Global Financial Markets Insights

Median tenure at Point72 and Balyasny is 1.8 years. At Millennium, 2.3. At Citadel, 3.0. Millennium hired approximately 160 portfolio managers last year. Three per week. And the firm reports 15 to 20% annual PM turnover as a structural feature of the model. The part that rarely gets discussed publicly is what happens to non-PM staff when a pod gets terminated. A PM hits a 5% drawdown at Millennium and capital gets cut in half. At 7.5%, the pod is terminated. The PM leaves. The senior analyst leaves. The quant researcher leaves. The junior analysts leave. Everyone attached to that pod is out the same day, regardless of individual performance. An anonymous employee at a major multi-manager fund described it recently: "I have seen people's careers being ruined. We don't get big bonuses and we are only as good as our last projects. Finding something new can be hard." The economics explain why. At many platforms, a PM's salary costs, Bloomberg terminals, and data subscriptions come directly out of their capital allocation. When a new PM enters a drawdown three months into a role, the fastest way to extend runway before hitting the stop loss is cutting headcount. The QR's actual research output is often irrelevant to the decision. It is a capital management call. Balyasny spends roughly $280 million annually on recruiting alone. Citadel disclosed $8.6 billion in compensation and benefits expenses across 2022 and 2023. Individual PM guarantees of $10 million to $15 million are now common. One senior PM was reportedly lured with over $120 million in guaranteed payouts. The people who receive none of these guarantees are the analysts and researchers whose careers depend entirely on which PM they are assigned to and whether that PM's book stays above the stop loss for longer than two quarters. I wrote a full breakdown of the internal politics at top hedge funds this week: how PMs get fired, how capital competition works inside the platform, how star researchers accumulate influence, and why some of the most profitable funds in the world become genuinely toxic workplaces. More on that: https://lnkd.in/dx3j3tUY Check out my other socials: https://lnkd.in/dQxqQGF8 10k special 50% off my newsletter: https://lnkd.in/dFY_Qr3i Image Credit: Jane Street

Size Matters: Why Operational Scale Is Key in Crypto Fund Management In the current crypto hedge fund landscape, managers have yet to be truly rewarded for running a fully institutional operation. The amount of capital allocated to hedge fund–style strategies (beyond simple long-only investments) remains relatively small—often coming from individual allocators with higher risk tolerance. These allocators may be crypto-native high-net-worth individuals or investors who recognize the compelling risk-reward profile of certain crypto strategies. Consequently, many managers boast impressive track records compared to their TradFi counterparts, yet investors often overlook or underappreciate the operational risks involved. The reality is that most crypto hedge funds manage under $100M, which typically means they operate with lean teams focused on what directly impacts performance. Robust internal policies, comprehensive risk controls, and institutional-grade operational setups are time-consuming and costly. They may not improve the immediate track record, but are critical to avoiding catastrophic blow-ups. It’s the sort of thing you only realize you should have prepared for after a crisis has already struck—and by then, the damage might be irreversible, leaving you out of the game. Moreover, these “left-tail” or extreme risks tend to be more common than many believe. Exchange failures, for instance, have already happened with Mt. Gox, FTX, and Bitfinex. They will likely happen again. The top priority for any fund manager is survival—because no matter how impressive potential returns could be in the next bull market, you won’t be around to reap them if you fail to manage fundamental structural risks. This year, I believe, will draw a clear line between niche players and industry leaders. Institutional capital commanding trillions of dollars has lower performance targets but nearly zero tolerance for subpar operational setups. While smaller funds often cut corners to remain efficient, especially with limited budgets, this only increases the fat-tail risks. Ultimately, to attract and retain institutional flows, scale and robust operational practices are essential. In crypto fund management, “size matters” goes beyond assets under management—it encompasses a fund’s operational maturity and its ability to protect investor capital under even the most extreme market conditions.

