The Ledger
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Sullivan: Hedge funds are the purest form of active management
“I think of it as the purest form of active management that exists in our industry. There's clarity of what you're trying to do. There was Indexes in long only that created inefficiencies and things that you had to do that weren't necessarily in pursuit of alph…”
Sullivan: Hedge fund industry tilts toward a mercenary P&L-driven model
“A lot of the hedge fund industry tilts more towards what I would describe as a more mercenary model and ties to most of the compensation models are specifically a hundred percent formulaic based on your piano and not much else.”
Sullivan: Firing PMs during drawdowns lets competitors benefit from their growth
“The pressure of a drawdown often creates the innovation to get better. If you just fire people at that point, someone else gets the benefit.”
Sullivan: Global trade, capital, and labor mobility are reversing in new regime
“We're of the viewer living through a regime change, and that many of the characteristics that characterize the last 30 years or so, things like free movement of capital, free movement of labor, increasing global trade, that actually all these things are likely…”
Sullivan: Hedge fund asset growth is driven by performance, not new inflows
“Assets allocated to the hedge fund industry has increased, but that's largely been driven by
Performance of the funds themselves, not necessarily new money flowing into it.”
Sullivan: Institutional return-seeking capital shifted from hedge funds to private markets
“A lot of clients have been allocating to hedge funds for diversifying strategy that can give you a high sharp ratio, no correlation to market risk, et cetera.
That part of the market has grown dramatically over the last 10 plus years, and at the same time,
The…”
Sullivan: Fund-of-funds structures limit leverage efficiency, netting, and portfolio agility
“In our first and second generation approaches to Multistrat, we were largely relying on more fund-to-funds type structures, which have limitations in terms of the flexibility around
Your allocation process, the use of leverage efficiently, the benefits of nett…”
Sullivan: Part-time hedge fund investing is a bad assumption for success
“I believe really strongly that to perform at the level required to be successful requires it to be almost the only thing you do. The idea that you're going to do that part-time and succeed, I think is a bad assumption.”
Sullivan: Wellington manages aggregate portfolio risk rather than constraining individual managers
“If you think about a multi-strat hedge fund platform, I generally think there are two ways you can go about that. One is you specifically make sure that every component part you're going to use has been constrained such that it is as pure a form of alpha as yo…”
Sullivan: US-China tensions will worsen market beta but enrich alpha opportunities
“The changing relationship between some of the bigger countries like the U S and China and with the new administration coming in, we think many of those themes will be supercharged and again, result in a higher volatility And I think more challenging returns fo…”