22 июня 2016 г.

CFA Russia hosted a business-breakfast on hedge funds

On June 22 at the Kazan bar CFA Russia hosted a business-breakfast on hedge funds. They have existed in the West since 1949 and they developed most rapidly in the 80’s. Today there are more than 12 thousand hedge funds worldwide. In Russia there are few of them due to regulatory constraints. But the demand for them by investors continues to increase, making this meeting very timely.

Mikhail Boboshko, founder and President of the National Alternative Investment Management Association, presented a review of hedge funds in Russia and his analysis. According to general estimates, the size of the market is 4.5 – 5 billion compared to 3 trillion dollars in the world market.  Meanwhile 2/3s of our funds are small funds, of less than $50 million (the majority being around $10 million), only 2% are in excess of this amount, and 2 or 3 funds tip the scales at half a billion. For comparison, in the West any fund less than $100 million is considered a small start-up. “The market so far is still very small” said Mikhail Boboshko and pointed out that when the Hedge fund manager’s Club of Russia awarded the best of the year, there wasn’t even enough money to award prizes to all the nominees.

“The lifespan of a Russian fund isn’t long by comparison. More than 50% have been around for less than 5 years, only 13% have been around for more than 10 years. 77 % are registered in the Caymans and then move to the BVI (British Virgin Isles) and Luxemburg is a new a trend. Sixty percent of investments are oriented towards the Russian market, many algotraders, HFT, and the general trend is to move to global markets from Russia. More than half are equity funds, next being multiclass funds, investing in derivatives, bonds and other tools. The year 2015 was better than 2014. Seventy hedge funds made more than 5.3%. Although the speaker noted that this result should not be considered significant. “ 24% volatility is very high while our funds’ midyear low profitability is 1.6%. Evaluating risk and effectiveness should ideally coincide with the profitability as a percent” he explained.

Vyacheslav Pivovarov, a partner in Altera Capital and a member of the board of directors for “RusHydro” presented a review of funds from different countries, covering their similarities and differences, strategies and products, and similarly covered the investment ideas of his own company, noting that every country’s growth has its driver: in Brazil it’s low rates, and exports that aren’t like in India or China. “Russia is a special case… a club of interests and ideological decisions, where profits are far from first place”. Our labor productivity is 4 times less than in the USA and 2/3s of this are caused by poor management. The situation is similar in finances. Investors always ask about risks and profits, and I give them one answer, “to be above average, you need to do your own work, build everything from zero, this is the only way. Plus, avoid serious cataclysms and always be in business, not waiting for good times to come” says Vyacheslav Pivovarov. He also explained the methods behind his work, sharing his experience; calling on the participants in the business-breakfast to make forecasts with consideration to human factors and human psychology, something robots cannot yet do. The success of Altera Capital is fairly significant: assets grew from $50 to $120 million. Lastly, he answered a question about Nassim Taleb’s "Black Swans”. The world doesn’t change like we expect and prepare for, this is the main idea of the book in the opinion of Vyacheslav Pivovarov.

In conclusion Vladimir Tutkevich noted that in the sphere of hedge funds regulation there remains a lot to be done, and participants in CFA’s meeting will have the opportunity to discuss this topic in September at the next planned business-breakfast.