Monthly Hedge Fund Trends – September 2013 (Deutsche Bank)

September 2013

KEYWORDS: asset allocation, Federal Reserve Board, hedge funds, marketing, AIFMD, European Union, United Kingdom, Switzerland, Chicago, China, qualified domestic limited partners, Hedge Fund Performance, Japan, Hedge Fund Regulation, EMIR, margin, OTC derivatives, non-centrally cleared derivatives, shadow banking, Basel III

Authors:

Deutsche Bank

Organizations:
  • Deutsche Bank

Summary:

Key findings in the report:

- In our first research piece, the Asset Allocation team discusses the 10y as the key driver of financial markets and its movement since the Fed’s QE taper communication in May. They expect yields to continue to move higher into the September FOMC and rates volatility to subside only at higher levels of yields (3.25%). In the second piece, the US Equity Insights team raises their S&P EPS and year-end target to 1750 due to better capex and exports. They expect healthy S&P ESP and sales growth to resume in 2H13 and 2014.
- The Hedge Fund Capital Group announces the launch of their bi-weekly call series “Marketing hedge funds to Europe: Navigating AIFMD.” They also discuss the increase in demand for liquid alternative strategies among UK and Swiss-based investors as well as demand for fundamental, directional long/short equity strategies from Chicago investors. In China, the first round of Qualified Domestic Limited Partners (QDLP) program applicants received approval to raise money from onshore Chinese investors.
- In a down month for the markets, the median fund lost 0.54% in August; however, equity l/s strategies continue to perform globally for the year (up 7.76% YTD) and regionally with Japan l/s up 17.55% YTD, US l/s up 8.56% YTD and European l/s up 7.35% YTD.

 

- The team highlights a few “back-to-school” names, J.C. Penney Co. and Sears Holdings Corp., that have come under pressure in the US. In Europe, a break in pricing arrangements in the potash industry led to a 40% price decline for competitor K+S. The Asia team discusses the potential impact to emerging markets from US stimulus tapering and the effects of the water leaks at Fukushima Plant in Japan on short interest in Tokyo Electric Power Co.
- The Regulatory team gives an update on the advice published on the equivalence of third country regimes under European Markets Infrastructure Regulation (EMIR). Several progress reports were also published by European governing bodies on final margin requirements for non-centrally cleared derivatives, shadow banking, financial benchmark reform, and Basel III implementation.

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