Marisca as Head of Business Development. Based in Centaur’s US headquarters in New York, Marisca will be responsible for overseeing and growing the company’s sales and revenue globally.
Marisca has extensive business development experience in the funds industry and has held several senior operational and business development positions. His experience will be an important addition to Centaur as it continues to experience rapid growth in its North American business.
Marisca will report to Des Johnson, CEO of Centaur US, who says: “We are delighted to welcome Mike as Head of Business Development. He brings extensive leadership and business development experience which will be instrumental in driving sales and enabling Centaur to expand our North America footprint.”
Marisca says: “This is a tremendous time to join such a dynamic and fast-growing firm. Centaur is experiencing impressive growth, especially in North America, and I am very excited to join its leadership team in fulfilling its ambitious growth goals projections.”
Marisca holds an MBA from New York University.
Like this article? Sign up to our free newsletter Related Topics Moves & AppointmentsDigital asset funds see fifth week of outflows
Digital asset investment products saw a fifth week of outflows totalling USD26 million, although the level of the outflows is lower than seen in either in May and June, according to the latest Digital Asset Fund Flows Report from CoinShares.
Following recent price rises, total investment product AuM is now back at USD5 billion, the highest level since mid-May.
Ethereum market share is again rapidly rising and now represents 26 per cent of investment products.
The number of funds/investment products listed has accelerated recently with a record 37 launched this year compared to the previous high of 30 seen in 2018.
Like this article? Sign up to our free newsletter Related Topics Digital Assets Surveys & researchExegy names new CRO
Exegy Inc, a global specialist in low-latency market data and execution solutions, predictive trading signals, and hardware-acceleration technology, has appointed Craig Schachter as Chief Revenue Officer (CRO).
In this newly created leadership role, Schachter will be responsible for setting and leading the organisation’s global go-to-market strategy and execution, with a focus on superior business outcomes for the customer base.
Schachter comes to Exegy with over 25 years of experience as a sales leader in global software, data, and service companies. Prior to joining Exegy, Schachter was responsible for relationship management across SS&C Technologies’ Financial Services Group. He also held senior leadership roles at Finastra, FIS, SunGard, and Xcitek/XSP, where he developed a wealth of knowledge, expertise, and network within all the major verticals within financial services and FinTech operations. Since entering the financial services and technology solutions industry, Schachter has assumed increasing levels of responsibility and shown proven results as a global leader. His past experiences and successes provide the perspectives and market insights needed to move Exegy forward as it expands its global footprint and broadens its offerings to new and existing customers.
“The combination of Craig’s experience and understanding of the FinTech market space coupled with his customer solution-centric approach, aligns extremely well with Exegy’s mission and vision as we bring forward our expanded portfolio of premier market data and execution platforms,” says Chief Executive Officer Jim O’Donnell. Based in Exegy’s New York office, Schachter will report to O’Donnell.
More than just knowing the industry, Schachter is a passionate and empathetic leader of people, specialising in building and cultivating relationships, while taking a “learn-it-all” rather than a “know-it-all” approach to his work. Schachter has been a champion for diversity and inclusion programs in multiple companies and has mentored numerous colleagues and employees over the years.
“I’m excited to join Exegy at this pivotal time and help drive the next phase of growth for our company,” says Schachter. “With the backing of Marlin Equity Partners, we are uniquely positioned to bring new and innovative products to market, adding immediate value for our buy- and sell-side customers in the electronic trading space. We have amazingly talented people here and state-of-the-art patented technology that will continue to lead the industry. I look forward to playing an integral role in accelerating Exegy’s growth and bringing value to this high-calibre team and partnering with our prestigious global customer base.”
Hedge funds fall into the red as volatility and variants halt nine-month rise
Hedge funds’ nine-month consecutive run of positive returns has been halted, with managers ending last month in the red as market volatility and renewed uncertainty over the impact of coronavirus variants.
