The benchmark Eurekahedge Hedge Fund Index was down 4.77% in March 2020 and 6.42% year-to-date. Total assets under management decreased by US$136.2 billion during the month as the sector witnessed performance-based decline of US$94.0 billion while registering net asset outflows of US$42.2 billion. The total size of the industry now stands at US$2,122.9 billion.
The Eurekahedge Hedge Fund Index was down 4.77% in March, outperforming the underlying equity market as represented by the MSCI ACWI IMI (Local), which lost 13.99% over the month. Global equities ended the month with double-digit losses, despite the partial recovery toward the end of the month, driven by fiscal and monetary stimulus packages. The situation surrounding the COVID-19 outbreak continued to worsen around the globe, with the United States overtaking China and Italy as the country with the highest number of confirmed cases. US authorities were forced to implement lockdown in most states adversely affected by the coronavirus outbreak, with New York being the hardest hit.
The Eurekahedge Hedge Fund Index was down 4.41% in March, outperforming the underlying equity market as represented by the MSCI ACWI IMI (Local), which lost 13.99% over the month. Global equities were under pressure from the market sell-offs throughout most of the month, before recouping some of their losses later on. The COVID-19 outbreak continued to worsen globally, with the United States overtaking China as the country with the highest number of confirmed cases. US authorities were forced to implement stringent social distancing measures in an attempt to flatten the outbreak curve, resulting in increasing unemployment rate and slowing economic growth as businesses deemed non-essential were forced to temporarily cease their operations.
Hedge fund managers ended the first quarter of 2020 down 6.42%, while delivering their strongest post-2008 monthly outperformance over the global equity market as represented by the MSCI ACWI IMI. The escalation of the COVID-19 outbreak, which has spread to more than a hundred countries around the globe over the past two months, has weighed on the performance of risk assets in February and March.
The Eurekahedge European Hedge Fund Index was down 2.48% as of February 2020 year-to-date, outperforming the MSCI AC Europe IMI, which lost 9.79% over the same period. In the fourth quarter of 2019, the European equity markets rose higher, supported by the positive geopolitical development surrounding the US-China trade negotiations as the two leading economies reached the phase-one deal, which was signed in January 2020. The DAX and CAC 40 gained 6.61% and 5.29% in Q4 2019, reaching new all-time highs. However, market risk sentiment shifted quickly in February 2020 as the extent of the COVID-19 outbreak outside China resulted in concerns over the global economic growth.
Since the onset of the global financial crisis, investors worldwide have grown more cautious in undertaking investments and have increased their demands for underlying investment products and instruments to be monitored by international compliance standards. The Undertakings for Collective Investment in Transferable Securities or ‘UCITS’ was developed to meet this post-crisis demand, as UCITS embodied by strong regulation results in a high level of investors’ protection with certain restrictions such as liquidity of the underlying assets and leverage caps to provide added transparency to investors.
Eurekahedge’s European hedge funds infographic sums up the industry as at April 2020. Find out more about European 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.
Eurekahedge’s UCITS hedge funds infographic sums up the industry as at April 2020. Find out more about UCITS 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.
Christopher R. Cole, CFA, is the Founder & CIO of Artemis Capital Management LP. Mr. Cole’s core focus is systematic, quantitative, and behavioral-based trading of volatility and derivatives. His decision to form a fund came after achieving significant proprietary returns during the 2008 financial crash trading volatility futures and options (verified by an independent auditor).
COVID-19 has been a major macroeconomic shock for the world. As a result, we have seen very large moves in inflation expectations, real GDP growth, credit spreads and energy prices across regions. These shifts in “macro factors” have deeply impacted all asset classes.
The primary legislation regulating mutual funds in the Cayman Islands is the Mutual Funds Law (As Revised) (the “Funds Law”) and accompanying regulations, including the Retail Mutual Funds (Japan) Regulations (As Revised) which generally apply to investment funds licensed under the Funds Law (licensed funds) where the securities are marketed to the public in Japan. The term “mutual fund” applies for Cayman Islands law purposes to all open-ended investment funds irrespective of whether they are hedge funds or other fund with multiple strategies.
