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    Asset managers and the wreck of ‘spec-tech’

    Welcome to FT Asset Management. This is a weekly newsletter about movers and rockers behind the trillion-dollar global industry. This article is an on-site version of the newsletter. Sign up here It will be sent directly to your inbox every Monday.

    And let me know your feedback: harriet.agnew@ft.com

    “Spec-tech is wrecked”

    Happy new year. There is little time to break the New Year’s aspirations and the market is already off to a bumpy start.

    Investors last week Abandoned trade This has generated significant profits since the financial crisis. It’s about throwing away stocks of fast-growing (and often unprofitable) tech companies and buying them into relatively stable companies that are expected to benefit from the economic recovery.

    It doesn’t take the market Savant Withdrawal of central bank support and rising US interest rates this year Challenge to risky assets Written market editors, pumped higher by the Federal Reserve’s economic powers Katie Martin..

    In particular, expectations for this tightening Gave a new blow For speculative high tech like Cathie woodof Ark Invest, Its flagship exchange-traded fund has fallen by almost 10 percent this year.As Hani Reda, Portfolio manager Pine Bridge InvestmentsIn other words, “Spec-tech is wrecked.”

    And as active fund managers put themselves in a world where interest rates aren’t bottoming out, they’re under pressure for years (think fee compression, passive, performance). Raison Dettle continue. Exhibit A: Three-quarters of the stock picker Behind the U.S. market last year.

    The uptrend in the hot stock market lifted almost all listed managers in 2021, although Winners and losers Investors are expected to increase in 2022 as they prefer groups exposed to fast-growing areas such as personal wealth, according to analysts.

    Tom Mills, Analyst Jeffreys,To tell:

    “Generally strong stock markets and pandemic-related cost savings have brought significant crutches to asset managers’ earnings. [since the] Given that many managers are currently investing for growth, future and potentially longer drawdowns can further hurt operating profit. “

    On the other hand, few people can escape by drawing similarities in between. Steven SpielbergOriginal Jurassic Park And the ETF industry.But my colleague Robin Wigglesworth Is one of them..He looks beyond the big headlines of the ETF industry (nearly $ 10 trillion from the second year onwards) Record growth) At the initial risk. In particular, “a surge in complex and expensive derivative-based ETFs, thinly disguised fee extractors sold to thrill-seeking retail investors and day traders.”

    And if you’re worried about risk, don’t miss it John Plender In multiple Investment risk After 2022.

    Hertz: Rental life

    It was a difficult time to become a poor debt manager. In the bull market for more than a decade, where central bank intervention has supported the global market, there have been few good investment opportunities.

    Therefore, when a pandemic occurred in the spring of 2020 and global travel stopped, Celtales management When Nighthead Capital Management Seeing the opportunity, we raised $ 1.5 billion to invest in the needy travel sector.

    They didn’t have to wait long to get the money to work. May 2020, Hearts I filed for bankruptcy. A pair of investors embarked on a marathon auction process to remove the company from the control of Chapter 11. Won the victoryMade a bold $ 2 billion investment in a car rental pioneer 100 years ago.

    “There is always one sector at the heart of every distressed cycle,” he says. Tom WagnerEstablished Nighthead in 2008 to invest in distressed assets. “In this case, it was travel and leisure. If you can do it right, you can do it right for your entire portfolio.”

    Currently, the two New York-based funds are enjoying about $ 3 billion in paper profits from the transaction. The pandemic continues, but the fate of the car rental industry is reversed.Hertz and as new car production is declining due to a global shortage of semiconductors Avis Budget We raised the price to meet the rapidly increasing demand. On the other hand, supply chain constraints have caused used car prices to skyrocket, and car rental companies are helping to make money as they own a huge number of vehicles to sell to used car dealers as they get older. ..

    of This analysis, My colleague Antoine Gala And I will cover one of the most lucrative transactions in the 2021 hedge fund industry. We also hear about the very different futures that Certares and Knighthead envision for Hertz. The next era of the booming electric vehicle industry and autonomous taxis.

    Race and Treasury: Asset Managers Fail to Walk

    Chandron Thomas, A black American from the south of Chicago, is now Northern Trastore Set ManagementA $ 1.2 trillion fundhouse based in a city in the Midwestern United States. When he started working in financial services 30 years ago, it was a “culture shock” to step into a trading floor where few people looked like him, Thomas recalls.

