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21 Dec 2007

Large Hedge Funds Taking Over From Smaller Counterparts

According to a report by research and data provider Hedge Fund Research, about 863 funds were launched through the third quarter, nearly half the amount for all of
2006. About 408 asset pools were liquidated compared with 717 in 2006.

In 2003, 1,094 new funds were introduced. Liquidations fell to an industry low of
296 funds in 2004.

Kenneth Heinz, Hedge Fund Research president, said investor requirements for size and infrastructure may be making it more challenging to launch a new fund, “In the third quarter of this year, investors allocated nearly 90% of new capital to funds with greater than $1bn (€695.8bn) already under management.”

Big hedge funds tower over the industry. Heinz said less than 10% of hedge funds controlled 73.5% of capital for the year through the third quarter. Half of the $45bn in new hedge fund capital in the third quarter was allocated to funds of hedge funds.

Heinz said that although some collapses were caused by bad investments tied to the sub-prime mortgage market, he said the majority of funds were closed because they failed to meet the expectations of fund managers or investors.

20 Dec 2007

HFR Says Fewer Hedge Fund Launches in 2007

Hedge fund launches slowed in 2007 for the third year in a row, a sign investors may be putting money into existing funds rather than into new ones with perceived higher risks, according to Chicago-based Hedge Fund Research.

863 funds were launched in the roughly $1.9 trillion industry by the end of the third quarter, compared with 1,518 new funds for all of 2006 and 2,073 launches in 2005. Liquidations also slowed, with 408 funds closing by the third quarter 2007, compared with 717 for 2006 and 848 for 2005, HFR said on Wednesday.

HFR also said that the slowing launches and liquidations in an industry with more than 9,000 funds suggests investors are more inclined to allocate to larger, more established hedge funds, which are likely to be more diversified and have better risk controls.

"In the third quarter of this year, investors allocated nearly 90 percent of new capital to funds with greater than $1 billion already under management," said HFR. "Investor requirements for size and infrastructure may be making it more challenging to launch a new fund."

That contrasts with previous years, when investors often clamored to invest in the latest funds, particularly those founded by high-profile former investment bank proprietary traders.

Private Equity Firms & Hedge Funds May Face Key Man Risk

Despite current investor and media attention on unexpected CEO turnover at major public companies, key man risk, the risk that the departure of a key executive or group of executives will lower credit quality, is more prevalent and a risk to credit quality among private equity firms and hedge funds, says Moody’s Investor Service.

“Recent departures at some large financial companies have brought to the fore the need for effective succession planning and management development, but also highlighted that large firms can usually cope with such departures, however unsettling,” says Moody’s vice-president Janet Holmes. “Hedge funds and private equity firms, however, can face considerably more acute CEO [or founder] leadership transition risk.”

Like other firms with founding CEOs, hedge funds and private equity firms face key man risk because they have often been created by successful founder executives who have played a central role in building a franchise and are closely linked with its business, brand and success. However, unlike most other major companies, these firms face additional key man risk because one or a handful of investors may hold most, if not all, of the voting stock.

Generally speaking, older firms will be more likely to have their equity distributed away from their founder, while private equity firms are less likely than hedge funds to have a single owner.

18 Dec 2007

Hedge Funds Ahead for November

Hedge fund returns remained in double digits for the year despite a 1.6 percent dip in November, according to the Greenwich Global Hedge Fund Index. Putting hedge funds ahead of a trio of broad stock indexes through the year's first 11 months.

Among the hedge fund strategies tracked by the index, the Specialty Strategies Group led the pack, up 16.5 percent despite a 1.9 percent drop in November triggered by a fall in emerging markets.

Through November, the GGHFI was up 10.5 percent compared with 6.2 percent for the Standard & Poor's 500, 8 percent for MSCI World Equity, and 3.4 percent for the FTSE 100.

The Long-Short Equity Group lost 2.3 percent in November but was up 10.8 percent for the year. The Directional Trading Group, which bets on futures, was up 9.4 percent for the year, while the Market Neutral Group, was up 7.7 percent through November.

Hedge Fund Launch Expected From GMP Capital

GMP Capital Trust is expected to announced the launch of a new hedge fund this year, according to Canadian newspaper Globe and Mail. The $50-million hedge fund is to be co-headed by star trader Michael Wekerle.

The firm will put up $20-million, employees will add their own money and outside investors will be invited to join, according to the paper. GMP is following a blueprint drawn up by houses such as Goldman Sachs Group Inc., which gleans more than half its revenue from smart investments with its own capital. All the major Canadian dealers also have proprietary trading funds that use hedge fund strategies.

If the fund can build a successful track record, sources at GMP say they anticipate it will attract support from wealthy individuals and outside institutions such as pension funds, which have embraced alternative asset managers in recent years.

The new hedge fund is expected to deploy four investment strategies. There will be a traditional equity trading approach that includes taking long and short positions, the fund will also do credit trading, which would include buying distressed debt, plus what's known as program or algorithmic trading and options-based volatility investing.

Successful hedge funds created by domestic dealers include three-year old Flatiron Capital Management Partners, a $350-million (Canadian) fund backed by National Bank Financial and staffed by its former employees.

Calvert Launches Alternative Energy Opportunities Abroad

Dublin based mutul fund manager Calvert Inc. announced the launched this year of the Calvert Global Alternative Energy Fund. The new hedge fund invests in a broad universe of U.S. and non-U.S. stocks, seeking out companies that are alternative energy market leaders as well as those building a significant presence in the sector.

Jens Peers, head of ECO Investing at Dublin-based KBC Asset Management International Ltd. and lead portfolio manager of the Calvert Global Alternative Energy Fund, said: “Non-U.S. companies and markets will benefit from the improving prospects for alternative energy in 2008 because Europe, Asia and other regions are further along than the U.S in addressing climate change and oil dependency by embracing alternative energy technologies.”

Over the long term, according to their website, Calvert believes that alternative energy technologies will become an increasingly significant solution to the global energy and climate change challenges. The firm believes it will take multiple strategies to address climate change and therefore advocates a broad range of solutions, such as greater energy efficiency and aggressive development of renewable energy sources.

The Fund was launched on May 31, 2007 and is advised by Calvert Asset Management Company, Inc. Calvert is one of the nation’s largest socially responsible mutual fund firms with approximately $16 billion in assets under management offering 41 funds that allow individual and institutional investors to pursue a broad range of investment objectives within a single fund family.

14 Dec 2007

A Challenging Year For Hedge Funds Ends Well

The 2007 Credit Suisse Index shows that hedge funds have outperformed many major global equity indices for the year while maintaining considerably less volatility.

According to Oliver Schupp, President of the Credit Suisse Tremont Index, LLC, the Index finished the period with estimated annual returns of 12.1% for 2007 year to date through November 30.

“We are pleased to present a research piece analyzing the performance of the Credit Suisse/Tremont Hedge Fund Index for 2007,” said Mr. Schupp. “Hedge funds experienced a challenging year due to certain market events but finished the year through November 30 by outperforming many major global equity indices while maintaining considerably less volatility.”

2007 was characterized by unusually high levels of volatility that impacted hedge fund strategies and financial markets throughout the year. A major sell-off in China in late February sparked fears of an Asian crisis reminiscent of 1997. Unexpected liquidation of several high profile hedge funds, as well as November’s equity sell-off in markets worldwide. Nevertheless, hedge fund strategies performed well and the Broad Index returned 2.0% in the fourth quarter with all 10 sectors in positive territory through November 30th.

The asset management business of Credit Suisse is comprised of a number of legal entities around the world that are subject to distinct regulatory requirements; certain asset management products and services may not be available in all jurisdictions or to all client types.

Hedge Funds Sector Positioned To Recover Quickly, F&C Partner Speculates

Commenting on the subprime crisis, Francois Barthelemy, partner at hedge fund F&C Partners said, "Hedge funds tend to suffer in very volatile environments but well-managed portfolios often recover quickly, once the market has come back to some sort of rational pricing of assets."

Despite the recent volatility that led many to describe November as the 'bloodiest' month for hedge funds, the sector is well positioned to benefit from the current turmoil.

Barthelemy explained, "The real question that people are struggling with is that there are a number of signs indicating that we might be moving into recession territory. We have had three great years where the way to make money was about growth and it seems we are now moving into a very different environment."

He belives, "the solution requires the raising of fresh capital and the selling of impaired assets to investors who will have the ability to work them through bankruptcies or restructuring," he said. "Only hedge funds have the legal and investment expertise to buy that type of assets and they are likely to do really well as a result of it."

Between December 2000 and December 2004, the Credit Suisse Tremont Distressed Hedge Fund Index was up +72%, while the MSCI World Index was down -2%. "We expect the next few years will see a repeat of this scenario."

Outside distressed assets, there are also attractive opportunities in a number of traditional investment sectors but not on a standalone basis. "While alpha is now easier to find, the beta of the market may kill you. This means it is the best of times for hedged strategies that aim to take most of the beta out of the return," he said.

Barthelemy, whose team is responsible for the management of the F&C Balanced Alpha Fund of Hedge Funds and the F&C Select Alpha Fund of Hedge Funds, concluded, "There is not doubt the world is very volatile and I don't think that buying just equity will work in the next few years. Volatility is not going to go away for a while and you will need a strategy that can cope with that. For me that means hedge funds."

13 Dec 2007

Alternative Energy Fund Launch by Guinness Atkinson

Guiness Atkinson Asset Management has launched an alternative energy fund for UK and European investors. The fund is managed by a team of three fund managers, Tim Guinness as the Lead Manager and Edward Guinness and Matthew Page as Co-Managers.

With a 50/50 top-down/bottom-up approach, the fund looks to identify the sub sectors within the space which have the greatest potential for growth and strong returns.

Tim Guinness said in an interview with Alt Energy Stocks, "I have been running a conventional energy fund since 1998 and have been following alternative energy stocks as a sub sector within the energy universe since then."

"Recently we have preferred wind and solar over fuel cells and biofuels but this is constantly under review." Guinness said, "We then screen the universe of 200 stocks we have identified to try and identify good companies that are cheap where sentiment towards them is improving and stock price action is positive. One tool we use is to screen by value, earnings momentum, economic returns vs peers, and a technical indicator."

