• Key market indices
    • S&P500: 3886.85 +4.65%
    • DJIA: 31148.25 +3.89%
    • Hang Seng Index:2907.11 +0.16%
    • Straits Times Index: 2907.11 +0.16%
    • Gold Spot $/Oz: 1812.98 -1.83%
    • Brent Crude: 56.95 +9.16%
    • Bitcoin: 39042.00 +17.80%
  • Hedge funds gain in January, navigating volatility (Link)
    • The HFRI Fund Weighted Composite Index gained +0.9% in January, while the investable 500 Fund Weighted Composite Index advanced +0.35%
    • The HFRI FWC experienced a wide dispersion in constituent performance, as the top decile of the HFRI gained +11.6%, while the bottom decile declined -7.9% for the month
    • Event-Driven strategies, which often focus on out of favour, deep value equity strategies and situations led strategy performance in January
    • Blockchain and cryptocurrency exposures continue to deliver strong performance as cryptocurrencies hit record highs as hedge funds increasingly incorporate related exposures into new existing fund strategies
  • 98% of responding wealth advisors to increase alternatives allocations in 2021 (Link)
    • 98% of responding wealth advisors indicated they plan to increase or maintain client exposure to alternative investments in the coming year
    • Majority of wealth advisors said that they use alternative strategies for diversification, risk management and/or to enhance returns
    • The funds not likely to see an increase in allocation are real estate, private equity and/or private credit; advisors planning to decrease alternatives exposure indicated the reduction will likely come from hedge fund strategies
  • Majority of institutional investors to cut bond exposure in 2021 (Link)
    • Majority of institutional investors plan to reduce their exposure to bonds this year, citing the risk of default and higher inflation
    • Of those planning to switch, 68% plan to redirect investments into real estate, 55% to hedge funds, 52% to life settlements, 45% to commodities, and 24% to equities
    • Only one in four plan to increase their exposure to bonds this year
  • CTAs slide into the red in January, as volatility rips through trend-following hedge funds' initial gains (Link)
    • A spike in market volatility led CTAs and other managed futures hedge funds to hand back their initial early-year returns last month, as gains in commodities and bonds were outweighed by losses in currencies and equity indices
    • The SG Trend Index - which tracks the largest 10 trend-following hedge funds' performance - finished the month down 0.75%, having been up 2.5% at one point in the month
    • Short-term strategies fared even worse, the SocGen Short-Term Index - which tracks daily returns for CTAs and global macro managers with 10-day trading windows - dropped 1.59% in January amid what SocGen described as a "difficult market environment throughout the month"
  • Hedge funds were big participants on GameStop trade, not retail investors (Link)
    • The narrative of the little guys taking on the big guys became a lot muddier this week as it was revealed that retail traders did not have the biggest positions in GameStop
    • Funds such as BlockRock are sitting on significant paper gains despite the volatility of the stock
    • However, funds that held short positions such as Melvin Capital experienced significant losses
    • Lessons to be had on risk management -  how levered a fund can be and your short position, considering how vulnerable you might be to a squeeze
  • Assured Capital Partners positive on 2021 outlook (Link)
    • ACP Balanced Growth Fund had another extraordinary year in 2020, despite the coronavirus pandemic, narrowly missing out on surpassing a 40% return for the third time in the fund's existence
    • The fund has now returned over 376% since inception as of the end of 2020and the firm is positive on the outlook for the year ahead, despite the ongoing economic disruption caused by the pandemic

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