Insight
Fagan: Multi-strategy hedge fund risk cutting drives cross-market contagion
“Nothing's really occurring in a vacuum anymore, largely because of the influence of multi-strategy funds and platforms that will trade all of these strategies at the same time. And have aggressive risk cutting guidelines for when they're losing money in any on…”
Opinion
Fagan: Current trading talent pool cannot support multi-strategy platform AUM growth
“The proliferation of AUM in the multi-strategy platform space is pretty remarkable. And the amount of talent out there, frankly, I don't think supports where we are today. There's been a lot of hiring of people who are good traders, but aren't probably the few…”
Insight
Fagan: Allocators who feel comfortable with leverage are doing something wrong
“I honestly don't think you're ever comfortable with that. If you're comfortable with leverage, you are doing something wrong.”
Insight
Fagan: Levered hedge fund footprint reaches $10T, half the Treasury market
“Let's just assume two and a half times gross leverage for the industry in aggregate, which is, I think is probably conservative. That would get you to 10 trillion, which is what I would then call the footprint of the hedge fund industry. 10 trillion is a bigge…”
Assertion Supported
Fagan: Multi-manager platforms have historically beaten equity returns with bond-like volatility
“Now with these platforms that we're talking about, if you look over the last three, five, 10, or even 20 to 30 years in cases where they've been around for that long, and there are some that have, the platforms have actually outperformed equities on a total re…”
Insight
Fagan: Macro Alpha Is Generated Waiting for Themes, Not Catching Breakouts
“So much from our perspective of the value that's added in macro is Is actually done while you're waiting for the themes to play out. It's not capturing the big breakout of a theme. And frankly, if that's what you're trying to do, I don't think you pay someone …”
Insight
Fagan: Systematic quant managers are less 'black box' than emotional human investors
“If anything, I would make the argument that you can actually get more comfortable with certain quant managers than you can
With most discretionary ones for the obvious reason that they adhere to clear systematic processes.
The real black box is the human inves…”
Insight
Fagan: Exceptional hedge fund opportunities are too scarce for top-down strategy buckets
“The rationale behind all that is we simply don't think there are that many opportunities out there that are truly exceptional and truly compelling. So we try not to narrow the spectrum across which we look at first and that's worked pretty well for us over tim…”
Insight
Fagan: Multi-strat diligence must prioritize risk culture and counterparties over returns
“Most investing, you start by thinking about what the opportunity of the investment is. In this case, I think you want to start it with the risk culture framework and setup of the business model itself. So what does that mean in practice? If you're dealing with…”
Insight
Fagan: Confident multi-PM fund allocators must act like recruiters
“If you're allocating to funds like this, and you want to do it with confidence, you almost have to wear a second hat of being a pretend recruiter as well. You want to talk to as many people who go in and out of these platforms as you can.”
