Investment

Analysis Shows Hedge Fund Industry is Booming

Published

2 years ago

March 22, 2022

Investors King Contributor

Highlights

67% of all hedge funds globally and 70% of all new fund launches are US-based
Crypto hedge funds appear for the first time in the top 10 of hedge fund strategies
22% of hedge funds apply a purely quantitative investment process and ca. 2% use artificial intelligence

An in-depth analysis compiled by quant technologies provider SigTech, reports that after continued expansion in 2021, there are currently 27,255 active hedge funds globally.

Geographical breakdown

The hedge fund industry remains dominated by the US market, which is home to 67% of all hedge funds globally, followed by 9% in the UK, 4% in China, and ca. 2% each in Brazil, Canada and Switzerland.

When it comes to the cities that have the largest concentration of hedge funds, unsurprisingly New York is the clear leader with nearly 7,000 funds (25.0% of total), followed by London with over 2,000 (8.2%), and Hong Kong with nearly 1,000 (3.6%).

Top 10 cities No. of hedge funds % of total hedge funds

New York 6,801 25.0%

London 2,230 8.2%

Hong Kong 978 3.6%

Boston 931 3.4%

Chicago 786 2.9%

Greenwich (USA) 682 2.5%

San Francisco 677 2.5%

Los Angeles 482 1.8%

São Paulo 448 1.6%

Toronto 395 1.4%

Daniel Leveau, VP Investor Solutions at SigTech, comments: “Our analysis reveals a strong and vibrant global hedge fund industry. Despite a healthy growth in emerging hedge fund centers, US-based managers continued to dominate the industry, both in absolute numbers and in terms of new fund launches.

Strategy breakdown

The most popular hedge fund strategy is Equity Long/Short, followed by Multi Strategy, Equities others (e.g., long bias, short bias), Fixed Income Credit and Event Driven. The fast-growing sub-strategy Crypto now makes up ca. 3% of all hedge funds. Also noteworthy is that 22% of the world’s hedge funds apply a purely quantitative investment process and ca. 2% claim to use artificial intelligence.

Top 10 hedge fund strategies No. of hedge funds % of total hedge fund strategies

Equity Long/Short 6,925 26.0%

Multi Strategy 4,899 18.4%

Equities others 3,120 11.7%

Fixed Income Credit 3,004 11.3%

Event Driven 2,004 7.5%

Managed Futures 1,780 6.7%

Macro 1,450 5.4%

Relative Value 1,377 5.2%

Alternative Risk Premia 997 3.7%

Crypto 774 2.9%

New hedge fund launches

On the backdrop of a strong performing hedge fund sector, new fund launches remain strong, with nearly 2,000 new launches per year on average since 2019. Of the 5,500 new hedge funds launched since 2019, 70.2% are based in the US, 9.3% in the UK and 5.2% in China.

Top 5 countries for hedge fund

launches since 2019 No. of hedge fund launches % of total

USA 3,859 70.2%

UK 512 9.3%

China 287 5.2%

Brazil 127 2.3%

Canada 101 1.8%

The most popular strategy for these new funds is Equity Long/Short, followed by Fixed Income Credit, Equity others (e.g. long bias, short bias) and Multi Strategy.

Top 10 hedge fund strategies No. of hedge funds % of total

among fund launches

Equity Long/Short 1,059 19.3%

Fixed Income Credit 515 9.4%

Equity others 394 7.2%

Multi Strategy 348 6.3%

Crypto 310 5.6%

Event Driven 244 4.4%

Relative Value 241 4.4%

Macro 238 4.3%

Managed Futures 133 2.4%

Alternative Risk Premia 38 0.7%

Leveau adds: “The robust level of new hedge fund launches reflects a sustained strong demand from investors for innovative and uncorrelated investment strategies to meet return expectations in an increasingly challenging market environment. Hedge fund growth shows no signs of abating, fuelled by the ever-increasing investment opportunities in the market, and the growth of new data and tools available to these funds.”

