Hedge Fund Focus: July 8, 2016
In case you missed them, here are the hot topics in the hedge fund/alternatives space this week…
Despite all the hoopla around Brexit and its initial shocks, it ended up having little effect on the industry because most managers sat it out due to market volatility over the past 12 months. However, according to Preqin, managers are planning to capitalize on opportunities in the wake of the U.K.’s decision to leave the EU.
Additionally, many alternative managers are still looking to leave London as a result of the vote; however, some lawyers are claiming managers will still be able to access the EU’s “single market” without having to sign up to the bloc’s core principles on migration.
Strategy Performance: Though it wasn’t bad, unfortunately Brexit did not really help rally performance for the month either. HFR reported average manager gains of just 0.2 percent. However, it was a different story for individual strategies, which were all over the place:
- CTAs led the pack, gaining 5.2 percent
- Systematic and distressed funds also had a good month, up 3.7 percent and 1.8 percent, respectively
- But global macro strategies still struggled, losing 9 percent
- Fixed-income funds were in the red at 2 percent
- Long/short strategies had a rough month as well with four out of six indices being negative
- And Brexit hit K. property funds extremely hard; they have frozen over $12B in assets due to a run on redemptions in the aftermath
Manager Performance: As for managers, they too reported extremely mixed results for the month despite dodging Brexit:
- Renaissance Technologies gained 6.59 percent
- Viking lost 2.5 percent
- Dan Loeb’s Third Point gained 1 percent
- Jana Partners lost a little over 1 percent, making June its 12th losing month in the last 18
- Leon Cooperman’s Omega Advisors lost more than 5 percent of its AUM, or $4.9B, in June
- Och-Ziff suffered similar issues, losing $3.2B in AUM last month and 12 percent of its assets since the beginning of the year
- Odey’s assets dropped below $10B after Brexit, down 25 percent ($3.1B) from this time last year
- And Bill Ackman cut 10 percent of his Pershing Square staff due to performance woes
According to a new report by CEM, hedge funds provide the worst long-term gains for U.S. pension funds. The report analyzed $8.4 trillion in defined-benefit plans from 1998 through 2014, finding that next to cash, hedge funds are the worst asset class. But despite CEM’s findings, Preqin reported that more institutions (40 percent) grew their hedge fund portfolios to over $1B than cut them over the last 12 months.
Quick Things to Know: AMG completed the first round of its acquisition of Goldman Sachs’ Petershill I Fund; well-known hedge fund consultant Mercer has quietly been building a fund of hedge funds business; and there were more reports this week that activist investors are taking a softer approach and dialing back their typically strong-armed campaigns