Alternative energy includes, but is not limited to power generated through solar, wind, hydroelectric, tidal wave, geothermal, biomass or biofuels. Energy technology includes technologies that enable these sources to be tapped and also various manners of storage and transportation of energy, including hydrogen and other types of fuel cells, batteries and flywheels, as well as technologies that conserve or enable more efficient use of energy.

12 Dec 2007

Hedge Funds Low in November but High Year To Date

The Greenwich Global Hedge Fund Index is up +10.53% year-to-date despite falling -1.61% in November, and it continues to outpace equities for the month and year.

Ben Rossman, Senior Vice President of Greenwich Alternative Investments noted that, “Hedge fund performance, which was less severe than that felt by the equity markets, highlights their unique ability to limit the downside.”

All four equity indices were down by more than 4% in November: the S&P 500, MSCI World Equity, and FTSE 100 Indices posted -4.18% (+6.23% YTD), -4.24% (+7.97% YTD), and -4.30% (+3.41% YTD), respectively.

The November Index currently includes 1,325 funds. Final November results will be posted in early January, once additional funds have submitted returns.

Greenwich Alternative Investments, LLC (and its affiliates) is among the oldest providers of hedge fund indices, asset management services and research to institutional investors worldwide.

Hedge Funds Experiencing Staff Shortages

According to a new survey conducted by CPA firm Rothstein Kass, nearly 70% of hedge funds are having difficulty retaining back-office personnel. "Hedge funds have seen tremendous inflows of capital in recent years, a trend that has accelerated as sophisticated investors seek to mitigate risk in volatile market conditions," said Howard Altman, Co-Managing Principal of Rothstein Kass.

"However, as our research reveals, the rapid pace of industry growth has left back-offices more pressured than ever before. Firms of all sizes are struggling to retain qualified personnel amid existing staffing shortages, including the CFO and COO levels. These problems will only be exacerbated by the industry's increasing institutional focus, since these investors generally demand stricter reporting and compliance capabilities."

Survey findings were based on interviews with over 500 Chief Financial Officers at direct investment hedge funds with at least $100 million in assets under management.

Firms in the study are representative of a wide range of investment styles, experience levels and assets under management. Approximately half had assets between $100 and $999 million. A quarter reported assets of between $1 and $2.99 billion, and the balance were firms with assets in excess of $3 billion.

The study was commissioned and results analyzed by the Rothstein Kass Executive Search Group, which specializes in the recruitment and placement of senior financial executives and staff at alternative investments companies.

"It was clear to us from our daily interactions with clients, that's a time of unprecedented opportunity for talented individuals looking for an exciting career in the hedge fund industry."

Findings are summarized in "The Compensation Conundrum," co- authored by Russ Alan Prince, a leading authority and counselor on private wealth, and Hannah Shaw Grove, a widely recognized expert on behaviors and finances of high-net-worth individuals.

"The Compensation Conundrum" also provides 2007 total compensation projections for key non-investment roles at hedge fund organizations, including CFO, COO and Controller. Figures are composed of base salary and bonus. "Our compensation figures offer ranges for total compensation by position and will serve as a benchmark for future research." said Todd Noah.

4 Dec 2007

Hedge Fund Operator Acquired For $1.32 Billion

In a deal worth up to $1.32 billion, London hedge fund operator Marble Bar Asset Management LLP has been bought by Swiss private banking group EFG International.

EFG said it will initially pay $517 million in cash, plus a further $300 million to $800 million over the next six years, depending on the performance of Marble Bar's funds. Of the initial cash payment to Marble Bar partners and staff, about $400 million will be reinvested in Marble Bar funds for up to six years.

In a press release yesterday, EFG said that the purchase broadens its capabilities in hedge funds and brings the hedge fund-related assets it manages to around $13.3 billion , or 18% of clients funds. Last year, EFG bought fund of hedge funds manager C.M. Advisors for an undisclosed amount.

According to Hedge Fund Research Inc., investors have poured $164 billion into hedge funds in the first nine months of 2007, boosting global assets to $1.8 trillion.

Chief Executive of EFG, Lonnie Howell, said buying Marble Bar gives the bank access to "sheer talent" and will help it meet demand from wealthy individuals for hedge fund investments.

Marble Bar's 2008 net profit is expected be at least $80 million to $100 million EFG said, meaning the purchase price is about 10 times estimated earnings.

3 Dec 2007

Dexion Fund Of Hedge Funds Raise $274.4 Million

Dexion Absolute Limited has now become one of the world's largest exchange-traded funds of hedge funds (FOHF) with net assets of GBP 512 million ($1,056.5 million).

The London Stock Exchange-listed FOHF completed the multi-currency share issue raising GBP 133 million ($274.4 million). The issue was sponsored by Hoare Govett Limited, a member of the ABN AMRO group.

Dexion director Nick Browne said, "We are very pleased with the response to this issue. We have built on the foundations established earlier this year in a number of jurisdictions across Europe and Asia, received strong support from many existing shareholders and gained a wide range of significant new pension fund and other institutional investors."

Bob Cowdell, managing director at ABN AMRO, is quick to point out the significance of the share issue. "This is the largest capital-raising to date in the London-listed funds of hedge funds sector," he says. "It has more than doubled the size of the Company's Euro and US Dollar share classes introduced earlier this year.'

The fund of hedge funds provides direct access to Harris Alternatives LLC manager of the 'Aurora' range of funds. With a 17-year investment record Harris Alternatives currently manages in excess of $7 billion in funds of hedge funds and segregated accounts.

Dexion's investment objective is to generate consistent long-term capital appreciation with low volatility and little correlation to the general equity and bond markets through a portfolio having a diversified risk profile. The FOHF has a database of approximately 550 FOHF managers.

20 Nov 2007

Alpha Titans Fund of Fund Launch

Alpha Titans, a multi-manager hedge fund announced that it will be open to outside investors from December 1st, the fund of funds was launched on November 1st 2007.

Alpha Titans was launched with equal allocations to DE Shaw, Renaissance, Citadel, IKOS and Whitebox. Most of these managers are either closed to new investors, or cannot be acquired by new investors without very high minimums and lockups. Alpha Titans has favorable liquidity terms with many of these managers due to long-standing investments with them.

Alpha Titans is offered to qualified investors through onshore and offshore funds. With a minimum initial investments of $100,000, the fund of funds has quarterly liquidity and no redemption penalties. Investors have the opportunity to choose from three different share classes of leverage, 1x, 1.5x and 2x.

Alpha Titan is an alpha-return investment manager that has achieved superior risk-adjusted returns through skill-based investing.

19 Nov 2007

Global Investment Fund Now Open

West Palm Beach (HedgeCo.Net)- Global Investment House has announced the Global Distressed Fund is now open for new and existing investors until the end of December.

The Barclays group, the world's largest independent hedge fund research company, ranked the Fund earlier this year as the 4th best Fund of Hedge Funds in the world, in terms of risk adjusted return, from a list of 647 funds.

The fund was also ranked by EurekaHedge among the top ten distressed fund of funds in terms of its annualized return, standard deviation, and Sharpe ratio.

Mr. Sameer Al-Gharaballi, Executive Vice President at Global, said the fund's reopening presents an opportunity to invest in one of the best and highly ranked fund of hedge funds.

Al- Gharaballi confirmed that the fund presents an opportunity for investors seeking diversification from local markets with low risk, adding that Global may provide interested investors with loans on invested capital, as a show of confidence in the fund's stable performance.

16 Nov 2007

$2.3 Million Raised By 100 Women in Hedge Funds

The hedge fund industry raised $ 2.3 million at the Sixth 100 Women in Hedge Funds Gala at Cipriani in New York City.

Many well-known leaders in the hedge fund industry attended the gala celebration, among them Tudor Investment Management, Williams Trading, Blue Ridge Capital, Highbridge Capital Management, Eton Park Capital Management, Moore Capital and Atticus Capital.

John Griffin, Founder and President of Blue Ridge Capital, who founded iMentor in 1999 remarked, "We are absolutely delighted to be this year's 100 Women in Hedge Funds beneficiary." To-date, iMentor has matched and supported over 4,000 mentor-mentee pairs, partnering with over 30 schools and after-school programs in underserved communities.

100 Women in Hedge Funds annually presents two awards that have historically recognized under-the-radar achievements and leadership. The 2007 Effecting Change award honored many leaders across the hedge fund industry who serve as powerful examples of effective mentoring.

The 2007 Industry Leadership Award was awarded to Jane Mendillo, Chief Investment Officer, Wellesley College in recognition of her talent, ethics and passion, which help define the hedge fund industry's standard of excellence.

Since its first session in 2002, 100 Women in Hedge Funds has hosted more than 150 events globally, connected more than 150 senior women through their Peer Advisory Councils and raised in excess of $13 million for philanthropic causes in the areas of women's health, education and mentoring.

15 Nov 2007

Germany as Europe's Most Attractive Destination For Renewable Energy Investors

Germany has emerged as Europe's most attractive destination for commercial investors in the renewable energy sector, while the UK has lost momentum due to a comparative lack of pace on policy matters, according to the latest "Ernst & Young Renewable Energy Country Attractiveness Indices", which tracks and scores global investment in renewable energy.

The index, launched at the World Energy Congress in Rome, reveals that Germany has jumped from fifth to second place, displacing the UK, India and Spain, which jointly held this position last quarter.

It also suggests that although the credit crunch has left many investors overexposed to certain sectors, renewables projects still offer a relatively low-risk option for investors.

Although EU countries dominate the Country Attractiveness Indices, the US remains the most attractive destination overall for investment in renewables, a position it has held for two years.

Jonathan Johns, Head of Renewable Energy at Ernst & Young, says the US will continue to attract the lion's share of global investment particularly if changes to legislation continue.

The Ernst & Young Country Attractiveness Indices provide scores for national renewable energy markets, renewable energy infrastructures and their suitability for individual technologies. The indices provide scores out of 100 and are updated on a regular basis.

BlackRock Launches Distressed Securities Funds

BlackRock, the biggest listed US asset manager, on Tuesday announced the launch of more distressed securities funds to take advantage of the current credit market troubles, according to Reuters.