Hedge Fund Research’s main industry-wide benchmark, the HFR Fund Weighted Composite Index – which tracks the monthly returns of some 1400 single manager hedge funds across all strategy types – lost 0.60 per cent in July, its first down month since September 2020.
The dent means hedge funds have now returned 9.45 per cent gain since the start of 2021. Before last month, the industry’s January-to-June advance – a rise of some 10 per cent – had been its best first-half performance since 1999, according to HFR data.
HFR president Kenneth Heinz said: “Hedge funds navigated a volatile market environment in July with mixed performance across sub-strategies and narrow declines across broad-based indices as, despite strong corporate earnings, investors focused on increased uncertainty surrounding renewed focus on the spread of virus variants.”
Long/short equity hedge funds gave back 0.76 per cent during July, with year-to-date returns now standing at 11.12 per cent, HFR data shows. Sector-focused equity managers were hit hardest, with healthcare hedge funds losing 2.87 per cent for the month, and energy and basic materials-focused managers down 2.38 per cent. But while the former is up just 1.02 per cent for the year, the latter remains up more than 16 per cent YTD, the best overall performing equity sub-strategy in 2021.
On the upside, quantitative directional (1.67 per cent), multi-strategy (0.86 per cent), market neutral (0.70 per cent), and technology-focused hedge funds (0.35 per cent) were the only equity hedge funds that ended July in positive territory.
Elsewhere, event driven hedge funds - which often trade out-of-favour, deep value equities and have been looking to capitalise on growing M&A activity this year – lost 0.82 per cent in July. Year-to-date, HFR’s event driven index remains up 10.75 per cent.
Within the event driven sector, activist strategies were flat at 0.06 per cent, while credit arbitrage funds added 0.80. All other strategy types were down, with multi-strategy event driven funds losing 3.11 per cent, merger arbitrage falling 1.77 per cent, special situations managers down 0.94 per cent and distressed strategies slipping 0.34 per cent.
Global macro hedge funds suffered their second consecutive down month in July, dropping 0.10 per cent following June’s 0.96 per cent slide. In the seven-month period since the start of January, macro managers – which make bets on macroeconomic events using equities, fixed income, currencies, commodities and futures markets – are up 8.22 per cent.
Active trading (-1.95 per cent), currency (-1.56 per cent), commodity (-0.97 per cent), and discretionary thematic (-0.96 per cent) funds were all down in July, though multi-strategy (0.03 per cent) and systematic diversified managers (0.59 per cent) ended the month in the black, as equity, inflation, and economic reopening data heralded mixed performances.
Fixed income-based relative value strategies, which are sensitive to rate movements, lost 0.80 in July, and are up 5.69 per cent year-to-date, with asset-backed funds up 0.10 per cent and fixed income sovereign-focused managers rising 0.38 per cent, while multi-strategy funds fixed income strategies dipped 1.87 per cent, and yield alternatives lost 4.43 per cent.
Elsewhere, emerging markets hedge funds were also down in July to the tune of 0.24 per cent, but year-to-date they are up 9.60 per cent. The best performing EM sub-strategy last month was India-focused funds, which advanced 6.25 per cent, while those trading Latin America slumped 4.10 per cent.
“The evolving macroeconomic environment continues to be fluid with reflationary, expansionary trends subject to sharp reversals and falling rates and inflation expectations,” Heinz observed.
“Hedge funds remain tactically positioned for these shifts, with high realised equity market volatility, oscillating between record highs and sharp correction cycles within intra-month, or even shorter, market cycles.”
Like this article? Sign up to our free newsletter Related Topics Results & performance Funds Surveys & researchInvestors brace for increased foreign exchange volatility
Professional investors are forecasting increased volatility and trading across the foreign exchange markets, new global research from blockchain-based derivatives trading platform CloseCross shows.
