Goldman Sachs just launched a new way to follow the hedge fund crowd. 

Goldman Sachs Asset Management is launching an exchange-traded fund, which pretty much anyone can access, that will invest in hedge funds' most popular stock picks.

The fund will track Goldman's Hedge Fund VIP Index, which includes the top 10 long stock positions held by hedge funds. Earlier this year, that group included Apple, Yahoo and Microsoft.

Goldman says that the new fund, GVIP, offers investors a way to invest in the "most important" long stock ideas and "gain exposure to key market themes."

The fund will cost 0.45% of assets managed, according to a press release. That's a far cry from hedge funds traditional two-and-twenty fees – in which fund managers charge investors 2% of assets and 20% of performance gains.

The fund started trading on NYSE Arca November 3 with $20 million in assets.

Goldman isn't the first to dip its toes in marketing hedge fund like investment vehicles to Main Street. Wall Street has developed alternative mutual funds, which invest like hedge funds in a mutual fund structure, for instance. 

The VIP index had had a rough time of it from August 2015 through June of this year, losing to the S&P 500 by nearly 15 percentage points. It started to pick up in the early part of 2016.

One drawback on the index, as noted previously by Goldman – it is based on public filings, like 13-Fs, that hedge funds make of their long stock positions. Those filings are a snapshot of what that fund held at a certain point in time, and by the time the filing is made (and Goldman has taken it into account for its VIP index) the fund may have changed its position.

Funds also don't have to report international stock holdings, or synthetic short positions in options or futures.

BI EXPLAINS: 'Hedge fund' doesn't mean anything more – and that's a problem

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The US presidential election is turning into a nail-biter as public polls show Hillary Clinton's lead in the race against Donald Trump suddenly eroding.

But suppose you had a way of knowing that the election outcome isn't as uncertain as it might seem.

Some of the world's biggest investors do have a way.

Unwilling to rely on public polls conducted mostly by the media and universities, these hedge funds and other large investors are paying for their own poll data and analysis. And they're paying a lot more than any news outlet or school would pay for more precise data that isn't always publicly available.

The point is to get a higher-quality, more accurate read on possible outcomes than a cash-strapped paper might be able to, or to ask specific questions that public pollsters may not be thinking of, says Scott Tranter, cofounder of Øptimus, a DC-based data firm.

These questions include specific ones ("Which members of Congress need to win or lose for Obamacare to be repealed?") and broader predictions ("Who will be elected president?"). That's according to Tranter, who recently spoke with Business Insider.

For investors, there's money to be made even just by knowing that Clinton's lead isn't as fragile as the latest polls indicate, which could implicate markets. Tranter's data shows Clinton is still favored to win, but her chances have been tightening over the past week, and he said aggregated public polling is now catching up.

"Folks like us sort out the noise and bring timely clarity tuned to the investors' investment position through sorting out 'bad' polls and bringing private, accurate data," Tranter wrote in an email to us.

A sudden jump in uncertainty over the outcome has led stocks to have one of their worst runs since the financial crisis. The Mexican peso, meanwhile, has bounced around with every new bit of information that might affect the outcome, and derivatives-markets predictions of future swings in the stock market are rising. A Trump win is viewed as a negative for Mexico, which drives down the peso's price, while a Trump loss would have the opposite effect.

At the moment, financial markets are pricing in more volatility than in previous elections, according to Credit Suisse. So an investor with greater confidence in a Clinton victory — which would be a less uncertain outcome in terms of policy and leadership — can profit from that information.

"Polling methods have become a lot more sophisticated since 1948, and early voting data in key swing states are consistent with a Clinton win," Credit Suisse's analysts wrote in their research note Friday. "Yet with Brexit still fresh on most investors' minds, it’s not surprising volatility is being bid up going into the election."

Brexit was the surprise decision earlier this year when the UK voted to leave the EU, which some hedge funds made money off of. Some of those funds got there via private polling ahead of that outcome.

Most hedge funds we asked said they were not buying private data, and some said a Clinton win is already priced into the markets.

It is a select few that pay the high prices for the data.

Business Insider interviewed Tranter by email. We discussed the kinds of private businesses that are seeking private poll data, how much they're spending, and the most surprising questions his firm is being asked to answer. Tranter would not name his clients.

This interview has been edited for clarity and length.

Rachael Levy: What kind of companies are asking you for private polls?

Scott Tranter: People and businesses that need a quantitative measure of certainty, time-sensitive analysis, and situation specificity in their polling measurement or modeled prediction.

Historically, much of politics has been emotional, personal. or even entertainment, and public polling done by universities and news orgs have been "good enough" to satisfy the public or these situations.

As of late, elections have financial or business consequences and understanding what happens is a competitive advantage or survival necessity. A business or investor is looking for more certainty and more nuanced insight. For example, it’s not about who is going to win the presidency. It’s about who might win and thus keep a key committee chairmanship or promote a certain government initiative that has big dollar implications if they win.

Take Brexit, which occurred earlier this year. There were lots of public polling and pundits interpreting that data that set the tone that Brexit was going to fail. Well, it succeeded. Businesses and financial institutions lost out big time. To have more clarity on the potential outcome or at least understand its closeness/lack of certainty ahead of time would allow someone to hedge against losses or position themselves to capitalize. Public polling failed on clarity, certainty and timeliness — all things private polling and modeling can solve. 

Around elections like this one, where you have news organizations, data journalists, and pundits who mix subjective opinion with objective data (along with lack of understanding how to properly interpret that data), we find lots of noise and very little clean signal. This lack of clarity, or, worse, perceived clarity, is driving more and more businesses and investors to seek private polling and predictive modeling.

Levy: How different are the private poll numbers for this election from what the public sees?

Tranter: I wouldn’t say private polling and modeling is different. I'd say private data has more clarity and consistency. With as much public polling available, a certain number will be correct at varying degrees. The question is, Which are correct and how do you interpret them?

