Managed Funds Association recap
The life of a hedge fund manager can be so very tough at times…
Take the just concluded Managed Funds Association’s “Forum 2015”, where managers have to make it through the squalor, noise, and smells of (wait for it…) the Four Seasons Hotel, dressed in nothing but a suit (usually without a tie). All sarcasm aside, many of the industry’s best and brightest were here in our home town swapping war stories and comparing track records at Managed Funds Association flagship conference highlighting education on managed futures and macro strategies.
Gates Capital's ECF Value II fund was up 9.4% for the first quarter, compared to the HFRI Event-Driven Index's 8.2% gain, the Russell 2000's Value Total Return Index's 21.2% gain, and the S&P 500's 6.2% return. Q1 2021 hedge fund letters, conferences and more Gates Capital Management is an event-driven value . . . SORRY! Read More
And as you can imagine – no self respecting managed futures focused firm would miss such a Managed Funds Association event, and multiple members of the RCM team were there rubbing elbows with managers, poring over fact sheets, and hearing about firm’s risk controls in between tea and crumpets (we made that last part up, there weren’t any crumpets, much to our surprise, at the Four Seasons).
So what was the buzz there on the ground at Managed Funds Association:
From the investor side, we heard about sizable commitments to the space, about an increased interest in the ‘short term space’ (hey, didn’t we just talk about that); about the continued need for education about this particular brand of Alternatives (despite some of us doing that for more than a decade now), about trend following becoming popular again (albeit now talked about as beta more and more often), about big institutional investors still leaning on consultants for advice in this arena, and those same institutions still having an aversion/lack of full understanding of futures markets and derivatives.
From the manager side, we heard about a lack of investors at the event… although managers always say that unless it’s a 10 to 1 ratio; about regulations in Europe making it very difficult to cater to investors there – while more and more European managers seem to be catering to US investors, about newer innovative products launched during the dark times of 2012 now coming up on three year track records, and about everyone’s desire to be part of (or bigger part of) a 40 Act Mutual Fund product.
Of course, the current king of the Managed Futures Mutual Fund, Cliff Asness, was in attendance, giving a sit down talk while everyone ate lunch (do they get hungry talking while everyone is eating?)
Live from MFA, Mr. Cliff Asness from AQR. pic.twitter.com/GWRMwqYnOs
— RCM Alternatives (@rcmAlts) June 24, 2015
We couldn’t help but press Mr. Asness on the size and capacity of his fund, and with the only question in the room – asked him about larger managers having declining performance and how much money they could manage in the managed futures fund. He said, “that’s a hard question”, and that they are aware of the research , yet haven’t yet been able to prove that it is true. Saying the real challenge in modelling for capacity isn’t how much liquidity is out there to support your strategy in good times, but what happens when there is no liquidity or a big liquidity event in any one market, concluding with the sentiment that they think they can handle two times the assets .
That would be Winton territory, and quite impressive from an asset raising standpoint… while a real time test of the bigger isn’t necessarily better thesis, so we’re all for seeing how that turns out. For those smaller managers out there, if $16 Billion in a managed futures mutual fund scares you, go read this.
As for comedian Jay Mohr at the Pinnacle awards… his best lines (beyond lamenting at going the wrong way in his career, starting on a Tom Cruise movie and ending up on AM radio) were in his bit on BarclayHedge’s Sol Waksman, telling everyone they were in Vietnam together, how good Sol smells, and that they went in to get glasses in tandem at Pearl Vision once.