A study of professional investors around the world responsible for around USD380 billion in assets under management found 28 per cent are predicting a dramatic increase in volatility on currency markets over the next six months with nearly half (47 per cent) predicting a slight increase. Less than one in 10 (9 per cent) believe volatility will ease.
The increased volatility will be accompanied by an increase in trading with 76 per cent expecting the level of trading to increase over the next 12 months. Around 23 per cent are predicting a significant rise in trading. Around 17 per cent expect the level of trading to stay the same while just 7 per cent believe it will drop.
The study for CloseCross, which enables traders to generate profits through a simplified three clicks process of selecting an asset, predicting price-bracket(s), and committing funds to these predictions, for a variety of asset classes including forex pairings, crypto, stocks, indexes and commodities, reveals a wide range of views on currency movements (see the tables below for views on the Euro and Dollar). which is regulated under MIFID II, rules
For example, 37 per cent of the professional investors surveyed, who include hedge funds, wealth managers, institutional investors, fund managers and IFAs, expect the Euro to strengthen against the Swiss Franc over the next 12 months while 47 per cent expect it to stay the same and 16 per cent expect it to weaken.
CloseCross CEO, Vaibhav Kadikar, says: “Traders on the FX markets are in for a tough six months with increasing volatility making it more difficult to correctly predict market movements and making trading riskier.
“Professional investors are clearly split on what will happen to the prices of major currencies which inevitably makes it harder for retail traders. CloseCross enables traders to generate returns based on their asset price predictions in any direction, including predicting stability of prices.
“The platform also offers CloseCross Crowd Wisdom which provides real-time data on the views and investments of other traders enabling investors to make a more informed forecast based on increased transparency. People can choose to follow the crowd or go on their own views.”
CloseCross is regulated under MIFID II rules offering increased protection and transparency for customers. Unlike other trading platforms, there are no participation fees for using CloseCross, and its patented multiparty model ensures that leverage is not needed to achieve potentially outsized returns. Money placed on incorrect predictions is lost, but you never lose more than what you put in as there is no leverage needed or possible on the platform. Users pay facilitation fees, only on their winning trades, giving them significant savings when compared to traditional trading platforms.
The platform also provides real-time data on the predictions of other traders enabling investors to make a more informed forecast based on increased transparency. People can choose to follow the crowd or go on their own views.
Like this article? Sign up to our free newsletter Related Topics Surveys & researchInvestors brace for increased foreign exchange volatility
Professional investors are forecasting increased volatility and trading across the foreign exchange markets, new global research from blockchain-based derivatives trading platform CloseCross shows.
A study of professional investors around the world responsible for around USD380 billion in assets under management found 28 per cent are predicting a dramatic increase in volatility on currency markets over the next six months with nearly half (47 per cent) predicting a slight increase. Less than one in 10 (9 per cent) believe volatility will ease.
The increased volatility will be accompanied by an increase in trading with 76 per cent expecting the level of trading to increase over the next 12 months. Around 23 per cent are predicting a significant rise in trading. Around 17 per cent expect the level of trading to stay the same while just 7 per cent believe it will drop.
The study for CloseCross, which enables traders to generate profits through a simplified three clicks process of selecting an asset, predicting price-bracket(s), and committing funds to these predictions, for a variety of asset classes including forex pairings, crypto, stocks, indexes and commodities, reveals a wide range of views on currency movements (see the tables below for views on the Euro and Dollar). which is regulated under MIFID II, rules
For example, 37 per cent of the professional investors surveyed, who include hedge funds, wealth managers, institutional investors, fund managers and IFAs, expect the Euro to strengthen against the Swiss Franc over the next 12 months while 47 per cent expect it to stay the same and 16 per cent expect it to weaken.
CloseCross CEO, Vaibhav Kadikar, says: “Traders on the FX markets are in for a tough six months with increasing volatility making it more difficult to correctly predict market movements and making trading riskier.
