Strategy Focused Reports

Distressed Debt Funds Strategy Profile

February 2023 | With Intelligence


With global credit markets posting double digit drops last year, distressed debt hedge funds managed to stay positive with short positions, bespoke financing deals and some upward repricing of individual distressed bonds helping to counter higher inflation and growing recession fears. Average 2022 returns for our index of distressed debt hedge funds were 0.8%, putting it second behind CTAs and ahead of our general hedge fund credit index, while over three years the sector is well ahead of both credit hedge funds and the overall hedge fund universe.

Healthcare Hedge Funds Strategy Profile

October 2022 | With Intelligence


The first nine months of 2022 have been exceptionally challenging for the global financial markets, with rising geopolitical tensions, inflation, interest rates, recession concerns and the emergence of new, more transmissible variants of Covid-19 among an evergrowing list of worries that investors must grapple with, causing a spike in market volatility that has seen the CBOE Volatility Index rise 83.6% this year. Against this backdrop, the average healthcare hedge fund declined 22.1%, a disappointing return but still superior to the 24.8% fall of the S&P 500. Nevertheless, healthcare hedge funds have performed exceptionally well over the long-term.

Macro Strategy Profile

September 2022 | With Intelligence


The first eight months of 2022 have been characterized by a turbulent market environment, with rising recession concerns amid multi-decade high inflation and central bank hawkishness weighing down on global bonds and equities. The S&P 500 and NASDAQ Composite have fallen 17.0% and 24.5%, respectively, marking their worst performance since the 2008 global financial crisis. Against this backdrop, the average macro hedge fund (0.2%) and billion-dollar macro fund (10.9%) have performed well, outperforming all other hedge fund strategies tracked by With Intelligence, with the exception of CTA/managed futures (7.1%).

L/S Equity Fund Strategy Profile

August 2022 | With Intelligence


The first eight months of 2022 have been characterized by a turbulent market environment, with the technology stock-driven bull market upended by central bank tightening, an inflation crisis, supply chain slowdowns, Russia's invasion of Ukraine and fears for the global economy. Against this backdrop, the average long/short equity hedge fund declined 7.9%, widely considered a disappointing return, but superior to the 13.3% fall in the S&P 500 Index, which entered a bear market for the first time since its sudden dive in March 2020. Despite a summer rally, few are expecting a sustained recovery in stock market performance, amid fears of a global downturn brought on by inflation-busting rate hikes, providing an opportunity for long/short managers to improve in a more subdued and less volatile market setting

Tail risk hedge fund strategy: In pursuit of alpha amid the challenging and volatile market environment

June 2022 | Eurekahedge


The return of market volatility driven by the combination of the restrictive monetary policies of global central banks to tame multi-decade high inflation rates and the geopolitical conflict in Eastern Europe has pushed a particular hedge fund strategy back into the spotlight: the CBOE Eurekahedge Tail Risk Hedge Fund Index which returned 6.82% over the first five months of 2022

Trade Finance Hedge Fund: An alternative asset class amidst the rising yields environment

March 2022 | Eurekahedge


Trade finance hedge funds have gained traction over the recent years, driven by investor demand for alternative asset classes with low volatility and consistent return, as well as low correlation against the broader financial market. The sector began its rapid growth following the global financial crisis in 2008, when banks started reducing their trade finance exposure to meet Basel III capital requirements.

Value Investing: hidden gems in a rising interest rate environment

February 2022 | Eurekahedge


In the aftermath of the COVID-19 crisis, central banks and government authorities injected massive amounts of economic stimulus to support their economies from the market meltdown which led to a rapid increase in money supply, pushing up consumer prices. In the same vein, the ongoing global economic recovery and winter season in Europe has led to a surge in global demand and pushed energy prices back to pre-pandemic levels, exacerbating the already high consumer prices.

Hedge Fund Strategy Performance Overview

January 2022 | Eurekahedge


Global hedge funds recorded higher returns in recent months as they benefitted from the strong recovery of risk assets, particularly equities. Global hedge funds gained 9.27%, 13.20%, and 9.37% annually from 2019 to 2021 respectively, marking their best three year performance since 2007.

CTA/managed futures strategy profile – A good alternative to gain exposure to commodities

November 2021 | Eurekahedge


CTA/managed futures hedge funds gained 5.89% over the first three quarters of 2021, thanks to the sharp increase in commodity prices, particularly in the energy sector over the recent period. In early 2020, energy prices reached uncharted territory as the COVID-19 outbreak resulted in a global economic shutdown, which completely dampened the demand for oil. As a result, the value of crude oil dropped to zero, and its contract value in the futures market fell to negative territory, which was unpr

Cryptocurrency hedge funds: Managing the risks of investing in this highly volatile asset class

October 2021 | Eurekahedge


The Eurekahedge Cryptocurrency Hedge Fund Index was up 238.40% over the first eight months of 2021, outperforming Bitcoin which returned 163.35% over the same period. In 2020, cryptocurrencies were undoubtedly the best-performing asset class in the market, with Bitcoin posting a 300.17% return during the year. Bitcoin unexpectedly benefitted from the ongoing COVID-19 crisis as investors perceived the coin as an alternative safe-haven asset during market uncertainties. As a result, the market value of Bitcoin increased by more than 600% from its March 2020 low to the end of August 2021.

