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Prime Brokerage in Focus 2021

hedgeweek hugh leask captioned.jpgNew industry research shows crypto hedge funds’ AUM has almost doubled over the past year, with even traditional non-crypto managers piling in for a piece of the action.

The third annual ‘Global Crypto Hedge Fund Report 2021’, published jointly by PwC, Elwood Asset Management and the Alternative Investment Management Association, found hedge funds’ crypto capital swelled to some USD3.8 billion in 2020.

Yet amid the clamour for bumper returns, many managers remain wary of potential pitfalls, from regulatory barriers to investor dyspepsia, a point brought into sharp focus by the sizeable price oscillations across digital currencies lately.

But as the burgeoning sector gains increasing mainstream acceptance, such huge swings can still offer considerable investment upside, according to Robb Rill, chairman and managing director of the Strategic Funds. With the Puerto Rico-based boutique alternative investment firm recently rolling out a quantitative crypto strategy, Rill believes its asymmetric risk/reward profile means everybody “should have some de minimis exposure to the asset class.”

CTAs remains another keenly watched strategy in 2021, having notched up commendable returns so far this year. With the largest managed futures funds set to finish this month comfortably in positive territory, trend-followers’ defensive stance on fixed income and long positioning on commodities puts them in good stead to continue their winning streak into the year’s midway point, Lyxor Asset Management said recently.

Elsewhere, as developed economies continue to thaw, London-based GWM Asset Management is seizing on the ongoing rebound in M&A and corporate activity with a novel sustainability-focused strategy. The new merger arbitrage fund launched earlier this month, with a specific focus on applying ESG investment criteria to its portfolio-building process.

Earlier this month, the hedgeweekLIVE Technology Summit heard how hedge fund managers of all strategies are grappling with the avalanche of data. This week, it was investors’ turn in the spotlight, with a new study by Intertrust Group indicating allocator appetite for data transparency could send hedge funds’ operating costs soaring over the next five years.

Finally, this week’s feature story profiles long/short sector specialist strategy Seligman Tech Spectrum, which marks its 20th anniversary next month. Lead portfolio manager and veteran tech investor Paul Wick discusses how the West Coast outfit has crafted a formidable track record in technology, media and telecoms sectors over the past two decades, launching amid the dotcom collapse of the early 2000s and subsequently thriving throughout an assortment of market environments.

Hugh Leask
Editor, Hedgeweek

 

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