Browsing: Hedge Funds

Hedge Funds

FACTOR INVESTING: GROSS TO NET RETURNS

Jan 15th, 2018 | Filed under: Fees, Hedge Fund Industry Trends, Hedge Funds, Newly Added, The A.I. Industry

By Nicolas Rabener, FactorResearch From Theory to Reality Summary: Long-short multi-factor portfolios generate attractive returns before fees Post fees charged historically returns are much less attractive However, some fees in the long-short space are likely justified given higher complexity INTRODUCTION Reality is the murder of a beautiful theory by aRead More


Global Macro: Valuable for Institutional Portfolios

Jan 7th, 2018 | Filed under: Allocating to A.I., Asset allocation, Asset Allocation Models, Hedge Fund Strategies, Hedge Funds, Institutional Asset Management, Institutional Investing, Macro and Managed Futures Funds, Newly Added

The Mekata Investment Group has published a white paper on global macro hedge funds, contending that a position in such a fund is a valuable defensive tool for an institution. Global Macros are valuable because they perform best during turbulent or volatile markets, which is when defense is most needed,Read More


Top Hedge Fund Industry Trends for 2018

Jan 3rd, 2018 | Filed under: Hedge Fund Industry Trends, Hedge Funds, Institutional Asset Management, Institutional Investing, Newly Added, Structure of the Hedge Funds Industry, The A.I. Industry

By Don Steinbrugge Each year, Agecroft Partners predicts the top hedge fund industry trends stemming from our contact with more than two thousand institutional investors and hundreds of hedge fund organizations. The hedge fund industry is dynamic, and participants are best served by anticipating, rather than reacting to, change. Below areRead More


Deloitte on the 2018 Outlook for Managers

Dec 29th, 2017 | Filed under: Hedge Fund Industry Trends, Newly Added, Structure of the Hedge Funds Industry, The A.I. Industry

A new Deloitte report on the year ahead says that 2018, globally, “could be the year that records the highest average [mergers and acquisitions] deal value” for the investment manager sector. Also, this will be a big year for artificial intelligence and machine-learning algorithms; Deloitte predicts that 70% of newRead More


Hedge Funds: Myths and Pendulums

Dec 27th, 2017 | Filed under: Allocating to A.I., Hedge Funds, Institutional Asset Management, Institutional Investing, Newly Added, The A.I. Industry

Steben & Co., a Gaithersburg, Maryland headquartered fund of fund manager, has issued a white paper on the various unfavorable myths that it contends surround the hedge fund market. It says that four different myths are discouraging investments, and indeed that they are promulgated precisely for that purpose. The myths:Read More


HARK! The Allocators Sing…

Dec 20th, 2017 | Filed under: Hedge Fund Industry Trends, Hedge Funds, Newly Added, The A.I. Industry

By Diane Harrison 2017 will be a hard year for allocators and investors to get excited about hedge fund performance versus US equities. Hedge funds returned on average about 6% in the first 11 months of 2017, significantly lagging the stock market, which was up over 20% for the sameRead More


Regulatory Challenges Posed by Crypto Funds

Dec 5th, 2017 | Filed under: Commodities, Currencies, Digital currencies, Emerging Alternative Investments, Finance & Economics, Hedge Funds, Newly Added, The Global Economy & Currencies

A forthcoming paper in the Stanford Journal of Law, Business, and Finance looks at the cryptocurrency markets (bitcoin and its kin), the hedge funds that look to make money from them and the operational issues involved. Two independent scholars collaborated on writing the paper: Edmund Mokhtarian and Alexander Lindgren. AlthoughRead More


PwC Charge: Asset Managers are Digital Tech ‘Laggards’

Nov 30th, 2017 | Filed under: Hedge Fund Industry Trends, Industry Size & Managers, Newly Added, Technology, The A.I. Industry

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


HOW MUCH OF YOUR ALPHA DO YOU PAY AWAY TO YOUR HEDGE FUND MANAGERS?

