Paragon Alpha - Hedge Fund Talent Business’ Post

Many hedge funds were caught off guard by 2023's surge in bond yields and the performance of most of them lagged stock market indexes. Hedge funds in 2023 averaged a 5.7% return in the year through November. By contrast, the S&P 500 index rose over 20% last year. But a handful of hedge funds were able to navigate a choppy year and achieved double-digit gains. Among them, SoMa Equity Partners beat the S&P 500 stock index and the Nasdaq Composite (.IXIC) with a whopping 62% result, according to research by Reuters. For long/short equity strategy, Anson Funds' Investments Master fund posted a strong rise for the year matching that of S&P. The $299 million Mulvaney Capital Management Limited posted a 51.22% return, said a source to Reuters. While large multi-strategy firms including Millennium Management and Citadel's Wellington Fund surged passed bond markets with 10% and 15.3% returns, reported by Bloomberg on Wednesday. What does this tell us? This highlights, more than anything, the importance of product curation in the investment decision making process. It also demonstrates the value of having a skilled managers behind the fund that can make the right market calls in a very uncertain market environment. Although hedge funds, as an asset class, underperformed the equity market in 2023, investors that have gotten into the right funds managed by skilled managers were able to far outperform the indexes. Are you a capital allocator looking for skilled managers to invest in 2024? Register for a FundKernel | InvestTech | WealthTech account at https://lnkd.in/g4J_iQaC. #fintech #wealthtech #investTech #fundTech #assetmanagement #wealthmanagement #investmentmanagement #portfoliomanagement #alternativeinvestments #hedgefunds #liquidalternatives #privatebanking #privatewealth #multistrategies #equitylongshort #privatecredit #fundkernel

🚨 Hedge Fund Face-Off: Fee Cuts vs. Fee Hikes! 🚨 𝗕𝗿𝗲𝘃𝗮𝗻 𝗛𝗼𝘄𝗮𝗿𝗱 and 𝗖𝗮𝗽𝗶𝘁𝗮𝗹 𝗙𝘂𝗻𝗱 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 (𝗖𝗙𝗠) are taking radically different paths in the competitive world of hedge funds. One is cutting fees to manage costs, while the other is hiking them to stay ahead in the quant arms race. While the two are not direct competitors given their contrasting trading styles, I find it interesting the fees are going in different directions nonetheless. Brevan Howard Asset Management is slashing fees for its Alpha Strategies fund to manage high tech and talent costs. The management fee has been cut to 0% until the new year, then to 0.5% for one quarter, before reverting to 1%. Despite these adjustments, the fund, with $12.2 billion under management, faced a 3.6% loss this year through May. 📉 Capital Fund Management (CFM), on the other hand, is increasing its performance fee to 30% for its flagship Stratus fund, which has gained 8.7% this year. CFM's $11.7 billion Stratus fund excels in the quant arms race, boasting a robust 18.3% gain in 2022. 📈💹 While Brevan Howard is restructuring to reduce expenses, CFM is capitalising on market volatility and the demand for cutting-edge quant strategies. How will this play out? Time will tell. ⏳ Check out the CFM article here: https://bloom.bg/3SmtdGh And the Brevan article here: https://bloom.bg/3WxMoQ1 #hedgefunds #quantitativeresearch #portfoliomanagement #financialmarkets #investmentstrategy #fintech

As of the end of August, hedge funds' year-to-date (YTD) performance has been "strong", with the S&P 500 benchmark up +14%. However, I expect the first 15 days of September may be already shifting the landscape, with the S&P catching up to the top performers! Here are some hedge fund YTD performances: Marshall Wace TOPS: 18.5% D.E. Shaw Oculus Fund: 15.7% Citadel Tactical Fund: 14.5% Schonfeld Strategic Partners: 11.8% Schonfeld Equity Fund: 11.7% Walleye: 11.4% Point72: 10% Two Sigma Absolute: 9.9% Citadel Wellington: 9.9% Citadel Equities: 9.3% D.E. Shaw Composite: 8.5% Millennium: 8.1% Winton Fund: 8.1% Two Sigma Spectrum: 7.2% Balyasny: 6% Jain Global: -1.2% Image credits for @alerts (instagram). ----------------------- → Join 3000+ Asset Pricing & Quant Finance enthusiasts who receive top new research ideas weekly in their email: bit.ly/3suSS6e -----------------------

