The Eurekahedge Report - September 2019

September 2019 | Eurekahedge

The benchmark Eurekahedge Hedge Fund Index was up 0.17% in August and up 6.58% year-to-date. Total assets under management declined by US$4.4 billion during the month as the sector witnessed performance-based decline of US$1.9 billion while registering net asset outflows of US$2.5 billion. The total size of the industry now stands at US$2,282.8 billion.

Asset Flows Update

September 2019 | Eurekahedge

The Eurekahedge Hedge Fund Index gained 0.17% in August, outperforming the global equity market which slumped 2.37% over the month, as represented by the MSCI ACWI (Local). The re-escalation of the US-China trade war combined with other political concerns resulted in weak global equity performance during the month. Despite the ongoing trade talks, the US imposed additional tariffs to US$300 billion of Chinese imported goods. The move prompted China to levy retaliatory tariffs to US imported goods, which rattled the world’s financial markets. Meanwhile, the deteriorating bilateral relationship between Japan and South Korea, the ongoing protests in Hong Kong, and the heightened risk of a no-deal Brexit also contributed to the risk-off sentiment among investors. Fund managers focusing on North America and Asia ex-Japan were down 0.78% and 0.96% respectively in August. Nonetheless, the two mandates are still up 6.04% and 6.83% respectively on a year-to-date basis, owing to their strong per

Hedge Fund Performance Commentary

September 2019 | Eurekahedge

The Eurekahedge Hedge Fund Index was up 0.17% in August, outperforming the MSCI ACWI (Local) which ended the month down 2.37%. The US administration imposed additional tariffs to the remaining US$300 billion of Chinese imported goods, which resulted in the weakening of the CNY past the symbolic 7 per USD level early into the month. Consequently, the US Treasury Department labelled China as a currency manipulator, further intensifying the trade tension between the two countries. The risk-off sentiment among investors during the month was mostly driven by political concerns encompassing the US-China trade war, the deteriorating bilateral relationship between Japan and South Korea, the ongoing protests in Hong Kong, and the risk of a no-deal Brexit among other things. Further exacerbating the risk-off sentiment during the month, the US 2-10Y yield spread inverted for the first time since 2007, raising concerns over an impending economic recession.

ESG Fund Investing: The pursuit of sustainable alpha

September 2019 | Eurekahedge

Investors are increasingly beginning to incorporate ethical considerations into their investment decisions, a development which has given rise to the ESG framework over the years. Despite the implementation challenges which arise when screening investments against acceptable environmental, social and corporate governance themes, the trend towards a more conscientious approach to investment is here to stay, especially from the perspective of large institutional investors. Fund managers, for both actively and passively managed investment vehicles are balancing their quest for superior returns with the need to meet investor demand for responsible investing. Further, an understanding that such an approach to investment can translate into ‘ESG-induced alpha’ for managers is further helping the cause of ethically guided investing. This article looks at the performance of funds, both long-only absolute return vehicles and hedge funds, with an active ESG investment framework and how they have

2019 Key Trends in Asian Hedge Funds

September 2019 | Eurekahedge

The Eurekahedge Asian Hedge Fund Index was up 6.06% year-to-date as of July 2019, despite several political uncertainties that plagued the region. The underlying equity market as represented by the MSCI AC Asia Pacific IMI gained 7.79% over the same period. Investors’ optimism towards the US-China trade talks combined with central bank rate cuts and the Chinese stimulus program boosted the region’s equity market resulting in strong Q1 performance of Asian hedge funds. However, the risk-sentiment had shifted entirely in May following the decision of the US administration to increase the tariff to the US$200 billion of Chinese imported goods. The move prompted the Chinese government to retaliate, which resulted in the escalation of their trade conflict. The Shenzhen and Shanghai Composite Index lost 6.40% and 5.84% in May, respectively.

Asian Hedge Funds Infographic September 2019

September 2019 | Eurekahedge

Eurekahedge’s Asian hedge funds infographic sums up the industry as at September 2019. Find out more about Asian hedge funds assets under management (AUM), asset flows into strategic and regional mandates, strategy returns, fund size and geographic AUM, head office locations and the best and worst performances of the year.

EMIR Refit update

September 2019 | Nick Shiren, Assia Damianova and Michael Sholem - Cadwalader Wickersham & Taft LLP

Regulation (EU) No 648/2012 (“EMIR”) imposed a range of obligations which can apply to counterparties trading in derivatives, including a clearing obligation, risk mitigation obligations (including the exchange of collateral) and a reporting obligation. In 2017, following a review of the effectiveness of EMIR, the European Commission published a proposal for a new regulation to amend EMIR, with the aim of making the legislation operate in a more proportionate, efficient and effective manner. The new Regulation (“EMIR Refit”) has now been published in the Official Journal of the EU and the majority of its provisions will come into force on 17 June 2019.

ILPA Releases Principles 3.0 to Address New Developments in Private Equity

September 2019 | David A. Winter and Bryan R. Ricapito - Hogan Lovells

ILPA report highlights new issues that have emerged in the 2010s, including additional concerns about GP conflicts and fiduciary duties, fee and expense reporting, subscription lines of credit, GP-led secondaries, co-investment allocations and change of control of the GP. Hogan Lovells is a recognised leader in representing both LPs and GPs in every aspect of the private equity industry, from fundraising and regulatory compliance to M&A and credit financing.