Eurekahedge in collaboration with AIMA, conducted the 3rd AIMA Japan and Eurekahedge Survey of Japanese investors with mandates to invest in Japan. The annual survey, which took place in February 2016 to May 2016 this year, gauges important insights into market sentiment, investment trends and key regulatory changes facing the Asian asset management industry, with a particular emphasis on the outlook for Japan.
The June 2016 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 gained 0.40% in May while underlying markets as represented by the MSCI World Index grew by 1.28% over the same period. Among regional mandates, North American managers posted the best returns, up 1.03% during the month followed by European and Japanese hedge funds which saw gains of 1.00% each. Across strategies, distressed debt hedge funds led the tables with gains of 1.66% followed by event driven hedge funds which were up 1.29%.
Hedge funds were up 0.40% in May while underlying markets, as represented by the MSCI World Index gained 1.28% over the same period. Managers held their ground despite tight markets in May with mid-month reversals across commodities, and weaker equity performance in developing markets affecting the trading scene. Risk appetite somewhat sustained during the month with oil prices remaining resilient going into May. Distressed debt hedge funds were a clear lead among strategic mandates, up 1.66% while North American managers led regional mandates, up 1.03%. Among profitable moves for managers were long developed markets consumer stocks, some into European consumer and information technology names.
The first four months of 2016 saw some renewed investor interest into the Latin American hedge fund space. Total assets for Latin American hedge funds grew US$0.8 billion as of April 2016 year-to-date, roughly twice the level of asset growth seen over the same period last year. The Eurekahedge Latin American Long Short Equities Hedge Fund Index and Eurekahedge Latin American Multi-Strategy Hedge Fund Index were up 11.21% and 8.53% respectively as of April 2016 year-to-date. Investor optimism in the region was evident as major Latin American equity indices rallied at the start of the year. The MSCI Latin America Index was up 15.24% in 2016 year-to-date as resilient oil and commodity prices have helped in pushing up the valuations of underlying assets.
Eurekahedge’s Latin American hedge funds infographic sums up the industry as at June 2016. Find out more about Latin American hedge funds assets under management (AUM), asset flows into strategic and regional mandates, launches and closures, lifespan of active and obsolete funds, and the best and worst performances of the year.
VL Asset Management Limited was founded in 2009 in Hong Kong by veteran investor Vincent Lam and ex-lawyer Adrian Wong. The company, being a home-grown boutique house though, has strengthened its team from two to nine members in less than seven years. Its flagship, VL Champion Fund, with a long-short equity mandate, was launched in mid-2009 and has been up and running with a loyal and steadily-growing investor base. VLAM launched an authorised fund VL China Fund in August 2015. Vincent Lam shares with Eurekahedge the fund's investment strategy.
The year has been exceptionally volatile not only for equities but also for the VIX itself fluctuating between 13% and 24% since the start of 2016. MMA Pan Asia Fund I Management believes the volatility is a result of bond investors driven to chase risk and yield in equities, and shares with us their market commentary for June 2016.
The Market Abuse Regulation (MAR) will take effect on 3 July 2016. MAR contains the rules on insider dealing, unlawful disclosure of inside information and market manipulation that will apply throughout the European Economic Area (EEA). It updates the existing market abuse regime, adding a great deal more detail to the existing rules and widening its scope to a range of financial instruments traded on venues other than the main EEA exchanges.
The sovereign Sukuk space has seen strong and sustained momentum by some of the largest issuers as well as a number of debut issuers over the past year. Fitch’s recent data, for instance, showed that Sukuk issuance in key markets reached an eight-year high in the first quarter of 2016, with new issuance in the GCC, Malaysia, Indonesia, Turkey, Singapore and Pakistan up 21% year-on-year to reach US$11.1 billion. Danial Idraki recaps some of the notable sovereign issuances over the last 12 months, and plans by a number of governments for further issuance.
The May 2016 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 funds of hedge funds.
The Eurekahedge Hedge Fund Index gained 0.88% in April while underlying markets as represented by the MSCI World Index gained 0.67% over the same period. Among regional mandates, Latin American managers posted the best gains, up 3.93% during the month followed by North American hedge funds which saw gains of 1.25%. Across strategies, relative value hedge funds led the table with gains of 1.96% followed by event driven hedge funds which were up 1.34%.