Public polls often (not always, but often) are done to the lowest bidder and are done under conditions that meet a certain standard — and not always standards that would get someone an A in stats class or adhere to the latest research.

Private polls are often better funded and structured to measure the specific situation the client wants to measure. Usually more sample, better sample-collection methods, better base data and multiple weightings and turnout profiles are considered. 

Polling and model quality, like most things, is highly correlated to how much you pay for it. 

Levy: How is private data different from public? What are the margins of error? Is there a bigger sample, more time?

Tranter: Yes, private data often has higher sample, better sample-collection methods, tuned methodology, lower margins of error, and more frequency. Public polling and modeling is a suit off the rack. Private polling and modeling is a suit from Savile Row. 

Public polling and modeling is a suit off the rack. Private polling and modeling is a suit from Savile Row.

The availability of trending (which is really how polling should be viewed) and scenario calculation and visibility on potential errors (and their corrections or self-awareness of the errors) are the "killer features" of private data, polling, and modeling. 

Polling is basically fancy averaging that starts losing value the minute it's computed. Modeling derived from polling allows for projections and "win/lose scenarios" beyond the basic topline computation, and that is highly valuable and much more difficult to do in comparison. 

Levy: Are you mostly doing big-picture polls, like who will be president, or are you more focused on propositions?

Tranter: At the moment, candidate campaigns (like who will be the president or senator or governor) are in high demand so we spend a lot of time polling and modeling for that. Ballot initiatives are big business, especially out West where state laws are more conducive to ballot measures, but only a few have big money behind them.

Levy: Any idea how many major private polls are going on in this election? We heard less public polling is going on.

Tranter: Good question. Our firm alone has conducted polls in all 50 states completing over 1 million interviews with voters on various questions, and I would say we are a big player in an industry with many big players. I have seen estimates that yearly market research is roughly $3 billion and political surveys would be a subset of that total, so my quick guess is that at any given time there are tens of thousands of surveys in the field.

Levy: What kind of investors are asking for data, and how are they buying it?

Tranter: Ones who have a lot of money riding on the outcome.

It’s interesting that in the financial industry, which is highly data-driven, many of these folks can’t get enough of it, but they sometimes get too much data or noise that clouds out the signal they are looking for. I think many investors this campaign cycle know they need it, but have no idea how to buy it, and more importantly interpret it for their specific business purposes.

Polling and modeling is math, and we have encountered some investors who are quite good at math, and so they think they can do this or are intelligent buyers — which is logical but not necessarily correct.

[It's like how] a cardiologist is a doctor and on paper might be able to set a broken leg but an orthopedist, who is also a doctor, is still more qualified for that specific procedure.

A cardiologist is a doctor and on paper might be able to set a broken leg, but an orthopedist, who is also a doctor, is still more qualified for that specific procedure.

Levy: What kind of data are they seeking?

Tranter: It's not as sophisticated as I expected. Most folks are simply looking to see who’s going to win, so they are simply looking for top lines and a narrative on what is going to happen. Some want the data themselves and a few want models. I expect this to shift to more modeling tuned for the specific outcome they want to predict, but it will take a cycle or two for these folks to realize they need that more than they need their own version of a polling book with a few hundred pages of non-actionable crosstabs. 

Levy: Has demand for the data changed?

Tranter: From my point of view it has. Our business could not have existed 16 years ago, and we are overwhelmed with data-analytics projects related to politics and legislation. This is a function of having more data to analyze and more uncertainty in the political space as a whole. 

Levy: Have you gotten more interest since the recent "October Surprise" on Clinton and the FBI investigation?

Tranter: Yes. As noted, trends matter — so those folks who haven’t been watching for a while are at the biggest disadvantage as they may get their answer but what they really need is the trend or the probability of various scenarios that affect their specific business or investment position. It is hard, if not impossible, to construct a poll or a model tuned for their specific purpose with so little time. 

We often get asked if we can just look at "other data" we have to create trends or reference analysis, and that is a huge "no" as each client gets exclusive access to their data and analysis. If we shared it, the value of the data is diminished. So those folks who thought about doing this three months ago are seeing the benefit of forethought, while those who waited are at a disadvantage. 

Levy: Is there any type of data that is hot for funds? For example, on North Carolina? If so, why?

Tranter: Can’t speak to anything specific but we get lots of questions about specific states or races that the investor thinks is the catalyst for a much larger event. Turnout questions are hot and are hard to predict, but scenario-building is possible, and that can be helpful in gaming out possible outcomes.

Levy: What’s the strangest request you’ve gotten?

Tranter:"Who needs to lose and win at the congressional level for Obamacare to be overturned?"

First off, they were right in taking a macro look at the entire Congress, but we advised they should really be asking us to tie this to a presidential outcome with a legislative-intelligence component to the answer they were looking for.

What folks are learning is that they need to explain the political outcome they need to predict and let us backward-engineer the correct measurement and subsequent model structure to link up to their desired prediction. Kind of like someone going to the grocery store and saying they need to buy steak to make dinner, and after a bit of digging you find out they need a rib roast, some vegetables, and the correct brine because they aren’t making steak, they are making a stew. Context matters in political predictions and clients need to understand this and be guided. 

Levy: Do you have a sense of how investors are using the data?

Tranter: Generally, not as much as we would like, because of confidentiality and compartmentalization. They are asking us to predict an outcome that has some sort of financial or business implication. That implication is often confidential, certainly to the press and oftentimes to us. In a way we are like the Transporter — we are paid to deliver a prediction and have no idea how the client is using the data and integrating it into their decision-making. This is a recipe for disaster and we have turned down projects because our prediction or model might be right, but wrong for their situation, so we do not want to put ourselves into that kind of no-win engagement, where our prediction might be mathematically correct but not correct for their outcome. 