“Professional investors are clearly split on what will happen to the prices of major currencies which inevitably makes it harder for retail traders. CloseCross enables traders to generate returns based on their asset price predictions in any direction, including predicting stability of prices.
“The platform also offers CloseCross Crowd Wisdom which provides real-time data on the views and investments of other traders enabling investors to make a more informed forecast based on increased transparency. People can choose to follow the crowd or go on their own views.”
CloseCross is regulated under MIFID II rules offering increased protection and transparency for customers. Unlike other trading platforms, there are no participation fees for using CloseCross, and its patented multiparty model ensures that leverage is not needed to achieve potentially outsized returns. Money placed on incorrect predictions is lost, but you never lose more than what you put in as there is no leverage needed or possible on the platform. Users pay facilitation fees, only on their winning trades, giving them significant savings when compared to traditional trading platforms.
The platform also provides real-time data on the predictions of other traders enabling investors to make a more informed forecast based on increased transparency. People can choose to follow the crowd or go on their own views.
Like this article? Sign up to our free newsletter Related Topics Surveys & researchBitfinex launches BIT Mode on Satoshi
Bitfinex, a digital token trading platform, has made BIT Mode on Satoshi available to the exchange’s user base, enabling customers to divide their holdings into the smallest units of a bitcoin.
SAT and BIT Mode is now available (1BIT = 100 Satoshis = microbitcoin). A satoshi is the smallest unit of a bitcoin, equivalent to 100 millionth of a bitcoin. Splitting bitcoins into smaller units is a means of facilitating smaller transactions.
“The launch of SAT Mode on Satoshi is fitting for an exchange that is a pioneer in the space that never forgets the ethos from which bitcoin was originally invented,” says Paolo Ardoino, CTO at Bitfinex. “This will facilitate micro-transactions in bitcoin, enabling users who may be dabbling with their first bitcoin purchases to further familiarise themselves with this amazing technology.”
To enable SAT or BIT Mode, users should take the following steps: go into account settings, interface, layout before obtaining access to BITCOIN View Mode. The following options will now be available: BTC, SAT (1/100M BTC), BIT (1/1M BTC).
A satoshi is named after Satoshi Nakamoto, the creator of bitcoin. The satoshi to bitcoin ratio is 100 million satoshis to one bitcoin. Given that the value of bitcoin has increased to almost USD40,000, it is satoshis that a bitcoin holder should track in order to break a bitcoin down into units used for everyday purchases such as buying a cup of coffee.
Like this article? Sign up to our free newsletter Related Topics Digital Assets Trading & ExecutionBitfinex launches BIT Mode on Satoshi
Bitfinex, a digital token trading platform, has made BIT Mode on Satoshi available to the exchange’s user base, enabling customers to divide their holdings into the smallest units of a bitcoin.
SAT and BIT Mode is now available (1BIT = 100 Satoshis = microbitcoin). A satoshi is the smallest unit of a bitcoin, equivalent to 100 millionth of a bitcoin. Splitting bitcoins into smaller units is a means of facilitating smaller transactions.
“The launch of SAT Mode on Satoshi is fitting for an exchange that is a pioneer in the space that never forgets the ethos from which bitcoin was originally invented,” says Paolo Ardoino, CTO at Bitfinex. “This will facilitate micro-transactions in bitcoin, enabling users who may be dabbling with their first bitcoin purchases to further familiarise themselves with this amazing technology.”
To enable SAT or BIT Mode, users should take the following steps: go into account settings, interface, layout before obtaining access to BITCOIN View Mode. The following options will now be available: BTC, SAT (1/100M BTC), BIT (1/1M BTC).
A satoshi is named after Satoshi Nakamoto, the creator of bitcoin. The satoshi to bitcoin ratio is 100 million satoshis to one bitcoin. Given that the value of bitcoin has increased to almost USD40,000, it is satoshis that a bitcoin holder should track in order to break a bitcoin down into units used for everyday purchases such as buying a cup of coffee.
