In 2020, we expect allocators to continue their hunt for niche, uncorrelated strategies. As with all strategies, peer data sets are essential to manager analysis – context is king. To accurately assess key manager characteristics, we structure robust data sets across different sub-strategies. For example, we use our Dispersion Indicator to track monthly performance dispersion on a strategy-by-strategy basis. The higher the indicator within a sub-strategy, the more crucial manager selection becomes for allocators. We also break out strategy-specific performance by AUM to see whether larger or smaller managers outperform.
The high-level indices cited in this monthly infographic are comprised of over 40 sub-strategies. In January, the high-level index with the greatest degree of dispersion amongst its sub-strategy components was the Equity Sector Index. Specifically, Technology/Media/Telecom was the best performing sub-strategy, gaining +3.5%, while Financials (-0.9%), Healthcare (-1.5%) and Energy/Utilities/Industrials (-1.7%) finished at the bottom. For access to sub-strategy indices, please contact email@example.com.
Beyond the recent market volatility attributed to Coronavirus-related fears, we have observed other anecdotal effects in the hedge fund world, including cancellations of industry conferences, manager roadshows and investor on-site visits to name a few. Last year, in an insight we published, we talked about how the protests in Hong Kong could drive managers to transfer operations to Singapore, thus altering capital flows in the region. How might the Coronavirus affect markets, and hedge funds in particular, on a longer-term basis? If the current trends in the Coronavirus data hold, we may look back at this as a scary, but somewhat routine flu season. Realistically, it is too early to tell. As we do with our hedge fund analysis, we stress the importance of evaluating the data in the right context.
For access to performance data, our proprietary alpha rankings and additional commentary, please download the full report.