Brief: The Great Resignation shows no sign of easing and a dwindling supply of workers may be here to stay, according to Randstad NV, a global provider of employment services. Fewer people in the job market, underpinned by a long-term demographic trend, is allowing talented workers to have more options and they’re going where their needs are met, said Sander van ‘t Noordende, who took over as chief executive officer of the Dutch company on Tuesday. “That is sort of a change today: Employees are more prepared to attach consequences to their unhappiness or not getting what they want,” van ‘t Noordende said in a phone interview as Randstad revealed its latest Workmonitor report. “They’re prepared to quit their job if they’re not happy.” The Great Resignation has been a boon to employees searching for better working conditions and higher pay. Economies bouncing back from the pandemic and work from home options have made it easier for employees to quit unappealing positions and look for alternatives, driving up wages.
Brief: The collapse of Archegos and the GameStop short squeeze has radically upended the hedge fund prime brokerage space over the past year, raising fundamental questions over PBs’ lending activities and business models. The implosion of Archegos Capital Management in early 2021, coupled with the “meme stock” short-selling squeeze which saw amateur investors drive up the price of selected shorted stocks – handing hefty losses to certain hedge fund managers in the process – has brought renewed upheaval to a prime brokerage sector that had only recently adapted to the challenges of Covid-19 and a landscape of lower revenues and falling trading volumes post-2008. The sudden meltdown of Archegos – the New York-based family office led by Bill Hwang, a former ‘Tiger Cub’ who previously managed money at Julian Robertson’s Tiger Management – led to USD10 billion in losses for its brokers.
Brief: Over the last two years, funds that hold only a few huge companies — often only one – have come to dominate the private equity secondary market. These funds, called continuation funds or GP-led secondaries, allow general partners to hold onto what they believe are still-promising companies after a fund reaches the end of its life as well as raise new money from existing clients. In 2021, 44 percent of GP-led secondaries were invested in single-asset or highly concentrated continuation funds, up by 9 percentage points from the year before, according to private equity advisory firm Campbell Lutyens. Investors have been gravitating towards single-asset funds in part because they can “dig deeper into assets and into the work that particular general partners carry out,” according to Gonzalo Erroz, partner at the U.K.-based manager Hayfin Capital Management. The pandemic made it harder for investors to conduct due diligence on larger portfolios.
Brief: If the latest numbers from the Investment Funds Institute of Canada (IFIC) are any indication, the pandemic has created a resurgence in active management. Investors who rushed to beat the March 1 registered retirement savings plan (RRSP) contribution deadline pumped nearly $10 billion into mutual funds in February alone, according to IFIC. As of March 1, total mutual fund assets reached $2 trillion in Canada. A big chunk of that came from a $111.5-billion bump in mutual fund sales in 2021. That’s nearly four times the $29 billion in mutual fund sales in 2020, which was in line with average annual sales going back to 2000. In comparison, sales in passively-managed exchange-traded funds (ETFs) totaled $4 billion in February, bringing total assets to $317.7 billion by March 1.Over half of February’s mutual fund sales went into balanced funds, which have been the funds of choice throughout the pandemic. Like the name implies, balanced funds attempt to strike a balance between equities and fixed income.
Brief: It’s still a good time to buy stocks that benefit from a pandemic recovery, such as airline and travel companies, according to Sarah Ketterer, chief executive officer of Causeway Capital Management. Investments with upside that have been held down by the prolonged Covid-19 outbreak and Russia’s invasion of Ukraine include Google parent Alphabet Inc. and Ryanair Holdings Plc, Europe’s biggest discount airline, she said during an interview Friday with David Westin on Bloomberg Television’s “Wall Street Week.” “Alphabet is interesting to us, because some of their ads are related to travel and leisure and we see that recovering,” Ketterer said. “These are opportunities for investors, because we can’t assume that invasions last forever and this pandemic is thankfully dissipating.” Stocks rallied this week, recovering some of the ground lost so far in 2022, while bonds flashed a key recession warning sign as rates of short-term Treasuries exceeded longer-term debt in what’s known as a yield-curve inversion.