Levy: Could you describe an instance when it’s not worth spending money on data, from an investor’s standpoint?

Tranter: When you can help the client look at the public data and construct a good model that fits their needs. Public data is usable but you have to know how to use it and fit it to the client’s situation.

FiveThirtyEight, The Upshot, and other data journalists are good at what they do, but the question is whether what they do is useful for the specific situation of the investor.

Levy: How much does the data cost? Could you give us a range?

Tranter: Projects range in size but smallest one we’ve done is five figures and largest one we’ve done is over seven figures.

Levy: Roughly how much more expensive is this kind of polling versus what CBS or The New York Times would buy?

Tranter: I am guessing here, because lots of media polls are done at discount so the pollster can align themselves with the media outlet or university for marketing purposes. On a single poll (not modeling) I would guess private polling is two to three times more, but also two to three times better in terms of quality and depth.

Levy: Are funds asking for data around any propositions — for example, around marijuana or fracking?

Tranter: Yes, and that’s all I can really go into on that. 

Levy: What role, if any, has Brexit had on how funds view polling data?

Tranter: Brexit was YUGE.

The media and many public polls pushed a narrative that it would fail and had various interested parties using that data to plan from — and they got burned.

Brexit was as much about the unique situation — public polls and the media blow the call on "Congressman X" or "Ballot Initiative Y" from time to time, but those failures do not have multibillion implications. Brexit was miscalled and investors lost the opportunity to hedge against its outcome, which had multibillion-dollar implications. 

This got them scared, or certainly suspicious, of public data, and likely even some private data, despite the fact that misses happen. I remind folks all the time that statistics are never certain and occasionally predictions or measurements are missed. The key is to understand where those miscalculations can occur and how to plan for them in critical situations. There is a reason why NASA is triple redundant for critical functions.

Levy: What’s next for polling data and investors?

Tranter: Large projects that are not just looking at political outcomes but legislative outcomes and linking those together. I don’t remember (or use, for that matter) a lot from my undergrad in finance, but I do remember that having specific information in a volatile market allows the holder of that specific information to capitalize on that information in that volatile market.

Politics and governments are huge black boxes with a lot of hyperbole and, to most, does not have a lot of actionable data — at least compared to traditional financial markets. But the truth is politics and government are quantifiable and it’s something we are continuing to expand our expertise in as well as our datasets. Are investors ready or able to hedge against the next TARP-like vote followed closely by a presidential election?

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It looks as though it's going to be another down year for Wall Street bonuses.

That's according to a report from the compensation consultant Johnson Associates, which predicts lower "incentive compensation" for professionals across financial services this year.

On the banking side, bonuses for advisory professionals are expected to be down 5-10% from 2015, while those in underwriting could see a 10-20% drop, according to the report. Bonuses for equities traders could decline 5-15%, while fixed-income traders could see their bonuses drop as much 10%.

Hedge funders could see a 5-15% drop in bonuses, according to the report, while bonuses for private-equity professionals are expected to remain flat from 2015.

A look at the trend since the financial crisis shows that after a sharp climb, incentive pay has been declining since 2014 — or in the case of hedge funds, since 2013.

Check it out:

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Hedge fund manager Carl Icahn has more than doubled his stake in Hertz Global Holdings, the parent company of Hertz car rental franchises.

That's according to a new filing with the Securities and Exchange Commission.

Icahn doubled his holding from about 15.6% to about 33.7%, according to Bloomberg.

Hertz shares collapsed nearly 50% on Tuesday following the release of third-quarter earnings. 

As Business Insider's Bob Bryan reported, the company missed earnings per share significantly, posting adjusted earnings of $1.50 per share against analyst estimates of $2.73 per share. Revenue also whiffed, albeit by less, at $2.54 billion against projections of $2.59 billion.

CEO John Tague said in a press release that the company is still aiming to cut costs in the long run, but recent events impacted the quarterly performance.

Following the news, the stock lost nearly half of its value, falling 49% to $18.19 a share. It later bounced back and closed at $26.76.

Icahn first bought into Hertz in early 2014.

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The world's biggest hedge fund thinks stock markets around the world will tank if Donald Trump wins the US presidential election.

Bridgewater Associates expects a 10.4% drop in the US equities market should Trump win the presidency, according to an investor note sent Tuesday obtained by Business Insider.

A Clinton win would boost the market 2.3%, according to the note.

The numbers represent the hedge fund's "updated rough estimates of the likely market action depending on the election result," Bridgewater said. 

The note, written by the firm's co-chief investment officer Greg Jensen, Jason Rotenberg and Jeff Amato, made clear that they were not taking a political stance on either of the candidates.

"We are global macro investors, not political experts," the trio wrote. Bridgewater manages about $150 billion firmwide.

Other equity markets that would plummet on a Trump win: European equity markets by 10.8%, Japan by 9%, and China by 11.4%, the note said.

A Clinton win, on the other hand, would boost those markets in the low single digits, the note said.

"The impact of a Trump win is larger because the odds of a Trump victory are currently smaller," the note said. 

The hedge fund also expects:

• The euro to surge 4.9% compared to the dollar on a Trump win, compared to a 1.1% drop if Clinton takes the presidency.
• The Mexican peso to drop 13.1% if Trump wins, and rise 2.9% if Clinton wins.
• The Japanese yen to surge 6.2% if Trump wins, and fall 1.4% if Clinton wins.
• Gold would surge 8.6% on a Trump win, while it would drop 1.9% with a Clinton win.
• Oil would drop 2.9% on a Trump win, and eke out a 0.6% gain on a Clinton win.

In the short term, the hedge fund expects it would experience investment losses equivalent to a bad month if Trump wins, calling it "a manageable loss." The note added that a Clinton win would mean the firm would "likely net a modest gain."

