Tuesday March 7, 2017 March 7, 2017 Alaska's Wealth Fund Seeks 11 Funds for Investments Number of the Week By Hema Parmar Alaska’s $55.4 billion wealth fund is seeking up to 11 hedge funds for allocations, following its decision in May to redeem from its funds of hedge funds and invest in $1.06 Billion managers directly. The Alaska Permanent Fund Corp. prefers experienced managers that have a track Net inflows into macro hedge funds in record of producing returns of at least inflation plus 5 percent, according to public January, according to eVestment. documents from its quarterly board of trustees meeting. Alaska is seeking funds with low correlation to equity markets, "appropriate" risk controls as measured by historical drawdowns and volatility and that can show they have protected capital during down Inside markets, the documents from the Feb. 22-23 board meeting show. Equity-focused Viking Global saw a Marcus Frampton, Alaska’s director of private markets, declined to comment. slight loss in February, while Alaska currently has nine managers in its program that invests directly in hedge funds. Renaissance's equities fund gained It plans to invest a total 5 percent of the firm’s assets, or about $2.8 billion, in managers in the month: Returns in Brief via that program, the documents said. As of Dec. 31, Alaska had a 4.5 percent exposure to commingled funds, either directly Macro funds run by Prologue and or via the funds of hedge funds from which it is redeeming. The move to allocate to State Street are closing: Closures managers directly will save Alaska $15 million a year, according to the documents, as it allows the wealth fund to cut the layer of fees paid to funds of funds for making Ray Dalio jolts Bridgewater as Jon investments. Rubinstein exits: People News In the past seven months, Alaska has made two hedge-fund investments: a $44 million allocation to Lansdowne Partners’s equity-focused Developed Markets Fund and Almost three-quarters of hedge a $100 million investment in Pharo Management’s macro Gaia Fund, the documents funds are creating new fee said. structures as a result of investor Alaska's hedge-fund investments, excluding separately-managed accounts, gained pressure: Research 4.8 percent in the second half of last year, the documents said. Alaska is also seeking access to some of the "most sought after" funds that were Coatue Management names long previously closed to new money, according to a performance update included in the positions in Symantec and Facebook; meeting documents. It is moving away from seeding new managers — an area that beefs up data science and software dragged down returns last year — and has "a very high bar" for investing in emerging team: Market Calls managers, the documents said. The Alaska fund manages at least 25 percent of all mineral lease rentals, royalty sales Baupost partner Blumenthal faces a proceeds, federal mineral revenue-sharing payments and bonuses received by the tax-fraud trial in France: Regulatory state, according to its website. Paul Tudor Jones pranks Funds Outperform Funds of Funds for First Time Since 2013 environmentalists at the Audubon awards gala: Over the Hedge Quantum, CSX, NRG Energy are among companies targeted by activists this week: Activist Situations What to Read: Quant Edition Luring beautiful minds — Citadel joins Two Sigma chasing quants in campus hiring push. Acadian to use Microsoft's big data Funds of funds on average gained about 0.5 percent in 2016, compared with a 5.5 percent technology to inform wagers. return for hedge funds, according to Hedge Fund Research, Inc. It's the first time since 2013 that hedge funds have outperformed funds of funds, the data show. Returns in Brief Hedge Funds March 7, 2017 2 Returns in Brief The main hedge fund at Greenlight February Returns Capital, led by David Einhorn, rose 2 percent in February as stocks marched higher. The performance brings the fund, which mostly makes wagers on stocks, to a gain of 2 percent in 2017 after a flat January, according to an e-mail to clients last Tuesday that was seen by Bloomberg News. The fund trails the equity market in the U.S., as the S&P 500 Total Return Index climbed 6.2 percent in the first two months of this year. While Einhorn has generally outpaced peers, his performance has lagged behind the S&P each year since 2012. Jonathan Gasthalter, an external spokesman for New York-based Greenlight, declined to comment on the results. — Simone Foxman Year-to-Date Returns Through February Och-Ziff Capital Management Group, the $33.7 billion publicly traded hedge fund, gained about 1 percent last month in its OZ Master Fund, according to public filings, dated March 2. The fund rose 3.1 percent in the first two