Observations/Commentary
Making It Attainable: RCM Buys Attain To Broaden Managed Futures Reach
Jim Kharouf – JLN
RCM Asset Management pushed further into the managed futures space today with the announcement it has acquired Attain Capital Management.
With the move, RCM aims to strengthen its education offerings and broaden its customer base.
“Things that they do very well, RCM does not do well or at all. So the combination of the two firms will really enable us to further our reach in the space,” said Bobby Schwartz, CEO and managing director at RCM.
Attain, which started in 2002 offering trading systems to high net worth individuals, has grown over the past 13 years into a higher profile firm in the managed futures space. That crop of high net worth investors also led Attain into the registered investment advisor (RIA) space, an area that RCM has targeted heavily recently with a series of 26 events around the country. RCM, which launched in 2010, has been focused heavily on the RIA space and creating the tools and products that make it easy for those advisors to offer managed futures.
Read the Rest of the Article on JohnLothianNews.com
NFA 2015: Have you Noticed Anything Different?
By Doug Ashburn – JLN
We just wrapped up a two-part video interview with Dan Roth, CEO of the National Futures Association. He offered up an honest assessment, in my opinion, of the state of the agency in the wake of the MF Global and Peregrine Financial Group bankruptcies that rocked the industry in 2011 and 2012.
In Part 1, Roth summarizes the internal changes made at the NFA, from its audit and hiring practices to the delivery of information to NFA members and market participants.
Watch Part 1
Part 2 is a summary of changes made to the agency’s rules to restore customer confidence, namely on audit confirmations, residual interest (which differs from the CFTC‘s residual interest rule), and the treatment of customer segregated funds (the “Corzine Rule”).
Watch Part 2
The role of a self-regulatory organization consists of threading the needle between overall effectiveness and over-burdening members and member firms. While there is always room for improvement, I see today’s NFA as a much different organization than it was five years ago.
NFA Board Update—February 2015 Meeting
NFA President and CEO Dan Roth joins Chairman Chris Hehmeyer to review rulemakings and other issues discussed at NFA’s February Board of Directors meeting.
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****** This video was shot and edited by John Lothian Productions.
Buying ‘market truths’ pays, but not impressively
John Authers, FT
Some investing truths are universal and self-evident. One of the most enduring is: never put cash into funds that have recently been hot performers. Following the hot hand always proves disastrous.
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***DA: In related news, the NASDAQ ticked over 5000 on Monday.
Nine in 10 people consider investing in alternative products
The Actuary, official magazine of SIAS
Based on data from 10,000 customers, pension information service provider Avacade Future Solutions (AFS) said 92.2% of people said they would consider investing in an alternative product. Products for alternative investment include metals, power, fine wine or forestry, compared to traditional products such as equities and bonds.
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***DA: They left out a few, like managed futures, private placements, and Beanie Babies.
Dalio’s Bridgewater Said To Start Artificial-Intelligence Team
FINalternatives
The world’s largest hedge fund manager is banking on machines. Ray Dalio’s $165 billion Bridgewater Associates will start a new, artificial-intelligence unit next month with about half a dozen people, according to a person with knowledge of the matter. The team will report to David Ferrucci, who joined Bridgewater at the end of 2012 after leading the International Business Machines Corp. engineers that developed Watson, the computer that beat human players on the television quiz show “Jeopardy!”
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***DA: The artificial intel team plans to allocate to traditional and alternative investment, including managed futures. No word on whether Beanie Babies will receive an allocation.
Lead Stories
Managed futures making a come back?
Futures & Options World
Managed futures have not had the best of times in recent years as the sector was hit by a series of losses. To make matters worse some firms tarnished the market by charging excessive fees at a time of declining returns. But a recent turnaround has seen the segment end these declines and could herald a possible revival of the strategy many had viewed as dead.
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***DA: No one who truly understands the asset class thought of it as “dead.” More accurately, it was a byproduct of the central banks’ undeclared war on volatility.
