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31 Jul 2009

Hedge Fund Shareholder Joins Board of Directors

Hedge fund founder J. Winder Hughes, III, has joined wastewater treatment and power generation technology company, ThermoEnergy Corporation, on the Company's Board of Directors.

Hughes is the Managing Director of the private equity firm of Hughes Capital Investors, LLC. In 2000, Hughes formed the Focus Fund, LP, a Florida-based, highly concentrated equity partnership that focuses on publicly-traded emerging growth companies. Over the past two years, the Focus Fund has become one of the largest investors in ThermoEnergy Corporation.

"We are extremely pleased that Mr. Hughes accepted our invitation to join the board of ThermoEnergy Corporation," said Dennis C. Cossey, ThermoEnergy's Chairman and CEO. "With his extensive background in corporate finance and investment banking, Mr. Hughes represents a tremendous resource on which the ThermoEnergy management team can rely on."

"Given that the Company is on the cusp of commercial prosperity with its wastewater treatment business and at the forefront of achieving value-creating milestones with its Babcock-Thermo Carbon Capture joint venture," said Mr. Hughes, "I look forward to working with the management team to strengthen the company's financial stability and improve business performance for the benefit of all its stakeholders."

30 Jul 2009

Changing Attitudes Towards Risk (New York) - "Attitudes towards hedge fund risk are poised to change," Sara Grillo, Founder of the Coalition for Safer Hedge Funds said in a paper examining proposed improvements in risk measurement, "The evolution will have positive results for the industry."

The paper also analyses the consequences of risk on portfolio performance, the report predicts that regulatory scrutiny will be the catalyst that forces risk levels down and ultimately drives the industry toward a period of maturity. Within this more stable environment, inflows from retail and institutional investors will surge, leading to the emergence of hedge funds as a more popular investment choice amongst the investing public.

Many academics believe that hedge fund returns are not predictable, and that the only persistent factor in performance history is risk itself. Research conducted by Martin Herzberg and Maim Mozes articulates the notion that less risky funds persistently are more likely to outperform riskier ones in the long term. Riskier managers are likely to take large directional “bets” which may crash when the market trends reverse. Less risky funds base decisions on fundamental skill and are less correlated with markets.

The role of high risk funds, Herzberg and Mozes believe, should be to diversify a portfolio rather than act as the main source of return. Aside from investment style, Herzberg and Mozes cite the other factors that affect returns such as the fund size, growth in assets under management, and length of investment history. They note that funds with shorter track records tend to exhibit higher returns than ones with longer track records. They identify the reasons to be their more experimental style, lack of controls, lack of auditing, and self-selection. Herzberg and Mozes hypothesise that funds with lower levels of assets under management tend to outperform, but this tendency fades as assets increase. Additional assets are placed in cash or must be placed with secondary managers, dragging down alpha.

The show is not over yet, she says. In fact, it is just beginning. As attitudes towards risk evolve, there is still plenty more room for the industry to grow. Although industry scandals have left investors reeling, scepticism will fade as industry regulation will increase transparency.

Increased scrutiny by industry watchdogs will lead to the normalisation of risk and return, which will ultimately decrease the level of hedge fund volatility. As volatility levels normalise, hedge funds will become more popular with retail investors and pension funds.

This surge in demand will propel the industry through its lifecycle until it reaches its ultimate maturation level. Regulatory developments and their effect on risk will be the catalyst that leads to the emergence of hedge funds as a prominent investment option amongst the investing public at large.

Sara Grillo earned her B.A. from Harvard University with honors. She is currently enrolled in a M.B.A program at the New York University Stern School of Business. She passed the CFA Level One examination in June 2003, and is a affiliate member of the New York Society of Securities Analysts and the CFA Institute.

BTIG Launches Fixed Income Prime Brokerage

BTIG LLC. announced that it has expanded its Prime Brokerage group to offer fixed income services, including trading and portfolio financing. The expansion into fixed income is in conjunction with the launch of BTIG’s Global Fixed Income Group in February of this year, which focuses on sales and trading of credit products across the full credit spectrum from investment grade to distressed debt.

BTIG Prime Brokerage previously covered equity and equity options and made the move to fixed income to better meet the needs of its hedge fund clients in today’s market.

“As our clients became more interested in fixed income products, we saw a huge need and opportunity to expand our services,” Justin Press, Managing Director and Co-Head of Prime Brokerage, said. “We have created a one-of-a-kind fixed income offering that will bridge the gap for hedge fund managers who have traditionally been operating in equities only.”

BTIG’s Prime Brokerage clients also benefit from the firm’s full range of expertise and services, including Outsource Trading, Market Intelligence, International Trading, and access to the Equity Derivatives team, Capital Introduction team and Commission Management services. The Prime Brokerage group was launched in January 2004 and caters to start-up and existing long/short equity hedge funds. Prime Brokerage and middle office operations have a combined 40+ professionals.

The Global Fixed Income Group has added 50+ professionals since its launch earlier this year.

29 Jul 2009

Halfway There: New Hedge Fund Research From Credit Suisse/Tremont

Credit Suisse Tremont Index LLC released a new research piece, 1H 2009 Hedge Fund Update: Halfway There, a review of how hedge funds have repositioned themselves in the first half of 2009 to generate positive returns for five out of the first six months of the year.