Like this article? Sign up to our free newsletter Related Topics Digital Assets Trading & ExecutionRM Targeted Investment Opportunities I strategy returns 36.8 per cent to investors
The RM Targeted Investment Opportunities I strategy was launched in October 2020 by RM Funds to allow investors to capitalise on the market dislocation in real asset prices and listed securities created by the global health pandemic. Now closed, the strategy has returned 36.8 per cent to investors.
The TIO strategy was set up to identify and invest in specific listed securities which had suffered a dislocation between their assets’ book value and the public security prices as a result of the pandemic.
Alongside the investment strategy, RM Funds worked to identify catalysts at the listed securities which could be harnessed to drive a rerating when utilised alongside an active management approach.
Each situation required a multi-disciplinary approach and contained common characteristics including asset backing, operational disruption, financially stable and importantly embedded optionality.
Pietro Nicholls, Head of Liquidate Alternatives, RM Funds says: “In its simplest form, our proposition was to provide liquidity to forced sellers, whilst capitalising on the dislocation between real asset prices and listed securities. In its most complex form, our mandate had the flexibility to engage with each investment’s executive management team and work constructively in creating shareholder value.”
“The strategy draws upon the three core pillars for RM Funds, our team and their diverse range of skills, experience and backgrounds, our proprietary technology platform, which allows us to analysis, monitor and revalue thousands of real assets in near real-time and our trading capabilities, allowing us to source, execute and build positions in all market conditions.”
Like this article? Sign up to our free newsletter Related Topics Results & performance FundsRM Targeted Investment Opportunities I strategy returns 36.8 per cent to investors
The RM Targeted Investment Opportunities I strategy was launched in October 2020 by RM Funds to allow investors to capitalise on the market dislocation in real asset prices and listed securities created by the global health pandemic. Now closed, the strategy has returned 36.8 per cent to investors.
The TIO strategy was set up to identify and invest in specific listed securities which had suffered a dislocation between their assets’ book value and the public security prices as a result of the pandemic.
Alongside the investment strategy, RM Funds worked to identify catalysts at the listed securities which could be harnessed to drive a rerating when utilised alongside an active management approach.
Each situation required a multi-disciplinary approach and contained common characteristics including asset backing, operational disruption, financially stable and importantly embedded optionality.
Pietro Nicholls, Head of Liquid Alternatives, RM Funds says: “In its simplest form, our proposition was to provide liquidity to forced sellers, whilst capitalising on the dislocation between real asset prices and listed securities. In its most complex form, our mandate had the flexibility to engage with each investment’s executive management team and work constructively in creating shareholder value.”
“The strategy draws upon the three core pillars for RM Funds, our team and their diverse range of skills, experience and backgrounds, our proprietary technology platform, which allows us to analysis, monitor and revalue thousands of real assets in near real-time and our trading capabilities, allowing us to source, execute and build positions in all market conditions.”
Like this article? Sign up to our free newsletter Related Topics Results & performance FundsHedge funds must build partnerships with investors in Europe, says new survey
Hedge fund managers in Europe need to focus on building closer partnerships with investors by providing additional services, according to the latest issue of The Cerulli Edge—Global Edition.
Hedge fund managers have institutionalised their offerings in the past decade, but based on a survey by Cerulli Associates, there is a recognition of the importance of establishing strong ties with investors. More than half (58 per cent) of the managers Cerulli surveyed said that focusing on partnerships will be a very important priority over the next 24 months when distributing their hedge fund strategies.
“Although providing additional services will be challenging for smaller managers, mid-sized and larger managers should aim to build holistic partnerships with their clients; this can improve investor retention even during downturns in performance,” says Justina Deveikyte, director in Cerulli’s European institutional research team.
