Browsing: alternative investment

By Bill Kelly, CEO, CAIA Association One hundred and fifteen years ago today two Wrights tried to make it right when it came time to ponder the prospect of flying the friendly skies. On that day in an open field in a place called Kill Devil Hills, the first recorded airplane flight took off and safelyRead More

A new paper by Alexander D. Beath and Chris Flynn examines the significance of real estate investing within the portfolios of large European institutional investors from 2005 to 2016. Beath is a senior research analyst with CEM Benchmarking, with a PHD. from McGill University on condensed matter and materials physics.Read More

Pitchbook has a new report out about private equity activity in Europe. It indicates that, despite a slow start to the year, PE deal activity picked up notably in the second quarter. Across the continent there were 804 deals 2Q with a total valuation of  €88.5 billion. Deals above the Read More

The newest Eurekahedge report says that total hedge fund assets have grown by $26.4 billion in the year to date (through May). The gain is the result of inflow, not of positive performance. Assets flowing in to the industry’s coffers YTD equal $30 billion, and one gets the net growthRead More

The Alternative Investment Management Association, the London-based organization representing the interests of the world’s alternative investment industry, has issued a new whitepaper about the impact of the exit of the United Kingdom from the European Union. This ongoing event, known popularly as Brexit, has occupied armies of reporters, planners, andRead More

KPMG International and CREATE-Research have jointly prepared a report about the digitization imperative for alternative investment management. The report includes within that term both hedge funds and private equity. Early on, its authors list eight key digital innovations that are reconstructing the industry: Application programming interfaces; cognitive technology and machineRead More

It has long been understood that ownership of works of art isn’t just a collection or a hobby, or a way to brighten up the walls of one’s home. It’s a portfolio decision. But it is a portfolio decision that involves non-fungible and very infrequently traded assets.  So: how doesRead More

A new paper from Milliman, a consultant to the insurance and financial services industries, discusses the ongoing transformation in and of the global reinsurance industry that alternative investment has created. About 20 years ago, in the wake of Hurricane Andrew and the Northridge earthquake, catastrophe bonds caught on as aRead More

A new paper from PricewaterhouseCoopers on the coming transformations in the asset and wealth management industries says that firms in this market must adapt or die. And the adaptation the authors have in mind isn’t just the usual Darwinian metaphor – managers must “become business revolutionaries, even disruptors” in orderRead More

It has been 20 years since the Alternative Investment Management Association published its first due diligence questionnaire, a template designed to standardize the diligence process by which investors decide if a particular management is right for them. Now it has published a new questionnaire/template, covering a broader range of entities/strategies.Read More

Willis Towers Watson (NASDAQ: WLTW) recently posted its Global Alternatives Survey. WLTW is a consultancy with a long history, roots going back to 1828, and that now has 40,000 employees serving clients in 140 countries. The gist of its new report is that the alternatives asset industry has grown toRead More

The British Private Equity & Venture Capital Association, in a new paper, contends that private equity has a valuable part to play in the portfolios of defined contribution schemes, for the simple reason that the PE world offers high returns in an era of low interest rates. To make thatRead More

The global real estate division of financial consultancy Ernst & Young recently published a report on the private equity outlook in the real estate space. As the head of the division, Mark Grinis, says in an introduction, the premise of the report is that success in this space requires managerialRead More

Private equity investors have a distinctive cash management question: what do they do with the money that has yet to be drawn or called? Keeping cash in pillow cases is, here as always, less than the optimal solution. One of the defining features of a PE firm is that anRead More

The Alternative Investment Management Association and S3 Partners jointly sponsored a new survey and report on the consequences of the Basel III reforms on the alternative-investment world. Basel III, a voluntary set of banking-supervisory standards for capital adequacy, stress testing, and market liquidity, published in its final form by theRead More

Guest columnist Andre Boreas takes a look at the alternative investment universe year-to-date 2015 by the numbers.Read More

