Brief: For Jim Simons, history is repeating itself, at least when it comes to meltdowns in the quant fund world. Computer models at Renaissance Technologies, the firm founded by the mathematician and former codebreaker, misfired when volatility surged this year, contributing to a first-quarter loss at its largest hedge fund. The beta models, which help determine portfolio exposure at funds for outside investors, “in recent volatile markets have not performed as expected,” Renaissance said in a March 30 filing. The setback for one of the industry’s best known hedge funds is another example of the turmoil wrought by the coronavirus. The pandemic has stalled global commerce, ended a record bull run for stocks and forced the Federal Reserve into an unprecedented multitrillion-dollar rescue of financial markets.
Brief: British hedge fund manager Man Group (EMG.L) said on Friday that its funds under management fell 11.5% to $104.2 billion in the first quarter as the novel coronavirus hit global markets.Man Group said the firm lost $10.7 billion on negative investment performance and $3.3 billion from currency and other movements.The firm’s long-only computer-driven and discretionary strategies, which bet on stocks rising, suffered the most during the quarter, losing $10 billion in investment movement and another $1.1 billion in outflows.Three of Man’s computer-driven long-only strategies were down more than 20% for the three months to March 31.
Brief: As President Donald Trump grappled with the coronavirus outbreak last month, he boasted at a press conference of tapping a secret weapon for advice: Larry Fink. The chief executive of BlackRock Inc. provided insight to Trump on coping with the fallout from the pandemic -- and once again put his firm at center of a white-hot economic emergency. BlackRock is no stranger to stepping in during a financial crisis cleanup. It played a similar role in 2008. But back then, it was a smaller firm with a focus on fixed income, closer to Pacific Investment Management Co., which had renowned money managers Mohamed El-Erian and Bill Gross at the helm. More than a decade later, the investing landscape has shifted. BlackRock has a premiere role in helping the Federal Reserve stabilize markets. The central bank has hired the firm to help manage its economic relief efforts. Beyond U.S. borders, the Bank of Canada has called on the asset manager as it shapes its response to the meltdown.
Brief: The energy fund at Zimmer Partners posted its worst quarter ever after sinking about 46% in March as oil markets plunged.The fund dropped 55% in the first quarter after losing money each month, according to an investor letter seen by Bloomberg. The fund, which ran $1 billion at the end of January, now has about $500 million in assets. The oil price war between Russia and Saudi Arabia ravaged the energy industry last month and helped send Brent crude to its lowest in nearly two decades. Making matters worse, the coronavirus pandemic has wiped out demand for crude amid an oversupply threatening the survival of oil producers and the economies of oil-dependent nations.
Brief: Vanguard Group said on Thursday it closed its $39.5 billion Treasury Money Market Fund to new investors, becoming the latest big asset manager looking to protect the returns of existing clients. Restricting the flow of new money helps reduce the amount of new securities paying lower yields that Vanguard will need to purchase, slowing the rate of dilution to returns for current shareholders. “Vanguard is taking this prudent step to temper cash flows and will continue to monitor the Fund and employ additional measures if needed,” the company said in a statement. New money market investors would still have access to other funds in its $414 billion lineup, Vanguard said. Other fund companies have taken similar steps including Fidelity Investments on March 31.
Brief: The UK accounting industry has been plunged into its worst crisis in over a decade as the “Big Four” firms slash partners’ pay by up to a quarter and their mid-tier rivals furlough junior staff to cope with the fallout from the coronavirus pandemic. London-headquarteredKPMG,PwC,Deloitteand EY have reduced the amount of profits that are distributed to their partners each month by between 20 and 25 per cent to build up cash reserves and help survive a downturn in work. Partners at the UK arms of the four firms, which between them employ about 74,000 people, earned an average of £720,000 last year and undertake activities including company audits, tax and restructuring advice, and consulting on transactions.