Such partnerships typically feature reporting capabilities (including environmental, social, and governance, or ESG, metrics), exposure to investment teams, and digital content. In addition, although transparency has improved, managers will need to make further progress as investors demand more position-level exposure data, including ESG metrics at the security and fund levels. This demand is expected to stem predominantly from European institutions rather than private banks or family offices.
Although Cerulli’s research indicates that European investor interest in hedge funds is set to increase, to create fundraising opportunities, managers will need to increase their competence in responsible investing, improve their client servicing, and focus their product development initiatives on unique and capacity-constrained propositions. Sustainability-oriented hedge funds, including liquid alternatives, are expected to become more dominant in the market as institutional investors expand their responsible investment policies to cover the whole of their portfolios. Cerulli’s survey found that 73 per cent of hedge fund manager respondents prioritise incorporating ESG considerations into the investment process. However, the assets under management (AUM) of dedicated ESG liquid alternative funds remain low, representing only 2 per cent of total industry AUM. Nearly two-thirds (60 per cent) of the hedge fund managers Cerulli surveyed see the incorporation of ESG factors as a competitive advantage.
“Although dedicated ESG liquid alternative fund AUM remains limited, representing only 2 per cent of total industry AUM, Cerulli anticipates growth. We expect managers’ negative screening approaches to gain most traction,” says Deveikyte.
One niche area that is experiencing growth is hedge fund replication and passive benchmark-tracking strategies that aim to provide a more passive exposure to an underlying hedge fund benchmark. Although the demand for such strategies remains low, growth is likely. Investors can use these products as a bridge while changing or investing in new traditional hedge fund strategies, or as a cheaper alternative to traditional hedge fund exposure.
Like this article? Sign up to our free newsletter Related Topics Funds Surveys & researchHedge funds must build partnerships with investors in Europe, says new survey
Hedge fund managers in Europe need to focus on building closer partnerships with investors by providing additional services, according to the latest issue of The Cerulli Edge—Global Edition.
Hedge fund managers have institutionalised their offerings in the past decade, but based on a survey by Cerulli Associates, there is a recognition of the importance of establishing strong ties with investors. More than half (58 per cent) of the managers Cerulli surveyed said that focusing on partnerships will be a very important priority over the next 24 months when distributing their hedge fund strategies.
“Although providing additional services will be challenging for smaller managers, mid-sized and larger managers should aim to build holistic partnerships with their clients; this can improve investor retention even during downturns in performance,” says Justina Deveikyte, director in Cerulli’s European institutional research team.
Such partnerships typically feature reporting capabilities (including environmental, social, and governance, or ESG, metrics), exposure to investment teams, and digital content. In addition, although transparency has improved, managers will need to make further progress as investors demand more position-level exposure data, including ESG metrics at the security and fund levels. This demand is expected to stem predominantly from European institutions rather than private banks or family offices.
Although Cerulli’s research indicates that European investor interest in hedge funds is set to increase, to create fundraising opportunities, managers will need to increase their competence in responsible investing, improve their client servicing, and focus their product development initiatives on unique and capacity-constrained propositions. Sustainability-oriented hedge funds, including liquid alternatives, are expected to become more dominant in the market as institutional investors expand their responsible investment policies to cover the whole of their portfolios. Cerulli’s survey found that 73 per cent of hedge fund manager respondents prioritise incorporating ESG considerations into the investment process. However, the assets under management (AUM) of dedicated ESG liquid alternative funds remain low, representing only 2 per cent of total industry AUM. Nearly two-thirds (60 per cent) of the hedge fund managers Cerulli surveyed see the incorporation of ESG factors as a competitive advantage.
“Although dedicated ESG liquid alternative fund AUM remains limited, representing only 2 per cent of total industry AUM, Cerulli anticipates growth. We expect managers’ negative screening approaches to gain most traction,” says Deveikyte.
One niche area that is experiencing growth is hedge fund replication and passive benchmark-tracking strategies that aim to provide a more passive exposure to an underlying hedge fund benchmark. Although the demand for such strategies remains low, growth is likely. Investors can use these products as a bridge while changing or investing in new traditional hedge fund strategies, or as a cheaper alternative to traditional hedge fund exposure.