Nov 27th, 2017 | Filed under: Fees, Hedge Fund Industry Trends, Hedge Funds, Newly Added, Structure of the Hedge Funds Industry

Introduction to TK Fee-to-Alpha ratioTM (TKFA)                    By Tanuj Khosla, CFA, CAIA, MBA INTRODUCTION The construction of hedge fund portfolios by institutional investors around the world has been a combination of both science and art over the years. While some use a strict quantitative methodology like Risk Budgeting and/or SharpeRead More


Interest Rates and Hedge Fund Returns

Nov 23rd, 2017 | Filed under: Allocating to A.I., Fees, Hedge Fund Industry Trends, Hedge Funds, Newly Added, Structure of the Hedge Funds Industry

A paper put out in October by an Associate Director and a Managing Director at Pavilion Alternatives Group says that hedge fund performance can suffer from a performance fee drag as a consequence of rising interest rates, and from the increasing cash rate that comes with that rise.  They explainRead More


Advice to Hedge Fund Managers on Attracting, Retaining Investors

Nov 19th, 2017 | Filed under: Fees, Hedge Fund Industry Trends, Hedge Funds, Institutional Asset Management, Institutional Investing, Newly Added, Structure of the Hedge Funds Industry

Ernst & Young has released a new survey on how hedge fund managers may “embrace innovation to illuminate competitive advantages,” that is, to attract and retain investors and their assets. Manager may need such advice, because the investors surveyed said they are more likely to decrease allocations to hedge fundsRead More


HEDGE FUND FACTOR EXPOSURE & ALTERNATIVES

Nov 15th, 2017 | Filed under: Hedge Fund Industry Trends, Hedge Funds, Indexes, Newly Added, Structure of the Hedge Funds Industry, The A.I. Industry

By Nicolas Rabener, FactorResearch Alternatives to Alternative Investments? Summary: Equity hedge fund returns have been disappointing over the last 14 years An exposure analysis shows no structural factor exposure, but frequent factor rotation Multi-factor long-short products are an interesting alternative, depending on the fee level INTRODUCTION Hedge fund assets reachedRead More


4 Lessons from the EQT Proxy Context

Nov 14th, 2017 | Filed under: Business News, Equity Hedge Funds, Event-Driven Hedge Funds, Finance & Economics, Hedge Funds, Newly Added

D.E. Shaw & Co., a hedge fund manager with an activist strategy and with about 4% of the equity in EQT Corp., said on September 14 that it thought the then-pending acquisition of Rice Energy Inc (RICE) by EQT should be contingent on two commitments: first, that EQT would mergeRead More


Hedge Fund Fees Are Only Half the Problem

Nov 13th, 2017 | Filed under: Fees, Hedge Fund Industry Trends, Hedge Funds, Newly Added, Structure of the Hedge Funds Industry

By Ben McMillan Hedge funds talk big about returns. Historically, successful managers have claimed credit for the favorable risk/return profiles of their funds, touting skilled security selection and portfolio management as a competitive edge. But the advent of investible benchmarks for a number of hedge fund strategies prove there’s moreRead More


Adding Some Contrarianism to the Momentum Strategy

Nov 12th, 2017 | Filed under: Allocating to A.I., Alpha & Beta, Hedge Funds, Newly Added

A scholar in Moscow, at National Research University Higher School of Economics, has proposed a trading strategy that combines ‘momentum’ and “contrarian’ strategies in a way that, this scholar believes, could reap the upsides of both. The scholar, Victoria Dobrynskaya, assistant professor of finance, says that momentum strategies do produceRead More


Are Clearinghouses Systemically Risky? Gary Cohn is Heard From

Oct 31st, 2017 | Filed under: Business News, Hedge Funds, Insolvency, Newly Added, Structure of the Hedge Funds Industry

Economists sometimes cite a “law of unintended consequences.” This is what it sounds like, the principle that actions of people, inclusive of and perhaps (depending on who is writing) especially the actions of a government, have unanticipated and (as far as third party observers can judge intentions) unintended consequences. InRead More