The report discusses how hedge funds have generated year-to-date returns of 7.2% through June 30, outperforming, with lower volatility, both key equity and bond indices. Some key takeaways from the report include:

* The Convertible Arbitrage, Emerging Markets, and Global Macro sectors have received increased attention as investors began to regain their appetite for risk and global markets rallied.

* Performance has improved across most sectors, with the bulk of returns for many strategies moving into positive territory for the year, with 80% of all funds reporting positive returns for the second quarter.

* Overall industry assets under management have dropped approximately $18 billion since the end of the first quarter of 2009; we estimate industry assets totaled $1.3 trillion as of June 30 - down from $1.5 trillion at the end of 2008.

* As of June 30, 2009, an estimated 9.6% of funds were classified as impaired, meaning they have either suspended redemptions, imposed gate provisions or sidepocketed assets.

Credit Suisse is comprised of a number of legal entities around the world and is headquartered in Zurich. The registered shares of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares, in New York.

28 Jul 2009

BHA Q1 2009 Alternative Investor Report

Working with a group of 150 alternative investment managers, alternative investor research company, Brighton House Associates,(BHA) published its Quarterly Research Report highlighting insights and trends from this research that are most pertinent to industry professionals.

In summary of the report, the markets continued their downward trend in Q1, but the ability of hedge fund managers and alternative investors to adapt and position properly is what allows investment managers to produce returns in even the most difficult markets. Throughout the alternative industry there are still managers making money and using alpha to produce uncorrelated return streams, and investors are conscious of this and judiciously seeking investment with them, the report said.

Currently, many alternative investors are turning towards short-term CTA and global macro managers because they can nimbly navigate these uncertain markets while providing excellent liquidity terms, according to BHA. Investors are also increasingly interested in the relative stability and unique opportunities that private equity funds provide. Investors are looking for generalist funds that can provide them with diversified exposure and buyout funds that can take advantage of drastically undervalued opportunities.

In the real estate space, according to the report, investors are looking for managers that are aggressively taking advantage of the depressed real estate market to acquire undervalued assets.

Investors and managers are eagerly anticipating a market turnaround in the second half of 2009 that should lead to a significant influx of capital into alternative markets, BHA said. Investors that are currently sitting on high levels of cash said that they are actively researching the proper opportunities to put some of that capital to effective use in 2009.

BHA works directly with a wide range of investment managers on a daily basis. These managers range from hedge funds and funds of hedge funds to private equity, real estate, and venture capital funds. They also range in size and experience from emerging managers to some of the most established firms in the industry.

Each quarter, BHA analysts collect detailed profiles from more than 1,000 investors that are actively making investments in hedge funds, private equity and real estate funds, and related funds of funds. These investors are located all across the globe; their assets under management range from less than $100 million to more than $10 billion. The Q2 research is scheduled for release early next week.

'Green' Hedge Fund of Funds Launched by Hedge Fund Veteran

Richard Bookbinder is launching TerraVerde Capital Partners LLC, one of the first “green” hedge fund of funds in the United States. Bookbinder is Managing Member of Bookbinder Capital Management, a New York-based hedge fund of funds, and a founding Principal of Sandler, O’Neill & Partners, L.P.

TerraVerde allocates capital to hedge funds devoted solely to reducing carbon emissions through clean-tech, renewable energy and other environmental sectors such as carbon trading, energy, solar, wind, water, reforestation and more.

“We’re in the early stages of a long-term, multi-generational growth cycle for carbon reduction strategies,” Bookbinder said. “TerraVerde is focused on those green strategies that are capitalizing on the business potential driven by the need for energy security and clean energy use.”

While managing one of Bookbinder Capital’s other hedge fund of funds, Bookbinder studied the emergence of investment opportunities in the “green” space. After an in-depth analysis of the industry, including meeting with hedge fund managers, green private equity funds, scientists, historians, and others, he came to the realization: investment funds with an environmental focus offer sufficient, attractive long-term investment opportunities to dedicate an entire strategy focused solely on the “green” space.

AIMA Warns Of Global Impact Of EU Hedge Fund Directive

The Alternative Investment Management Association (AIMA), the global hedge fund industry association, has warned that the European Commission’s draft directive on Alternative Investment Fund Managers would hit fund managers and investors around the world if enacted into European law.

The hedge fund assiciation argues that the directive creates potentially major difficulties for non-EU funds and/or non-EU managers in accessing the EU market. Marketing of funds by managers will only be allowed with a special marketing passport that the directive creates. However the directive also delays its introduction by three years and imposes significant obstacles (such as demonstrating regulatory and tax equivalence) to obtaining it.

AIMA suggests that the directive makes it so difficult and costly for non-EU funds and managers to access the EU market that it is clearly protectionist in effect, if not in intent. This will have major consequences for non-EU funds and managers (particularly in North America and Asia-Pacific) who will face a major loss of business in the EU. Investors will face loss of choice, increased costs and diminished returns.

Andrew Baker, CEO of AIMA, said, “Funds and managers outside the EU face being locked out of the EU market with extremely worrying consequences. Global industry centres such as the United States , Canada , Switzerland , Hong Kong , Singapore , Japan , Australia and South Africa , will all be affected by this. This is not just an internal EU matter.

This will also have a very significant impact on investors. EU investors, in particular, face a situation where they can use only EU asset managers of EU domiciled funds investing assets under an EU custodian. And international investors with EU funds or managers will find that their costs will go up and their returns will go down because of the restrictions and compliance costs the directive imposes.

