News > Financial Services

The most consistent performing hedge funds over the past five years
Hedge Funds
<p>Preqin issues league tables of funds that have consistently generated higher returns and lower volatility than their peers.</p> <p>Drawing on data compiled for the 2015 Preqin Alternative Assets Performance Monitor, Preqin has created league tables of Hedge Funds that have most consistently delivered strong, stable performance. The league tables do not seek in any way to endorse these funds, but rather to illustrate those that have performed the most consistently over the period June 2010 – June 2015. Seven top-level strategies are represented – Equity, Macro, Event Driven, Credit, Relative Value, Multi-Strategy, and CTA – with all of the top 10 equity strategies funds scoring over 90 out of 100 across all metrics.</p> <p>Methodology:<br /> From its Hedge Fund Analyst database of over 12,000 hedge funds, Preqin ranked the 1,358 qualifying funds (those with a full performance record of at least five years) using a percentile rank methodology over each of the following metrics: annualized return, volatility, Sharpe ratio and Sortino ratio. The score of each fund was then derived through an equally weighted average of the four percentile values, and used to determine the fund’s Consistency Rating. Where a Sortino ratio could not be calculated (due to the fund not generating a negative return in the sample period) the fund was given a percentile score of 100 for its Sortino ratio metric.</p> <p>Most Consistent Performing Hedge Funds:</p> <p> Equity Strategies – All of the top 10 consistent performing equity strategies funds scored in the 90th percentile for each metric. The highest score was for the Peregrine High Growth Fund, with a Consistency Rating of 95.5. Peregrine Capital and 36ONE Asset Management each had two funds in the top five.<br /> Macro Strategies – The top macro strategies Consistency Rating was 96.7 for the BNY Mellon ARX Extra FIM fund. ARX Investimentos and Verde Asset Management had three and four funds respectively in the top ten.<br /> Event Driven Strategies – The top ranked event driven strategies fund was Altum Credit Fund, run by Altum Capital Management, which scored 88.0.<br /> Credit Strategies – Capitania Multi Credito Privado FIC FIM, with a Consistency Rating of 91.7, was ranked leading credit strategies fund. III Capital Management had two funds in the top ten.<br /> Relative Value Strategies – The Peregrine Capital Pure Hedge Fund scored 93.5. III Capital Management also had a further two of the top ten funds in this strategy.<br /> Multi-Strategy – The TRZ Funds Global Arbitrage Fund had the top Consistency Rating of 95.7. Six of the top ten scoring multi-strategy funds are based in Brazil.<br /> CTAs – The top score for CTAs, and the highest Consistency Rating of any top-level strategy, was for the Global Sigma Plus fund, run by the Global Sigma Group, which scored 98.5.</p>
A day in the life of an asset management consultant: Greek crisis and ‘healthy’ stress levels
Asset Management
<p>What is it like to work a London office of one of the world’s biggest advisory firms? A FinBuzz guest writer shares her daily working routine. </p> <p>It may look like I live in a fairy tale, but I worked hard to get it and don’t plan on slowing down any time soon. I have a degree from an American business school and moved to London right after studies. Recently I changed jobs and am very content.</p> <p>Three months ago I started a position with a financial consultancy that works with corporate and central banks in Europe, as well as insurance companies.</p> <p>8:45 AM</p> <p>I wake up, brush my teeth, and leave the house. My commute to work only takes one minute. Literally. I live and work in the West End and I am very lucky that my office of 40 employees recently moved to the area. When I knew that the office was moving, I looked for a place in the same area.</p> <p>9:00 AM</p> <p>When I get to my desk, I start the day by making myself a cup of coffee and reading all the news in FT, Economist and other major publications, looking not only for general developments, but for news in my area of expertise as well. We work a lot with EU banks, including lots of Greek projects. So every single day I read articles on the front page that I later use in my work. It is an interesting feeling, because you have to adapt and change your strategies every day, depending on how things develop in Greece. I feel that what I am doing at the moment is at the epicentre of the financial world.</p> <p>9:30 AM</p> <p>We start gathering for a team meeting. We work in teams that are constantly changing, depending on projects. The minimum time you spend on one team is three months, and the maximum – one year.</p> <p>Most of people in the office are from Europe, especially France and Greece. But we also have Italians, Germans, Chinese, Indians… everyone.</p> <p>I like working in an international team like this, because we have local people who know culture and the language of Greece in our case, but we also have contributions from the other members, who have very fresh and diverse views.