Technical Corner
March Fund Flows for Representative ETPs
Evidenced by a 0.8 percent dip in the share value of the IQ Hedge Multi-Strategy Tracker ETF (QAI), hedge strategies grudgingly gave up some ground in March.
Evidence of the growing disfavor in emerging markets came in the form of a billion dollar (1.7 percent) asset leakage from the Vanguard FTSE Emerging Markets ETF (VWO). VWO’s share price lost 1.3 percent in March. At the same time, the IQ Hedge Macro Tracker ETF (MCRO) eased 0.3 percent.
Brad Zigler and Ashmead Pringle
For this month’s commodity issue, Alternative Insights editor Brad Zigler caught up with Ashmead Pringle, co-founder and president of GreenHaven LLC, a sponsor of one of the largest broad-based commodity exchange-traded funds.
Gold ETP Assets Nosedive; SocGen Declares a Bullion Bubble
Société Générale S A became the fourth money center bank to mark down its 2013 gold target price following record outflows from gold ETPs.
Holdings of gold exchange-traded products sank 154 metric tons worldwide over the first quarter, the largest drop-off on record, according to analysts at Barclays Capital. By contrast, gold assets rose 71 tons in the year-ago quarter.
Managed Futures Up Again
Managed futures funds posted a third consecutive monthly gain in March with a 1.2 percent uptick measured by the Newedge CTA Index. For the year to date, the index is up 2.8 percent.
Besides the uptrends in natural gas and crude oil captured by many funds, copper was successfully played from the short side. The month’s standout move, however, was a limit-down swoon in corn prices following a USDA grain report which caught a number of commodity trading advisors by surprise.
Gaming a Rise in U.S. Interest Rates
Hedge fund managers expecting a rise in U.S. interest rates are making ever-larger wagers through complex derivatives, according to investment dealers. Particularly popular now are options on the S&P 500 that pay out only if ten-year rates rise past a certain level before expiration. Rate-contingent S&P 500 put options enable hedge funds to get inexpensive downside equity and upside rate exposure at the same time.
Hedge Fund Pros Pressured To Break Rules
A survey recently commissioned by the Hedge Fund Associationproduced some statistics bound to raise investor eyebrows. In the quest for alpha, nearly half of hedge fund professionals surveyed believe their competitors engage in illegal activity, more than one third have personally felt pressure to break rules, and about one third have witnessed misconduct in the workplace.
To boot, more than half of respondents reported the SEC is ineffective in detecting, investigating and prosecuting rule violations.
Time For A Deflation Hedge?
In April the central bank of Cyprus announced it would sell off three-quarters of its gold reserves, some 10 metric tons, to fund the bailout of its financial system. That’s the largest bullion sale by a eurozone nation since France sold 17 metric tons in 2009.
Foreign Affairs
Currency war? No. But you can still profit from the slide in the Yen.
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