Sector SPDR Growth

In an interview with Dan Dolan of Select Sector SPDRs on how the economic crunch is affecting trading rhythms, Dolan presented a broad overview of sector SPDRs and how more hedge funds and institutional investors are utilising the option of buying baskets of securities over single stock options.

Dolan developed and runs the Select Sector SPDR Trust, the ETFs which divide the S&P 500 into nine component sectors. With more than $27 billion in assets, the Trust is well into its 10th year of business.

"While most ETF providers continue to position their products as substitutes for traditional mutual funds, an attribute from which we also benefit, we're seeing increased usage of Select Sector SPDRs as substitutes for equities, to reduce single stock exposure." Dolan said, "SPDR trading volume has averaged well over 200 million shares per day in 2008 as institutional investors take advantage of the outstanding liquidity to implement their trading strategies."

Sometimes considered speculative and volatile, sector investing has finally earned a place in many portfolios either as part of “core and explore” strategies, or as a way of betting on sectors about which investors feel especially bullish. Some investors have even diversified some of their mutual fund holdings to ETFs, opting for passive products, especially during market routs.

Dolan characterizes his products as the “new blue chips,” substitutes for large concentrated positions in widely-held stocks, and a way to provide investors with downside protection by avoiding headline risk. Select Sector SPDRs were the first sector family of ETFs and is the largest based on assets and trading volume.

ARE Opportunity Fund Launch

Lee Hetfield has joined ARE Asset Management LLC, a distressed credit and distressed real estate asset management company in Florida, as Portfolio Manager.

Hetfield reports that as of May 30, 2008, ARE Asset Management launched ARE Opportunity Fund, Ltd. (British Virgin Islands). The fund works in purchasing mortgage loans, the strategy is generating returns using both loan modifications negotiated with borrowers to create loan re-performance, as well as loss mitigation techniques. Re-performing loans are held for income or sold to securitizers or other investors for a gain.

Loans that cannot re-perform, resulting in “REO” or real estate owned property, are resolved via a property sale or entered into a rental income program. The fund also opportunistically invests in senior commercial loans backed by improved real estate at low LTV’s (50-65% of 90 day liquidated value, 35%-45% of BPO), through high-yielding originations made by an affiliated commercial loan originator, SeaBreeze Financial.

The investment manager currently has $110 million under management under the strategy as that of the fund, and the results since launch have been encouraging: For the month of June the BVI fund was up 1.59%, net of expenses, and July looks to be up ~1.5% (early est.). Prior to the BVI fund launch The Manager has historically managed funds for offshore investors in fixed-term, LLC structures (in the same distressed/credit opportunities strategy).

The team is spearheaded by Jeffrey Kirsch with over 30 years of experience in commercial and residential real estate. He has managed the ARE group of companies, based in Miami, FL, since their founding in 1996. At ARE, Mr. Kirsch has overseen more than $1 billion in performing and non-performing mortgage transactions and has long-standing relationships with private and public-sector sellers.

Hedge Fund Platform To Expand Research Team

Alternative investment platform, Altegris Investments, has plans to expand their research team under the leadership of Mr. Allen Cheng, an accomplished hedge fund investment professional with extensive industry experience.

Cheng joins Altegris as Managing Director, Research and Investments, and will be a member of the Altegris Investment Committee, with responsibility for evaluating investment strategy and completing product review for the Altegris platform of alternative investments.

"Allen's breadth of experience in alternative investments, with both major financial institutions as well as private investment firms, complements the deep knowledge base of our research team," said Jon Sundt, President of Altegris Investments. "We are dedicated to maintaining a world-class research team, under Allen's expert leadership, to accomplish our mission of providing high quality alternative investments to wealth managers and high net worth investors."

Cheng joins Altegris from his recent role as Managing Director, Head of Fund of Funds Portfolio Management at Bank of America's Alternative Investment Group. He has significant experience in the alternative investment industry, particularly in the area of identifying, selecting, and monitoring hedge fund managers across multiple investment disciplines.

"Altegris offers clients a unique, open-architecture platform of alternative investments, supported by extensive review and ongoing monitoring," said Cheng. "I am energized by the opportunity to join this team specializing in alternative investments and to expand our in-depth research capabilities."

The Altegris team finds, selects and negotiates capacity with selected hedge funds, managed futures funds, and other alternative investments. Currently, investors have allocated more than $2.4 billion in trading level to alternative investments available through the Altegris platform. The Altegris Group of Companies includes Altegris Investments, APM Funds, and other affiliates.