The November 2015 Eurekahedge Report contains qualitative and quantitative analyses on the industry's assets flows and performance over the past month, with a special feature on key trends in Latin American hedge funds.
The Eurekahedge Hedge Fund Index ended its four month losing streak, gaining 1.33% in October 2015. Underlying markets as represented by the MSCI World Index were also up this month, gaining 7.22%. Returns across all regional mandates were positive this month as the market rebounded in October.
Hedge funds ended their four month losing streak, gaining 1.33% in October as most major equity markets ended the month in positive territory. Underlying markets as represented by the MSCI World Index posted strong gains during the month, up 7.22%. Central bank policies remained divergent with the European Central Bank (ECB) and the Bank of Japan (BoJ) rather dovish, reiterating their intent to meet inflation targets as part of their broader strategy to support growth in their respective economies. On the other hand, the Fed appears to be hinting at a long overdue rate hike in December which seems likely given the encouraging employment numbers coming out from the US as well as the stabilising outlook overseas - mainly China which appears to have weathered the worst for the moment.
Latin American hedge funds have been experiencing dwindling interest from investors over the last few years as they cope with redemption pressure and stagnating performance-based gains compared to other regional mandates. The global economic slump throughout 2015 has not spared the Latin American economies - commodity-dependent countries in the region were affected by the slowing growth of export destination countries such as China and the US. The fall in commodity and oil prices and the weakening of the real and peso are also affecting the ability of companies to fulfil their debt obligations, while political instability continues to affect the region. Meanwhile, depending on the Fed’s interest rate hike timing, capital outflows from the Latin American region could put them in a worse shape than before.
The Oak Spring Alpha Fund is a multi-strategy hedge fund that seeks to extract alpha across different geopolitical regions and asset classes. Launched in 2015, the fund has implemented a disciplined approach to managing investment process and portfolio risk. The fund also exhibits low volatility as well as low beta to equity and credit markets during high volatility market conditions.
On August 25, 2015, the Financial Crimes Enforcement Network (FinCEN) proposed rulemaking that would require registered investment advisers, including certain hedge funds and asset managers, to establish antimony laundering (AML) programs and monitor and report suspicious activity. In 2003, a similar rule was proposed and later withdrawn, and this new proposal comes amid an increasing focus on criminal and regulatory enforcement actions for AML, Office of Foreign Assets Control (OFAC), and Foreign Account Tax Compliance Act (FATCA) violations.
The China Insurance Regulatory Commission (CIRC) recently issued new regulations that relax restrictions on the investment of insurance proceeds by allowing insurance capital to be used for the formation of private equity funds within the PRC. The Circular of the China Insurance Regulatory Commission on Matters relating to the Formation of Insurance Private Equity Funds (the Circular) was released on 10 September 2015 and aims to further enhance the unique advantages of the long-term investment of insurance funds, support economic development and prevent potential risks. The Circular sets out the categories, investment objectives, governance structure, management and operation and registration and regulation of private equity funds formed by insurance capital (insurance PE funds).
There are often articles written on the Islamic finance sector highlighting the exponential growth in the market, but are we paying enough attention to the range of products being offered to institutional as well as retail users? There seems to be little reference to the product range, which could potentially add value to the real Islamic economy by way of providing efficient methods of managing risk, saving, investing and borrowing. Jamil Mufti writes.