Thu, Sep 1, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Hedge fund fixed-income trading jumped 36% from 2009 to 2010 - Greenwich study

Wednesday, August 11, 2010
Opalesque Industry Updates - Hedge funds are quickly regaining some of the clout they lost in U.S. fixed-income markets during the market meltdown.

The results of Greenwich Associates’ 2010 U.S. Fixed-Income Investors Study reveal that while overall U.S. fixed-income trading volume declined from 2009 to 2010, hedge fund trading volumes jumped some 36% among a matched sample of institutions. Such growth demonstrates that although hedge funds are far from the dominant force they were in 2006–2007, they remain key players in U.S. fixed-income markets.

Hedge Funds Focusing on More Liquid Products
At their pre-crisis peak, hedge funds were generating 29% of all U.S. fixed-income trading volume. By 2009 that share had declined to just 12%. This year, hedge funds generated 19%. “Hedge funds over the past 12 months have been refocusing their attention onto more liquid products,” says Greenwich Associates consultant Tim Sangston. “This change in approach reflects both shifts in investment strategies and the impact of liquidity demands on the institutions that supply a growing share of hedge fund capital.”

The most obvious example of this shift can be seen in U.S. Treasuries. Looking at a matched sample of investors, hedge fund trading volume in government bonds increased by approximately 73% from 2009 to 2010. In 2009, hedge funds generated only about 3% of trading volume in government bonds; in 2010 that share jumped to approximately 20%. Although hedge funds still make up only a small part of the market for agency securities, their trading volume in this product increased more than 60% from year-to-year.

Hedge funds increased their share of total investment-grade credit trading volume to 26% in 2010 from 16% in 2009. “Hedge funds now account for about 42% of total trading volume generated in investment-grade credit default swaps and index products,” says Greenwich Associates consultant Frank Feenstra. Hedge funds also generate about 46% of total trading volume in high-yield credit, including 37% in cash bonds and 63% in CDS and index products.

Large Presence in Out-of-Favor Products
Hedge funds maintain a large presence in fixed-income products that have fallen out of favor among many U.S. institutions as a result of their historically poor performance and role in the global market crisis. For example, hedge funds account for almost two-thirds of trading volume in structured credit. “In other, less liquid products as well hedge funds still represent the bulk of the market, despite their increased activity in more liquid products,” says Greenwich Associates consultant Peter D’Amario. “For example, hedge funds account for approximately 90% of total trading volume in distressed debt, more than half of trading volume in leveraged loans, and more than a quarter in emerging markets.” Corporate website: www.greenwich.com

- 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. The Big Picture: Water is single largest environmental investment opportunity[more]

    Benedicte Gravrand, Opalesque Geneva: Water, the world’s most precious and undervalued commodity, is set to lead the socially and environmentally responsible investment themes. This is according to specialist fund manager Thomas Schumann. His firm,

  2. Commodities - Hedge funds pile into bullish bets on U.S. crude by most on record, Rig count steady, hedge funds dump short contracts on 63 million barrels, Hedge funds bail on Copper as Goldman predicts ‘supply storm’, Hedge funds pile up bets against sterling[more]

    Hedge funds pile into bullish bets on U.S. crude by most on record From BRecorder.com: Hedge funds and other speculators raised their bullish bets on US crude oil in the past week by the most on record fuelled by speculation that Organization of the Petroleum Exporting Countries will agr

  3. Investing - U.S. hedge fund Marathon makes Brexit bet on European property, Hedge funds love Liberty and John Malone, DE Shaw could bid for control over TerraForm Power, New York hedge fund increases stake in Tronc as sale talks continue, Don't wait too long to check this +20% value fund's ideas[more]

    U.S. hedge fund Marathon makes Brexit bet on European property From FT.com: Marathon, a $13bn US hedge fund, is building a big Brexit trade, increasing its investments in property across Ireland, France, Germany and the Netherlands, in a bet that they will be among the big beneficiaries

  4. Investing - Hedge funds express interest in acquiring Terraform's class B shares, REIFs: A new opportunity for foreign real estate investors, $21bn distressed expert hedge fund likes these 4 ideas, This merger arbitrage ETF is drawing increased interest, Investors look to emerging Asia for returns[more]

    Hedge funds express interest in acquiring Terraform's class B shares From Thecountrycaller.com: The US residential solar provider, Sunedison Inc. has received a bid from hedge fund manager D.E Shaw & Co LP for controlling a stake in its Yieldco TerraForm Power Inc. According to Reuters,

  5. Opalesque Exclusive: Investors struggle to identify the better performing hedge funds[more]

    Komfie Manalo, Opalesque Asia: Fund managers and investors believe that performance is one of the major factors driving change in the hedge fund industry, a Preqin survey showed in its latest Hedge Fund Spotlight. Preqin said that the disappoin