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Crypto Hedge Funds?

There has been quite a lot of volatility with crypto hedge funds over the last few months.  But does this mean that they should be completely discounted?  Should we take a break for a while, or make that long term? Adding to this issue is Americans lack of understanding of its regulatory status.

Still, having said all that, a recent  CryptoGlobe report suggests quite the opposite, and that investing in hedge funds has actually increased in 2018.    Crypto Fund Research data found statistics from last month as being: 216 investments in these funds (216 investments for the entire 2017 year).  So it’s not so surprising that there is an escalation in popularity of the cryptocurrency hedge fund space.

Looking at crypto-related Venture Capital we also see an upswing this year, with Digital Currency Group leading the blockchain VC funds having made 58 investments (worth $78 million). According to Josh Gnaizda, CEO of Crypto Fund Research:

“the four criteria we used [reflect] not only total investment but also how long they’ve been investing in blockchain and how active they are today, not just a year or three ago … the industry is changing rapidly. So what’s most accurate today won’t be as correct next month.”

In conclusion, even though right now crypto markets are somewhat ‘volatile,’ according to Henri Aslanian of PwC, “the long-term positive impact of the number of institutional players entering cryptocurrency investment is more important than short-term price fluctuations.”

Hedge Fund Investments: Good or Bad Idea?

While managers are doing well, are hedge funds all that?  Yes and no.  hedge fund portfolios have, traditionally actually performed well but this success can be substantially diluted due to service provider fees. It has been said that it is the hedge fund investors who suffer these fees ultimately.  But we’re not convinced that’s true.  It was pointed out in a recent article that:

“The annual Institutional Investor magazine survey of their earnings shows that the 25 highest earners took home an average of US$615 million last year, making a collective total of US$15.4 billion, up from US$11 billion in 2016. Top of the list for the third straight year is James Simons, of Renaissance Technologies, with total earnings of US$1.7 billion in 2017.”

Furthermore, the Japanese seem to feel that hedge funds make a good investment.  Given their economic environment, spurred by political uncertainty resulting in “low rates and market turmoil,” hedge fund investments are becoming more popular and vigilant.

One example is Taiyo Life Insurance Co. which is planning on investing almost $400 million into hedge funds. Indeed:

“Hedge funds, after significantly underperforming the U.S. and Japanese stock markets last year, have returned an average 0.2% so far this year through April, according to eVestment. That compared with the S&P 500’s decline of 1% and Nikkei Stock Average’s drop of 1.3% during the same period.”

 

 

Nigeria and Capital Markets

For the economy in Nigeria to grow and flourish, capital markets are “critical.”  According to Nigerian Stock Exchange CEO Oscar Onyema – in his recent address to the 5th Lagos and London Capital Markets in Partnership Conference – for growth to really happen, Nigeria needs a “solid and vibrant capital market ecosystem that will attract investment and unlock the potential that exists in the economy.”

Apparently though, Nigeria is already becoming an attractive option for international investors.  Being Africa’s “largest economy” according to Iheanyi Nwachukwu “has the potential for a larger capital market that offers better returns for any prospective investor now and in future.”  This sentiment was supported by Head of Primary Markets, Middle East, Africa and India, Gokul Mani who pointed out that:

“Nigeria still offers huge opportunities for investors. Africa and indeed Nigeria are very high focus regions for London Stock Exchange Group (LSEG),”

The NSE and LSE Dual Listing Conference – held earlier this month – was organized in an attempt to enhance and advance relations between the UK and Nigeria.  As the situation currently stands, Britain – according to Laure Beaufils, British Deputy High Commissioner, British High Commission – is 100% in favor of supporting “investment, finance, and inclusive growth in Nigeria. One out of every five companies listed on FTSE 100 Index has business presence in Nigeria.”

 

 

M&A News

The acquisition by Principal Financial Group of RobustWealth is happening.  With both corporations working together on the deal for nearly a year, the details are that in the deal, RobustWealth will “retain its open architecture philosophy and operate independently under a management committee within Principal [and] will continue to sell their platform to firms outside Principal as part of their growth strategy.”  According to CIO of Principal Financial Group Tim Dunbar, the deal will “accelerate [Principal’s] broader digital efforts.  We really think it’ll help advisors to get closer to their clients, provide customized solutions, and help the advisors to grow. We have to acknowledge people’s needs and wants: there is an unprecedented need for financial advice. And, in today’s fast-paced, always on, digital world, people have a strong desire for personalization, convenience and 24/7 access to their money.”

Viking Global Investors recently acquired a majority stake in Birchbox beauty startup. Investing approximately $15 million into the business, this will render the company’s other investors somewhat obsolete.  VC firms like Accel Partners and First Round Capital will likely walk away with nothing from the firm now valued at $500 million. Co-founder and CEO Katia Beauchamp will remain at the head of the company and there have been promises that there will not be job cuts connected to the deal.

Kohlberg Kravis Roberts (KKR) is purchasing BMC, a software company.  At the date of this publication, the price has yet to be revealed.

Hedge Fund Agents: The New Player

In this video, Professor John C Coffee, Adolf A. Berle Professor of Law, Columbia University, discusses his winning paper in the ECGI Law Series in 2017. It examines the “new world of hedge fund activism.” New agent –which aggregates the support of many institutional investors and brings pressure to bear on the board for issues that it believes will be value maximizing.” That’s basically good, Coffee says, but warns that “new agents always involve new agency costs.”

Trade War and Reacting Futures

Once Treasury Secretary Steven Mnuchin declared that the trade war was “on hold,” futures took a huge jump. Following discussions and negotiations, they reached a “very comprehensive framework agreement that needs to be implemented” with a large variety of components.
One of these has been Trump’s focus on trade deficit reduction through the significant increase of exports.

Finance Awards

Throughout the world, awards are presented for various accomplishments in finance and related industries.  Here we take a look at recent Enterprise Awards given in the UK; Alabama’s Elite Investment Awards and Malaysia’s Investment Awards. Later on in the year, we will be privy to Boring Money – in conjunction with – The Telegraph putting together the Consumer Investment Awards 2018.

The UK’s most esteemed recognition for business success – the Queen’s Award for Enterprise 2017 – this year went to LEW Techniques Ltd. in recognition for its growth in international trade.  According to the company’s technical director, Andrew Walker:

“Since we were honored in 2016, we have continued to grow significantly, doubling our turnover mainly by increasing our overseas sales, which have risen more than 250 percent. Over the last few years, we have collaborated in projects with customers developing loudspeakers, critical oxygen sensors, and safe explosive detonators — all areas new to us and each requiring significant new process development. Often these types of projects take years to deliver a functional, marketable product, and some may fall by the wayside, but we always learn along the way, take the knowledge learned, and add it to our portfolio of techniques.”   said Andrew Walker, technical director at LEW Techniques.  LEW Techniques specializes in the manufacture of custom miniature mechanical ceramic and metal components.”

In Alabama, Wayne Farms and Mercedes-Benz were chosen for the elite investment awards assembled by Trade and Industry Development.  According to Publisher Scott D. Swoger, the

“These major investments provide a clear snapshot of where and in which industries growth is occurring today. Each of the investments to be made by Trade & Industry Development’s 13th Annual CiCi Awards recipients will be transformational for the communities in which the projects will be located.”

And in Malaysia, PMB Investment Bhd took home 4 Thomson Reuters Lipper Global Islamic Fund Awards. PMB Shariah Growth Fund won the Best Malaysian Equity Fund award; its Shariah Dividend Fund won the Best Malaysian Income Equity Fund award; the PMB Shariah Aggressive Fund (PMB SAF) won in the Best Malaysian Equity Fund.