We believe that the provisions of the draft directive with protectionist consequences will not only hit the industry worldwide but weaken the competitiveness of the EU in investment management and make the EU a less attractive destination for international investment. Naturally, we hope that it can be revised to avoid this.”

SEC To Curtail Abusive Short Sales

The SEC announced several actions protecting against short sales and make more short sale information available to the public.

"Today's actions demonstrate the Commission's determination to address short selling abuses while at the same time increasing public disclosure of short selling activities that affect our markets," said SEC Chairman Mary Schapiro.

First, the Commission made permanent a rule, that seeks to reduce the potential for abusive "naked" short selling in the securities market. The new rule, Rule 204, requires broker-dealers to promptly purchase or borrow securities to deliver on a short sale. The temporary rule, approved by the SEC in the fall of 2008, was set to expire on July 31.

Second, the Commission and its staff are working together with several self-regulatory organizations (SRO) to make short sale volume and transaction data available through the SRO Web sites. This effort will result in an increase over the amount of information presently required by another temporary rule, known as Temporary 10a-3T. That rule, which will expire on August 1, applies only to certain institutional money managers and does not require public disclosure.

Apart from these measures, the Commission is continuing to actively consider proposals on a short sale price test and circuit breaker restrictions.

Third, the Commission intends to hold a public roundtable on September 30 to discuss securities lending, pre-borrowing, and possible additional short sale disclosures. The roundtable will consider, among other topics, the potential impact of a program requiring short sellers to pre-borrow their securities, possibly on a pilot basis, and adding a short sale indicator to the tapes to which transactions are reported for exchange-listed securities.

Short selling often can play an important role, the SEC said, in the market for a variety of reasons, including contributing to efficient price discovery, mitigating market bubbles, increasing market liquidity, promoting capital formation, facilitating hedging and other risk management activities, and importantly, limiting upward market manipulations. There are, however, circumstances in which short selling can be used as a tool to manipulate the market.

27 Jul 2009

Uzbeki/Khazakh Hedge Fund Market's Decline Slowing

Uzbekistan hedge fund manager, Ansher Fund Management, has reported that their flagship hedge fund, Ansher Regional Property Fund, (ARPF) has maintained its performance moderately stable at –0.37% during April-June 2009 despite the still lagging property markets around the globe.

"Property markets in the region, especially Kazakhstan residential segment, continued slowing in the quarter owing to still limited or expensive mortgage facilities for buyers," Khurshid Kholov, hedge fund manager and CIO said. "However, the decline rate in the region has been slower during the 2nd quarter as compared with previous quarters, showing signs of market recovery. Thanks to active portfolio management ARPF is still up by 0.80% since inception, thus comfortably outperforming all three benchmarks."

Despite the fact that the economy of Kazakhstan has been under pressure amid the global financial turmoil, a slight signs of economic recovery has been observed in the country, the fund manager said. It’s expected that the GDP of this oil rich country will not post negative growth for the year 2009, owing to currently recovering oil and commodity prices in the world markets.

This is the result of the antirecessionary measures the Government undertook in which $25 billion of funds were injected into the economy. About $4 billion out
of this amount was directed particularly into the real estate sector of the country.

ARPF has seen new investment opportunities in the hotel sector after the residential real estate market dropped out. "The hotel sector is immature and currently existing 4 five star hotels in Almaty operate with 90% occupancy rate," ARPF said.

A sharp deficit is expected to emerge with the Asian Winter Games which will take place in Almaty in 2011. Real estate sector of this energy house country still offers promising investment opportunities for property investors in the long term.

Swiss Hedge Fund & FoHFs Provider Expands To US

Swiss based hedge fund and FoHFs provider, Infonic AG, has expanded to the US by establishing a New York office. Infonic named IT specialist Nolan Phillips as Chief Operating Officer, and financial expert, Bridget Piraino, Head of Global Marketing & Sales.

“I’m delighted to welcome Nolan Phillips and Bridget Piraino to the executive team. Adding to the depth of our management team demonstrates Infonic’s commitment to becoming the trusted operational backbone of the institutional hedge fund investor industry,” said Tom Furrer, Infonic’s CEO. “With the establishment of a New York office we will expand our presence delivering innovative products and dedicated client services to asset managers and administrators of funds of hedge funds.”

Nolan has held executive and consulting positions at Coopers and Lybrand, Union Bank of Switzerland, Société Générale, Bankers Trust, IQ Financial Systems and Bank of Bermuda, Alternative Investments Program.

Piraino's career has included Aregon International, the UK financial data delivery system provider, and Goldman Sachs and Co’s Fixed Income Research group. She held senior technical management and financial services marketing positions with Sybase, TIBCO Financial Systems and SeeBeyond.

Headquartered in Switzerland with offices in Zurich and New York, Infonic AG is the provider of HedgeSphere, a product suite for operations of funds of hedge funds.

24 Jul 2009

Multi-strategy Malta Hedge Fund Launch

Malta-based Golden Hedge Umbrella Sicav has launched a multi-strategy hedge fund and is currently looking for prospective seed investors.

The Golden Hedge Multi-Strategy Fund is the first subfund of the umbrella structure, run by Andreas Koettner and Dr. Bernhard Goetsch, the new hedge find specializes in relative value commodity trading and stock index arbitrage strategies.