Alpha Generation and Real-Time Data

Oct 10th, 2017 | Filed under: Equity Hedge Funds, Hedge Funds, Newly Added

In a recent paper, Michael W. Brandt and two colleagues look into whether hedge funds “adjust the conditional market exposure in response to real-time changes in macroeconomic conditions, and whether doing so improves their performance.” The paper is a short one but it may punch above its weight in severalRead More


AIMA and SGPS on Managed Futures and CTAs

Sep 28th, 2017 | Filed under: Algorithmic and high-frequency trading, Allocating to A.I., Business News, Commodities, CTA, Institutional Asset Management, Investing in Commodities, Macro and Managed Futures Funds, Newly Added, The A.I. Industry

The Alternative Investment Management Association and Societe Generale Prime Services have together put out a white paper about managed futures funds and the commodity trading advisers who manage them. A key themes of the paper is that managed futures strategies aren’t as risky as are typical investments in equity markets.Read More


Cautious Numbers Estimates: A Comparative Look

Sep 26th, 2017 | Filed under: Hedge Fund Industry Trends, Hedge Funds, Industry Size & Managers, Newly Added, Structure of the Hedge Funds Industry, The A.I. Industry

On August 29, we at AllAboutAlpha ran a summary of the latest Eurekahedge report, saying that total hedge fund industry assets around the globe were $2.33 trillion, and that this figure was up by $108.6 billion over the first seven months of 2017. We heard soon thereafter from a readerRead More


Hedge Fund Activism: The Facts Don’t Bear Out the Dire Warnings

Sep 24th, 2017 | Filed under: Equity Hedge Funds, Event-Driven Hedge Funds, Hedge Funds, Newly Added

Lucian Bebchuk, a professor at Harvard Law, has been at the heart of scholarly arguments over corporate governance for a long time, perhaps since 1990, the year he edited a textbook on Corporate Law and Economic Analysis. That was also the year Bebchuk, along with Marcel Kahan, authored a seminalRead More


SUNY Scholars: Hedge Funds are Smart about PIPES

Sep 21st, 2017 | Filed under: Equity Hedge Funds, Hedge Funds, Newly Added, Other Issues in Private Investments, Private Investments

Two scholars affiliated with the State University of New York at Albany recently looked into the roles of hedge funds in corporate misreporting. Specifically, they used a database of PIPE issuers. The resulting paper, by Na Dai (Associate Professor of Finance at SUNY) and Alfred Zhu Liu (Assistant Professor ofRead More


Below the Black: A Review of Risk Reduction Strategies

Sep 13th, 2017 | Filed under: Commodities, Commodities, Hedge Fund Strategies, Hedge Funds, Investing in Commodities, Macro and Managed Futures Funds, Newly Added, Risk management, Risk Management & Operations, Risk Management Strategies & Processes, Risk Metrics and Measurement

Excerpted from the Alternative Investment Analyst Review, Volume 1, Issue 4 The Alternative Investment Analyst Review is the official publication of the CAIA Association. Access to the most current issue is an exclusive benefit of CAIA Membership while archived issues are available to the public in the Perspectives section atRead More


M&F Worldwide: Not Just for Squeeze Outs Anymore

Sep 12th, 2017 | Filed under: Equity Hedge Funds, Event-Driven Hedge Funds, Hedge Fund Strategies, Hedge Funds, Newly Added

In 2014, hearing litigation over the fate of M&F Worldwide, the Delaware Supreme Court set out rules as to what a controlling shareholder has to do in order to keep his/its decisions within the safe domain of the “business judgment rule.” Last month, in a decision that may be ofRead More


Investor Sentiment: Fees, Redemptions, Structures

Sep 4th, 2017 | Filed under: Alternative Investments in Context, Hedge Funds, Industry Size & Managers, Newly Added, Structure of the Hedge Funds Industry, The A.I. Industry

Credit Suisse, in its new report on its mid-year survey of hedge fund investor sentiment, says that there is “continued appetite to allocate to hedge funds” and that there is increased interest, especially, in quantitative strategies. Specifically, 81% of investors say that they will likely make allocations to hedge fundsRead More