Chairman and Chief Executive Laurence Fink said the firm would launch hedge funds investing in distressed mortgages and distressed real estate. These funds would raise "multibillion dollars". BlackRock has already raised a "very large" leveraged-loan fund and is now in the process of investing the money.

Just last week, BlackRock again earned first place in DALBAR’s 2007 Trends & Best Practices in the "Leading Mutual Fund Statements" category. DALBAR issues this award annually.

"At BlackRock, our goal is to produce a comprehensive investor statement tailored to
shareholder needs" said Anne Ackerley, managing director at BlackRock. "Receiving this award for three consecutive years demonstrates our successes and is a clear indication of our ability to deliver beyond expectations and surpass the industry standard."

BlackRock is one of the world’s largest publicly traded investment management firms. With a reported AUM of $1.3 trillion as of September 30, 2007.

13 Nov 2007

Hedge Funds More Proactive in Search for New Research

Hedge funds manage external research more proactively than long only managers, according to a study released by Integrity Research Associates. Hedge funds review their external research more frequently than long only investment managers, are three times more likely to seek assistance finding external research, and are much less confident that they have already found the best sources of external research.
“Our study confirms that hedge funds are more aggressively seeking out new sources of research than long only managers,” says Michael Mayhew, Integrity’s chairman and author of the study. “Long only managers are complacent about external research whereas hedge funds are continuously looking for what’s new and innovative.”

Conducted in October, 2007, the survey polled forty-three research directors at US based hedge funds and long only institutional investors. The survey focused on how institutional investors source and value external research. Highlights from the study include:

• Forty-two percent (42%) of hedge funds evaluate their portfolio of research providers at least monthly compared to five percent (5%) of long only managers.
• Hedge funds are three times more likely to use external sources to identify research, with forty-five percent (45%) of hedge fund research directors using outside sources compared to thirteen percent (13%) for long only directors of research.
• Thirty percent (30%) of hedge funds were either Not Too Confident or Somewhat Confident that they are using the best external research available compared to eighteen percent (18%) of long only managers.

“As long only managers introduce more alternative product like 130/30 funds, they are talking the talk, but our survey suggests that they are not yet walking the walk,” adds Mayhew.

Hedge Funds See Best Performance In 5 Years

According to the HFN Hedge Fund Aggregate Average, the second round of U.S. Federal Reserve interest rate reductions pushed hedge fund returns up +3.32% in October 2007.

Strategies which rebounded sharply following the U.S. Fed's actions in September were again beneficiaries in October. The HFN Emerging Markets Average was +5.01% in October and +22.22% YTD. Energy sector funds took advantage of oil prices closing in on $100/barrel.

The hedge fund’s excellent performance wasn't limited to commodity related strategies, several equity related strategies outperformed broad equity benchmarks. Long only strategies outperformed the S&P 500 by the largest margin in the last twenty months. Additionally, technology sector funds returned +5.07% in October while the healthcare sector and small/micro cap funds returned +5.07% and 3.43%, respectively.

Hedge funds influenced by market volatility through options strategies produced their best average performance in five years, and macro funds continue to benefit from strong trends in currency and commodity markets. (HFN), a division of Channel Capital Group Inc, is a source for hedge fund news and information. Registered users include a wide range of institutional investors and high net worth individuals.

7 Nov 2007

Hedge Funds in the Middle East Conference

The third Annual Conference for Hedge Funds in the Middle East, organized by Hedge Funds Review magazine, got underway on November 5 under the sponsorship of Investcorp, the alternative investment specialist.

The opening session was attended by His Excellency Mr Rasheed Muhammed Al-Maraj, the Governor of the Central Bank of Bahrain. Attending the conference are leading investors from various Gulf nations, in addition to hedge fund managers from the Middle East, North Africa, Europe, Asia and the United States, who have been discussing the latest strategies for alternative investments.

Investcorp Managing Director Sewanyana Kironde welcomed the participants. He was followed by the co-heads of hedge funds at Investcorp, Ibrahim Gharghour and Deepak Gurnani, who presented a review of global strategies for hedge fund activity. Their presentation stressed the importance of studying risks and managing them wisely in order to attain balanced investments.

Investcorp has more than 10 years' experience in hedge funds. At present it manages $6.4bn in hedge fund assets, making it one of the biggest international investors in this area. Hedge funds are now being used in the portfolios of institutional investors and high net worth individuals as an alternative means of maximising returns and increasing wealth.

In collaboration with the conference organizers, Investcorp has designed this summit to facilitate discussion about the various hedge fund strategies, about the means of addressing geographic distribution and about Islamic Sharia compliance in the Middle East market, which is growing at a rapid pace.

The conference, which continues until Wednesday night, also featured a "Day at the Races" at the Bahrain International Circuit, and a banquet dinner.

$61 Million Shariah Fund Launch By KAMKO

KIPCO Asset Management Company ("KAMCO") today announced the launch of the Al Raya Investment Company KSC, with the private placement of 170 million shares. The fund will primarily target international investors in developed markets interested in Shariah compliant international asset management.

"Al Raya Investment Company aims to be the first and most comprehensive Islamic investment company in Kuwait and the GCC region with a clear focus on international Islamic asset management products and services," said Mr. Hazem Al-Braikan, Chairman of the Founders' Committee.

Al Raya is a private company that will be incorporated under Kuwaiti company law as a Kuwaiti closed shareholding company, and will be registered with the Central Bank of Kuwait as an Islamic Investment Company.

Primarily, the company will target international equities, asset management, alternative investment products, advisory services and portfolio management segments of the market.

Islamic finance represents a fast growing market segment. At the end of 2006, over 250 Islamic financial institutions operated in more than 75 countries, holding assets estimated at more than $265 billion with another $400 billion in financial investments.

It is estimated that within the next 10 years, 50 to 60% of the total savings of the world's 1.5 billion Muslims will be in the form of Shariah compliant products, and that the potential market for Islamic financial services to be in the area of $4 trillion.

"KAMCO is delighted to announce this new investment opportunity to its clients and investors in Kuwait and internationally," said Mrs. Intisar Al-Suwaidi, KAMCO Vice Chairman. "We strongly believe that this private placement offering will be of significant interest to selected and sophisticated investors."

6 Nov 2007

BNP Paribas Adds Three Members to Their Hedge Fund Relationship Management Team

BNP Paribas announced today the expansion of its Hedge Fund Relationship team with the appointments of Conrad Johnson as a director in New York and Stephanie Wong as an associate director in Hong Kong.

Conrad joins BNP Paribas from J.P. Morgan Securities in New York where he worked in Fixed Income prime brokerage. In his new role, Conrad will assist his team in optimizing the firm's relationships across its various business lines with the world's leading Hedge Funds.

Prior to joining BNP Paribas, Stephanie was with HSBC managing Hedge Fund relationships in Asia. Her career started with JP Morgan in the Structured Finance CDO/CLO group in 2000 and later moved to Hedge Fund Credit function with JPM in Singapore.

Also announced was the relocation of Mark Walker to London from New York to further the global effort as Head of Hedge Fund Relationship Management for Europe. With over fifteen years' experience, Mark will help drive the bank's efforts in the dynamically growing European hedge fund market. Mark will also spearhead the Hedge Fund Capital Markets Solutions Group by drawing upon the vast capabilities of the firm to deliver capital introduction, and more recently DCM and ECM syndication and structuring solutions. Conrad, Stephanie and Mark all functionally report to Talbot Stark, Global Hedge Fund Relationship Manager.

Commenting on Conrad's appointment, Talbot Stark said, "Hedge Funds are a core client sector for BNP Paribas. Mark, Conrad and Stephanie will draw on our extensive footprint across Europe, the US and Asia and our superior capability in derivatives across asset classes, to set ourselves apart from our competitors by adding value for our Hedge Fund clients through the delivery of dynamic solutions."

The BNP Paribas Hedge Fund Relationship Management Team was formed in 2006 to co-ordinate client coverage across Fixed Income, Equity Derivatives and Commodities ensuring that BNP Paribas effectively covers its hedge fund clients and is constantly developing its business in close alignment with their needs.

BNP Paribas is a European leader in global banking and financial services and is one of the 5 strongest banks in the world according to Standard & Poor's. BNP Paribas also has a significant presence in the United States and strong positions in Asia and the emerging markets.

2 Nov 2007

Sidley Austin Named Top Hedge Fund Firm

Institutional Investor’s Alpha Magazine has ranked Sidley Austin LLP the number one legal adviser to the hedge fund industry among onshore law firms for the second consecutive year.

Thomas A. Cole, chair of the firm’s Executive Committee said, “We are particularly gratified by the results of this year’s Alpha Awards because we have once again been chosen by our clients,” he explained. “We have been privileged to work with some of the most respected hedge funds and alternative asset managers and we are very proud of the performance of our team, which this ranking acknowledges.”

The Alpha Awards are calculated from the responses of nearly 1,000 hedge fund firms, representing roughly $1.4 trillion in assets under management. Additionally, this year Alpha introduced a new ranking showing which providers best serve hedge fund firms with assets $1 billion or more; Sidley was ranked first in this new category. Additionally, Sidley placed first in almost every sub-category, including “business planning,” “client service,” “hedge fund expertise” and “regulatory and compliance.”

Sidley’s hedge fund and investment management practice comprises approximately 95 lawyers in New York, Chicago, Los Angeles, San Francisco, Hong Kong and London. Sidley was also named Investment Funds Law Firm of the Year in the 2007 Asian Legal Business Awards.

1 Nov 2007

Prudential Launches 4 Sub-Funds In Hong Kong

Prudential Asset Management today announced its entrance into Hong Kong's retail funds market with the launch of its first four retail sub-funds, the M&G Global Basics Fund, M&G Global Leaders Fund, M&G Pan European Fund, and the M&G American Fund.

The launch signals the latest stage of development for Prudential's asset management business in Asia, which has operated in the Hong Kong market since 1994. The Hong Kong launch follows the sub-funds' previous introduction to retail investors in Singapore, Korea, Japan, Taiwan and Malaysia where they attracted significant interest with inflows exceeding $760 million over eight months to 31 August 2007.