Crypto hedge funds on the rise

In 2021, a record number of 171 crypto hedge funds were launched. In total, there are now 774 hedge funds focused on crypto, with the US again being the driver of innovation with 80% of these funds domiciled in the US.

Daniel Leveau says, “We are investing heavily in our quant technology platform to satisfy the strong demand from hedge funds looking to accelerate their data-driven investment processes.

Alongside the growing hedge-fund community, SigTech enjoyed strong growth in 2021. Clients with a combined AUM of over $5 trillion are now using our platform, including some of the world’s leading hedge funds, as well as recently launched start-up systematic funds.”

About SigTech

SigTech offers a future-proof quant trading platform to global investors. Cloud-hosted and Python-based, the platform integrates a next-gen back test engine and analytics with curated datasets covering equity, rates, FX, commodity, and volatility. SigTech eliminates the expensive upfront costs of infrastructure build-out, giving clients an edge in alpha generation from day one.

The SigTech platform was originally built over seven years to manage systematic investments at Brevan Howard, which remains a SigTech client today. After the spinoff into an independent company in 2019, the team has grown substantially and established SigTech as the leading provider of quant technologies.

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Investment

Nigeria Offers 12 Oil Blocks and 5 Deep Offshore Assets to Global Investors

Published

2 weeks ago

May 8, 2024

Samed Olukoya

Nigeria has unveiled plans to offer 12 oil blocks and 5 deep offshore assets to global investors.

The announcement was made during the ongoing 2024 Offshore Technology Conference (OTC) in Houston, United States, where Nigerian officials presented the country’s vast hydrocarbon potential to an international audience of industry stakeholders.

Addressing participants at the African Oil Industry Opportunities Session, a side event at the OTC, Gbenga Komolafe, Chief Executive of the Nigerian Upstream Regulatory Commission, outlined Nigeria’s significant reserves and emphasized the strategic importance of leveraging these resources for economic development.

With over 37.5 billion barrels of crude oil and condensate reserves, as well as 209.26 trillion cubic feet of natural gas reserves, Nigeria stands as a major player in Africa’s energy landscape.

Komolafe highlighted the government’s commitment to conducting a transparent and competitive bidding process, in accordance with the Petroleum Industry Act (PIA) and applicable regulations.

The 2024 Licensing Round, he noted, marks a significant milestone in Nigeria’s hydrocarbon development initiative, introducing 12 carefully selected blocks spanning diverse geological formations, from onshore basins to deep offshore territories.

Each block has been identified for its potential to enhance Nigeria’s reserves and stimulate economic growth, offering opportunities for investors to participate in the country’s oil and gas industry.

The bidding process, which commenced on April 29, 2024, is structured to ensure fairness, competitiveness, and transparency, with guidelines issued to guide prospective bidders.

In addition to the 12 blocks, Nigeria will also conclude the sale of seven deep offshore blocks from the 2022 Mini-Bid Round Exercise, covering approximately 6,700 km2 in water depths ranging from 1,150m to 3,100m.

This comprehensive offering underscores Nigeria’s commitment to maximizing the potential of its petroleum resources and attracting strategic investments to drive sectoral growth.

The bidding round, scheduled to conclude by January 2025, presents a significant opportunity for investors and companies to participate in Nigeria’s oil and gas sector.

The inclusion of both new greenfield blocks and assets from previous bid rounds reflects the government’s dedication to fostering innovation, technological exchange, and capacity building within the industry.

With criteria emphasizing technical competence, financial capacity, and viability, the 2024 licensing round aims to be conducted in a fair, competitive, and non-discriminatory manner, in line with the provisions of the Petroleum Industry Act.

As Nigeria positions itself as a prime destination for oil and gas investment, stakeholders are optimistic about the potential for sustainable growth and development in the sector.

Investment

Microsoft to Invest $2.2 Billion in Malaysia’s Digital Infrastructure

Published

2 weeks ago

May 2, 2024

Samed Olukoya

Microsoft Corporation has announced plans to inject $2.2 billion into Malaysia’s digital infrastructure over the next four years.

This investment shows the company’s determination to harness the potential of Southeast Asia’s burgeoning technology market.

