Mon, Jun 25, 2018
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

S&P Fund Services FOHFs sector update: Emerging markets provide leading strategy but many FOHF still dealing with liquidity issues

Thursday, November 19, 2009
Opalesque Industry Updates - Gross exposures remain well below historical levels among funds of hedge funds, says Standard & Poor’s Fund Services in its latest update on the sector, available at www.fundsinsights.com.

“Many funds of hedge funds (FOHFs) are still dealing with liquidity issues beyond the recovery in equity and credit markets,” said S&P Fund Services lead analyst Randal Goldsmith. “Underlying net market exposures within FOHFs are also below historical levels, but have increased during the third quarter. In general, net exposures have moved up only gradually because hedge fund managers held in FOHFs portfolios have not been convinced on the sustainability of the rally in markets and have preferred to concentrate on alpha generating opportunities.”

Goldsmith says this was particularly the case in Europe, where returns have generally been disappointing despite competitive returns in the underlying equity markets. Some FOHFs managers have also deliberately resisted increases in aggregate net exposure.

“GAM's David Smith maintains an agnostic view on markets and has focused GAM Diversity's portfolio on managers able to generate alpha regardless of market conditions," said Goldsmith.

Goldsmith also pointed to Charles Hovenden, CIO of Absolute Fund Managers, who deliberately reduced exposure to Crispin Odey’s hedge fund this year because the manager took net market exposure up to a higher level than he was comfortable with. “Hovenden tends to avoid equity hedge fund managers who run their portfolios with net exposures over 30%,” said Goldsmith. “On the other hand he has continued to hold a small exposure to short-biased managers despite disappointment with their slowness to cut losses on cyclical shorts.”

FOHFs returned 4% over the third quarter, and 8% over 2009 so far, with funds that focus on emerging markets leading the recovery. Among S&P Fund Services-rated FOHFs, GAM Multi-Emerging Markets has returned 20.5%, Permal Asian Holdings has returned 24.8% and Permal Emerging Markets Holdings has returned 26.1%.

One positive surprise has been Permal Japan Holdings, which has returned 16.0% over 2009 to the end of September. “Japan has been a laggard in the equity markets recovery, but Permal's team was relatively quick to go fully invested on this fund,” said Goldsmith. “Its selection of long-only managers – about 26% of the portfolio – has collectively achieved more than double the market average return. Going forward, Permal sees some of the best opportunities for alpha generation in Japan where its hedge fund managers are able to find many stocks on extremely low valuations.” Corporate website: Source

- FG

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Paper: The performance of stocks actively pitched by hedge funds[more]

    Using a novel dataset drawn from investment conferences from 2008 to 2013, I show that hedge funds take advantage of the publicity of these conferences to strategically release their book information to drive market demand. Specifically, hedge funds sell pitched stocks after the conferences to ta

  2. North America - US fundraising for special purpose acquisition vehicles hits record this year[more]

    From AFR.com: Special purpose acquisition vehicles (spacs) are hitting the US market at the fastest rate on record, attracting the likes of Goldman Sachs and hedge fund investor Daniel Loeb for the two largest such deals in 2018. Spacs have raised $US4.5bn so far in 2018, the largest amount fo

  3. Investing - Man Group and AQR try to take aim at private equity industry, Hedge funds poised to be winners in AT&T-Time Warner deal[more]

    Man Group and AQR try to take aim at private equity industry From FT.com: The popularity of private equity investments has prompted asset managers such as Man Group and AQR to devise strategies that aim to replicate PE returns but at a much lower cost to investors. Both companies a

  4. News Briefs: David Stemerman's hedge fund holdings shrank before his run for governor, nvestment manager TSW triggers succession plan, Alan Howard joins Peter Thiel investing in Cologne-based fintech startup[more]

    David Stemerman's hedge fund holdings shrank before his run for governor But the U.S. holdings of Stemerman's Greenwich hedge fund, Conatus Capital, shrank from $2.6 billion at the apex to just over $1 billion before he announced his move into politics. (Hartford Courant) Inv

  5. British Empire: Pershing's 23% discount 'unsustainable'[more]

    From Citywire: The wide discount on Pershing Square Holdings (PSH) is 'unsustainable' and puts star hedge fund manager Bill Ackman under pressure, says British Empire (BTEM). Pershing is the third largest holding in the £850 million British Empire trust, managed by Joe Bauernfreund, which sp