The Eurekahedge Report - October 2019

October 2019 | Eurekahedge

The benchmark Eurekahedge Hedge Fund Index was down 0.30% in September, up 5.70% year-to-date. Total assets under management declined by US$2.7 billion during the month as the sector witnessed performance based increase of US$3.4 billion while registering net asset outflows of US$6.2 billion.

Asset Flows Update

October 2019 | Eurekahedge

The Eurekahedge Hedge Fund Index declined 0.30% in September, trailing the global equity market which edged 2.04% higher over the month, as represented by the MSCI ACWI (Local). Global equities rallied through the earlier half of the month, supported by the resumption of the US-China trade talks, only to retreat toward the end of the month as an impeachment inquiry was launched against the US President. The bond market saw yields decline as major central banks continued with their easing policies: the Fed cut its rate for the second time this year in September, and the ECB announced new stimulus packages, including the restart of their asset purchases. Returns were mostly positive across regions, with the exception of fund managers focusing on Europe, who were down 0.10% in September. Nonetheless, the mandate is still up 3.75% on a year-to-date basis. Japan-focused hedge funds were up 1.26% throughout the month, outperforming their Asia ex-Japan peers who were up 0.97%.

Hedge Fund Performance Commentary

October 2019 | Eurekahedge

The Eurekahedge Hedge Fund Index was down 0.30% in September, underperforming the MSCI ACWI (Local), which ended the month up 2.04%. The resumption of the US-China trade negotiations combined with the withdrawal of the controversial Hong Kong extradition bill boosted the two regions’ equity markets early into the month. However, the impeachment inquiry against the US President Donald Trump wiped out a portion of the gains posted by US equities, dragging the S&P 500 down 1.01% through the week ending 27 September. Despite the improving risk sentiment among investors throughout the month, the global bond markets saw yields decline due to the accommodative stance adopted by the major central banks. The ECB announced new stimulus measures, including the resumption of asset purchases, while the Fed decided to cut its rate for the second time this year in September. The commodity market saw a sharp increase in oil prices during the month following the drone attack on Aramco oil facilities,

Hong Kong: A turning point for the number one Asian hedge fund hub

October 2019 | Eurekahedge

Hong Kong has been a major focal point within the Asia Pacific hedge fund industry, currently accounting for US$92.1 billion of assets under management (AUM), overseen by 449 hedge fund managers as of August 2019. Proximity to the fast-growing economy of China, availability of highly-trained talent base, as well as robust regulatory landscape have successfully attracted both foreign and domestic hedge fund managers to base their operations in the special administrative region. The Hong Kong hedge fund industry has continued to grow and reach new highs on the back of robust investor allocations and performance-driven growth in the post-GFC era. Seen as the gateway to China, Hong Kong is uniquely positioned to benefit from foreign asset owners interested in allocating into the Greater China region, as well as domestic asset owners looking to gain international exposure.

2019 Key Trends in North American Hedge Funds

October 2019 | Eurekahedge

The Eurekahedge North American Hedge Fund Index was up 5.71% year-to-date as of August 2019, underperforming the underlying equity market as represented by the MSCI North America IMI, which gained 16.47% over the same period. The progress of the US-China trade negotiations combined with the exhibited accommodative stance of the Fed acted as tailwinds for North American hedge fund managers, resulting in Q1 return of 5.22% - the strongest since 2006. The positive developments of the US-China trade talks prompted President Trump to delay the scheduled tariff increase in March, which further uplifted the risk sentiment among investors during the first few months of the year. However, the robust rally in the equity market ended in May, following President Trump’s decision to increase the tariffs imposed on the Chinese imported goods resulting in the breakdown of their trade negotiation. Over the same month, President Trump blacklisted Huawei due to national security concerns. The tech-heavy

North American Hedge Funds Infographic October 2019

October 2019 | Eurekahedge

Eurekahedge’s North American hedge funds infographic sums up the industry as at October 2019. Find out more about North American 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.

