Browsing: Featured Post

Featured Post

Private Equity Placements in China

Dec 8th, 2016 | Filed under: Allocating to A.I., Benchmarking & Performance Attribution, Currencies, Emerging markets, Newly Added, Private Equity, Private Investments, The Global Economy & Currencies

A new paper by G. Nathan Dong and two other scholars investigates private equity placements in China and their consequences for the issuing firms. The study works from a natural experiment that resulted from regulations created by the PRC ten years ago. In 2006, the China Securities Regulatory Commission issuedRead More


Shedding Light on the ESG/SRI Scene      

Dec 6th, 2016 | Filed under: Climate change, Newly Added, Other Topics in A.I., SRI and Clean Energy

The US SIF Foundation has published its latest Trends Report on sustainable, responsible, and impact investing. On the one hand, this is a statistical snapshot of US-domiciled assets in the ESG/SRI field at years’ end 2015. On the other hand, it offers fascinating historical material making it clear how weRead More


Global Pension Funds: Process and Best Practices

Dec 4th, 2016 | Filed under: Allocating to A.I., Asset allocation, Asset Allocation Models, Newly Added

A new white paper from PwC, sponsored by AMAFORES, La Asociación Mexicana de Administradoras de Fondos para el Retiro (The Mexican Association of Retirement Fund Administrators) , looks at the best practices for the pension fund industry in the wake of the global financial crisis of less than a decadeRead More


Preqin on Ag Funds and Their Managers

Dec 1st, 2016 | Filed under: Farmland, Natural Resources and Land, Newly Added, Real Assets

Fundraising for agriculture/farmland-focused funds has been remarkably strong recently, according to research by Preqin, the multi-national data and consulting firm. Farmland has been aptly described as the “oldest alternative investment” and dates as far back as 9,000 years ago. The focus on Preqin’s special report on agriculture is somewhat more recentRead More


Selling Growth Stocks at the Right Time: Hedge Funds Are Good At It

Nov 29th, 2016 | Filed under: Equity Hedge Funds, Hedge Fund Strategies, Hedge Funds, Newly Added

Two scholars at Ozyegin University, in Istanbul, make the case that hedge funds have a uniquely good record in one specialized sort of alpha harvesting: they are good at finding overpriced growth stock securities and trading to their advantage on the basis of that finding, especially when other sorts ofRead More


Local and Global VC Need to Work Together for Best Results

Nov 27th, 2016 | Filed under: Newly Added, Other Issues in Private Investments, Private Investments, Venture capital

Thomas J. Chemmanur of Boston College, Carroll School of Management, and two other scholars looked into the issue whether local venture capitalists “play well together” with international VCs, and vice versa. The resulting paper, in the latest issue of the Journal of Business Venturing, suggest that entrepreneurs benefit by bringingRead More


Rudin and Marr: A Reformulation of RP Methods of Portfolio Construction

Nov 24th, 2016 | Filed under: CAPM / Alpha Theory, Finance & Economics, Newly Added

A recent article by Alexander Rudin and William M. Marr, in The Journal of Alternative Investments, seeks to change the terms of discussion of the risk parity method of portfolio construction in a way that might remove some of the counter-intuitive consequences that can dog the approach. The paper, “InvestorRead More


Infrastructure Project Finance: Benchmarking and Definitions

Nov 22nd, 2016 | Filed under: Infrastructure, Newly Added, Operationally Intensive Real Assets, Real Assets

In a new article in The Journal of Alternative Investments, three EDHEC-affiliated scholars, led by Frédéric Blanc-Brude, the director of the EDHEC Infrastructure, Singapore, look at recent improvements in the understanding of the financial performance of privately held infrastructure investments, debt or equity, with respect to benchmarking thereof.  They concludeRead More


Aftermath of 2008: Reactions to Decreased Liquidity

Nov 20th, 2016 | Filed under: Finance & Economics, Liquid Alternative Investiments, Liquid Alts, Macroeconomics, Newly Added, Other Topics in A.I., Regulatory Environment, The A.I. Industry, The Global Economy & Currencies

