Funds
Recovery continues in hedge funds according to Eurekahedge which found that hedge funds were up 0.48 per cent during the month of November, with 2016 year-to-date returns coming in at 3.60 per cent.
Meanwhile, underlying markets as represented by the MSCI AC World Index (Local) gained 2.88 per cent in November with its 2016 year-to-date returns at 4.88 per cent. Roughly 56 per cent of underlying constituent funds for the Eurekahedge Hedge Fund Index were in positive territory this month, with majority of them being long/short equities mandated. North American hedge fund managers posted the best returns among regional peers
By David Young (pictured), President, Gemini Alternative Funds – Allocations to alternative investment strategies have continued to evolve as asset owners – in particular pensions, endowments and family offices – have become more knowledgeable about, and comfortable with, these strategies.
Direct investments into hedge funds, funds of hedge funds and alternative mutual funds are not meeting the increasingly complex needs of today’s institutional investors, where flexibility, tailored reporting, transparency and cost efficiency are key factors.
Today, asset owners are searching for the appropriate structure and relationships that will provide them with the services and controls that meet their individual, committee
Managed account platforms (MAPs) vary in size and sophistication. At one end of the spectrum, the simplest MAP provides a separate ownership structure whereby a single investor invested in a MAP is required to manage each counterparty relationship with the administrator, the prime broker(s), OTC counterparties, FX counterparties, repo counterparties and so on.
The traditional fund of funds (FoF) investment model is structured so that the FoF manages the overall allocations into the hedge fund on behalf of the investor. However, transparency tends only to be provided on a monthly basis, and typically with a one-month lag.
In some cases,
Managed account platforms allow institutions to broaden out their hedge fund allocations and invest in emerging managers with confidence, thanks to the strong operational controls they provide. At a time when some of the larger established names have suffered performance issues, diversifying into a wider mix of unknown managers is becoming of strategic import to institutions.
Speaking recently at a New York Hedge Fund Roundtable event, Robert Akeson, COO of Daewoo Securities (and the event moderator) was quoted as saying that small and emerging hedge fund managers, as a group, consistently outperform other managers. “However, as the physicists like to
Linear Investments allows emerging managers to leverage its managed account platform, enabling them to utilise multiple managed accounts, and avoid having to go down the costly route of setting up a hedge fund on day one.
“At this date, Linear has 105 active hedge fund/managed account prime brokerage clients live. Over the past three months we have brought on 10 new clients; five prime brokerage, one managed account and four hedge funds. We are actively in discussion with 12 new clients (two thirds based in the UK) who are thinking of joining the Linear platform, in addition to several early
Large institutions face a Catch 22 when it comes to investing in hedge funds. On the one hand, despite performance having been muted for the last few years, institutions still broadly appreciate their importance as part of a diversified portfolio. On the other hand, negative media coverage that continuously compares hedge fund performance to the broader markets, not to mention continued questioning over exorbitant fees, means that institutions face external pressures to justify their allocations.
“What is interesting is that the major flows into hedge funds really seem to be driven by the super institutions such as public and private
Lyxor Asset Management runs one of the most well established MAPs in the hedge fund industry, having established it in 1998. It has seen a lot of hedge fund talent come and go over that time.
When it comes to investing in emerging managers, Lyxor is well placed to provide investors with the confidence, and assurances, needed. Whilst historically, emerging managers have tended to outperform larger established names – thereby making them an appealing alpha generator component to a portfolio – they often have less robust infrastructures. This is a risk for institutions.
As Daniele Spada (pictured), Head of Lyxor
Managed accounts are proving to be an effective tool for institutions to better control fee structures in hedge funds. What’s more, by building customised mandates using carve-outs of managers’ strategies, investors are able to enjoy a better investment experience that fits their individual risk appetite.
An article by CNBC on 17 October 2016 revealed that New York state had paid hedge fund managers USD1 billion in fees over the last eight years. The New York State Department of Financial Services said pension investments in hedge funds had been a giant failure, resulting in USD2.8 billion in underperformance.
This is exactly the
Aston Hill Financial has completed a transaction with Front Street Capital 2004 and Tuscarora Capital to combine their respective companies, creating a new independent asset management firm LOGiQ.
Effective immediately, Joe Canavan is the new chief executive officer of the company and the board of directors is now comprised of Dr Eldon Smith, Nevin Markwart, Catherine Best and Donna Toth, together with Canavan.
"We see tremendous opportunity for a strategic, technology-driven, active management firm in the current environment," says Canavan. "LOGiQ is committed to ensuring that all investors have access to the insight and execution required to produce consistently
The valuation of European stock markets is proving less attractive than previously, notably because of higher long term government bond rates, according to Renaud Froissart, manager of the Quaero European Long Short Equity Fund.
The fund returned minus 2.7 per cent in October 2016 versus minus 1.0 per cent for the HFRX Equity Hedge EUR Index, but since inception on 20 February 2014, the fund is +5.7 per cent versus -5.5 per cent for the HFRX Equity Hedge EUR index.
Through October, the net investment rate was +60 per cent (comprised of 80 per cent long individual stocks and
