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MARKETS
Activist hedge funds and certain other special situations strategies are still holding off from piling into longer-term buy-and-hold stocks amid the continued market uncertainty, instead choosing to trade opportunistically around cyclical names recovering from their coronavirus battering.
Managers running special situations funds have made hay in the recent recovery in cyclical names, but “have not shown the same appetite for bargains than in previous sell-offs,” Lyxor Asset Management strategists said this week.
Traditionally, event driven and activist funds tend to underperform in risk-off markets due to their long structural beta, but typically rebound quicker by eschewing short-term volatility patterns.
They
INNOVATION
In 2016, SEI issued a paper on what it saw as five major innovations that were causing disruptions both within and outside of their respective industries. The company has revisited those themes, namely: Watsonisation, Googlisation, Amazonisation, Uberisation and Twitterisation, to provide an up-to-date picture of the innovations occurring in our industry today. Over the next few months SEI will share its findings and recent developments for each theme. Next up: Amazonisation…
OIL
Hedge funds which generated striking returns in volatile energy markets last year are now preparing for a major rebound in oil in 2021, with post-vaccine travel demand, potential inflation hedges, and surging emerging markets growth all combining to push prices higher this year and beyond.
PERFORMANCE
Hedge funds are continuing to recover from sharp losses suffered earlier this year, notching up positive returns for the second successive month in May as economies slowly reopen following the coronavirus lockdown, new data from Hedge Fund Research shows.
All long/short equity hedge fund strategies clawed back profits last month, including sector-specialist managers such as technology and materials, while activist and special situations funds are making hay amid widespread global market dislocations.
The HFRI Fund Weighted Composite Index – which tracks the performance of more than 1,400 single manager funds of various strategies globally – gained 2.5 per cent in May, with
FUND PERFORMANCE
DE Shaw’s flagship multi-strategy fund delivered net returns of +19.4 per cent for investors in 2020, according to a person familiar with the firm’s results.
The DE Shaw Composite Fund (Composite), the firm’s largest fund, launched in 2001 and provides investors with exposure to the broadest array of the firm’s absolute return strategies. Last year’s returns, in what, for many, was a hugely volatile period, build on 2019’s net annualised return of +10.4 per cent.
DE Shaw is widely regarded as one of the industry’s most successful hedge fund managers. Since 2001, Composite has posted an annualised net return of
MARKETS
The current stock market rebound is “out of step with economic reality”, according to Pictet Asset Management’s chief strategist Luca Paolini. While the sustained market resurgence appears to have bolstered equity and credit-focused hedge funds’ returns during May, Paolini warned that hopes for a quick V-shaped recovery following the coronavirus downturn look “optimistic”.
Despite being “lukewarm” on the near-term prospects for global equities overall, Pictet nevertheless sees opportunities in certain industries. Specifically, it is increasing positions in certain cyclical names battered by the Q1 Covid-19 sell-off.
These include some materials stocks – such as mining names and chemical firms – which
FUND PERFORMANCE
When hedge fund indices tumbled in tandem with equities during this year’s historic Q1 sell-off – before sharply rebounding in April with their biggest monthly gain since the 2008 financial crisis – it reignited the debate over alternatives’ role in investment portfolios, and particularly the hedge fund industry’s core objective of outsized gains uncorrelated to broader marker performance.
COMMENT
Schultze Asset Management, a distressed investing specialist which targets a range of restructuring situations on a long and short basis, is forecasting a slew of investment catalysts in this area as the global economy gradually recovers from the coronavirus pandemic.
Founder George Schultze said the best opportunities in the distressed investing space during 2021 are likely to be in post-reorganisation equities, which offer event-driven return catalysts such as spinoffs, M&A, special dividends, and stock buybacks.
“Post-distress equities are those stocks that formerly went through a reorganizasion and/or recapitalsation as a result of their prior distress – this phase represents the
FUND PERFORMANCE
Hedge funds weathered the political, social and economic shocks brought about by the global pandemic and frequent bursts of soaring volatility to score a near-12 per cent return last year – their best since 2009 – outperforming both the Dow Jones Industrial Average and FTSE 100, new data from Hedge Fund Research shows.
HFRI’s main Fund Weighted Composite Index – a global, equal-weighted measure of some 1400 single-manager hedge fund strategies – finished 2020 up 11.6 per cent for the year following a 4.5 per cent rise in December.
The full-year gains represent a strong rebound for the hedge fund
COMMENT
As lockdown easing pushes markets higher, hedge funds gauge the ‘new normal’
COMMENT
As lockdown easing pushes markets higher, hedge funds gauge the ‘new normal’