Hedge Funds

Review of Market Performance: Calendar Year 2022

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Calendar year 2022 witnessed multi-decade record inflation and central banks responded with rapidly tightening monetary policy. Rising rates saw the correlation between bonds and equities turn positive, contributing to large declines across most asset classes. Funds flows diverted away from growth and momentum strategies, and yield curves flattened with the ten-year/two-year yield curve becoming inverted in most developed markets, signaling economic uncertainty ahead.

2023 Outlook: Hedge Funds

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We expect macro hedge funds to perform well, given our expectations that market volatilities will remain elevated and our view that inflation risks are skewed to exceeding expectations. We expect long/short managers will benefit from positive short rebates.

Solvency Beyond Relief: Unlocking the Full Potential of SFA Program Assets

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The American Rescue Plan Act of 2021 included substantial relief funds for the most troubled US multiemployer pension plans through its Special Financial Assistance (SFA) program. This paper looks at how multiemployer plans have a unique opportunity to improve their solvency through 2051 and beyond by optimizing how they invest both SFA relief funds and their existing plan assets.

Asia Insights: Playing Defense

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Asian markets have had a difficult year, but while the current environment has been challenging for most investments, it has also created an opportunity for more defensive and diversifying strategies to add value. In this edition of Asia Insights, we focus on the case for Asia quality strategies within public equities; increased interest in India and Southeast Asia venture capital markets; private infrastructure and private credit as defensive strategies; and the value in Asia macro and equity long/short.

The Growing Importance of Asia Equity Long/Short

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Equity long/short investing is one of the most widely adopted strategies by hedge fund managers in Asia. Its importance has increased over time, and we believe that this strategy can play a key role within a global hedge fund portfolio. There have been several positive developments in recent years that build the case for investors to allocate to the strategy, including better market access, continued alpha opportunity, and a greater talent pool.

Review of Market Performance: Fiscal Year 2022

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Fiscal year 2022 was a challenging one for public market investments. Rising levels of inflation across most developed and emerging markets saw central banks become more aggressive in their monetary tightening plans. This in turn saw correlations between bonds and equities become positive; bonds declined as a direct result of higher inflation and tighter policy, while equities weakened in response to the higher cost of capital. This chart book presents returns and other market metrics for fiscal year 2022.

Hedge Fund Update: Second Quarter 2022

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Volatility peaked in June as markets struggled to find equilibrium between inflationary pressures and the prospects of a recession. There was no shortage of uncertainty. Given the environment, hedge funds performed relatively well versus broad equity and credit market indexes, despite most strategies experiencing absolute losses.