"We are launching our retail presence in Hong Kong by introducing some of our core funds to the market." Guy Strapp, Regional Head of Investment Management said about the launch, "These funds have a history of consistent performance and will provide Hong Kong investors with access to global equity markets to help diversify investment portfolios."

Prudential Asset Management (Hong Kong) Limited is a subsidiary of Prudential plc (United Kingdom). Its insurance operations span 12 markets, Mainland China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, the Philippines, Singapore, Taiwan, Thailand and Vietnam.

With $66 billion in assets under management, it is the only foreign asset manager in the top 5 position in more than one Asian market.

High Turnover Among Hedge Fund Employees

A survey conducted by Job Search Digest revealed insights into the world of hedge fund compensation. Most respondents, the survey shows, have less than two years with their firms, suggesting high employee turnover in the industry.

The high turnover extends to workers on both sides of the Atlantic. Though 50% of survey respondents had more than 10 years of professional experience, more than 60% of respondents reported being with their current firm for two years or less. This short tenure is reflected in a fraction of the professional sharing in the equity pie.

"The survey raises an interesting question," says David Kochanek, president of Job Search Digest, "Are the players unhappy because intelligent, well-educated hard charging 'Type A' people are never satisfied? Or, does the hedge fund industry have a problem."

With the very top hedge fund managers earning hundreds of millions of dollars, even those making a million a year wonder what they could be making if they jump to another firm." Kochanek added.

Production-based bonuses are an integral part of employees' compensation, the survey found, and range from 38% of base salary to more than 400% for top producers. The survey found the further you move up in the organization, the bigger that bonus percentage becomes.

When it comes to educational requirements, a bachelor's degree is the minimum for jobs in the field, but an advanced degree or master's in business administration isn't a requirement for many positions, the survey found. "Although MBA¹s are earning more on average, hedge fund players can be successful in the firm without an MBA or other advanced degree," said Kochanek.

The 2007 Hedge Fund Search Digest Compensation Survey captures information from industry players at all levels. The respondents are from more than 200 hedge funds firms, including Credit Suisse, Deutsche Bank, Goldman Sachs, and Morgan Stanley.

30 Oct 2007

GCC Economist Urges Consideration Of Asset Based Rather than Oil Based Economy

According to Dr Nasser Saidi, Chief Economist of the Dubai International Financial Centre, "Economies of GCC states should now be considered as asset-based ones rather than oil-based."

The 'Sovereign Reserve Management, Pension and Institutional Funds Congress 2007' was held in Doha, Qatar. During the keynote address Dr Saidi said that in the UAE for example, "asset revenue is more important than resources". The economist discussed at length sovereign wealth funds. These funds are foreign currency assets held by states over and above the reserves of their central banks.

"We have seen the emergence of GCC countries going into acquisitions. With oil prices up, government spending has gone up. This resulted in the emergence of bureaucracies in GCC countries and as welfare states."

Though sovereign wealth funds are fully-capitalized and have low leverage, accounting for $3.1trillion globally, hedge funds account for $1.4 trillion but are highly-leveraged. However, both these funds are dwarfed by the size of insurance funds which amount to $16-17 trillion and pension funds, which total $18 trillion globally.

"It is highly unlikely that sovereign funds will act in a cohesive way. Growth is driven by high commodity prices, not just oil. This has led to high current account surpluses," said Dr Saidi.

Saidi said if a country has an extra $20 billion on hand, questions would arise on how the money should be invested. "The money should not be put into the central bank's reserves but placed where the money would get high returns. Emerging economies have now turned from being net capital importers to net capital exporters. The money is mainly going to other emerging markets."

It is matter of time, anything between five to ten years, for China to start investing in oil-producing states. "This will be because of China's need for energy resources and the need to diversify its assets," Dr Saidi said.

The Gulf Cooperation Council (GCC) also known as the The Cooperation Council for the Arab States of the Gulf (CCASG) is a trade bloc involving the six Arab states of the Persian Gulf with many economic and social objectives.

29 Oct 2007

Fund Of Resources-Hedge Fund Launch

The Gibraltar based Sirius Investment Management is launching the Sirius Investment Fund II, a natural resource and mining-focused fund of hedge funds, which will be open to new investment on 1 November.

It will invest predominantly in hedge funds that invest in very early stage mining plays and other natural resources, projects which are not dependent on fluctuations in commodity prices to generate returns, Sirius said.

It is particularly interested in projects which are moving from exploration to production, the stage with the greatest uplift in valuation. Larger companies with established production are more sensitive to the commodity price, Sirius added, so the fund will not invest in such opportunities. It targets 20% and hopes to raise $300m.

The Sirius Resource Fund, a resources special situations hybrid fund launched in April this year is broadly targeting iron ore, gold, diamonds, energy and copper plays, but expects to concentrate primarily on African emerging markets. Its special situations strategy will see investment targeted in pre-initial public offering companies as well as in small-cap listed equities and physical assets.

The fund has delivered 54.2% since inception, with an August return of 16.07% and has $50 million in assets under management.

Blackstone Appoints New Hilton Head

Hilton Hotels Corporation and Blackstone Group announced the completion of their merger last week and are now expected to name Host chief executive of Hotels & Resorts Inc Christopher Nassetta as president and CEO, according to the Wall Street Journal.

The Merger has been financed with $20.6 billion of mortgage and mezzanine debt financing and approximately $5.7 billion of equity invested by hedge funds affiliated with The Blackstone Group. As part of his new responsibilities, Nassetta will build up Hilton’s luxury lines, aiming to "marry" the hotel’s numerous lines, including Embassy Suites, Doubletree and Hampton Inn, with many of Blackstone's own hotels.

Acquisition financing was provided by Bear Stearns, Bank of America, Deutsche Bank, Goldman Sachs, Lehman Brothers, Merrill Lynch and Morgan Stanley. Hilton Hotels Corporation is the leading global hospitality company, with 2,896 properties totaling approximately 490,000 rooms in 76 countries and territories.

The Blackstone Group is a global alternative asset manager and provider of financial advisory services. Its alternative asset management businesses include the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds.

25 Oct 2007

UAE Investors To Increase Hedge Fund Holdings

Private investors in the United Arab Emirates plan to increase their holdings in alternative investments such as private equity, hedge funds and derivatives in the next three years, according to a new global report published by Barclays Wealth.

However, fewer than half of UAE investors polled expressed confidence in their knowledge of personal finance, hedge funds and private equity.

The report, 'Barclays Wealth Insights: Risk, Return and Reward', reveals that investors with at least $100,000 in investable assets plan to put more money into alternative investments over the next three years, as they seek more absolute returns.

The report reveals a trend amongst these investors of an increasing appetite for financial products which help reduce volatility, such as derivatives, private equity and hedge funds, particularly in the Middle East and Asia. At the same time, there is a move away from equities, which suggests investors have more of an appetite for returns that are stable rather than driven by market movements.

The survey, based on a global sample of 790 respondents that includes 100 individuals from the UAE, shows that 41% of UAE investors plan to invest in hedge funds in the next three years compared with the past three years (32%), according to the report.

Soha Nashaat, Managing Director and Head of Middle East at Barclays Wealth said, "Assets like hedge funds,... can all be used to manage risk, reduce volatility and stabilize results. Shariah-compliant products are of particular interest, as they are viewed in absolute return terms as well. The region has seen huge development in the Islamic finance sector in recent years and this is rapidly filtering through to the asset management arena, where considerable product development is now taking place."

24 Oct 2007

Real Estate Entrepreneur Rod Khleif And Personal Philanthropy

The Florida real estate investor Rod Khleif has founded two non-profit charity organizations -Tiny Hands Foundation and A Better Choice Foundation.

The Tiny Hands Foundation was founded by Rod Khleif in the year 2001 with an intention to create an experience of joy for low-income children by providing a holiday meal for their entire family.

Through his basket brigade, implementing educational programs, researching cancer methodologies and love, Mr. Khleif intends to make a huge impact on the world. Through this foundation Rod Khleif has fed thousands of children around the holidays with giant baskets of food during the holidays for the past 6 years. Rod Khleif along with the “Tiny Hands Foundation” will feed 1,600 families on November 17, 2007 for the Thanksgiving holiday.

Rod Khleif also founded “A Better Choice Foundation” to support the search for alternative cures for cancer, emphasizing a non-traditional, holistic approach to a cancer patient’s physical and emotional well-being.

This foundation was formed to educate the public and doctors about the benefits of fighting cancer holistically. A Better Choice Foundation is in the process of assembling as many methodologies and practitioners as possible to form a collective voice, which will be presented to the public thus creating a massive impact.

Greenspan Concerned With Low-risk Long-term Rates

According to former Federal Reserve Chairman Alan Greenspan, "Low risk-free long-term rates worldwide seem to be one factor driving investors to reach for higher returns, thereby lowering the compensation for bearing credit risk and many other financial risks over recent years", he said in a said in an interview published on Friday by the Federal Reserve board.

"The search for yield is particularly manifest in the massive inflows of funds to private equity firms and hedge funds. These entities have been able to raise significant resources from investors who are apparently seeking above-average risk-adjusted rates of return, which, of course, can be achieved by only a minority of investors."

Greenspan also expressed his concern over, "many new hedge fund entrepreneurs....embracing a strategy of pinpointing temporary market inefficiencies, the exploitation of which is expected to yield above-average rates of return."

Greenspan concluded with, "I trust such an episode would not induce us to lose sight of the very important contributions hedge funds and new financial products have made to financial stability by increasing market liquidity and spreading financial risk, and thereby enhancing economic flexibility and resilience."

19 Oct 2007

Hedge Funds Go For Stability

GFT UK, one of Europe's leading suppliers of innovative IT solutions is seeing hedge funds beginning to adopt business housekeeping methods in an attempt to reduce risk and improve continuity.

Having seen the assets under management in global hedge funds reach $2.48 trillion in July this year the market was positively buoyant; that was until the summer’s credit crunch which has taken its toll and seen the funds stutter through a turbulent few months.

The growth spurt, followed by a downturn, has raised some business continuity issues for hedge funds. Market and personnel changes can be very damaging for such technology and process-light companies. When fund managers leave, so does their knowledge and competencies.

