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Editor's Note
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Since Brummer & Partners' decision to establish their first hedge fund in 1996 onshore in Sweden, the Nordics have been a centre of excellence in both active management and professional investing. The Swedish FSA has the reputation to actually know and understand hedge funds, and has provided an environment where retail investors, for instance, have been able to access hedge fund returns at a really early stage.
UCITS absolute return funds have grown nine times faster than offshore funds since 2009
This success story is continued with UCITS absolute return funds which have grown by around 47% since 2009, while the offshore fund market has grown by 5%. That is a fundamental change in the industry. Regulations have put more structure around hedge funds, so they are not as scary as they used to be perceived in the past, and regulators feel it is acceptable for someone in a private pension or individual portfolio to access that kind of diversification.
Alternative asset managers have a great opportunity to show the advantage of alternative investments in today’s environment, where rates can’t really go much lower and equity valuations may not be very attractive. Also more traditional institutions are adopting the alternative investment route. We see, for example, that an institutional investor such as the Church of England, which by the way runs a portfolio of £9 billion, has no issue with investing significantly in CTAs.
Crisis Alpha and Innovation in the CTA Space: Will they bounce back in the next quarter?
CTAs say that one of the most important benefits they provide to investors is “crisis alpha”. These funds should give their strongest returns in times of market distress, and especially equity distress which is typically when irrationality dominates. Equity distress signals change in the macro-economic, political or psychological climate and is strongly linked to trending markets. That is when CTAs or momentum-based strategies have historically performed the best, and there are good reasons why they will continue to do that the next time the market tanks.
In light of the bad years (2011, 2012, 2013), most CTAs have put a lot of research effort into risk management and portfolio composition. They were forced to, because things suddenly were not as easy as in previous years. But these steps, or shifts in quality or ability, happen regularly. As soon as the CTA industry is pronounced dead, which happened a year and a half ago, something happens in terms of development. Possibly the most major development now is the CTA’s improved ability to control downside risk.
The interplay between convergent and divergent trading styles seems to be very cyclical. Currently, the markets have reached a new low in terms of lack of divergence and lack of trends. RPM’s proprietary aggregate measure of general trendiness or momentum across major futures markets is at a record low, they have not seen such a low reading and such subdued price moves since the 90s. Values like these have historically signalled good CTA returns over the next quarter or so.
Have banking regulations gone too far? Unintended consequences of regulations created new major market risks:
Here is something that is starting to trouble regulators globally. Some of the larger banks no longer offer OTC clearing to their clients, but will only do it for their books. In essence, all investment banks seem to follow the same strategy nowadays, which is to just pursue the top 20 or the top 40 most profitable clients, and are happy with that. Major investment banks are saying now that they neither can nor want to offer clearing services to for example smaller clients, and in some cases even larger clients, like pension plans or insurance companies, as their business are unattractive from a capital adjusted perspective. Unless the client can offer interesting ancillary business, the return is just too small. This is a problem for the general real money industry and for the hedge fund industry, but the banks don’t necessarily care.
Consequently the problem goes back to the regulators. The banks are going to say, “We are now so constrained by the regulatory requirements that we have limited balance sheet to offer and can’t take any more business.” These themes are actually picking up now, and the regulators have started to worry about these items such as clearing, market liquidity and the potential impact for retail clients.
The 2015 Opalesque Nordic Roundtable took place end of October at RPM’s Stockholm office with:
- Mikael Stenbom, RPM
- Erik Eidolf, Nordkinn
- Thomas Stridsman, Alfakraft
- David Rindegren, Carnegie Asset Management
- Mikael Spangberg, Nektar
- Stefan Nydahl, IPM
- Renaud Huck, Eurex
The group also discussed:
- What can systematic managers learn from Google, Netflix, Amazon, Facebook, and others?
- How the “not-invented-here” syndrome within the quant shops hurts performance and investors
- How are machine-learning and data science shaping the quant space? Will a systematic trading shop be “dead” in ten years if they don’t adopt those technologies?
