Browsing: Hedge Funds

Hedge Funds

Liquid Alt Juggernauts: Worth their Salt?

Jun 6th, 2021 | Filed under: Access to Alternatives, Featured Post, Manager Selection, Newly Added, Hedge Funds

By Nicolas Rabener of FactorResearch (@FactorResearch) INTRODUCTION One of the most perplexing questions in the investment industry is why liquid alternatives have not been able to disrupt the hedge fund industry in the same way that ETFs have captured significant market share from mutual funds. Neither hedge funds nor mutualRead More


Performance Persistence: Is It There, and Can It Be Exploited?

Jun 3rd, 2021 | Filed under: Featured Post, Private Equity, Manager Selection, Newly Added, Hedge Funds

By Hossein Kazemi, PhD, CFA, Isenberg School of Management and CAIA Association By the end of 2020, only 0.72% of all active US mutual funds had finished in the top quartile every year since 2016. Among mutual funds, mid-cap funds displayed the highest degree of persistence: 1.47% of them haveRead More


Will the 2020 SPAC IPOs Boom Continue?

Jun 2nd, 2021 | Filed under: Featured Post, Private Equity, Newly Added, Hedge Funds

By Wu Guowei Jack, CFA, CAIA, Director, Content APAC, CAIA Association  2020 was a boom year for Special Purpose Acquisition Company (SPAC) listings. An annual total of US$ 83 billion was raised, accounting for 46% of total US IPO proceeds and 55% of the total number of US IPOs. The momentumRead More


A Hot Commodity: Systematic Investing in China

Jun 1st, 2021 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Hedge Funds, Commodities & Natural Resources

By Giuliana Bordigoni, Adrian Chang, Adi Mackic, Sophie Rossini, and Kate Straker Introduction Diversification is the cornerstone of a systematic manager’s strategies: greater diversification means a larger pool from which to capture different return streams. Driven by recent rule changes, China offers access to some of the world’s most liquid markets:Read More


Analyzing 60/40 Portfolios Without Bonds

May 3rd, 2021 | Filed under: State of the Industry, Featured Post, Newly Added, Asset Allocation, Hedge Funds

By Nicolas Rabener, CAIA, of FactorResearch (@FactorResearch) INTRODUCTION John Maynard Keynes famously asked, “When the facts change, I change my mind—what do you do, sir?” If this question was directed at global pension funds and their fixed income allocation, then the answer would have to be, “Not much.” Their averageRead More


What Hedge Fund Risk Systems Don’t See

Mar 16th, 2021 | Filed under: Featured Post, Newly Added, Risk Management, Hedge Funds

By Linus Nilsson and Rikard Lundgren Many investors, trading floor managers, fund of fund allocators, and risk managers have experienced unexpectedly large losses that were not predicted by their risk management systems. Seemingly out of the blue, a safe portfolio can generate large losses for reasons that had not beenRead More


Axe Capital and Spartan-Ives: The Impact of Prime Broker Relationships

Mar 11th, 2021 | Filed under: Featured Post, Newly Added, Hedge Funds

By Hossein Kazemi, PhD, CFA, CAIA Association, FDP Institute, and Isenberg School of Management Introduction Bobby Axelrod had a good day on June 10, 2018. On this day, Axe Capital’s manager took the podium in front of a group of institutional and high-net-worth investors to pitch his fund. Thirty minutesRead More


The Art of Due Diligence, Part I: The Story Beyond the Numbers

Feb 25th, 2021 | Filed under: Featured Post, Manager Selection, Newly Added, Risk Management, Hedge Funds

By Keith Black, PhD, CFA, CAIA, FDP, Managing Director, Content Strategy, CAIA Association and Mark S. Rzepczynski, PhD, Founding Partner and CEO, AMPHI Research and Trading Given the reliance on quantitative analysis in asset allocation, some investors may be tempted to continue with a numerical approach when filling their assetRead More


Multi-Strategy Hedge Funds: Equity in a Different Shade?

Jan 26th, 2021 | Filed under: Featured Post, Newly Added, Hedge Funds

By Nicolas Rabener, CAIA, of FactorResearch (@FactorResearch) INTRODUCTION Investing in hedge funds is challenging as both strategies and fund structures are complex. Almost all strategies are cyclical, although not all are on the same cycle. For example, statistical arbitrage tends to perform best when volatility is high, however, that representsRead More


What is DeFi?