</p> <p>All of us are global citizens: people from Greece who work here are not very typical Greeks, as well as people from Italy are not very typical Italians. They are more global Greeks, global Italians, etc. It seems as if we are all on the same wavelength, but each of us also contributes his/her own perks.</p> <p>So we discuss plans for the day as a team. Usually we will have a conference call with a client and decide who prepares what.</p> <p>I worked in a classic investment bank before. The business model there is traditional and you are not expected to develop quickly. All the projects that we do here are new and unique, no one has worked on anything identical before, so no one knows how exactly we approach it; there is no procedure. That’s why we feel like we are all in the same boat: senior members and people like me, who joined recently, are all welcome to put something on the table, to join the discussion, to share views and ideas. This is definitely my favourite part of everything I do workwise – discussing ideas with colleagues, brainstorming, finding a new way to do things.</p> <p>11:00 AM</p> <p>Conference call with a client. Last week I went on a business trip to Greece. I love meeting clients, because it effective to meet personally to discuss and agree on an action plan. So the conference ca</p>
NexAmerica People Moves: Goldman loses, replaces insurance lead; JPMorgan hires portfolio manager
Asset Management
<p>Hartford steals Goldman insurance lead. Hartford Investment Management Company, subsidiary of the Hartford insurance company, has hired John Melvin as head of portfolio management, effective September 14. Melvin most recently worked at Goldman Sachs Asset Management as CIO for the global insurance asset management business. He also worked as head of insurance fixed income in the Americas for Deutsche Insurance Asset Management.</p> <p>Goldman hires for insurance team. GSAM has hired Matthew Armas as global head of insurance fixed income for the firm in New York, replacing Melvin. Amas has worked as a senior portfolio manager for GSAM in London for more than 10 years. Insurance Asset Risk</p> <p>JPMorgan appoints emerging markets portfolio manager. Diana Amoa has joined JPMorgan Asset Management as a senior portfolio manager on the local currency emerging markets debt team based in London. Amoa most recently worked at UBS AG. Celina Merrill has also joined the firm as senior credit analyst in the corporate debt emerging markets team. The New York-based Merrill previously worked for Van Eck Global. Reuters</p> <p>Deutsche names new institutional head for MENA. Albert Trinkl has been named head of institutional asset management in MENA for Deutsche Asset &amp; Wealth Management. He will be based in Dubai. Trinkl most recently worked for Lingohr &amp; Parther Asset Management as head of institutional clients in the Middle East, Africa &amp; Australia. CPI Financial </p> <p>Woodford booms with six new hires. Woodford Investment Management has hired Lucinda Crabtree, Richard Lockington, and Harry Raikes as investment analysts. Mohammad Sohail, James Coats, and Dominic Eccles have also joined the firm on the operations team. Woodford was established in 2014 by Neil Woodford, formerly of Invesco Perpetual. Yahoo Finance<br /> Photo: ©<br /> &nbsp;</p>
StanChart, Manulife team up to dominate HK’s pension fund arena
Asset Management
<p>HSBC may be the undisputed champ in Hong Kong’s pension fund arena, but perennial runner-up Manulife has been busy looking for ways to bridge the gap – and fast.</p> <p>According to Asia Asset Management, Manulife has just entered a 15-year partnership with Standard Chartered Bank – Hong Kong’s 12th largest Mandatory Provident Fund (MPF) provider – to exclusively distribute the latter’s MPF products in the territory.</p> <p>The deal reportedly cost Manulife 400 million big ones, but in return, it gets to boost its 18.8% share of the region’s MPF business closer to HSBC’s 23%. Not to mention a large chunk of the nation’s Occupation Retirement Schemes Ordinance (ORSO) traffic and a big piece of StanChart’s investment management ops as well.</p> <p>Regarding the partnership, Manulife Asia CEO Roy Gori had this to say:<br /> “This partnership between two of Hong Kong’s top financial services companies will enable us to increase value to customers and deliver the benefits of economies of scale.</p> <p>The MPF industry in Hong Kong is experiencing continued consolidation, and Manulife is seen as a partner of choice. Manulife is a major player in the pension business in Hong Kong, Canada, the United States, and Indonesia. This deal complements Manulife’s recent acquisitions in Canada and the United States and accelerates our strategy to grow our Asia and wealth management businesses.”<br /> Photo: Kirill Ξ/Κ Voloshin</p>
Howard Marks still sees opportunity in China
Hedge Funds
