Hedge fund invasion of U.S. Treasuries puts bond traders at risk



Hedge funds are crowding into U.S. Treasuries, and that has bond traders bracing for more turbulence.

While the Federal Reserve doesn’t break out hedge-fund ownership, a group seen as a proxy increased its holdings to a record $1.27-trillion (U.S.) in the past year, according to a quarterly report released by the central bank this month. That came as foreign central banks and finance ministries, the biggest buy-and-hold owners in recent years, culled their investments for the first time on an annual basis since 2000. read more

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Regulators launch probe into the ‘closet indexers’ of the mutual fund industry



Regulators are taking a closer look at actively managed funds to determine if portfolio managers are fulfilling their duty – or simply hugging an index.

The Ontario Securities Commission wants to know whether funds that are advertised as actively managed are in fact living up to their name, or whether they are exhibiting a close tracking of their benchmark index, such as the S&P 500 or the S&P/TSX composite index. read more

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This hedge fund topped rivals with mix of algorithms and 16th-century theory



The market turbulence leading investors to flee hedge funds around the world is providing a measure of vindication for one asset manager.

First Quadrant LP, which manages $11-billion in foreign- exchange strategies, relies on computer models that crunch data such as interest-rate differentials and equity valuations to identify currencies’ fair value and determine entry and exit points. The $1-billion Absolute Return Currency Fund it runs out of Pasadena, Calif., for John Hancock Investments has returned 9.6 per cent in the past year, topping 13 rivals tracked by Bloomberg. read more

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Investors to be provided mutual fund details earlier



Mutual fund investors will soon be receiving mutual fund details prior to signing on the dotted line.

Beginning May 30, financial advisers and their investment firms will be required to provide investors with a document called “Fund Facts” before the purchase of a mutual fund.

The purchase will not be effective until the document is received by the clients electronically, in-person or by mail. (Investment firms will be responsible for keeping a record of delivery of the document.) read more

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This hedge fund topped rivals with mix of algorithms and 16th-century theory



The market turbulence leading investors to flee hedge funds around the world is providing a measure of vindication for one asset manager.

First Quadrant LP, which manages $11-billion in foreign- exchange strategies, relies on computer models that crunch data such as interest-rate differentials and equity valuations to identify currencies’ fair value and determine entry and exit points. The $1-billion Absolute Return Currency Fund it runs out of Pasadena, Calif., for John Hancock Investments has returned 9.6 per cent in the past year, topping 13 rivals tracked by Bloomberg. read more

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Regulators launch probe into the ‘closet indexers’ of the mutual fund industry



Regulators are taking a closer look at actively managed funds to determine if portfolio managers are fulfilling their duty – or simply hugging an index.

The Ontario Securities Commission wants to know whether funds that are advertised as actively managed are in fact living up to their name, or whether they are exhibiting a close tracking of their benchmark index, such as the S&P 500 or the S&P/TSX composite index. read more

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Investors to be provided mutual fund details earlier



Mutual fund investors will soon be receiving mutual fund details prior to signing on the dotted line.

Beginning May 30, financial advisers and their investment firms will be required to provide investors with a document called “Fund Facts” before the purchase of a mutual fund.

The purchase will not be effective until the document is received by the clients electronically, in-person or by mail. (Investment firms will be responsible for keeping a record of delivery of the document.) read more

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Some hedge funds eye the next Big Short



A group of hedge funds, convinced they have found the next Big Short, are looking to bet against bonds backed by subprime auto loans. Good luck finding a bank willing to do the trade.

Money managers have looked at betting that subprime auto securities will tank for many of the same reasons that investors wagered against risky mortgage bonds in the run-up to the financial crisis: Loan volume has mushroomed in the last few years, lending terms have become looser and delinquencies are ticking higher. Mary Kane, an asset-backed securities analyst at Citigroup Inc., wrote in a note late last month that the bank has received “an explosion of calls” in recent weeks, after the movie The Big Short portrayed a group of traders that wagered against subprime bonds. read more

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Meet the energy hedge funds that made money while oil plunged



The plunge in oil prices has dragged down much of the energy sector with it. Yet, some energy-focused hedge funds managed to avoid the carnage entirely.

Lansdowne Partners – one of Europe’s largest hedge funds with $22-billion (U.S.) – gained 14.8 per cent last year in its long- short energy-focused equity fund, according to a person familiar with the matter. Some commodity trading advisers, or CTAs, posted gains of more than 25 per cent in 2015. read more

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