Pivotal Point of View – August 2020

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Observations:

  • YTD,  six fund strategies are members of the double-digit return club, four at the top, two at the bottom:

    • Technology/Media/Telecom: 20.7%

    • Commodities: 20.4%

    • Asia Long/Short Equity: 13.8%

    • Convertible Bond Arbitrage: 11.0%

    • Risk Premia: -10.9%

    • Financials: -11.8%

  • This month, 76% of managers reported positive performance. On a YTD basis, 68% of managers are in the black, while 32% have yet to break even.

  • Hedge fund industry professionals, from allocators to Prime Brokers, share a wide-spread belief that alpha will decline during the latter part of the year. While 2020 has seen significant alpha-generation across strategies, we did observe a decline in alpha over the recent rolling year period.  We will be monitoring whether this is a monthly aberration or the start of a year-end trend.

  • Our allocator clients continue to remain interested in adding to their hedge fund portfolios. In particular, they are focused on Multi-Strat, Distressed and Sector-Focused funds. In the next few weeks alone, our research team will meet with almost 100 managers on behalf of these clients.

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