For investors in buyout funds, sticking with managers who have a strong track record doesn’t always pay off.

From 2009 to 2018, only 23 percent of buyout funds in North America with a top-quartile performance at the time of fundraising remained in the top quartile in their subsequent funds, according to a recent Preqin report. The results aren’t much different than they were in the years before the global financial crisis. From 1980 to 2008, only 26 percent of the top-quartile performers kept their seats in the same quartile with their follow-on funds, according to the report. 

“This leads us to believe that investors need to look beyond past performance, and that the evidence for performance persistence [among top performers] in buyouts is fairly weak,” Sam Monfared, vice president of research at Preqin, wrote in the report.

Poor performances were more likely to carry on to the next funds. Before the GFC, 42 percent of...

Palm oil and soybean oil have long been used in cooking, but their growing use as a biofuel is causing a spike in demandUkraine’s reduced exports of sunflower oil are creating an additional surge in demand for other edible oils

To meet their return targets in the coming years, nonprofits are turning to the private markets. 

In Mercer’s global not-for-profit investment survey released Monday, 65 percent of investor respondents said that over the next three years, diversifying away from traditional asset classes would be their greatest opportunity. To do so, many of them have begun moving toward the private markets: Sixty-three percent of survey respondents said that they’re either currently investing in the private markets or plan to do so over the next 12 months. 

“Historically, almost all private markets have provided a return premium, or the advantage of [outperforming the] public markets,” Texas Hemmaplardh, Mercer’s not-for-profit commercial leader, told Institutional Investor. Private markets provide investors with an illiquidity premium: Because private assets tend to be illiquid, investors interested in allocating capital to them expect to...

The Securities and Exchange Commission’s proposed new rules on special purpose acquisition companies could force almost half of the SPACs that are still searching for a merger partner into liquidation, according to a new report from SPAC Insider.

Those SPACs account for $80.6 billion in capital that is now held in trust, but which would be returned to investors.

Under the SEC’s proposal, a SPAC would need to announce a deal within 18 months from the date of its IPO and close within 24 months in order to avoid falling under the Investment Company Act of 1940.

“As investment companies, their activities would be severely restricted and subject to very burdensome compliance requirements,” wrote Kristi Marvin, the founder of SPAC Insider and author of the report. “Those requirements can get quite expensive, and most SPACs do not have the funds available to pay for it.” As a result, she said, “liquidating would be the most palatable and...

Geeta Kapadia has been named chief investment officer at Fordham University.  

Formerly associate treasurer for investments at Yale New Haven Health, Kapadia will start working at the roughly $1 billion university endowment on August 22. Eric Wood, the university’s previous CIO, had been with the organization since 2011.  

Kapadia is “an investment professional with 25 years of diverse experience and a demonstrated commitment to service and excellence in her profession,” according to an announcement published by Fordham senior vice president, chief financial officer, and treasurer Martha Hirst.  

Kapadia spent 13 years at Yale New Haven Health, leading a five-person team and overseeing $5.7 billion in academic medical center assets and $3.8 billion in defined contribution retirement assets. She received the health system’s Diversity and Inclusion ‘All In’ Award in 2019.

With equity markets recovering sharply in July after the worst calendar-year first half in more than 50 years, hedge funds also saw gains. 

According to Hedge Fund Research data, equity hedge funds, which use long-short strategies, posted solid numbers in July. HFR’s investable HFRI 500 Equity Hedge Index increased 3.25 percent and its HFRI Equity Hedge Total Index gained 2.9 percent. 

The S&P 500 index, for comparison, was up 9.1 percent in July, recording its best month since November 2020.

“July was the first sustained reversal from the worst equity market performance for a first half in over 50 years, [and it] happened despite the Fed raising rates, inflation holding near a generational high of 9 percent, and the economy officially entering recession,” HFR President Ken Heinz told Institutional Investor in an e-mail. 

If history is any indication, stable large-cap companies will generate the most outsized returns as the U.S. dollar becomes more expensive.

The quality factor has outperformed the market by an average of 34 basis points during periods of dollar appreciation, according to the latest report by Investment Metrics, a Confluence company. The size factor, defined by IM as a measure of how much large-cap companies outperform smaller ones, also beat its benchmark by an average of 38 basis points during these periods. The volatility factor, however, lagged the market by an average of 80 basis points when the dollar became more expensive — the worst performance across all factors.

IM based its results on a study of factor performance during the periods of March 2008 to March 2009, July 2014 to March 2015, and May 2021 to June 2022 — all times when the U.S. dollar appreciated against currencies traded in other developed economies. According to the...

If history is any indication, stable large-cap companies will generate the most outsized returns as the U.S. dollar becomes more expensive.