These companies’ traditional lack of technical infrastructure is perhaps beginning to change. GFT has recently received an increase in request for process reviews from hedge funds. It would seem that even in these traditionally finance-driven companies, infrastructure is beginning to play a vital role.

GFT has been approached by a leading hedge fund, keen get the procedures and processes of its European Equities Team documented. GFT was selected due to previous project work and a strong knowledge of internal operations.

18 Oct 2007

Hedge Fund Hires New Members To Allocation Committee

The Portland City Council and the Multnomah County Commission recently appointed 2 new members to the Portland Children's Investment Fund Allocation Committee. They are respectively: Alissa Keny-Guyer, a consultant for foundations and nonprofits; and Adrienne Livingston, executive director of the Black United Fund of Oregon.

Both Keny-Guyer and Livingston have spent much of their professional careers devoted to improving the lives of others, especially the youngest and most vulnerable in our society.

The Children's Investment Hedge Fund annually allocates about $10 million to programs throughout Portland in areas of early childhood, after school and mentoring and child abuse prevention and intervention. A five-member Allocation Committee meets publicly to make funding decisions for the Fund.

In 2002 Portland voters passed Measure 26-33 creating the Children’s Investment Fund. The Fund provides approximately $10 million a year for five years to support 65 programs in early childhood development, after-school and mentoring and child abuse prevention and intervention. Programs annually help more than 10,000 of the city’s neediest children and their families so youth enter kindergarten prepared to succeed, stay engaged in school and safe after school and families most at risk for abuse and neglect receive support and intervention services.

Technology Biggest Spending Area For Hedge Funds

According to a poll of over 100 top global hedge funds (and fund of funds) managers,
collectively managing some $900 billion in assets, shows that three quarters of respondents identified technology as the biggest spending area in the next two year, for 58% of funds, expenditure on risk management systems was anticipated to be the biggest proportion of that spend.

Only 13% of respondents expect to raise permanent capital in the next two years. The most popular route is deemed to be a partial sale to an external owner. The greatest interest in raising permanent capital comes, from managers in the Far East.

David Sung of Ernst & Young's Hong Kong office said: "Given that the managers in the Far East have yet to experience the maturity of businesses in the US and Europe, the idea of having more permanent capital could be appealing as a faster means of stabilizing their asset base."

Greater transparency around the valuation process is the foremost medium-to-high level regulatory challenge for 64% of respondents in the next two years; conflicts of interest (57%) and market abuse (55%) are the next key concerns. Valuation and pricing risks were also deemed the second greatest operational risk for managers.

The survey shows that the majority of funds (80%) expect incentive fees and management fees to decrease in the next two years. Almost two-thirds also identified increased operational costs as a significant future pressure on fees over the same period.

The survey was carried out by Ernst & Young in partnership with Ipsos MORI, an independent research company, across a number of leading global hedge funds, and fund of funds managers.

17 Oct 2007

Research Shows Hedge Fund Talent A Priority

According to new research 'Navigating New Complexities' published today by Ernst & Young. The world's leading hedge funds managers are more concerned about attracting and retaining talented people and managing growth than anything else.

"Governance and infrastructure are the top enablers for hedge fund growth, as the industry continues to mature and develop," said Leon Chin, partner in the Ernst & Young Toronto hedge funds practice.

The poll of over 100 top global hedge funds (and fund of funds) managers, collectively managing some $900 billion in assets, shows that retaining the right people (42%) and managing growth (39%) are the highest level challenges over the next year, compared to just 9% who anticipate investing or developing in new products. Respondents were principals, chief operating officers and chief financial officers at these funds.

Art Tully, co-leader of the global hedge funds practice at Ernst & Young, said: "The global hedge fund industry now manages $2.5 trillion of assets; $41.1 billion poured in from investors in the second quarter of 2007 alone.

The industry appears to be proving that it can handle such inflows. The ability to absorb such flows is only tested by the capacity to grow and retain talent.

Hedge funds are working just as hard as other financial institutions to ensure they attract and retain the right people. Salary packages (86%) and firm culture (83%) are the main attractions enticing the best staff to join.

The managers surveyed for this research represented some US$900 billion in funds (approximately 55% of the entire industry).

Ernst & Young has teams around the world, including North America, the UK, Cayman, Bermuda, Ireland, continental Europe, Hong Kong and Australia, who are part of our global alternative asset management practice.

16 Oct 2007

Federal Reserve moves to stop Credit Crunch

In September, according to the Credit Suisse/Tremont Hedge Fund Index, the U.S. Federal Reserve moved to stop the spreading Credit Crunch from further impacting the global economy with a half-percentage-point cut in interest rates.

Overall, the market environment has led to the majority of hedge fund sectors ending September on a positive note. In particular, the Managed Futures sector benefited with a 5.13% return as the market rebounded and volatility rose, leaving managers with a positive opportunity set.

The cut sought to ease terms on direct loans from its discount window in hopes banks would use the Fed's cash to restore liquidity to the credit markets. The interest rate cuts sparked a rally in global stock markets as investor fears were somewhat quelled, said Oliver Schupp. "However, the rate cut also led to a sharp fall by the U.S. Dollar and the rise of long-term Treasury-bond yields and oil prices, which could potentially foster inflationary pressures."

The Index is constructed using the Credit Suisse/Tremont database of more than 5,000 hedge funds. It includes both open and closed funds located in the U.S. and offshore, but does not include fund of funds. The Index is calculated as a total return index on a monthly basis, adjusted for asset in- and outflow, including a reselection according to the procedure outlined above on a quarterly basis.

11 Oct 2007

Robeco Bank Bought By Kaupthing Bank Luxembourg S.A.

Private banking and alternative asset manager Robeco Bank of Belgium was purchased by Kaupthing Bank of Luxembourg, it was announced today.

Robeco was established in Rotterdam in 1929, and has EUR 142 billion ($201.5 billion) in assets under management (as of 31 December 2006). Their product range runs from equity and fixed-income investments, to money-market and real-estate funds and alternative investments, such as private equity, hedge funds and structured products.

George Möller, Chief Excecutive Officer of Robeco said, "The Belgian market has evolved enormously over these last years with most banks now operating an `open architecture´. They are increasingly incorporating the financial products of other specialist banks -including Robeco-. This opening up enables us to focus on third party distribution and on the institutional market in Belgium."

Magnus Gudmundsson, Managing Director of Kaupthing Bank Luxembourg said, "Robeco Bank Belgium represents an excellent strategic fit forKaupthing Bank in terms of geographic diversification, products and business culture. This acquisition is a logical step in building up Private Banking offerings in the Benelux countries. By taking over the activities of Robeco Bank Belgium we become immediately operational in Belgium and will have a platform for further growth".

Robeco has offices in Bahrain, Belgium, Germany, France, Japan, Luxembourg, Poland, Spain, the United States and Switzerland. Robeco has a bank license in Belgium, France and the Netherlands.

Thomson Financial Invests $180 Million in TradeWeb

Thomson Financial today announced it plans to form a strategic partnership with nine of the world's leading global dealers including, Credit Suisse, Deutsche Bank, Goldman Sachs, JPMorgan, Lehman Brothers, Merrill Lynch, Morgan Stanley, The Royal Bank of Scotland, and UBS to drive the expansion of electronic trading using the TradeWeb platform.

Under the terms of the agreement, the dealers will invest approximately $180 million to purchase a minority stake in TradeWeb's established markets. Separately, Thomson and the dealers will fund additional investment in asset class expansion.

"This partnership is a natural step forward in the evolution of the online financial marketplace, taking us closer to the time when almost all trading is electronic," said Jim Toffey, CEO of Thomson TradeWeb. "TradeWeb is ideally positioned to seize this opportunity, and expand e-trading for our clients on one platform through organic growth and through acquisition. The end-game is to be the leading global network where markets meet."

The transaction is expected to close in the next few months, pending regulatory approval. TradeWeb will maintain its global headquarters in Jersey City, NJ. Average daily trading volume on TradeWeb exceeds $250 billion.

Thomson TradeWeb is the leading online fixed-income trading network with over 12 million trades executed and total volume surpassing $200 trillion since its inception in 1998.

10 Oct 2007

TS Capital Launches $200 Million Fund Of Hedge Funds

Alternative asset management firm ThinkStrategy Capital, today announced the launch of the TS Multi-Strategy Fund LP Class B. The TS Multi-Strategy Fund is a hedge fund-of-funds designed to generate solid returns from creative strategies while preserving capital.

With a $1 million minimum investment and $200 million in assets under management, according to the announcement, this new class is an unleveraged version of ThinkStrategy's existing TS Multi-Strategy Fund LP Class A and will be based on a concentrated subset of current investments from which TS selected the best performers.

Headquartered in New York, NY, the fund targets medium-term capital appreciation in the mid-teens per annum with controlled risk. This share class exhibits lower risk parameters in terms of standard deviation, as well as stronger Sharpe ratios.

The TS Multi-Strategy Fund has an initial lock up period of 12 months with quarterly returns.

Camelot Hedge Fund Launch Announced

Alternative investing consultant and director Bob Torkelund has announced the launch of a new hedge fund, Camelot Global Investments, with the initial offering period running throughout October 2007.

Camelot Global Investment is a Global Macro Fund with a strategy of utilising global economical developments, cycles and events. Due to the investments in Futures, Camelot is able to profit from both falling and rising markets.

Analysis is founded on data from Torkelund's own researched stocks, the analysis of political and social environments, knowledge of biological facts and continuous observation, according to the statement.

State-of-the-Art trading programmes independently developed are used by an experienced team of traders, analytics and experts. Since the trading start, according to the statement, Camelot has outperformed almost all investments in different classes and performed well not correlating to the world markets.

Torkelund is Director of Global Retail Sales, Marketing & Operations for several boutique fund managers. He was also responsible for the formulation and execution of Threadneedle Investments as a serious and reliable player in Continental Europe.

9 Oct 2007

Tokyo Stock Exchange Has Strong Week

Stocks rose on the Tokyo Stock Exchange this week giving the Tokyo market a strong start, catching up with U.S. and other overseas counterparts.

The dollar's upswing versus the yen, which reflects receding expectations for an imminent interest rate cut by the Federal Reserve, provided an additional boost to the market, brokers said.