<p>While most of his hedge fund brethren rush for the exit at the mere mention of China, Oaktree Capital’s Howard Marks says there’s still a lot of good buys in the region. And not only that, he sees a “bright future” ahead of it as well.</p> <p>Granted, Marks is known as a distressed asset wunderkind, so his view may differ than the Bill Ackman’s and the Ray Dalio’s of the world, but surprisingly, the SCMP reports that most of his positions in the region aren't in his bread and butter non-performing loans or bankrupt companies, rather, they're mostly in listed Chinese equities.<br /> “We have found equities in China that have been worth holding…We strongly believe in the A-share market…We have a substantial position in Chinese equities today and we are very comfortable.”<br /> He also said that there were a lot of good buys when the SHCOMP hit the 3,100 level, especially in contrast to its earlier high of 5,200 points. He didn’t share which stocks he was talking about though, which would’ve been great to hear given that the index is still below 3,200.</p> <p>Anyway, despite all that A-share talk, the man behind the world’s largest distressed-asset fund still has an eye on the region’s various bad debts, and is hoping to ramp up his holdings of them if he can:<br /> “Oaktree made its first investment in non-performing loans in May and would continue, he said.</p> <p>‘NPL investment will be a good idea if banks are willing to sell them at reasonable prices, which we believe to provide good return,’ he said.”<br /> With the market going the way it is, he just might have a lot of those pretty soon.<br /> Photo: Ade Russell</p>
People Moves: Aberdeen hires senior manager in Korea; Monument hires three in HK
Asset Management
<p>Aberdeen adds senior manager in Seoul. Dong-Ki Kim, Russell Investments Korea’s former business development associate director, has joined Aberdeen Asset Management as senior manager for its Seoul office. This will be a new position for the firm as it looks to expand its operations within Korea. Prior to his tenure at Russell Investments, Kim spent several years at Hanwha Life Insurance, where he managed investments from mezzanine debt to properties to hedge funds. He will be reporting to Alex Kim, the asset manager's chief representative in the region. Asia Asset Management </p> <p>Monument Group makes three HK hires. Albert Jun, a former VP and Fund Placement Division senior at NH Investment &amp; Securities Korea, will be joining the Monument Group in Hong Kong as director. He will be in charge of marketing, with a focus on Korean as well as other Asian investors. Also joining the firm are Sabrina Meng, a four-year veteran of Emerald Hill Capital Partners, who’ll be a senior associate within Monument’s analytics team, and Kris Ho, who’ll be handling the firm’s various client service and office management needs as its operations manager. She joins the fund placement agent from MVision, where she held a similar role the past five years. FINalternatives</p> <p>For Capital Markets moves, click here.<br /> Photo: Luke Ma</p>
GE looks to sell asset management arm
Asset Management
<p>General Electric is looking at a potential sale of its asset management arm, reports the Wall Street Journal.</p> <p>GE has expressed interest in cutting extraneous units to focus on its core industrial businesses. The asset management arm has $115 billion in assets from GE's U.S. benefits plans, as well as third party institutional investors. Proceeds of a potential sale will go to GE Pension Trust. GE Asset Management would still remain plan sponsor and fiduciary for the company's plan benefits following a sale.</p> <p>GE Asset Management is separate from the financial services unit GE Capital, but GE is moving to shrink that business as well.<br /> Photo: Diana Parkhouse<br /> &nbsp;</p>
Will VC valuations come down to earth?
Venture Capital
<p>Is the U.S. VC market in bubble territory? There’s no shortage of commentary on the subject, but the conversation was more theoretical before the stock market dipped in late August. For startups and their investors, high valuations feel more uncertain today than they did 12, six, even three months ago. Most of the data in this report is through the first half of 2015, before the stock market lost its footing. As such, they could represent a high point in round sizes and valuations across any—or all—stages. Even if stock prices recover over the next few months, it wouldn’t be surprising to see valuations come down to earth as the year progresses.</p> <p>Through June, however, valuations kept climbing. Seed valuations hit a median $6.1 million, a record. Markups at the seed stage have pushed up Series A and B valuations to $15.1 million and $41.4 million, respectively, up from already high medians of $12.6 million and $35.3 million in 2014. Later stage trajectories were even steeper, and arguably more vulnerable to the latest downturn in public markets. At a median $184 million, valuations at Series D and later stages are the most likely to get hit in the coming quarters. So-called “unicorns”, startups valued at $1 billion or higher, are set to get the most scrutiny. As we detail on page 13, the number of U.S.-based unicorns has almost doubled this year. Another 31 startups joined the club through August, on top of 32 new unicorns minted last year. It’s taken less time for this year’s unicorns to reach billion-dollar status; the time between their prior rounds and unicorn rounds fell to a median 1.1 years, and median valuation step-ups from those prior rounds fell to 2.1x compared to 10x in 2012.