• Key market indices
    • S&P 500: 3,798.91 +0.81%
    • DJIA: 30,930.52 +0.38%
    • HSI: 29,794.41 +0.51%
    • STI: 2,994.35 -0.05%
    • Gold Spot: 1845.10 +0.29%
    • Brent Crude: 56.02 +0.21%
    • Bitcoin: 36,195.45 -0.11%
  • Global hedge funds struggle even in a more open China market (Link)
    • In November, China expanded access for foreign institutions, allowing them to invest through private securities funds, the local version of hedge funds.
    • Despite the policy easing, most existing hedge fund products remain off limits for qualified foreign institutional investors
    • Chinese investors give preference to local firms such as Shanghai Greenwoods Asset Management and Perseverance Asset Management.
    • Global managers expressed frustration at the limitations they face, as well as the lack of tax incentives. However they got few assurances of further easing ahead.
  • Orbis isn't afraid to refund fees for poor performance (Link)
    • The firm’s flagship Orbis Global Equity fund has had a compounded annual return of 11%, outperforming its benchmark since inception.
    • Orbis fulcrum fee: Investors pay nothing unless the firm beats its global benchmark; when that happens, clients pay 25% of the outperformance.
    • Managers believe this fee structure aligns the firm's interest with clients. Orbis and its employees are the fund’s largest investors.
  • Gold steadies with traders weighing lower dollar, growth outlook (Link)
    • U.S. equities pushed toward all-time highs and U.S. Treasury yields advanced, eroding demand for gold
    • The metal is still seen as an inflation hedge with the possibility that further stimulus could weaken the dollar and lift consumer price.
    • Hedge funds cutting longs by 31% last week is a clear sign that current price action is not giving any strong buy signals.
    • Spot gold lost less than 0.1% to $1,840.14 an ounce. Bloomberg Dollar Spot Index declined 0.2%.
  • Bitcoin’s inefficiencies are creating arbitrage trades for crypto hedge funds (Link)
    • Investors increasingly use bitcoin as a hedge against falling real yields and inflation risks stemming from central bank quantitative easing.
    • Bitcoin’s charge helped HFR’s Blockchain Composite Index soaring to a 190.1 per cent return in 2020.
    • Appetite for BTC will now likely cool off for the time being, the potential structural risk of tougher regulation, speculation risk and the absence of a central authority to step in during crises.
    • Lyxor Asset Management expects the latest cold shower to moderate institutionals’ enthusiasm for crypto in the short-term, providing time to prepare for a third run later.
    • Bitcoin’s volatility could also be seen as “price discovery” in a new asset class, which will give way to greater stability and more credibility.
  • Active-management alpha now key to hedge funds’ success, as economies emerge from Covid slump (Link)
    • Vaccination challenges, virus mutations, subsequent waves of new infections, and renewed lockdowns could keep volatility and dispersion elevated, creating opportunities for active management.
    • K2 Advisors’ outlook suggested inflation “will inevitably surface” if earnings, growth and sentiment jump the gun on the recovery, though a period of reflation could boost equities.
    • "It is prudent to be growth-oriented in our portfolio positioning while also holding hedged alternative investments that exhibit low correlations to broader risk assets." says K2.
    • K2 provides a range of investment products including custom-tailored investment programs, commingled funds of hedge funds, strategic advisory with multiple strategies.
  • Quant Pioneer Jim Simons Steps Down After 40 Years at the Top (Link)
    • The chairman of $60 billion Renaissance Technologies, makes a formal exit. Simons helped pioneer the math-and-computer-loving field of quantitative investing.
    • He will remain a member of the board and Chief Executive Officer Peter Brown will become chairman.
    • Renaissance’s public funds lost more than 30% last year, while private fund Medallion was up more than twice, according to a person familiar with the matter.

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