During his visit to Kuala Lumpur, Microsoft’s Chief Executive Officer, Satya Nadella, revealed the company’s ambitious agenda, which encompasses the construction of essential infrastructure to support its cloud computing and artificial intelligence (AI) services.

Nadella also outlined plans to provide AI training to 200,000 individuals in Malaysia and collaborate with the government to enhance the nation’s cybersecurity capabilities.

The move comes amidst intensified competition among tech giants, including Alphabet Inc., Amazon.com Inc., and Alibaba Group Holding Ltd., to gain a foothold in Southeast Asia’s rapidly digitizing landscape.

With a population exceeding 650 million people, the region presents a lucrative market for tech companies seeking to expand their operations beyond traditional strongholds like China.

“We are committed to supporting Malaysia’s AI transformation and ensure it benefits all Malaysians,” stated Nadella.

During his visit, Nadella met Prime Minister Anwar Ibrahim and discussed the importance of collaboration between the public and private sectors in driving digital innovation.

Microsoft’s investment not only serves to fortify Malaysia’s technological infrastructure but also aligns with the company’s broader strategy to assert its presence in the Asian market.

Nadella has previously pledged a substantial sum of $7 billion to bolster Microsoft’s services across the region, emphasizing the pivotal role of AI as a catalyst for growth and urging countries to ramp up investment in the technology.

In Malaysia, the southern region of Johor Bahru, linked to Singapore by a causeway, is emerging as a key hub for AI data centers.

The partnership between Nvidia Corp. and local utility YTL Power International Bhd. to establish a $4.3 billion AI data center park in the area underscores the region’s growing significance in the realm of digital infrastructure.

While AI adoption in Southeast Asia is still in its nascent stages, experts predict significant economic benefits with the potential to add approximately $1 trillion to the region’s economy by 2030.

Malaysia is poised to capture a substantial portion of this growth with estimates suggesting a potential windfall of around $115 billion for the country.

Microsoft’s commitment extends beyond Malaysia, as the company announced similar investments during Nadella’s regional tour.

In Indonesia, Microsoft unveiled a $1.7 billion investment plan, while an undisclosed amount was pledged for initiatives in Thailand. Notably, Microsoft intends to invest approximately $1 billion in a new data center in Thailand, as reported by the Bangkok Post.

Treasury Bills

Investors Flock to Nigerian Treasury Bills, Subscriptions Soar to N23.75 Trillion

Published

3 weeks ago

April 29, 2024

Samed Olukoya

Nigeria’s Treasury Bills market has witnessed an unprecedented surge in investor interest with subscriptions soaring to N23.75 trillion in the first four months of 2024.

This increase represents a significant 292% Year-on-Year growth from N6.06 trillion recorded in the same period in 2023.

Treasury Bills, short-term government debt instruments issued by the Central Bank of Nigeria (CBN), have become increasingly attractive to both local and foreign investors.

The double-digit interest rates offered on NTBs have lured investors seeking refuge from the uncertainties of the global economic landscape.

The surge in subscriptions comes amidst Nigeria’s efforts to bridge its budget deficit and manage monetary challenges amidst a scarcity of foreign exchange and double-digit inflation rates.

Investors’ confidence in the CBN’s ability to navigate these challenges has been bolstered by robust subscription rates, indicating a positive outlook for the country’s fiscal stability.

The 2024 Budget of ‘Renewed Hope’, proposed by President Bola Tinubu, outlines a total expenditure of N27.5 trillion, with a deficit of N9.18 trillion.

The high demand for NTBs underscores investors’ confidence in the government’s fiscal policies and its commitment to economic reform.

As interest rates on NTBs have risen in response to inflationary pressures, the CBN has capitalized on this demand by auctioning larger volumes of NTBs.

The move aims to address liquidity in the financial system while attracting foreign investors seeking higher yields.

Analysts view the surge in NTBs subscriptions as a testament to investors’ confidence in the Nigerian government and its reforms.

The massive oversubscription signals significant system liquidity and reflects the attractiveness of NTBs as a safe investment option amidst economic uncertainties.