📣 Emerging Fee Structures Challenge Traditional '2 and 20' Model in Hedge Fund Industry In a move that defies the broader industry trend towards cost reduction, some key players in the hedge fund space are introducing new types of fees. The traditional '2 and 20' fee structure is undergoing a transformation, with the introduction of 'pass-through' and 'compensation' fees to make up for revenue shortfalls. 🔑 Key Point: The "pass-through" model is enabling multi-strategy funds to hire aggressively. Interestingly, this can sometimes elevate the effective management fee to as high as 6/7%, a significant departure from the conventional 2%. 📈 These new fees are designed to cover operational expenses, including the crucial task of hiring and retaining top-tier talent. 📉 The backdrop to these changes is a challenging environment for hedge funds, marked by a decline in new launches and average returns that lag behind broader market indices. 🤔 The introduction of these new fees is a double-edged sword. While they may help funds cover operational costs and retain talent, they also place an additional burden on investors, particularly when these fees are levied regardless of fund performance. 👀 Investors must scrutinise the value they receive in return for these additional fees. If the returns don't justify the higher costs, a shift in capital allocation could be on the horizon. With the top multi-strategy groups closed to any new outside capital, we've seen a rapid rise of multi-strategy competitors where this additional capital has gone. For more details, read the full article below. https://lnkd.in/dBfKxMBT #quanttrading #quant #portfoliomanagement #hedgefunds #quantitativeresearch #financialmarkets #quantitativefinance #feestructure #capitalallocation

📣 Emerging Fee Structures Challenge Traditional '2 and 20' Model in Hedge Fund Industry In a move that defies the broader industry trend towards cost reduction, some key players in the hedge fund space are introducing new types of fees. The traditional '2 and 20' fee structure is undergoing a transformation, with the introduction of 'pass-through' and 'compensation' fees to make up for revenue shortfalls. 🔑 Key Point: The "pass-through" model is enabling multi-strategy funds to hire aggressively. Interestingly, this can sometimes elevate the effective management fee to as high as 6/7%, a significant departure from the conventional 2%. 📈 These new fees are designed to cover operational expenses, including the crucial task of hiring and retaining top-tier talent. 📉 The backdrop to these changes is a challenging environment for hedge funds, marked by a decline in new launches and average returns that lag behind broader market indices. 🤔 The introduction of these new fees is a double-edged sword. While they may help funds cover operational costs and retain talent, they also place an additional burden on investors, particularly when these fees are levied regardless of fund performance. 👀 Investors must scrutinise the value they receive in return for these additional fees. If the returns don't justify the higher costs, a shift in capital allocation could be on the horizon. With the top multi-strategy groups closed to any new outside capital, we've seen a rapid rise of multi-strategy competitors where this additional capital has gone. For more details, read the full article below. https://lnkd.in/dBfKxMBT #quanttrading #quant #portfoliomanagement #hedgefunds #quantitativeresearch #financialmarkets #quantitativefinance #feestructure #capitalallocation

A recent Barclays Hedge Fund report 📊: 1️⃣ The #hedgefund industry has consistently outperformed the risk-free rate by 3-4% annually since 2000, regardless of market conditions. 📈 2️⃣ Investor sentiment appears positive for 2024, with approximately 85% of investors planning to allocate to hedge funds, compared to 80% in 2023. This marks an improvement in #investor confidence. ⬆ 3️⃣ Roark Stahler, US Head of Strategic Consulting adds "Expect an increase over 2023 in gross allocations to approx $340B" 💼 According to Radient AI 📈: ➡ Gross Asset Value Increase: The total gross asset value of all hedge funds, as reported in 2024 ADV filings has increased by ~20% compared to the previous year. ➡ Number of Hedge Funds: In 2024, the total number of hedge funds disclosed in the Form ADV filings increased to 3,980. This is a rise from the 3,806 hedge funds disclosed by the same firms in the previous year. Read the full report here: https://lnkd.in/gdWt-RZc #privatefunds

