Gwyn Roberts

09/11/2011 Author: Gwyn Roberts

Editor's view: 9 November 2011

Few would name-check ‘counterparty risk’ as a potential business benefactor, but for some funds a meaningful
solution to the weakness of external partners is seen as an important selling point. It’s simple: Fail to show the necessary rigour in this area (like those exposed to MF Global) and you risk missing investment – prove you have all bases covered and the mandates should be forthcoming.

Currently these mandates are thin on the ground. Administrators tell HFMWeek that, post-31 October, we are now living in a period of net redemptions. This isn’t the wild panic-selling of 2008, but the sort of niggling attrition that means operational standards at funds will come under greater scrutiny.

It’s not all doom and gloom. Certain strategies continue to do well and a thin beam of inflows is currently picking out CTAs, macro and credit funds. Pension funds, and other investors, are also sat on enormous cash balances that need to be deployed before year-end. This could still turn a trend of small net redemptions into one of net inflows – particularly if managers can consolidate on October’s positive figures.

Finally, there is also another ‘positive’ aspect of counterparty risk at play. Investors are growing nervous with their own banking arrangements and stockpiles of cash. This could begin to fall into the hands of the ‘right’ managers – namely, those with positive numbers, the right strategy and a meaningful operational backbone.

Post a comment

Post a comment…

Be the first to comment on this article!

07/06/2012

UK: Impact of the AIFMD - the real story

Join us and our panel of experts for HFMWeek's Subscribers' Club June's UK breakfast briefing, 'Impact…

Read More

31/05/2012

US: Family Offices

The next US HFMWeek Subscribers' Club breakfast, will take place on Thursday May 31. Join us and…

Read More

02/02/2011

European Hedge Fund Services Awards 2012

HFMWeek's European Hedge Fund Services Awards are designed to recognise companies that have outperformed...

Read More

Search HFMWeek