Market Commentary

Anton Murray - Market Commentary

Hedge funds must evolve amid tech disruption

Posted by Anton Murray Consulting on . Posted in News, Market Commentary, Funds Management News, Funds Management MC

InvestorDaily

Hedge fund managers will need to update their business model in order to compete with new strategies offered by disruptive and innovative technology providers, writes Quandl’s Abraham Thomas. 

Marc Andreessen famously said “software is eating the world”, and nowhere is this truer than in the hedge fund industry.

Niche strategies are being replaced

A decade ago, my colleague Tammer Kamel was a portfolio manager at a large hedge fund company. In this role, Tammer got to inspect and dissect the strategies employed by the world’s leading hedge funds at close range – the perfect job for a curious quant.

One common strategy he investigated at the time was called factoring, which capitalised on the large windows of firms’ accounts receivable. Hedge funds would advance the creditor 90 per cent of the receivable instantly, wait three months for the full 100 per cent payment from the debtor and pocket the 10 per cent spread. It’s a low-risk, high-return way to make profits, and at the time dozens of hedge funds did it, but that’s no longer a common strategy and technology is one of the main reasons this is happening.

The rest of this article can be found at investordaily.com.au.

Hedge funds outperform equities in 2016

Posted by Anton Murray Consulting on . Posted in News, Market Commentary, Funds Management News, Funds Management MC

InvestorDaily

Hedge funds outperformed equities and bonds on a risk-adjusted basis according to a new report from the Alternative Investment Management Association. Using data provided by alternative asset intelligence company Preqin, the association found hedge funds delivered a Sharpe ratio of 1.45 for 2016, placing them ahead of the S&P 500’s 1.1 and the MSCI World Index’ 0.68. “The analysis, based on a database of more than 3,000 funds, found that hedge funds also outperformed stocks and bonds on a risk-adjusted basis over three years and five years,” the Alternative Investment Management Association (AIMA) said.

AIMA said that hedge funds returned 7.4 per cent on an absolute basis in 2016, based on the Preqin All Strategies Hedge Fund Index, with the net gain in asset value estimated at $120 billion. “As markets responded to the unexpected events of 2016, hedge funds were able to show their worth and generate their best returns for three years,” said Preqin head of hedge funds Amy Bensted. “Investors, however, are looking for hedge funds to produce more than high returns; as this study shows, hedge funds have delivered solid risk-adjusted returns over the short and longer terms.”

The rest of this article can be found at investordaily.com.au.

Volatility drives decline in equities popularity

Posted by Anton Murray Consulting on . Posted in News, Investment Banking News, Market Commentary, Funds Management News, Funds Management MC, Investment Banking MC

InvestorDaily

Investor confidence in equities fell significantly in the first half of 2016, suggesting investor sensitivity to volatility, according to research from Colonial First State Global Asset Management. The company’s Equities Preference Index (EPI) declined by a total of 29 per cent in the first six months of the year Colonial First State Global Asset Management (CFSGAM) said, compared with only 3 per cent and 9 per cent declines respectively in the second and first halves of 2015. “The decline was relatively evenly spread from January to May, averaging about 5 per cent per month, suggesting investors took some time in reacting to the market weakness and volatility early in the half,” the company said.

“Surprisingly, the decline in June ahead of the Brexit vote was smaller at just 1 per cent, however this may be because investors already reduced their positions ahead of the vote.” CFSGAM said the sizeable decline in preference for equities was significant due to the “already low starting point” from which it fell. The company’s research also highlighted “a significant difference in equity preference by age”, with younger investors (aged under 35) increasing their preference for the asset class by 3 per cent, where those between 50 and 59 years of age decreased theirs by 39 per cent.

The rest of this article can be found at investordaily.com.au.

‘People on the ground’ vital for Asia success

Posted by Anton Murray Consulting on . Posted in News, Market Commentary, Funds Management News, Funds Management MC

Tim Stewart, InvestorDaily

If Australian fund managers want to be taken seriously in Asia they must establish a distribution presence in the region, says Perpetual. Despite the progress being made on the Asia Region Funds Passport and accompanying regulatory/tax settings, more needs to be done to promote the export of Australian financial services to Asia. Perpetual and the Financial Services Council released their fifth Australian Investment Managers Cross-Border Flows Report yesterday.

The report found that between 1 January 2010 and 31 December 2015, investment by foreign investors into Australia through Australian-domiciled investment managers more than doubled from $20.3 billion to $46 billion, growing at a compound rate of 17.8 per cent per annum. Speaking at the launch of the report, Perpetual general manager for managed funds services Andrew Cannane warned fund managers not to discount distribution in their expansion plans. “You can have all of the returns in the world, but you need to be seeing both the gatekeepers and the end investors [in Asian financial hubs],” Mr Cannane said.

The rest of this article can be found at investordaily.com.au.

Barriers remain for women fund managers

Posted by Anton Murray Consulting on . Posted in Insights, News, Market Commentary, Funds Management News, Funds Management MC

Tim Stewart, InvestorDaily

The funds management industry has made no progress on gender diversity in the eight years since the global financial crisis, according to a new study by Morningstar. The Morningstar report, titled Fund Managers by Gender, considered 26,340 managers of funds across 56 countries and found that 20 per cent were women. Morningstar found the rate of women fund managers is lower than the rate of women in other professions with similar education requirements, such as doctors and lawyers.

Countries with large financial centres tend to have lower proportions of women fund managers than smaller markets, found the report. In addition, larger wealth management firms are more likely to name women as fund managers than smaller firms. Women are more likely to run funds in areas of industry growth, found the research – such as passive, funds-of-funds and team-managed funds.

The rest of this article can be found at investordaily.com.au.