Eurekahedge Reports: Total Industry Assets Stand at $2.33 Trillion

Aug 29th, 2017 | Filed under: Industry Size & Managers, Newly Added, Other Topics in A.I., SRI and Clean Energy, Structure of the Hedge Funds Industry, The A.I. Industry

Eurekahedge’s August report says that the Eurekahedge Hedge Fund Index grew by 0.88% in July 2017, while the underlying markets represented by the MSCI World Index grew by 1.64%. For June, overall, managers reported performance based losses of $8.4 billion, so that the industry growth was due entirely to netRead More


Half-Time Report on PwC’s Vision for Asset Management

Aug 20th, 2017 | Filed under: Fees, Industry Size & Managers, Newly Added, Regulatory, Regulatory Environment

Three years ago PwC published a paper on what they expect the asset management world will look like in 2020 – which is, as it happens, three years from now. We have reached the half-point in the hypothetical timeline. Much in the report still holds up, though of course itRead More


Real Estate Tops the Willis Alternative Investment League Table

Aug 10th, 2017 | Filed under: Hedge Funds, Industry Size & Managers, Newly Added, The A.I. Industry

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


Hedge Fund Gigantism is Not Necessary

Jul 30th, 2017 | Filed under: Fees, Hedge Funds, Newly Added, Seeding/early-stage, Structure of the Hedge Funds Industry

A joint survey by the Alternative Investment Management Association and GPP, the financial services firm formerly known as Global Prime Partners, disaggregates the hedge fund industry by size. It finds that the dynamics of the smallest (emerging-funds) sector looks very different once the “billion dollar club” and even the medium-sizedRead More


AIMA Gets Its Groove On: Two New Guides

Jul 25th, 2017 | Filed under: Hedge Fund Industry Trends, Newly Added, Structure of the Hedge Funds Industry

The Alternative Investment Management Association, the global AI industry group, has been busy of late. Its recent publications include a Best Execution Guide for the European Union’s revised Markets in Financial Instruments Directive (MiFID 2) and a guide to fund administration. Fund Administration The AIMA guide on fund administration reworksRead More


Skin in the Game: Testing a Cliché

Jul 16th, 2017 | Filed under: Alternative Investments in Context, Asset Managers, Hedge Funds, Industry Size & Managers, Newly Added

One of the most well-worn clichés in the hedge fund industry is the phrase “skin in the game.” Investors want managers who have “skin in the game,” that is, managers who risk/hedge their own money the same way they are risking/investing their outside investors’ money. A recent paper by ArpitRead More


New Technologies Adding to Pressure on Fees

Jun 25th, 2017 | Filed under: Fees, Hedge Funds, Newly Added, Structure of the Hedge Funds Industry

A new paper proposes that emerging technologies (blockchains, Big Data and artificial intelligence) have increased pressure on the traditional hedge fund fee structure of 2 + 20. Its author is Wulf A. Kaal, an Associate Professor at the University of St. Thomas and director of the Private Investment Fund Institute.Read More


Do Teachers Pensions Need Trumpian Negotiators?

Jun 20th, 2017 | Filed under: Allocating to A.I., Hedge Funds, Institutional Asset Management, Institutional Investing, Newly Added

The American Federation of Teachers (AFT) has issued a lengthy rebuke to and critique of the fee structure of the alternatives investment industry; in a position paper it calls The Big Squeeze. Should the title be considered obscure, the subtitle is clearer about the paper’s thesis, “How Money Managers’ FeesRead More


First Quarter: An Industry Recovers From a Dry Spell

May 18th, 2017 | Filed under: Hedge Funds, Industry Size & Managers, Newly Added, Structure of the Hedge Funds Industry, The A.I. Industry

Preqin’s review of the hedge fund space in the first quarter of 2017 describes the quarter as a time of “return to form” after a dry spell. Two thirds of the investors interviewed by Preqin at the end of 2016 had said that their hedge fund investments had failed toRead More


Preqin: Another Net Outflow Year Underway for Hedge Fund Industry

Apr 20th, 2017 | Filed under: Hedge Funds, Newly Added, Relative Value Hedge Funds

