• Key market indices
    • S&P 500: 3913.11 -0.77%
    • DJIA: 32627.98 -0.46%
    • HSI: 28990.94 +0.87%
    • STI: 3134.54 1.27%
    • Gold Spot $/Oz: 1726.96 +1.64%
    • Brent Crude: 61.42 -6.33%
    • Bitcoin: 59171.51 +0.26%
  • Trends in demand for hedge fund strategies (Link)
    • Long/short equity captured 61 per cent of Q1 2021 respondents, the largest share among all strategies, indicating the continued positive change in investor sentiment regarding fund managers’ abilities to generate alpha in stock selection.
    • The two strategies that saw the largest increases in demand were Cleantech/ESG/Impact Investing and Cryptocurrencies, both of which saw a 65 per cent increase.
    • Cryptocurrency strategies are evolving from being considered exotic and speculative to being more broadly accepted.
    • Beyond the staggering returns, several factors are leading to the increased recognition and demand. They include a broader understanding of block chain technology, an increase in the size of the industry to over $1 trillion, growth in inflation concerns due to massive government stimulus, and the backing of well-respected industry leaders.
  • Dalio says inflation heightens risk of an earlier fed rate hike (Link)
    • Ray Dalio, founder of Bridgewater Associates, said rising inflation could force the Federal Reserve to raise rates earlier than anticipated.
    • Fed Chair Jerome Powell stressed on Wednesday that the central bank won’t raise interest rates until the U.S. economy shows tangible evidence that it has fully healed from Covid-19.
    • In a LinkedIn post this week, Dalio wrote that “the economics of investing in bonds (and most financial assets) has become stupid. Rather than get paid less than inflation why not instead buy stuff — any stuff — that will equal inflation or better?
  • Is the world on the verge of a new commodities supercycle (Link)
    • Rising commodity prices have bank analysts and strategists asking if resurgent demand for raw materials and insufficient supply will create a new commodities supercycle. Price swings, of course, are as old as business itself. A commodities supercycle is different, though.
    • In the usual business cycle, demand pushes prices up, and supply increases to try to capture that windfall, sending prices down again. In a supercycle, supply is so inadequate to demand growth that prices rise for years, even a decade or more.
  • Yield hungry investors stick with private debt (Link)
    • Investors on the hunt for yield are pouring assets into private credit. According to data from Preqin, the asset class is on pace to hit $1.5 trillion by 2025. Hundreds of new funds are fundraising this year and many investors have indicated they are also interested in re-upping with existing relationships.
    • One firm poised to take advantage of the growth in private credit is Katch Investment Group. Katch is an asset manager dedicated to investing in private debt with more than $800m in investment funds and mandates. Returns across Katch's fund lineup are positive year to date.
    • The Katch Global Lending Opportunities Fund, a multi-strategy investment vehicle dedicated to lending solutions for small- and mid-sized companies (SMEs) ended 2020 up 6.2% despite the pandemic and is up 0.4% through January.
  • Specialist hedge fund Delbrook eyes industry metals and materials for recovery trades (Link)
    • The fund’s successful long trades recently have been Brazilian multinational miner Vale SA, and gold miner Torex, with the former taking positive steps to strengthen its ESG efforts.
    • The fund, which launched in September 2018, combines relative value, event driven and opportunistic investing, trading a range of commodities spanning gold, precious metals, silver, platinum and palladium, as well as base metals such as copper and zinc, industrial metals including iron ore and coal, and energy metals like lithium and uranium.
    • Since the start of the year, the strategy has advanced more than 6 per cent.
    • “We continue to prefer the economic recovery narrative to that of prolonged government stimulus and therefore hold higher conviction in industrial metals and bulk materials,” Zabloski says of the prevailing investment environment.
  • ARRC announces Refinitiv as publisher of spread adjustment rates for cash products (Link)
    • The ALternative Reference Rates Committee has selected Refinitiv, an LSEG business, to publish its recommended spread adjustments and spread-adjusted rates for cash products, following a robust request for proposals (RFP) process.
    • Refinitiv will publish ARRC-recommended spread adjustments to Secured Overnight Financing Rate (SOFR)-based rates and spread-adjusted SOFR-based rates for cash products that transition away from US dollar (USD) LIBOR.

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