In the week ending 12 September, 2014, investors are expected to pump $49bn of fresh assets into funds that mimic hedge fund tactics over the next year - liquid alternatives. Hedge fund investors added more cash than they redeemed from the asset class in September; Carlyle Group’s Asia fund assets reached $13.6bn; several hedge funds reaped profits on FHA’s decision to sell distressed loans; CIBC Mellon wins $1bn mandate from Arrow Capital Management; Fifth Street Asset had recently submitted to federal regulatory authorities its application for an IPO; hedge funds are targeting SMSFs as a future source of investment capital; and Pelargos Capital is seeking to more than triple over the next three to five years the assets of its Japan Alpha Fund.
Algebris Investments said it was planning to launch a $500m hedge fund that buys Italian debt; Emmanuel Hermann is opening a new fund specialized in risk arbitrage, credit and distressed assets; Seven Sages Capital is in the process of launching its second fund from Midtown Manhattan; Advantage Capital launched a special situations/M&A fund; Paul Harvey and Mark Bright received regulatory approval to launch their hedge fund; and Brett Icahn has scuttled plans to strike out on his own with a new hedge-fund firm.
Olean Capital Management CTA in conjunction with Armory Advisors LLC has announced the launch of Olean Capital Management CTA.
CogentHedge announced plans to shut down.
The HFRI Fund Weighted Composite Index was up 1.56% in August (+4.10% YTD);
The Greenwich Global Hedge Fund Index gained 1.57% (+4.22% YTD);
The Eurekahedge Hedge Fund Index rebounded and gained 1.36% (4.22%);
The Lyxor Hedge Fund Index was up 0.9% (YTD +1.7%);
eVestment said hedge funds returned an average 1.4% in August (4.0% YTD);
And CTAs bounced back to post positive performance, Newedge CTA Index up 3.89% (+3.97% YTD).
GFIA reported that emerging markets hedge funds outperformed in July with the exception of Russia; the future of trend-following hedge funds are in doubt because of poor performance; John Paulson’s funds posted mixed returns last month as stocks and credit markets advanced; Fortress Investment’s main macro hedge fund lost 2.3% in August; the Merchant Commodity Fund gained 16% in the first eight months of the year; Bridgewater Associates’ Pure Alpha Fund rose 2.8% in August; Andy Hall has cut risk in his $3.3bn hedge fund by more than half since June; Baupost posted its best month in five years from its Idenix Pharmaceuticals bid; and Bob Treue's hedge fund, Barnegat Fund, recovered in August and was up 0.5% (+16% YTD).
Indian focused hedge funds delivered a 45.3% return for the 12 months ended August.
Among investments made by hedge funds, Hillhouse Capital said it would invest $30m into China Auto Rental; BofA Merrill Lynch reported that market neutral hedge funds raised their exposure to 3% net long from 2% net long in August; some of the world’s biggest investors in leveraged-buyout funds are themselves using unprecedented levels of debt to boost returns; Natixis Global Asset said the search for yield is increasingly seeing investors look to liquid alternatives; Alpha Strategic recently made a minority revenue share investment in Premium Point Investments; Dan Loeb, David Tepper and Dan Benton showed strong interest in Alibaba’s scheduled IPO; and Maglan Capital increased its stake in both an energy company and entertainment firm.
In other miscellaneous hedge fund news, Michael Platt’s BlueCrest Capital cut management fees on its $8.2bn computer-driven hedge funds; and Laven Partners expects demand for external resources to review and validate their compliance processes to increase.
A study by New Amsterdam Partners showed that socially responsible asset managers provide more gains; an analysis by Capital Markets Cooperative Research Centre showed that companies could influence HFT trading in their own stocks; a study by Deutsche Bank found that investor demand is fuelling the fast growth of hedge fund liquid alternatives; and some of the best hedge fund stock pickers are those many investors may never have heard of before.
Among outlooks, the ageing U.S
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