Hedgeweek newsletter - "The dawn's early light"

The dawn’s early light

After Donald Trump exited the White House for the last time this week, the initial stages of Joe Biden’s presidency have started with an air of calm optimism.
Stocks enjoyed a ‘Biden bounce’ on Thursday following the new president’s inauguration, with the S&P 500 trending upwards as investors looked to the Democrat administration’s USD1.9 billion pandemic relief package and vaccination plan to power-charge an economic recovery stateside.
Despite the continued fight against the coronavirus and its attendant social and economic challenges, the cautiously positive sentiment has reverberated across the broader financial services sector, with the global hedge fund industry no different.
This week we learned that the total volume of hedge fund assets under management globally reached a new record high of USD3.6 trillion last year, on the back of strong returns and renewed investor faith. That statistic, coupled with a solid early start to the year by several managers, will put the industry in further good stead in the eyes of allocators following a tricky couple of years.
Indeed, against a backdrop of continued market uncertainty and potential economic pitfalls, hedge funds may prove to be a “valuable portfolio complement” in investors’ portfolios this year, according to JP Morgan Asset Management, who this week predicted a “rich environment for growth” in 2021. The firm’s annual wide-ranging annual outlook for alternatives assets forecast a series of lucrative global ‘megatrends’ – encompassing investment themes around technology, healthcare, and sustainability themes – arising from the pandemic.
Meanwhile, Brummer Multi-Strategy CEO Mikael Spångberg has suggested the fund, which celebrates its 25th year of operation in 2021, is well-placed to build on recent positive performance – but stressed the importance of generating alpha in such unpredictable times.
In a feature interview with Hedgeweek, Bluebell Capital discussed how “significant inefficiencies” in large swathes of markets and companies in Europe are making the region ripe for activist managers.
Finally, Hedgeweek’s annual Global Outlook 2021, published this week, examines the key issues and trends likely to shape markets and asset classes this year. The wide-ranging report brings together an assortment of manager perspectives from across the hedge fund universe globally – including equities, credit and macro – and also delves into how evolving operational and investment trends are impacting asset management firms. The substantial study also explores the shifting manager-allocator dynamic in what is certain to be another eventful year for the industry.

Hugh Leask
Editor, Hedgeweek

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