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Beverly Chandler, Opalesque London: The Strategic Consulting
Team at Barclays Capital Solutions Group has researched the convertible (convert) hedge fund
landscape in their latest paper. "Despite the relatively small AUM base of HF
strategies focussed on converts, the team found the subject
matter intriguing for two main reasons: While a number
of HF strategies performed poorly in 2008 and suffered heavy
redemptions, most appear to have recovered and are back in
favour with investors (e.g., mortgages, structured credit) but
this appears not to be the case for convert HFs. Despite the
fact that, on average, convert HFs have produced some of
the most compelling returns among key HF strategies since
2008, they have fared the worst in terms of net flows into the
Strategy" the team writes.
Since flows generally track performance over time,
this conspicuous inconsistency, the authors found this surprising, especially in the
current return-seeking environment. Beyond that, Barclays finds the convert market
itself has undergone significant changes since 2008, both on
the supply side (e.g., market size, ownership, leverage, liquidity)
and the demand side (e.g., convert HF AUM, number of players,
strategy).
"In a number of ways, convert HFs today are very
different from what they were pre-crisis. In this study, we take
a closer look at these changes and their implications with an
eye toward helping investors better asse...................... To view our full article Click here
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