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NEWSLETTER | 5 Mar 2021

Just over a month after the GameStop frenzy jolted some hedge funds’ short positions, the sector came under renewed pressure again this week, as shares in US real estate services company Rocket soared, in what some see as a fresh charge by Reddit traders against short sellers. As a number of portfolio managers have suggested to Hedgeweek in recent weeks, such raids may yet become an increasingly common risk in markets, as online investors seek more scalps in what they regard as a ‘David-versus-Goliath’ war against Wall Street.

On the flip side, asset servicing firm Citco’s annual hedge fund review brought some good news to the industry, showing solid performances and positive investor flows over a turbulent 12-month period. The wide-ranging study, which gauged performance data, trade volumes, treasury services, and investor flow metrics, indicated that 2020 once again demonstrated the value of hedge funds as a key portfolio diversifier for allocators.

Man Group, the publicly-quoted London-headquartered global investment group, saw its funds under management swell to a record high last year, with its hedge fund strategies posting commendable performances.

Seen by many as an indicator of the wider UK hedge fund sector’s health, Man’s alternative funds – which include an assortment of discretionary and quantitative hedge fund strategies focused on a variety of asset classes and markets – were mainly in positive territory, as CEO Luke Ellis struck an optimistic tone in the group’s annual results statement this week.

Another mainstay of London’s hedge fund scene, Aspect Capital, was also in a buoyant mood this week. The well-known trend-following firm – whose founders earlier established AHL, now part of Man Group – believes its systematic global macro fund is well placed to pounce on the short-term dislocations, relative value trades and medium term trends expected to emerge this year, as conditions ripen for "significant moves across assets."

Christopher Cruden, another former AHL manager and founder of the currency and gold-focused CTA strategy Insch Kintore, is also hoping to capitalise on the shifting market environment up ahead. Following a positive start to 2021, Cruden anticipates "ideal" elevated volatility levels in gold as the fund marks its sixth anniversary this year.

This week’s feature story spotlights BKCoin Capital, a New York-based digital assets-focused outfit. As investment managers from across the strategy spectrum pile into cryptocurrencies in ever-increasing numbers, BKCoin Capital’s founders discuss how they have steadily evolved and updated their algorithm-based arbitrage strategy in line with the rapidly changing opportunity set in digital currencies.

Hugh Leask
Editor, Hedgeweek

Fri | 5 Mar 2021, 12:07

With shares in heavily-shorted real estate services firm Rocket surging more than 70 per cent this week, a new study by London-based AI start-up causaLens explores the ways in which so-called ‘meme’ stocks, popular with online amateur traders, could potentially face short squeezes.

Fri | 5 Mar 2021, 12:07

The biggest hedge fund firms topped performance charts and drew the most investor capital over the course of last year, with 2020 proving "the year of outsourcing" for a range of middle office functions, as the industry demonstrated its value to investor portfolios, according to new analysis by Citco.

Fri | 5 Mar 2021, 12:07

The transition of leadership in the private world of hedge funds is incomparable to corporate America, requiring both a deft touch and significant forward planning. The founders of successful hedge funds will have invested years, often decades, building the business in their image. When it comes time to handing over the keys to someone else, it can be a hugely emotional affair so picking the right leadership has to be approached very carefully.

Fri | 5 Mar 2021, 12:07

Bitfinex, a digital token trading platform, has expanded the range of market data services available to algorithmic traders with the launch of snapshots of historical funding book data on Bitfinex Terminal.

EQUOS launches ether perpetual futures

Fri | 5 Mar 2021, 12:07

EQUOS, Diginex’s institutional-grade cryptocurrency exchange, has launched ether (ETH) Perpetual Futures (ETH/USDC[F]), to provide investors with the opportunity to trade and hedge in all market conditions.

Fri | 5 Mar 2021, 12:07

Gemini, a crypto exchange and custodian, has launched a new global offering — Gemini Fund Solutions — to provide fund managers with custody, clearing, trade execution, and other capital markets services tailored to ETFs, closed-end funds, and other fund vehicles.

Fri | 5 Mar 2021, 12:07

Tuesday, 9 February marked the successful launch of the EPEX SPOT Polish Day-Ahead auction which extends the Group’s power spot offering in Central Europe. The market started off well with 33.6 GWh traded until the end of the month.

Fri | 5 Mar 2021, 12:07

Global law firm Ropes & Gray has bolstered its international funds offering with the appointment of Emily Brown as a partner in its Asset Management Group, based in London.