A new report from State Street Corporation and the Alternative Investment Management Association says that nearly half of the market participants surveyed believe that decreased market liquidity is a secular change, not a cyclical one: that is, that it is a climate that is here to stay, not a rainRead More


PE Buyout Funds: Finding or Building a Proxy

Nov 17th, 2016 | Filed under: Allocating to A.I., Asset allocation, Asset Allocation Models, Newly Added, Other Issues in Private Investments, Private Investments

Alexandre Coupe, associate director, Pacific  Alternative Asset Management Company, head of PAAMCO’s asset allocation research, and formerly of Green Street Advisors, has written a fascinating review of private equity funds. She looks at what proxies work (and which don’t work) in assisting portfolio managers who have to make asset allocationRead More


Commissioner Piwower and Alpha Seekers

Nov 15th, 2016 | Filed under: Commodities, Event-Driven Hedge Funds, Hedge Funds, Newly Added, Operations, Risk Management & Operations

With a new administration in the making, thoughts in the world of asset management naturally turn to the issue of appointments to the Securities Exchange Commission and the Commodity Futures Trading Commission. Who is likely to get what position and what difference might it make? Recent practice has been thatRead More


MIND THE GAP—LENDERS APPROACHING

Nov 14th, 2016 | Filed under: Debt Types of Private Equity, Newly Added, Private Investments, Real Assets, Real Estate

By Diane Harrison It’s been years since investors have been able to get excited about the term “yield” when referencing their investment portfolio. Too many individuals have been hanging onto cash while searching fruitlessly for somewhere other than equities to put their money to work. Advisors haven’t been much helpRead More


Dakota Access and the Army Corps of Engineers: An Odd Mistake?

Nov 13th, 2016 | Filed under: Commodities, Commodities, Commodities: Examples, Infrastructure, Newly Added, oil, Operationally Intensive Real Assets

On November 7, the U.S. Army Corps of Engineers put out a statement that said that the Dakota Access Pipeline (DAPL) had agreed to halt its controversial ongoing construction in North Dakota. The following day, which happens to have been Election Day, [so non-election news went largely uncovered], the ownersRead More


Energy Infrastructure: The Midstream Sector

Nov 10th, 2016 | Filed under: Allocating to A.I., Endowments & Foundations, Institutional Asset Management, Newly Added, Regulatory Environment, The A.I. Industry

Is it a stream or is it a sea? They seem to have gotten their hydrological imagery mixed up. But no, the “sea” in question is a literal sea, though the “stream” in question is a mere bit of imagery, so clichéd as such that no one sees it asRead More


Pension Funds, Hedge Funds, and Allocations

Nov 8th, 2016 | Filed under: Allocating to A.I., Alpha & Beta, Institutional Asset Management, Institutional Investing, Newly Added

A new scholarly paper addresses the puzzle: which institutional investors are best informed? Zhe Chen, of the University of New South Wales, David Forsberg, Macquarie Graduate School of Management, and David R. Gallagher, UNSW Australia Business School,  compare hedge funds, mutual funds, pension funds, and private banking firms to determineRead More


McKinsey: Historically Anomalous Period Nears an End

Nov 6th, 2016 | Filed under: Alternative Investments in Context, Infrastructure, Newly Added, Operationally Intensive Real Assets, Real Assets, The A.I. Industry

McKinsey & Co. has posted a new report assessing the state and the future of the North American asset management industry, encompassing both active and passive managers and looking at five mega-trends. Skipping to the chase, the trends are these: The end of an anomalous eta of “exceptional investment returns.”Read More


Dealmakers: Trump, Hillary, and Mergers

Nov 3rd, 2016 | Filed under: Business News, Event-Driven Hedge Funds, Hedge Funds, Newly Added

Intralinks, a firm created 20 years ago to enable “high-stakes transactions and business collaborations,” has surveyed global dealmakers on the upcoming U.S. presidential election and on how it may affect the economic and regulatory environment for mergers and acquisitions. The gist of it is: in a database of 1,600 M&ARead More