Hedge funds outperformed underlying markets in April and were up 0.88% during the month while underlying markets as represented by the MSCI World Index gained 0.67%. Emerging market managers continued to perform well during the month supported by resilient oil and commodity prices which helped to inject some investor optimism. A confluence of factors has helped oil gain some support despite ineffective talks between OPEC members while rather encouraging Chinese macro data and stimulus measures have also aided in providing a better outlook for the Chinese economy, resulting in the climb in prices across the commodity space.
The global funds of hedge funds industry faces numerous challenges with little let down in investor redemptions since 2010 as the multi-manager model has come under scrutiny over the years. Over the past year, the industry has faced steep redemption pressure from investors witnessing US$52.7 billion in investor outflows alone. Going into 2016, the industry continues to face redemption pressure with its seventh consecutive month of investor outflows ending March 2016. As of Q1 2016, investor outflows of US$5.8 billion were recorded while performance-based losses stood at US$8.1 billion, bringing the current assets under management (AUM) for the industry to a record low of US$451.9 billion.
Eurekahedge’s funds of hedge funds infographic sums up the industry as at May 2016. Find out more about funds of hedge funds assets under management (AUM), asset flows into strategic and regional mandates, launches and closures, lifespan of active and obsolete funds, and the best and worst performances of the year.
36ONE Asset Management is an independent owner-managed specialist investment manager based in Johannesburg, South Africa. Our investment philosophy is to focus on fundamental analysis while using a macro overlay to understand which themes complement our fundamental approach and for risk management purposes with the aim of generating above-average real returns. We continually manage our investments in a flexible manner to reflect changing market conditions. Cy Jacobs shares with Eurekahedge the fund's investment strategy.
On 23 June 2016, the UK will decide in a referendum whether to remain in or to leave the European Union. Should the UK vote in favour of leaving, so-called Brexit, the UK Government will initiate a procedure leading to the UK's withdrawal from the EU and, ultimately, to the establishment of a new relationship with its former EU partners. Precisely what this will look like, and when it will come about, is uncertain and there is much debate on whether the consequences will ultimately be positive or negative for the UK. What is certain, however, is that Brexit will have a significant impact across a range of sectors - financial services, trade, employment, tax, competition and others. Asset managers, be they based in the UK, the EU or elsewhere, will be caught up in this, and will find themselves affected by Brexit, albeit to varying degrees.
Derivatives and hedging are tools that remain necessities in the financial system as a way to manage risks that might arise from uncertainties and price fluctuations in the market, although it remains a contentious subject in Islamic finance due to some of the features in the instruments that invite speculative trading. Views are often split from a Shariah standpoint, given that excessive uncertainty and speculation are concepts not permissible in Shariah compliant transactions.
The Grand Duchy of Luxembourg (Luxembourg) has been at the forefront of the financial markets’ and the structured finance’s trends and evolutions. Over the years, it grew to become a hub for securitisation and structured finance transactions with one of the world’s safest business environment, notably as a result of its financial, political and social stability and innovative approach towards the financial sector. Issuers and investors in Luxembourg benefit from strong and stable regulatory and tax frameworks, in line with European Union directives and regulations.
Family offices are increasingly popular in Asia. In addition to helping plan the vehicle structure, professional trustees can provide even more value. Family office is a term yet to acquire a definition, but generally represents a platform (sometimes a separate entity, and sometimes a unit within a family business) to deal with the financial and other matters of an ultra-high net worth family. This concept has been prevalent in the United States and Europe for some time, and is becoming increasingly popular in Asia as the number of ultra-high net worth families surge and their demand for wealth management, family planning and other related services gets more complex. Depending on the tax and regulatory environment and the actual needs of the family, a family office can be structured with different vehicles.
We are pleased to announce the nominees for the Eurekahedge Asian Hedge Fund Awards 2016 which will be taking place at Capella Singapore on 27 May 2016. Well into its 13th year, the event has had award categories across the board in regional and strategic mandates that not only reflect the industry’s performance, but also highlight outstanding performers of the year.
The April 2016 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 global hedge funds.
The Eurekahedge Hedge Fund Index gained 1.33% in March while underlying markets as represented by the MSCI World Index declined 5.47% over the same period. Among regional mandates, Latin American managers posted the best gains, up 4.85% during the month followed by Asia ex-Japan hedge funds which saw gains of 4.78%. Across strategies, event driven hedge funds led the table with gains of 3.16% followed by distressed debt hedge funds were up 3.03% - an impressive rebound after their four-month losing streak.
