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Hedge funds are ramping up wagers on the yen’s continued strength, with the Japanese currency surging by another 1% on Friday, as traders bought options against the Australian dollar, Swiss franc, and offshore Chinese yuan, according to a report by Bloomberg.

The yen has gained about 14% against the US dollar since the end of June, driven by signals from the Bank of Japan (BOJ) that it may raise interest rates again, although not at its upcoming meeting next week. This has led to the rapid unwinding of short yen positions and boosted the currency to its highest level, 140.37, since December 2023.

Expectations of rate cuts from the Federal Reserve have also contributed to the yen’s rise.

The report quotes Jane Foley, Head of Foreign-Exchange Strategy at Rabobank in London, as saying that :“If the BOJ next week doesn’t shut the door on another rate hike around the turn of the year, we expect USD/JPY to continue moving towards 140 in a three-to-six-month view.”

Other analysts predict the dollar-yen pair may drop to 135 by year-end, a nearly 4% decline from current levels.

Next week is crucial for yen options trades as both the BOJ and the Federal Reserve will make key policy decisions. The BOJ’s decision next Friday will follow a likely Fed rate cut earlier in the week. Comments from BOJ board members have hinted at the possibility of more rate hikes after Japan raised its policy rate to 0.25% in July.

Zodia Custody, an institution-first digital asset custodian, whose shareholders include Standard Chartered, SBI Holdings, Northern Trust, and National Australia Bank, has launched an integration with the Solana stake automation platform, Marinade.

This integration enables Zodia’s institutional clients to access Solana staking via Zodia Gateway, an ecosystem of third-party services. Investors can connect with Marinade and stake directly from their Zodia Custody cold wallets.

According to a press statement, Zodia Custody and Marinade will bring the Solana ecosystem closer to institutions looking to generate additional potential rewards on their digital asset holdings. The partnership adds a fifth blockchain to the ETH, DOT, ADA and BNB staking options that the Zodiac Custody already supports.

Arrowpoint Investment Partners, one of the largest hedge funds launched in Asia this year, is rapidly expanding its presence in Hong Kong and has taken on an entire floor at the newly built Six Pacific Place in Wanchai, according to a report by Reuters.

The report cites three sources familiar with the development as confirming that the firm, founded by the former Asia co-CEO of Millennium Management Jonathan Xiong, has leased the 22nd floor of the office tower owned by Swire Properties. The hedge fund plans to relocate from its current co-working space to the nearly 8,000-square-foot (743 sq m) office in the first quarter of 2025, according to one of the sources.

Since starting trading in July, Arrowpoint has been aggressively growing its team. Backed by major investors, including Blackstone and the Canada Pension Plan Investment Board (CPPIB), the $1bn multi-manager fund is headquartered in Singapore, with an additional office in Hong Kong. The firm is on track to more than double its staff to around 100 employees by the first quarter of 2025, with 60% based in Singapore and the remainder in Hong Kong. Arrowpoint is expected to have over 20 trading teams by that time, the source added.

Arrowpoint declined to comment on its expansion plans.

Arrowpoint is also planning a move in Singapore, with its office set to relocate to Marina One in early 2024, according to the same source.

Steve Cohen’s Point72 Asset Management is preparing to return a significant portion of capital to investors for the first time, joining other large multi-strategy hedge funds that are capping assets after a period of rapid growth, according to a report by Bloomberg.

The report cites unnamed sources familiar with the matter, as revealing that the firm is considering returning profits to clients by the end of the year. The amount could run into billions, though the exact figure has not been finalised and plans may still change.

Hedge fund managers typically restrict new money or return cash to investors to avoid getting too big as size can pose challenges when navigating volatile markets and managing certain asset classes.

Since 2020, Point72 has raised nearly $12.8bn, and its AUM have reached a record $35.2bn. The firm has gained around 10% through August this year, adding over $3bn in profit, according to Bloomberg News. A Point72 representative declined to comment on the potential capital returns.

Point72 is joining other multi-stat peers in returning investor cash with Citadel having returned $25bn to clients since 2017, and Millennium about $38bn since 2020, though much of that has returned to the firm via a new share class.

Elliott Advisors, the UK arm of activist hedge fund giant Elliott Investment Management, significantly boosted pay for its directors last year, despite a slight drop in revenue, according to a report by Financial News.

The report cites the firm’s latest accounts as showing that the highest-paid director received £28.7m, a sharp increase from the £8.8m paid in the previous year.

Turnover at Elliott Advisors for 2023 fell to £212m, down from £225m in 2022. However, profit rose to £8.9m from £7.9m in the same period. The hedge fund has not yet commented on the pay raise.

The number of employees at the UK affiliate also saw a slight increase, with an average of 129 employees in 2023, up from 124 in 2022.