AMLD5 in Germany: Implementation provides far-reaching licensing requirements for crypto-asset service providers

October 2019 | Hans Stamm - Dechert LLP

German draft bill for the implementation of the 5th EU Anti-Money Laundering Directive provides for licensing requirements and an expansion of the address of the anti-money laundering obligations with regard to crypto-asset service providers. On 31 July 2019 the Federal Cabinet published a draft bill implementing the Amending Directive to the 4th EU Anti-Money Laundering Directive (Directive [EU] 2018/843) into German law (”AMLD5””). The bill introduces, amongst other things, changes to the German Anti-Money Laundering Act (Geldwäschegesetz – GwG) and to the German Banking Act (Kreditwesengesetz – KWG) and new provisions for electronic wallet providers and exchange platforms for crypto-assets. The draft bill will become effective on 1 January 2020 and will have a big impact on the crypto-assets industry as it extends the scope of anti-money laundering and countering financing of terrorism (AML/CFT) duties to providers engaged in exchange services between virtual currencies and fiat

Crowd-sourced funding in Australia: a viable alternative?

October 2019 | Jeremy Horwood - Corrs Chambers Westgarth

Earlier this year, the first report on Australia’s crowd-sourced funding (CSF) sector was released by the Australian Securities and Investment Commission (ASIC). The release of the report follows the expansion of Australia’s CSF regime to include eligible proprietary companies in late 2018.

FDIC and OCC Approve Volcker 2.0 — Summary of Amendments to Fund Activity Provisions

October 2019 | Joseph P. Vitale and Jessica Romano - Schulte Roth & Zabel LLP

On Aug. 20, 2019, the Federal Deposit Insurance Corporation (“FDIC”) and the Office of the Comptroller of the Currency (“OCC”) approved a final rule (“Final Rule”) to amend the regulations adopted in 2013 (“2013 Rule”) implementing Section 13 of the Bank Holding Company Act, commonly referred to as the “Volcker Rule.” While the Final Rule is largely similar to the Notice of Proposed Rulemaking issued by the agencies on May 30, 2019 (“Proposed Rule”), it does contain important modifications from the Proposed Rule. The other three agencies charged with implementing the Volcker Rule — the Commodity Futures Trading Commission (“CFTC”), Federal Reserve Board (“Board”) and the Securities and Exchange Commission (“SEC” together with the FDIC, OCC, CFTC and Board, “Agencies”) — are expected to approve the Final Rule in the coming days.

New Regulatory Framework for the Cross-border Distribution of Investment Funds

October 2019 | Mark White, Iain Ferguson, Tony Spratt, Darragh Murphy, Hugh Beattie and Anna Moran - McCann FitzGerald

The EU’s new regulatory framework facilitating the cross-border distribution of collective investment undertakings was published in the EU’s Official Journal on 12 July 2019. The new framework, which is intended to provide clarity for fund managers that want to market their products across the EU comprises: Regulation 2019/1156 on facilitating cross-border distribution of collective investment undertakings and amending the EUVECA Regulation 345/2013, the EUSEF Regulation 346/2013 and the PRIIPs Regulation 1286/2014 (the “Regulation”) (here); and Directive 2019/1160 which amends the UCITS Directive 2009/65 and the Alternative Investment Fund Managers Directive 2011/61 (“AIFMD”) in certain respects (the “Directive”)

The ABCs of ESG

October 2019 | Eric Belli-Bivar - DLA Piper

A further example evidencing the trend towards ESG investment in Canada comes from the largest single investor in Canada: the Canadian Pension Plan. The Canada Pension Plan (“CPP”) offers Canadian contributors and their families with partial replacement ?of earnings upon retirement, disability, or death. Almost all individuals who work in Canada outside of ?the Province of Quebec (where the Quebec Pension Plan provides similar benefits) contribute to the ?CPP. ?In 2013, CPP’s net managed assets totaled CAD $175.0 billion.