Manager Selection: The Hidden Alpha Engine “It’s not just the strategy. It’s who’s driving the car.” We obsess over strategies: macro vs long/short, private equity vs credit. But in alternatives, it’s often not what you buy—it’s who you back. Top-quartile managers can outperform by thousands of basis points. And yet, due diligence often gets treated like a checkbox. I’ve seen funds with dazzling decks and nothing under the hood. And I’ve seen quieter managers with airtight process, discipline, and skin in the game deliver decade-long outperformance. Manager selection isn’t always glamorous. But it’s your real edge. Don’t chase alpha. Allocate to it. #bealternative So how do you identify the right managers—and avoid the wrong ones? Here are five actionable principles backed by Hedge Fund Due Diligence, Due Diligence and Risk Assessment of an Alternative Investment Fund, and Private Equity Compliance: 1. Prioritize Behavioral Red Flags Over Marketing Shine Most blowups stem from behavioral warning signs—not poor returns. – Be alert to evasive answers, overpromising, and CV inconsistencies. – If the manager can’t clearly explain their worst drawdown, walk away. Operational risk often wears a smile. 2. Use a Layered Due Diligence Framework – Investment: strategy clarity, mandate discipline, leverage use. – Operational: NAV policies, service providers, valuation controls. – Manager: track record, co-investment, legal history. A strong fund passes all three layers—not just the first. 3. Move Beyond the Checklist Mentality – Ask how—not just what. – Request audit letters, compliance manuals, fund org charts. – Evaluate how quickly and how clearly information is shared. It’s not what’s disclosed. It’s how it’s delivered. 4. Re-underwrite Annually—Not Just at Allocation Diligence doesn’t stop once the subscription agreement is signed. – Monitor for style drift, team turnover, and audit delays. – Build an annual risk scorecard: manager alignment, NAV consistency, valuation transparency. Great managers stay great when they’re held accountable. 5. Investigate the “Why” Behind the Performance Outperformance isn’t always repeatable—but process is. – Ask: “What edge do you believe is durable?” – Review decision-making consistency, not just returns. – Confirm fee alignment, risk-adjusted mindset, and long-term incentive structure. Strong governance and repeatable process beat personality and narrative—every time. Alpha doesn’t live in the deck. It lives in the decisions behind it. What’s your non-negotiable when assessing a manager beyond performance? #bealternative

The hedge fund playbook is changing. Over the last three quarters we have surveyed over a 100 global allocators multiple times. Here's a cheatsheet with the top four themes that have emerged: 1️⃣ NEW RELATIONSHIPS MATTER → 40% actively seeking new managers (not just mega funds) → Only 13% doubling down on existing relationships → Niche strategies with better terms gaining traction 2️⃣ FEE COMPRESSION PLATEAUING → 55% expect fees to remain unchanged → 22% willing to pay MORE for differentiated strategies → Performance > Price in 2025 3️⃣ OPERATIONAL ALPHA IS MANDATORY → 74% view missing fund admin as immediate red flag → 80% of North American allocators increasing scrutiny → Infrastructure now a disqualifier, not preference 4️⃣ SCALING ROADMAPS REQUIRED → 64% demand clear operational scaling plans → Allocators want vision beyond current AUM → Future-proofing now part of due diligence What's your take on these shifts? Are you seeing similar demands from LPs? 

As equity PMs know well, generating consistent Alpha is hard. 👉 But what might be less obvious is that preserving alpha is easier than creating it. The events of early summer provide a good example. The US hedge fund Most Shorted stocks rallied hard. 🚀 In fact, the Most Shorted basket is up 82% from 8th April to today but we will focus on the early summer episode here 📉 But US hedge funds' favourite longs didn't keep up in the early April to early July period. 👉 Traditional factor frameworks showed no clear driver and left the move without explanation ❓ But what if the real story was hiding in plain sight? 🤔 Our analysis of the GS Hedge Fund VIP basket vs. the Most Short basket reveals a different truth: 🗝️ Macro factors were the dominant driver, explaining nearly two-thirds of the relative performance unwind. 👉 This is "alpha leakage" driven by L/S books that have "macro beta" While PMs were focused on fundamentals, shifts in financial conditions (HY credit, rate volatility, metals) became the hidden headwind for popular longs and the tailwind for heavily shorted names. 🚨 Measuring that "macro beta" and adjusting for it saves alpha Especially when macro factors have been so volatile - and the future looks no less stable If you'd like to see the full in-depth analysis down to stock level, just comment "ALPHA" below, and I'll send it to you the full report, ..which also updates the exposures of this L/S as of early September as well. Indeed, the L/S is on the move again, with clear drivers. Chart courtesy of Quant Insight #HedgeFunds #LongShort #PortfolioManagement #RiskManagement #Alpha #Macro #QuantInsight #FactorInvesting