Should investors, especially institutional investors, push back (or push back harder than they have so far) against the fee structure preferred by those whom they pay to manage their money? And is the recent announcement from CalPERS such a push? Read More

Guest columnist Andrew Beer looks at the changes in institutional investing.Read More

Guest columnist Charles Skorina looks at the five-headed NYC pension system with its new leader, Scott Evans.Read More

Guest columnist Diane Harrison looks at what advisors think of hedge funds.Read More

Guest columnist Andy Tully looks at the future of renewable energy investment and finds a future so bright, you might need to wear shades.Read More

For an investor allocating slots in its portfolio to hedge funds, the draw of recent outsized performance can be powerful. Thus, the temptation to chase winners. But two members of the Hedge Fund Strategies Group at Commonfund caution against it. Read More

Banco Espirito Santo, and its CEO Salgado, had emerged from an earlier round of crisis (way back in 2012) with a roseate smell. Their latest smell ... not so good. Read More

Guest columnist Don Steinbrugge looks at why the same hedge fund firms consistently bring in the assets.Read More

Intuitively, the problem with valuing the debt issued by an private SPE in an illiquid infrastructure project is this: the free cash flows of the SPE aren't easily observed. So how does one go about deriving their present value? Read More

For many fund managers working in Southeast Asia, and/or China, June 2014 was “listless,” with numbers that suggest a flat tire. The booms on the ASEAN bourses are concentrated where the fund managers aren’t, in “high beta cyclical sectors.” Read More

The obvious reason for the allocation preferences of healthcare endowments is that they believe they need to remain very liquid. Jarvis, in this white paper, points out that the liquidity preference comes at a cost in performance. Read More

The new technologies make less difference than some might think. "Even back in the days of physical market makers, when things went bad, as for example in the crash of '87, the market makers would head for the hills," said James Angel. Nowadays the computers go dark. Or (worse) they don't.Read More

The reason for the increased interest in alternatives, McKinsey says, isn’t that the alternatives’ managers are slashing the price of their services. It is, rather, a discontent with the return to be gained from traditional investment. “Even with downward pressure likely over the next few years, revenue yields for institutional alternative products should remain well above the 35 bps average earned on today’s traditional institutional products.” Read More

Mark Casella, leader of the U.S. alternatives group at PwC, tells us why he thinks funds of funds still have a role to play in the future of the hedge fund industry, although "we have seen more and more institutions invest directly in hedge funds rather than through funds of funds." This is the first part of a two-part transcript of a broader discussion.Read More

The survey also asked that the asset managers state where their total assets are invested, using four geographical categories: Europe; Central/North America; Asia Pacific; Other. Commodity funds were easily the most heavily invested in C/NA, to the extent of 94 percent of their portfolios. Private equity funds are 61 percent invested in C/NA, and PE FoFs also have the majority of their portfolios there, at 54 percent.Read More

In the introduction to their report, the authors quote one of their interviewees, a leader at a European pension fund, who said: “To me, investing is about going back to the basics. Why do I want to be in this asset class? Why do I want this product? Where does it fit in my portfolio?” Much of the report is structured as a discussion of two distinct shifts in the answers that have been given and are being given to those old queries.Read More

Institutions aren’t to be rushed into committing to a hedge fund. The process can take more than a year. Preqin asked institutions: once a fund has caught their attention, specifically once they have first seen a fund proposal, how much time typically passes before they actually make an investment, if they do?Read More

The return of assets to the realm of hedge funds comes with enhanced scrutiny. As Todd Groome, chairman of AIMA, says: “Following 2008, a much greater investor focus on liquidity, portfolio transparency, control and fund governance was clearly evident.” In common with legislative/regulatory changes, this requires transformation.Read More

Veteran consultant Charles French, CAIA, discusses how to properly forge relationships with investment consultants.Read More

A deeper look at alternatives with Dr. Bob Swarup, a world-renowned expert and commentator on alternatives and financial markets as well as being a visiting fellow at London School of Economics.Read More