- How to overcapitalise a hedge fund startup to ensure sustainability
- What is the “game plan and tagging” that has been developed at the Central Bank of Norway?
- How to create an investment process that is NOT very sensitive to changes in the general market environment
- How can funds survive the ever more often occurring black swan events?
- What is more important for systematic strategies: risk management or entry/exit strategies?
- What alternative investment managers can learn from behavioural finance.
- More and more assets are being concentrated to fewer and fewer players. What is really behind this investor behaviour?
- Are investors’ investment decisions driven by rationality in the first place, or something else?
- What are the appropriate criteria for investors and trustees to make responsible investment decisions?
- New products from Eurex: Mini-DAX® futures, spot FX trading
- How and why Eurex invests in start-up firms focusing on FinTech
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BAI Alternative Investor Conference 2023 (BAI AIC) April 23-24
BAI Alternative Investor Conference 2023 (BAI AIC) April 23-24
With Pre-Event on Law & Regulation on April 22, 2024 - Kap Europa, Frankfurt
The German Association for Alternative Investments (BAI) is hosting the conference for institutional investors and the AI industry. Attendees can expect a varied program with highly topical and entertaining presentations as well as panel discussions on topics including Infrastructure, ESG, the current interest rate phase, Private Equity and much more.
In the evening of April 23, a get-together will take place in the Gesellschaftshaus at Frankfurt Zoo. The mind reader Thorsten Havener will give a keynote speech here.
The keynote speakers at this year's AIC include:
- Prof. Dr. Bernd Raffelhueschen, Forschungszentrum Generationenvertraege, Albert-Ludwigs-Universitaet Freiburg
- Prof. Oliver Gottschalg, PhD, Strategy Department, HEC School of Management: "How AI will turn the Private Equity world upside down"
- Prof. Dr. Isabell Welpe , Chair for Strategy and Organization, TUM School of Management: "From Algorithms to Assets: How artificial intelligence is transforming the investment sector"
- Christoph Junge, Head of Alternatives, Velliv gives the investor presentation on: "A look under the hood: Alternative Investments at Velliv, a commercial pension fund"
An investor workshop with keynote speeches by institutional investors and the investor dinner complete the AIC.
Further information and registration: https://www.ai-conference.com/en/
Or contact Bundesverband Alternativer Investments (BAI)
Christina Gaul
+49 228 969870
events@bvai.de
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GAINING THE EDGE - GLOBAL CAP INTRO VIRTUAL CONFERENCE June 17-28
Record Attendance expected: Your invitation to the 5th GAINING THE EDGE Virtual Cap Intro June 17-28
Agecroft Partner's 5th GAINING THE EDGE will be the largest virtual cap intro event for the remainder of the year.
Don't miss out on the largest and most influential virtual capital introduction event remaining this year. GAINING THE EDGE is renowned for its exceptional scale and quality, offering unparalleled opportunities in the investment management industry.
Exclusive Registration Benefits For Investors:
- Two Weeks of Optimized Networking:
Benefit from meaningful interactions without the fatigue of travel and crammed back-to-back meetings. Enjoy high-quality, flexible scheduling over two weeks, with our 24/7 open meeting scheduler accommodating global time zones across North America, Europe, the Middle East, and Asia. Diverse and Unique Range of Participating Managers: Virtual format, lower price point and no need for physical travel attract a wider range of managers. Low overlap of managers and investors with other cap intro events makes the event distinct and highly complementary to other independent and prime broker-sponsored capital introductions.100% Self-Directed and Flexible: You decide when, for how long, which and how many managers to meet (Agecroft suggests investors to book a minimum of just 5 meetings).
Investors register here: https://gainingtheedge.wufoo.com/forms/z5fxojr18lq3k2/
Exclusive Registration Benefits For Managers: Grab Your $3,478 Goodie Bag
- Special Pricing: Register for just $4,975 with no hidden costs - a steal considering the absence of travel, hotel, or yearly membership fees.
