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    London Investment Firm to Launch Twitter-Based Hedge Fund

    A London-based investment firm is getting ready to launch a hedge fund using Twitter as a stock market predictor.

    Investors have been playing with the idea of Twitter  as a stock market analysis and speculation tool for some time now.

    After all, one of the first big hits in third-party Twitter apps was StockTwits, which features graphs and the ability to filter messages by company or stock exchange symbol. Startups like Chart.ly and Covestor operate in the same space, roughly.

    But this is the first time we’re seeing a literal and real application of cash to Twitter sentiment.

    Derwent Capital Markets explained its scheme to The Next Web. Basically, as Twitter users reveal themselves to be more worried, upset, happy, content, etc., the market fluxuates with rough correlation, rising on calm days and falling on anxious ones. Currently, Twitter is about 87.6% accurate for predicting stock market fluctuations.

     

    twitter stock trading hedge funds 

  2. Hedge-Fund ETFs: The Future?

    The Wall Street Journal, 18 gennaio 2010

    Exchange-traded funds are the investment phenomenon of the last decade, attracting more than $1 trillion of assets under management, up 46% in 2009 alone. But so far these index-following funds have tended to be used mainly as a cost-effective way of managing broad market risk rather than a source of the investment managers’ Holy Grail: alpha, or market outperformance. Could that be changing? Marshall Wace’s plan to launch a London-and-Frankfurt-listed ETF to track its TOPS strategy suggests the ETF revolution still has further to run.

    Deutsche Bank launched a hedge-fund-of-funds ETF last year that has already attracted more than $1 billion in assets under management. Marshall Wace’s ETF would take the product a stage further, becoming the first in Europe run by a dedicated hedge-fund-group manager and the first to target absolute returns from a single strategy. If it succeeds in raising at least $500 million, as it expects, then others are sure to follow.

    Marshall Wace’s TOPS strategy—a trading system that attempts to identify the brokers whose recommendations most consistently deliver value—is well-suited to testing investor appetite. The underlying funds are highly liquid, investing almost entirely in large-cap stocks traded on major stock exchanges, so the ETF will have no problem offering daily liquidity. TOPS also has a good track record of delivering alpha: The six TOPS funds have returned, on average, 10.9% each year since launch.

    Investors may yet balk at paying an extra 0.25% in fees on top of the 1.5% management fee and 20% performance fee paid out of the underlying funds. But the ETF market could open hedge funds to a much-wider investor base. Many investors are unwilling or unable to access offshore hedge funds, which typically have long lockups and restricted liquidity. ETFs offer daily liquidity and can be marketed across Europe. And unlike listed closed-end funds, such as the one floated by Marshall Wace during the boom, an ETF is unlikely to trade at a persistent discount to net asset value.

    ETFs may yet prove a Holy Grail for hedge-fund managers, too: a quick way to rebuild assets under management badly depleted by the crisis.

    Simon Nixon at wsj.com

     

    etf hedge funds wsj.com economics