Hedge funds attracted a net $44 billion in assets globally last year, the smallest amount since 2012. As these increasingly desperate funds try to change that in 2016, one enormous target has been identified in Australia.
Following a brief surge of hedge fund closure announcements in late 2015 and early 2016, there had been a lull in hedge fund shutterings in recent months, as the smart money community had benefited from the dramatic jump in the S&P500 to just shy of all time highs. That changed moments ago when Reuters reported that hedge fund Pine River Capital Management is closing its Pine River Fixed Income fund and returning roughly $1.6 billion in assets to investors just two months after Steve Kuhn, one of the fund's co-managers, left the firm.
Consider: an influential consulting firm that advises some of the world's largest companies on strategic questions such as M&A and restructuring has an internal investment arm with $9.5 billion in assets that hasn't lost money more than once in 25 years.
“We have come regretfully to the conclusion that the current algorithmically driven market environment is one which is increasingly incompatible with our fundamental, research orientated, investment process. The bear market in emerging market equities, which began in 2011, may eventually engulf developed markets too."
BlueCrest Capital Management Limited "BlueCrest" announces it will, over the next several months, transition to a Private Investment Partnership, and will return to its clients the $8 billion it currently manages on their behalf. Following the transition, BlueCrest will manage assets solely on behalf of its partners and employees.
While the storm clouds continue to build above Trafigura, we now know the fate of Galena and why its CEO Letchford departed the company in a hurry last week: according to a follow up from Bloomberg, Trafigura has decided to close the flagship Galena Metals Fund, the latest hedge fund victim of the rout in raw materials markets from oil to copper.
CFTC meets this morning to propose a registration standard applying to as many as 100 firms that have changed markets by trading their own money using complex algorithms and advanced technology. As Bloomberg notes, this proposal follows more than 5 yrs of debate about market disruptions, such as the May 2010 flash crash. Crucially, as is well known now, high-speed, automated trading in recent years has surged to account for almost three-quarters of certain derivatives markets which means any regulatory crackdowns will no doubt have impacts on markets; as former CFTC chief Chilton noted “Clearly some of the rules are antiquated.”
The arrests or investigations targeting the finance industry in the aftermath of China’s summer market crash have intensified in recent weeksaccording to Bloomberg, creating a climate of fear among China’s finance firms and chilling their investment strategies. As one professor of Chinese economy noted, "some in the political leadership sought to find scapegoats to blame" for the market crash which along with massive intervention "created uncertainty and anxiety that can only undermine the effort to make these markets work better."