The Eurekahedge Report - November 2019

November 2019 | Eurekahedge

The benchmark Eurekahedge Hedge Fund Index was up 0.31%[1] in October and up 6.27% year-to-date. Total assets under management increased by US$2.9 billion during the month as the sector witnessed performance-based increase of US$2.8 billion while registering net asset inflows of US$0.1 billion. The total size of the industry now stands at US$2,272.8 billion.

Asset Flows Update

November 2019 | Eurekahedge

The Eurekahedge Hedge Fund Index declined 0.31% in October, trailing the global equity market which edged 1.93% higher over the month, as represented by the MSCI ACWI (Local). Global equities rallied throughout the month, supported by the continuation of the US-China trade talks which culminated in a partial trade agreement between the two countries. The bond market saw yields climb as the risk-on sentiment returned to the equity market and the Fed signalled that they are done with rate cuts for the moment. Returns were positive across regions, with Asia ex-Japan mandate returning 2.36% for the month. On a year-to-date basis, fund managers focusing on Asia ex-Japan were up 9.74% over the first 10 months of the year, outperforming their North American peers who returned 6.26% over the same period.

Hedge Fund Performance Commentary

November 2019 | Eurekahedge

The Eurekahedge Hedge Fund Index was up 0.31% in October, trailing behind the MSCI ACWI (Local), which ended the month up 1.93% over the same period. The resumption of the US-China trade talks resulted in a partial trade agreement between the two largest economies. The positive development prompted President Trump to postpone the scheduled tariff hike on Chinese goods, which boosted US and Asian equities during the month. In the UK, the region’s equity market underperformed their global and EU peers despite the 3-month Brexit extension granted by the EU lawmakers, as a result of the stronger British pound. Government bond yields strengthened over the month, supported by investors’ risk-on sentiment combined with the Fed’s less dovish remark as they signalled a pause in cutting rate for the foreseeable future.

Eurekahedge European Investor Perspectives – Zurich 2019

November 2019 | Eurekahedge

Altinvestor Europe 2019 is Eurekahedge’s third European asset owner forum and the seventh of its kind across Europe and APAC regions, delivering exclusive insights from family offices as well as institutional asset owners on exploring alternative investments and optimizing portfolio returns. The event is aimed at facilitating a private environment for candid discussions between investors and to serve as a melting pot of ideas connecting Europe’s leading institutional investors under one roof.

2019 Key Trends in Latin American Hedge Funds

November 2019 | Eurekahedge

The Eurekahedge Latin American Hedge Fund Index was up 8.54% as of September 2019 year-to-date, narrowly underperforming the MSCI EM Latin America Index, which gained 10.24% over the same period. The market showed optimism following the consecutive rate cuts announced by the country’s central bank, which lifted the region’s equity markets. Investors also reacted positively to the approval of the pension reform in the lower house as the government saw the overhauling of the pension system critical in boosting the economic growth of Latin America’s biggest economy. Meanwhile, the region’s gross domestic product shrank in the first quarter this year for the first time since 2016. The delayed adoption of the pension reform was seen as a key reason for the weaker economic recovery of the country as international businesses were holding back their investment until the promulgation of the said reform. The Bovespa Index was up 19.18% as of September 2019 year-to-date.

Latin American Hedge Funds Infographic November 2019

November 2019 | Eurekahedge

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

2019 Key Trends in Emerging Market Hedge Funds

November 2019 | Eurekahedge

Emerging market mandated hedge funds were up 6.33% year-to-date, recovering the losses they suffered in 2018 on the back of the accommodative stance of the Fed and the market optimism towards the US-China trade negotiations, which boosted the equity markets of the developing economies over the year. During the first quarter of the year, the Federal Reserve completely shifted their stance from restrictive to accommodative monetary policy following the multiple equity markets sell-offs in 2018 and strong criticisms from the US President. Meanwhile, the market showed optimism towards the US-China trade talks as the two economic powerhouses agreed to resume the negotiations after the US President decided to postpone additional tariffs on the remaining US$300 billion of Chinese imported goods in August. The Shenzhen and Shanghai Composites were up 25.82% and 16.49% as of September year-to-date respectively. Over in India, the region is facing challenges surrounding liquidity risk owing to t