The cascading impacts of the coronavirus outbreak (COVID-19) on markets and businesses are creating a variety of challenges and opportunities for private equity funds. General partners (“GPs”) may want to consider a variety of proactive steps, including reviewing investment objectives; altering fund documents; being more proactive in information sharing, valuations and reporting; reviewing borrowing limitations and derivative contracts; and other protective measures.
The benchmark Eurekahedge Hedge Fund Index was down 1.73% in February 2020 and 1.66% year-to-date. Total assets under management decreased by US$32.1 billion during the month as the sector witnessed performance-based decline of US$33.8 billion while registering net asset inflows of US$1.7 billion. The total size of the industry now stands at US$2,270.6 billion.
The Eurekahedge Hedge Fund Index was down 1.73% in February, outperforming the underlying equity market as represented by MSCI ACWI (Local) which plummeted 7.84% over the same period. Global equities started the month on a positive note, driven by the market optimism towards the containment of the COVID-19 as the number of newly infected people in Mainland China decelerated and central banks announced stimulus packages.
The Eurekahedge Hedge Fund Index was down 1.73% in February, outperforming the underlying global equity market as represented by the MSCI ACWI (Local) which lost 7.84% over the month. Global equities rallied earlier into the month, supported by the improving situation in China over the COVID-19 outbreak and stimulus packages announced by central banks. The tech-heavy NASDAQ Composite recorded a new all-time high for the week ending February 14, as the encouraging macroeconomic data in the region also contributed to its performance during the period.
The return of market volatility on the back of the escalating COVID-19 outbreak situation around the globe has pushed two particular niche hedge fund strategies back into the spotlight: the CBOE Eurekahedge Long Volatility Hedge Fund Index and the CBOE Eurekahedge Tail Risk Hedge Fund Index returned 10.27% and 12.28% respectively in February 2020. The two strategies which provide crisis alpha and protection for institutional portfolios have long since generated debates among asset owners and academics alike.
The Eurekahedge Hedge Fund Index was up 0.08% year-to-date as of January 2020, outperforming the underlying global equity market as represented by the MSCI ACWI IMI, which was down 0.89% over the same period. In 2019, the positive development of the US-China trade negotiations and the Fed’s shift of stance on their policy rates were the primary drivers of the global equity market performance.
Eurekahedge’s global hedge funds infographic sums up the industry as at March 2020. Find out more about global 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.
The Institutional Limited Partners Association (“ILPA”) has recently issued a publicly available model private equity limited partnership agreement (the “Model LPA”) as part of its simplification initiative. ILPA is an international organization that represents the limited partner community, although it also works with managers of private equity funds and other practitioners when publishing its model texts and guidelines. One of ILPA’s principal aims in publishing the Model LPA is to standardize a document that is generally negotiated on a bespoke basis.
The benchmark Eurekahedge Hedge Fund Index was up 0.14% in January and 8.67% in 2019. Total assets under management increased by US$2.0 billion during the month as the sector witnessed performance based increase of US$1.6 billion while registering net asset inflows of US$0.4 billion. The total size of the industry now stands at US$2,304.6 billion.
The Eurekahedge Hedge Fund Index ended 2019 up 8.67%, recording its strongest annual performance since 2013 on the back of the de-escalation of the US-China trade war and accommodative central bank policies. Going into 2020, hedge fund managers returned 0.14% in January, outperforming the MSCI ACWI (Local) which slumped 0.90% over the month following the COVID-19 outbreak in China. Despite liquidity injection by the People’s Bank of China and the reduction of tariffs on US imports, investors remained concerned on the impact of the epidemic on the global economic outlook. Returns were mixed across regions in January, with Asia ex-Japan fund managers returning 0.93%, ahead of their peers focusing on North America, who ended the month down 0.11%. Long/short equities fund managers were down 0.35% in January as the weak equity market performance throughout the latter half of the month weighed on their returns.
The Eurekahedge Hedge Fund Index was up 0.14% in January, ahead of the underlying equity market as represented by the MSCI ACWI (Local) which lost 0.90% over the same period. Global equities rallied earlier into the month, supported by the easing tension in the Middle East and the signing of the US-China phase-one trade deal. The S&P 500 and the tech-heavy NASDAQ returned 2.29% and 1.97% respectively for the week ending January 17. However, market sentiment shifted rapidly towards the end of the month, following the coronavirus outbreak in China. Investors feared that the epidemic, which draws parallel to the SARS outbreak in 2003 might have an adverse impact on the global economic outlook.
