Stephen Blyth will replace the outgoing Jane Mendillo as Harvard’s hedge fund czar, the university announced on Wednesday. Earlier this year Mendillo said she would be stepping down as president and CEO of the Harvard Management Company, the university’s investment arm, a job that requires maximizing returns on the $36.4 billion endowment. Blyth, who has been working at Harvard’s endowment since 2006, is in charge of the public equity, fixed-income and credit portfolios. The endowment gained 15.4 percent in fiscal year 2014, which ended June 30, but Blyth will be under pressure to keep up with the Yale endowment, which reported a gain of 20.2 percent for the fiscal year.
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How much has the hedge fund industry changed since September 2008, when the collapse of investment bank Lehman Brothers rocked the world’s financial markets and marked the defining moment of the so-called Great Recession? Quite a bit, according to London-based hedge fund industry data tracker Preqin. For a start, total assets managed by hedge funds have climbed to $2.9 trillion from $2.3 trillion, by Preqin’s count. The number of funds has also climbed. Some 5,882 hedge funds have launched since September 2008, compared with 5,165 hedge funds launched “before and in 2008,” according to Preqin. So much, then, for the pre-crisis notion that increased regulation of hedge funds would stifle the industry’s growth: Preqin notes that hedge funds are now far more regulated than they were pre-2008, with the advent of legislation including the Dodd-Frank Wall Street Reform and Consumer Protection Act in the U.S. and the Alternative Investment Fund Managers Directive in Europe.
Perhaps because of that increased oversight, institutional investors are now a much bigger part of the industry, accounting for 63 percent of total dollars invested in hedge funds post-2008, compared with 45 percent before. And for all the talk of disappointing performance over the past few years, investors appear to be more satisfied with hedge funds now than before the height of the crisis: 72 percent of investors today say hedge funds have met or exceeded expectations, compared with 62 percent before. Interestingly, Preqin notes that the proportion of funds charging the standard 2-and-20 annual fee structure — a 2 percent management fee and a 20 percent performance fee — has fallen, from 28 percent in September 2008 to just 23 percent now.
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Hedge fund managers betting that the Japanese yen will keep falling are getting their wishes fulfilled this month. Kyle Bass’s Hayman Capital Management, Daniel Loeb’s Third Point and Erich Mindich’s Eton Park Capital Management have been among the proponents of shorting the yen against the U.S. dollar as Prime Minister Shinzo Abe tries to institute policies that will keep interest rates rock bottom. Massive selloffs have weakened the yen by almost 10 percent since early August, allowing hedge fund managers to build up options at 115 yen to the dollar. The Nikkei Asian Review reports that some market observers predict a continued weakening down to 120 per dollar later this year or next.
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New York-based global macro hedge fund firm Caxton Associates has hired former BNP Paribas proprietary trader Philippe Fourcade, according to a Bloomberg report. Fourcade left the bank after it closed down its London-based emerging markets proprietary trading desk, one of several global investment banks to shut down prop desks to comply with post-financial crisis regulations, according to the report.