Targeting an annualized return of 15% with volatility at 8%.The quantitative strategies are designed to generate returns with low correlation to traditional CTA and hedge fund styles. Inception of trading was in May 2009.

Minimum investment starts at EUR100,000 ($142,000) with monthly liquidity. The auditor is Ernst & Young, prime broker MF Global and fund administrator Valletta Fund Services.

23 Jul 2009

Cayman Islands Hedge Funds and Capital Markets in India

A study by Dennis S. Ryan and Sonia Xavier of offshore law specialist, Conyers Dill & Pearman has come out 'Cayman Islands Funds - Entering the Gateway to Capital Markets in India.' The team describes the history and challenges of what Cayman Islands domiciled investment funds have faced when seeking to invest into Indian capital markets.

One of the major hurdles in this regard has been addressed by the 10 June 2009 admission of the Cayman Islands Monetary Authority (“CIMA”) as an ordinary (i.e., full) member of the International Organization of Securities Commissions (“IOSCO”), according to the report.

By way of background, the IOSCO Objectives and Principles of Securities Regulation were endorsed by its member regulators of various securities and futures markets in 1998, and generally are viewed by securities regulators as the key international benchmark on sound principles and practices for securities regulation. Currently, IOSCO members regulate the vast majority of the world's securities markets.

To access the Indian markets, an investment fund must register as a Foreign Institutional Investor (“FII”) with The Securities and Exchange Board of India (“SEBI”). In the past, since CIMA was not a member of IOSCO, SEBI often engaged in extensive due diligence and inquiries before allowing registration of a Cayman fund as a FII. As a result, few Cayman Islands funds have registered with SEBI. CIMA’s admission to IOSCO looks set to change this trend in favour of Cayman Islands funds.

The timing could not be better, the report says, with emerging markets competing to attract liquidity, the Cayman Islands, with over 9,000 CIMA registered investment funds, a proven track record with investors and an excellent and sophisticated service infrastructure, has a great deal to offer India and investors that wish to access its markets.

One remaining challenge is that the Cayman Islands do not currently have a tax treaty with India, the law fim asid. Mauritius, on the other hand, has long been the preferred jurisdiction for investment into India as a consequence of the favourable double taxation agreement between those countries (the “Mauritius-India DTAA”), contributing to around 44% of foreign direct investment (“FDI”) into India.

Investment funds from non-tax treaty jurisdictions have developed a structure involving a wholly owned Mauritius subsidiary for purposes of Indian investment. Typically, this structure requires a Cayman Islands (or other non-treaty jurisdiction) investment fund to register with SEBI as a FII. The Mauritius subsidiary fund will then be registered with SEBI as a sub-account of the FII, permitting it to invest directly in Indian securities via SEBI.

The Mauritius fund will be set up as a Global Business Company Category 1 (“GBC1”) that is resident in Mauritius for tax purposes. As a Mauritius tax resident, this fund is subject to tax on income at the flat rate of 15%. However it is entitled to claim a credit for foreign tax on income not derived from Mauritius against the Mauritius tax payable, resulting in an effective tax rate generally ranging between 3% and nil. As a tax resident GBC1, the fund is also entitled to take advantage of Mauritius’ network of tax treaties, including the Mauritius-India DTAA.

Hedge Fund Managers as Registered SEC Advisors

"One of the focal points of the Obama Administration’s Financial System Regulatory Reform Plan is to seek the passage of legislation that would require hedge fund managers (as well as other private fund managers) to become registered as investment advisors with the SEC and be in compliance with the applicable requirements under the Investment Advisers Act." HedgeOp Compliance said, announcing the launch of a new service to help managers deal with current registration issues.

There are presently three bills pending in Congress and a recent proposal from the Treasury that would achieve that goal if passed. “We are seeing a lot of activity as hedge fund managers look to get ahead of the curve on these requirements and starting the process sooner rather than later." Bill Mulligan, the CEO of HedgeOp said, "In addition to allowing for key thoughtful planning, addressing the registration issue early will provide a great deal of comfort to investors and prospective investors."

The newly launched ADVassist is designed to provide focused registration and compliance guidance, the hedge fund consulting firm said, to not only complete the registration process, but also to create a foundation for development of a compliance culture and infrastructure.

22 Jul 2009

Hedge Fund Inflows Reach $19.2 Billion

Hedge funds attracted $19 billion of fresh capital (gross) in June, marking their second consecutive month of net inflows of $6 billion. Nearly 75% of all reporting hedge funds are in the black for H12009, with event driven funds up an impressive 19% (YTD), on average, according to Eurekahedge.

Gross inflows into hedge funds totalled a healthy $19.2 billion (or 1.5% of end-May assets), about two-thirds of which were negated by redemptions of $13 billion. A good portion of these redemptions (nearly $5 billion) represented the assets withdrawn by funds of hedge funds, which continued to witness redemption pressures as investors are increasingly opting to invest directly into hedge funds for better returns and capital protection, as well as relatively lower fees.

The Eurekahedge Hedge Fund Index gained 9.5% while the S&P 500 rose 1.8% over 1H2009. Since Jan-2007, hedge funds are up 10.4%, while the S&P 500 is down over 35%.