</p> <p>One reason for the rise in unicorns (and high valuations in general) has been a steady migration of mutual fund investors into the asset class. We dove into that trend on page 15 and found some interesting results. Late stage rounds with mutual fund participation skyrocketed in 2014 (no surprise there) and stayed high through 1H 2015. Starting this year, however, mutual funds have crowded into earlier stages, as well, causing the median early stage valuation (Series B and prior) to jump to $56 million. The 2014 median was a much more modest $13.6 million, about half of what it was in 2007.</p> <p>If U.S. VC activity is in for a correction, it’s going out on a high note. $21.8 billion worth of investments were inked in 2Q, yet another post-crisis record. The past five quarters have either nearly hit or eclipsed the $15 billion mark, compared to zero prior to 2Q 2014. At the same time, the number of rounds has steadily waned since the 2,200 seen in 1Q 2014. This past quarter’s total fell to 1,767, a 20% drop by count. The sharpest slowdown continues to be in later stage activity, tallying only 338 rounds in the second quarter versus 548 in 2Q 2014. Depending on investor sentiment, we might see further slowdown at the Series C and D stages, or at least a leveling off if VC firms are pressured to finance future pre-IPO rounds.</p>
Legg Mason cracks into growing ETF field
Asset Management
<p>Legg Mason isn't one to be left out. The Baltimore-based asset manager is breaking into ETFs.</p> <p>The $696 billion, multi-boutique Legg Mason requested regulator approval for its first four ETFs last week, reports InvestmentNews. Legg Mason CEO Joseph Sullivan has pushed to revitalize his firm after it was decimated during  and after the financial crisis. The ever-popular ETFs offer Legg the growth Sullivan is so fervently seeking.</p> <p>The four new ETFs include: developed ex-U.S. diversified core ETF, emerging markets diversified core ETF, the U.S. diversified core ETF, and the low volatility high dividend ETF. Legg affiliate QS Investors has developed the proprietary technology for the funds.</p> <p>U.S. listed ETFs brought in $2.4 billion in net new assets last month, according to ETFGI. The funds are raking in cash, posting net inflows of $219.7 billion globally during the first eight months of 2015, a 16% increase from the same period during 2014.<br /> Photo: Liam Quinn</p>
Boston HF does away with 2 and 20
Hedge Funds
<p>We all know how hedge fund fees work. We give them an x amount of money, and then they charge us around 2% off that as a management fee. They then try to make a y amount of money using our x, and then charge us a 20% performance fee from the y that they made. What if they lose money? Well, there’s usually a clawback clause for that – but they still get to keep the 2%.</p> <p>It’s been that way for decades, millennia even, given that Alfred Winslow Jones copped the formula off Phoenician sailors. Two ex-Harvard endowment people however, seem to be trying to change that:<br /> “A pair of former Harvard University endowment executives have built the world’s largest stock-focused hedge fund with the opposite approach. Robert Atchinson and Phillip Gross let investors in their $28 billion Adage Capital Management LP keep almost all of their trading gains—and promise refunds if the fund’s performance falters.”<br /> According to the Wall Street Journal, Adage Capital charges just 0.5% annually plus 20% off gains in excess of the S&amp;P 500’s return. While that doesn’t look particularly anomalous at first glance, here’s the kicker: they keep half of their performance fee locked away for the rest of the year, and it gets awarded to them only if they beat the S&amp;P in the following year. What happens if they fall short? Well, it goes back to investors as a refund.</p> <p>The break from “tradition” seems to have brought Adage its fair share of fans; the firm saw its assets under management balloon from nearly $4 billion in 2001 to $28 billion in 2015, and ex-Harvard endowment head Jack Meyer had nothing but good things to say about their fee structure:<br /> “That’s how I think the world should look…I’m surprised it has taken the world so long to get there.”<br /> It has cost them a King’s ransom in fees though. Last year, when the fund was up 18.4%, Adage divvied up just $400 million in fees among its 26-strong staff, a massive sum by any measure, but still much less than an over $1 billion take they would have claimed had they done the usual 2 and 20 structure. No one seems to be complaining however, as the firm’s crew seems to be more interested in winning that getting on the Forbes list.</p> <p>Also impressive is the fact that they’ve only paid refunds on two occasions: in 2002 and in 2008, when the fund trailed the S&amp;P by 0.18% and 0.75% respectively.</p> <p>It also raises the question though; if their fee structure catches on – which I think it will – what does that mean for absolute return? I thought that was the whole point of hedge funds in the first place – to not be tied down by some benchmark and to just focus on making money, bull or bear market.</p> <p>Its different strokes I guess, but still, I'm curious what you have to say.<br /> Photo: GotCredit</p>