In the February issue of its Hedge Fund Spotlight, Preqin looks into its crystal ball and tells us of its near term (2017) predictions for the hedge fund industry. The article begins with a simple observation: hedge funds saw net outflows of assets under management (AUM) in 2016. Likewise, 54%Read More


Credit Suisse Finds that Institutions Remain Committed to Hedge Funds

Apr 11th, 2017 | Filed under: Allocating to A.I., Hedge Funds, Newly Added, Structure of the Hedge Funds Industry

A new Credit Suisse report about hedge fund investors’ appetites, titled “shifting tides,” comes to the somewhat re-assuring conclusion that, in some respects at least, the shift isn’t what one might fear. The report begins with the simple observation that 2016, a year that began with unexpected swings in manyRead More


Why They Call it an Absolute Priority Rule

Apr 9th, 2017 | Filed under: Business News, Event-Driven Hedge Funds, Finance & Economics, Hedge Funds, Newly Added

The U.S. Supreme Court’s recent opinion in Czyzewski v. Jevic Holding Corp. matters to hedge funds pursuing a distressed assets strategy, because the Justices have now made it more clear than they had before that the absolute priority rule under the U.S. bankruptcy code’s chapter 11 is … absolute. ItRead More


The Low Volatility Anomaly: Gunpowder Inc.

Feb 26th, 2017 | Filed under: CAPM / Alpha Theory, Finance & Economics, Financial Economics Theory, Hedge Funds, Newly Added, Structure of the Hedge Funds Industry

In a new paper David Blitz, the head of quantitative strategies for Robeco Asset Management, crunches numbers and reaches a surprising conclusion, precisely contrary to an intuitively appealing theory about the low volatility anomaly.  But … let’s begin from the beginning. Standard financial economic theory holds that investors are compensatedRead More


Hedge Fund Managerial Talent: From Quality to Quantity

Feb 20th, 2017 | Filed under: Hedge Fund Industry Trends, Hedge Funds, Newly Added, Structure of the Hedge Funds Industry

A new report that comes to us jointly from EY and the AIMA indicates that hedge fund industry leaders believe that one of the secrets to success in the field is investment in, and thus retention of, talent. When the report was released, Dan Thompson, partner in the EY financialRead More


Formula: Information + Liquidity + Short Time Horizon = Short Sales Profits

Feb 14th, 2017 | Filed under: Equity Hedge Funds, Event-Driven Hedge Funds, Hedge Funds, Newly Added

Jaewon Choi and two other scholars recently presented a paper that offers “direct evidence about the profitability of hedge fund short trades in equities.”  What is intriguing about this paper is not only what it finds about the profitability of short trades, but its method, why its authors consider theirRead More


Pitfalls and Publicly Owned Hedge Fund Managers

Jan 31st, 2017 | Filed under: Alternative Investments in Context, Hedge Funds, Newly Added, The A.I. Industry

Two scholars affiliated with Singapore Management University have published a study of “the pitfalls of going public,” that is, of what can happen when the management of a hedge fund becomes a publicly owned company. They conclude that the going-public process itself breaks the alignment of incentives between managers andRead More


Hedge Fund Performance: A Multi-Factor Model

Jan 22nd, 2017 | Filed under: Allocating to A.I., Benchmarking & Performance Attribution, Hedge Funds, Newly Added

Dimitrios Stafylas, of Aston University, Aston Business School, in Birmingham, England, has proposed a “holistic” model of hedge fund performance attribution with three key features: Irrespective of underlying fundamentals, it is only during good times that hedge funds as a class deliver significant excess return to their investors; Also duringRead More


Another Take on ‘A Modest Proposal’

Jan 9th, 2017 | Filed under: Allocating to A.I., Asset allocation, Hedge Funds, Newly Added

By Diane Harrison Jonathan Swift, one of the great satirists of all time, published a disturbing and provocative essay, ‘A Modest Proposal,’ in 1729 suggesting a unique and terrible solution to Ireland’s famine crisis. In his piece, Swift recommended cannibalism as a wholesale solution to Ireland’s struggles with overpopulation, starvation,Read More