A dollar invested in the PutWrite Index in 1986 would have been worth $12.53 in January 2011. That represents annualized growth of 10.4 percent. ACG concluded that such option writing strategy-based indexes “could appeal to investors who are concerned about low interest rates, increased volatility, illiquid investments, or sluggish stock market returns.”Read More

The meat of the guide addresses what AIMA Canada considers sound practice in marketing and promotion, such as in the calculation and presentation of returns, in selecting a benchmark relevant to a specific strategy, and in explaining the various ratios used for the same purpose. It notes that the Association for Investment Management and Research’s Performance Presentation Standards (AIMR-PPS) recommend using a time-weighted method for the calculation of returns, a model otherwise known as the Modified Dietz method.Read More

New columnist Charles Skorina interviews Peter Stein, veteran alternative investments professional.Read More

Although distressed“fire sales” are fewer in some periods than in others, it is true all around the business cycle that mutual fund managers face constraints related to the need “to cater to investors by investing in the hot stocks and by having a strong positive correlation between their flow and the value of the assets in which they invest,” as a new academic paper explains. Hedge funds, with their more professional investors, their deliberate opacity, and their constraints upon withdrawal, aren’t subject to those constraints. Thus, when mutual funds are constrained to follow a trend, hedge funds are in a position to be contrarians.Read More

SWFs are distinct from pension funds at least in this sense, there are broadly speaking no explicit liabilities. There is no ongoing schedule of payments an SWF is responsible for making, for example. Nonetheless, there are clearly implicit liabilities. On this the point nearly all (92 percent) of survey respondents concurred, saying that implicit liabilities, arising from the objectives of the fund, must be taken into account in managers’ plans.Read More

It looks like the pension funds are worse off than if they had stuck to vanilla bonds and stocks, not least because of the management fees they pay to alternative investment managers.Read More

According to its advocates, trend following as a strategy works from the premise that price trends represent a process of consensus building. As a new idea takes hold, "the earliest adopters of this idea place their trades in accordance with it" and they get to watch in satisfaction as "a growing mass of market participants adopts the same thesis. Early adopters can surf the wave to the beach.Read More

AllAboutAlpha catches up with Lauren Templeton, great niece of Sir John Templeton to discuss value investing and its alpha potential.Read More

Britain’s Private Finance Initiative has continued through the administrations since Blair’s, and indeed has inspired emulation across the Channel. At the same time, it has stirred up a good deal of criticism, and in November 2011 the Chancellor of the Exchequer announced a plan to reform the PFI. One of the reform proposals is to seek broader participation by pension funds, or in pale bureaucratic jargon, “access a wider range of financing sources.”Read More

Funds of funds dominate the world of institutional investors in Day 1 or early stage (D1/ES) hedge funds, and they do so for a simple reason. That is their business model. They exist to invest in hedge funds, and their goal is to be fully invested at all times, not to have a lot of money sitting around as cash. Read More

The question in 2012 is not whether hedge funds (and other alternative investment vehicles) can attract pension funds, but how they should go about it. Alternatives managers will benefit most from the heightened interest of pension funds if they address the continuing concerns of their pension fund colleagues. For example, pension fund managers are well aware that investment in exotic and illiquid products is something hedge funds do, and they know that these products can help make a quick exit impossible. Read More

Emerging managers want and need investors and investors reputedly are sitting on cash looking for opportunities. So why aren't the two managing to get together?Read More

"We're seeing a cycle where China is now a leader, and experiences the biggest rates of marginal growth in the world. That is already a game-changer which has had a disproportionate impact on emerging markets than developed ones."--Louis-Vincent GaveRead More

After a survey of recipients of the UCITS Alternative Index, the UAI Industry Survey Q1 2012, Alix Capital reports that majorities expressed satisfaction with the current level of allocation for certain strategies: commodities, emerging markets, forex, and macro global strategies. But there was a lot of interest in increasing allocations to CTAs, equity market neutral, and volatility-based strategies. The strategy that receives the largest negative response (largest intended reduction in portfolio allocation) is fixed income. Read More