Hedge funds recovered part of their losses from earlier in the year and were up 1.33% in March as underlying markets represented by the MSCI World Index gained 5.47% in what shaped up to be a positive month for global markets. The Fed's decision to roll back further on its scheduled interest rate hikes for 2016, coupled with rising oil prices and monetary easing in China provided much need relief for the markets. As of end-Q1 2016, hedge funds are down 0.37%, ahead of underlying markets as the MSCI World Index posted losses of 1.97%.
The world economy had a shaky start in 2016 with investors flocking to safe haven assets amid a volatile market environment. The global hedge fund industry’s asset base contracted US$20.1 billion as of February 2016 year-to-date, with performance-driven losses a main contributor to this contraction. Performance-based losses stood at US$16.6 billion in the first two months of 2016 alone, while investor outflows of US$3.5 billion were recorded. The assets under management (AUM) of the global hedge fund industry currently stand at US$2.22 trillion, managed by a total of 11390 hedge funds. Going into 2016, further easing seems to be a main theme as central bankers worldwide have largely adopted accommodative monetary policies in an attempt to re-energise the current lethargy of the world economy.
Eurekahedge’s global hedge funds infographic sums up the industry as at April 2016. Find out more about hedge fund assets under management (AUM), asset flows into strategic and regional mandates, launches and closures, lifespan of active and obsolete funds, and the best and worst performances of the year.
InnoFusion Capital Management runs a multi-strategy fund focused in relative value/arbitrage strategies. The fund invests in a wide range of asset classes and financial products, including equities, fixed income, convertible bonds, commodities and derivatives. During the last 10 years, the fund return 14.35% per annum with very low correlation to various markets and asset classes. Dr. Leung Wing Cheong, CEO and CIO shares with Eurekahedge the fund's investment strategy.
Hyung-Kyu Choi is the Managing Partner of Korean-based asset management firm QUAD Investment Management since January 2014. With 16 years of experience in investments, FX trading and credit analysis, Hyung-Kyu shares with us the fund's investment objective, along with his thoughts about the impact of smart watches on the industry, and display technology.
King & Wood Mallesons recently launched its five annual DealTrends report (Report) for private M&A in Australia. The Report draws off actual private M&A deal data in the Australian market and is the only one of its kind currently being produced for the Australian market. The Report gives insight into the changes in market practice for private M&A and the data collected allows us to differentiate for a variety of factors, including deals involving PE sponsors. Below we highlight the standout trends in private M&A over the last five years, recent material developments and areas in which PE sponsors are significantly diverging from the broader M&A market.
There has been much discussion about possible consequences for UK pensions should the public vote to leave the EU in June. We discuss the main strands of this debate, both legal and concerning the wider pensions environment, and start by confirming our view that Brexit would not mean an immediate change to the regulatory and legal arena of UK pensions.
Good or bad, European law has had a bearing on some of the most challenging themes of UK pensions law. In particular, for equal treatment and the valuation of benefits, as well as in the transactional sphere, EC legislation has had a marked influence on our domestic law.
Perhaps in contrast to other investment strategies, discretionary global macro (macro) managers cannot be easily categorised into homogeneous groups. Macro funds will vary by a number of characteristics, including but not exclusive to, asset-class focus, geographical focus, trading style (thematic versus idiosyncratic), investment horizon and structuring sophistication. The focus for a particular manager will of course be influenced by the skill set and experience of the portfolio managers and their team.
The provision of benchmark indices will, for the first time, be brought within regulatory scope in the EU with the impending introduction of the Regulation on Indices used as Benchmarks in Financial Instruments and Financial Contracts, commonly referred to as the ‘Benchmark Regulation’, (the Regulation). The aim of the Regulation is to ensure the accuracy, robustness and integrity of benchmarks and the benchmark setting process. The Regulation introduces a requirement for the prior-authorisation/registration and on-going supervision of benchmark administrators, and prescribes conditions with regard to improving their governance structure; greater transparency of the benchmark production process; and the enhanced supervision of what are termed ‘critical benchmarks’.
The benchmark Eurekahedge Hedge Fund Index was up 0.36% in February, while the MSCI World Index was down 1.43% over the month. Total assets under management increased by US$0.89 billion as the sector witnessed performance-based declines of US$4.74 billion while registering net asset inflows of US$5.63 billion. The total size of the industry now stands at US$ 2.22 trillion.