1H 2009 Hedge Fund Update: Halfway There - Report

Six months after their worst drawdown on record, hedge funds appear to be demonstrating stronger performance than in some previous recovery periods, such as during the Asian Currency Crisis and the Tech Bubble Burst events.

On average, it has taken hedge funds 13 months to recover from these market disruptions accordind to research peice by Credit Suisse Tremont Index LLC, the research reviews of how hedge funds have repositioned themselves in the first half of 2009 to generate positive returns for five out of the first six months of the year.

The report discusses how hedge funds, as measured by the Credit Suisse/Tremont Hedge Fund Index (“Broad Index”), have generated year-to-date returns of 7.2% through June 30, outperforming, with lower volatility, both key equity and bond indices. Some key takeaways from the report include:

The Convertible Arbitrage, Emerging Markets, and Global Macro sectors have received increased attention as investors began to regain their appetite for risk and global markets rallied.

Performance has improved across most sectors, with the bulk of returns for many strategies moving into positive territory for the year, with 80% of all funds reporting positive returns for the second quarter.

Overall industry assets under management have dropped approximately $18 billion since the end of the first quarter of 2009; we estimate industry assets totaled $1.3 trillion as of June 30 - down from $1.5 trillion at the end of 2008.

As of June 30, 2009, an estimated 9.6% of funds were classified as impaired, meaning they have either suspended redemptions, imposed gate provisions or sidepocketed assets.

21 Jul 2009

Insight Into June Hedge Fund Performance - Credit Suisse/Tremont

Long/Short Equity managers who maintained a cautious stance through the recent market run-up appeared to be positioned to profit as markets shifted from cyclicals to defensives in June. Overall, the Credit Suisse/Tremont Hedge Fund Index (“Broad Index”) finished up 0.43% for June, bringing year to date to 7.18%.

Convertible Arbitrage funds continued to post the best performance of all the strategies in the Broad Index, with 4.05% for June and 23.95% cumulative performance YTD, Credit Suisse/Tremont Index's monthly commentary reported. As equity markets’ recovered in the second quarter, managers began to profit again from the volatility arbitrage aspect of the strategy.

Overall, Emerging Markets finished the month relatively flat despite a rebound in economic activity in Asia, as countries across the region saw rising industrial and manufacturing output, the Index reported.

Credit-oriented hedge funds performed well as credit markets showed healthy activity, with $102 billion of investment grade bonds brought to the market in June. Many believe continued governments’ activism in the markets could provide additional opportunities for these managers.

Global Macro hedge funds posted their first negative monthly performance since October 2008 as the sell-off of short rates in US Treasuries negatively impacted the positions of a number of Global Macro hedge funds early in the month, Credit Suisse/Tremont said.

20 Jul 2009

Fund Of Hedge Fund Operational Due Dillegence - Study

Jason Scharfman, Managing Partner at Corgentum Consulting, LLC, sent me a recently completed a study focused on operational risk frameworks in fund of hedge funds, 'Analyzing Operational Due Diligence Frameworks In Fund of Hedge Funds.'

In short, they analyzed and surveyed over 275 hedge fund allocation organizations (primarily fund of funds) around the world with a variety of AUM (39% managed less than 1 billion and 61% managed more than 1 billion) to study their operational due diligence frameworks:

Some of the key findings include:
Only 27% of Fund of Funds have a full time person on staff or team dedicated to fraud detection

Less resources are dedicated to operational due diligence in the US as compared to the rest of the world (Asia and Europe):

In Asia and Europe there is a trend towards dedicated operational due diligence functions

In North America shared operational due diligence frameworks (where the same people who perform investment due diligence look at operational risk) are the most common

There is lack of consistency in fund of hedge funds operational due diligence approaches

Smaller fund of hedge funds (under USD $1 billion) use a wide variety of operational due diligence frameworks with less dedicated resources

Full report available here.

Jason Scharfman is also the author of the book: “Hedge Fund Operational Due Diligence: Understanding the Risks.”

Hedge Fund Replication Mutual Fund Marks One-Year Anniversary

One of the first no-load, open-end mutual funds designed to replicate broad-based hedge fund performance characteristics, the 'IQ ALPHA Hedge Strategy Fund' (IQHIX) has marked its one-year anniversary on June 30th, 2009.

For the trailing 12-month period, the fund was down -2.58 percent, compared to a loss of -26.21 percent for the S&P 500.

“The performance over the past year can be attributed to a number of factors, including the ability of the fund to hold both long and short positions, and the liquidity of the ETFs used to represent asset class exposures,” said Adam Patti, IndexIQ’s Chief Executive Officer. “As a result, we were able to continuously execute our strategy during the period, something not all hedge funds could do.”

The fund works by optimizing the relative index weights among six hedge fund strategies, Equity Long/Short; Global Macro; Emerging Markets; Fixed Income Arbitrage; Equity Market Neutral; and Event Driven.

The funds do not invest in hedge funds, but use ETFs and a variety of other highly liquid financial instruments to provide exposure to the components of the index in approximately the same weighting. It employs leverage totaling 25 percent of the portfolio to magnify returns.

17 Jul 2009

Rosemawr Municipal Partners Fund Launch

Rosemawr Management LLC, two months ago launched the Rosemawr Municipal Partner Fund LP,. The fund has seen returns of 0.82% in May and 0.86% in June, since inception on May 1st 2009.

