Investor withdrawals from hedge funds reached $19.96 billion in December, despite the full-year growth in assets under management reaching $15.9 billion, according to data from eVestment's December and Full Year 2021 Hedge Fund Asset Flows report. "While December's outflows did significantly minimize the hedge fund industry's overall 2021 apparent success, this year still goes down as the first year of net inflows since 2017 and second since 2015," said Peter Laurelli, eVestment's global head of research.
Goldman Sachs Asset Management and BNP Paribas Asset Management are among the bank-managed funds that see potential for strong performance by emerging market stocks this year. Relative to US shares, emerging market stocks are close to their lowest valuations since 2007.
JPMorgan Asset Management has formed a team specializing in sustainable investment within the company's private equity business. The team caters to privately held growth-stage companies working on resource efficiency and climate adaptation.
BlackRock has filed for Securities and Exchange Commission approval to launch the iShares Blockchain and Tech exchange-traded fund, which would track entities involved in "development, innovation, and utilization of blockchain and crypto technologies." The filing comes amid significant upheaval in the cryptocurrency sector.
Some international and domestic fund managers are preparing to roll out new funds investing in bargain-priced US dollar bonds issued by China's property developers. "The high-yield space presents a lot of opportunities, especially for distressed investors," said Paula Chan, senior portfolio manager at Manulife Investment Management.
The largest commodity-focused hedge funds recorded a $3 billion increase in investment during 2021 and reported "positive double-digit performance" for the past two consecutive years, according to the Bridge Alternatives Commodity Hedge Fund Index monthly report. Bridge Alternative Investments' managing partner Ryan Duncan says that 2022 presents more opportunities, particularly in the "ongoing shift to renewable energy, which is expected to create volatility in crude and refined products, natural gas, electricity and metals markets."
Speculation on the Federal Reserve's future rate policy has caused a surge in futures and swaps linked to the Secured Overnight Financing Rate, with open interest in the SOFR-based futures market hitting a record 2.27 million contracts, according to CME Group. The March Fed-dated swap has had a 25 basis point rate hike added to the price, with anticipation of four rate hikes this year.
Issuance of collateralized loan obligations in the US and Europe climbed to record levels last year, and credit quality improved, according to Fitch Ratings. The ratings agency has given CLOs a neutral performance outlook, based on portfolio credit quality and a favorable market environment.
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The Securities and Exchange Commission is exploring expansion of cybersecurity rules to include third-party service providers, such as market makers and brokerages not registered with the SEC, Chair Gary Gensler said. Heightened supervision in these areas "could help ensure important investor protections are not lost and key services are not disrupted as financial-sector registrants increasingly rely on outsourced services," Gensler said.
Securities and Exchange Commission Chair Gary Gensler said he wants to find a way to more directly regulate cryptocurrency exchanges. Gensler said the SEC's other regulatory priorities this year include more thorough disclosure by hedge funds and private equity funds, improved transparency about executive compensation and reforms to the Treasury market.
The Federal Reserve Bank of New York has appointed Michelle Neal, currently CEO of blockchain platform LedgerEdge, to lead its markets group. Starting in March, Neal will replace Daleep Singh, who has taken a position with the Biden administration.
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