Judge Rose: Libya’s SWF Heads Knew What They Were Doing

Nov 1st, 2016 | Filed under: Allocating to A.I., Institutional Asset Management, Institutional Investing, Legislation/Court rulings, Newly Added, Regulatory Environment, The A.I. Industry

The economic historians of posterity have their work cut out for them here. There are doctoral dissertations in the works already, no doubt. And in time several scholarly careers will hang on this.   Those scholars will have to make sense of the political developments in late-Qaddafi Libya, of the roleRead More


Impact Investing: The Impacts, Measurement and Profit

Oct 30th, 2016 | Filed under: Alpha-centric Companies, Newly Added, Other Topics in A.I., Social investing, Socially responsible investing

One candidate for the title “next new thing” is “impact investing.” As the term suggests, this refers to investing with an eye to the ways in which the investor’s decisions make an impact upon society beyond his own portfolio. This sounds a lot like socially responsible investing, or like itsRead More


Massad: Where the U.S. and the World Stand on Margins & Cap Requirements

Oct 27th, 2016 | Filed under: Commodities, Finance & Economics, Forex, Investing in Commodities, Newly Added, The Global Economy & Currencies

The chair of the Commodity Futures Trading Commission, Timothy Massad, addressed the Outlook Conference of the Managed Funds Association on October 21, and spoke about the global implementation of uncleared margin rules, which he called a critical component of “the new regulatory framework for swaps trading that the leaders ofRead More


Academics:  No, Navinder Sarao Did Not Cause the Flash Crash 

Oct 25th, 2016 | Filed under: Algorithmic and high-frequency trading, Business News, Finance & Economics, Hedge Fund Operations and Risk Management, Newly Added, Operations, Personalities in AI, Risk management, Risk Management & Operations, Technology

Mid-October news reports tell us that Navinder Sarao has lost his effort to avoid extradition from Britain to the United States. So he will face charges in the U.S. in connection with the “flash crash” of May 2010, the incident in which the DJIA fell 998.5 points in less thanRead More


Eurekahedge: Exodus from the Event-Driven Funds YTD  

Oct 23rd, 2016 | Filed under: Allocating to A.I., Commodities, Equity Hedge Funds, Event-Driven Hedge Funds, Hedge Funds, Newly Added, Relative Value Hedge Funds

The event-driven hedge fund space is the most troubled in a generally troubled time for the industry. According to the new Eurekahedge report, the event-driven strategy “has seen US$14 billion investor redemptions over the past nine months,” and $10.7 billion over just the past six months. The first nine monthsRead More


Fraudulent Transfer: No ‘Safety’ for Lyondell Shareholders   

Oct 20th, 2016 | Filed under: Business News, Equity Hedge Funds, Finance & Economics, Hedge Funds, Insolvency, Newly Added

In two decisions this year, in July and against in a re-affirmance in October, the U.S. District Court for the Southern District of New York has reinstated a claim brought by Trustee of the creditors of the bankrupt  chemical company Lyondell, looking to recover distributions made to the company’s shareholdersRead More


Islam, Western Pensions, and Real Assets

Oct 18th, 2016 | Filed under: Allocating to A.I., Institutional Asset Management, Institutional Investing, Intellectual Property, Natural Resources and Land, Newly Added, Operationally Intensive Real Assets, Real Assets

A recent academic discussion of the much-vexed question of Islamic finance (including the always at least implicit query, how does it fit into the broader usually non-Islamic global picture?) focuses on the role in Islam of real assets, understood as tangible objects such as land, buildings, machinery, and commodities. TheRead More


It’s On: Bondholder Groups Square Off over Puerto Rico Financing

Oct 16th, 2016 | Filed under: Business News, Event-Driven Hedge Funds, Hedge Funds, Insolvency, Newly Added