Barclay CTA Index gains 3.41% in January
Hedgeweek
Managed futures traders got off to a fast start in 2015, with a 3.41% gain in January according to the Barclay CTA Index compiled by BarclayHedge.
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U.S. futures regulator’s chairman says probably will step down next year
By Tom Polansek, Reuters
The chairman of the U.S. National Futures Association, who led the regulator during broker scandals that rocked confidence in the industry, was re-elected on Thursday but told Reuters he plans to step down after that term ends.
After the board re-elected Christopher Hehmeyer as chairman for his fifth one-year term, he said in a telephone interview that he had told board members he will likely step down because chairmen typically serve five years.
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Leaving Barclays In The Past, Sir David Walker Joins Winton
Mark Melin – ValueWalk
After a stint at Barclays bank where he undertook a the rather daunting task of ridding the firm of its trouble making operations, Sir David Walker, the dignified 75-year-old former chairman of Morgan Stanley International and one-time Bank of England official, might have made a decision to end his career in a fashion befitting a major world economic player. In announcing that he was joining Winton Capital, Walker joins hedge fund royal David Harding in his new role as chairman of the algorithmic managed futures momentum player.
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***DA: It’s a young man’s game, and 75 is the new 45.
As Hedge Fund Returns Falter, Money Continues to Flow In
By JAMES B. STEWART, NY Times
Another year, and another mediocre performance by hedge funds, to put it kindly. The Barclay Hedge Fund Index gained a meager 2.89 percent in 2014, while the Standard & Poor’s 500-stock index gained over 13 percent and the Barclays United States Aggregate Bond Index rose over 5 percent.
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Managed Futures “Founder” Man Group Diversifies Strategy
Mark Melin – ValueWalk
Man Group PLC, the world’s largest publicly traded hedge fund, is further moving away from its managed futures, quantitative investing roots and diversifying its strategy set through the purchase of the investment management business of NewSmith. The move follows a consistent pattern of purchases by Man Group, each adding a unique strategy component to the firm’s traditionally momentum-based investment offerings.
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Managed Futures/Managed Funds
Managed Futures Rankings February 2015
Attain Capital Management
What’s the BEST managed futures program?
This is a tricky one. Put too much emphasis on returns, and you penalize those who control risk. Too much emphasis on experience, and you penalize a potential new star. Too much reliance on the present, and you discount the past, too much on the past and you discount the present, and so on. We tackle the problem with our unique ranking algorithm, which time weights 11 different risk and reward metrics to arrive at a more intelligent ranking than just who had the highest returns.
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The 25 Highest-Earning Hedge Fund Managers And Traders
Forbes
A little more than one year ago, Steve Cohen’s SAC Capital Advisors pleaded guilty to insider-trading related charges stemming from a sweeping federal investigation into the hedge fund firm. Cohen’s SAC Capital, one of the most successful hedge fund firms ever, agreed to pay $1.8 billion to the federal government and stop managing money for outside investors. Instead, Cohen, who was never criminally charged, converted SAC Capital into a family office that manages his personal fortune and rebranded it Point72 Asset Management.
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***DA: Good work if you can get it.
2 ETFs That Invest in Liquid Alts
Think Advisor
Liquid-alternative exchange traded funds (ETFs) comprise only a small part of the ETF universe. Estimated assets under management for the group are just about $2 billion, with roughly $1 billion of that total in the IQ Hedged Multi-Strategy Tracker ETF (QAI) from IndexIQ. The investment options for this category are expanding, though.
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The fall of the female fund manager
Chris Newlands, FT
Women are ‘dangerously outnumbered’ in asset management, says Chris Newlands
Endangered species. That is the term being used to describe female portfolio managers.
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European hedge funds close at record pace as higher costs, poor returns bite
By Nishant Kumar, Reuters
About 40 pct of hedge funds closures globally in Europe
Europe funds lag U.S. peer performance for eighth year
Trend hits investor choice, fund service providers
Hedge funds in Europe are shutting down at the fastest-ever pace as rising costs, weak performance and a slowdown in the pace of new investment leads some embattled founders to bail out.
