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OUTLOOK
The fallout from the coronavirus pandemic is set to unlock global “megatrends” this year, including consumer and corporate technology, healthcare, and sustainability themes – and hedge fund investors can expect a “rich environment for growth”, a major new study by JP Morgan Asset Management suggests.
The firm’s 2021 Global Alternative Outlook also predicts a rebound in equity market fundamentals as economies recover from the Covid crisis, as well as continued momentum in special purpose acquisition vehicles (SPACs), which have seen a surge in activity among several high-profile, brand name hedge funds over the past year.
Hedge fund managers can expect
CRYPTOCURRENCY
As more hedge funds pile into cryptocurrencies, market inefficiencies and price dispersion are bringing fresh arbitrage opportunities for managers.
Bitcoin’s sustained rally over the past year saw the cryptocurrency roar to a record high of more than USD41,000 in early 2021, with many investors increasingly using it as a hedge against falling real yields and inflation risks stemming from central bank quantitative easing.
But as more hedge fund managers join the digital asset arena, running a range of discretionary and quantitative strategies, the potential for alpha generation “will likely moderate” in the coming months and years, said senior Lyxor Asset
CORONAVIRUS
K2 Advisors, the hedge fund investing unit of Franklin Templeton, says active-management alpha will be critical to hedge funds’ success this year, as the global economy mounts a tentative recovery from the coronavirus pandemic.
Brooks Ritchey and Robert Christian, co-heads of investment research and management at K2, said the Covid-driven economic slowdown appears to be nearing an end, as individuals and corporations have been able to weather the economic storm partly due to “enormous stimulus” from governments.
But they warned that vaccination challenges, virus mutations, subsequent waves of new infections, and renewed lockdowns could derail the recovery.
That, in turn,
RESULTS
Switzerland-headquartered global asset manager GAM, which is home to Cambridge-based quantitative hedge fund unit GAM Systematic, is set to post a CHF380 million (USD426.4 million) loss in its full-year 2020 results published next month.
The loss stems mainly from a CHF377.7 million impairment charge announced in its first half results published last August, which relates to legacy goodwill resulting from the acquisition of GAM by Julius Baer in 2005 and UBS in 1999.
GAM will also report an underlying loss before tax of around CHF15 million (USD16.8 million), compared to a CHF10.5 million (USD11.7 million) underlying profit for the full
FUND PERFORMANCE
The incoming US administration led by Joe Biden will be a “crucial” factor looming large over the healthcare industry this year, with planned reforms heralding potentially far-reaching implications for healthcare stocks and drug prices, Rhenman & Partners Asset Management said this week.
Rhenman’s flagship Healthcare Equity Long/Short hedge fund gained 17.1 per cent in its main euro-denominated IC1 share class last year, bolstered by a 4.8 per cent monthly return in December.
The strategy – which trades a range of small, medium and large pharmaceuticals, biotechnology, medical technology and service company stocks – made profits in each of those sectors
MANAGER INSIGHTS
The current market uncertainty and value discrepancy offers the biggest opportunity in volatility-based trading in a generation, according to Jerry Haworth (pictured), the chief investment officer of London-based 36 South Capital Advisors, who is preparing a new fund to capitalise on further volatility shocks up ahead.
PERFORMANCE
Managed futures strategies slipped deeper into the red over the past week, having already started to give back many of their early strong 2020 gains last month – but short-term trend followers appear to have weathered the recent reversal, according to Société Générale data.
Société Générale’s main SG CTA index has lost 2.52 per cent so far in June, having earlier dropped almost 1 per cent in May. The index, which tracks the daily performance of a select pool of large managed futures strategies, has now fallen 3.76 per cent year-to-date.
Meanwhile, the SG Trend Index, which measures the net daily
NEWS
TIG Advisors, the New York-based alpha-focused manager which makes growth equity investments in alternative asset management firms, has bought a minority stake in Hong Kong-based credit and distressed situations specialist Arkkan Capital.
TIG – which has around USD7 billion in assets, providing growth capital, infrastructure and management support to investment teams – acquired the minority revenue share interest from a fund managed by a Blackstone advisor and Arkkan seeder, which will remain an investor in the Hong Kong-based fund.
Established in 2013 by Jason Brown, Arkkan now has around USD1 billion in assets under management, targeting credit, distressed and special situations opportunities
FUND PERFORMANCE
Hedge fund managers have experienced “significant” performance dispersion over the past 12 months, with the biggest funds seeing the largest gaps between gains and losses, new industry data shows, once again underlining the importance of investor due diligence in separating winners from losers.
Hedge funds globally ended a tumultuous 2020 on a high, generating an average monthly gain in December of some 4 per cent, to bring full-year returns to more than 11 per cent, according to newly-published year-end performance data from eVestment.
The 10 biggest hedge funds tracked by eVestment generated returns of just 3.72 per cent between January
CRYPTOCURRENCY
As more hedge fund firms pile into the digital asset and cryptocurrency space, analysts at the London-listed hedge fund giant Man Group say bitcoin’s recent volatility could be seen as “price discovery” in a new asset class, which will ultimately give way to greater stability in the currency, and more credibility among investors.
After a sustained surge which saw it reach a record high of USD41,000, bitcoin plummeted by more than 25 per cent earlier this week – its biggest collapse since March last year. Before the fall, the asset – considered the world’s foremost cryptocurrency – surged some 833