Greater China hedge funds: Daunting challenges ahead in 2021 and beyond

September 2021 | Eurekahedge


The Eurekahedge Greater China Hedge Fund Index was down 4.20% in July, reducing its year-to-date return to 1.66%. In comparison, the underlying equity market in the region as represented by the MSCI China Golden Dragon IMI recorded a loss of 9.60% over the same period. A month after Didi Global Inc. celebrated its debut in the NYSE which makes them the biggest IPO of Chinese companies listed in the US, Beijing abruptly announced a stricter policy for domestic companies listing offshore, particularly in the US. The move by the government of China raised concerns among investors who fear a wave of potential delisting of Chinese companies in the US. As a result, the region's equity market experienced a massive sell-off during the month, with the Hang Seng down by 9.94%, while China’s Shanghai Composite fell 5.40% throughout the month. Looking back at 2020, Greater China fund managers benefitted from the strong performance of the equity market in the region, supported by the rapid recovery

ESG fund: Consistently delivering alpha amidst the ongoing pandemic

August 2021 | Eurekahedge


Investors are increasingly beginning to incorporate ethical considerations into their investment decisions, a development which has given rise to the ESG framework over the years. Despite the implementation challenges which arise when screening investments against acceptable environmental, social and corporate governance themes, the trend towards a more conscientious approach to investment is here to stay, especially from the perspective of large institutional investors. Fund managers, for both actively and passively managed investment vehicles are balancing their quest for superior returns with the need to meet investor demand for responsible investing. Further, an understanding that such an approach to investment can translate into ‘ESG-induced alpha’ for managers is further helping the cause of ethically guided investing. This piece looks at the performance of funds, both long-only absolute return vehicles and hedge funds, with an active ESG investment framework and how they have pe

Indian hedge funds outperformed global peers amid COVID-19 pandemic

July 2021 | Eurekahedge


Indian hedge funds outperformed their global peers by a large margin in 2020, supported by the strong performance of the Indian equity market over the year. Despite the Indian economy’s 7.7% contraction in 2020 as a result of the devastating impact of the coronavirus pandemic, the Eurekahedge India Hedge Fund Index generated 19.88% return over 2020, dwarfing the 12.66% return posted by the Eurekahedge Hedge Fund Index over the same period, which also happened to be the best annual performance of the global hedge fund industry since 2009. However, most of those gains were generated through exposure toward the fast-growing equity market of the country, raising the question of whether some of these hedge fund managers actually generate enough alpha for their investors to justify their management and performance fees.

Long Volatility/Tail Risk: A perfect way to hedge your portfolio against market uncertainties

June 2021 | Eurekahedge


The return of market volatility on the back of the ongoing COVID-19 pandemic around the globe and the retail trading frenzy of meme stocks like GameStop and AMC Entertainment has pushed two particular niche hedge fund strategies back into the spotlight; the CBOE Eurekahedge Long Volatility Hedge Fund Index and the CBOE Eurekahedge Tail Risk Hedge Fund Index returned 25.41% and 34.84% respectively in 2020. The two strategies which provide crisis alpha and protection for institutional portfolios have long since generated debates among asset owners and academics alike.

High performing hedge funds retain ability to charge standard '2 and 20' fee structure and above despite overall trend of declining fees

May 2021 | Eurekahedge


The global hedge fund industry has witnessed a trend of declining management and performance fees over the past decade, calling into question the traditional “2 and 20” fee structure the industry was famous for. Mediocre returns over recent years – as opposed to the double-digit annual returns investors had come to expect from hedge funds pre-2008 along with increasing competition within the industry and tighter regulation over alternative investment vehicles are some key factors which have contributed to this trend. Investor experience during the 2008 global financial crisis had resulted in more disintermediation within the industry, with institutional investors engaging hedge fund managers directly. Faced with more proactive and demanding investors, many hedge fund managers ended up lowering their fees, or adopting stricter hurdle rates and shorter lockup periods. Nevertheless, as we will discuss in this piece, a sizeable part of the hedge fund industry has continued to maintain leve

Fixed income-focused hedge funds: Return profile across the years

April 2021 | Eurekahedge


Since the aftermath of the Global Financial Crisis in 2008, the Federal Reserve has kept interest rates at zero to keep borrowing costs low and spur economic growth. This policy had persisted until December 2015 when the Federal Reserve Chair Janet Yellen started the Fed back on a rate-hiking path in a bid to bring interest rates back to normal levels and reduce the size of the Fed’s balance sheet. The target funds rate was increased by 25 basis points from 0.25 to 0.5 percent, marking the first increase in interest rates since the key rate was increased to 5.25 percent on June 29, 2006.