On Oct. 7, a group of hedge funds that hold the general obligation bonds of Puerto Rico amended an existing complaint (initially filed in July) in a significant respect: by adding a new defendant. The new defendant is the issuer of the “COFINA” bonds, the Puerto Rico Sales Tax FinancingRead More


Venezuela: Thinking of Cromwell and Crude

Oct 13th, 2016 | Filed under: Commodities, Commodities: Examples, Emerging markets, Finance & Economics, Newly Added, oil, The Global Economy & Currencies

Hedge funds, among them some of those the unsympathetic call “vultures,” bought into the bonds of the Petróleo de Venezuela SA (PDVSA) early this year. PDVSA is Venezuela’s state-owned oil company, the consequence of nationalization forty years ago. Its fate turns on (a) the vagaries of post-Chavez politics in thatRead More


Fine Art as Joy and Investment: A Reflection

Oct 12th, 2016 | Filed under: Business News, Newly Added, Real Assets

Why do people own great paintings? As something pleasing to hang on the wall? As a way to impress the neighbors? Presumably many buyers of privately circulating 17th century Dutch masterpieces are speculators, alpha seekers. But aren’t they speculating, in the end, upon what some end user will pay? WhatRead More


Saving the World: One EM City at a Time

Oct 10th, 2016 | Filed under: Infrastructure, Newly Added, Operationally Intensive Real Assets

The Global Commission on the Economy and Climate has issued a new report urging governments and major financial institutions to “scale up and shift investment to sustainable infrastructure as a fundamental strategy….” The report, The Sustainable Infrastructure Imperative, has no force as law or policy anywhere, but it may signalRead More


Looking to the Technological Imperative: Where Has It Been?

Oct 6th, 2016 | Filed under: Equity Hedge Funds, Hedge Funds, Newly Added, Regulatory Environment, The A.I. Industry

On September 28, the Securities and Exchange Commission held an open meeting about a proposed shortening of the settlement cycle. The SEC’s staff has recommended that the settlement cycle for most broker-dealer transactions be shortened from three business days after trade date to two or, in the usual typographical abbreviation,Read More


Tick Pilot Program: A Progress Report

Oct 4th, 2016 | Filed under: Algorithmic and high-frequency trading, Business News, Finance & Economics, Newly Added, Regulatory Environment, The A.I. Industry

The long-awaited nickel-tick pilot program, an effort to test an alternative to the penny-or-less tick sizes that now prevail, , officially gets underway on October 3, and is scheduled to continue for two years. Securities have been selected and the phase-in schedule is set. The pilot is of significance, becauseRead More


Papaconstantinou on ‘Selling the Family Silver’  

Oct 2nd, 2016 | Filed under: Business News, Currencies, Insolvency, Newly Added, The Global Economy & Currencies

A former finance minister of the Republic of Greece has published a book, Game Over, on what it is like to be in the midst of a continent-wide political and financial crisis. This is a volume that might be read with attention by those who seek alpha from distressed sovereignRead More


From UMIFA to UPMIFA: Taking Stock 10 Years Later

Sep 29th, 2016 | Filed under: Endowments & Foundations, Institutional Asset Management, Newly Added

Ten years ago, thus before the global financial crisis, the Uniform Law Commission promulgated the Uniform Prudent Management of Institutional Funds Act (UPMIFA), a successor to an earlier uniform act, the UMIFA. One of the big changes from UMIFA to UPMIFA was the elimination of the concept of “historic dollarRead More


Eurekahedge on Outflows, Performance and Tail Risk

Sep 27th, 2016 | Filed under: Commodities, CTA, Equity Hedge Funds, Hedge Funds, Macro and Managed Futures Funds, Newly Added, Relative Value Hedge Funds

Eurekahedge, a provider of hedge fund industry news since 2001, has released its report about the state of the industry in August 2016. Among the key points: August was the fourth consecutive month of outflows. Although preliminary, the data for the month suggests a net asset outflow of $7.5 billion.Read More


Alpha From the Non-Bank Lending Space

Sep 25th, 2016 | Filed under: Hedge Funds, Newly Added, Other Issues in Private Investments, Private Investments

