Observations / Statistics / Commentary
CTA Expo New York: April 30th
The New York Expo moves to a new venue this year – the historic New York Stock Exchange. The word from Frank and Bucky is that the registration cap is fast approaching, so you better hurry. Also new this year is a conference app for use by all attendees, sponsors and exhibitors, but you need to pre-register.
***DA: For what it’s worth, I will be on one of the panels – “Public Relations and Marketing for the Emerging Manager.”
3rd Annual Managed Futures Pinnacle Awards, June 17th, Chicago
The Managed Futures Pinnacle Awards recognizes excellence exclusively in the managed futures space. Presented by CME Group and BarclayHedge, the Awards honor the top managers in the industry today, while providing networking opportunities for managers and investors.
***DA: If you plan to be in town for the MFA conference, get yourself on the list for the Pinnacle Awards. It’s a nice event with great networking opportunities.
Tudor to Return Money From Managed-Futures Fund After Losses
Saijel Kishan – Bloomberg
Tudor Investment Corp. is returning money to clients from its $120 million managed-futures fund run by Steve Evans after three years of losses.
Investors in the Tudor Tensor Fund can put their money into a managed account that follows the same strategy, the firm said today in a letter to clients, a copy of which was obtained by Bloomberg News. Investors can get their money at the end of the month or the end of April, Tudor said.
What A Hedge Fund Failure Looks Like
Jeff Malec, Attain Capital in Seeking Alpha
The Twittersphere couldn’t get enough of the news today/yesterday that hedge fund legend Paul Tudor Jones was shutting down one of his eponymous funds, the Tudor Tensor Fund (try saying Tudor Tensor ten times fast). And critics of hedge funds will jump to the conclusion that it’s a dangerous world out there among alternative investments, and investors need to be careful because even a legend like Paul Tudor Jones can’t make money, having to shut down his futures fund.
***DA: Fund management is like a bathtub with a running tap and open drain. The water level rises and falls, but there are always new entrants as well as retirees.
World’s Biggest Hedge Funds Reach Record Highs
Absolute Return just went live with its latest Billion Dollar Club rankings and US hedge funds are now managing their all-time peak assets, with growth at levels not seen since before the financial crisis.
Assets grew by $250 billion over 2013. Last time the industry had growth like this was pre-crisis in 2007 when they grew by $407 billion.
**JK – The report says 293 firms manage $1.71 trillion, up from $1.46 trillion at the start of 2013.
US Justice Department Convicts Hedge Fund CEO Of $500 Million Fraud
The CEO of the now-bankrupt hedge fund Sentinel Management Group, Inc., was convicted today of defrauding more than 70 customers of over $500 million before the firm collapsed in August 2007.
**JK – One of the longest running sad sagas in the industry.
Simulation Tools Key as Managed Futures Funds, CTAs Optimize Execution
A potent mixture of in-house, futures commission merchant, and boutique brokerage-provided algorithms now play a part in commodity trading advisors’ and managed futures funds’ trading activities. Tim Bourgaize Murray examines why a new cadre of simulation tools is helping to organize—and perhaps re-mold altogether—these buy-side specialists’ order flow.
***DA: Another nail in the coffin of the single-strategy technical trend follower?
Cargill, Copersucar to form world’s No. 1 sugar trader
U.S.-based agribusiness trader Cargill and Brazil’s Copersucar announced plans on Thursday to form a business to create the world’s biggest sugar trader through a 50-50 joint venture.
Louis Dreyfus Commodities gets ‘IPO-ready’
By Neil Hume in Lausanne, FT
Louis Dreyfus Commodities is taking steps to ensure that it is ready for either a stock market listing or a partial sale to a strategic investor, as one of the world’s largest food trading houses navigates a fast changing landscape for natural resources.
Invisible men lined up as heirs at commodity traders
Abrupt leadership changes at commodity traders Trafigura and Gunvor over the past week have put a sharp light on an industry-wide challenge: shifting oversight from a legion of legendary, aging leaders to a new generation.
Hedge fund managers shy away from mutual funds
What’s catching the attention of many smaller hedge fund managers, and to a lesser extent big fund complexes, is steady growth of multi- and single-manager hedge fund strategy mutual funds. Assets managed in these funds jumped 54% to $139.3 billion in the year ended Dec. 31 and increased 292% from year-end 2007, according to Morningstar Inc., Chicago.
***DA: The fears include contraint, cost and complexity – three things to which fund managers are allergic.
Hate stocks and bonds? Try alternative assets
Despite a handsome rally for U.S. stocks recently, American investors are increasingly interested in playing the field. A recent survey conducted by MainStay Investments found a significant number of investors are opting out of traditional categories like stocks, bonds and cash. Instead, they are putting that money into commodities, hedge funds and other alternative investments.
Managed Futures / Managed Funds
Zombie hordes thrive, await further hedge fund corpses
Close to a tenth of all hedge funds tracked by HFR succumbed to the inevitable last year as 904 hedge funds liquidated. Their historic performance will live on in the databases of hedge fund returns, but like more than two-thirds of all hedge funds that have ever existed, they are dead, defunct and arguing with their investors over valuations for those lingering illiquid assets.