Tech-focused hedge funds: sustaining returns in a rising rate environment

March 2021 | Eurekahedge


The stellar performance of technology stocks in 2020 amid the COVID-19 pandemic has led to outsized returns for investors who have placed bets in technology stocks. The tech-heavy NASDAQ Composite rose 43.64% in 2020, posting the highest return recorded by the index since 2009 and outperforming the broader S&P 500 which rose 16.26%. Technology stocks benefited from the COVID-19 induced lockdowns as people brought forward their technology purchases to enable themselves to work from home productively and stay connected to their friends and colleagues. In addition, technology stocks were also supported by the Federal Reserve’s emergency move in March 2020 to cut benchmark interest rates to zero and restart quantitative easing. As technology stocks are generally regarded as long-duration, the fall in interest rates increased the present value of their future earnings by a larger extent and supported their share prices.

Greater China equity hedge funds: recovery in sight?

July 2020 | Eurekahedge


Greater China equity hedge funds ended 2019 up 15.49%, supported by the strong performance of the Chinese equity markets throughout the year on the back of improving geopolitical situations and accommodative central bank policies. The Eurekahedge Greater China Long Short Equities Hedge Fund Index which tracks 55 active Greater China-focused hedge funds utilising equity strategies slumped 14.74% in 2018 as mounting pressure from the escalating trade tension between China and the US weighed on the performance of Chinese equity markets. Volatile trading condition and various political concerns took their toll on Greater China equity hedge funds as they ended nine of the months of 2018 in the red. On top of the tariff spat between the Chinese government and the Trump administration, the continual protests in Hong Kong which resulted from the introduction of an extradition bill in early 2019 has also acted as a major headwind for the city state’s economic outlook throughout the year.

Trade finance fund managers outperformed major hedge fund strategies amidst COVID-19 pandemic

June 2020 | Eurekahedge


Trade finance hedge funds have gained traction over recent years, driven by investor demand for alternative asset classes with low volatility and consistent return, as well as low correlation against the broader financial market. The sector began its rapid growth following the global financial crisis in 2008, when banks started reducing their trade finance exposure to meet Basel III capital requirements. To address the lack of a standard benchmark for this niche hedge fund strategy, Eurekahedge launched the industry’s first trade finance hedge fund index in 2018, providing institutional investors with a benchmark index representing the performance of trade finance hedge fund managers.

Alternative Equity ETF and Hedge Fund Performance Comparison

May 2020 | Eurekahedge


Exchange-traded funds (ETFs) have become an increasingly crucial tool for both institutional and retail investors to gain exposure to certain markets or hedge risks at a low cost in recent years. The explosive growth of the assets managed through ETFs has been largely driven by the increase in popularity of index funds, ETFs designed to track the performance of an index. An index fund could be used by retail investors to passively invest in equity markets, or by fund managers to easily adjust their portfolio exposure towards certain markets.

Hedge Fund Round Up Q1 2020

April 2020 | Eurekahedge


Hedge fund managers ended the first quarter of 2020 down 6.42%, while delivering their strongest post-2008 monthly outperformance over the global equity market as represented by the MSCI ACWI IMI. The escalation of the COVID-19 outbreak, which has spread to more than a hundred countries around the globe over the past two months, has weighed on the performance of risk assets in February and March.

Tail risk protection: The price of watching over your tail

March 2020 | Eurekahedge


The return of market volatility on the back of the escalating COVID-19 outbreak situation around the globe has pushed two particular niche hedge fund strategies back into the spotlight: the CBOE Eurekahedge Long Volatility Hedge Fund Index and the CBOE Eurekahedge Tail Risk Hedge Fund Index returned 10.27% and 12.28% respectively in February 2020. The two strategies which provide crisis alpha and protection for institutional portfolios have long since generated debates among asset owners and academics alike.

Continued loss creep from past events curtailed ILS fund performance in 2019

February 2020 | Eurekahedge


The Eurekahedge ILS Advisers Index gained 0.92% in 2019, following two consecutive years of losses during which ILS fund managers with catastrophe risk exposure suffered from the damage caused by the Atlantic hurricane seasons. Despite being a period of calm insurance losses, 2019 saw ILS fund managers languishing under loss creep from upward adjustments in estimated losses of past events. Insurance-linked securities (ILS) hedge funds trade in instruments whose values depend on insurance loss events. The majority of these instruments are reinsurance policies that assume the risk taken by insurance companies, which in turn assume the risk taken by individuals or institutions.

Structured credit hedge funds: Staying ‘Sharpe’ in ultra-low rate environment

January 2020 | Eurekahedge


Structured credit traces its history back to the 20th century and has been a part of institutional and hedge fund portfolios for decades. Hedge fund managers focusing on structured credit could largely be dichotomised into those who generate returns from beta exposure to the asset class, and those who exploit mispriced instruments resulting from market inefficiency. Structured credit instruments result from the securitisation process in which multiple debt obligations are packed into interest-bearing securities whose cash flows are then sold to investors. This asset class has remained attractive to investors due to their ability to offer good return potentials and low rate of losses while providing diversification from other fixed income assets. The securitisation process also allows the final product to be tailored to an investor’s specific risk profile and constraints. On the other hand, the complexity of the instrument may result in heightened liquidity risk, and certain structured

Hedge Fund Round-Up 2019

December 2019 | Eurekahedge


Hedge fund managers have returned 7.27% as of November 2019 year-to-date, supported by the global equity market recovery throughout the year. Optimism over the progress of the US-China trade talks and accommodative central bank policies since the beginning of the year have acted as tailwinds for the hedge fund industry, resulting in positive performance for most geographic and strategic mandates for the year. The global hedge fund industry AUM currently stands at US$2,272.8 billion, down US$19.5 billion year-to-date as investor redemptions persisted in spite of positive performance-driven growth.

