Solutions
Zehrid Osmani, manager of the Martin Currie Global Portfolio Trust, gives his market outlook and suggests how investors should approach the current pandemic…The ever-deepening Coronavirus crisis is having a profound impact upon people’s lives the world over, and markets are experiencing their worst falls since the global financial crisis. While it may be hard to see a path out of the doom and gloom, taking a view of the current situation and having a balanced and pragmatic approach to market conditions, focusing on long-term themes, is more important than ever for investors.
Markets are likely to remain in fear
Managed futures strategies have been slowly clawing back gains in recent days, as steep downward trends continued to rock global markets on the back of the coronavirus pandemic.
Covid-19 will impact Greek tourism, but with strong PMI figures in 2019 and a new stable government, hedge funds such as Greylock Capital see long-term opportunities in the country; in particular Greek debt and real estate. Hopefully, the storm that ensued from its debt crisis in 2010 will not be repeated.
By Ben Watford, Eversheds Sutherland – Selecting the fund domicile which best suits an emerging hedge fund strategy is one of the key decisions facing investment managers ahead of launch. The choice they make at the outset will have far reaching regulatory and tax consequences throughout the life of the fund.
Law firm Eversheds Sutherland notes that in making this choice, a manager needs to take into account the preferences and location of the fund’s seed and target investors. Historically, hedge fund managers have favoured offshore, low tax jurisdictions like the Cayman Islands, but more recently the dedicated fund vehicles
In the current challenging capital raising environment, emerging hedge funds need to juggle a number of priorities, including having a clear business plan and building a strong track record. But a key element in determining a start-up hedge fund’s fate is keeping a close eye on expenses.
“You want to keep your expenses under control, because if these are too high, then your performance comes under pressure,” explains Joris Groot, Business Development Manager Europe, Circle Partners.
He says cost needs to be considered in several crucial decisions start-up hedge funds need to make, for example choosing their service providers. “They can
Emerging hedge funds risk getting lost in the melee as large investment banks streamline their service offerings. Banks are tightening their fees and raising restrictions on clients which is leading to smaller and start-up hedge funds being left in the lurch.
In response to this quandary, the market is seeing a shift towards firms leveraging the services of specialist third party administrators who enable emerging hedge funds to cost-effectively scale their back-office functions while maintaining operational agility.
“We are seeing the emergence of an increasingly underserved sector of the market; start-up entities or those with assets of less than EUR150
Hedge funds looking to launch in Europe should be selective in their infrastructure investment, identify credible target client groups and understand the importance of concise marketing material which clearly outlines their unique selling point.
Cowen’s London-based prime brokerage and cap intro team outline some of the challenges emerging hedge funds may face. Colin Bridges, Director, suggests that “funds often try to do too much too soon. They can spend many thousands of dollars on an institutional grade setup for Day One, but if they’re just managing friends and family money, that may not necessarily be needed up front. Having the ability
By Mike Cumming Bruce, Senior Associate, and Andrew Flynn, Associate, both at law firm Cooke, Young and Keidan – Imagine that you are the boss of a hedge fund that has outsourced all of its core analytical functions to a highly sophisticated AI-driven system and, in doing so, have generated market-beating returns for a number of years.
Extreme market movements, in all directions, are driving market participants to use high speed strategies to keep pace. Demand for Avelacom’s low latency network has seen unprecedented growth, with a 35 per cent increase in volume of data transferred between exchanges in March. Demand from FX and cryptocurrency trading clients is particularly significant.
High speed strategies from banks, hedge funds, asset managers, broker dealers and proprietary trading firms all require high speed price discovery and immediate execution to take advantage of any price movement. Low latency global networks with best-in-breed hardware and sophisticated routes, such as provided by Avelacom on
H2O Asset Management, Bruno Crastes’ discretionary macro hedge fund firm, has written to investors to offer its “sincere apologies” for “significant” risk-adjusted losses this past week.
“If 2008 was a liquidity crisis, 2011, a volatility crisis, and 2016, a convexity crisis, 2020 is a combination of the three previous shocks,” H2O said in a client letter this week following the recent stock market collapse.
Its flagship fund H2O Adagio, which invests in sovereign bonds, credit and currencies, has shed more than 15 per cent since the start of the year, reversing last year’s 7.6 per cent annual gain.
Meanwhile, H2O