"Over time, we expect to capture the effects of either Trump's or Clinton's policies on markets and economies and adjust our views accordingly," the note said. 

Bridgewater's external PR firm Prosek Partners didn't immediately respond to a request for comment.

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Donald Trump's election win has shocked some hedge funders – even those who are set to make major money off the news.

"I expect to make money today – though it will be one of the most bittersweet up days in my memory," said Josh Packwood of New York-based Lucus Advisors.

Many hedge funders that Business Insider spoke with prior to the Tuesday vote expected Hillary Clinton to take the presidency. Many had priced that victory into their models.

In the early morning as a Trump win became nearly certain, several people expressed their shock and dismay.

"The American people have spoken and they voted for the devolution of democracy into the farcical tragicomedy of reality television," said Milind Sharma, CEO of QuantZ Capital.

Other hedge funders struggled to put into words what the polls were showing. Joe Mauro, head of markets at hedge fund launch Light Sky Macro, tweeted:

"I am in shock and disbelief and don't have anything to opine on," another hedge funder told Business Insider.

A Facebook exchange between Whitney Tilson of Kase Capital, and former Fortress hedge fund manager Mike Novogratz, highlights the disconnect. Tilson asked Facebook followers to "pray like you've never prayed before" as the election results came in favoring Trump.

"This really is so disturbing," Novogratz responded. "Not even sure what to do."

Not everyone was shocked. And to be sure, some hedge funders, like Anthony Scaramucci of SkyBridge Capital, have politically supported Trump.

"After Brexit, nothing surprises me," said Ryan Tolkin, CIO at Schonfeld Group Holdings. "It would be easy sitting here in New York to say you don't understand how this could happen, but ultimately our country is made up of a lot of different people, and a lot of people have different beliefs."

"This was clearly a vote for change," Tolkin added, "and there were enough people that believed in that message."

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Lots of people were surprised by Donald Trump's victory in the US presidential election.

But some hedge funds positioned themselves for this outcome — and might end up performing better than they did after Brexit.

"It's a surprising outcome, but I suspect that our [profit and loss] will be even better than 'Brexit day after,'" Nancy Davis, founder of macro hedge fund Quadratic Capital, wrote Business Insider early Wednesday just as the voter tallies started to favor Trump.

"We do well with any sort of unexpected move," Davis told Business Insider. "We did very well following the Brexit vote, and we did so today following the US election."

Quadratic's strategy doesn't place binary bets on outcomes, but rather uses options that "perform well during times of uncertainty," she said.

Other funds expect to make money, even if the political implications are hard to swallow.

"I expect to make money today – though it will be one of the most bittersweet up days in my memory," said Josh Packwood of New York-based Lucus Advisors.

And in some cases, the surprise election result could provide investors with opportunities. 

"The truth is that emotional markets can create great investment opportunities for those of us who have a process in place which allows us to be disciplined, unemotional, and consistent in focusing on the long-term drivers of return," Valerie Malter, CEO of Matarin Capital Management, wrote to Business Insider. 

Malter said that Matarin, which invests in equity markets, has "benefitted from staying neutral to political risk."

The strategy involves "buying great businesses, at inexpensive valuations, with shareholder friendly leadership, and with catalysts in place for short-term outperformance, and hedging out the rest."

Markets, for their part, expected Hillary Clinton to win, and the world's biggest hedge fund, Bridgewater Associates, predicted before election results came in Tuesday that a Trump win would sink markets.

Andrew Beer, managing partner at Beachhead Capital Management, said before markets opened Wednesday that "most people are on the wrong side of this ... given the moves in the dollar, equities and bonds."

Schonfeld Group Holdings, meanwhile, reduced its leverage – or borrowed money – that it was using coming into the vote on Tuesday, said CIO Ryan Tolkin.

"We had some distrust for the polls, especially in the wake of Brexit," Tolkin said. "We definitely came into the event with less exposure."

Packwood at Lucus Advisors said he expected a volatile decline in the market, and that there are two possible scenarios under which that drop doesn't become a long-term bear market. He said:

• "People wake up next Monday and realize America is still here. We are still here. That the President of the United States is only so influential and that Trump has made a lot of enemies in the House and Senate that might make it difficult for him to implement the few number of fantastical initiatives that he has actually discussed in any coherent detail."
• "Trump removes the orange face paint and reveals to the world that the past 30 years have been an enormous production. He completely changes his tone and surrounds himself with respected advisors." 

"I view #1 as decently probable," he said. "I view #2 as nearly impossible."

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Predictions of a market crash in the wake of Donald Trump's shock election win have been proved desperately wrong.

Global stocks dipped on news of a Trump victory but, less than 24 hours later, stocks rallied in Asia and Japanese equities soared 6% on Thursday morning.

But global markets have failed to price in the policy uncertainty of a Trump presidency, according to Jerry Haworth, CEO of London-based hedge fund 36 South Capital Advisors.

He sees inflation rising, forcing central banks to raise interest rates more rapidly than expected and popping the asset price bubble built up in the wake of the 2008 financial crisis.

"I would expect there to be more fiscal spending in the future that will accelerate any potential inflation in the system. The quicker inflation returns, the quicker interest rates may go up," Haworth said in a telephone interview.

"I don't want bad things to happen but if interest rates go up I think you could see a 25% plus fall in equity and or bond and real estate prices and that would be quite serious," he said.

"We could be a while off yet because even with something like 10% inflation, because there's no rule that central banks have to raise interest rates. In that case, you'll create even more social inequality and the Trump vote was directly against that," he added.

Haworth has reason to say this. One of 36 South's funds gained more than 200% in the market downturn after the 2008 Lehman Brothers collapse and raked it in last August in the China markets chaos, Business Insider reported. His fund makes money when markets go haywire and clients use 36 South as a hedge against disaster.