The Eurekahedge ILS Advisers Index gained 0.92% in 2019, following two consecutive years of losses during which ILS fund managers with catastrophe risk exposure suffered from the damage caused by the Atlantic hurricane seasons. Despite being a period of calm insurance losses, 2019 saw ILS fund managers languishing under loss creep from upward adjustments in estimated losses of past events. Insurance-linked securities (ILS) hedge funds trade in instruments whose values depend on insurance loss events. The majority of these instruments are reinsurance policies that assume the risk taken by insurance companies, which in turn assume the risk taken by individuals or institutions.
The Islamic finance industry is a niche market predominantly serving the needs of the world’s Muslim population. Products marketed under the umbrella of Islamic finance comply with a different investment philosophy as opposed to traditional investment philosophy which the rest of the world are familiar with. Under a Shariah-compliant framework, transactions which are considered to be unethical under Islamic law are prohibited and instead, fund managers invest in products which are compliant with Islamic guidelines. Islamic financial products are accessible to all investors, some of whom choose to allocate into Islamic funds for purposes of portfolio diversification or their preference in investing in products which deemed as socially responsible. In recent years, Islamic finance has been catching on with traditional finance institutions as international banks have expanded into providing Islamic finance services.
Eurekahedge’s Islamic hedge funds infographic sums up the industry as at February 2020. Find out more about Islamic 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.
Dino has over 27 years of experience in global trade finance and debt markets both in the banking and investment management sectors. He has served as global head of trade finance related products for Standard Chartered Bank, Standard Bank, and Banco Santander where he managed trading and investment portfolios in the trade finance related sector and market leading origination and trading desks.
The year 2019 has seen responsible business, climate change and impact financing feature high on the agenda with increasing focus on the sector by investors, regulators, trade bodies and financial institutions. As a result, there is growing evidence of the influence of environmental, social and governance ("ESG") factors in mainstream finance.
On 8 January 2020, the Cayman Islands Government published a draft Private Funds Bill, 2020 (the Bill) and a draft amendment to the Mutual Funds Law (2019 Revision) (MFL Amendment). The proposed legislation is a result of certain EU and other international recommendations and has been developed to align the Cayman Islands investment fund regulatory regime with other jurisdictions. The Bill and the MFL Amendment are expected to be put before the Cayman Islands Legislative Assembly on 30 January 2020, where final amendments may be made before they are passed into law. It is expected that there will then be a transition period for existing structures.
The Wall Street Journal recently reported that the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) has sent letters to asset management firms that market and offer environmental, social, and governance (“ESG”) investment products. Below are some key takeaways that asset managers should know and do as the SEC focuses in on asset managers that offer impact investment strategies.
The U.S. Securities and Exchange Commission (the “SEC”) has issued a release (the “Proposing Release”) (available here) proposing amendments that expand the definitions of “accredited investor” (“AI”) and “qualified institutional buyer” (“QIB”). The AI definition is used principally to determine to whom an offering can be marketed in a private placement under Rules 506(b) and 506(c) of Regulation D, and the QIB definition is used principally to determine to whom securities can be resold in a sale structured under Rule 144A.
The FCA has outlined some key risks of harm in the asset management and alternative investments sectors and the steps that firms should take to address these risks. Firms may therefore need to make changes to their current practices and procedures.
The 17th annual Eurekahedge Asian Hedge Fund Awards will be held in Hong Kong for the first time on 24 June 2020 at Grand Hyatt. Stay tuned to this page for more updates.
The benchmark Eurekahedge Hedge Fund Index was up 1.57% in December and 8.74% year-to-date. Total assets under management increased by US$22.1 billion during the month as the sector witnessed performance-based increase of US$17.0 billion while registering net asset inflows of US$5.1 billion. The total size of the industry now stands at US$2,302.2 billion.
