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

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

Published

3 days 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

6 days 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.

Investment

A.P. Moller-Maersk Pledges $600m Investment in Nigerian Ports

Published

7 days ago

April 29, 2024

Samed Olukoya

A.P. Moller-Maersk, one of the world’s largest shipping and logistics companies, has committed a $600 million investment into Nigerian ports.

The decision was unveiled during a high-profile meeting between Chairman of A.P. Moller-Maersk, Mr. Robert Maersk Uggla, and Nigerian President Bola Tinubu.

The investment, aimed at expanding port infrastructure to accommodate larger container ships, comes at a pivotal moment for Nigeria’s economy.

Historically, the West African coast has been serviced by smaller vessels but with this injection of capital, A.P. Moller-Maersk envisions deploying larger ships to Nigeria, transforming the country into a major logistics hub for the region.

The move not only underscores Nigeria’s strategic importance but also highlights the company’s confidence in the country’s growth potential.

Speaking on the sidelines of the World Economic Forum Special Meeting on Global Collaboration, Growth, and Energy for Development in Riyadh, Saudi Arabia, Chairman Robert Maersk Uggla expressed optimism about Nigeria’s prospects.

“We have seen a significant opportunity for Nigeria to cater for larger container ships,” Uggla stated. “To achieve this, we need to expand the port infrastructure, especially in Lagos, where we need a bigger hub for logistics services. The growth potential is hard to quantify.”

In response, President Tinubu welcomed the firm’s commitment and emphasized the government’s dedication to fostering an enabling environment for investments.

“We appreciate your business and the contribution you have made and continue to make to our country’s economy over time,” Tinubu remarked. “A bet on Nigeria is a winning bet. It is also a bet that rewards beyond what is obtainable elsewhere.”

The infusion of $600 million into Nigerian ports signifies more than just a financial transaction; it symbolizes a partnership built on mutual trust and shared objectives.

With Nigeria poised to benefit from enhanced port infrastructure and increased trade capacity, the ripple effects of this investment are expected to be felt across various sectors of the economy.

Furthermore, A.P. Moller-Maersk’s decision aligns with Nigeria’s broader vision of becoming a regional economic powerhouse. By attracting foreign investment and fostering strategic collaborations, the country is laying the groundwork for sustainable growth and development.

As Nigeria charts a course towards prosperity, the $600 million commitment from A.P. Moller-Maersk serves as a beacon of hope and a testament to the nation’s potential on the global stage. With determination and collective effort, Nigeria stands poised to capitalize on this opportunity and navigate the waters of progress with confidence.