***DA: Which leads to the inevitable survivorship bias that has always nagged the sector.
**JK – Who is tired of zombie references? Yep, me too.
Hedge Fund Letters to Tell of Favorite Trades Unraveling
Pity the poor folks who have to write letters to investors on behalf of equity-focused hedge funds this month.
***DA: Spin it as a positive. Dear Mr. Doe, We are excited to inform you that the recent trend in your portfolio’s valuation has gained momentum!
U.K.’s Largest Hedge Funds Get Bigger With 82% of Assets
The U.K.’s largest hedge funds are getting even bigger, with 20 firms controlling 82 percent of the assets under management, the country’s markets regulator said.
***DA: And yet largest funds tend to converge toward correlation with traditional assets. If only we could combine the trust of a large fund with the nimbleness and freshness of an emerging manager.
33% of Hedge Funds Switched Service Providers in 2013
Ivy Schmerken – Wall Street & Technology
Dissatisfaction with quality of service is the most common reason cited by hedge funds for changing their fund administrators, according to a Preqin study.
***DA: Note for all you administrators out there – time to bulk up your sales staff and send them out on the road.
Could computers become the best beta allocators?
A cursory glance at the data would suggest that the headline above is a question to which the answer is no. For now.
First Trust Global Tactical Commodity Strategy Fund Voted ‘Best New Commodity ETF’
An actively managed ETF that takes a risk-managed approach to commodities investing earned the award at the ETF.com awards.
ITG’s Triton EMS Now Handles Futures Trades
For agency-only broker and technology firm ITG, it’s back to the future for its execution management system.
The firm’s EMS system, Triton, is now capable of executing futures trades for institutional clients, making the system a one-stop tool for buyside and sellside traders.
Pensions & Institutions
A Pension Fund Invests Against the Rules, and Wins
The Tampa, Fla., pension fund may be unique in its approach to managing its assets, which totaled $1.76 billion as of last September. Unlike the so-called Yale model, which has been widely copied and stresses alternative investments, the Tampa fund has no hedge fund or private equity investments.
Japan Pension Panel Calls for Higher Returns
Wall Street Journal
An advisory panel reviewing investment strategies for more than ¥160 trillion ($1.56 trillion) in publicly managed Japanese retirement money, including the mammoth Government Pension Investment Fund, suggested that the funds take more risks and move away from their bond-heavy investments.
The government-sponsored panel said in a draft proposal Monday that pensions will have to undertake “forward-looking risk analysis” and aim for higher returns by managing funds actively when appropriate.
Temasek spreads its wings with London base
By Anne-Sylvaine Chassany – FT
Temasek, Singapore’s state investment agency, has opened an office in London and is on track to open another in New York later this year, as it seeks to invest its cash more actively and globally.
No new funding requirements for EU pension schemes, but expert criticises cross-border “funding anomaly”
The proposed new legal framework which would govern occupational pension provision in the EU is a missed opportunity to remove inefficiencies from the current regime and improve outcomes for members, an expert has said.
Pension Funds Join in Fee Pushback
Tired of paying large sums to invest in private-equity funds, a group of small and midsize pension plans has banded together to successfully bargain for lower fees. The deal is a sign of how some investors are trying to reclaim power from money managers and the first time such a consortium has won major concessions.
***DA: A little muscle-flexing from the end-user crowd. A result of increased transparency.
Commission plans to tap pension funds to kickstart business
Tapping pension funds and encouraging online crowd funding are at the heart of plans unveiled by the European Commission to kickstart business investment..European pension funds hold EUR 2.5 trillion which should be put to work, says the commission
***DA: What could possibly go wrong?
CME Group prevails in lawsuit over grain settlement rules
CME Group Inc can keep in place rules that factor in electronic trades for settling end-of-day grain futures prices, an Illinois judge ruled on Monday following a legal challenge from veterans of the Chicago trading floor. Cook County Circuit Court Judge Jean Prendergast Rooney in Chicago ruled that CME Group, which owns the Chicago Board of Trade, had the authority to implement the settlement method in June 2012 without taking a vote among certain stakeholders.
EU unveils infrastructure push in new pensions directive
The European Union published the long-awaited overhaul of its main pensions regulation this morning, putting a revamp of investment rules–which it says will facilitate investment into long-term assets such as public infrastructure–at its heart.
Financial reform effort disappoints former CFTC regulator
Bart Chilton, an outspoken US regulator, said one of his biggest disappointments as he steps down is that the White House has not made financial reform a top priority in recent years.
***DA: Poor Bart. So much momentum was squandered.
UK pension funds turn to alternative beta
Ceri Jones investigates the trend for UK pension funds to offer diversified growth and alternative beta funds in place of more expensive alpha-based products
Humble pension funds targeting retail investors increasingly mirror the cutting-edge investment thinking of major public pension funds in Denmark and the Netherlands that lead the way in private pension provision.
One of the biggest growth areas in the UK defined contribution (DC) market in recent years has been diversified growth funds, which promise equity-like returns with low volatility.