Displaying items by tag: hedge funds

While many hedge funds performed poorly last year, there was one strategy that had a big year, macro. According to Investopedia, a global macro hedge fund strategy is defined as a strategy that bases its holdings primarily on the overall economic and political views of various countries or their macroeconomic principles. Macro strategies performed well in last year’s volatile market, leading to strong gains for several funds. For instance, AQR Capital Management’s longest-running strategy had its best year since its inception in 1998, with the fund posting a gain of 43.5% net of fees. In fact, at least a dozen AQR funds saw record performance. AQR’s Absolute Return strategy soared 55% before fees, while the Style Premia Alternative Fund jumped 30.6%. AQR’s global macro strategy also had its best year, with a 42% gain. AGR wasn’t alone in having a strong year. Scott Bessent, who is a former Soros Fund Management investing chief, posted a 30% gain in his macro hedge fund and Chris Rokos’s $15.5 billion Macro Fund surged 51% in 2022, his best-ever gain. However, there was one notable firm that didn't perform well, Bridgewater Associates. Ray Dalio’s firm gave up much of its gains after losing money in October and November.

Finsum: Several macro hedge funds performed well last year, with at least twelve AQR funds achieving record performance.

Last year was a terrible year for the markets, even for many hedge funds. According to investment data firm Preqin, hedge fund returns were down 6.5% in 2022, the largest drop since the 13% decline in 2008 during the financial crisis. That’s why global hedge fund managers are preparing for persistent inflation by seeking exposure to commodities and bonds that perform well in inflationary environments. A majority of 10 global asset and hedge fund managers that were surveyed by Reuters said commodities are undervalued and should thrive as global inflation stays elevated this year. In addition, they are also seeking inflation-linked bonds to shield against price rises, and exposure to certain corporate credit, as higher rates restore differentiation in company bond spreads. For instance, London-based hedge fund manager, Crispin Odey is betting inflation will remain high. He told Reuters that "Commodities will start to rise again. They've sold off very heavily and are below operating costs in many instances." Danielle Pizzo, chief strategy officer at Schonfeld Strategic Advisors, told Reuters that her firm “Aims to focus more on investment grade and high-yield bonds this year as well as commodities.”

Finsum:Hedge funds, which saw the largest drop in performance last year since the financial crisis, are concerned about persistent inflation and are seeking exposure to commodities and select bonds.

While institutional investors are allocating more to alternative investments, recent analysis has shown that the asset class does not help boost returns. Public Pension Investment Update: Have Alternatives Helped or Hurt? was run by the Center for Retirement Research at Boston College (CRR). It found that the investment performance of public pension funds from 2001 to 2022 averaged only 5.9%, despite increasingly larger allocations to private equity, hedge funds, real estate, and commodities. CCR looked at the returns for broad indices of alternatives and traditional equities before, during, and after the Financial Crisis. It found that alternatives substantially outperformed traditional equities from 2001 to 2007; and other than real estate, alternatives lost less than equities during the financial crisis. However, Jean-Pierre Aubry, associate director of state and local research at CRR and the brief’s author wrote that “Since the crisis, the performance of alternatives has been more mixed, with private equity and real estate rebounding somewhat, while hedge funds and commodities continue to provide lower returns.”

Finsum: A recent brief found that alternatives have not helped public pension performance due to mixed performance since the financial crisis. 

F.L.Putnam Investment Management Company recently announced the launch of a new platform that will allow advisors to execute direct investments in alternatives. The platform is designed for registered investment advisors and features proprietary investment manager research on a curated list of hedge funds, private equity, private real estate, private credit, and venture capital from Atrato, F.L.Putnam's consulting practice. Advisors will be able to access the research with +SUBSCRIBE, an alternative investment order management system for non-traditional product transactions. Through +SUBSCRIBE, RIAs will be able to review Atrato's manager due diligence, the manager's data room of fund materials, and execute transactions into a tailored menu of alternative investments. Tom Manning, CEO of F.L.Putnam had this to say about the launch, "As RIAs grow and scale, the need for sophisticated investment advice, tools, and capabilities increases exponentially. With our platform, advisors will have access to a fully customizable, state-of-the-art solution that allows them to research and confidently allocate to alternative investments on behalf of their clients."

Finsum:RIAs can now access manager research and execute direct investments in alternative assets through F.L.Putnam’s new investment platform.

CAIS recently announced that Mariner Wealth Advisors selected the firm to provide a customized alternative investment platform solution for the firm’s rapidly growing network of advisors. CAIS is a leading alternative investment platform for independent financial advisors. It provides advisors with a broad selection of alternative investment strategies, including hedge funds, private equity, and more. Mariner Wealth Advisors is a privately held advisory firm with over $60 billion in assets under advisement. CAIS will offer Mariner’s advisors access to a broad menu of alternative investment funds and products, educational resources, end-to-end digitized transaction processing, and third-party reporting integrations. Mariner’s advisors will receive access to a curated menu of diversified alternative investment products across asset classes and qualification levels. CAIS will also assist in the launch of proprietary funds and multi-manager funds managed by Mariner Wealth Advisors and enable the firm to add its own sourced third-party funds to the platform for centralized monitoring, transacting, and reporting.

Finsum:Alternative investment platform CAIS was recently selected by Mariner Wealth Advisors to provide its advisors with a broad selection of alternative investment strategies.