Hedge Fund Focus: September 16, 2016
In case you missed them, here are the hot topics in the hedge fund space this week…
Though we have seen a nice upswing in performance, funds overall remained flat during the beginning of September with CTAs continuing to do well and macro funds faltering, according to Lyxor. Looking back to August:
- EurekaHedge had funds flat like many other indices, but up 2.5 percent YTD
- SS&C GlobeOp had funds up slightly, three-fourths a percentage point for the month
- Preqin had funds up nearly a whole percentage point
- Distressed and activist funds led August gains
- And merger arbitrage funds were also cited as big winners for the month
Unfortunately despite the gains, redemptions continued to plague the industry and it looks like funds will face a year of net outflows in an environment where liquidations are outpacing launches, which have hit a seven-year low. Additionally, it was revealed that 50 percent of all strategies suffered outflows of some kind in July with distressed funds experiencing the biggest losses.
As for individual managers, Richard Perry’s Perry Capital has lost 60 percent of its AUM over the past year. Paulson is also down 15 percent and Och-Ziff is not far behind. However, Bridgewater Associates revealed it has brought in $22.5B over the last 18 months, $11B of which was brought in this year alone.
The periods of mediocre performance are finally having an impact on fees and investor terms as clients lose faith in mangers’ ability to generate alpha. Changes include: firms cutting fees across the board, with Caxton being the latest to announce it will reduce fees; managers returning capital to investors if value is not being generated; and higher employment of hurdles, one-third to be exact, according to AIMA.
Apparently several Tiger Cubs have taken such major hits in the first half of 2016 that Steve Taub at Institutional Investor’s Alpha speculates they will not be able to overcome them before the end of the year.
Quick Things to Know: Despite a windfall of outflows, Calstrs plans to add at least $8.7B to the industry; according to the Financial Times, the S. government is out for blood in its investigation into bribery allegations by Och-Ziff; Bill Ackman’s Pershing Square is already down over 5 percent for the month; and BlueCrest investors are still waiting for their money to be returned from an $8B fund the firm closed nearly nine months ago.