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Hedge Fund Focus: July 29, 2016

Ryan FitzGibbon  Follow

In case you missed them, here are the hot topics in the hedge fund space this week…

On the nearly 2-year anniversary of CalPERS decision to terminate all its hedge fund investments, Preqin revealed that the decision has not had a domino effect and on the whole pensions have remained loyal to the industry. In fact, in the last 18 months the combined assets pensions have invested in hedge funds have grown by 16 percent. And according to PGIM, all institutions, not just pensions, are sticking with the industry.

However, according to eVestment there was an uptick in redemptions last month, $20.7B to be exact, and despite inflows in April and May it brought Q2 flows to negative $10.7B. Asian hedge funds were hit the worst by the outflows and European funds did not fare much better, as flows slowed to modest levels in H1. Additionally, European funds also suffered losses for the same period.

CTAs continue to lead the industry with their strong performance in Q2 helping to bolster assets, bringing in $42B in capital. Additionally, demand for credit funds is also growing due to increased lending opportunities in Europe.

As for managers, Dan Loeb’s Third Point gained 2.2 percent in H1, but unfortunately David Einhorn’s Greenlight Capital lost 2.6 percent in Q2.

Woes continued for Fortress, which announced it will close its Fortress Centaurus Global hedge funds as part of its continued efforts to wind down the parts of its business that focus on liquid or “easy trade” assets. However, the funds are small in comparison to Fortress’ overall AUM, only $182M.

Weekly Read: Business Insider wrote an interesting piece this week about how despite all the buzz around performance, fees and transparency, the industry’s real problem is how difficult it is to launch firms nowadays, resulting in decreased diversity and concentration of assets amongst only a few managers.

Quick Things to Know: Deutsche Bank’s problems are hitting its hedge fund unit particularly hard; Jeff Fig, former co-CIO of Fortress’ now defunct macro fund, is starting his own firm; and aiCIO reported that the issue with liquid alternatives is they really aren’t liquid.


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