With former Managing Director at Lehman Brothers, Greg Shlionsky, as portfolio manager, the new fund's investment approach is fundamentals-driven. The investment team believes it possesses a unique understanding of municipal investments’ fundamentals. The investment strategy is based on thorough analysis of securities’ structure and credit, rather than on short-term momentum or technicals.

The fund limits its capital allocation (before leverage) to any one investment to 15% of the Fund (with exceptions made for short-term very liquid securities). Leverage is only applied to securities that the Investment Team considers liquid.

Rosemawr Management LLC, the Fund Manager, is an SEC-registered Investment Adviser focused exclusively on the U.S. Municipal market. The Fund’s Investment Team is comprised of professionals who draw on decades of senior-level experience overseeing municipal portfolios and major trading desks to manage credit, interest rate and event risk. Average Principal’s tenure in the municipal market is 20 years.

In addition to the fund, Rosemawr oversees value-added municipal strategies for family offices (including those of Forbes 100 and Forbes 400 families), ultra high net-worth individuals, and select institutional clients.

16 Jul 2009

The Private Fund Investment Advisers Registration Act of 2009

Richard H. Baker, President and CEO of the Managed Funds Association (MFA) wrote a letter to MFA members this afternoon, highlighting today’s announcement by the Obama Administration requiring all advisers to hedge funds and other private pools of capital, including private equity and venture capital funds, to register with the Securities and Exchange Commission (SEC).

Baker highlights how the Administration’s proposed legislation would:

* eliminate the private adviser exception in the Investment Advisers Act and require hedge fund managers and other investment advisers to private investment pools with at least $30 million in assets under management to register with the SEC;

* eliminate the exemption from registration in the Advisers Act for certain commodity trading advisors registered with the CFTC if the commodity trading advisor acts as an investment adviser to a private fund (defined as a company that would be an investment company under the Investment Company Act of 1940 but for the exceptions contained in Section 3(c)(1) or Section 3(c)(7));

Read the rest

Hedge Fund Regulation Guide

SYZ & CO Expands To Hedge Funds & FoHF's In Spain

International hedge fund manager and Swiss banking group, SYZ & CO, has acquired 50% of the asset management company owned by Spanish alternative investment group N+1.

The joint venture, named “N+1 SYZ Gestión”, will provide asset management services to high level clients in Spain, providing discretionary or advisory mandates for large family groups or institutional clients, as well as for investment funds and funds of hedge funds.

“As has been the case in Italy, we have preferred entering into a partnership with a solid and well-established local partner. This enables us to provide offerings that are adapted to the specific nature of the local market”, said Alfredo Piacentini, Managing Partner at Banque SYZ & CO. “We are particularly satisfied with our partnership with N+1, a group we have known for many years, and with which we share the same vision and values.”

“The Spanish asset management market is in the midst of dramatic change and today there is real demand for high level international asset management expertise; our alliance with SYZ & CO will enable us to successfully meet this demand”, said Santiago Eguidazu, N+1’s President. “SYZ & CO enjoys a strong reputation in the Spanish market and there are strong synergies between our two asset management groups.”

N+1 Group company currently has approximately CHF 400million ($353 million) in assets under management. The transaction is subject to approval by the CNMV, the Spanish financial markets regulatory authority. SYZ & CO's total assets under management now exceed CHF 3.2bn ($2.9 billion).

Appeals Court Dismisses Fraud Charges Against Hedge Fund Advisor Hennessee Group

The U.S. Court of Appeals affirmed a district court’s decision that also dismissed a securities fraud case against New York-based hedge fund investment adviser Hennessee Group LLC.

Judge Colleen McMahon of the U.S. District Court for the Southern District of New York that dismissed claims of breach of contract and securities fraud in South Cherry Street, LLC. v. Hennessee Group. All of South Cherry’s arguments on the appeal were found to be without merit.

The claims were in connection with Hennessee's investment advice regarding Bayou Management’s hedge funds that were uncovered as part of a large Ponzi scheme, for which Bayou’s principals were found guilty of securities fraud in 2005.

“We are delighted with the Second Circuit’s decision that finds all claims of breach of contract and securities fraud against Hennessee are without merit. Bayou’s Ponzi scheme caused many unfortunate events, but the Court’s decision establishes that Hennessee was not a participant on any level,” said Bennett Falk, Hennessee’s trial counsel and a partner in the securities litigation and regulatory practice group in the Florida office of Bressler, Amery and Ross, P.C.

15 Jul 2009

Swiss Hedge Fund Buy-Back Program Equalises Share Price With NAV

In order to achieve capital reduction, Swiss alternative investment company ALTIN AG has launched a share buyback program as part of a broader range of measures to reduce share price discount.

The hedge fund company has already succeeded in bringing the difference between the NAV and the share price from 33% at the end of 2008 to 21.7%. This, among other things, should enable ALTIN’s stock market price to come closer to the NAV.

The Annual General Meeting of shareholders approved a share buyback programme of up to 10% of the share capital. A second trading line for the registered shares of ALTIN will be opened on the SIX Swiss Exchange on 22 July 2009. ALTIN intends to buy back up to 5% of its shares until the end of March 2010.

The offer may be accepted only by Non-US persons, outside the United States.

People Moves: Hedge Fund Hires 2 Asia Veterans

Hedge fund manager OakRun Capital announced the appointment of Mark Potter and Brian Long, both experienced Asia investment executives. The expansion is to build strategic relationships with local institutional investors and provide access to its hedge funds and investment products, including the new OakRun Short Term Income Fund.