Selling Growth Stocks at the Right Time: Hedge Funds Are Good At It

Nov 29th, 2016 | Filed under: Equity Hedge Funds, Hedge Fund Strategies, Hedge Funds, Newly Added

Two scholars at Ozyegin University, in Istanbul, make the case that hedge funds have a uniquely good record in one specialized sort of alpha harvesting: they are good at finding overpriced growth stock securities and trading to their advantage on the basis of that finding, especially when other sorts ofRead More


Commissioner Piwower and Alpha Seekers

Nov 15th, 2016 | Filed under: Commodities, Event-Driven Hedge Funds, Hedge Funds, Newly Added, Operations, Risk Management & Operations

With a new administration in the making, thoughts in the world of asset management naturally turn to the issue of appointments to the Securities Exchange Commission and the Commodity Futures Trading Commission. Who is likely to get what position and what difference might it make? Recent practice has been thatRead More


Dealmakers: Trump, Hillary, and Mergers

Nov 3rd, 2016 | Filed under: Business News, Event-Driven Hedge Funds, Hedge Funds, Newly Added

Intralinks, a firm created 20 years ago to enable “high-stakes transactions and business collaborations,” has surveyed global dealmakers on the upcoming U.S. presidential election and on how it may affect the economic and regulatory environment for mergers and acquisitions. The gist of it is: in a database of 1,600 M&ARead More


Eurekahedge: Exodus from the Event-Driven Funds YTD  

Oct 23rd, 2016 | Filed under: Allocating to A.I., Commodities, Equity Hedge Funds, Event-Driven Hedge Funds, Hedge Funds, Newly Added, Relative Value Hedge Funds

The event-driven hedge fund space is the most troubled in a generally troubled time for the industry. According to the new Eurekahedge report, the event-driven strategy “has seen US$14 billion investor redemptions over the past nine months,” and $10.7 billion over just the past six months. The first nine monthsRead More


Fraudulent Transfer: No ‘Safety’ for Lyondell Shareholders   

Oct 20th, 2016 | Filed under: Business News, Equity Hedge Funds, Finance & Economics, Hedge Funds, Insolvency, Newly Added

In two decisions this year, in July and against in a re-affirmance in October, the U.S. District Court for the Southern District of New York has reinstated a claim brought by Trustee of the creditors of the bankrupt  chemical company Lyondell, looking to recover distributions made to the company’s shareholdersRead More


BLEAK HOUSE–OR THE OUTLOOK ON HEDGE FUNDS NOW

Oct 19th, 2016 | Filed under: Allocating to A.I., Endowments & Foundations, Family Offices, Hedge Fund Industry Trends, Hedge Funds, High-net-worth investors, Institutional Asset Management, Institutional Investing, Investor Relations, Newly Added, Sales & Marketing in the AI Industry

By Diane Harrison Charles Dickens’ Bleak House spins a tale of mystery, intrigue, family dynamics, and irony in the Victorian age that had readers gripped by its indictment of the English court system. While the novel is packed with intricate plot twists and turns, the main story line centers onRead More


It’s On: Bondholder Groups Square Off over Puerto Rico Financing

Oct 16th, 2016 | Filed under: Business News, Event-Driven Hedge Funds, Hedge Funds, Insolvency, Newly Added

On Oct. 7, a group of hedge funds that hold the general obligation bonds of Puerto Rico amended an existing complaint (initially filed in July) in a significant respect: by adding a new defendant. The new defendant is the issuer of the “COFINA” bonds, the Puerto Rico Sales Tax FinancingRead More


Looking to the Technological Imperative: Where Has It Been?

Oct 6th, 2016 | Filed under: Equity Hedge Funds, Hedge Funds, Newly Added, Regulatory Environment, The A.I. Industry

On September 28, the Securities and Exchange Commission held an open meeting about a proposed shortening of the settlement cycle. The SEC’s staff has recommended that the settlement cycle for most broker-dealer transactions be shortened from three business days after trade date to two or, in the usual typographical abbreviation,Read More