Like this article? Sign up to our free newsletter Related Topics Funds Surveys & researchVistra launches SPAC and de-SPAC services
Vistra has launch its Special Purpose Acquisition Companies (SPAC) service, which aims to provide a tailored proposition built around the key phases of a SPAC to address each stage of growth – beginning with an IPO through to de-SPACing and business growth.
Leveraging Vistra’s extensive expertise across multiple jurisdictions, sectors, and intermediary relationships, Vistra supports a wide range of SPAC scenarios. Vistra also provides leading entity expertise with over 200,000 entities under management, including Special Purpose Vehicles (SPVs).
“As we experience accelerated change across the business landscape globally, SPACs have picked up pace and continue to develop as an alternative to traditional IPOs in capital markets due to the speed in which they can bring companies to the public market – providing the strategic combination of funding and know-how of sponsors to rapidly scale high growth businesses around the world,” says Navita Yadav, Global Head, Capital Markets, Vistra.
Essentially an IPO in reverse, SPACs are entities without operations that are listed on an exchange with the purpose of raising capital to acquire a target company that aligns with pre-defined investment criteria. Typically, a SPAC has two years to find a suitable target operating company, then effect a reverse takeover, after which the SPAC is an operating company.
Once the operating entity is known and the reverse takeover has taken place, SPACs may also wish to migrate to another stock exchange that more readily fits their operations. Should a SPAC fail to make an acquisition within the stipulated timeframe, they may also need to cancel their listing or admission.
“Although the process for public listing has accelerated via SPACs, there are still multiple considerations such as selection of stock exchange, jurisdiction for entity set-up, entity governance, and operational support to name a few. Vistra helps remove the complexities associated with going public through our full lifecycle SPAC offering,” says Debbie Farman, Head of Advisory UK and Global Co-Lead Advisory.
Vistra’s SPAC service is a strong complement to Vistra’s existing capital markets, international expansion, fund structuring and administration services.
Link Group completes acquisition of Casa4Funds
Following the announcement in December 2020 that Link Group had signed an agreement with Banor Capital for the acquisition of Casa4Funds, the deal is now complete following regulatory approval from the CSSF.
The acquisition provides additional scale for Link Fund Solutions in Luxembourg, Europe’s largest investment fund centre. It also provides access to Casa4Funds’ extensive experience in a wide range of traditional and alternative asset classes including hedge funds, private equity, real estate and debt.
Jean-Luc Neyens, Managing Director, Fund Solutions Luxembourg, Link Group, says: “The completion of our acquisition of Casa4Funds, one of Europe’s oldest third-party UCITS Management Companies and AIFMs, is a sign of our continued expansion and strategic ambition. We are committed to reinforcing our position as one of Europe’s leading independent ManCos and Authorised Fund Managers. Casa4Funds’ experts bring an exceptional wealth of experience across traditional and alternative asset classes, and a solid knowledge of Europe’s main asset management centres. We greatly look forwards to working with them.”
Alt investment fund managers predict growing popularity of IFCs
An overwhelming majority (85 per cent) of alternative fund managers expect to see increased demand for investment vehicles to be based in international financial centres (IFCs) over the coming three to five years, driven by a skills gap and potential tax increases in their local jurisdictions to combat the impact of Covid-19.
That's according to a new global study commissioned by Ocorian, which reveals that, on a regional basis, Asia-based fund managers are the most bullish about the use of IFCs for funds and other investment vehicles (96 per cent), ahead of North America and Africa (both 92 per cent), considerably ahead of Europe, which saw only 60 per cent of investors expect to see an increase.
