PivotalPath

Renewables are not done under Trump, instead managers enthuse about the “mosaic approach” in energy: Rising energy demand on the back of old infrastructure and the “electrification of GDP” are seen as huge investment winners. In the US alone energy demand has gone from flat to a sharp upward trajectory over the last few years, requiring new infrastructure that will need multi-year projects, creating dislocation and opportunity. Much has been made of the proliferation of clean energy shorts heading into the Republican win. However, as energy needs increase, the US will become a “mosaic energy producer”, relying on multiple types and sources. As one manager said, “current power demands won’t change based on who wins the US election – renewables are a political football, but they are also a key part of how we meet demand, and prices will rise post the election. Energy production is not a zero-sum game.” Any increase in inflationary pressures will also help renewables as they become cheaper via greater fixed costs, versus the growing expense of traditional sources of energy. Reach out to PivotalPath to discover how allocators with $400bn in hedge fund investments are using our research to support better decisions.  Read the full Pivotal Point of View Report at https://lnkd.in/e-mP7RzU

All strategies continue to produce positive Alpha in Q4. However, Managed Futures is now on the brink, showing positive alpha of 0.6% across October, a vertiginous fall from its 14.3% of alpha at the end of Q1, when it sat atop PivotalPath’s alpha leaderboard. Read the full PPOV report at https://lnkd.in/ePh3cf8X

Check out a quick clip from Jon Caplis from a recent AIMA - The Alternative Investment Management Association webinar. It’s worth remembering that portable alpha has made its way back into institutional investors conversations and portfolios – and while a particular focus on the past year, is something that has been happening for much of the last decade.   Why? Hedge funds have been generating significant alpha relative to the S&P with better risk- adjusted returns.   Jon shares his take below. Reach out to PivotalPath to discover how allocators with $400bn in hedge fund investments are using our research to support better decisions.  

The November edition of the Pivotal Point of View is now available. Despite October’s volatility, hedge funds did a credible job of besting the wider markets over a challenging month, with the PivotalPath Hedge Fund Composite Index flat at 0.1%. YTD the PivotalPath Equity Sector Index remains the strongest of our main hedge fund indices, it is now up 14.6% for the year and 26.4% over the last 12 months. Read the report to gain insight on sector performance and other valuable intelligence. Click below to go to our website and read the full PPOV. #research #data #hedgefunds #markets

A new presidential administration may mean new opportunities in #M&A. For the merger arb space, this could lead to a much brighter future.   For context, funds focused on mergers have had a more challenging year than most. As we shared with Caitlin McCabe for the The Wall Street Journal, the PivotalPath Merger Arbitrage Index is up only 4.6% through October of this year – which compares to an 8.5% return for our Composite Index.   An economic agenda that is lighter on regulation will likely change these dynamics and allow more deals to get done.   https://lnkd.in/erY7_ZFA

Trading activity jumped by the most in seven months this week following the re-election of Donald Trump. What’s behind it – and how long will it last?   As Jon Caplis shares with Natalia Kniazhevich of Bloomberg, “#Hedgefunds think that Trump will continue low tax and low regulation policies and managers are expressing their confidence by buying again.”   However… Jon also notes that while hedge funds are participating in the stock-market rally, that may not last as some money managers may prefer to lock in profits before the calendar flips over for the new year. For context, the PivotalPath US Equity Long Short Index is up 10% this year through October, in the 70th percentile of rolling 10-month returns going back to 2010.   More details in the article below.   https://lnkd.in/e6NCEPWE

Are CTAs making a comeback? As always, context matters and as we shared with Lydia Tomkiw at Pensions & Investments, 2022 was a big year for Managed Futures.   Our Managed Futures Index finished that year up 14.7%. This year through Sept. 30, the Index is up 3.4% and has annualized 5.1% over the last 3 years rolling.   Full story in the link below.   https://lnkd.in/eGYR6yER

With election day finally here, many #hedgefunds have been focused on other more concrete trends, as the race has been impossible to predict. But it’s worth noting how the industry has performed coming into the election.   As we noted in a recent conversation with Carolina Mandl of Thomson Reuters, the PivotalPath Composite Index gained 8.3% in the first nine months of the year. This compares to the S&P 500's 20% move higher.   Jon Caplis shared that based on conversations with numerous managers, he expected some selling ahead of the election. “They could bank those returns, and then they could wait for weeks or months, depending on how long it takes before things become clear again.”   Check out more in the link below!   https://lnkd.in/eKkRPukq

Some #hedgefunds are beginning to position themselves for a certain election outcome. But as Jon Caplis shares with Caitlin McCabe for the The Wall Street Journal, many are still hesitant to make bets that could jeopardize this year’s strong gains.   Hedge funds are up 8.3% in our Composite Index so far this year, and as Jon notes, “the incentive for any of them to make big bets on what still seems pretty uncertain, it just doesn’t behoove them or their investors.”   Check out the full story below.   https://lnkd.in/gdH6cfAN

Last week, Jon Caplis joined the AIMA - The Alternative Investment Management Association Global Investor Forum, alongside Diana Myint from BlackRock, Zarqaa Shaikh, CFA from OPTrust, Kadmiel Onodje, CAIA from NEPC, LLC and Brad Dunkley from Waratah Capital Advisors Ltd., to discuss #hedgefund performance in today’s environment, what allocators are looking for, and how managers are engaging with clients in new and creative ways. For those who weren’t able to join the event, PivotalPath is seeing continued outperformance with many funds experiencing double-digit returns over the past 12 months. Allocators are increasingly rewarding diversification, low-correlation, liquidity, and genuine alpha - making hedge funds an investment priority. Lastly, Jon shared some perspectives on how managers are creating strategic relationships with clients that go far beyond the traditional comingled fund structure. We’re proud to work with the AIMA - The Alternative Investment Management Association team and to continue providing unmatched clarity and transparency for hedge fund allocators.