A new report, Financing the Economy 2016, looks at “the role of alternative asset managers in the non-bank lending environment,” addressing such questions as the likely impact of an exit of the United Kingdom from the European Union (a “Brexit,”) upon Europe-focused direct lending vehicles. The paper is a jointRead More


Kyle Bass, IPR and Shorting Big Pharma

Sep 22nd, 2016 | Filed under: Intellectual Property, Newly Added, Operationally Intensive Real Assets, Other Topics in A.I., Personalities in AI, Real Assets

Kyle Bass, the investor who shorted the market in residential mortgage-based securities a decade ago, with speculator success, is interested now in shorting the major pharmaceutical companies. He is certainly entitled to try that play. But what is especially provocative and controversial is that he also seems willing to giveRead More


Research, Unbundling and MiFID II

Sep 20th, 2016 | Filed under: Investor Relations, Newly Added, Other Topics in A.I., Regulatory Environment, Sales & Marketing in the AI Industry, The A.I. Industry

The “soft dollars” question, that is, the issue of the arrangements by which the managers of other peoples’ and other institutions’ money might most appropriately pay for investment-related research, remains unresolved. Traditionally, the managers of investment funds, alternatives among them, could collect rebates from the trading fees charged them byRead More


Aligning Interests: Changes in Alt Investment Business Models

Sep 18th, 2016 | Filed under: Fees, Hedge Fund Industry Trends, Hedge Funds, Industry Size & Managers, Newly Added, Structure of the Hedge Funds Industry, The A.I. Industry

A new AIMA research paper discusses “the alignment of interests between hedge fund managers and investors” as it manifests itself in changes in the hedge fund business model. There have always been features in the relationship that were designed to produce such an alignment. As Michelle McGregor Smith observes, inRead More


Investors in Extractive Industries: Practice Your Forced Grin

Sep 15th, 2016 | Filed under: Commodities, Commodities: Examples, diamonds, Newly Added, oil

A new book comes to us this year from the Mapungubwe Institute for Strategic Reflection (MISTRA), a think tank founded in March 2011 “to create a platform for engagement around strategic issues facing South Africa.” Unsurprisingly, this report suffers from the generic weakness of books written by committee—it reads asRead More


On Aluminum and Other Metals: A Thought on Physicality 

Sep 13th, 2016 | Filed under: Business News, Commodities, Commodities: Examples, Finance & Economics, Hard metals, Investing in Commodities, Newly Added

Hong Kong Exchanges and Clearing (HKEx), the company that bought the London Metal Exchange four years ago, has further expansion plans. At a recent event on the commodity markets of East Asia, Charles Li, the CEO of HKEx, spoke on this point. Li wants to create a physical metals tradingRead More


ESMA’s Greybeards Ponder Blockchains

Sep 11th, 2016 | Filed under: Algorithmic and high-frequency trading, Business News, Currencies, Digital currencies, Emerging Alternative Investments, Finance & Economics, Newly Added, Other Topics in A.I., The Global Economy & Currencies

There has been a flurry in recent days of activity about blockchains among the graybeards of the financial world, those who ponder the Really Big Picture and who have the ear of important regulators. Let us start from the beginning. What is a blockchain? It is a chronological, virtual, andRead More


Hedge fund activists need friends

Sep 8th, 2016 | Filed under: Equity Hedge Funds, Hedge Funds, Industry Size & Managers, Newly Added, The A.I. Industry

Two scholars at the University of Warwick, Warwick Business School, in the UK, have written a paper on “the benefits of friendship in hedge fund activism.” At the heart of the paper is the not-especially-astonishing news that hedge fund activists benefit from social ties, that is, from the ability toRead More


UC Berkeley: Stale Prices Not a Threat to Liquidity Takers

Sep 7th, 2016 | Filed under: Algorithmic and high-frequency trading, Alpha Strategies, Business News, Equity Hedge Funds, Finance & Economics, Hedge Funds, Newly Added