Local skills shortages in their existing jurisdictions were cited by 81 per cent of respondents as the biggest driver behind the growing popularity of IFCs, closely followed by likely tax increases resulting from the economic impact of Covid-19 (74 per cent). The impact of Brexit (35 per cent) and increasingly complex local regulation (22 per cent) are likely to have much less influence on their choice of IFCs.
Ocorian commissioned independent research among 100 senior-level alternative fund managers including hedge funds, private equity, real estate, venture capital and infrastructure working in Europe, North America, Africa and Asia to assess their operational readiness as they plan their post-Coronavirus pandemic investment strategies.
The study highlights how investor preference is playing a crucial role in encouraging fund managers to redomicile their funds to an IFC, with 71 per cent of respondents citing this factor, ahead of attractive structuring and distribution options (53 per cent and 49 per cent respectively).
According to the study, the three IFCs expected to attract the largest amount of new capital into their tax efficient structures in the coming three to five years are the British Virgin Islands, Barbados and the Cayman Islands, followed by Bahrain, Dublin and Curacao in fourth and joint fifth places respectively.
Simon Burgess, Head of Alternative Investments at Ocorian, says: "International financial centres are already the preferred location for many alternative fund managers but there is every sign that the relationship will become even closer in the years to come as qualities including access to talent and competitive tax rates prove even more compelling. Against a highly competitive fundraising climate it is little surprise that fund managers will switch to a new international domicile that is in keeping with investor preference, too.
“When moving to a different domicile, it is important to do your research and keep abreast of all the regulatory and tax changes. This can be a labour-intensive exercise, but this is where a fund services provider can help, offering on-the-ground expertise. However, careful due diligence of service providers is key, because some are struggling to keep up with changing regimes and are receiving record fines.”
In anticipation of the increased focus on IFCs, three-quarters (72 per cent) of respondents believe that outsourcing will play an even more central role in the coming years. All the fund managers surveyed currently outsource elements of their work to a third party, with accounting (41 per cent), company secretarial support, regulatory reporting and loan agency (all 38 per cent) being the most popular activities.
Hedgeweek Americas Awards: Covid pandemic throws spotlight onto healthcare-focused strategies
With the Covid-19 pandemic proving the defining factor shaping the direction of economies and markets globally over the past 18 months, hedge fund strategies trading healthcare stocks have come into particularly sharp focus.
The vaccine race and subsequent rollout, the emergence of digital and remote diagnostics and treatment services during lockdowns, and the impact of the Biden administration on the US healthcare industry are among the assortment of factors which will potentially herald far-reaching implications for healthcare stocks in the next few years.
For equity hedge fund managers trading this sector, 2020 proved to be stellar year. Healthcare hedge funds scored a near-27 per cent annual gain on average, with a nine-month uninterrupted run of positive returns from April onwards, according to Hedge Fund Research data. That was more than double the 12 per cent gain notched up by the wider hedge fund industry last year.
W2021 has proved altogether trickier, however. Healthcare hedge funds remain in positive territory to the end of July, but their 2.57 per cent average return lags well behind the broader industry gains of more than 10 per cent YTD.
Still, a handful of managers have shrugged off recent challenges to maintain their strong performances over the course of the pandemic, and three strategies have been nominated for the Best Equity Sector-Focused Hedge Fund (Healthcare) category at this year’s Hedgeweek Americas Awards 2021.
Blue Water Life Science Advisors’ Blue Water Life Science Fund, Optima Management Partners’ JENOP Global Healthcare Fund, and Pura Vida Investments’ Pura Vida Master Fund are all in contention for the award, one of 29 fund manager categories to be announced at an exclusive presentation ceremony and industry networking event held at The University Club of New York on 21 October.
Recognising and honouring excellence among hedge fund managers and service providers in the Americas region, and voted for by participants within the hedge fund industry itself, the Hedgeweek Americas Awards – hosted by Hedgeweek, with fund manager data being provided in partnership with Bloomberg – represent an important mark of recognition and respect among peers, investors, advisors, and counterparties.
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