The Eurekahedge Hedge Fund Index gained 0.36% in February while underlying markets as represented by the MSCI World Index declined 1.43% over the same period. Among regional mandates, Japanese managers posted the steepest loss down 3.83% during the month followed by Asia ex-Japan hedge funds which saw losses of 1.78%. Across strategies, CTA/managed futures hedge funds led the table with gains of 2.62% propped up by exposure into safe haven assets such as gold and the Bund.
Hedge funds bounced into positive territory in February despite volatile market conditions – up 0.36% during the month, outperforming underlying markets as the MSCI World Index declined 1.43% over the same period. The global risk-on mode continued into February as investors fled to safety with yields on sovereign bonds particularly the Bund, ending lower as investors anticipate Draghi’s stimulus shots in the ECB’s coming March meeting. Over in Asia, much of the equity market weakness was led by the Japanese markets as dovish comments from Janet Yellen sent the yen appreciating mid-month.
The North American hedge fund industry continues to grow despite muted returns in 2015 when a challenging market environment saw underlying managers post sub-zero returns in what was the worst year for managers since the lows of 2008. However, not all was doom and gloom. North American managers running Asia Pacific, broad emerging market and European mandates ended 2015 in the green, while across strategic mandate arbitrage strategies; in particular managers employing volatility based strategies post good returns.
Eurekahedge’s global hedge funds 2015 overview infographic sums up the industry for the past year. Find out more about hedge fund assets under management (AUM), asset flows into strategic and regional mandates, launches and closures, lifespan of active and obsolete funds, and the best and worst performances of the year.
Christopher Peck has been in the industry with 16 years of experience in Japan and Singapore and currently focuses on resources and mezzanine debt at Maiora Asset Management.
Noemi Holecz, a risk and portfolio manager of Loyal Explorer Fund shares how the fund stands out from competition through advanced quantitative methodologies utilised by Colombus Investment Management.
"Volatility strategies are distinct and non-homogeneous, making it critical to segregate into separate categories to effectively analyze and properly benchmark performance. The CBOE Eurekahedge Volatility Indexes were specifically created to address this challenge and, based on our analysis, we strongly believe they provide a robust and innovative solution to volatility-based strategy benchmarking and due diligence."
What's happening on UCITS V? Where are we on implementation? Are we nearly there yet? Yes and no. The UCITS V directive comes into force on 18 March 2016. But additional implementing rules (known as 'Level 2') on the duties of UCITS depositaries and management companies dealing with those depositaries have yet to be finalised and will not come into effect until (at earliest) the third quarter of 2016. ESMA has consulted on but not yet finalised its additional guidelines ('Level 3') on sound remuneration policies for UCITS and AIFMD managers. There are various transitional arrangements affecting management companies' remuneration and fund disclosure requirements. There is likely to be further guidance from the FCA once Levels 2 and 3 have been finalised.
In early 2016, popular opinion on the utility and function of offshore centres (OFCs) or, to use the more inflammatory term, tax havens, must be close to an all-time low. The general view, stirred up by cash-strapped governments and the media, is that the vast majority of the world’s wealth is hidden away in secret island jurisdictions, controlled by shady businessmen and inaccessible to the common man. Hamish Masson writes.
The February 2016 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 Islamic funds and private equity funds.
The Eurekahedge Hedge Fund Index lost 1.20% in January while underlying markets as represented by the MSCI World Index were down 5.71%. All regional mandates were down during the month as global equities faced intense sell-off pressure; much of the weakness in equity markets was led by Asian equities. Asia ex-Japan managers posted losses of 3.15% during the month followed by Japanese hedge funds which saw losses of 2.71%. Across strategies, CTA/managed futures hedge funds led the table with gains of 2.32% during the month while other strategies languished in negative territory.
January was not a happy start to the year for hedge funds as managers witnessed a drag in performance - down 1.20% during the month, as investor panic induced strong downward pressure on equity markets leading to a sell-off and the resulting capital flight to safe havens. The MSCI World Index declined 5.71% over the same period with much of the weakness in the global equity markets being led by Asia. Indeed, all eyes were on Asia in January as developments in East Asian economies along with a tumbling oil price took centre stage and sent ripples throughout the region and beyond.
The Islamic finance industry has traditionally served the needs of the Muslim population which accounts for a quarter of the world’s population. This niche market operates by a different investment philosophy as opposed to a traditional investment philosophy which the rest of the world is more familiar with. The key characteristic that differentiates Islamic funds from other conventional funds is that it provides services to its investors inside a Shariah-compliant framework, prohibiting transactions considered to be unethical under Islamic law, engaging in products that are compliant with Islamic guidelines and promoting greater social justice by sharing risk and reward. In recent years, Islamic finance has been catching on with traditional finance institutions as international banks have expanded into providing Islamic finance services.
