Money managers under the microscope
Guest blogger Paul Compton is head of product management at SunGard Alternative Investments.
The views expressed here are the author’s own and do not constitute Reuters point of view.
A recent EU report on the draft AIFM (alternative investments fund managers) directive commissioned by the Parliament’s Committee on Economic and Monetary Affairs has added to the furious debate generated by politicians and by the army of campaign groups mustered against it.
The report criticised the directive as “poorly constructed, ill-focused and premature,” and something that is likely to impose untenable costs on the alternative investments industry. The draft directive has raised a lot of hackles, but just how bitter a pill will it be to swallow in reality?
Convertible arbitrage is the hedge fund trade of the moment, with top-ranking returns of 12.58 percent so far this year, but there could be more to come.
The strategy, in which managers usually buy a convertible bond and short the underlying stock, is proving particularly profitable because the bonds are rebounding from the battering they took last year. The strategy lost 31.59 percent, the second-worst performing strategy, in 2008 as funds scrambled to sell their positions in what had become a crowded trade.