Jan 19th, 2021 | Filed under: Emerging Asset Classes, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Hedge Funds

By Dan Eyre You may have heard about tech’s newest portmanteau in the last few months: DeFi. This is due to the meteoric rise in value of the related assets. This post will attempt to explain what DeFi is, and what the medium- to long-term impact will be. To understandRead More


The Challenges—and Opportunities—of Chinese Distressed Debt

Jan 4th, 2021 | Filed under: Featured Post, Newly Added, Hedge Funds

By Dinny McMahon, Economic Advisor to ShoreVest For the last few years, China has been involved in a slow-moving cleanup of its banking system, creating vibrant distressed debt and special situations opportunities for investors. Those opportunities have been heightened by the pandemic which is forcing banks to accelerate their paceRead More


What About Beta? | Finally, Hindsight Is 2020

Jan 3rd, 2021 | Filed under: State of the Industry, Private Equity, Newly Added, Asset Allocation, What About Beta?, Hedge Funds

By Aaron Filbeck, CFA, CAIA, CIPM, FDP – Director, Global Content Development at CAIA Association Well…we made it. This has been the longest decade year of our lives. Whether it’s been personal or professional circumstances, or simply having been an investor in this market, none of us could escape theRead More


Hedge Fund Battle: Discretionary vs Systematic Investing

Dec 15th, 2020 | Filed under: Data Science & AI, State of the Industry, Featured Post, Newly Added, Hedge Funds

By Nicolas Rabener, CAIA, Factor Research & Karl Rogers, ACE Capital Investments INTRODUCTION Anyone who has watched the hit TV show “Billions” will have noticed that the hedge fund billionaire Bobby Axelrod and his former lieutenant, and occasional nemesis, Taylor Mason have totally different trading styles. Bobby, although mathematically gifted,Read More


The Future of Hedge Funds: Timing!

Dec 13th, 2020 | Filed under: Featured Post, Newly Added, Hedge Funds

There’s an old joke. Even, if you like, a meta-joke. It probably dates back to vaudeville, and it takes the form of an exchange between the stage comic and a selected victim from the audience. It goes like this: Comic: Today’s your lucky day. I’m going to tell you theRead More


Structured Finance: Unleash the Inefficiency

Nov 29th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Hedge Funds

By Shreekant Daga, CAIA, CFA, FRM What is structured finance? Finance has several theoretical traditional and modern frameworks in practice. Needless to say, often the frameworks have conflicting assumptions. The sub-prime mortgage crisis is a modern classic example. Data-reliant credit rating agencies (CRAs) had not seen such a large drawdownRead More


The New Generation of Behavioral Finance

Nov 26th, 2020 | Filed under: Featured Post, Newly Added, Asset Allocation, ESG, Risk Management, Hedge Funds

Meir Statman, a professor of finance at Santa Clara University and a consultant to Avantis Investors, has focused his scholarly efforts for decades on behavioral finance, and those efforts have given us a recent book on the subject, Behavioral Finance: The Second Generation. In Statman’s view the first generation ofRead More


Keynes vs. Markowitz ‘Thrilla in Portfolia’

Nov 19th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Asset Allocation, Risk Management, Hedge Funds

By Hossein Kazemi, PhD, CFA, CAIA Association, FDP Institute, and Isenberg School of Management Introduction While Keynes vs. Markowitz is not as thrilling as Ali vs. Frazier, it has important implications for investors when selecting funds and investment managers when constructing portfolios.  In this “fight,” we have in one cornerRead More


What Is the Future of Alternatives?

Nov 17th, 2020 | Filed under: State of the Industry, Featured Post, Private Equity, Newly Added, Asset Allocation, ESG, Hedge Funds

By Grant Murgatroyd, senior writer EMEA at Preqin Preqin predicts that alternative assets under management will rise to $17.2 trillion in 2025. We believe the COVID-19 induced slowdown in 2020 will be temporary and lead to a larger, more efficient, and more sustainable industry. Assets under management (AUM) in alternativesRead More


The Alternative Imperative, Part II

Oct 25th, 2020 | Filed under: Data Science & AI, State of the Industry, Featured Post, Newly Added, Asset Allocation, Hedge Funds

By Rick Roche, CAIA, Little Harbor Advisors, LLC Part 2 of a two-part series on The Alternative Imperative in the COVID Era. In Part 2, the author tackles notorious technology laggards. This piece transitions to alternative data pioneers (Alt-Venturers) and the 4-1-1 on Alt-Data: Hype or Hope? The author dispelsRead More


Why Alternative Investment Operations Still Matter

Oct 20th, 2020 | Filed under: Featured Post, Private Equity, Manager Selection, Newly Added, Risk Management, Hedge Funds