- BONUS Gift 1: "Asset Raising" Digital Masterclass by Opalesque ($2,999 Value): Elevate your asset-raising game with:
- 16 Video Modules spanning 3 hours and 33 minutes
- 42 Workbook Pages
- 29 Unique Guerrilla Tactics (shortcuts to success)
- Testimonials: "Secured three times more meetings and doubled closing rates."
More testimonials at https://www.fundmanager.tools
- What you'll learn: Detailed overview of all 16 video modules: Download PDF
- BONUS Gift 2: One-Year Subscription to NEW MANAGERS by Opalesque ($200 Value): Since 2012, a monthly publication with full archive access.
- BONUS Gift 3: One-Year Subscription to Alternative Market Briefing by Opalesque ($279 Value): Daily insights since 2003, with access to an archive of over 400,000 articles.
Your Pathway to Exceptional Opportunities Starts Here: Register using this exclusive link to claim your three bonus gifts valued at $3,478 along with your event registration: GAINING THE EDGE Registration.
Why GAINING THE EDGE Stands Apart:
- Record-Breaking Attendance:
Our previous virtual cap intro event attracted over 1,900 registrations, featuring a diverse and unique range of managers, distinct from other large independent and prime broker-sponsored capital introductions.
Expert-Led Interactive Panels: Engage in over 10 hour-long Interactive Panel Style Discussions. Gain insights from top decision-makers in alternative investments, including pension funds, endowments, foundations, institutional consultants, family offices, and fund of funds.
Alternative Investment Industry Leading Conference Organizer Since 2013: From 2013 to 2016, Agecroft Partners was a co-producer of Hedgeopolis, one of the top hedge fund conferences in the industry. From 2016 to 2020 sold out 6 conferences in a row with over 2,000 registrations while its most recent cap intro events ranked as the largest virtual events in the history of the alternative investment industry. In addition, over 32,000 professionals subscribe to their Hedge Fund Industry Insight Newsletter.
Philanthropy: A percent of profits to be donated to charities that benefit at-risk youth. To date, GAINING THE EDGE LLC and Agecroft Partners have donated over $3 million dollars to these organizations.
Act now: Bonus gifts valued at $3,478 only available to registered managers of the 2024 GAINING THE EDGE conference.
Secure your spot here: GAINING THE EDGE Registration for managers..
Investors register here: https://gainingtheedge.wufoo.com/forms/z5fxojr18lq3k2/
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| Carry-Neutral Tail Risk Hedging: The Ambrus Group's revolutionary approach to protecting your portfolio |
In an exclusive interview with Opalesque TV, the founding partners of The Ambrus Group unveil a groundbreaking strategy that is redefining tail risk hedging. Unlike traditional approaches that bleed investor capital during normal market conditions, Ambrus has developed an innovative, carry-neutral m...
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| Technical Research Briefing |
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S&P FUTURES (@ES) – Daily
Currently: Long Looking to: Sell @ 4,118.75
As of 3/21/21 @ 7:58pm EST: 3,896
LAST WEEK: We suggested buying dips to 3,875 with stops on a close below 3,840 and with a target for selling longs / getting short at 4,118.75.
UPDATE: S&P futures had a terrible day Thursday and limped into the weekend. Right now, we put possible short-term ceilings at 3,918 or 3,950. If 3,918 holds as short-term resistance, we will look for a dip in the ES futures to 3,818 – 3,820. If 3,950 is tested and holds as resistance instead, we will look for a dip to 3,848 – 3,850 to follow. After this bounce and subsequent dip, we will be buying S&P futures aggressively (unless evidence presents itself that forces us to change our opinion) near one of those support levels.
We would look to buy dips to either 3,849 or 3,818.50 with stops honored on a close below 3,847 and 3,815, respectively. The upside target for either entry will be 4,119. NO SHORTING RIGHT NOW!
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