The clock is ticking for hedge funds and other alternative asset management firms to prepare for the UK’s Investment Firms Prudential Regime. There are now just three months left until the far-reaching new regulatory framework – which heralds sweeping changes to rules covering capital, liquidity, remuneration, reporting, and disclosures, among other things – takes effect. With investment managers potentially facing “complex and multi-faceted” processes as a result of the overhaul, compliance experts say hedge funds now “need to get going” to ensure they are up to speed with the new regime.
In one of two feature interviews this week, Natalie Hwang, founder and managing partner of New York-based Apeira Capital Advisors, discusses how the creative venture capital asset manager is seizing on opportunities in the private technology start-up space using long/short hedge fund investing techniques.
In a deep-dive Q&A, Hwang highlights the importance of the venture capital economy and explains how her strategy is designed to capture both positive and negative value by investing in a multi-directional basis through longs, shorts, hedging and delta-neutral trading.
Meanwhile, Sherban Tautu, head of liquid alternatives at Geneva-based wealth advisor Syz Capital, says high-net-worth investors are continuing to plump for multi-strategy specialists in the hunt for hedge funds that can better control risks and lock in returns.
Speaking to Hedgeweek, Tautu – whose firm advises on CHF1 billion for a small group of families based across Europe, Brazil, the Middle East and Asia – said multi-strat vehicles act as “stabiliser investments, where risks are tightly controlled, and returns of 5-10 per cent per year are probable.”
The number of new hedge funds launched in the second quarter totalled 180, outweighing the number of closures for the fourth consecutive quarter, according to new data published this week by Hedge Fund Research.
The stats suggest the hedge fund industry globally is building momentum, as managers position for higher interest rates and rising inflationary pressures and investors look to protect portfolios. Some 695 new funds were rolled out over the course of the previous four quarters – a total which tops calendar year totals for the past three years dating back to 2017, when 735 funds launched, HFR noted.
Elsewhere, new analysis by Citco Fund Services shows funds of hedge funds’ performance outflanked long/short equity and convertible arbitrage strategies in the first half of the year, with larger portfolios pulling ahead of the pack. On average, FoHFs were up 4.2 per cent between January and June, with some 92 per cent ending the six-month period in positive territory.
TCI Fund Management, the formidable activist manager led by Sir Christopher Hohn, wrote to Canadian National Railway’s board of directors this week to voice “serious concerns” about the Montreal-headquartered firm’s commitment to proper corporate governance practices. TCI’s latest missive follows recent criticisms of CN’s USD30 billion swoop for Kansas City Southern, the US, Mexico, and Panama-focused railroad operator.
Hedge fund short sellers betting against Cineworld’s share price saw their bearish positions tank earlier this week, after the London-listed cinema chain’s share price soared on the back of anticipation for the new James Bond movie release. The beleaguered movie theatre operator – a long-running target of hedge fund short sellers on both sides of the Atlantic – has seen its value spike in the run-up to the release of No Time To Die, Daniel Craig’s final outing as Ian Fleming’s superspy, denting a number of high-profile managers positioned against Cineworld.
Hugh Leask
Editor, Hedgeweek