🤔 Will alternative investments including hedge funds and real estate really DISAPPEAR from the portfolios of pension funds and endowments over the next 10-20 years? That's what investment consultant Richard Ennis thinks. Already in 2020 he wrote "Alternatives a ‘loser’s game’" (https://lnkd.in/eafShkdx). Ennis says that since the Global Financial Crisis, hedge funds have failed to add value for institutional investors, and referenced to the HFR Fund-Weighted Composite Index's annualized return. However, this comparison misses several critical points: 1. The index itself is flawed as a measurement tool as the HFR Fund-Weighted Composite isn't investable. It suffers from selection bias, survivorship bias, and backfill bias. Many of the best-performing funds aren't even included as they're closed to new investment. 2. Risk-adjusted returns tell a different story. The cited period includes unprecedented market conditions, including ultra-low interest rates and massive central bank intervention that artificially supported traditional assets. Yet hedge funds delivered these returns with significantly lower volatility and drawdowns—precisely what institutional investors seek. 3. Top-quartile managers consistently outperform. The dispersion of returns in alternative investments is much wider than in traditional asset classes. Sophisticated institutions with access to premier managers have achieved returns substantially above the index. 4. Diversification benefits remain compelling. Hedge funds' true value proposition isn't just absolute returns but rather portfolio efficiency through low correlation to traditional assets. During the COVID market crash, many hedge fund strategies provided critical downside protection. 5. The landscape has evolved. Fee structures have become more investor-friendly since the GFC, with reduced management fees, hurdle rates, and performance crystallization terms that better align manager and investor interests. 6. A working paper by Barth et al. (2023) indicates that a newly emergent subset of hedge funds—ones not included in vendor databases—has produced better returns than those that do participate in the databases. Indeed, while #multistrategy firms' dominance has made it harder for under-the-radar names to compete, investors still look for and invest in up-and-coming managers, e.g. Blackstone and the Teacher Retirement System of Texas seeded new funds and sought out emerging managers. Institutional allocators invest in hedge funds not to replace equities but to enhance overall portfolio construction through differentiated return streams. When properly selected and incorporated into a sophisticated investment program, #hedgefunds continue to serve an essential role in institutional portfolios. In private banking, appetite for alternative assets is growing: https://lnkd.in/emxTUd7D What's your view?

#ETFs : A Disciplining Tool for Active Fund Managers. Active exchange-traded funds (AETFs) serve as a disciplinary tool for investors to remove underperforming portfolio managers. •AETF managers outperform both mutual fund and passive fund managers. •The BIS study finds that the higher flow-performance sensitivity of AETFs is partly driven by the ability to short-sell, as increased covered short interest increases the performance flow-sensitivity •Unlike mutual fund (MF) shares, ETF shares can be shorted, allowing #investors to bet against manager performance. This short-selling feature is a novel aspect of AETFs that enables them to act as a disciplining device. •AETFs exhibit over five times greater flow-performance sensitivity than #mutualfunds . This means that poorly performing AETFs experience larger outflows compared to similar MFs •When an underperforming manager joins an AETF, investors respond by shorting more shares of the fund. Conversely, short interest decreases when a poorly performing manager leaves or a high-performing manager joins. •Underperforming managers in an AETF structure are more likely to exit the fund management industry. This enhances the overall efficiency of the sector by allowing more high-performing managers to remain. •The stocks held within AETFs exhibit improved price informativeness, suggesting that AETFs provide a faster channel to incorporate corporate information about the underlying assets. Higher AETF ownership correlates with increased price efficiency of a stock

🟡⚪𝐃𝐨 𝐠𝐨𝐥𝐝 & 𝐬𝐢𝐥𝐯𝐞𝐫 𝐅𝐨𝐅𝐬 𝐫𝐞𝐚𝐥𝐥𝐲 𝐦𝐢𝐫𝐫𝐨𝐫 𝐄𝐓𝐅𝐬 𝐚𝐧𝐝 𝐦𝐞𝐭𝐚𝐥 𝐩𝐫𝐢𝐜𝐞𝐬? Fund of Funds (FoFs) based on gold ETFs and silver ETFs have become a popular, demat-free way for retail investors to gain precious metal exposure. In theory, they should closely track their underlying ETFs—and in turn, domestic gold and silver prices—since FoFs invest entirely in ETF units. But real-world data tells a more nuanced story ACEMF data shows that for the one year ended Feb 5, 2026, domestic gold rose ~77.5%, largely matched by gold ETFs, while gold FoFs delivered a wider 72–78% range. The divergence is sharper in silver: domestic silver surged ~155%, ETFs broadly tracked it, yet silver FoFs ranged between 147–157%. 🔍 The gap raises two key questions: why FoFs diverge among themselves, and why ETF prices and FoF NAVs don’t always move in lockstep—especially during sharp rallies. Here, we analyse two aspects: first, 𝐫𝐞𝐭𝐮𝐫𝐧 𝐝𝐢𝐯𝐞𝐫𝐠𝐞𝐧𝐜𝐞 𝐚𝐦𝐨𝐧𝐠 𝐅𝐨𝐅𝐬, and second, the 𝐝𝐢𝐟𝐟𝐞𝐫𝐞𝐧𝐜𝐞 𝐢𝐧 𝐫𝐞𝐭𝐮𝐫𝐧𝐬 𝐛𝐞𝐭𝐰𝐞𝐞𝐧 𝐄𝐓𝐅 𝐩𝐫𝐢𝐜𝐞𝐬 𝐚𝐧𝐝 𝐅𝐨𝐅 𝐍𝐀𝐕𝐬. ⏰ 𝐓𝐢𝐦𝐢𝐧𝐠 𝐦𝐢𝐬𝐦𝐚𝐭𝐜𝐡: FoFs buy ETF units near market close at market price, not NAV 📉 𝐏𝐫𝐞𝐦𝐢𝐮𝐦/𝐝𝐢𝐬𝐜𝐨𝐮𝐧𝐭 𝐫𝐢𝐬𝐤: If ETFs trade away from NAV, FoFs inherit the distortion 📊 𝐍𝐀𝐕 𝐥𝐢𝐧𝐤𝐚𝐠𝐞: FoF NAV reflects ETF closing price, amplifying price inefficiencies 💸 𝐇𝐢𝐠𝐡𝐞𝐫 𝐜𝐨𝐬𝐭𝐬: Dual-layer expense ratios eat into returns over time 📈 𝐑𝐞𝐯𝐞𝐫𝐬𝐞 𝐜𝐨𝐦𝐩𝐨𝐮𝐧𝐝𝐢𝐧𝐠: Fewer ETF units bought → gaps widen sharply in bull markets 𝑪𝒍𝒊𝒄𝒌 𝒉𝒆𝒓𝒆 𝒇𝒐𝒓 𝒅𝒆𝒕𝒂𝒊𝒍𝒆𝒅 𝒓𝒆𝒑𝒐𝒓𝒕: https://lnkd.in/g2YNGegD Hari Viswanath Kumar Shankar Roy ✍businessline