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Pensions & Institutions
Getting to the bottom of hedge fund fees
Stephen Foley, FT
Funds are beginning to react to pressure to charge less
Last year was another dismal one for hedge funds, as returns failed once again to live up to expectations and heavyweight institutional investors led by Calpers, the giant California pension fund, reconsidered whether managers were worth their high fees.
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***DA: You get what you pay for. Except when you don’t.
Japan Pension-Fund Return Climbs on Riskier Investments
WSJ
Japan’s $1.2 trillion public-pension fund generated its second-highest return ever last quarter, benefiting from moves into foreign assets and domestic stocks while helping support a rally in the Tokyo stock market.
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***DA: A savvy strategy or a Hail Mary pass? Or is it a key to long-term finance for industry and infrastructure?
Big investors need to take more risk
Ian Goldin and Ashok Gupta, FT
Life assurers and pensions funds help supply much needed long-term finance for industry
The effective mobilisation of savings is vital to provide retirement income for the rapidly ageing populations in a growing number of advanced and emerging markets. It also has the potential to supply much needed long-term finance for industry and infrastructure.
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How to Invest for Market Volatility
Financial Planning
Are markets more volatile now? It depends on the market and the asset class in question, but in general the answer is yes — at least among equities and diversifier asset classes such as real estate and commodities, as measured by standard deviation. On the other hand, fixed income has seen a slight decrease in volatility overall since 2008.
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Hedge fund Scipion Capital fills commodity trade finance gap
Reuters
Hedge fund manager Scipion Capital is hoping to appeal to institutional investors disillusioned with poor commodity fund performance by offering an alternative – a commodity trade finance fund that delivers decent steady returns.
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US launches crackdown on pension adviser conflicts
Gina Chon and Barney Jopson in Washington, FT
President Barack Obama is launching a crackdown on the US pensions industry, where the White House says Americans are losing billions of dollars at the hands of advisers who put their own profits before clients’ interests.
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Members of 32bn euro Danish pension funds to vote on fossil fuel divestment
By Damian Carrington – The Guardian
Hundreds of thousands of academics, engineers and lawyers in Denmark are set to vote on divesting their 32bn euro (£23bn) pension funds from the fossil fuels that drive climate change.
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Asset managers’ pay set to beat investment bankers
Harriet Agnew and Laura Noonan in London, FT
Asset managers are set to be paid more than investment bankers by 2016, according to new research, illustrating a shifting balance in global capital markets following the financial crisis.
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The investing golden age may be over: Robert Shiller
By Shawna Ohm, Yahoo Finance
The American economy is changing and we may be overcompensating. That’s one takeaway from Yahoo Finance’s latest discussion with Nobel Prize winning economist, and Yale University professor, Robert Shiller.
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Regulation
BoE warns of ‘more intrusive’ regulation
Philip Stafford, FT
UK authorities may introduce “more intrusive” regulation to police markets if asset managers and corporations are unable to shop around for alternatives to counterparties they felt were engaged in abusive market behaviour, a senior Bank of England official will warn on Wednesday.
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CFTC Staff to Host Public Roundtable on Recovery and Orderly Wind-Down of Derivatives Clearing Organizations
CFTC
Staff of the U.S. Commodity Futures Trading Commission (CFTC) will hold a public roundtable on March 5, 2015, from 9:00 a.m. to 5:00 p.m., to discuss issues related to recovery and orderly wind-down of Derivatives Clearing Organizations (DCOs). The goal of this roundtable is to gather views from a variety of stakeholders, including DCOs, their clearing members (futures commission merchants), and the customers of their clearing members (including money managers, end-users, and others).
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READ MORE: JLN Managed Futures: Managed futures making a come back; Barclay CTA Index gains 3.41% in January; As Hedge Fund Returns Falter, Money Continues to Flow In.