Observations – Statistics – Commentary
In this issue, we see CTAs following a new trend – that of swap futurization. Some see the end of the commodity party, but a lady named Margarita says otherwise. George Soros continues to hurl verbal grenades at Germany after having recently declared war in the Eurozone. Our friends at Attain Capital ask, “So you want to be a CTA?” And Dodd-Frank is keeping the regulatory section of JLN Managed Futures full of new stories. But first, Allston Trading CEO Raj Mahajan takes a look at opportunities and challenges in the algorithmic sector.
So You Want to Be a CTA?
Attain Capital Management
From managed futures billionaire David Harding of Winton, to the legend of John Henry leveraging managed futures success into ownership of the Boston Red Sox, to the tale we recently told of Bill Eckhardt and the Turtle Traders – there are plenty of alluring stories to entice skilled traders to try their hand at becoming professional Commodity Trading Advisors (CTAs). Taking the leap from trading your own money to managing others’ is the first step toward building a legend of your own, but how realistic is it to turn that gleam in your eye into a successful enterprise and tens of millions in the bank?
**DA: Making money is the easy part. Or so I hear.
Barclay CTA Index Up 0.57% in March; All Strategies Show First Quarter Gains
Managed futures gained 0.57% in March according to the Barclay CTA Index compiled by BarclayHedge. The Index is up 1.07% year to date.
June is Managed Funds Event Month in Chicago
On June 19-20, the Managed Funds Association will be hosting Forum 2013, its 19th annual managed futures and global macro strategies conference The event is designed to bring managers and investors together for networking, education and business development. Forum 2013 will be held June 19-20 at the Four Seasons, Chicago.
In conjunction with MFA, CME Group and BarclayHedge will be holding the second annual Managed Futures Pinnacle Awards, an event which recognizes excellence in the managed futures space.
CTAs eye swap futures
Kris Devasabai, Hedge Funds Review (Subscription Required)
The emergence of listed swaps and other esoteric futures contracts has piqued the interest of CTAs that are looking to increase diversification in programs by adding new markets
**DA: All we need is liquidity and price action.
The end of the commodity party?
Richard Jeffrey, Fund Strategy Investment Committee
During a recent interview I did with a fund manager, it was suggested that after a decade of rising prices, the “supercycle” enjoyed by commodities is at an end. The theory went that 10 years of fast-rising growth meant it took a long time for supply to catch up with demand but now demand has slowed and supply has caught up. While not anticipating a collapse in prices, the manager said commodity cycles tend to last for a decade and the outlook for investing in commodity equities will remain difficult for at least another 10 years. So now is not a great time to invest in countries solely geared to commodities or commodity-related sectors. Can this really be true?
Margarita Louis-Dreyfus lifts stake in trader
Margarita Louis-Dreyfus has increased her control over the holding company that owns Louis Dreyfus Commodities, buying shares from other members of the family. Ms Louis-Dreyfus, through a family trust known as Akira, raised her stake in LouisDreyfus Holding to 65.1 per cent at the end of last year, up from 61.1 per cent in 2011 and 50 per cent five years ago.
**DA: Not wasting away in Margaritaville, but rather aggressively buying out other family members. I smell an IPO, with maybe a hint of lime.
Soros Battles Top German Economist in Euro Spat
Here is the City
Billionaire investor George Soros has struck back at one of Germany’s top economists for distorting his arguments on Germany’s role in the euro zone.
CFTC to Name Fourth Defendant in Nymex Leak Case
JACOB BUNGE – WSJ.com
U.S. regulators plan to charge a fourth defendant in a lawsuit against the largest U.S. energy-trading exchange and two former employees, alleging that confidential trading information was leaked to an unnamed broker.
Brokerage Ills Stir Auditor Scrutiny
JEAN EAGLESHAM AND MICHAEL RAPOPORT – WSJ.com
U.S. regulators are tightening their scrutiny of accountants in an effort to crack down on firms bungling “red flags” that signal fraud and imperil customer money. The increased attention is occurring largely at the Commodity Futures Trading Commission, where investigators and top officials were rattled by the collapses of Peregrine Financial Group Inc. and MF Global Holdings Ltd. At both firms, rules that are supposed to protect customer funds were allegedly broken without being detected by accountants.
