• Key market indices
    • S&P 500: 3906.72 -0.71%
    • DJIA: 31494.33 +0.11%
    • HSI: 30644.73 +1.56%
    • STI: 2880.64 -1.53%
    • Gold Spot $/Oz: 1783.35 -2.18%
    • Brent Crude: 58.93 -1.14%
    • Bitcoin: 56261.04 +15.61%
  • 66% of fund selectors managing $12.7 tn outperformed their aggressive portfolio in 2021 (Link)
    • Two-thirds of respondents in a new survey expect aggressive portfolios to outperform defensive ones in 2021, despite the same proportion saying the global economy will fail to fully recover from the coronavirus crisis this year.
    • The Natixis Investment Management survey revealed that 66% of fund selectors outperformed their aggressive portfolio in 2021.
    • Fund selectors indicate that while the opportunities are out there, it will require close analysis to find them: 70% forecast active investment to outperform passive, and 63% project value stocks to outperform growth. And after seeing ESG strategies outperform during the past year, 57% say outperformance will continue in 2021.
  • Volatility risks push professional buyers to move clients to more model portfolios this year (Link)
    • Model portfolios are on the rise as financial advisory firms focus on providing personalized planning and advice.
    • According to the Natixis Investment Management survey, 84% of fund selectors selected in the US and Canada use models, and 52% say that moving a larger share of client assets into models is a key objective for their firm.
    • 60% report that they are finding a greater need for specialty models, including ESG and alternative sleeves, to compliment the core models on their platform.
    • 64% say models make it easier to implement ESG across client portfolios.
  • Merger Arbitrage takes the lead in hedge fund space performance (Link)
    • On a year-to-date basis, Merger Arbitrage remains the best performing strategy (+2.4%) in a context where SPACs experienced a sharp rebound (+17.9% for the IPOX SPAC Index year-to-date).
    • Global Macro strategies underperformed so far year-to-date (+0.8%) as EM-focused Macro strategies were virtually flat (+0.2%) and Systematic Macro returns were minimal (+0.5%).
  • GameStop saga brings congressional scrutiny of short selling, execution (Link)
    • Congress and regulators may need to revisit rules on short sale disclosure and order execution practices highlighted by volatile trading in GameStop in January, members of a House panel said Thursday at a hearing.
    • A memo before the House Financial Services Committee hearing said the short squeeze "raises important questions about the efficacy of anti-market manipulation laws and whether technology and social media have outpaced regulation in a manner that leaves investors and the markets exposed to unnecessary risks."
    • Citadel CEO Kenneth C. Griffin told the panel that his firm's ability to better execute trades than the exchanges "is very important to the democratization of finance," with trading costs at their lowest level in history to the benefit of retail investors.
  • The SPAC bubble is about to burst (Link)
    • SPACs raised around $26 bn in January this year in the US, nearly a third of the record $83 bn collected by 248 SPACs over the whole of 2020.
    • SPACs are a form of a reverse merger where a successful private company merges with a listed empty shell to go public without the paperwork and rigors of a traditional IPO. Where SPACs are different is simply that the shell company is a proactive party, flushed with cash from the IPO and hunting for private targets.
    • The analysis of data showed that the higher popularity of the practice initially triggered and furthered adoption. But, simultaneously, as the number of reverse mergers grew, investors and the media became increasingly skeptical about the practice. As skepticism and negative reactions were further intensified, a phenomenon triggered a decline in the practice.
  • Bitfinex launches Increase Position and Bitfinex Borrow features for paper trading (Link)
    • Users can now choose the Increase Position feature to create or increase a margin position, add exposure without the need for additional trading, in their paper sub-accounts.
    • This allows users to maintain their exposure to a digital token such as bitcoin, while adding liquidity to their portfolio which could then be used for further trading strategies.
    • Users who use Bitfinex Borrow with their paper trading sub-account can now obtain loans of up to 70% of the value of their TESTUSD holdings in TESTBTC and vice versa.

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