Observations/Commentary

Video Killed the Radio Star: J2’s Esposito Stresses Importance of Digital Media
JohnLothianNews.com

“Video is king. Video is everywhere.”

Joan Esposito, co-founder of the media consulting firm J2 Strategic Communications, said that more companies are putting CEOs and other key personnel in video for their websites, internal communications and external strategies.

“That’s wonderful because it puts a human face and hopefully a passionate face on the company,” she said. “But if they make a video like that and they are dull or not energetic, or not passionate, or not clear, that’s not helping your company.”
Watch the video »

Is Managed Futures Secret Weapon Coming Back?
Attain Alternative Blog via ValueWalk
Managed futures secret weapon, so to speak, is its ability to harness the power of US Treasury Bills at the same time it is putting trades on with commodity futures. In short, the secret weapon is the ability to earn both interest and trading returns on the same money.
jlne.ws/1Dlh2Qd

MarketsWiki Education Intern Series 2015

Stop Thinking About Markets as if They Were Human
Barry Ritholtz, Bloomberg View
We know from Princeton professor Burton Malkiel that markets take a random walk, without a predictable pattern or memory from day to day. Hence, describing markets as having volition or the ability to act on their own might be colorful and make dry reports more readable, but it isn’t in any way accurate.
jlne.ws/1DlioKQ

**JK – If any of this is remotely true, CNBC, Bloomberg and Fox Biz are in deeper trouble than we thought.

The Trend Following Landscape & How CTAs’ Performance Must Be Analyzed
Red Rock Just – Octafinance
As of the end of May 2015, the approximately $74 billion of manager assets under management that constitute the Newedge Trend Index was up 2.49% year to date and 4.77% into drawdown off its most recent high water mark. The question remains the same as we posed in the original version of our paper: what is the best way to objectively analyze, measure, and compare the performance of a group of trend following CTAs?
jlne.ws/1Dlj9DJ

**JK – How Red Rock beat Winton.

A Wealth of (Managed Futures) Common Sense
Attain Capital Managed Futures Blog
If you haven’t had the chance to check out the work of Ben Carlson over on his blog, “A Wealth of Common Sense,” we highly suggest it. We’ve written about his thoughts and ideas a couple times (here and here) and we couldn’t help but notice the subject of his musings on doing what works for you in his latest post, “The Importance of Intellectual Honesty in the Markets” is of Managed Futures.
jlne.ws/1DlhjTf

Lead Stories

How Whipsawing Grain Prices Are Affecting ADM, Cargill
By Michelle Hackman- WSJ
Several of the largest agribusiness companies are set to announce quarterly results, providing insight into how whipsawing grain prices are affecting the farm economy.
jlne.ws/1OL8Uc7

***DA: Cargill’s Black River unit shuttering four funds. Scroll down to the next section.

Barclay CTA Index down 1.71 per cent in June
Hedgeweek
Managed futures traders lost 1.71 per cent in June according to the Barclay CTA Index compiled by BarclayHedge. The Index remains up 0.05 per cent year to date.
“Trend reversals in equities, energy, and the US Dollar resulted in losses for 72 percent of the funds that have reported a June return as of today,” says Sol Waksman, founder and president of BarclayHedge.
jlne.ws/1OLcR0y

One of the richest men in the world is backing a startup that ranks Wall Street’s hedge funds
JONATHAN MARINO, Business Insider
The ability to generate conclusions about hedge fund managers’ behavior could be the tipping point for whether big investors double down in hard times or call for redemption.
jlne.ws/1gZipty

**JK – We’ll call it Slim Pickings.

Here’s why ETFs are overtaking hedge funds
CNBC
The active versus passive debate just got a new wrinkle, and one analyst thinks he knows why. Exchange-traded funds, which are the primary vehicle for passive management, now have assets under management greater than hedge funds, according to a count from research firm ETFGI. ETFs primarily follow market indexes, while hedge funds use a mix of strategies to beat those same benchmarks.
jlne.ws/1HXg8pk

**JK – It’s about the fees. Two and 20 ain’t cuttin’ it.

Hedge Fund Assets Continued To Grow In First Half
HedgeCo.Net
Another segment of the hedge fund industry that saw inflows while struggling from a performance standpoint was the CTA/Managed Futures funds. New capital has moved in to the segment to the tune of $20 billion in the first half of the year and that is the biggest inflow of assets for the group since 2008.
jlne.ws/1Dljk1P

**JK – Er, um, 2 and 20 is cutting it after all.

Traders beat computer-driven hedge funds
Financial News
Computer-driven funds that trade using complex programs, often devised by scientists and mathematicians, have been hurt by choppy markets. According to data group Hedge Fund Research, the $272 billion computer-driven sector is on a three-month losing streak. In contrast, macro funds – which use human judgement to make trades, often betting on a similar range of assets to CTAs, including stocks, bonds, commodities and currencies – have fared better in the past three months.
jlne.ws/1KitjV1