Eurekahedge European Investor Perspectives – Zurich 2019

November 2019 | Eurekahedge


Altinvestor Europe 2019 is Eurekahedge’s third European asset owner forum and the seventh of its kind across Europe and APAC regions, delivering exclusive insights from family offices as well as institutional asset owners on exploring alternative investments and optimizing portfolio returns. The event is aimed at facilitating a private environment for candid discussions between investors and to serve as a melting pot of ideas connecting Europe’s leading institutional investors under one roof.

Hong Kong: A turning point for the number one Asian hedge fund hub

October 2019 | Eurekahedge


Hong Kong has been a major focal point within the Asia Pacific hedge fund industry, currently accounting for US$92.1 billion of assets under management (AUM), overseen by 449 hedge fund managers as of August 2019. Proximity to the fast-growing economy of China, availability of highly-trained talent base, as well as robust regulatory landscape have successfully attracted both foreign and domestic hedge fund managers to base their operations in the special administrative region. The Hong Kong hedge fund industry has continued to grow and reach new highs on the back of robust investor allocations and performance-driven growth in the post-GFC era. Seen as the gateway to China, Hong Kong is uniquely positioned to benefit from foreign asset owners interested in allocating into the Greater China region, as well as domestic asset owners looking to gain international exposure.

ESG Fund Investing: The pursuit of sustainable alpha

September 2019 | Eurekahedge


Investors are increasingly beginning to incorporate ethical considerations into their investment decisions, a development which has given rise to the ESG framework over the years. Despite the implementation challenges which arise when screening investments against acceptable environmental, social and corporate governance themes, the trend towards a more conscientious approach to investment is here to stay, especially from the perspective of large institutional investors. Fund managers, for both actively and passively managed investment vehicles are balancing their quest for superior returns with the need to meet investor demand for responsible investing. Further, an understanding that such an approach to investment can translate into ‘ESG-induced alpha’ for managers is further helping the cause of ethically guided investing. This article looks at the performance of funds, both long-only absolute return vehicles and hedge funds, with an active ESG investment framework and how they have

Trade finance hedge funds maintained their winning edge throughout the trade war

August 2019 | Eurekahedge


Trade finance hedge funds have gained traction over recent years, driven by investor demand for alternative asset classes with low volatility and consistent return, as well as low correlation against the broader financial market. The sector began its rapid growth following the global financial crisis in 2008, when banks started reducing their trade finance exposure to meet Basel III capital requirements. To address the lack of a standard benchmark for this niche hedge fund strategy, Eurekahedge launched the industry’s first trade finance hedge fund index in 2018, providing institutional investors with a benchmark index representing the performance of trade finance hedge fund managers.

Hedge Fund Fees Overview 2019

July 2019 | Eurekahedge


The global hedge fund industry has witnessed a trend of declining management and performance fees over the past decade, calling into question the traditional “2 and 20” fee structure the industry was famous for. Mediocre returns over recent years – as opposed to the double-digit annual returns investors had come to expect from hedge funds pre-2008, along with increasing competition within the industry and tighter regulation over alternative investment vehicles are some key factors which have contributed to this trend. Investor experience during the 2008 global financial crisis had resulted in more disintermediation within the industry, with institutional investors engaging hedge fund managers directly.

Eurekahedge Global Hedge Fund Awards 2019 Profile

June 2019 | Eurekahedge


The Eurekahedge Global Hedge Fund Awards have been launched with the intent of identifying and celebrating the very best of hedge fund managers in the Americas, Europe, Middle East & Africa (EMEA) and Asia Pacific (APAC) across 45 award categories carefully designed to track key strategic and regional mandates within the global hedge funds industry. In addition to this, we have introduced specialised awards that recognise the performance of new entrants to the industry as well as ‘consistency awards’ for established players that have continued to add value for institutional investors over the years. As a first for the hedge fund industry, the funds are evaluated over the same time period under consideration for all regional awards (Americas, EMEA and APAC) using a consistent methodology that draws on the expertise of our judges who have extensive years of experience allocating institutional money to hedge funds across the globe.

Eurekahedge Asian Investor Perspectives – Hong Kong 2019

May 2019 | Eurekahedge


Altinvestor APAC 2019 is Eurekahedge’s fourth Asian asset owner event and the sixth of its kind across Europe and APAC, delivering exclusive insights from family offices as well as institutional asset owners on exploring alternative assets and optimising portfolio returns. The event is aimed at facilitating a private environment for candid discussions between investors and to serve as a melting pot of ideas connecting Asia’s leading institutional investors under one roof. The first day of the event was geared towards large asset owners such as pension funds, while the second day focused on single and multi-family offices.