The quality factor has outperformed the market by an average of 34 basis points during periods of dollar appreciation, according to the latest report by Investment Metrics, a Confluence company. The size factor, defined by IM as a measure of how much large-cap companies outperform smaller ones, also beat its benchmark by an average of 38 basis points during these periods. The volatility factor, however, lagged the market by an average of 80 basis points when the dollar became more expensive — the worst performance across all factors.

IM based its results on a study of factor performance during the periods of March 2008 to March 2009, July 2014 to March 2015, and May 2021 to June 2022 — all times when the U.S. dollar appreciated against currencies traded in other developed economies. According to the...

After four-and-a-half years at the helm, Carlyle Group’s chief executive officer Kewsong Lee is stepping down.  

Lee’s departure comes earlier than expected: In 2017, he signed a five-year contract that was set to be up by the end of 2022.  

According to Carlyle’s late Sunday announcement, “both the company’s board of directors and Mr. Lee mutually agreed as part of their discussions that the timing is right to initiate a search for a new CEO to lead Carlyle forward in its next phase of growth.”  

The announcement said Lee would step down from his CEO and board of directors posts “today” — Sunday, August 7 — but that he’ll be available “as needed” to help with the leadership transition in the months to come. The $376 billion publicly-traded private equity firm has named William Conway, co-founder, former co-CEO, and non-executive co-chairman of the board as interim CEO.  

The USDA’s June Acreage report showed less acreage planted in soybeans and more in corn than was expected in the springAg producers had additional crops risks to contend with this season, including a war, ongoing pandemic and heightened inflation

With links to the most developed and extensive pipeline networks in the country, the Louisiana hub serves four major U.S. regionsSince 1990, the hub has been the physical delivery point for the world’s most-traded natural gas futures contract

The Healthcare of Ontario Pension Plan has appointed Michael Wissell as its new chief investment officer, the Canadian pension giant announced Wednesday. 

Wissell will assume investment responsibilities for the C$104 billion (US$82 billion) fund from president and CEO Jeff Wendling, who has been serving in both roles since becoming CEO in March 2020.

“I’m honored to be HOOPP’s next CIO and look forward to building upon the success of my predecessors,” Wissell said in a statement. “HOOPP has an excellent track record of adapting to evolving market conditions and maintaining a strong funded position for our members.”

Wissell has been serving as senior vice president of HOOPP’s capital markets and total portfolio since he joined the fund more than three years ago. Prior to joining HOOPP, he spent 16 years at the Ontario Teachers’ Pension Plan, where he was in charge of the public equities team and the portfolio construction...

Outsourced chief investment officers are in high demand after delivering strong results during the pandemic, according to a report by Cerulli Associates.

The research and consulting firm expects the OCIO market to grow at 5 percent annually for the next three years, a faster pace than the broader institutional market.

Over the year ending March 31, the broad market AlphaNasdaq OCIO index, which measures all account-level returns reported by 39 OCIO providers, rose 30.69 percent. According to Laura Levesque, associate director of Cerulli’s institutional division, this shows that OCIOs brought robust financial recoveries to their clients in the year following the start of the pandemic.

OCIOs often combine different asset classes like cash, real estate, bonds, and stocks to meet the risk levels that their clients can take. These multi-asset strategies are crucial during market dislocations like those caused by the Covid-19 pandemic,...

As more institutional investors adopt cryptocurrencies, allocators and crypto managers are looking beyond Bitcoin for opportunities.

Take for example, Bitwise, which last week launched what it’s calling the first large-cap cryptocurrency index fund without exposure to Bitcoin. The index fund is a nine-currency, ex-Bitcoin version of the company’s flagship Bitwise 10 Crypto Index Fund, which launched in 2017 and includes the ten largest cryptocurrencies in the world.

According to Matt Hougan, chief investment officer of Bitwise, the decision to exclude Bitcoin was two-fold.

For one thing, he said many investors first came into the crypto markets through Bitcoin. Since then, new currencies have arisen and new products have dominated the space. In fact, over the past year, Bitcoin’s share of the total market capitalization of the crypto space fell from 69 percent to 42 percent, according to Bitwise.

Jeff Ubben, the activist hedge fund manager who founded Inclusive Capital Partners a little more than a year ago, is calling for the Securities and Exchange Commission to make companies include a price for carbon as part of their climate-related ESG disclosures.

Ubben, who is also a board member of ExxonMobil, made his comments in a September 8 letter to the SEC. It was one of thousands sent since SEC Commissioner Allison Herren Lee earlier this year asked for public comments regarding upgrades to the SEC’s climate change disclosures. 

“[Inclusive Capital] believes that — even in the absence of Congressional establishment of a national price for carbon — the most impactful role for the SEC would be to require all U.S.-listed companies to report the price of carbon they assume in their strategic planning, from decision-making to risk assessment and capital allocation,” he said in the 14-page missive.

Carbon pricing “captures the...

On Wednesday, August 25, I interviewed Federal Reserve chairman Jerome Powell. 

