The diversity of strategies among hedge funds means that convertible arbitrage and distressed debt specialists have become very bullish following troubles in global credit flowing from the US sub-prime market, according to a leading global hedge fund consultant.
Thomas Whelan, the chief executive of Greenwich Alternative Investments in the US, said during a recent roundtable that the key factors dictating returns for hedge funds in coming years depended on what strategies they adopted. His analysis comes as Basis Capital was forced to activate its right to limit redemptions from its credit-exposed hedge funds, citing “;irrational pricing”; in the market thanks to contagion from the US sub-prime mortgages crisis. Whelan said that long/short equity managers were highly correlated with the equities indices – in a good year long/short managers should have a good year and in a bad year they should still outperform their long-only counterparts. But in a market such as the US this year, where the main indices have been up 5 per cent and then down 5 per cent, long/short funds typically get whipped around because there was insufficient trend for them to make money. Whelan said: “Looking at the arbitrage space there are different opportunities. The convertible managers we speak to are very bullish. In the distressed space every manager we talk to believes that the sub-prime troubles … are just the beginning of opportunity. “Each area has different opportunities and I think it is important to stress how diverse the hedge fund space is.” Whelan is known in Australia as both an alternatives consultant and the provider of investable hedge fund indices through its Australian associate company VanMac Group. He was speaking in the US at a roundtable which included Stuart Leaf, chief executive of Cadogan Management, a hedge FoF provider, and Sergio Trigo Paz, head of Fortis Investments’ emerging markets debt fund. Each of the managers defended the continued use of hedge FoFs by institutional investors, notwithstanding the recent trend towards single-manager multi-strategy and single-manager single-strategy hedge funds.
The $355 billion AustralianSuper has acquired a $1.4 billion European industrial and logistics portfolio, owned by OMERS real estate subsidiary Oxford Properties. The nation’s biggest fund is targeting a $7.5 billion valuation for the venture and $35 billion allocation in European and UK region before 2030, supported by its biggest international office in London with 121 employees.
Darcy SongJanuary 14, 2025