📣 Emerging Fee Structures Challenge Traditional '2 and 20' Model in Hedge Fund Industry In a move that defies the broader industry trend towards cost reduction, some key players in the hedge fund space are introducing new types of fees. The traditional '2 and 20' fee structure is undergoing a transformation, with the introduction of 'pass-through' and 'compensation' fees to make up for revenue shortfalls. 🔑 Key Point: The "pass-through" model is enabling multi-strategy funds to hire aggressively. Interestingly, this can sometimes elevate the effective management fee to as high as 6/7%, a significant departure from the conventional 2%. 📈 These new fees are designed to cover operational expenses, including the crucial task of hiring and retaining top-tier talent. 📉 The backdrop to these changes is a challenging environment for hedge funds, marked by a decline in new launches and average returns that lag behind broader market indices. 🤔 The introduction of these new fees is a double-edged sword. While they may help funds cover operational costs and retain talent, they also place an additional burden on investors, particularly when these fees are levied regardless of fund performance. 👀 Investors must scrutinise the value they receive in return for these additional fees. If the returns don't justify the higher costs, a shift in capital allocation could be on the horizon. With the top multi-strategy groups closed to any new outside capital, we've seen a rapid rise of multi-strategy competitors where this additional capital has gone. For more details, read the full article below. https://lnkd.in/d8aNbjMH #quanttrading #quant #portfoliomanagement #hedgefunds #quantitativeresearch #financialmarkets #quantitativefinance #feestructure #capitalallocation

Can / Should Institutional Investors “Time” Hedge Funds? Timing investments in hedge funds after a drawdown, and capitalizing on a possible rebound, is a strategy that hinges on several critical factors, but at the end of the day it depends on myriad qualitative and quantitative factors along with an astute assessment of the manager: Key Factors Influencing Recovery: • Managerial Skill and Pedigree: Success in hedge funds often starts with the manager. Top performers not only generally have a robust academic and professional background but also a proven track record. Their ability to outperform the market, and their peers, consistently demonstrated in part through metrics including the Sortino Ratio, highlights skill and an upside bias in returns. • Experience and Historical Performance: Length and depth of experience, especially gauging how a manager has navigated past drawdowns, play a crucial role. Managers who have successfully rebounded before often have refined risk management strategies and a disciplined trading approach that keeps them focused during market turbulence. • Robust Trading Strategy: The strength of a manager's strategy—its adaptability to different market conditions and the rigor of its underlying analysis—is fundamental. It's not just about having a good strategy but also about the discipline to stick to it and adapt, when necessary, without deviating from core principles. • Support Mechanisms: Behind every successful manager is an effective support system. This includes operational backing, strategic counsel, and a competent team. Psychological resilience, fostered by a supportive environment, can significantly influence a manager's performance under stress. • Risk Management Acumen: Effective risk management is paramount. The best managers set and adhere to strict risk and exposure limits, adjusting thresholds and managing allocated investment position sizing as market conditions change to safeguard the fund’s assets and investor interests. Timing Success: Investing in hedge funds during or after a drawdown requires more than just timing; it demands a deep understanding of the manager's skill set, strategy, technology, infrastructure and support system. The ability to manage and mitigate risks effectively distinguishes those who merely survive downturns from those who use them as opportunities for significant gains. Visit CAYLER CAPITAL and our Data Room at CaylerCapital.com for more info about our Systematic-Fundamental, Relative-Value, uncorrelated Oil / Products program. hashtag #oil hashtag #hedgefunds hashtag #investing hashtag #commodities hashtag #trading hashtag #timing Trading commodity futures & options is speculative, involves risk, & is not suitable for all investors. The Cayler Capital Energy Program is only available to Qualified Eligible Persons (“QEP”), as defined by CFTC regulation 4.7. This is NOT an offer or solicitation.

📉 What Distinguishes Hedge Funds: Navigating All Market Conditions 📈 Hedge funds stand out in the investment world for their unique ability to employ diverse strategies that can generate returns irrespective of market trends. Unlike traditional funds that often rely heavily on bullish markets, hedge funds are designed to capitalize on opportunities in both rising and falling markets. #Investing #HedgeFunds #MarketStrategies #FinancialMarkets #InvestmentStrategies https://lnkd.in/dbT8q6H3 Peregrine Capital Kavita Patel

Hedge funds have gone through an extended period of market volatility, starting with the global pandemic four years ago and driven further by geopolitical tensions, and interest rate fluctuations. That these funds exist to generate alpha during market turbulence brought them into sharper focus, making their performance journeys over the past few years into a mixed bag. Some have consistently outperformed the market, while others have struggled to stay resilient amidst all this unpredictability. Despite macroeconomic headwinds and geopolitical concerns, 2023 still proved to be a good one for hedge funds. A recovering stock market last year brought additional returns to these funds, though the large ones managed to outdo the rest. Market data suggests that the world’s 20 most successful hedge funds reaped record profits in 2023, creating a combined $67 billion for investors.