months of the year, after returning 3.8 percent last year, the filing said. Assets under management were up about $100 million in March from $33.6 billion as of Feb. 1, the filing shows. The New York-based firm, led by Daniel Och, managed $43 billion as of March 1, 2016. — Hema Parmar Viking Global Investors, the $30.6 billion firm run by Andreas Halvorsen, Funds in the charts not mentioned in the accompanying text were reported in other issues of the lost 0.2 percent in its flagship hedge fund Brief or in Bloomberg News stories. For questions, e-mail [email protected]. last month, bringing year-to-date returns to 1.7 percent, according to a person familiar with the matter. The Viking Renaissance Technologies’s equity two months of 2017, the person said, Global Equities fund fell 4 percent in hedge fund gained 3.5 percent last while the S&P 500 Index returned about 2016, the biggest annual loss since the month, according to a person familiar 6 percent. A spokesman for the $32 flagship fund’s inception in 1999, with the matter. The Renaissance billion New York-based firm, founded by according to a letter previously seen by Institutional Equities Fund rose 2.3 Jim Simons, declined to comment. Bloomberg News. Rose Shabet, chief percent in the first — Hema Parmar operating officer of New York-based Viking, which wagers on and against stocks, declined to comment. — Hema Parmar Hedge Funds March 7, 2017 3 Closures Hedge Funds March 7, 2017 4 Closures Prologue to Close After Macro Funds See About $1 Billion in Inflows in January Political Bets Misfire Prologue Capital, the $775 million macro hedge fund run by David Lofthouse and Graham Walsh, is closing after more than a decade as clients pulled their money amid poor performance. “Last year we started well but we got the big political events wrong, it’s as simple as that,” Walsh said in an emailed statement Wednesday. “We tried to secure a one-year commitment from our big investors, but that didn’t come through. The timing is unfortunate, but I fully understand investor disappointment with recent performance.” Macro hedge funds started the year with $1.06 billion in net inflows after investors yanked about Prologue, based in Greenwich, $10 billion from the funds last year, according to data compiled by eVestment. The industry Connecticut, with offices in London and overall had its fifth consecutive month of outflows in January, with $5.2 billion in redemptions. Miami, was founded in 2005 by Lofthouse and Walsh, former colleagues at RBS Greenwich Capital, to wager on Management in Paris. “They are likely to business. Rather than offer traditional macroeconomic trends with a focus on continue to generate gains over the next hedge funds that charge a 2 percent sovereign debt and currencies. Macro quarters as long as the macro management fee and 20 percent of hedge funds have suffered withdrawals divergence theme between Europe and gains, the Boston-based firm will seek to after years of middling performance, with the U.S. holds true. With the Fed on track replicate their strategies and charge managers blaming low interest rates and to hike rates as soon as mid-Match and lower fees, Heinel said. other central-bank policies for restricting the U.S. dollar still trending upward, their The firm has expanded its money- their ability to make money. positioning has proved right so far." management business after its active Prologue lost 1.8 percent in 2016 and — Nishant Kumar and Saijel Kishan strategies shrunk and it lost ground to has been little changed over the previous BlackRock Inc. and Vanguard Group Inc. three years, according to the statement. State Street Closes Global in exchange-traded funds. Under Ronald The fund returned an annualized 8.7 O’Hanley, who took charge of the $2.47 percent from 2006 to 2013. Prologue’s Macro Hedge Fund trillion asset-management unit in 2015, best years were during the financial State Street Corp. shut its sole hedge State Street sought to grow its alternative crisis, when it returned 19 percent in fund after three years and plans to shift investment business. 2008 and 12 percent in 2009, according its focus to offering similar strategies that But investors have lost patience with to an investor letter. charge less. macro hedge funds as the strategy About 782 hedge funds shuttered in the The firm decided to liquidate the global struggled in a low interest rate first nine months of last year, the fastest macro fund after a review of the environment. Even marquee firms in this pace of closures since the aftermath of alternatives business, Lori Heinel, arena have faced redemptions and the financial crisis, according to the latest deputy global chief investment officer at pressure to reduce fees.