Interview with Tom James CEO & CIO, John Collis CLO of Tradeflow Capital Management

November 2019 | Eurekahedge

Tom James is CIO & CEO and a co-founder of the CEMP - NR Capital Trade Flow Fund SP (the Fund), the innovative digitised trade finance solution for bulk physical commodity transactions being shipped or stored around the world. He is widely recognised as a leading practitioner in the global natural resources market with over 30 years of commercial exposure gained through broad ranging senior regulated roles in financial institutions (including Bank of Tokyo Mitsubishi UFJ, Credit Agricole and Credit Lyonnais) and various trading firms including BHP Billiton. John Collis is a co-founder of the Fund and holds the position of Chief Legal Officer (CLO) and Head of Compliance. As well overseeing the development of the Fund’s critical legal infrastructure and working with leading Counsel on its enforceability, John has overseen the classification of the specialist intellectual property developed and acquired by TradeFlow and its licensing; and has worked with insurance underwriters

AIFMD II - The Harmonisation of Pre-Marketing

November 2019 | Hanny Tirta and Tom Pinnell - Langham Hall

Following a lengthy process through the EU Commission and Parliament, the proposed amendments regarding harmonisation of pre-marketing across the EU have now been agreed. On August 2nd 2019, a two year implementation period began, requiring all member states to apply the new rules from August 2021. At present, AIFMD regulates the “marketing” of a fund to investors, but does not specifically discuss “pre-marketing”. Consequently, the definition of pre-marketing varies between each member state, with some countries such as Spain taking a more restrictive stance on allowing any pre-marketing activities compared with for example, the UK.

EU Commission finalises draft RTS on securitisation transparency

November 2019 | Richard Fletcher and Edward Karsten - Macfarlanes LLP

Regulation (EU) 2017/2402 (the Securitisation Regulation), amongst other things, aims to enhance transparency in respect of the securitisation market. Investors and potential investors in a securitisation need to be able to, and may be required to, conduct due diligence and monitor a number of risks. Likewise, the entities listed in Article 17(1) of the Securitisation Regulation (including the European Supervisory Agencies, the European Systemic Risk Board, supervisory and resolution authorities) need to be able to meet their respective mandates, including (amongst other things) monitoring the overall functioning of securitisation markets.

FinSA / FinIA are just around the corner

November 2019 | Dr. Stefan Grieder - Vischer AG

According to the Federal Council's timetable, the Financial Services Act (FinSA - German only) and the Financial Institutions Act (FinIA - German only) are to enter into force on 1 January 2020. The results of the consultation (German only) on the corresponding Federal Council ordinances (FinSO and FinIO - both German only) are available. We expect the Federal Council to publish the definitive texts of the ordinances in October 2019. Only a few months remain until the new laws come into force. Even if generous transition periods are granted in some cases, financial service providers should adapt to the new circumstances in good time and take the necessary measures.

Fund Managers, Corporate Governance and the Role of the INED

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

The corporate governance of fund management companies has been a key area of focus for the Central Bank of Ireland over the past number of years. In a recent speech, Michael Hodson, Director of Asset Management and Investment Banking at the Central Bank, considered some of Central Bank’s key expectations of the board and directors, with particular reference to Fund Management Companies (“FMCs”), the role of INEDs, regulatory developments and Brexit.

New licence requirement for depositories of public funds

November 2019 | Scott Carnachan and Isabella Wong - Deacons

The Hong Kong Securities and Futures Commission (SFC) has issued a consultation paper (Consultation) that proposes a new licensing regime for trustees and custodians (depositories) of SFC-authorized collective investment schemes (Relevant CIS). The Consultation is open for comment until 31 December 2019. Existing trustees and custodians of Relevant CIS should read the Consultation and consider what the proposed licence and conduct requirements will mean for their business.