Managed Futures/Managed Funds
Alternative Investments With the Best Payoff
Craig L. Israelson, Financial Planning
Some people see the investment universe as divided into just two classes of assets: core investments and alternative investments. Others prefer to view the asset allocation world as having three categories: core assets, diversifiers and alternatives.
Commodity funds Clive and Merchant gain from mid-April upheaval
Clive Capital and Merchant Commodity Fund, two commodity hedge funds that lost money over the last two years, are on an upswing after their bearish bets on prices benefited from this month’s market tumble.
Superfund launches new CTA programme
Investment & Pensions in Asia
CTA/Managed futures specialist Superfund has introduced a new product. The “Superfund Red One” is a new short term CTA programme. That means it will be looking for trends to ride in the usual CTA style, but only for shorter tenors. It will usually be in and out of positions within 10 days in comparison to its longer term offerings, which can endure in an asset class for years, assuming that the sustained trends are favourable.
Colorado Fire & Police creates managed futures allocation, pledges $49 million to alts
Colorado Fire & Police Pension Association, Greenwood Village, approved a new asset allocation that includes a new 5% allocation to managed futures strategies and committed a total of $49 million to three alternatives managers, confirmed Scott Simon, chief investment officer. Shortlist searches for managed futures managers will take place in the “near term” and will be handled internally, Mr. Simon said. Interested managers can contact the pension fund.
**DA: Tell them JLN Managed Futures sent you. Then tell them who we are, and that we are awesome.
CalPERS asks Milken crowd for hedge fund resumes
CalPERS continues to build out its hedge fund capability and seeks four additional investment professionals to join its six-person team, said Edigio “Ed” Robertiello, senior portfolio manager, absolute-return strategies, for the $258.3 billion fund.
**DA: CalPERS is also leading the push to turn 2-and-20 into 1-and 10. Yowza!
Expanded authority, increasing numbers and record fines: the changing landscape of the CFTC’s enforcement actions
Jeffrey L. Steiner and John H. Sturc, Gibson Dunn & Crutcher
Since 2010, the CFTC has dramatically increased its annual enforcement action totals, and has imposed record high financial penalties on significant market participants. In 2011 and 2012, the CFTC filed at least 201 enforcement actions, almost as many as the past five years combined, and has already recovered approximately $1.8 billion in total sanctions. As CFTC Chairman Gary Gensler has stated, “Dodd-Frank expands the CFTC’s arsenal of enforcement tools. We will use these tools to be a more effective cop on the beat, to promote market integrity, and to protect market participants.” This alert focuses on the CFTC’s new rulemakings and how Title VII has increased the CFTC’s power to create and police the derivatives markets.
**DA: Budget-starved, understaffed, and technologically behind the times. But look out, anyway – we’re on the prowl.
Exchanges Win Dismissal of Market-Data Pricing Rule Case
NYSE Euronext, Nasdaq OMX Group Inc. and other exchanges can set prices for proprietary market data, a U.S. appeals court ruled, saying the Dodd-Frank financial reform law limits its right to review Securities and Exchange Commission decisions on the issue.
**DA: Almost three years after the signing of Dodd-Frank, and we are still learning what’s in there.
CFTC struggles to keep pace with technology issues
Dina ElBoghdady – The Washington Post
For years, the Commodity Futures Trading Commission has been working on a paper outlining how it should cope with the latest developments in the technological revolution transforming the investing landscape. Absent from the report: any mention of Twitter or other social media.
SEC’s White Said to Push for Lifting Ban on Hedge-Fund Ads
U.S. Securities and Exchange Commission chairman Mary Jo White is pushing to adopt a rule allowing hedge funds to advertise in a move consumer advocates say could fail to protect unsophisticated investors, according to two people familiar with the matter.
**DA: For more info on the proposed rule, visit the page in MarketsReformWiki.