Potter, an experienced investment executive based in Singapore, joins the firm as Director of Asia Institutional Marketing and Distribution. Long, a senior level investment professional based in Singapore, has been named Director of Asia Institutional Relations.

The OakRun Short Term Income Fund charges a 1% management fee and a 10% incentive fee with a $1MM minimum investment requirement, it returned 0.73% (9.26% Annual Yield) for June 2009 and paid out its third quarterly dividend.

“Asia is a natural market for OakRun Capital," Potter explained, "Together, the team has extensive experience in the region, speaks several local languages and has built very strong personal and institutional relationships."

"The flagship Short-Term Income Fund has received incredible initial feedback from institutions. There are very few products or funds, if any, like the OakRun Short Term Income fund that can provide investors with high credit quality, superior performance, and stable income distributions. The fund is invested in highly liquid instruments with substantially higher yields than comparable investments with duration of less than 45 days," Portfolio Manager, Arturo Neto, CFA, said.

14 Jul 2009

MFA Commends CCP Working Group Report

Hedge fund, funds of funds and managed futures funds group, the Managed Funds Association (MFA) has commended the working group paper, “Report to the Supervisors of the Major OTC Derivatives Dealers on the Proposals of Centralized CDS Clearing Solutions for the Segregation and Portability of Customer CDS Positions and Related Margin,” which was submitted to industry regulators on June 30, 2009.

"The efforts of the special working group and the Report are both comprehensive and timely." Richard H. Baker, MFA President and CEO, said, "MFA has been a strong proponent in advocating collateral segregation, portability of trades and direct and indirect buy-side access to centralized clearing. We remain committed to working with industry regulators, industry working groups such as the Operations Management Group, and other trade associations on the next steps toward providing such access."

The report was written by a special working group of eight dealers, four MFA members and four other buy-side market participants, addresses key concerns raised by supervisors and legislators globally, to analyze the various U.S. and European CDS clearing solutions with respect to the issues of customer margin segregation and portability of cleared customer CDS positions.

MFA fully endorses the collaborative efforts with industry regulators to support commercially viable centralized clearing platforms and to promote sound business practices.

MFA members include the vast majority of the largest hedge fund groups in the world who manage a substantial portion of the approximately $1.5 trillion invested in absolute return strategies. MFA is headquartered in Washington, with an office in New York. For more information, please visit:

Former Morgan Stanley Traders Launch Commodity Trading Advisor

Cinneas Foreign Exchange LLC, an alternative investment management firm specializing in momentum based trading in the foreign exchange market, have announced the launch of a Commodity Trading Advisor (CTA).

The Cinneas investment process combines technical, fundamental and intraday market flow analysis with the careful application of leverage for the purpose of delivering non-correlated returns, preserving capital and mitigating risk. Cinneas offers a low barrier to entry with a minimum investment of $5,000 with no lock-up period.

Cinneas was founded by Morgan Stanley veterans Michael Myrtetus and Douglas Borthwick. Myrtetus and Borthwick met in 1996 when Douglas joined Morgan Stanley's foreign exchange trading team. At that time Morgan Stanley's FX business had revenues approximating $200 million. Over the 9 years they worked together, the business grew to approximately $1 billion.

"We believe that an actively managed, globally diverse portfolio can adapt and grow with the changing markets," said Douglas Borthwick, Managing Partner. "Our approach draws upon global economic, fundamental, and technical analysis to identify momentum trading opportunities, with the ultimate goal of producing non-correlated risk-adjusted returns."

100 Women in Hedge Funds Award Goes To Kathryn Hall

CEO and CIO of Hall Capital Partners, Kathryn Hall, will be awarded the 100 Women in Hedge Funds 2009 Industry Leadership Award at its New York Gala, on November 18, 2009.

Each year, the organization identifies a woman whose professional talent, business ethic, and passion for investing help define and advance the hedge fund industry's standards of excellence. This year’s theme is Education and net proceeds from the NY Gala will be given to Computers for Youth.

Hall Capital Partners LLC was founded by Hill as Laurel Management Company in 1994, it currently manages more than $17 billion in assets. Hall formerly served as a General Partner of HFS Management Partners (predecessor to Farallon Capital Partners) and an early advisor to hedge fund investors.

"Katie stands out for her long history of working closely with investors to navigate the difficult landscape of hedge fund investing. She has bona fides as both an investor and hedge fund manger, and that experience gives her an especially insightful perspective in the current turbulent market," noted Lauren Malafronte, Director, Barclays Capital and Board member of 100 Women in Hedge Funds Foundation. "Katie has a well-established reputation for communication with investors; her leadership in this area makes her a role model for so many women in the industry.

Past awardees include Sonia Gardner, Avenue Capital; Jane Mendillo, Harvard Management Company; and Anne Dinning, D. E. Shaw group.

13 Jul 2009

Bandon Capital Management Hires Industry Veteran to Lead Intermediary Market Development

Alternative investment management company, Bandon Capital Management, LLC, has hired J. Michael Miller as Managing Director responsible for the development and management of the financial intermediary market.

Miller has over 25 years of experience in building, leading and managing intermediary distribution organizations and has held senior level positions with multiple national firms including Federated Investors Inc., Weiss, Peck & Greer, LLC, mPower/Morningstar and most recently was Managing Director for Concord Wealth Management.