Founded in 1977 by billionaire Paul Singer, Elliott Investment Management oversees more than $69.7bn in assets, up from $65.5bn at the close of 2023. The firm employs 570 staff, with around 50% of its workforce focused on portfolio management, trading, analysis, and research across its Florida headquarters and other global offices.

By Stephen L. Nesbitt – Chief Executive Officer, Chief Investment Officer of Cliffwater.

State Street Global Advisors, the asset management business of State Street Corporationhas launched the State Street Global Alternative Beta Fund, which seeks to approximate the returns of hedge funds as a broad asset class.

The State Street Global Alternative Beta Fund is managed in reference to the HFR’s HFRX Global Hedge Fund Index, which represents a broad range of hedge fund strategies including equity hedge, event driven, macro/commodity trading advisor and relative value arbitrage.

According to a press statement, the new und aims to approximate hedge funds’ beta returns driven, to a large extent, by various market exposures and approximate the risk-return profile of the asset class through a dynamic, factor-based investment process. The strategy aims to determine which market factors have been driving hedge fund returns recently and dynamically replicates those exposures. This strategy increases liquidity relative to directly investing in hedge funds, and by replicating hedge fund beta returns through a systematic process, costs are reduced.

The fund, which is registered in the UK, Ireland, Netherlands, Luxembourg, Sweden, Finland, Norway and Denmark, has been seeded with an initial £123m investment from Quilter Investors.

Jackie Haynes, the former Head of Trading Analytics for Equity Quant Research at Multi-strategy hedge fund major Citadel, has returned to the banking sector as a Managing Director and Distinguished Architect for Risk Technology at JPMorgan, according to a report by eFinancial Careers.

Haynes announced her new role via social media, revealing that she started in July, having left Citadel last December after just a year.

Prior to going the hedge fund, Haynes spent 16 years at Goldman Sachs having initially joined the bank as a VP in Controllers Technology in London in 2006, before progressing to the role of Technology Fellow in 2013 and eventually being promoted to Managing Director in 2018.

At Goldman, she held key roles such as Global Head of Core Engineering for the bank’s risk and price platform, SecDB, and worked in machine learning and digital asset architecture. Additionally, she represented Goldman Sachs on Java’s executive committee.

The KLS Scopia Market Neutral Equity Fund has grown its AUM to $63m and recorded a 12-month trailing net return of 9.8% since being launched by New York-based hedge fund manager Scopia Capital Management in UCITs format on Kepler Partners’ KLS Funds platform.

Scopia was founded in 2001, and for a period of over two decades, the Scopia Market Neutral Strategy has demonstrated its ability to generate diversifying returns.

The KLS Scopia Market Neutral Equity Fund, a Dublin domiciled UCITs fund, provides access to the Scopia Market Neutral Strategy, which employs a fundamentals-based, equity market neutral approach.

The strategy has generated a 7.1% annualised return with a 7.9% annualised volatility since inception in April 2001. It has performed particularly well during periods of higher interest rates; in particular, the strategy returned: +19.6% (2021), +19.3% (2022) and +9.4% (2023), with a number of strong double digit calendar year returns between 2001-2008. Historically, it has also performed well in equity drawdowns (an 22-Sep 22: S&P 500 Index -24%, vs Scopia: +14%) and has displayed 0.0 correlation to the S&P 500 Index since inception.

Year to date, the KLS Scopia Market Neutral Equity Fund has returned 5.9% net of fees. Importantly, the fund continued to deliver positive performance during recent spells of market volatility, returning 1.8% during the month of August 2024.

By Joachim Klement, Head of Strategy, Accounting, and Sustainability at Liberum Capital.

By Joachim Klement, Head of Strategy, Accounting, and Sustainability at Liberum Capital.

By Vincent Weber, CEO and Head of Research at Resonanz Capital, an investment advisory firm specializing in absolute return strategies. 

Is there a viable alternative to offshore multi-manager hedge funds that offer a comparable risk-return profile but comes with higher liquidity?

By Al Otero, Portfolio Manager for HAUS, Armada ETF Advisors

By Beezer Clarkson, Partner at Sapphire Partners, and Evan Tarzian, Associate.

By Michael Green, Portfolio Manager and Chief Strategist at Simplify. 

This note examines how passive investing has influenced short-selling dynamics, particularly highlighting unusual occurrences of stocks with over 100% short interest. Examples like Gamestop and Dillard’s are discussed, showing how passive funds’ activities and company buybacks impacted short sellers and stock prices.

Case Studies of Gamestop and Dillard's:

By Dominik Cisar, Quant Analyst, Quantpedia.

By Hunter Hopcroft, Managing Director of Portfolio Solutions for Armada ETF Advisors, an ETF issuer focused on quantitative REIT research and asset management.