Not all hedge funds are created equal: The hidden gems of the Asia Pacific hedge fund industry

April 2019 | Eurekahedge


ANDA Cruise, FengHe Asia Fund, Golden Pine Fund, KS Asia Absolute Return Fund, Realm High Income Fund, and Segantii Asia Pacific Equity Multi-Strategy Fund outshine peers in 2018 The Asian hedge fund managers tracked by Eurekahedge ended 2018 down 8.71% on average, recording their worst yearly performance since the 2008 global financial crisis. In spite of a strong start in January, the return of market volatilities in February and the escalation of the trade tension between the United States and China pushed the majority of Asian hedge funds into the red for the year. Compared to their global peers, fund managers focusing on Asia suffered heavier blows from the equity market sell-offs in response to the US Federal Reserve’s aggressive rate hikes throughout the year.

Greater China equity hedge funds: Is the bumpy ride over?

March 2019 | Eurekahedge


Greater China equity hedge funds ended 2018 down 14.78% after posting negative monthly returns over the better part of the year as fund managers struggled to generate profits amidst the volatile market. The escalation of the US-China tariff spat, combined with the US Federal Reserve’s aggressive rate hikes throughout the year severely weighed on the equity markets across the emerging markets, and especially China. Difficult trading situation arising from the return of market volatility and equity market sell-offs resulted in substantial performance-driven losses for the managers comprising the region’s US$28.7 billion hedge fund industry.

The case of funds of hedge funds: extra cost vs. diversification

February 2019 | Eurekahedge


The Eurekahedge Funds of Funds Index ended 2018 down 4.58%, trailing behind the average hedge fund which would have lost 4.08% throughout the year. The persistent underperformance of multi-manager funds in terms of net returns has sparked questions over the value proposition offered by such structure, which was supposed to provide investors access to a wider pool of fund managers, as well as cheaper due diligence costs for smaller investors planning to invest in multiple single manager hedge funds.

Robust investor allocations toward ILS funds despite weak 2018

January 2019 | Eurekahedge


The Eurekahedge ILS Advisers Index ended 2018 down 2.93%, recording its second consecutive year of losses after 2017, during which the index slumped 5.60%. The catastrophic losses incurred by Hurricane Florence in September and Hurricane Michael in October weighed on the ILS fund managers’ returns throughout the fourth quarter of the year.

Hedge Fund Round Up 2018

December 2018 | Eurekahedge


The year 2018 has not been very friendly toward the hedge fund industry in general, with the Eurekahedge Hedge Fund Index down 2.36% year-to-date, in contrast to how it returned 8.51% last year. The return of market volatility, combined with the escalation of the US-China trade war around the middle of the year, as well as the political uncertainties surrounding Brexit negotiation and Italy’s debt level have exerted significant pressure on the hedge fund industry.

The bright stars of the hedge fund industry: what the mainstream media missed out

November 2018 | Eurekahedge


The year 2018 might not have been the best year for the hedge fund industry, with the return of market volatilities in the first quarter and the immediately following global trade friction between the world’s two strongest economies. The equal-weighted Eurekahedge Hedge Fund Index was up 0.12% as of September 2018 year-to-date, as fund managers struggled to generate profits amidst the volatile market and difficult trading situation throughout the year. The industry has also seen multiple liquidations of high-profile hedge funds overseeing billions of dollars of assets, as they were incapable of generating returns beyond what the fund managers and investors deem acceptable.

European Investor Perspectives – Geneva 2018

October 2018 | Eurekahedge


Altinvestor Europe 2018 is Eurekahedge’s second European asset owners’ event and the fourth of its kind across Europe and APAC regions, delivering exclusive insights from family offices as well as institutional asset owners on exploring alternative assets and optimising portfolio returns. The event is aimed at facilitating a private environment for candid discussions between investors and to serve as a melting pot of ideas connecting Europe’s leading institutional investors under one roof.

Crypto-currencies: the future, or just a speculative bubble?

September 2018 | Eurekahedge


Crypto-currency funds dominated the hedge fund performance league tables back in 2017, thanks largely in part to the gravity defying price of Bitcoin (BTC), Ethereum (ETH), and other major crypto-currencies. The Eurekahedge Crypto-Currency Hedge Fund Index returned 1708.50% throughout the year, outperforming the global hedge fund industry average performance by over two hundredfold. While opinions around the future of crypto-currency became increasingly polarized, the enviable price appreciation continued to attract actively managed funds investing in crypto-currencies.

The consistently consistent: trade finance hedge funds maintain their winning edge amidst the trade war

August 2018 | Eurekahedge


Despite the escalation of the ongoing trade conflict between the US and China, trade finance hedge funds successfully traded their way around this challenge over the past few months. The Eurekahedge Trade Finance Hedge Fund Index has not spent a single month in the red since the year started, and has returned 3.51% as of July 2018 year-to-date, ahead of hedge fund managers utilising fixed income strategies as represented by the Eurekahedge Fixed Income Hedge Fund Index which gained 1.16% over the same period. The custom index, an equal weighted index composite of 26 unique trade finance hedge funds tracks US$3.7 billion in assets under management (AUM) as of July 2018, a figure which has surged more than 50% since the end of 2016.

