Active fund managers are responding to the popularity of passive investing by forsaking diversification in favor of focused portfolios that contain fewer stocks. The number of active funds with fewer than 35 stocks has almost doubled in the past decade, while assets under management in those funds have nearly tripled, according to Morningstar Direct.
After a decade of low interest rates, US corporate debt has reached almost $10 trillion, or a record 47% of the economy. "This is part of a much bigger issue: an increased amount of collateral damage and the unintended consequences of an excessive reliance on central bank liquidity," says Mohamed El-Erian, chief economic adviser at Allianz. Explore the growth of corporate debt over time with SIFMA's fixed-income data visualization.
Foreign hedge fund managers are still struggling to make headway in China's $355 billion hedge fund market three years after gaining access. The challenges they face include poor brand recognition and difficulty recruiting top talent.
Private equity over the past decade has shown its potential as an asset class strongly positioned to survive in an era of negative interest rates, says Kristoffer Melinder of Nordic Capital. "There were ideas that PE wouldn't survive the financial crisis as it was all built on a pile of debt," but it has "delivered the best returns through it all," Melinder says.
Hedge funds are adapting to today's evolving market for their services by offering customization to a growing number of clients such as pension funds and hedge funds of funds. Figures from the HedgeMark platform show the value of assets held in separately managed hedge fund accounts rose 450% from $4 billion in 2014 to $22 billion as at the end of October.
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The Securities and Exchange Commission has proposed rules on use of derivatives in leveraged and inverse exchange-traded funds. "By standardizing the framework for funds' derivatives risk management, the proposal would benefit investors, funds and our markets," Chairman Jay Clayton says.
The House Agriculture Committee has advanced a bill that would instruct the Commodity Futures Trading Commission to review recognition of EU derivatives market participants, while the Senate agriculture committee has introduced similar legislation. US lawmakers are concerned the latest version of the European Market Infrastructure Regulation will apply to US clearinghouses in a way that subjects them to regulation on both sides of the Atlantic.
The European Securities and Markets Authority, European Banking Authority, and European Insurance and Occupational Pensions Authority are expected to submit a draft proposal to the European Commission that postpones rules requiring non-cleared margin on equity options for another year, sources say.
A position paper circulated among Council of the EU members rejects a proposal by major banks that derivatives clearinghouses set aside additional capital, or have more "skin in the game," to cover the cost of a clearing member's failure. The proposal will be taken up for approval by EU ambassadors next month if it gains support from the majority of the council.
China's State Administration of Foreign Exchange has proposed ways for non-Chinese banks and non-banks to access its domestic foreign-exchange derivatives market. SAFE also notes that foreign firms planning to trade Chinese FX derivatives can do so "with no more than three domestic banks and shall file the list of those banks with the [China Foreign Exchange Trade System] before commencing trade."
Attracting more than 400 executives, the annual FIA-SIFMA AMG Asset Management Derivatives Forum brings together market participants from all sides of a trade to examine the latest developments in global derivatives trading and clearing, operations and regulation. The Forum presents a unique opportunity to connect investors with market expertise in over-the-counter and exchange-traded derivatives.
At SIFMA's Annual Meeting, The Capital Markets Conference, we gained insights into top-of-mind topics for market participants. Inside the debrief from SIFMA Insights, we provide a 360-degree view with perspectives and key themes from analysts, executives and market participants. Read on for the results of our audience poll, as well as summaries of the most impactful, market-wide issues for the year ahead, including Brexit, CAT, cyber, fintech, the LIBOR transition, Reg BI implementation and much more.