By Jason Scharfman Esq., CFE, CRISC, CAMS, CAIA Managing Partner, Corgentum Consulting As an operational due diligence (ODD) professional who performs ODD reviews of alternative investment managers on behalf of institutional investors and family offices, I have noticed a recent increase not only in the number of ODD reviews investorsRead More


Don’t Get Carried Away by Carry

Oct 15th, 2020 | Filed under: Featured Post, Newly Added, Asset Allocation, Hedge Funds

By Nicolas Rabener of FactorResearch (@FactorResearch) INTRODUCTION There are folks in finance who know and folks who don’t know. The latter group often drives the former crazy by abusing terminology. For example, moderators and guests on CNBC talking about momentum and growth stocks as if they were the same thing.Read More


Three Sources of Alpha: A Call for Small Manager Investment

Oct 13th, 2020 | Filed under: Featured Post, Private Equity, Newly Added, Asset Allocation, Risk Management, Hedge Funds, Commodities & Natural Resources

By Karl Rogers, ACE Capital Investments I recently finished a multi-strategy fund of hedge funds build for an institution where I focused on three sources of alpha: small manager, equities and commodities. Small Manager Alpha Given that “small” managers have been found to outperform their larger peers[1], why do manyRead More


The Alternative Imperative, Part 1

Oct 6th, 2020 | Filed under: Data Science & AI, State of the Industry, Featured Post, Newly Added, Hedge Funds

By Rick Roche, CAIA, Managing Director of Little Harbor Advisors, LLC Part 1 of a two-part series on Alternative Investment Data (Alt-Data) in the COVID Era. In Part 1, the author makes the case for high-frequency, short-interval Alt-Data while discussing three primary drawbacks of interpreting official economic statistics amid aRead More


Introduction to Insurance-Linked Securities

Oct 5th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Hedge Funds

By Chin Liu, Director of Insurance Linked Securities and Quantitative Research, Portfolio Manager; Campbell Brown, Portfolio Manager;  and Joe Morgart, Client Portfolio Manager,  at Amundi Pioneer Insurance-linked securities (ILS) is an alternative asset class offering investors the potential for attractive risk-adjusted returns and desirable diversification1 benefits. This overview describes aRead More


India: An Alternative Investment Industry Growth Story

Sep 27th, 2020 | Filed under: State of the Industry, Featured Post, Real Estate, Manager Selection, Newly Added, Hedge Funds

By Shreekant Daga, CAIA, CFA, FRM – Associate Director of Industry Relations, India at CAIA Association & Guowei Jack Wu, CFA – Director of Content, APAC at CAIA Association Through August-September 2020, CAIA Association hosted a 10-part educational webinar series titled 10 Lessons in Finance. The event brought together academics fromRead More


Retirement’s Mid-Life Crisis

Sep 22nd, 2020 | Filed under: State of the Industry, Featured Post, Private Equity, Newly Added, Asset Allocation, Hedge Funds

By Rob Croce, PhD – Managing Director and Portfolio Manager at Mellon & Aaron Filbeck, CAIA, CFA, CIPM – Associate Director of Content Development at CAIA Association In 2000, United States 10-year government bonds rates were 6% and the median U.S. public pension plan had an actuarial return assumption ofRead More


What If Bob Ross Was a Portfolio Manager?

Sep 14th, 2020 | Filed under: Data Science & AI, State of the Industry, Manager Selection, Newly Added, What About Beta?, Hedge Funds

By Aaron Filbeck, CAIA, CFA, CIPM Associate Director, Content Development at CAIA Association If you’ve ever watched an old Bob Ross video, you’ve probably felt a combination of relaxation and, in many cases, exasperation… “how does he do that so effortlessly?!” While there are rarely “happy accidents” in investing, IRead More


AI, What Have You Done for Me Lately?

Sep 10th, 2020 | Filed under: Data Science & AI, State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Hedge Funds

By Nicolas Rabener of FactorResearch (@FactorResearch) INVESTING IN AI VERSUS AI INVESTING “AI will probably most likely lead to the end of the world, but in the meantime, there’ll be great companies.” – Sam Altman If investors are looking for that one great AI company that will also end theRead More


Volatility Hedge Funds: The Good, the Bad, and the Ugly

Sep 3rd, 2020 | Filed under: Featured Post, Newly Added, Hedge Funds

By Nicolas Rabener of FactorResearch (@FactorResearch) INTRODUCTION In finance 101, there is usually little doubt on what constitutes the major asset classes in the investment industry, i.e. there are the traditional ones like equities or fixed income as well as alternatives like real estate or private equity. The instruments ofRead More


