Assessing how Chicago’s hedge fund sector performed over the past year
Despite regulatory pressures, Chicago’s hedge fund sector has still performed well as investor confidence improves. RSM’s Simon Lesser discusses how managers are responding to a stronger stock market as firms adjust to Dodd-Frank.
Managers as a whole have performed well in 2013 by focusing on fundamentals such as stock picking, in which a broad base of managers in Chicago excel. The performance comes in the context of firms’ bulking up their compliance teams, by hiring in-house lawyers and compliance personnel. For any business. While the oversight is welcome to protect investors, examinations also be a distraction for the manager who needs to spend time preparing for the exam and answering questions
Looking ahead, the sector is well-position for a turnaround in the futures industry. The need to trade certain former OTC derivatives and swaps on exchanges, driven by Dodd-Frank reforms, will be good for Chicago, since the exchanges and FCMs are well-equipped to deal with the increased business. FCMs and the futures and options exchanges well positioned to roll out new products, effectively deal with increased oversight and work with the respective regulatory agencies. This next year could well see the turning point on the positive side.