"The better-than-expected employment data eased worries about the U.S. economic outlook," said Hiroichi Nishi, equity general manager at Nikko Cordial Securities Inc. "But there were few domestic incentives to support the Tokyo market and turnover remained slack. So, many players chose to cash in profits before Japan's fiscal first-half earnings reporting season swings into full gear next week."

Kenichi Hirano, equity general manager at Tachibana Securities Co., pointed out that the market is vulnerable to selling as the recent upturn is providing long-awaited profit-taking opportunities to investors who bought stocks three to six months ago, before the U.S. subprime mortgage market meltdown rattled the global financial markets this summer.

"It will take some time before the market fully absorbs the profit-taking pressure," said Hirano. "But given the improving overseas market environment, the Tokyo market is certain to stay in a long-term uptrend."

Consumer loan companies Promise, Aiful and Takefuji advanced, thanks apparently to short covering by hedge funds.

Meanwhile, Nippon Steel, JFE and Sumitomo Metal Industries slipped, due to speculation that the commercialization of carbon fiber automotive parts may reduce demand for steel. The recent downturn in crude oil prices pushed down Inpex, AOC and Nippon Oil.


3 Oct 2007

An American Hedge Fund Review

Well, I just received the final copy today, I actually read this book a couple of months ago when Timothy Sykes sent me an advance copy, my then review making it into the book under "What the people say-Financial Journalists"!

I like the way the book was self published under the "Bull Ship Press" name, I guess Sykes has always been a bit of a madcap entrepreneur. There is a lot of insight and honesty in "An American Hedge Fund", and Sykes has an exciting way of explaining his strategy.

This bit is pretty relevant, "Opportunities come and go. The key is to remain nimble enough to be able to take advantage of situations when they arise."

Besides being the book's official release date, Sykes also announced the closing of the Cilantro fund on October 1st, a day he said, "Will free him from the shackles of SEC regulations he will be able to detail Cilantro's complete trading history- winners and losers."

Rubinstein & Rubinstein Launch Alternative Offshore Fund

Rubinstein & Rubinstein, LLP has launched an offshore alternative investment fund practice which has seen a great deal activity in the past few months.

Taking advantage of a tax treaty between the United States and a foreign government, Rubinstein & Rubinstein established the fund in an offshore jurisdiction, reducing taxation to 1 to 2%. In addition, private placement and foreign registration allowed the fund exemption from S.E.C. and blue sky registration.

One of the fund's highlights being that Asher Rubinstein represented a principal in establishing an international co-investment fund based in New York, London and Dubai. The fund will make investments in private equity buyouts, real estate, aerospace and other sectors. It has also been capitalized by various onshore and offshore investment sources, including "sovereign wealth," i.e., investment by a foreign government.

In addition, Kenneth Rubinstein and Asher Rubinstein represented United States-based principals and foreign- based managers of an investment fund dedicated to investments in the insurance settlement industry.

Kenneth Rubinstein has also developed a proprietary tax strategy to allow tax-free access to offshore deferred compensation assets by hedge fund and private equity fund managers.

The strategy is particularly timely, given the recent calls by members of the United States Congress to increase taxes on the "carried interest" portion of fund managers' compensation. Rubinstein & Rubinstein's tax patent application for this strategy is currently pending before the United States Patent and Trademark Office.

Hedge Fund BlackRock Aquisitions Quellos Fund of Funds

Hedge fund investor BlackRock, Inc. today announced that it has completed its acquisition of the fund of funds business of Quellos Group, LLC. BlackRock is calling the combined fund of funds platform BlackRock Alternative Advisors.

Laurence D. Fink, BlackRock’s Chairman and Chief Executive Officer said, “Extreme market volatility over the past couple of months accelerated the opportunity for strategic interactions between our respective investment and risk management professionals and reinforced the value of operating on a unified, global platform."

"In addition, the market environment bolstered our belief that demand for top quality funds of funds and innovative investment solutions will continue to increase. We are excited to welcome our new colleagues and look forward to delivering the tremendous capabilities of BlackRock Alternative Advisors to our clients." Fink said.

BlackRock is one of the world’s largest publicly traded investment management firms. As of June 30, 2007, assets under management were $1.230 trillion. Headquartered in New York City, the firm has approximately 5,000 employees in 18 countries and a major presence in key global markets, including the U.S., Europe, Asia, Australia and the Middle East.

2 Oct 2007

Alternative Investor Partners With Former Head Currency Trader at Tudor

Alternative investor Last Atlantis Capital Management and Jerry Considine, former head currency trader at Tudor Investment, have partnered to introduce LACM Foreign Exchange, Share Class W within the Last Atlantis Partners Fund.

The share class will be traded by Mr. Considine and seeks to capitalize on near-term opportunities in the global currency futures and foreign exchange markets.

The short-term, largely discretionary methodology was developed by Mr. Considine and has produced consistently non-correlated returns, according to the press release. "It combines fundamental and technical market analysis, sentiment evaluation, crowd psychology assessment, and money management to create a risk-averse investment strategy."

Irwin Berger, managing partner of Last Atlantis said, “Jerry has established an exceptional track record and reputation over the course of his career including stellar turns at Tudor and his own trading firm,.....His currency program adds another quality alternative to our Last Atlantis Partners platform.”

With the launch of this new share class, Mr. Considine continues his nearly 30-year career trading the currency markets.

Last Atlantis Capital Management (St. Thomas, USVI) develops and markets innovative alternative products. Last Atlantis Partners, LLC is master-feeder offering currently providing onshore and offshore investors access to fifteen segregated share classes with individual fund strategies incorporating proprietary and discretionary options, trend following futures, multi-strategy, macro discretionary, credit receivables, real estate financing and others.

The company was founded by managing directors Irwin Berger and Stig Ostgaard, one of the original Richard Dennis “Turtles”, and Last Atlantis Capital, LLC, a professional trading firm with highly-developed systems incubation and trading technology.

Reuters Hosts Solution for Hedge Fund Trading in Singapore

Reuters and BT announced the launch of the lowest latency Proximity Hosting Solution for hedge funds trading on the Singapore Exchange Limited.

Rama Pillai, Senior Vice President of Intermediaries and Market Access at SGX said, "The Singapore Exchange is seeing an increasing demand for low-latency direct access to our markets by high-frequency traders as well as our traditional customer base. We welcome the Reuters Proximity Hosting Solution."

Edward Haddad, Managing Director, ASEAN, Reuters said, "We recognize the increasing demand for low latency feeds to meet the needs of a growing automated and programmed trading community on the Singapore Exchange. Reuters provides our clients with a complete suite of comprehensive capabilities -- from algorithmic trading tools, such as tick history, tick capture and time-stamped news, to proximity hosting to allow our customers to be first to market."

Demand for trading services that are hosted within close proximity of the exchange is increasing as institutions look to take advantage of low latency data provision and reduced time to trade execution. This enables firms to gain competitive advantage through programmed trading strategies that can consume data and execute trades more quickly.

This proximity hosting solution provides an end-to-end hosted service that is fully managed, and that also allows clients to co-locate their own applications within the Reuters data centre.

1 Oct 2007

Growth in IPOs Help European Hedge Funds Gain Ground

According to a press release, the new edition of IFSL's annual report; Financial Market Trends Europe vs. US 2007, shows that in three quarters of indicators, 14 out of 18, financial markets in Europe have been growing faster than those in the US between 2001 and 2006.

The 14 indicators showing improvement in Europe included 8 out of 9 in sectors such as private equity and hedge funds. Funds raised by European private equity companies have moved up from half of funds raised in North America in 2004 to almost equal in 2006.

European hedge fund assets moved up from 12% of US assets in 2001 to 42% in 2006. Growth in European IPOs has been even more dramatic, increasing ten times between 2002 and 2006 and were well ahead of US IPOs in 2005 and 2006.

The short term trend in indicators between 2005 and 2006 was also positive, with business in Europe improving relative to the US in 11 out of 18 activities.

The trend over a number of years demonstrates how London, as the capital for many of Europe's most important wholesale financial markets, is gaining in importance as a global financial center.

28 Sep 2007

FXCM’s Sentiment Aggressive Forex Managed Funds Up Over 25%

After a successful launch, FXCM's Sentiment Aggressive Managed Funds are up over 25% in its first two months since inception.

Clients had requested a more aggressive and highly leveraged version of FXCM's popular Sentiment Fund, so FXCM introduced its Sentiment Aggressive Fund in July of 2007.

These funds are divided into two strategic components, the first leverages FXCM's Speculative Sentiment Index (SSI) which gauges market sentiment to identify break out and trend trading opportunities. The second strategy is an approach that uses sophisticated technical strategies to harvest tops and bottoms in range bound markets.

This type of fund has found favor amongst many investors who are starting to recognize foreign exchange as an alternative asset class in any diversified portfolio.

In September 2006, FXCM held in excess of $215 million in customer funds out of a total of over $770 million held by Forex Dealer Members. While there are approximately 31 active Forex Dealer Members with liabilities to customers of approximately $795 million, FXCM holds approximately 1 out of every 3 dollars of customer funds held by Forex Dealer Members.

The company does warn however, that leveraged foreign exchange trading carries a high level of risk, and may not be suitable for all investors.

Hegde Fund Article Awards

It was announced today in a press release that Lehman Brothers' research on the classification of hedge fund investment styles is one of this year's Martello Award winners for best research article in alternative investments.

Lehman Brothers' research authors Arik Ben Dor, Lev Dynkin, and Anthony Gould showed that there are inconsistencies between the actual and self-proclaimed hedge fund styles. They won the award for Best Practitioner Article, for their article "Style Analysis and Classification of Hedge Funds."

Sharing the honor with Lehman's team for Best Practitioner Article were Ben Branch of the University of Massachusetts Amherst and Taewon Yang of California State University, for their article "Merger Deal Structures and Investment Strategies." The authors found that the level of wealth protection for the target firm's shareholders is likely to improve both the performance of merger/risk arbitrage trading positions and the chance of merger completion.

In the category of Best Academic Article, IXIS Corporate & Investment Bank, a subsidiary of Natixis, took the top award. Florent Pochon and Jérôme Teïletche penned the award-winning article "A Conditional Approach to Hedge Fund Risk." The authors applied a two-step conditional Bayesian approach to hedge fund risk. This approach has several advantages given specific features of hedge funds returns, notably non-linear exposure to standard assets returns and short sample history.

