Funds
Investor allocations to hedge funds have fallen for the third consecutive year – but the industry’s ability to weather economic turbulence and market volatility through active management will continue to attract investor attention, according to two new industry studies.
Hedge funds have notched up positive returns in recent weeks, positioning around the investment uncertainty surrounding the US presidential election and fresh Covid-19 lockdowns with gains inversely correlated to the sharp stock market declines seen at the end of October.
New data from Hedge Fund Research shows the industry as a whole was up 0.4 per cent last month, which took the HFRI Fund Weighted Composite Index’s year-to-date performance to 1.2 per cent.
As governments reimposed lockdowns in a bid to contain a renewed increase in coronavirus cases in many countries, HFR president Kenneth Heinz described October’s performance as “impressive”.
CBAM, an alternative investment management firm, has closed its third European collateralised loan obligation (CLO), Bastille CLO 2020-3, totaling EUR300 million, with Citibank acting as lead arranger. This brings CBAM’s total CLO issuance to USD11.5 billion since the closing of its first CLO in June 2017 and its total Euro CLO issuance since July 2020 to EUR950 million.
As of 30 September, 2020, CBAM’s AUM stood at USD13.3 billion across multiple credit vehicles and separate accounts.
CTAs and managed futures hedge funds gave back their early-month gains during October’s market reversal, but they managed to stay generally flat for the month as equities tumbled to their second consecutive monthly loss.
New data from Société Générale suggests the reversal in equity markets was “one of the hardest movements for CTAs to navigate” last month, the French bank said on Friday morning.
But SG’s trend indicator suggests gains across the bond sector and currencies – particularly rising trends in European bonds, and currencies such as Mexican peso and JPY versus USD – helped stem losses elsewhere.
Commodity markets
Spring Valley Asset Management, an alternative investment manager specialising in the application of systematic investment strategies, has launched the Commodity Advantage Portfolio.The portfolio pursues a multi-strategy systematic approach to investing across a diverse selection of highly liquid commodity markets (including precious metals, industrial metals, energies, grains, foods, fibres and meats), offering the potential for attractive risk-adjusted returns, controlled downside volatility and distinct correlation benefits within a cash efficient (ie, low margin) investment vehicle. It utilises a series of proprietary forecasting models to “map” the prevailing alpha opportunity set for each individual commodity market based upon an assessment of market volatility
Half of the EDHEC-Rosk Alternative Indexes achieved positive performances in September, with Short Selling ending the month as the best performing strategy (1.39 per cent), followed by Merger Arbitrage (0.83 per cent) and Fixed-Income Arbitrage (0.79 per cent). The lowest performing strategy was CTA Global (-1.91 per cent), followed by Emerging Markets (-1.46 per cent) and Global Macro (-1.36 per cent).
Two equity-oriented strategies were negatively impacted by the downturn in the stock market, with a higher decrease for Long/ Short Equity (-1.09 per cent), and a limited drop for Market Neutral (-0.20 per cent). The third equity-oriented strategy, Event Driven,
EEX Group’s European Spot Markets increased by 9 per cent to 53.8 TWh in October 2020 with the EPEX SPOT Intraday Market the main growth driver recording an increase of 20 per cent to 10.3 TWh, a new record.A total of 900.1 GWh were traded on the Intraday auctions including the newly launched Intraday auctions in Austria, Belgium, France and the Netherlands. Launched on 14 October 2020, these new auctions reached a combined 26.5 GWh.
The European Power Derivatives Market increased by 17 per cent compared to last year. Those solid results were mostly driven by the double and triple-digit
Brummer & Partners’ flagship multi-manager hedge fund vehicle squeezed into positive territory in October, despite rising Covid-19 infections and renewed lockdown fears sending stock markets southwards following a strong early start to the month.
The Stockholm-based multi-strategy hedge fund firm’s Brummer Multi-Strategy (BMS) multi-manager fund – which invests in a range of single-strategy hedge funds – rose 0.1 per cent in its dollar share class, and 0.2 per cent in its SEK-denominated tranche. It is now up 4.4 per cent since the start of the year.
The Brummer Multi-Strategy 2xL (BMS 2xL) SEK class meanwhile posted estimated returns of 0.2
As hedge fund managers continue to navigate the Covid-19 environment there are several potential issues that could arise as they manage the impact of the pandemic on their business and re-calibrate strategies to take advantage of market opportunities.
Kevin Huys, Director at of HTC Fiduciary Services Limited, “Harbour”, comments on this development: “We’re seeing the potential for managers to re-evaluate their asset allocation and the focus of their strategies as a result of the Covid-19 pandemic and its impact on markets. Some managers are seeing opportunities in different areas of their strategies, whether that be geographic, sector specific or otherwise,
By Stéphane Badey, Arendt – These are uncertain times, but three solid trends driving the Luxembourg investment funds market can be highlighted.
1. The continuous growth of the alternative investment strategies. Luxembourg has positioned itself as a jurisdiction of choice for alternative asset managers. As a consulting firm we are accompanying clients in their move to Luxembourg. This is made easier from a regulatory perspective by the adoption of a clear regulatory framework.
2. The further integration of ESG criteria into asset managers’ strategies. The upcoming regulations (SFDR*) are prompting asset managers to position themselves accordingly. Although many had already embraced
