April 19, 2012
Attain Capital
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The bane of our existence some days is the inaccurate association between hedge funds and managed futures in mainstream media and financial circles. We’ve covered the differences ad nauseam, but given the widespread nature of the association, a few pieces of commentary floating around the web today caught our eye, particularly because they may signal a reversal in the trend (and you know how we love our trend following). Larry Swedroe wrote on CBS News:
While reviewing the latest round of papers and articles on hedge funds, I was reminded of the film “Night of the Living Dead” — no matter how many zombies were killed, more kept coming back. In 2008, about 1,500 funds were liquidated and 500 launched. The next year, about 1,000 were liquidated, and more than 500 new ones launched.
It’s hard to argue against those numbers, but today, that merry-go-round of managers seems to be slowing substantially. Reuters reports:
The old picture of the hedge fund start-up as two traders and a terminal at a posh London address looks ever more dated as the risky financial environment makes jobs at bigger firms a safer bet.
A tough year for hedge funds and new bank regulations mean there is no shortage of traders looking to move on – just the sort who might once have started small funds.
But it takes more than ambition for would-be hedge fund managers to get the $100 million or so needed for a chance of success in a maturing industry with a more competitive landscape.
“A lot are going to established firms instead,” said Jeff Holland, co-founder of fund of funds firm Liongate Capital.
The reasoning for this change in direction? Reuters continued:
To found a start-up, managers need enough to cover costs and attract big investors wary of the smaller firms.
But only 17 percent of investors were ready to provide the seed capital that new funds need in 2011 compared to 53 percent in 2002, according to a survey by Deutsche Bank.
Even those that do provide seed capital avoid the 2 percent management fees that funds traditionally charge. They also often demand a large slice of a fund’s future revenues, making growth much less profitable than it once was.
It marks a reversal from a decade ago, when a couple of traders could set up in London’s West End and hope to grow into a multi-billion dollar firm using any of the varied and complex range of strategies that hedge funds are free to employ.
It also shows how big-name firms such as Brevan Howard, Winton or BlueCrest have come to dominate the industry.
In other words, investors are demanding more than the “hedge fund” title before they allocate, which has led to a downward spiral in the number of new hedge funds being set up to begin with – which is definitely something we can get behind. So, while Swedroe may have had a point from a historical perspective, today the hedge fund landscape is very different – and in more ways than one. You’ll notice that the big-name firms referenced in the Reuters piece include Winton and BlueCrest – both of which are managed futures firms. Maybe the bigger lesson here is that investors have started to figure out all the hedge fund hang-ups we’ve been lamenting… and are turning to managed futures for true diversification.
Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.
The programs listed here are a sub-set of the full list of programs able to be accessed by subscribing to the database and reflect programs we currently work with and/or are more familiar with.
Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history. Individuals cannot invest in the index itself, and actual rates of return may be significantly different and more volatile than those of the index.
Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.
Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.
Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.
RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.
Limitations on RCM Quintile + Star Rankings
The Quintile Rankings and RCM Star Rankings shown here are provided for informational purposes only. RCM does not guarantee the accuracy, timeliness or completeness of this information. The ranking methodology is proprietary and the results have not been audited or verified by an independent third party. Some CTAs may employ trading programs or strategies that are riskier than others. CTAs may manage customer accounts differently than their model results shown or make different trades in actual customer accounts versus their own accounts. Different CTAs are subject to different market conditions and risks that can significantly impact actual results. RCM and its affiliates receive compensation from some of the rated CTAs. Investors should perform their own due diligence before investing with any CTA. This ranking information should not be the sole basis for any investment decision.
See the full terms of use and risk disclaimer here.
Disclaimer
The performance data displayed herein is compiled from various sources, including BarclayHedge, and reports directly from the advisors. These performance figures should not be relied on independent of the individual advisor's disclosure document, which has important information regarding the method of calculation used, whether or not the performance includes proprietary results, and other important footnotes on the advisor's track record.
The programs listed here are a sub-set of the full list of programs able to be accessed by subscribing to the database and reflect programs we currently work with and/or are more familiar with.
Benchmark index performance is for the constituents of that index only, and does not represent the entire universe of possible investments within that asset class. And further, that there can be limitations and biases to indices such as survivorship, self reporting, and instant history. Individuals cannot invest in the index itself, and actual rates of return may be significantly different and more volatile than those of the index.
Managed futures accounts can subject to substantial charges for management and advisory fees. The numbers within this website include all such fees, but it may be necessary for those accounts that are subject to these charges to make substantial trading profits in the future to avoid depletion or exhaustion of their assets.
Investors interested in investing with a managed futures program (excepting those programs which are offered exclusively to qualified eligible persons as that term is defined by CFTC regulation 4.7) will be required to receive and sign off on a disclosure document in compliance with certain CFT rules The disclosure documents contains a complete description of the principal risk factors and each fee to be charged to your account by the CTA, as well as the composite performance of accounts under the CTA's management over at least the most recent five years. Investor interested in investing in any of the programs on this website are urged to carefully read these disclosure documents, including, but not limited to the performance information, before investing in any such programs.
Those investors who are qualified eligible persons as that term is defined by CFTC regulation 4.7 and interested in investing in a program exempt from having to provide a disclosure document and considered by the regulations to be sophisticated enough to understand the risks and be able to interpret the accuracy and completeness of any performance information on their own.
RCM receives a portion of the commodity brokerage commissions you pay in connection with your futures trading and/or a portion of the interest income (if any) earned on an account's assets. The listed manager may also pay RCM a portion of the fees they receive from accounts introduced to them by RCM.
Limitations on RCM Quintile + Star Rankings
The Quintile Rankings and RCM Star Rankings shown here are provided for informational purposes only. RCM does not guarantee the accuracy, timeliness or completeness of this information. The ranking methodology is proprietary and the results have not been audited or verified by an independent third party. Some CTAs may employ trading programs or strategies that are riskier than others. CTAs may manage customer accounts differently than their model results shown or make different trades in actual customer accounts versus their own accounts. Different CTAs are subject to different market conditions and risks that can significantly impact actual results. RCM and its affiliates receive compensation from some of the rated CTAs. Investors should perform their own due diligence before investing with any CTA. This ranking information should not be the sole basis for any investment decision.
See the full terms of use and risk disclaimer here.