David McCarthy, Managing Partner and Chief Investment Officer of Martello Investment Management L.P., congratulated the recipients, "This year's winners have produced exceptional research that will contribute to investors' understanding of investment strategies and portfolio return and risk characteristics. We wish them continued success."

The annual Martello Award is sponsored by Martello Investment Management L.P., a specialist fund of funds and advisory firm based in Massachusetts. It honors the best research articles published in Institutional Investor, Inc.'s The Journal of Alternative Investments. Winners were chosen by the Editorial Advisory Board of The Journal of Alternative Investments.

27 Sep 2007

600 Energy and Environmental Hedge Funds Now Listed

The Energy Hedge Fund Center, LLC has announced that it is now tracking over 600 energy and Recent trends include the growth of carbon and environmental energy funds and, as the total universe of energy hedge funds has grown and matured funds of hedge funds in the energy and environment sector.

Dr. Gary M. Vasey, co-founder of the Energy Hedge Fund Center, LLC said, "Our breakthrough study of hedge funds in energy issued in late 2004 identified 180 hedge funds, mostly equity long/short and commodity trading vehicles. Since then, the directory has grown three-fold and the types of strategies followed by hedge funds in energy and environment has also grown and matured."

"Today, nothing much has changed in terms of the attractiveness of all aspects of the energy industry for investors and that is reflected in the growing number of hedge funds that operate in the various energy markets and sectors."

Peter C. Fusaro, co-founder of the Energy Hedge Fund Sector and chairman of Global Change Associates in New York said, "We expect more energy commodity and green funds for 2008!.....Despite well publicized energy hedge fund blow ups, we continue to see more investors deploying capital in the energy and environmental sector. We also see the closure to investors of some larger funds and niche strategies which leads to more opportunities for new fund managers in this dynamic sector,"

Since its launch in October 2004, the directory has constantly grown reflecting investor appetite for energy oriented hedge funds.

26 Sep 2007

Hedge Funds Backup Habitat For Humanity

An initiative by the hedge fund community to provide New York City families with home ownership opportunities through Habitat for Humanity NY, has announced the launch of a campaign called Hedge Funds for Habitat.

Most immediately, this campaign will help Habitat-NYC complete its 41 unit affordable condominium buildings on Atlantic Avenue in Ocean Hill-Brownsville, Brooklyn, a $13 million state-of-the-art green complex and the largest multifamily complex ever constructed by any Habitat affiliate.

Championed by Stuart Feffer, co-chief executive officer of Lacrosse Global Fund Services, Hedge Funds for Habitat NY is calling on supporters from hedge funds, private equity firms and the service provider community who recognize that there are many working families in New York City living in unsafe and overcrowded conditions whose lives will be forever changed with a Habitat home.

“Our initial goal is to help Habitat-NYC give 41 hardworking families a safe place to live, the opportunity to realize their dreams of home ownership and the ability to secure their future,” Feffer said. “Hedge fund professionals know that investing in human capital is key to the success of our industry... and our city. Safe, decent and affordable homes will help New York’s working families to thrive. And that helps all of us flourish.”

“Habitat-NYC is proud to partner with Stuart Feffer, LaCrosse Global Fund Services and New York City’s hedge fund industry,” said Josh Lockwood, acting executive director of Habitat-NYC. “This unique collaboration unites hedge fund leaders.”

Living up to the Habitat motto “we give a hand up, not a handout,” future homeowner families will work alongside volunteers to construct their own simple, decent and affordable homes. The Hedge Funds for Habitat campaign will help underwrite the recruitment, selection and financial literacy training of the 41 first-time home buyers and help enable Habitat-NYC to complete these “green” condominiums.

Designed by Dattner Architects, construction includes energy efficient and environmentally friendly materials and design. The complex is expected to qualify for a LEED rating, which will allow the homeowners to save up to 30% on their energy bills and raise their families in a healthy home.

Bear Stearns Hires New Hedge Fund Manager

Bear Stearns today announced new additions to their staff, among others, Douglas C. Stern, a senior managing director and industry veteran who will help manage the prime brokerage sales team focused on the firm’s largest hedge fund relationships.

“Bear Stearns Prime Brokerage Services offers clients the best products and service by top professionals in the business,” said Louis Lebedin, head of Prime Brokerage Services. “These additions to our staff will add terrific value to our franchise and will help us to provide clients with more world-class products and capabilities.” The strength of the prime brokerage franchise contributed to record revenues for Bear Stearns’ Global Clearing Services division for the third quarter of 2007.

Douglas Stern, who has 23 years experience in institutional sales and prime brokerage services, joins from Morgan Stanley’s prime brokerage unit, where for seven years he was responsible for managing relationships and developing business with some of that firm’s largest clients. He also managed a team responsible for newly launched hedge funds. Mr. Stern holds a B.A. in Economics from St. Lawrence University.

In the 2007 Global Custodian Prime Brokerage Survey, Bear Stearns was ranked the No. 3 prime broker globally and was awarded 50 out of a possible 72 “Best in Class” awards. In the latest Lipper HedgeWorld Prime Brokerage survey, Bear Stearns was the leading prime broker by assets for U.S. hedge funds and the No. 2 prime broker for the largest non-US funds.

25 Sep 2007

“Hedge Funds Demystified”

Applied Learning announced today the launch of the “Open Course” Program, the first course being, “Hedge Funds Demystified”. It will run in London on December 4tt offering tutors of outstanding caliber and experience. It will be the first time Applied Learning has opened its courses to institutional clients and (individual) financial professionals.

The one-day course will allow delegates to get an insider’s insight into how hedge funds really work, the different investment strategies and techniques hedge funds employ, who invests in hedge funds, and why. Understanding different hedge fund investment styles will be addressed, as well as the regulation and risk management of the hedge fund sector.

Gerald Ashley, director at Applied Learning says, “ While we do not expect Northern Rock style queues, we are seeing a lot of interest in training in understanding risk and behavioral finance. The current market turmoil is an ideal backdrop for launching this course. Investment professionals need facts, not half- baked opinions and vague rumors about how hedge funds really operate. This course is the right topic, with the right content, with the very best trainer and critically, available at the right time.”

This will be the first time that a wider audience will be able to attend Applied Learning training courses. The training company has established a solid reputation as a high quality provider of professional level training for the world’s major banks and trading institutions. Now it brings innovative and specialized training, which in the past was available only in-house, to financial markets professionals.

Future topics in the Program will include specialist training on credit derivatives, behavioral finance and commodity investment. The Open Courses will be initially available in London with plans to roll out to other financial centers in 2008.

24 Sep 2007

AEGON launches the UK's first Ethical Cautious Managed fund

AEGON Asset Management has announced the coming launch of the UK’s first Ethical Cautious Managed fund to the retail market on 1 March 2007.

The Ethical Cautious Managed fund marks another first for AEGON Asset Management, which was also the first to launch an Ethical Corporate Bond fund in April 2000, a move since copied by many of its rivals.

It is one of three new funds AEGON Asset Management is bringing to the market, which also includes a UK Cautious Managed fund and a UK Opportunities fund.

The UK Cautious Managed and Ethical Cautious Managed funds have been launched in response to demand from UK investors and advisers for lower risk managed funds as an alternative to with-profits and cash investments. They aim to provide a relatively safe and steady return through a low volatility investment strategy with a maximum of 60% of the funds held in equities and 40% in fixed income.

Both Cautious Managed funds build on AEGON Asset Management’s recognized capabilities in the UK equity and fixed income sectors. The Ethical Cautious Managed combines AEGON Asset Management’s stringent ethical criteria with a cautious investment philosophy, bringing together the expertise of both its Ethical Equity team and its Ethical Corporate Bond team.

Audrey Ryan will manage the Ethical Cautious Managed fund, supported by Iain Buckle. Audrey also runs AEGON Asset Management’s Ethical Equity fund, which is AA rated by Forsyth-OBSR and has achieved consistent strong top quartile performance over one, three and five years*. Iain Buckle is also the support manager of AEGON Asset Management’s Ethical Corporate Bond Fund, which is AA rated by Forsyth-OBSR.

The Ethical Cautious Managed fund intends to take an unconstrained investment approach, capitalizing on the recognized research capabilities of the UK equity team.

Ryan said, “The Ethical Cautious Managed fund will aim to take advantage of our experience and in-depth knowledge of the UK equities market without any benchmark constraints. It will be a high conviction, stock-picking fund with no sector or stock limits and have an ideal range of 50 to 60 stocks at launch.”

Jon Bennett, AEGON’s director of third party business, said, “We believe there is significant demand from advisers and investors for a real and viable alternative to with-profits and cash investments. At AEGON Asset Management, we are well placed to deliver this alternative, with our recognized strength in the fixed income market and growing reputation for UK equities.

To mark the launch of these new funds, early investors will benefit from a 2.5% discount reducing the initial charge to 3% until 30 April 2007. This means that if the 3% initial commission is rebated there are zero up-front costs for the investor.

AEGON Asset Management UK's assets under management totaled more than £40.4 billion ($8.1 billion). The company's activities are divided into three business areas, Institutional Business, Insured Business and Retail-Fund Business.

21 Sep 2007

Babylon Admitted To Participate in Iraqi Central Bank T-Bill Auction

Iraqi hedge fund `The Babylon Fund´ announced that today, as the first foreigners, they were admitted by the Iraqi Central Bank to participate in the primary auction of Iraqi-dinar denominated 6 month and 12 month T-bills.

The investment case for T-bills: Annual net yields are running at approx 18% for 6 month T-bills, and the exchange rate is consistently appreciating against the USD via a managed float regime.

The inflation rate is also now quickly falling down from extreme levels. In January it was running at 50%+ , but YTD it's now down to 5%.

Babylon's winning streak continued during July and August, with a rise of 3,8% in the Babylon Fund's NAV-price.

Of the hedge fund's direct Iraqi holdings, bond yields steered higher upon a combination of dried-up flow and risk aversion factors partly based upon the perceived weakened state of the government whose success might be seen as being indirectly linked to the bond payment stream.

