18/08/2010
We are all joined by an invisible economic thread; a skein that belies theories of financial decoupling. Yet, there is still room for nuance. Credit Suisse’s latest research reveals that
global investors are not all opting for the same strategies. Currently, US investors have left their European and Asian peers behind, showing a high level of interest in emerging market strategies.
And while equities continue to be universally popular, trading strategies top the list in Europe, while US investors are opting for market neutral, as they hope to side-step the fast-moving
markets.
11/08/2010
Leverage; so long the shibboleth that has been used to brand hedge funds, dropped out of sight in 2008. Since this nadir, hedge fund borrowing has slowly been creeping back as managers and
investors take on more risk and look to benefit from ratcheting up the value of funds. May and June temporarily halted this return. Market fluctuations led to a process of de-risking, particularly
among relative value and multi-strategy funds (see news analysis, p15). Yet, average leverage is still expected to hover around the 3x mark by year-end. Despite this return, it’s also very
clear that rates of gearing will not hit the unmanageable pre-crisis highs. Credit Suisse’s latest figures show how modest the return to leverage has actually been, with managers, investors
and hawkish regulators all monitoring levels for signs of hubris and over-exposure.
28/07/2010
Hedge inflows have slowed as volatile markets made sitting on the sidelines the safest option in Q2. According to figures from HFR, the quarter’s $9.5bn - a 30% drop from Q1’s $14bn
– reflected the 'wait and see' policy of many investors as the HFRI Fund Weighted Composite dropped -2.5%. With nerves setting in, recent predictions of a boom of interest in the alpha
potential of smaller managers also fell flat, with the lion’s share of money going to large $5bn-plus managers.
21/07/2010
Every graph tells a story, every index holds a tale. If last year’s uninterrupted upward curves relayed an economic fable of undervalued securities and over-confidence, 2010’s wildly
fluctuating indices have been authored by powerful macro-economic moves. Initially, Asia played the role of a prosperous bystander; now the economies of the East have been dragged into an uncertain
story, with regional-focused hedge funds down, according to HFR’s Emerging Markets: Asia ex-Japan Index, -2.34 YTD.
No region can be truly decoupled from Western problems, but with the last 12 months boasting near 12% hedge fund returns, Asia still remains a good bet for trades and, according to a recent Nomura
cap intro event, fresh inflows. The surveyed views of the event’s investors is an interesting story in itself, as Asian allocators look beyond home markets and even eschew the AuM
requirements that have hampered small funds
in the West.
14/07/2010
The Volcker rule passed by the US House of Representatives last week may not be as draconian as some had originally feared, but its newly inserted de minimis exemption still leaves banks with
little room for manoeuvre. A recent study by Citigroup analyst Keith Horowitz has provided estimates for just how far over the new limit (3% of tier 1 capital) certain US banks are, with the
results making better reading for some than others.