The hedge fund ESG experience: the rise of conscientious and responsible alternative investing

July 2018 | Eurekahedge


Investors are increasingly beginning to incorporate ethical considerations into their investment decisions, a development which has given rise to the ESG framework over the years. Despite the implementation challenges which arise when screening investments against acceptable environmental, social and corporate governance themes, the trend towards a more conscientious approach to investment is here to stay, especially from the perspective of large institutional investors. Fund managers, for both actively and passively managed investment vehicles are balancing their quest for superior returns with the need to meet investor demand for responsible investing. Further, an understanding that such an approach to investment can translate into ‘ESG induced alpha’ for managers is further helping the cause of ethically guided investing. This article looks at the performance of funds, both long-only absolute return vehicles and hedge funds, with an active ESG investment framework and how they have

Another Atlantic hurricane season looms over the ILS industry

June 2018 | Eurekahedge


The Eurekahedge ILS Advisers Index ended 2017 down 5.60%, breaking the streak of positive returns that lasted for five years, owing to the devastating losses incurred during the Atlantic hurricane season of 2017. The index, which tracks the performance of 34 ILS hedge funds with predominantly non-life risk exposure, declined by 8.61% in the month of September 2017 alone, as the extent of damage caused by hurricane Harvey and hurricane Irma started to come into light. Going into 2018, the index barely budged from its position as at the end of 2017, as it returned 0.07% over the first four months of 2018. Performance across fund managers were mixed, with strong primary cat bond market activities and healthy net inflows providing supports for them, while increased estimations on the losses induced by last year’s Atlantic hurricanes and California wildfire counteracted the gains. However, above-average activity forecasts for the 2018 Atlantic hurricane season may put pressure on ILS fund m

Greater China Equity Hedge Funds: Market Volatility Strikes Back

May 2018 | Eurekahedge


Greater China equity hedge funds ended 2017 with their best annual performance on record since 2009, supported by the remarkable rally of the Chinese equity markets throughout the year. The Eurekahedge Greater China Long Short Equities Hedge Fund Index which tracks 59 Greater China focused hedge funds utilising equity strategies posted a 31.87% gain in 2017, outperforming equity hedge fund managers from the broader region, as represented by the 19.73% return generated by the Eurekahedge Asia Long Short Equities Hedge Fund Index over the same period.

Indian Hedge Funds: Good Returns, Mediocre Alpha?

April 2018 | Eurekahedge


Indian hedge funds outperformed their global peers by a large margin in 2017, riding on the back of the Indian equity market’s exceptional performance over the year. The Eurekahedge India Hedge Fund Index generated 28.96% return over 2017, dwarfing the 8.25% return posted by the Eurekahedge Hedge Fund Index over the same period, which also happened to be the best annual performance of the global hedge fund industry since 2013. However, most of those gains were generated through exposure toward the fast growing equity market of the country, raising the question of whether some of these hedge fund managers actually generate enough alpha for their investors to justify their management and performance fees.

Billion Dollar Systematic Macro Hedge Funds Lose Close to 5% in February

March 2018 | Eurekahedge


This piece looks at the performance of CTA/managed futures hedge funds and its various sub-groups which have come under pressure during the difficult market environment of February. We conclude by looking at the returns for the industry heavy weight systematic macro hedge funds overseeing assets in excess of US$1 billion which recorded steep monthly losses in February declining 4.77%. In contrast to popular news insinuating that the recent market melt-down was the doing of a handful of AI hedge fund managers which recorded their worst monthly loss on record, it seems that the major casualties lie somewhere elsewhere.

Artificial Intelligence: The New Frontier for Hedge Funds (2/2)

February 2018 | Eurekahedge


This piece revisits the performance of hedge funds that utilise artificial intelligence and machine learning theory in their trading process, focusing on the overall risk-return profile of artificial intelligence (AI) hedge funds as captured by the Eurekahedge AI Hedge Fund Index in comparison to traditional quants, equity-hedge strategies and the average global hedge fund.

Eurekahedge European Investor Perspectives – Series 1 of 2

January 2018 | Eurekahedge


Altinvestor Europe 2017 took off with a powerful opening presentation from a highly experienced pension executive presenting on how pension funds could secure long term success through collaboration with peers and asset managers and taking a more active and innovative approach to pension fund investment management.

Hedge Fund Round Up 2017

December 2017 | Eurekahedge


Early estimates put the Eurekahedge Hedge Fund Index return at 7.81% by the end of 2017, and hedge funds are on track to post twelve consecutive positive months in a year for the first time since 1999.

Actively Managed Crypto-Currency Strategies

November 2017 | Eurekahedge


Crypto-currency funds continue to dominate hedge fund performance league tables’ thanks largely in part to the gravity defying price of bitcoins. In fact since we first published an index tracking the performance of crypto-currency investing hedge funds earlier this year, the price of bitcoin, the most liquid and the shiniest of all crypto-currencies has almost quadrupled. While opinions around the future of crypto-currency have become increasingly polarized, the enviable price appreciation continues to attract actively managed funds towards investments in crypto-currencies.