The firm managed about $913 million at year-end 2015, according to a regulatory filing.

The boundary between knowledge and uncertainty has just changed.

It invests in long-dated options meaning it benefits when volatility spikes and markets start moving wildly.

Haworth said the muted market reaction to Trump shows that markets are yet to catch on, putting too much faith in central banks' ability to manage change.

"I personally think this was a turning point for implied volatility going forward as the boundary between knowledge and uncertainty has just changed. Uncertainty has risen but price volatility hasn't. As the level of uncertainty continues to rise we expect volatility will rise too. This means that the current level of implied volatility is probably below what it should be," Haworth said.

"I'm pretty excited that volatility hasn't moved. I don't want to say the markets have missed a trick here – maybe they haven't – but to me it looks like a definite blind spot. There seems to be a discrepancy between the increased level of uncertainty and the price it trades at i.e. volatility. I would say implied average global volatility should be about 25% higher," he said.

"Clients understand that markets haven't reacted. They have us in place for when things actually go haywire. Trying to time specific events has proved difficult," Haworth added. "There are a lot of unknown unknowns. You can't predict, you can only prepare."

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The world's biggest hedge fund isn't sure yet what to make of Donald Trump's election to the US presidency.

That's the big takeaway from an investor note that Bridgewater Associates founder Ray Dalio sent on Thursday, two days after Election Day.

"There is much more that we don't know than we do know," Dalio wrote in a client letter viewed by Business Insider. "Our guess is that the markets will increasingly focus on what he is likely to do and less on how sensible he sounds."

Dalio added that Trump's win meant there were "a significantly wider range of possible policies" to consider — adding a wrench into market predictions. "It would be a mistake to use the rhetoric of a campaign as much of a guide to what policies are likely," Dalio added. "We have entered an extremely ambiguous and interesting period of time."

The $150 billion firm is closely following several areas that would be affected by Trump, including regulatory reform and the Federal Reserve. Fed Chair Janet Yellen's term expires in February 2018, while a few other seats will open next year.

"The stakes here are high," Dalio wrote, noting that the selections would influence the Fed's stance on quantitative easing and monetary policy more generally.

On Tuesday, before the election results rolled in, Bridgewater told clients it expected markets to plummet should Trump win. Stocks did fall sharply, but they recovered just as fast, and the Dow Jones Industrial Average broke all-time highs earlier Thursday, even as tech stocks were crashing.

To be sure, Bridgewater didn't specify a time frame in its Tuesday predictions, and the firm's latest letter does not update those estimates.

Prosek Partners, Bridgewater's external public-relations firm, didn't immediately respond to a request for comment.

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Working class people from the Rust Belt played a large part in getting Donald Trump elected earlier this week. These same types of people also played a role in voting the UK out of the European Union earlier this year.

Trump's campaign targeted people in once-booming manufacturing towns who felt the punch of globalization as jobs moved overseas. The Brexit campaign had similar success on the areas of Britain that hadn't shared in the prosperity of the UK capital, London. 

This chart from $150 billion Bridgewater Associates, the world's biggest hedge fund, shows just how hard people across the US and Europe have been hit by globalization, and the loss of jobs to other countries and to technology. 

The graph is based on data from MIT economist David Autor and shows how much middle-skill jobs, which generally require some education after high school like community college classes, have declined in the past 26 years. And it really explains an awful lot.

"What this election highlighted more than anything is that there are lot of people in this country who, regardless of their political leanings, are hurting," Jeffrey Solomon, CEO of Cowen and Company, said in a note. "Many who feel like their voices haven’t been heard for a long time." 

Autor defines middle-skill jobs as white collar clerical, administrative, and sales occupations, and blue collar production, craft and operative occupations. 

In an April 2010 research document, Autor said: "The decline in middle-skill jobs has been detrimental to the earnings and labor force participation rates of workers without a four-year college education, and differentially so for males, who are increasingly concentrated in lowpaying service occupations."

Which populations tended to vote for Trump? White men, typically over 45, typically without a college degree, who believe the economy is in bad shape and that the effect of foreign trade is to take jobs away from America.

In the UK, it is a similar story. Brexit voters were typically 45 and over and didn't stay in education beyond high school. In other words, the individuals who, in years gone by, may have taken up an apprenticeship, and found their way into a middle-skill, technical role, but have been replaced in recent years by overseas labor or robots. 

That's not to say that these individuals haven't benefitted from globalization. Bridgewater estimates that the developed world has seen a 0.3% boost to annual growth, which over 40 years adds up to incomes that are on average 12% higher. 

"Yes, these workers have benefited from cheaper goods, but the negatives, including job losses and stagnant incomes, are more directly visible and easily attributable to global competition," Bridgewater's Jason Rotenberg and Jeff Amato wrote in a Friday client note that was viewed by Business Insider.

The benefits of globalization are indeed harder to feel. Smartphones may be cheaper than they otherwise would be, for instance, but that's little consolation to someone who can't rely on the same line of work as his father.

Here is what Wall Street dealmaker Ken Moelis told Business Insider's Matt Turner recently:

"Turner: It feels like there is a group of people that has benefited from globalization, and a group of people who feel like they haven't. Those two worlds seem to be colliding.

Moelis: Let me say this: There is a perception that that group has not benefitted. As I said, without going too deep, without globalization I am not sure everyone would be able to have a supercomputer in their pocket at the low cost.

Moelis: But that is hard to understand, so there are some very difficult things to understand that globalization is providing, that people really think are just here but really are a function of some of that. There are some very difficult arguments.

Turner: Right. Real wages haven't increased, but if things are getting cheaper and you're able to now afford a supercomputer in your pocket with that wage that hasn't increased in five years, it is difficult to pick that out.