ESG Hedge Fund Managers and the Agency Problem

Sep 1st, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, ESG, Hedge Funds

Economists in general, and scholars of finance in particular, have long been concerned with the “agency problem,” the conflict of interest inherent in any relationship where X is expected, and perhaps required by law or contract, to act in the best interest of Y. The problem exists because, for example,Read More


This May Not Be the Apocalypse After All

Aug 9th, 2020 | Filed under: Featured Post, Newly Added, Asset Allocation, Hedge Funds

From the point of view of the alternative investment world, the dramas associated with the year 2020 may not constitute as apocalyptic a challenge or as paradigmatic a shift as is commonly thought. It may even be considered, in many respects, business as usual (aside from an occasional “murder hornet.”)Read More


Putting 2020 into Perspective: Diversification May Work Better than You Think

Aug 6th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Asset Allocation, Risk Management, Hedge Funds

By Rodney Sullivan, CFA, CAIA, Executive Director, University of Virginia Darden School of Business US recessions are typically accompanied by declines in stock market returns and, of course, 2020 has been no exception. We are once again reminded that investing is not easy leaving many investors to wonder how bestRead More


Understanding the Limitations of Liquid Alternatives

Jul 30th, 2020 | Filed under: State of the Industry, Access to Alternatives, Featured Post, Newly Added, Asset Allocation, Hedge Funds

By Shana Sissel, CAIA, Spotlight Asset Group More than a decade ago the world of alternative investments witnessed hedge-fund-inspired Investment Act of 1940 (40 Act) funds appear on the scene. Much like their private alternative counterparts, liquid alternatives offer valuable diversification benefits within traditional portfolios, but it’s important to keepRead More


What’s the Difference Between Momentum and Trend Following?

Jul 29th, 2020 | Filed under: Featured Post, Newly Added, Hedge Funds

By Alex Botte, CFA, CAIA, Vice President, Two Sigma At the end of 2019, Two Sigma’s Venn platform added three new macro style factors to its risk model, the Two Sigma Factor Lens: Fixed Income Carry, Foreign Exchange Carry, and Trend Following. The first two factors are meant to capture anRead More


Hedge Funds and Private Equity—Building Bridges—Or Not

Jul 27th, 2020 | Filed under: State of the Industry, Featured Post, Private Equity, Private Debt, Newly Added, Asset Allocation, Hedge Funds

Alternative investment managers were evolving in the context of changing market conditions even before the Covid-19 pandemic, although the virus has speeded up the process. What is emerging is an alternatives landscape where pure-play hedge funds will be rare. That is one of the conclusions of a new study byRead More


Global Macro: Masters of the Universe?

Jul 23rd, 2020 | Filed under: Featured Post, Newly Added, Hedge Funds

By Nicolas Rabener of FactorResearch (@FactorResearch) INTRODUCTION He-Man and the Masters of the Universe was a popular TV cartoon show in the 1980s, where a handsome Prince Adam was battling the evil Skeletor for control of the universe. Each time Prince Adam held the Sword of Power and boomed “ByRead More


Technology: Aiding and Abetting the Democratization of Alternative Investments

Jul 14th, 2020 | Filed under: Data Science & AI, State of the Industry, Access to Alternatives, Featured Post, Private Equity, Newly Added, Hedge Funds

A recent working paper for the European Corporate Governance Institute maintains that technology has the potential to make hedge funds and private equity more accessible to the retail investor. The paper, by Omololu Bajulaiye of Tilburg University, along with some other scholars begins with the non-controversial proposition that venture capital,Read More


A CLO-ser look at structured products

Jul 12th, 2020 | Filed under: Featured Post, Newly Added, Hedge Funds

By Robert Hoffman, Managing Director, Investment Research and Kara O’Halloran, Associate, Investment Research, FS Investments Structured products are no stranger to the limelight. Once only garnering interest from niche Wall Street trading floors, collateralized debt obligations (CDOs) and mortgage-backed securities (MBS) have become household names, as these products were cited asRead More


Variance Risk Premium: What Premium?

Jun 25th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Risk Management, Hedge Funds

By Nicolas Rabener of FactorResearch (@FactorResearch) INTRODUCTION Investing is akin to fighting in the forever war. There are long periods of peace and prosperity, but investors are frequently drawn into short-term combat, extended battles, and multi-year wars. And the cycle repeats over and over. For some of the foot soldiers,Read More


CRE Debt & the Downturn: What’s Next?