💰 Gold ETF Comparison – Understanding the Expense Ratio Before You Invest 💰 Gold has always been seen as a symbol of stability and a hedge against inflation. In recent years, Gold ETFs (Exchange Traded Funds) have become a popular way to invest in gold without worrying about physical storage, purity, or safety. But while most investors focus on returns, there’s one crucial factor that often goes unnoticed — the Expense Ratio. The image above clearly compares the Expense Ratios of various Gold ETFs in India, giving investors a transparent look at the cost of holding these instruments. 🔍 What is the Expense Ratio? It’s the annual fee charged by the fund to manage your investment — covering administrative costs, management fees, and operational expenses. A lower expense ratio means more of your money stays invested and compounds over time. 📊 Key Takeaways from the Chart: 🥇 Zerodha Gold ETF stands out with the lowest expense ratio at just 0.32%, making it the most cost-efficient option for investors. Mirae Asset and Angel One Gold ETFs follow closely at 0.35%, showing that newer entrants are focusing on cost competitiveness. On the higher end, SBI Gold ETF (0.7%) and Nippon ETF GoldBeES (0.8%) charge more, which can impact returns in the long run. Even a small difference in expense ratios can significantly affect long-term gains, especially for those investing with a horizon of 5–10 years. ✨ Why It Matters: If you’re building a diversified portfolio, Gold ETFs are a great way to add a defensive asset. But just like in equity mutual funds, cost efficiency matters. Choosing a lower expense ratio ETF can lead to higher net returns over time. 🧠 Pro Tip: Before investing, always check: 1️⃣ The expense ratio 2️⃣ The tracking error (how closely the ETF tracks gold prices) 3️⃣ The liquidity and AUM (Assets Under Management) #GoldETF #Investing #Finance #WealthManagement #SmartInvesting #ETFs #PersonalFinance #GoldInvestment #MoneyMatters #FinancialLiteracy

After sharing our Large-Cap ETF approach, many asked for a deeper look. 𝐒𝐨, 𝐰𝐞 𝐰𝐞𝐧𝐭 𝐚𝐡𝐞𝐚𝐝 𝐚𝐧𝐝 𝐝𝐢𝐝 𝐢𝐭. Because even among the top 100 companies, what separates one ETF from another often comes down to efficiency and consistency. We evaluated India’s leading Large Cap ETFs using two core parameters: Expense Ratio and Tracking Error. ⏩ Swipe through the carousel to see how they perform against each other. The differences might look small, but they can make a meaningful impact over time. Disclaimer: This study is for educational purposes only and does not constitute investment advice or buy/sell recommendations. Follow Akashdeep Grover for more practical insights on stock market LinkedIn LinkedIn News India LinkedIn Learning Community LinkedIn Guide to Creating Linkedin News #largecapETF #largecap #investing #smartinvesting #personalfinance #mutualfunds #marketanalysis #investingsimplified #finance #stockmarket