Moelis: If you can watch the ball game on the bus, when you used to miss it ... and by the way, I think that life expectancy over the last 10 years has increased dramatically. You're living longer.

You ever go out to a restaurant now? You can get quality food — you can go out and get the best food that was available 20 years ago. They'll put it on a plate, you'll sit in a plastic chair because nobody values the chair, the white tablecloth, the maître d', but they'll put on your plate some great food for what used to be available at Applebee's prices. There are some really nice things going on, some external values being delivered to people. It's a story that is hard to tell."

The disconnect is also a story of growing income inequality. While the richest 5% of US households have seen incomes rise by 50% since 1990, incomes have barely grown for 80% of the population, Bridgwater notes below.

Bridgewater's external PR firm Prosek Partners didn't immediately respond to requests for comment.

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The New York-based hedge fund Caerus Investors has written a letter to Kate Spade's board urging it to sell the company.

"We have become increasingly frustrated by management’s inability to achieve profit margins comparable to industry peers," Caerus' founder, Ward Davis, and managing partner, Brian Agnew, wrote.

"Given the market's lack of faith in the current management team, as evidenced by the 63% decline in the shares since the intraday high on August 11th, 2014, we believe the best path for enhancing shareholder value is to pursue a sale of the company."

Caerus doesn't say how much of Kate Spade's shares it owns, or what it intends to do if the company doesn't take its advice.

Kate Spade beat third-quarter earnings estimates but missed on revenues. CEO Craig Leavitt cited "several macroeconomic factors, including a challenging retail environment and continuing tourist headwinds," in a statement. He also cited lower tourist traffic after the firm's second-quarter earnings miss.

The retail analyst Eric Beder of Wunderlich Securities said at the time that the firm was also suffering from bargain hunters and outlet-shoppers, who have "become even more aggressive in [their] demands for price cuts."

Kate Spade's stock was down 7.3% year-to-date as of Friday's close.

Caerus says that more than $3 billion in equity value has been destroyed in the last two and a half years, that EBITDA margins are "woefully" below peers, and that current valuation reflects "little to no growth despite a 23% revenue and 36% EBITDA CAGR."

The firm says Kate Spade would make a good acquisition candidate for a strategic lifestyle accessories company.

The brand equity, while strong, is "better suited in the hands of a larger, more experienced, global player," the letter reads.

Here is the letter:

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What should be done to help those whose jobs are made redundant by technology?

We just got our hands on a letter to investors from Elliott Associates, the nearly $30 billion hedge fund founded by Paul Singer, and it has some suggestions.

The letter says technology offers huge promise for the developing world; however, it says the benefits are less clear for the developed world. From the note:

"It is societies which already have a lot of infrastructure in place (mainly developed countries) where technology can seem to be strongly net negative for employment. The fast-food industry is a large employer in the developed world, and cost pressures compel corporations to look to technology for solutions. The unintended effects of the recent and prospective push in the US to mandate $15 per hour minimum wages may in fact provide momentum toward replacing waiters and cooks with machines and robots. Similarly, it is not the developing countries whose job landscapes will be significantly affected by self-driving trucks and taxis in 5 to 10 years. And so on."

Elliott is far from the first to bring this topic up. We reported this weekend that the number of "middle skill" jobs in the developed world has cratered since 1990, with some lost to globalization and some lost to automation. It's something Oaktree cofounder Howard Marks and Moelis & Company chief Ken Moelis have talked about. Viktor Shvets, a strategist at Macquarie, has called it the "third industrial revolution."

Elliott's letter is interesting, however, as it makes some recommendations. The letter says (emphasis added):

"Throughout the developed world and in many parts of the developing world, technological change is a top-priority jobs issue demanding smart, creative, comprehensive responses by governments and employers (as well as workers and unions). There is no single answer, but the direction of the answers should be toward rapid-response solutions which can train, upgrade, educate and relocate workers before their skills and motivation can deteriorate."

It is not hard to find examples of areas that could benefit from this. There are plenty of single-industry towns on both sides of the Atlantic that either lost that industry or found it could be managed mostly by robots.

This feeds into politics. The pitch to these constituencies from politicians from both sides of the aisle has often been based around reopening the factories that shut down. "Train, upgrade, educate and relocate," in Elliott's language, is less catchy, but it could be an important step in helping those who feel that they've been left behind.

There are challenges of course. As Elliott notes, even if older professionals do retrain, they are often unfairly discounted by would-be employers. And embarking on reeducation and relocation later in life is a daunting task. Still, Elliott makes some good points about the need for better-organized "rapid-response solutions."

Back to the letter:

"Unfortunately, while there are a myriad of job-training programs that purport to address the problem of the unemployed, there are few programs which are focused on technological obsolescence and aimed at comprehensive and rapid-response solutions to the combined elements of skills and geography. Reforms and creativity in this realm would be important not only in aiding the workers who are affected but also in creating the impression that governments can respond to real problems with clever and timely solutions."

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Cellphone addiction, particularly among millennials, may be hurting the labor force and the economy at large.

That's according to a $3.7 billion New York hedge fund, Tourbillon Capital Partners.

"Perhaps we aren't in secular stagnation. Perhaps we need to put our phones down and get back to work," founder Jason Karp wrote in the firm's third-quarter investor letter, a copy of which was obtained by Business Insider.

"At the risk of sounding like an old-man curmudgeon and a Luddite, I believe this to be a massive problem for society at large," Karp added. "All businesses globally, where employees have smartphones, are not getting as many true labor hours as we think."

Karp lists several concerns, including that millennials and teens are addicted to their smartphones and computers. Millennials check their phones over 150 times per day compared with about 30 times for the average adult, Karp wrote, citing Facebook data. Meanwhile, the average human's attention span has dropped.

"Undoubtedly, access to such time-saving technologies has dramatically increased our potential productivity," Karp wrote. "But what if we are spending those saved hours on Facebook, Instagram, Snapchat and the like. As much of the above data shows, we unfortunately are spending those hours on our phones."