Jun 23rd, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Hedge Funds

By Matt Malone, Managing Director, Real Estate and Andrew Korz, Associate, Investment Research, FS Investments As the COVID-19 pandemic has swept across the world, it has become clear that the necessary steps being taken by governments to protect human life have thrust the global economy into a recession. In theRead More


The Test and The Bet

Jun 16th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Hedge Funds

By Shreekant Daga, CAIA, CFA, FRM | Associate Director, Liaison Office, India | CAIA Association Sporting incidents at times draw similarities to financial matters. The below write-up compares and contracts one of the most famous cricket test matches and a Wall Street bet with a financial investment lens. The blog post takes form of aRead More


Stat Arb, Algos and the Difference Between Cats and Dogs

Jun 1st, 2020 | Filed under: Data Science & AI, State of the Industry, Featured Post, Newly Added, Asset Allocation, Hedge Funds

A co-founder of Quantigic Solutions has presented what he calls “the freshmanlevel” answer to the question: why did dollar-neutral quant trading strategies, such as equities stat arb, fail so markedly during the COVID-19 market sell-off? Zura Kakushadze, a professor at the Free University of Tblisi, is on reasonably solid groundRead More


Hedge Funds and 2 Economic Crises: Focus on Systematic and Algorithmic Hedge Funds

May 28th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Asset Allocation, Hedge Funds

By Hossein Kazemi, PhD, CFA, Senior Advisor at CAIA Association During the Global Financial Crisis (GFC), the role of hedge funds and their potential to provide significant downside protection was hotly debated. The same debate has resurfaced earlier this year again when markets for risky assets experience double-digit declines withinRead More


Time-varying Equity Volatility Markedly Affects Hedge Fund Performance

May 19th, 2020 | Filed under: Featured Post, Manager Selection, Newly Added, Risk Management, Hedge Funds

By Masao Matsuda, CAIA, FRM, Founder, Crossgates Investment and Risk Management One would think hedge funds can weather market gyrations better than long-only equity investments as hedge funds have greater flexibility in determining the levels of market exposure.  However, while some individual hedge funds may have been successful in adverse marketRead More


Hedge Funds Between the Economics Crises

May 7th, 2020 | Filed under: State of the Industry, Newly Added, Hedge Funds

By Hossein Kazemi, Ph.D., CFA, Senior Advisor, CAIA Program Introduction The performance of hedge funds since the Global Financial Crisis (GFC) has been hotly debated in both industry and academic studies. There is strong evidence that the GFC had a profound impact on the structure and the relative performance of theRead More


Back(wardization) to the Future

May 3rd, 2020 | Filed under: Newly Added, What About Beta?, Hedge Funds

By Aaron Filbeck, CAIA, CFA, CIPM – Associate Director of Content Development at CAIA Association In the title reference, the character Dr. Emmett Brown says this about a bolt of lightning: “Unfortunately, you never know when or where it is ever gonna strike.” Frame of reference is everything when itRead More


MERGER ARBITRAGE: ARBITRAGED AWAY?

Apr 30th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, Hedge Funds

By Nicolas Rabener, @FactorResearch INTRODUCTION Working in the restructuring team of a corporate finance boutique is like being a trader focused on short-selling. Most money is made when companies falter, and stocks turn bearish. A restructurer’s cyclical counterpart is the ever-optimistic merger & acquisition (M&A) banker that thrives when theRead More


Peeling Back the Wrapper of Hedge Fund Strategies

Apr 13th, 2020 | Filed under: State of the Industry, Access to Alternatives, Newly Added, Asset Allocation, Risk Management, Hedge Funds

By Aaron Filbeck, CAIA, CFA, CIPM, Associate Director, Content Development at CAIA Association During CAIA Association’s most recent Virtual Chapter event, Keith and I (virtually) sat down with Chris Tidmore, CFA, CPA at The Vanguard Group to discuss Vanguard’s recent whitepaper, “The Wrapper Matters: Comparing Liquid Alternatives to Hedge Funds”Read More


Hedge Funds, Sustainable Investing, and the Data Gap

Apr 12th, 2020 | Filed under: State of the Industry, Featured Post, Newly Added, ESG, Hedge Funds

KPMG and CREATE have collaborated on a new report on the involvement of hedge funds in sustainable investing, which they define as investing that aims at three interlocking results: avoid harm and mitigate ESG risks; benefit all stakeholders; and contribute solutions to societal problems. The involvement of hedge funds inRead More


Funding a Covid ‘Long Shot’

Apr 2nd, 2020 | Filed under: State of the Industry, Private Equity, Newly Added, Hedge Funds

Every venture exists to solve a problem. Since the dawn of the Covid-19 pandemic, pharmaceutical companies and investors have been scrambling to solve what has quickly become one of the biggest problems in modern history. But as the Financial Times observed earlier this month: “For most biotechs, success will beRead More