Hurricane Season Takes Toll on ILS Managers

October 2017 | Eurekahedge


After 5 consecutive years of positive returns, hedge funds with exposure to catastrophe bonds or Cat bonds for short, are on track to post their first year of losses as the full extent of damages from Hurricane Harvey, Irma and Maria come to light. An index of such funds tracked by Eurekahedge who explicitly allocate to insurance linked investments and have at least 70% of their portfolio invested in non-life risk – the Eurekahedge ILS Advisers Hedge Fund Index was down 0.33% in August and 5.46% in September, bringing the year-to-date return into negative territory with a loss of 3.69%. This comes after ILS hedge funds delivered compound returns of 15.60% versus 12.21% for the average hedge fund in the three year period ending December 2016.

US Equity Hedge Funds Gain on Trump Boost

September 2017 | Eurekahedge


November 2016, what many thought was unthinkable became a reality when Donald Trump assumed power in the United States. His unpredictability and outspokenness had already spooked markets in the lead up to the election, but what has happened since has been quite remarkable in its own right. Markets, which once feared the idea of a Trump presidency embraced it whole-heartedly, and what President Trump had once called ‘a big, fat, ugly bubble’ got a new lease of life. The rhetoric was toned down and the handshakes were tempered as the prospect of a renewed fiscal stimulus coupled with economic de-regulation set about trying to woo markets. While little has materialized save a deadlock on Capitol Hill, markets have risen to new highs.

The Hedge Fund ESG Experience: A Growing Conscience for Absolute Returns

August 2017 | Eurekahedge


Investors are increasingly beginning to incorporate ethical considerations into their investment decisions, a development which has given rise to the environmental, social, governance (ESG) framework over the years. Despite the implementation challenges which arise when screening investments against acceptable environmental, social and corporate governance themes, the trend towards a more conscientious approach to investment is here to stay, especially from the perspective of large institutional investors.

China A-Share Investing Hedge Funds Strategy Profile

July 2017 | Eurekahedge


A revival appears to be underway for China investing mandates in 2017 following disappointing returns last year. The recent decision by MSCI to include Chinese A Shares in its broader Emerging Market Indices is likely to support this trend, though exposure through long-only type vehicles to underlying markets could take investors for a ride given the inherent volatility. This piece looks at the performance of China A-Share investing hedge funds and how they have managed to ride the volatility in underlying markets over the years.

Crypto-Currency Funds Strategy Profile

June 2017 | Eurekahedge


Since 2013, a new breed of actively managed crypto-currency alternative funds has been coming to the fore. Initially starting off with dedicated exposure to bitcoins, these funds have now diversified across the breadth of crypto-currencies and consistently rank at the top of performance tables thanks to the skyrocketing price of crypto-currencies over the past few years.

Merger Arbitrage Hedge Funds Strategy Profile

May 2017 | Eurekahedge


Corporate events such as mergers and acquisitions (M&A) and company spinoffs provide opportunities for merger arbitrage hedge funds to capitalise on pricing inefficiencies prior to the completion of a transaction. Before acquisition, the price of the share of a target company is usually traded at a discounted price, creating a potential opportunity for merger arbitrageurs to reap gains once the transaction is complete. However, much of the opportunities within the merger arbitrage space lies in the health of M&A activity as well as other factors which would motivate (or de-motivate) the successful transaction of an M&A deal. For instance, the Pfizer/Allergan M&A deal was threatened by US regulatory challenges and this led to the abandonment of the deal. Other than regulatory challenges, the outlook of the global economy as well as business sentiments play an integral role in sustaining the appetite for corporate activity by conglomerates.

Man versus Machine: Quantitative Hedge Funds

April 2017 | Eurekahedge


The rise of computer-driven strategies in the hedge fund sphere has caught considerable interest from the investment community over recent years. These quantitative hedge funds incorporate automated trading strategies, enabling them to capitalise on price discrepancies in the markets through executing trade positions within a very short span of time. While these systematic hedge funds have been employing methods of technical analysis into their trading strategies, sentiment analysis is also an up and coming feature in investment decisions. Text-mining data collected from various sources could be an indicator of ground sentiment during key market events, which can then be used as inputs in trading models or for risk control.

2016 Roundup - Activist Hedge Funds

March 2017 | Eurekahedge


Activist hedge funds, a sub-strategy of event driven hedge funds, deploy shareholder activism as a key cornerstone of their investment strategy and have closer interactions with management of the companies which they invest into. Cultural differences also play a part in the adopted style of activism with Western activist hedge funds pursuing a dynamic approach, while their Asian counterparts adopt a more engagement-styled activism. This special feature takes a quick look at activist hedge funds, which have markedly outperformed their global hedge fund peers in 2016.

2016 Roundup - Equity Focused Hedge Fund Strategies

February 2017 | Eurekahedge


Equity focused hedge fund strategies have seen their assets under management (AUM) grow from US$460.2 billion since end-2009 to US$778.0 billion as of January 2017 through a combination of performance-based gains and investor allocations over the years. Having recorded six consecutive years of asset growth between 2010 to 2015, long/short equity hedge fund AUM contracted for the first time in 2016, declining by 2.56% on the back of steep investor redemptions totalling US$29.1 billion. Performance-based gains were the lowest on record in the last five years following losses in 2011. While 2017 has started on a positive note, with assets for long/short equity hedge funds approaching the US$800 billion mark, the year holds much uncertainty in store.