That's making people less productive at work, and it might be keeping wages down, according to Tourbillon. Since the financial crisis, wages have been growing, but at a slow pace, federal data shows. That's even as wages surged in the latest figures, reported earlier this month.

Here's more from the Tourbillon letter:

• "In an odd way, the democratization of the smartphone has led to increased 'wealth' and decreased hours work despite the economic data showing no such drop in hours worked."
• "There are enormous implications for this, both long and short. This ability to consume leisure and goods so easily has forever altered our attitudes toward convenience and avoiding hassle."
• "While most employers think they are paying their employees for 10 hours of labor a day, they are, in fact, only getting 8 or fewer hours of actual labor. Perhaps the lack of rising wages and anemic growth in most sectors is not a function of any true stagnation, but really it is because people have chosen to consume far more leisure during the workday. ... When true hours worked equals what the employers are paying for, wages will rise, slack will be reduced and our increased productivity will really be evident once and for all."
• "Even 18 years ago, when I joined the workforce, it was far more difficult to consume leisure at work. If I wanted to see what a friend was up to, I had to call him (and others could see or overhear). Or I would visit them at night or on the weekends. ... Getting groceries, doing errands, planning big things had to be done on weekends or outside the office. Not anymore."

Tourbillon's master fund was up 9.1% net of fees for the third quarter, compared with 3.3% with the S&P 500, according to the letter. Year to date through October 30, the fund was down 7.4% net of fees, according to a person familiar with the matter.

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Billionaire Michael Platt decided to close his hedge fund firm, BlueCrest Capital Management, to outside money last year as investors pulled out.

BlueCrest now focuses on managing Platt's and employees' money — and has had a huge year, returning 40%, according to a Bloomberg News report.

The firm decided to trade with high levels of leverage, or borrowed money, Bloomberg reported.

Last year, the then $9 billion firm received a wave of redemptions from big investors, like pensions and endowments, as performance wavered.

From January 2012 through January 2015, the flagship fund "performed poorly with an annualized return of 0.65% net of fees," according to a consultant report for the Employees' Retirement System of Rhode Island.

"It is no longer a particularly profitable business to run a multi-manager hedge fund on 2 and 20% fees,"Platt told the Financial Times last year. "Instead we are happy to be our own client and run our own amount of leverage. We are going from earning 2 and 20 on clients' money to earning 0 and 100 on our own."

The firm had also drawn criticism for an internal fund that managed employees' money and produced higher returns than the fund for outside investors. That arrangement was said to be under investigation by the Securities and Exchange Commission as of earlier this year, Bloomberg reported.

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NEW YORK, Nov 16 (Reuters) - Many hedge fund managers have reason to cheer even as their investors grouse about lackluster returns; they are on track to reap a much larger payday for 2016 than for 2015.

"There have been a lot of reports about hedge fund compensation being down this year but that is misleading," said Adam Zoia, chief executive officer of Glocap, the largest investment management search firm which tracks hiring and pay in the hedge fund industry. "The headline here is that pay is up for star performers this year."

And the jump is expected to be large, according to the 2017 Glocap Hedge Fund Compensation Report which was reviewed by Reuters.

At top performing funds, investment managers' bonuses are on track to be up as much as 11 percent. Portfolio managers at poorly performing funds will see bonuses shrink by as much as 7 percent, the report said.

Hedge funds became famous more than a decade ago for delivering eye-popping returns, but more recently the industry as been criticized for its high fees and low returns, prompting many pension funds to pull money out.

Even as the average hedge fund is earning returns only in the low single digits, portfolio managers at the best performing funds are likely to earn 6.6 times more than those at the industry laggards, the data from CompIQ show.

The strong jump in compensation is being fueled by a wider spread between returns this year. The top performing one-third of funds are boasting gains of roughly 15 percent. The bottom one third are nursing average losses of 7 percent. A year ago the top third was up only about 4.2 percent while the bottom third was off about 4.2 percent.

"Last year there was a much tighter range," Zoia said.

Hedge funds have long paid extremely well with the 25 best-paid hedge fund managers earning $13 billion last year, Institutional Investor's Alpha's 15th annual ranking of the industry's highest-earning managers show.

With more sluggish returns this year the conventional wisdom was that pay would shrink at a time some firms have laid off staff and trimmed spending on employees to save.

The data show this is not true. Since hedge funds charge a management fee and take a portion of gains, analysts say there is still enough to pay and that firms will have to pay up to keep their best staff.

"The feeling in the industry is that it is hard enough to make money, so if you make me money you will be very well taken care of," Zoia said. (Reporting by Svea Herbst-Bayliss; Editing by Lisa Shumaker)

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A $19 billion UK-based hedge fund just launched a coding contest with cash prizes for young Europeans.

Man AHL, a quantitative fund within Man Group, launched a contest for EU and Swiss residents who are between ages 16 and 25.

Here's more info from Man:

"Entrants will be tasked with writing code using Python, the programming language which Man AHL utilises for its systematic models, to control a player for Man AHL’s homemade game HiveMinder. The seven coders that perform the best will be invited to a day of live coding at Man AHL’s offices in London to determine the ultimate winner. The top 3 finalists will be awarded cash prizes of £5,000, £2,000 and £1,000 respectively and all finalists are encouraged to apply for an internship at Man AHL."

Quant strategies have grown in popularity over the past few years, attracting assets from investors, while more traditional hedge funds bulk up on coders and data pros. 

This is the second year Man AHL is running the contest. Last year, Hamed Ahmadi, a student at the University of Oxford, won the contest, got an internship at Man, and has since joined full time, the company said.