On the other hand, in the ISX stock market in Baghdad, prices rose strongly, as did value and volumes traded, as participants positioned themselves ahead of foreigners' entrance into the ISX, which was allowed as of 1st of August.

According to a statement, Babylon's aim is to provide long-term capital growth from an investment portfolio consisting of Iraqi and Iraqi-dependent securities. The investment process is mainly top-down driven, with a mix of fundamental analysis and portfolio diversification characteristics, aiming to be regarded as an easy, safe and efficient Gateway towards investing into the region.

Amanda Invests $7 Million In Finnish Fund

Hedge Fund Amanda Capital Plc announced today in a press release that they have invested five million euros ($7 million) in a Finnish private equity fund, the MB Equity Fund IV.

Equity Fund IV will continue MB Funds' earlier investment strategy by investing in medium-sized companies in Nordic countries.

The Amanda Group is a private equity investment company. Its parent company (Amanda Capital Plc is the first publicly listed private equity fund-of-funds in Scandinavia. The parent company has investments in 24 different private equity funds and in four funds of funds managed by Amanda.

Amanda Group is one of Finland's largest private equity fund investment management companies. The Group manages several private equity fund portfolios under consultancy agreements. It manages also five private equity funds of funds, which have several domestic and international investors.

Amanda Group currently has more than EUR 1.5 billion ($2.1 billion) in assets under management (original
investment commitments) and has made investments in more than 100 private equity funds in Europe, the United States, Asia and Russia.

20 Sep 2007

Asia Value Formula Fund Launched By SAM

Sensible Asset Management today announced the coming launch of the Asia Value Formula Fund. The new hedge fund aims to provide long-term capital growth over an investment horizon of 3 to 5 years, by investing primarily in the constituents of the MSCI Asia ex-Japan Index.

The aims are to outperform the MSCI Asia ex-Japan Index by applying the "Value Formula", an active, systematic and quantitative value based approach to identify undervalued securities comprising the index that will benefit from the upside correction between the market's short-term inefficiency and long-term efficiency.

With a minimum investment of $100,000 and a 5% management fee, the hedge fund aims for a launch date of October 15th of this year. Sensible Asset Management was founded in December 2004 with the aim of offering a broad range of products and solutions.

19 Sep 2007

MPC Samsara Hedge Fund Launch

The MPC Samsara Team announced the launch of a new hedge fund, the MPC Samsara Fund. The hedge fund will be run by Ajay Gambhir and he will follow the same successful strategy as the JPMorgan Europe Dynamic Long Short hedge fund of which Ajay was the sole portfolio manager.

This hedge fund returned, net of fees, 31.5% in 2005 and 40.2% in 2006. The Fund won the Eurohedge Best European Equities Hedge Fund 2006 award (under $500m) with a fund size of $400m (as at February 2007). Over the three years to end 2006 the Europe Dynamic Long Short hedge fund returned 104.7% with a sharpe ratio of 3.1.

MPC Samsara has a directional long short strategy with the ability to be net short of the market. Therefore it is able to vary its exposure to the market and thus profit even in poor stock market environments. Ajay will manage the hedge fund with precisely the same approach as he has used at JP Morgan which was bottom-up stock-picking fund with a top down overlay, using rigorous fundamental analysis and an active approach to stock selection.

Ajay was previously Managing Director and Head of the European High Alpha Team at JPMorgan Asset Management, running over $8bn of assets. Ajay himself personally managed $6bn of assets all of which was in either absolute return or unconstrained vehicles.

MPC Investors is an independent asset manager of both alternative and traditional assets for predominantly institutional clients across the world.

Middle East Hedge Fund Summit to Take Place In Bahrain

The third annual Middle East summit taking place on 5-7 th November at the Ritz-Carlton Hotel in Manama, is the first hedge fund specific event to take place in the Kingdom of Bahrain. Developed in close conjunction with event partners, Bahrain Financial Services Development (BFSD), part of the Economic Development Board, and global alternative asset manager Investcorp, the summit will attract major investors from across the GCC region, with leading fund managers from MENA, Europe, Asia and the US discussing innovative alternative investment strategies.

The hedge fund summit will focus on areas including the recent legislative developments in the region, an overview of its current hedge funds market, panel discussions on emerging markets, advice on how to successfully set up and market a hedge fund and case studies on the most effective investment strategies.

The summit, according to the announcement will also explore various strategies to overcome Shariah compliance in the rapidly growing Middle East market. "The hedge funds market in the Gulf region is set for a period of unprecedented growth," said Jane Dellar, managing director of the Bahrain Financial Services Development (BFSD).

"The recent revision of the collective investment undertakings by the CBB introduces an exempt fund category, enabling hedge funds and other alternative investments. This is yet another prime example of Bahrain's dominance in leading the region's funds development," she said.

Rasheed Mohammed Al-Maraj, Governor of the Central Bank of Bahrain, will attend the inaugural session of the event.

Gary Long, Investcorp's Chief Operating Officer, said: "It is very appropriate for Investcorp to sponsor this event. Not only is it taking place in Bahrain , where Investcorp has such strong ties, but we have a ten-year track record of investing in hedge funds and with $6.4 billion in assets under management, Investcorp is one of the leading global players in this asset class."

17 Sep 2007

Carbon Hedge Fund Growth, Explained

Daniel Butler, the Trade Director for Czech carbon asset fund manager Blackstone Global Ventures sent us at HedgeCo this much needed Carbon Market simplification;

It could be said that when the average man on the street hears about a new Environmental Fund or Climate Change Funds its easy to imaging the observer visualizing a member of Greenpeace flogging and IPO prospectus on Wall Street. Perhaps destined to be a most undersubscribed offering.

In reality many of these carbon fund raisings are employing tried-and-true investment principals such as: origination of new stock, arbitration of differing instruments, the capture of significant discounts, all to ultimately return a capital gain to the investor. But how could this possible considering Climate Change-Global Warming is a greenie issue? Hardly the type of thing that would interest the professional financial markets community, an observer might opine.

In reality it is not too far fetched to imagine the near future where even investors lacking a renewable energy brief (or an environmental conscience) might consider the world of carbon trading simply a new commodities type market where variables such as the supply of the existing underlying, new origination efforts, and even a tight relation to the energy markets, will be enough to consider before investing.

But wait; did someone just explain the carbon market without spending multiple paragraphs on the issues causing Global Warming, the long process of negotiations between green house gas emitting countries and the acceptance of many said governments to curtail their harmful emissions to the detriment of their gross national product? Isn't that a bit too brief?

Well, that is why it is, for many, still in unexplored and unfathomable territory. Many would-be investors never read through those paragraphs because, while the basis for this new market is a paradigm of inter-governmental coordination and mother of all surprises - an 'agreement' between the majority of nations (the Kyoto Protocol) - the concepts employed tend to be explained in excruciatingly painful detail.

If however, the market of carbon instruments is explained from a different approach, an inside-out approach, perhaps investors would see how it works first and learn the why’s later.

The European market (yes, there are many locality based variables) market can be explained as a place where the right to emit greenhouse gases is securitized into ‘permissions’ or ‘allowances’ to emit, where less of these allowance credits are issued over time in a concept not unlike musical chairs; a simple concept for a serious issue whereby fewer emission allowance credits in circulation means less greenhouse gases actually emitted into the atmosphere. To police this, the participants “governments and companies face severe fines for ‘non-compliance’. These participants can, however, buy cheaper, newly created credits.

This next concept of newly created or ‘originated’ credits is the one that forms the basis for the lion’s share of new carbon funds and unfortunately becomes a bit wordier. This involves the principal of originating new credits based on causing the reductions of GHG emissions in places around the world were it would be much less expensive.*

After all, implementing reductions, (cleaning up, capturing), elsewhere in the world benefits the globe as a whole. And the agent implementing the reduction is then awarded a carbon credit that is usually shared with the site where the emissions were reduced (the factory, the installation, etc).

This is quite frankly not unlike a new IPO offering or the mining of a new commodity. And the effort and expertise expended to bring the new security to market is recouped by the agent because the origination might take place at prices much lower than where the agent can sell them on the world market. Now it should be clear that with the capture of sizeable discounts, there is in fact room for larger financing. And with the growing surge of climate change understanding, the resultant political willpower, the sheer power of the financial market is brought to the cause. This power should be compared to other attempts at taxation where the application is usually up to individual governments and subject to changes as governments change; not nearly as affective as the financial incentive.

It must be made clear, however, that an investor to a fund that captures discounts in the generation of greenhouse gas emissions must be cognizant of important issues such as the risks involved in the creation of new credits: the lengthy and tedious administrative processes to establishing a carbon credit-worthy project, the verification and validation of real emission reductions, as well as the more obvious macro components affecting the supply and demand and ultimately the prices of credits. And also the investor must critically judge the fund manager (agent) to navigate the by-ways of the new credit approval process.

Indeed, perhaps it is here that the investor might best value a the fund since profitability mostly relies on the abilities of the manager to source discounted projects, manage the extraction process from the identification up to perhaps 5 years later when credits are issued: the fund manager must be a master of the carbon credit origination process.

Of course there is criticism. A cynic might say that with all those financial types involved, banks that need to earn large margins to stay afloat, it seems that the real greenhouse gas reductions may take a lesser import. On the other hand, many other previous attempts to apply environmental remedies have fallen short of their goals because the free market was not involved.

The carbon market now however, seems to have surpassed this criticism and is now firmly established as its own financial market. The carbon market and pricing is related closely to energy movements, subject to international acceptance (USA and Australia have not signed the Kyoto Protocol), and even another important factor when it comes to industrial prices. It is nevertheless a growing market confirmed by the appetite for growing fund investment.

*These less expensive locations (countries where emissions reductions are cheaper to implement, might have accepted emissions limits such as the Ukraine or Romania, or possess no limits at all such as in India or China; they benefit in the long run since the creation of new credits benefit the installation ‘host’ and host government implicitly, since they share in the sale of new credits.

Daniel Butler is the Trade Director for carbon asset fund manager Blackstone Global Ventures, a.s. in Prague, Czech Reublic.

For more information, contact;

Alex Akesson
Editor for HedgeCo.Net

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