    But he still says the client has stepped into a meeting where “I’m not a senior leader, I think it helped.” With few black mentors, according to Thomas, black employees face additional hurdles when trying to climb a corporate ladder in asset management. “Informal” hiring, where current employees recommend candidates for work or promotion, often benefits those who attend the same school or have the same background.Overall, working in the world of wealth management clubby can be an unpleasant experience for minority employees, he tells my colleagues. Attractor Moony When Madison Derbyshire with this Deep dive..

    After George Floyd’s murder in 2020, the $ 110 million global asset management industry stood out in an effort to raise concerns about racism. Major institutional investors have not only pledged to promote diversity in their ranks, but have also increased their votes to support shareholder resolutions calling on other executives to do the same.

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    A year and a half later, asset managers are struggling to achieve their stated ideals. Black employees and other minority group members are dramatically undervalued in this sector, especially in senior positions, and industry executives have begun the recruitment efforts needed to truly diversify their employees. It says it can take years to do.

    “Failure to diversify is not just a moral issue, it’s about performance,” he said. Robert Raven, Washington-based founder Various asset management company initiatives Former Assistant Secretary of Justice.

    What do you think you can do to increase the diversity of the asset management industry? Please send me the email: harriet.agnew@ft.com

    This week’s chart

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    Growth Equity The hottest corner Data providers in the private capital industry as larger companies than ever find strong demand among investors who are eager to avoid the public market and bet on higher returns. Prekin Growth Capital has more than doubled since the end of 2016 and is estimated to reach approximately $ 920 billion by the end of March.Groups such as TPG When Permira Expanding with Growth Capital. However, there are signs of bubbling. “The game has changed tremendously,” he says. Mike Turner, Law firm partner Latham & Watkins.. “There are quite a lot of FOMOs [fear of missing out] Investment is high and many investors are entering the market who do not fully understand the companies and the opportunities they are investing in. “

    Top stories you might have missed during your vacation

    Bill Stromberg, Retired Chief Executive Officer T Rowe Price, “Free-form risk-taking“In last year’s booming market,” he said, investors should “away from risk” to avoid burns in increasingly speculative markets.

    Turnover of more staff Ray dalioof Bridgewater Associates..Appointed by the world’s largest hedge fund Two co-chief executive officers Exchange David McCormick, Those who are leaving for the expected implementation of the US Senate.

    In the UK crypto lobby Strengthen its influence A cross-party group of lawmakers was launched in Westminster as politicians on both sides of the Atlantic strengthened their efforts to regulate the growing digital asset market.

    Some investors are looking to hedge funds to survive next year’s changes in global monetary policy. $ 500 billion California Civil Servant Retirement System It is unlikely to be in them.Hedge fund fees Remain “problem”,say Mercy Frost, Chief Executive Officer of the largest public pension system in the United States.

    Non-fungible tokens have evolved from a niche part of the crypto market to become a $ 40 billion industry in 2021. Breakout year Buyers spent almost as much on digital collections as traditional art.

    The so-called stake of activist investors is necessary More detailed investigation, Write Lex head Jonathan Guthrie..The actual size of investor-owned fiscal spending: Paul singer When Patrick Drahi Often overrated.

    Few hedge fund managers can raise $ 1 billion immediately after losing a quarter of their investors.However Chris Locos, Founder of $ 13 billion Locos Capital Management, Have Just did it..

    The pension system must be free to decide No political interference According to the government when it is trying to use the retirement pot to reach its economic goals Quebec Investment Trust Bank, Canada’s largest pension fund.

    British companies US personal investment boom..According to, more and more of them are trying to target U.S. retail investors who are ready to support fast-growing and sometimes more risky businesses. OTC Markets Group..

    A new enforcement authority that allows the UK pension watchdog to seek prison terms if corporate activities damage the workplace retirement system Affect transactions, According to the pension adviser. Potential buyers are now more cautious about companies with defined benefit plans.

    And finally

    Bemelmans Bar in Carlisle, New York
    Bemelmans Bar in Carlyle, New York © Don Riddle

    Dry January is overrated.With that in mind, here How to use it Guide to 25 hotel bars Dry Martini January can start stylishly.

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