Hedge funds have enjoyed their best start to a year in 15 years with Q1 gains now standing at 4.8%, the latest data from Eurekahedge show, while survey findings from eVestment point to a similarly strong start. Recent market upsets such as the GameStop rally and the Archegos collapse have helped to create the kind of market environment that benefits strongly active trading strategies, industry watchers say.
President Joe Biden has entered detailed discussions with lawmakers on how to finance his infrastructure plan. Asset managers have expressed disappointment that there appears to be few opportunities for public-private partnerships, though Biden has said he is open to negotiation on the "extent of the infrastructure project, as well as how we pay for it."
Top alternatives managers will enjoy an increase of fee income of between 17% and 18% as investors increase their exposure to the sector over the next 12 months, Morgan Stanley analysts say. "[D]emand for alternatives remains intact driven by a low-rate backdrop and asset owners struggling to meet return targets that's leading to an increasing willingness to trade liquidity for returns that could drive fundraising above our base case," the analysts say.
The so-called Brent-Dubai exchange of futures for swaps, a key price spread used by traders to compare the overall costs of buying Middle East versus Brent crude oil barrels, is nearing its widest point since late 2019. The shift in pricing is likely to drive more buyers toward Middle East barrels.
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The Securities and Exchange Commission has announced it will ramp up its enforcement of how special purpose acquisition companies account for warrants they either sell or pass on to investors. The watchdog's intervention could force some SPACs to restate their financial statements and lead to a slowdown in the market for blank cheque companies.
A panel at an industry event has suggested US Securities and Exchange Commission chairman Gary Gensler will be more aggressive in pursuing misconduct in the derivatives markets. The experts also agreed that "that cross-collaboration between the CFTC and SEC is likely."
The prospect of higher taxes on top earners in New York City has prompted some hedge fund managers to relocate to Florida, where they benefit from a nil-rate of income tax, with other managers reportedly considering such a move. One factor behind the shift is the $10,000 cap introduced in 2018 on deductions from federal taxes for state and local levies.
The Securities and Exchange Commission has found inconsistencies, shortcomings in compliance and inadequate documentation in firms' disclosure of environmental, social and governance investments. The SEC has issued a risk alert stating firms must ensure consistent compliance across departments and accuracy in public communication on ESG investments.
The likelihood of EU firms shifting their clearing business out of the UK is low, given the sector's concentration in London and the opportunities to still reach the City's lower-cost services through other channels, such as through US firms.