Displaying items by tag: hedge funds

Hedge funds are one of the leading experts in volatility management, which is exactly why their latest moves might surprise people as they move into crypto and other digital assets. According to a report from PwC the number of hedge funds investing in digital assets is up to a third, and 11% higher than the previous year. It’s hedge funds' specialty and their namesake that they can utilize similar tactics in traditional markets in digital ones to mitigate risk in their digital exposure through derivatives trading. Specifically short positions are extremely useful in the highly volatile crypto markets. Over three-fifths of crypto specializing hedge funds are using these hedging strategies in their portfolio, and this has allowed them to edge out over traditional bitcoin returns. Another surprising finding in the report is that a vast majority of crypto hedge funds have high-net-worth clients and family office investors.

Finsum: Crypto hedging strategies might just be the key to unlocking the full power o digital assets.

The mainstream financial world is all over the place when it comes to crypto however, Bridgewater Associates is planning on increasing their exposure to digital assets. The firm has made it clear they have some small investments in crypto, Dalio himself advises investors to allocate a small portion of their portfolios into crypto. It will most likely only be a small portion of their $150 billion portfolio but it is in phase 1 of 2. Marshall Wace, Point72 and Brevan Howard have all made crypto investments in the last year.

Finsum: Biden’s most recent crypto executive order legitimizes crypto in many investors eyes because it brings it into the traditional realm.

The hedge fund universe is getting a facelift. It appears the old days of strategic macro or a single quant visionary are a distant memory. Most funds are pouring money into swathes of teams throwing new money at multistrategy. Moreover, it appears clients are increasingly okay with higher fees in exchange for access to a wider range of investments particularly those in more unconventional areas: currency trading, precious metals, and private equity. Funds like Citadel have seen their multi-strategy departments multiply, and it's one of the fastest and near only ways for hedge funds to grow. Multi-strategy has grown 50 percentage points faster than the rest of the industry since 2014Q1.

FINSUM: Diversity is the name of the game and it appears investors are turning to hedge funds to channel funds into a wider net than ever before.

The Biden Admin hasn’t been shy about wanting to tighten the regulatory belt on Wallstreet and the financial world, and another step is being taken. The SEC is considering changing the disclosure rules when it comes to acquisitions of public companies by hedge funds. Currently, HFs have a 10-day buying period to which the public doesn’t have to be made aware of a purchase. Chairman Gensler is making it clear they are eying tighter rules when it comes to disclosure. The current rules are over 50 years old and were meant to bring more information symmetry between the public and private investors. The SEC is looking to increase transparency and give the public more time to adjust.

FINSUM: This will definitely give the public an advantage, but we’ll see how the SEC votes when push comes to shove.

Bridgewater is the world’s largest hedge fund and their current CEO stepped down in a recent memo. Former CEO David McCormick is planning on running for a US Senate seat. Stepping into the leadership role will be Nir Bar Dea and Mark Bertolini in a shared leadership role. Bridgewater has had three different CEOs since Ray Dalio stepped down in his capacity as chief executive. Bridgewater gained a cult-like following for its radical transparency in the financial world where individuals rate and score their co-workers. Bar Dea is a relatively young executive in the hedge fund industry, but the pairing is seen as complementary in their shared CEO role. Bridgewater manages over $150 billion in pensions.

FINSUM: Hedge funds made a huge splash in 2021 by avoiding a lot of public turmoil and investing privately, we’ll see if that trend and those returns continue in 2022.