***DA: It’s John Henry vs. the machines, again.

Preqin: Number of zombie funds continues to grow, up 12.5% in past year
Pensions & Investments
Preqin estimates 1,180 zombie private equity funds are in investor portfolios, with estimated unrealized assets of $126.6 billion. The number of zombie funds is up 12.5% from last July and up 18% from July 2013.
jlne.ws/1Dlmjr2

***DA: Where will we get all the brains required to keep them fed?

Managed Futures/Managed Funds

Cargill’s Black River Asset Management Shutting Four Hedge Funds
WSJ
A firm owned by Cargill Inc. plans to shutter four of its hedge funds and return more than $1 billion to investors over the next several months, the latest agricultural giant to reassess its investment ambitions. Executives at the firm, Black River Asset Management LLC, cited a lack of investor demand for the funds, which includes a commodities fund and two emerging-markets funds, as the reason for the closures. They also said the firm planned to lay off some employees but declined to quantify the scope of the job cuts.
jlne.ws/1DliCSe

Hugh Hendry stops betting on Armageddon
FT.com
Hugh Hendry is the founder and chief investment officer of Eclectica Asset Management, the hedge fund manager. A verbally dexterous man, who claims he lost his creative mojo in 2012, strides into one of Eclectica’s contemporary meeting rooms sipping a bright green health juice.
jlne.ws/1MHiRZu

Man Group suffers net outflows but profits jump 89%
Natalie Kenway, InvestmentWeek
Man Group saw $2.6bn of net outflows during the first half of the year, largely driven by redemptions from the group’s long-only portfolios including GLG’s Japan CoreAlpha strategy, but performance fees helped profits jump 89%.
jlne.ws/1OBosze

Special Report: Blackstone champions hedge funds for the little guy
Reuters
John McCormick has been on a mission for the past five years: to bring hedge funds to the masses. That may seem like a tough sell. Traditional hedge funds, those lightly regulated investment pools open exclusively to large institutions and rich individuals, have been duds lately, trailing the U.S. stock market’s performance every year since 2009 by an average of 10 percentage points, according to Hedge Fund Research Inc data.
jlne.ws/1MmD2fh

***DA: A Festivus for the rest of us.

Investors Warned on Carlyle Hedge Fund; Loss-Hit Claren Road faces prospect of redemptions
By Juliet Chung, WSJ
Hedge-fund losses are causing more headaches for private-equity firm Carlyle Group LP.
Carlyle’s $4.9 billion hedge-fund firm, Claren Road Asset Management LLC, faces the prospect of investor withdrawals after an influential consultant advised clients who are invested in Claren Road to pull their money, according to people briefed on the matter.
jlne.ws/1HY3PeH

***DA: Another example of redemption risk and how it affects trading decision-making, as well as the onboarding process.

Catalyst Funds To Acquire Auctos Capital Management, Convert Managed Futures Fund
FINalternatives
Liquid alternative mutual fund company Catalyst Funds has acquired Auctos Capital Management and will convert the Chicago-based firm’s hedge fund, which employs a managed futures strategy, into a mutual fund. Catalyst and will assume Auctos’ separately managed accounts business, which will function as a subsidiary of Catalyst and under the Auctos name.
jlne.ws/1DlgPMS

Armajaro Commodities Fund Said to Plan Closing at End-July
Bloomberg Business
Armajaro Asset Management LLP plans to close its $450 million commodities fund after losing money and its lead manager, a person with direct knowledge of the matter said. Many commodity hedge funds, which aim to make money in both bear and bull markets, lost money in the first half. The Newedge Commodity Trading index, which tracks hedge funds investing in natural resources, retreated in nine of the past 10 months.
jlne.ws/1DlhRZq

***DA: The survivors will be the ones who can manage and thrive when the trend is down.

Pensions & Institutions

CalSTRS in market for hedge fund strategy consultant
Global Investor Magazine
California State Teachers’ Retirement System (CalSTRS) has issued an RFP for a consultant for its hedge fund strategy. California State Teachers’ Retirement System (CalSTRS) has issued an RFP for a consultant for its hedge fund strategy. The contract with its current platform provider Lyxor is set to expire. The term of the new contract will be for three years, with the possibility of an additional three one-year extensions. Proposals are due on 10 August.
jlne.ws/1MHku9O

San Diego County Pension Says Goodbye to Controversial Strategy
MoneyBeat – WSJ
A large California pension fund is stepping away from a controversial investing strategy as it parts ways with a longtime outside manager.The San Diego County Employees Retirement Association said this week it would end a six-year relationship with Salient Partners LP, which had implemented a so-called “risk parity” strategy that uses leverage to boost performance.
jlne.ws/1Kf9qhw