More correctly, I interviewed an artificial intelligence simulation of chairman Powell — and it was amazing. 

The inspiration for the interview was “The Jessica Simulation: Love and Loss in the Age of A.I.,” an article in the San Francisco Chronicle written by Jason Fagone. 

Here’s my synopsis: Boy meets girl. Boy and girl fall in love. Girl dies. Eight years later, boy uses AI to create and communicate with startlingly unnerving facsimile of dead girl (Jessica), which helps him come to terms with his grief.

In the European trading and equity business, the more things change, the more they stay the same.

The biggest trend in trading and execution, according to industry leaders, remains the convergence of high-touch and electronic trading, amid a push for automation and algorithmic trading by the buy-side.

“It’s been ongoing for years but definitely an accelerating trend as more and more client desks become automated and quantitative,” said Antoine Bisson, head of European execution for Exane BNP Paribas. 

Couple that with 2018’s update to the Markets in Financial Instruments Directive and the Covid-19 pandemic — both of which continue to significantly impact the relationship between sell-side firms and their clients — and the result is Institutional Investor’s All-Europe Equity Trading Team.

Hartford HealthCare, the $4 billion fund supporting a Connecticut-based hospital system, is anchoring a new GP-stakes style fund for diverse managers.  

The $400 million fund is being raised by Xponance, which is working alongside Investcorp to deploy the capital. Hartford is anchoring the fund with a $50 million commitment as its first investor, according to David Holmgren, the organization’s chief investment officer.  

The new fund will target diverse and women-owned funds in private equity and private credit, among other alternative asset managers.  

“These are the firms that are on the cusp of growing,” said Marquette Chester, senior managing director and head of alternatives at Xponance, over Zoom. “These are people with really good returns. They need to do something to accelerate or improve their businesses to facilitate a better, broader platform.” 

The influence of the treasury market and the trend toward self-directed trading meet with arrival of Micro Treasury futuresSmaller futures contracts could open the door to hedging strategies for traders in equity, foreign exchange or gold markets

Institutions with larger shares of capital invested in private equity and venture capital earned higher returns in 2020, according to new research from Cambridge Associates.

In the past decade, those with a private investment allocation of at least 30 percent have outperformed those with an allocation of 10 percent or less by 200 basis points, the investment and consulting firm said. 

Private equity and venture capital investments were also found to be more profitable than U.S. public equities over the last five, 15, and 25 years.

In the report, Cambridge Associations evaluated the performance of public equities by calculating the return of the S&P 500 index if shares were bought and sold on a schedule matching the cashflows of private funds. Measured this way, U.S. public equities have fallen behind their private peers by 250 to 320 basis points over the last five and 15 years.

Institutional demand for outsourced portfolio management services is generally contingent on one factor: size. While smaller foundations tend to need more outside help, larger institutions are often self-sufficient, relegating in-house staffers to investment management duties. But, in an unexpected twist, outsourcers may have an untapped opportunity at foundations with $500 million or above in assets under management.

According to the Commonfund Institute’s latest annual study on private and community foundations, only 14 percent of surveyed private foundations with over $500 million in assets had internal investment committees, while 28 percent had an internal investment office with a chief investment officer.

“That’s very interesting, because that means there’s a lot of opportunity left for outsourcers,” executive recruiter Charles Skorina told Institutional Investor.

The remaining 58 percent likely use some hybrid approach,...

Ackman asserted in a letter to Tontine shareholders last week that Assad is merely a “prop” for the law professors and other lawyers putting the complaint together. The same lawyers and firms are in all three lawsuits, and they include former Securities and Exchange Commissioner Robert Jackson, an NYU law professor who was one of former President Trump’s Democratic nominees, and Yale law professor John Morley. The two professors have reportedly said they are using the lawsuits to reform the SPAC market. 

“The real desire is to go after all SPACs,” said Joel Rubinstein, partner at White & Case who advises SPACs.

All three cases accuse the SPACs and their sponsors and directors of breaching the Investment Company Act of 1940 because they hold securities. After going public, SPACs place the proceeds in trust, where they hold government securities and money market funds that invest in government securities until they use the money to help purchase a...

Shareholder activism is in for a dramatic shift as investors move away from the classic approach of targeting improvements at a single company and instead work to benefit their entire portfolios. But the activist hedge funds that have historically led proxy campaigns may not be the best suited to lead that charge, according to new research.

Presently, there are two main types of shareholder activism: the more traditional firm-specific activism, which targets a specific company and demands change to benefit that company, and systemic risk activism, which aims to reduce systemic risk in the larger market. According to Columbia University School of Law professor John Coffee, firm-specific activism may be phased out by systemic risk activism in the coming years, as investors emphasize issues like climate change and diversity and inclusion. However, for all but the top-three index managers — State Street, BlackRock, and Vanguard — systemic risk...