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New Managers April 2013

Focus - Social media and hedge funds - Part 1: Usage trends - Part 2: Best practice - Part 3: Drivers

Social media and hedge funds, Part 1: Usage trends

Social media and social business are growing: brands now rely on an average of 29 employees to manage more than 20,000 daily interactions across 50 social accounts. The Spredfast Social Business Textbook urges social practitioners to 'sprint to keep up.'

For hedge funds, social media is used as a research tool, the way Derwent, the "Twitter hedge fund", did exclusively during its one month long existence. But when using social media for investor outreach or marketing, new managers in the U.S. must be very aware of what they are doing, lest they infringe advertising rules - even if those regulating financial advisors' use of social media are still fuzzy.

To avoid any pitfalls, fund managers should carefully comply with regulatory requirements, internal monitoring and compliance policies.

Paul Hawtin

Derwent Capital Markets, a London-based investment firm, launched the first sentiment based hedge fund, the Derwent Absolute Return Fund, on 1st July, 2011 with £25m. The so-called "Twitter hedge fund" was inspired by an academic paper titled "Twitter Mood Predicts the Stock Market". Derwent Capital's founder Paul Hawtin explained during an interview on Opalesque TV back then that the raw data necessary to analyze Twitter sentiment was approximately a billion Tweets per week. The fund returned ......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.
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