News round-up: TEC Credit Income Fund Launch; Omnicom threat leads to worst monthly HF returns; The hedge fund war for talent

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Third Eye Asset Management - TEC Credit Income Fund Launch

Third Eye Asset Management Inc (TEAM) has held the initial closing of the TEC Credit Income Fund with approximately $201 million of subscriptions of preferred units. TEAM is an affiliate of Toronto-based alternative capital firm Third Eye Capital (TEC).

The Income Fund was created to transition the Third Eye Capital Alternative Credit Trust (ACT Fund), managed by TEAM, into a longer, fixed-term investment vehicle with enhanced alignment to the liquidity profile of the underlying loan investments.

The fund also meets demand from institutional and high net worth investors where a more predictable and stable-return exposure to TEC's special situations credit strategy is favoured.

TEC and its employees have invested a total of $29 million, including $23 million in common shares, which provides first loss protection for investors and the pre-funding of an income reserve. The Income Fund is targeting a total raise of $500 million, which may be increased if needed due to investor demand.

Omnicom threat leads to worst monthly hedge funds returns since the start of the pandemic

Omicron-fuelled market volatility appears to have made November the worst month for global hedge fund performance since the virus first shut down economies.

Hedge funds are down an estimated 1.6% to 2% in November, according to early data from industry research firm PivotalPath, their worst monthly performance since March 2020.

The average hedge fund is up 11.4% in the first 10 months of 2021, data from HedgeFund Research (HFR) showed. That compares to 11.8% last year and 10.5% in 2019. These potential losses are a setback in what has until now been a steady year for performance.

Robert Sears, chief investment officer of London-based Capital Generation Partners, which invests in hedge funds has said the losses are “quite widespread". "A few of our managers got a little bit of positive performance but I think, in aggregate, it's going to be down" he continued with.

The S&P 500 (.SPX) fell 3.9% from its record high in November as Omicron concerns hit stocks in the month’s last few day, which equated to a 1% loss for the month as a whole.

Some sectors of the market were harder hit than others , with the S&P’s energy sector (.SPNY) losing 6.2% last month and financials (.SPSY) losing 5.9%. November also saw volatility increase across asset classes, with uncertainty over Federal Reserve monetary policy driving swings in bond, stock and currency markets.

The hedge fund war for talent

With the overall sector swelling by more than $100 billion during the pandemic, a race for talent is now under way across the globe.

“It’s black and white. You know the rules of the game. Millennium tells you that they want to empower you; bring over your business and your team and we’ll take care of compliance, administration, trading systems etc. At a time when starting your own hedge fund is getting more expensive and more complex, this really resonates.” Says a Millennium portfolio manager

A top trader at a multi-manager funds can now expect a package with a base salary of $250,000 to $400,000, plus as much as 25 per cent of their trading profits. But pay inflation is most apparent in so-called buyouts.

Citadel is said to be one of the most generous upfront payers - with the average in London earning $20 million last year. Although, insiders suggest people join for the strength of the platform and the calibre of the colleagues and not just the enormity of the pay.

In this ruthless environment, firms are being as flexible as they are able. Millennium will let a trader work from wherever they want to be based, and this year has opened offices in Palm Beach and Miami.

Rival, Citadel opened offices in Paris and Singapore last year and joins firms like Blackstone, Elliott Management and Japanese group SoftBank by moving jobs and investment to South Florida, to make the most of the benefits of sun and lower tax rates.

Carmen Bamford

Head of Event Content, HFM

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