Two scholars associated with the University of California, Berkeley, have argued in a recent paper that there is less to latency arbitrage, or at least to a certain paradigmatic sort of latency arb, than meets the eye. Robert P. Bartlett III and Justin McCrary used data from the Securities InformationRead More


Eurekahedge: Redemptions Exceeding New Investment for HFs Worldwide

Sep 5th, 2016 | Filed under: Commodities, Commodities, Commodities: Examples, Energy, Hard metals, Hedge Funds, Newly Added, Relative Value Hedge Funds

Hedge funds have now seen three consecutive months in which redemptions have exceeded new investment, for a net outflow. The net outflow for July alone was $5.7 billion. Fortunately, July also saw performance based gains of $10.5 billion, so the total assets under management grew slightly. The table below adaptedRead More


Sovereign Debt: A Cryonic Solution to the Holdout Problem

Sep 1st, 2016 | Filed under: Business News, Finance & Economics, Industry Size & Managers, Insolvency

Where does the world stand on the restructuring problem after NML v Argentina?  One professor and one practicing attorney recently coauthored a fascinating proposal that might answer that question, part of which they call the “cryonic solution,” after the hoped-for science of freezing people to await the development of aRead More


Fiduciary Duty, Excessive Fees, and Findings of Fact  

Aug 30th, 2016 | Filed under: Asset Managers, Industry Size & Managers, Legislation/Court rulings, Newly Added, Regulatory Environment, The A.I. Industry

The Honorable Peter J. Sheridan, for the U.S. District Court for the District of New Jersey, ruled in favor of defendants, AXA Equitable and related entities, in a consolidated derivative action on behalf of mutual fund investors. This was a lengthy decision issued on August 25 that will reward attentionRead More


Northill: In Defense of Active Management

Aug 27th, 2016 | Filed under: Allocating to A.I., Alpha & Beta, Benchmarking & Performance Attribution, Newly Added, Performance, Analytics & Metrics

Northill Capital, a London-based asset manager, has released a report defending active asset management from the common charge that it cannot, after costs, beat the passive managers. That is an old and familiar subject for debate. What cannot be debated, because it is a simple matter of definition and arithmetic,Read More


The Next Crisis: BIS Warns of ‘Financial Vulnerabilities’ in EME/NFCs

Aug 25th, 2016 | Filed under: Currencies, Emerging markets, Finance & Economics, Macroeconomics, Newly Added, The Global Economy & Currencies

In a recent paper submitted to the G20’s working group on international financial architecture, scholars with the Bank for International Settlements have warned that an accumulation of debt in the years since the global financial crisis has left the emerging market economics (EMEs) vulnerable to capital outflows. The authors ofRead More


The Shale/Fracking Revolution: 1998 to 2011

Aug 23rd, 2016 | Filed under: Commodities, Commodities, Commodities: Examples, Investing in Commodities, Newly Added, oil

A critical revolution in the crude oil and natural gas markets began 18 years ago. Gary Sernovitz, who has given the world his thoughts on this revolution in the new book The Green and the Black, has had some convenient seats whence to observe, most recently as a managing directorRead More


Risk-Adjusted Time Series Momentum Strategies

Aug 21st, 2016 | Filed under: Finance & Economics, Financial Economics Theory, Hedge Funds, Macro and Managed Futures Funds, Newly Added

The name is awkwardly long, and the standard abbreviation, “RAMOM,” sounds like what one says when cheering on one’s mother as she nears a finish line. Still, risk adjusted time series momentum strategies have something to be said for them, in comparison to cross-sectional momentum (MOM without preface), or evenRead More


New Support for a 40-Year-Old Theory about IPOs

Aug 18th, 2016 | Filed under: Finance & Economics, Financial Economics Theory, Newly Added

It is always aesthetically pleasing to see something elegant brought down from an attic, dusted off, and found to be of continuing value as part of the home’s furniture. Back in 1977, Edward Miller offered a hypothesis about the price move patterns distinctive to newly listed stocks.  In “Risk, Uncertainty,Read More