SEE ALSO: $3.7 BILLION HEDGE FUND: 'Perhaps we need to put our phones down and get back to work'

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Hedge funds hopped out of healthcare ahead of the US presidential election – and may have missed on a big rebound in that sector in the wake of Donald Trump's win. 

S&P Global Market Intelligence tracked hedge funds' stock holdings for the third quarter, which ended September 30, more than a week before the November 8 election.

The takeaway? Hedge funds "may have been just as surprised by the election as pollsters and psephologists," S&P says. The general thinking was that Hillary Clinton as president would have reformed drug pricing in a way that would have adversely affected the sector.

After Trump won, healthcare stocks bounced.

Healthcare was the biggest net sell for hedge funds, with energy following up.

Meanwhile, funds including Glenview Capital and Viking Global "pulled out significantly from Allergan, which was this quarter’s top sell at $1.5 billion," the report said.

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Working class people from the Rust Belt played a large part in getting Donald Trump elected earlier this week. These same types of people also played a role in voting the UK out of the European Union earlier this year.

Trump's campaign targeted people in once-booming manufacturing towns who felt the punch of globalization as jobs moved overseas. The Brexit campaign had similar success on the areas of Britain that hadn't shared in the prosperity of the UK capital, London. 

This chart from $150 billion Bridgewater Associates, the world's biggest hedge fund, shows just how hard people across the US and Europe have been hit by globalization, and the loss of jobs to other countries and to technology. 

The graph is based on data from MIT economist David Autor and shows how much middle-skill jobs, which generally require some education after high school like community college classes, have declined in the past 26 years. And it really explains an awful lot.

"What this election highlighted more than anything is that there are lot of people in this country who, regardless of their political leanings, are hurting," Jeffrey Solomon, CEO of Cowen and Company, said in a note. "Many who feel like their voices haven’t been heard for a long time." 

Autor defines middle-skill jobs as white collar clerical, administrative, and sales occupations, and blue collar production, craft and operative occupations. 

In an April 2010 research document, Autor said: "The decline in middle-skill jobs has been detrimental to the earnings and labor force participation rates of workers without a four-year college education, and differentially so for males, who are increasingly concentrated in lowpaying service occupations."

Which populations tended to vote for Trump? White men, typically over 45, typically without a college degree, who believe the economy is in bad shape and that the effect of foreign trade is to take jobs away from America.

In the UK, it is a similar story. Brexit voters were typically 45 and over and didn't stay in education beyond high school. In other words, the individuals who, in years gone by, may have taken up an apprenticeship, and found their way into a middle-skill, technical role, but have been replaced in recent years by overseas labor or robots. 

That's not to say that these individuals haven't benefitted from globalization. Bridgewater estimates that the developed world has seen a 0.3% boost to annual growth, which over 40 years adds up to incomes that are on average 12% higher. 

"Yes, these workers have benefited from cheaper goods, but the negatives, including job losses and stagnant incomes, are more directly visible and easily attributable to global competition," Bridgewater's Jason Rotenberg and Jeff Amato wrote in a Friday client note that was viewed by Business Insider.

The benefits of globalization are indeed harder to feel. Smartphones may be cheaper than they otherwise would be, for instance, but that's little consolation to someone who can't rely on the same line of work as his father.

Here is what Wall Street dealmaker Ken Moelis told Business Insider's Matt Turner recently:

"Turner: It feels like there is a group of people that has benefited from globalization, and a group of people who feel like they haven't. Those two worlds seem to be colliding.

Moelis: Let me say this: There is a perception that that group has not benefitted. As I said, without going too deep, without globalization I am not sure everyone would be able to have a supercomputer in their pocket at the low cost.

Moelis: But that is hard to understand, so there are some very difficult things to understand that globalization is providing, that people really think are just here but really are a function of some of that. There are some very difficult arguments.

Turner: Right. Real wages haven't increased, but if things are getting cheaper and you're able to now afford a supercomputer in your pocket with that wage that hasn't increased in five years, it is difficult to pick that out.

Moelis: If you can watch the ball game on the bus, when you used to miss it ... and by the way, I think that life expectancy over the last 10 years has increased dramatically. You're living longer.

You ever go out to a restaurant now? You can get quality food — you can go out and get the best food that was available 20 years ago. They'll put it on a plate, you'll sit in a plastic chair because nobody values the chair, the white tablecloth, the maître d', but they'll put on your plate some great food for what used to be available at Applebee's prices. There are some really nice things going on, some external values being delivered to people. It's a story that is hard to tell."

The disconnect is also a story of growing income inequality. While the richest 5% of US households have seen incomes rise by 50% since 1990, incomes have barely grown for 80% of the population, Bridgwater notes below.

Bridgewater's external PR firm Prosek Partners didn't immediately respond to requests for comment.

SEE ALSO: RAY DALIO: 'There is much more that we don't know than we do know'

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The 20-year-old who dropped out of New York University to start a hedge fund says he has raised $5 million.

Julian Marchese launched Marchese Investments last year after starting his fund in his dorm room.

In September, Marchese told Business Insider he was managing about $1 million at his startup and planning to raise around $3 million more. So the $5 million raised is slightly above his expectations.

Technically, Marchese Investments runs separately managed accounts, and the firm is small enough that it doesn't have to file regulatory filings on its assets, so Business Insider hasn't independently verified the figures.

Marchese told Business Insider the bulk of the new investments came from one investor, but declined to identify who was writing the checks.

Chris Kohler, an investment consultant at Mercer, is one of Marchese's advisors helping him with business strategy. Kohler said he had high hopes for Marchese.

"Some of the [hedge fund] all stars now, if you really track back, they were the ones that started doing this in high school and college," Kohler told Business Insider.

To be sure, $5 million is peanuts in the world of hedge funds – institutional investors like pensions and endowments don't usually start looking at funds until they have at least $100 million or so.

But then again, few people start investment firms at age 20. 

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