The Eurekahedge Hedge Fund Index ended 2019 up 8.74%, recording its strongest annual performance since 2013. The global hedge fund industry has been supported by the global equity market rally on the back of the de-escalation of the US-China trade war and accommodative central bank policies. Positive geopolitical developments surrounding the trade war and Brexit have also sustained investors’ risk sentiment over the last quarter of the year. Returns were positive across regions, with Asia ex-Japan fund managers returning 2.58% in December, on the back of the region’s equity market rally. Fund managers focusing on Asia ex-Japan were up 12.03% over the year, outperforming their North American peers who returned 9.32% over the same period.
The Eurekahedge Hedge Fund Index was up 1.57% in December and 8.74% for the year, recording its strongest annual return since 2013. The risk-on sentiment resulting from positive geopolitical development provided support for risk assets as the two-leading economies officially reached an agreement that de-escalated their 18-month long trade tension. The global equity market as represented by the MSCI ACWI (Local) ended 2019 up 23.44%. US equities recorded new all-time highs, with the S&P 500 up 2.86% in December on the back of market optimism toward the US-China phase-one deal which was signed in early 2020. Over in Europe, UK equities outperformed their European peers, thanks to the landslide victory of the UK Conservative Party, which resulted in better clarity surrounding Brexit. The FTSE 100 rose 2.67% during the month. On a similar note, positive trade development, monetary stimulus, and strong macroeconomic data acted as a tailwind to the performance of Asian equity markets, especi
Structured credit traces its history back to the 20th century and has been a part of institutional and hedge fund portfolios for decades. Hedge fund managers focusing on structured credit could largely be dichotomised into those who generate returns from beta exposure to the asset class, and those who exploit mispriced instruments resulting from market inefficiency. Structured credit instruments result from the securitisation process in which multiple debt obligations are packed into interest-bearing securities whose cash flows are then sold to investors. This asset class has remained attractive to investors due to their ability to offer good return potentials and low rate of losses while providing diversification from other fixed income assets. The securitisation process also allows the final product to be tailored to an investor’s specific risk profile and constraints. On the other hand, the complexity of the instrument may result in heightened liquidity risk, and certain structured
The Eurekahedge Asian Hedge Fund Index was up 7.41% year-to-date as of November 2019, supported by the robust performance of risk assets in the region resulting from the progress of the US-China trade talks. The underlying equity market, as represented by the MSCI AC Asia Pacific IMI gained 15.19% over the same period. The trade negotiation process between the two countries has faced considerable challenges throughout the year, notably when the PBOC allowed the yuan to weaken past the symbolic level of seven. The US Treasury department responded by labelling China as a currency manipulator, further escalating the tension between the two economies. However, market sentiment improved when the trade talks resumed in October, and finally concluded in a phase-one deal which was eventually signed in January 2020, shortly after the removal of China from the US Treasury list of currency manipulators. The positive geopolitical development surrounding the trade war boosted market sentiment and a
Eurekahedge’s Asian hedge funds infographic sums up the industry as at January 2020. 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.
On Nov. 25, 2019, the Commodity Futures Trading Commission approved amendments that impact several registration and reporting exemptions, which will affect many hedge fund and private equity fund managers. While, in general, these are long-needed changes that streamline administrative processes or harmonise CFTC rules with those of other regulators or with actual market practice, every private fund manager relying on a CFTC exemption should review the details of the changes.
The European Supervisory Authorities (the “ESAs”) have published joint draft Regulatory Technical Standards (“RTS”) to amend Commission Delegated Regulation 2016/2251 (the “CDR”) on the risk mitigation techniques for non-cleared OTC derivatives including in respect of the phase-in of the regulatory initial margin requirements.
As the deadlines and expiry of derogations the subject of the proposed amendments are fast approaching, and RTS need to go through various steps before being finalised and entering into force (endorsement by the European Commission and scrutiny and non-objection by the European Parliament and the Council), the ESAs have stated that they “expect competent authorities to apply the EU framework in a risk-based and proportionate manner until the amended RTS enter into force”.
On 6 November 2019, the Swiss Federal Council decided that the Swiss Financial Services Act (FinSA) and the Swiss Financial Institutions Act (FinIA) will enter into effect on 1 January 2020. Concurrently, the final versions of the Financial Services Ordinance (FinSO) and the Financial Institutions Ordinance (FinIO) (as well as the Supervisory Organisation Ordinance (SOO)) containing the implementing provisions for FinSA and FinIA were published.