Private credit might be less attractive than it was last year as investors rush into the market, but there are sweet spots to be found.
The Eurekahedge fund index was down 3.9% in October, and following on the heels of a September decline of 5%, it represents the worst month-on-month hedge fund performance in a decade.
In October, CTA/managed futures were up 6% according to Eurekahedge, bringing them up 16% for 2008 so far. While macro stayed flat, every other strategy slumped, with long/short, event driven and relative value all flirting with 5% declines. Arbitrage and multi-strategy were down 3.5%. At the rear were fixed income and distressed debt with 10% falls.
Eurekahedge recorded $68.1 billion in redemptions from hedge funds in October and just $5.4 billion in new inflows, illustrating how the capital raising tap has continued to run dry. Combined with the monthly losses, the world of hedge funds, measured in dollars, shrank by $110 billion to $1.65 billion in that one month.
Although the MSCI World Index was down 40% for the first 10 months of 2008, it is in their 10-month aggregate returns where the sense of unease about hedge fund performance really kicks in, as there has been a notable absence of months where the trend has been bucked.
Asian hedge funds are down 21% overall so far in 2008. Asia ex-Japan funds have lost 26% and Japanese strategies are down 14%. In splendid isolation at the back of the field is India. Indian hedge funds have declined by 53% so far in 2008, safely proving that although there were many people claiming that IndiaÆs growth story in 2006 and 2007 would be sustainable, they were wrong.
Regional transactions are bouncing back to pre-Covid levels, but experts caution that each geography requires a different investment strategy.
The run-up to the COP26 meeting in Glasgow provides an opportunity for governments to take stronger leadership on the climate crisis as scepticism over green financing escalates.
The asset allocation of Indonesian pension funds showed a flight to safety last year, but did fear outweigh the numbers? Some experts argue, in the light of local equities, for staying the course.
As more multi-asset portfolios integrate sustainability, such portfolios’ ability to navigate short-term swings in performance is enhanced without sacrificing longer term returns, says Schroders’ Jason Yu. In this Beyond Profit series, the firm explores both investing in sustainability-driven sectors and incorporating ESG considerations in the investment process.