The Eurekahedge 50 (EH50) index was designed to represent the exposures and experience of institutional hedge fund investors. Seeking to create a more selective benchmark reflective of diversified, institutional-quality multi-manager portfolios, Markov Processes International (MPI), in partnership with Eurekahedge, launched this unique Index in December 2014. After its first full year, the industry’s first measure of the collective performance of top hedge funds delivered better risk-adjusted returns with fewer turnovers than all-inclusive hedge fund indices.
In 2010 the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) eliminated the private fund adviser exemption. Prior to Dodd-Frank, many managers to hedge funds and private equity funds relied on this exemption from registration as investment advisers. After Dodd-Frank, many private investment fund managers were required to register with the U.S. Securities and Exchange Commission (SEC) as investment advisers. These investment advisers are now subject to significant on-going compliance obligations and examination by the SEC.
The Inland Revenue (Amendment) (No.2) Ordinance 2015 (the ‘Amendment Ordinance’) came into effect on July 17, 2015, extending Hong Kong profits tax exemption to offshore private equity (PE) funds.
It is observed that various misconceptions about Islamic banking are disseminated by many who criticise Islamic banking. Islamic banking is becoming an important part of today’s banking industry with increasing market share across the globe. It is therefore essential to know the basis of such misconceptions about this growing industry. In this article, Chowdhury Shahed Akbar attempts to discuss to a greater extent about some issues which are relevant to the origin of the misconceptions.
In 2014, the SEC formed the Private Funds Unit (PFU), a multi-disciplinary task force designed to specifically address matters that had surfaced during their initial round of ‘presence examinations’ for private funds, which commenced in 2012. Since that time, much has happened. Examinations revealed material weaknesses and deficiencies among private equity firms in the areas of valuation, performance reporting, disclosure to limited partners and conflicts of interest. The staff of the SEC has commenced enforcement actions against a number of private equity firms and indicated that the industry can expect additional enforcement actions related to the above issues.
The January 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 Asian hedge funds.
The Eurekahedge Hedge Fund Index lost 0.70% in December while underlying markets as represented by the MSCI World Index were down 2.23%. The performance of regional mandates was mixed during the month with Asia ex-Japan managers leading the table with gains of 1.45% followed by Japanese managers up 0.27%. Meanwhile the performance of European managers was flat, while Latin American and North American hedge funds languished, down 0.60% and 0.94% respectively during the month.
2015 did not end with much pomp and circumstance and was a challenging year for managers. Hedge funds ended 2015 on a low note with the Eurekahedge Hedge Fund Index down 0.70% in December, while the MSCI World Index declined 2.23% during the month. Overall for 2015, hedge funds were up 1.45% (their lowest annual return on record since 2011) amid a challenging market environment. Meanwhile underlying markets as represented by the MSCI World Index ended the year in the red, down 0.48%.
Market calamity took Asian hedge funds on a rough ride in 2015, and despite facing financial storms, Asian hedge funds have recorded positive assets under management (AUM) growth in the last quarter of 2015 with the industry’s total asset base growing by US$9.5 billion as of November 2015 year-to-date, bringing the total size of the industry to reach US$171 billion, managed by 1,423 hedge funds.
For many years, the private fund industry and the securities bar have called for a limited rule set to govern broker-dealers solely engaged in raising capital for private funds or other issuers of unregistered securities or in merger and acquisition advisory activities. These broker-dealers would share several common traits: they do not execute securities transactions, accept orders to purchase or sell securities, introduce or carry customer accounts, handle customer funds or securities, or participate in principal transactions or market making activity.
Singapore’s prowess as a global financial hub is undeniable and while there have been efforts made to position itself in the Islamic financial markets, these have not translated into the success story many have hoped for. Vineeta Tan provides a breakdown of the Lion City’s Islamic finance ecosystem.
On December 4, 2015, President Obama signed into law the Fixing America’s Surface Transportation Act (the ’FAST Act’). The legislation primarily related to the federal transportation matters, but lurking toward its end is an amendment to the Securities Act of 1933 (the ‘Securities Act’) establishing a new registration exemption for private resales of securities. The exemption is embodied in new §4(a)(7) of the Securities Act. It is largely based on (but does not replace) the so-called ‘Section 4(a)(1-½) exemption’ that securities lawyers have developed over time under the SEC’s eye.