Hedge Fund Focus: July 1, 2016
In case you missed them, here are the hot topics in the hedge fund/alternatives space this week…
With the world still reeling from the U.K.’s decision to leave the EU last week, much of this week’s news was still dominated by Brexit. Most notable were the roundups of how strategies and managers faired as a result of the stunning vote. Here’s what’s going on:
- Despite the shocking news, industry performance stayed in the range of 2 percent losses to 2 percent gains in the aftermath of the vote, with HFR reporting managers were down on average 1.1 percent
- Strategies that did well included market neutral strategies, managed futures and quant funds, which gained an average of 3 percent, leading Lyxor to predict that CTAs will benefit the most from Brexit
- Managers who also fared well included Crispin Odey, who made 21 percent, as well as George Soros, Discovery Capital, Tudor Capital and Brevan Howard
- However, not everyone was so fortunate as some were caught on their back foot, including:
- Bill Ackman, who lost over a half a billion dollars
- Equity funds, which fell on average 2.1 percent, including Lansdowne, which was down 4.1 percent and Marshall Wallace which lost 1.5 percent
- Currency funds, whose losses Brexit added to
- And activist managers, because the stocks they most heavily invest in suffered the biggest losses in the aftermath
- As for the state of the industry, Bloomberg’s Gadfly column predicted the vote will have an overall negative effect on hedge funds, especially AUM, and not really groundbreaking, but The Wall Street Journal said European-heavy hedge funds will be hit the hardest as a result of the exit
On the heels of the Brexit news, it was revealed that 2016 is not shaping up to be a good year for hedge funds. The first half of the year’s performance is the worst on record for the industry since 2011.
However, there was some good news with regard to flows. The industry’s overall AUM once again climbed above the $3T mark in May, but with Brexit officially happening everyone is holding their breath to see how it will impact hedge fund capital.
Swiss money manager GAM Holding agreed to buy British fund Cantab Capital for $217M plus further payments based on management fees.
Not surprising, the fund of funds industry took another hit as CIO Magazine revealed institutional investors are firing them in lieu of hiring their talent directly in house instead.
Quick Things to Know: In the wake of Brexit, Institutional Investor announced the winners of its annual Hedge Fund Industry awards; one of the few woman-run hedge funds, Chesapeake Partners Management, is closing its doors after 25 years due to the tough investment environment that has persisted since the crisis; and apparently the SEC is ramping up hedge fund insider trading investigations