With investor appetite for hedge fund strategies growing amid an evolving and increasingly volatile economic landscape, managers of all stripes continue to demonstrate their tenacity.
New data published by Hedge Fund Research showed managers notching up another month of positive returns in the face of a rapid equity market reversal and rising energy prices. With year-to-date industry returns staying above 10 per cent heading into the final quarter of 2021, hedge funds strategies of all stripes successfully exhibited “tactical flexibility and strategic portfolio execution” during September.
CTAs and trend-following hedge funds are riding high on the “explosive” price movements in energy markets. Computer-based strategies have capitalised on the sustained upwards trends in commodities this year, and managers running those models told Hedgeweek that further commodities rises may be in the pipeline, as supply bottlenecks persist amid the post Delta-variant economic recovery and reopening.
Looking towards their business prospects for the next 12 months, hedge funds remain in buoyant mood according to the latest Hedge Fund Confidence Index (HFCI), published jointly by the Alternative Investment Management Association, Simmons & Simmons and Seward & Kissel. Managers across the UK, Europe and Asia are all in bullish mode heading into the final quarter of the year, with sentiment among larger firms, as well as UK and EMEA-based managers showing the biggest rise during the third quarter.
With the post-Brexit readjustment continuing to garner considerable column inches, a new survey by institutional prime broker IG Prime of 250 hedge fund portfolio managers and hedge fund traders has found that British hedge funds exhibit a ‘patriotic bias’ towards UK stocks, despite them underperforming US companies. That tendency towards London-listed names has grown during the Covid-19 pandemic, and is stifling managers’ efforts to diversify portfolios, according to IG Prime’s analysis, which probed the internal and external factors which shapes investment decisions and diversification strategies.
Brevan Howard, the high-profile global macro hedge fund firm co-founded by Alan Howard, has taken a minority stake in 1543 Capital, an alternative credit and structured finance-focused investment manager, as part of a new strategic partnership. Meanwhile, Stockholm-based manager Brummer & Partners’ flagship multi-strategy hedge fund vehicle – which recently unveiled a new leadership team – has announced it is redeeming its investment in tech-focused equity fund Black-and-White, one of the underlying strategies in BMS.
In this week’s feature interview, London-based Stamford Associates – which has more than GBP80 billion under advisement across a client roster of pensions, wealth managers and charities – discusses its unique and forensic approach to hedge fund manager selection. Using a team of three fully-qualified psychologists, Stamford’s novel due diligence process draws as much on behavioural analytics and manager temperament as it does on investment performance, with the aim of unearthing “future winners” rather than solely relying on “past winners”.
Hugh Leask
Editor, Hedgeweek