How to Evaluate your Hedge Funds like Ontario Teachers’
Chief Investment Officer
Evaluating a hedge fund’s impact on an institutional portfolio is not as straightforward as some might think due to constraints left out by most models, according to research.
In a paper titled “A Simulation-Based Methodology for Evaluating Hedge Fund Investments,” Christophe L’Ahelec, assistant portfolio manager at the Ontario Teachers’ Pension Plan and Marat Molyboga, director of research at Efficient Capital Management, set out a method they claim pension funds can use for insight into real-life scenarios—and how their investments are actually working.
jlne.ws/1DlgU3f

Active money managers feel pressure to adjust fees
Pensions & Investments
Active money managers that pride themselves on adding value to portfolios increasingly are under fire to justify the fees they charge, and some have realized a refusal to budge will see them increasingly bypassed by investors. “The value proposition of asset managers is being questioned,” said Luba Nikulina, London-based global head of manager research at Towers Watson & Co.
jlne.ws/1DllYEN

Loyalty Rewards: A Better Fee Structure for All
Enterprising Investor
Hedge funds have not met spending needs net of fees in the current zero interest rate policy (ZIRP) environment, despite generally producing returns that met investor expectations gross of fees since the financial crisis. This has led to an outcry for a reduction in fees. For the most part, however, fees have not changed. The industry needs a framework that turns a zero-sum game (less for the managers, more for the investors) into a positive-sum game in which both managers and investors benefit.
jlne.ws/1Dlm9zU

Hedge fund investors looking to maintain, increase allocations — survey
Pensions & Investments
The vast majority — 93% — of institutional investors intend to increase or maintain their current hedge fund allocations in the second half of 2015, a midyear survey by Credit Suisse Capital Services showed.
jlne.ws/1Dlm6nH

Regulation

CFTC issues letter exempting CTAs from CTA-PR form filing
Hedgeweek
he US Commodity Futures Trading Commission’s (CFTC) Division of Swap Dealer and Intermediary Oversight (DSIO) has issued a letter that exempts commodity trading advisors (CTAs) that are registered but do not direct any client commodity interest accounts from filing Commission Form CTA-PR.
jlne.ws/1Dlj3vQ

Obama Administration Asks Supreme Court to Review Insider Trading Ruling; Government says decision overturning hedge-fund trader convictions hurts policing of markets
By JACOB GERSHMAN, WSJ
The Obama administration on Thursday asked the Supreme Court to review a controversial decision by a federal appeals court that prosecutors say will make it harder for them to win insider trading cases.
jlne.ws/1Snn7lN

CFTC plans more scrutiny over algorithmic trading
Argus Media
The Commodity Futures Trading Commission (CFTC) later this year plans to propose new rules to boost oversight over algorithmic traders that have claimed a growing share of energy futures. About 80pc of the trading volume in natural gas contracts now involves algorithmic traders on at least one side of the transaction, CFTC chairman Timothy Massad said today. Those traders use computer models to buy and sell hundreds of times per second to capitalize on minute price movements.
jlne.ws/1HXkuwK

Asset managers ‘fatigued’ by cost and scale of regulation
Investment Week
Asset management firms are feeling the burden of compliance costs and expect both cost and time burdens to increase in future as the deadline for MiFID II approaches.
jlne.ws/1OyvqoA

Firms making good progress in handling unauthorised transactions
UK FCA
Research into how claims are handled for unauthorised transactions (when a payment is made from a consumer’s account without their consent) found that firms are making good efforts to deliver fair outcomes for consumers. A thematic review into the issue by the Financial Conduct Authority (FCA) found firms tended to err on the side of the customer and handled complex claims on a case-by-case basis.
jlne.ws/1JO1Dom

***DA: I wonder if the FCA used MF Global as one of its data points.

Corzine must face MF Global customer class action -US judge
Reuters
MF Global Holdings Ltd commodities customers may pursue their lawsuit seeking hundreds of millions of dollars from former chief executive Jon Corzine and other officials over the brokerage’s bankruptcy as a class action, a federal judge said on Monday. U.S. District Judge Victor Marrero in Manhattan said it was desirable to let the roughly 25,200 customers sue as a group rather than require a “plethora” of individual lawsuits, a process he said would be “wholly inefficient and wasteful.”
jlne.ws/1MgwmiR

***DA: Speaking of which…

US hedge funds shun Europe over regulation
Financial News
The European Union’s controversial Alternative Investment Fund Managers’ directive was implemented on July 22 last year, fundamentally changing how hedge fund and other alternatives managers operate in the region. It governs aspects of alternative fund management as diverse as remuneration, reporting and marketing.
The far-reaching directive not only impacts European managers, but also managers from further afield, which must also comply with the rules if they want to actively market funds in the region.
jlne.ws/1MI1Igi

Pin It on Pinterest

Share This Story