Artificial Intelligence: The new frontier for hedge funds

January 2017 | Eurekahedge


Quantitative hedge fund strategies have received considerable interest from investors over the last decade. The application of growing computing power and the availability of big data has enabled these systematic trading models to capitalise on market inefficiencies that were otherwise difficult to identify or harvest given the implied trading costs. However, this growth has met with some headwinds on two key accounts; firstly, trading models built using back-tests on historical data have often failed to deliver good returns in real time (as previously identified trends have broken down), and secondly, the diffusion of similar quant models which has led to crowding in the space and consequently depressed the returns from such strategies.

Event Driven Strategies Outshine Peers in 2016

December 2016 | Eurekahedge


Event driven and their sub-group of distressed debt hedge fund strategies account for almost 12% of the global hedge fund assets under management, standing at US$266.5 billion as of November 2016. Despite posting the best returns among hedge fund strategic mandates in 2016 (distressed debt and event driven strategies are up 11.89% and 8.15% respectively which compares with average global hedge fund gains of 3.50%), the two strategies have seen investor redemptions for most of 2016. Event driven strategies saw outflows of US$13.5 billion in 2016, while distressed debt hedge funds recorded redemptions of US$2.1 billion which compares with industry wide investor redemptions of US$28.2 billion for the year.

CTA/Managed Futures Strategies Continue to Attract Investor Capital

November 2016 | Eurekahedge


CTA/managed futures hedge fund strategies account for almost 11% of the global hedge fund assets under management (AUM), accounting for US$250.3 billion as of October 2016. While the global hedge fund industry has seen redemptions of US$16.6 billion in 2016; the highest on record since 2009, CTA/managed futures strategies have continued to attract investor capital for the second consecutive year in a row. The strategy has seen net investor allocations of US$12.2 billion in 2016, following capital inflows of US$29.0 billion in 2015. Average index returns for the strategy have been muted over the last two years (this following their strong showing in 2014 when the Eurekahedge CTA/Managed Futures Hedge Fund Index was up 9.62%), the prospect of uncorrelated returns, both to traditional and hedge fund mandates adds much to the appeal of CTA/managed futures hedge funds in an investor’s portfolio.

Long/Short Equity Strategies Struggle Led by Weaknesses in Europe

October 2016 | Eurekahedge


Long/short equity hedge fund strategies account for almost 36% of the global hedge fund asset under management (AUM), accounting for US$801.7 billion as of September 2016. Following a difficult start to the year, the strategy is on its way to recovery following four consecutive months of positive returns with the Eurekahedge Long Short Equity Hedge Fund Index up 2.47% for the year. However, given the challenging market environment since end 2013, long/short equity manager have posted low single digit returns over the last three years – up 3.69% in 2014, 3.04% in 2015 and 2.47% September 2016 YTD; a development that has slowed investor allocations into the strategy and contributed in part to a decline in the net growth activity (launches less closures). The outlook remains challenging for the moment, and the fourth quarter holds much in store from the outcome of the US elections to the Fed’s signalling on the pace of future rate hikes that could potentially limit the upside for the stra

Volatility Hedge Funds – The Dark Knights of the Industry

September 2016 | Eurekahedge


Volatility investing hedge funds are a much overlooked segment of the hedge fund industry - niche players who invest exclusively in volatility as either a standalone alpha generating strategy or as part of a diversified portfolio seeking to provide downside protection during periods of elevated market stress. The strategy though is ripe for a comeback, and a source of much added value for investors seeking to hedge their portfolios during uncertain times and possibly flirt with the notion of direct exposure to volatility as an asset class in its own right. The report which follows will review the performance of the CBOE Eurekahedge Volatility Indexes over the years and the added benefits that can arise from increasing allocations towards volatility investing strategies.

Commodity Focused Hedge Funds Outshine Peers in 2016

August 2016 | Eurekahedge


The&nbsp;<em>Eurekahedge Commodity Hedge Fund Index</em>&nbsp;is an equal-weighted index which tracks the performance of underlying hedge fund managers who invest exclusively into commodities and commodities-related instruments. In our analysis, the&nbsp;<em>Eurekahedge Commodity Hedge Fund Index</em>&nbsp;was up 0.77% in July (9.19% July year-to-date) in what turned out to be a good month for managers allocating to precious metals, energy and softs. Underlying managers reported impressive gains made from the rally in precious metals in July as gold climbed during the latter half of the month, on the back of a weakening greenback and lacklustre GDP figures coming from the US. Short positions in crude oil proved to be profitable as concerns of a sat

Eurekahedge FX Hedge Fund Index Strategy Profile

July 2016 | Eurekahedge


The Eurekahedge FX Hedge Fund Index tracks the performance of dedicated currency investing hedge funds in the spot, futures and forward markets utilising both systematic and discretionary overlays and investing across all of major, minor and exotic currency pairs. The Eurekahedge FX Hedge Fund Index was up 0.10% in June in what turned out to be a volatile month for global currencies. Underlying managers reported losses on their long USD versus emerging market currency pairs’ positions in the earlier part of the month as disappointing US non-farm payroll data pushed back expectations of a summer rate hike in the US. Short positions in the Rand proved to be costly for managers as South Africa avoided an expected ratings downgrade ...