Bandon is focused on delivering the attractive investment characteristics of alternative investing – absolute returns with low correlations – to a wider audience while minimizing or eliminating many of the structural negatives including high minimums, high fees, long lock ups and lack of liquidity and transparency.

Bill Woodruff, Founder and Managing Principal, said “We are delighted to have someone with Mike’s experience and track record joining the firm. We look forward to further expanding our relationships with the financial intermediary community and providing access to non-correlated, absolute return oriented strategies to a market starving for quality solutions”.

Bandon’s flagship strategy DIRS – Directional Interest Rate Strategy – is quickly approaching its 5 year anniversary with historical average net ROR of +7.23% per year, annualized standard deviation of 6.56%, and very low correlation with the major equity indices, as evidenced by a correlation of -.08 to the S&P
500 and -.05 to the Barclays Aggregate from August of 2004 through June 30th of 2009.
Bandon’s strategies are offered in multiple structures with DIRS, the flagship strategy, currently offered as a separately managed account that can be held at most major custodians. A separately managed account is an increasingly attractive structure in light of the recent hedge fund abuses associated with private pooled vehicles.

10 Jul 2009

ALTIN Hedge Fund Group Goes For Full Disclosure

ALTIN, the London and Swiss-listed fund of hedge funds, has released a full disclosure of its underlying investments and weightings. ALTIN has adopted a position of total transparency, and holds one of the world’s longest track records as an exchange-listed fund of hedge funds.

ALTIN has reduced its cash allocation from 14% on 1 March 2009 to 6.3% on 1 July 2009, as part of an active investment programme into hedge funds to benefit from the current investment opportunities. The portfolio, featuring more than 30 underlying funds representing 10 different strategies, is particularly well diversified and boasts a positive performance of +5.18%[1] to date in 2009.

Only approximately 20% of funds held by ALTIN have restricted redemptions of one form or another. This relatively low proportion does not affect ALTIN as, being a fixed-capital investment company, it is not faced with redemption requests.

The portfolio’s great liquidity allows the investment manager to perform a dynamic management and benefit from the current investment opportunities. The manager has thus launched a significant investment programme in the past months.

ALTIN AG was launched in December 1996 and has been listed on the Swiss Stock Exchange since its inception as well as on the London Stock Exchange since 2001. ALTIN is a multi-strategy fund of hedge funds investing in more than 30 hedge funds representing various investment styles. The Company holds one of the world’s longest track records as an exchange-listed fund of hedge funds. Its objective is to generate an absolute annual return in US dollars terms with lower volatility than equity markets.

ALTIN is managed by 3A SA (Alternative Asset Advisors), a management firm specialised in alternative investments and member of the SYZ & CO Group.

3A currently manages more than USD 2.1 billion in hedge fund assets. 3A also provides alternative research and due-diligence services on an additional USD 4 billion in alternative investments.

9 Jul 2009

Hatteras Expands, Launching 2 Mutual/Hedge Fund Strategies

Hatteras Funds has acquired a controlling interest in Alternative Investment Partners, LLC, a Harrison, NY-based provider of open end mutual funds of hedge fund strategies known as AIP Mutual Funds, increasing Hatteras Funds and its affiliated companies’ AUM to approximately $1.6 billion.

The two newly launched mutual funds of hedge fund strategies, the Alpha Hedged Strategies Fund (ALPHX) and the Beta Hedged Strategies Fund (BETAX) provide financial professionals with access to alternatives that have all the client-friendly features of a mutual fund, including daily liquidity, no lock-ups, no accreditation requirement, no performance fees, and 1099-tax reporting. The funds actually have a unique structure that allocates assets to a variety of hedge fund managers who run the capital in a separate account from their hedge fund – so the funds not hold actual shares in a hedge fund. This is how they get around the lock-up and liquidity issues associated with hedge funds.

David B. Perkins, CEO and founder of Hatteras Funds, will become Chief Executive Officer of the company, which will be rebranded under the Hatteras umbrella and operate as the mutual fund division within Hatteras Funds upon investor approval of the transaction. Lee Schultheis, Chief Executive Officer and Chief Investment Strategist of AIP Mutual Funds, will remain with the company as President of this division. Mr. Schultheis, along with Asset Alliance Corporation, an original investor in the company, will continue as significant shareholders.

“AIP Mutual Funds is an ideal fit.” said David B. Perkins, Chief Executive Officer of Hatteras Funds. “AIP Mutual Funds had a stroke of genius when it created the structure of these funds, which allow a wider range of individuals to access alternatives. In a post-Madoff world, these mutual funds of hedge fund strategies are a tool for financial advisors to allocate to alternatives while meeting increasing client demands for liquidity and transparency.”

The mutual funds of hedge funds provide financial professionals with access to alternatives that have all the client-friendly features of a mutual fund, including daily liquidity, no lock-ups, no accreditation requirement, no performance fees, and 1099-tax reporting, the company said.

ALPHX and BETAX may also invest in smaller capitalized companies, foreign securities, securities limited to resale to qualified institutional investors and shares of other investment companies that invest in securities and styles similar to the Funds, resulting in a generally higher investment cost than from investing directly in the underlying shares of these funds. Additional information will be filed with the SEC, the company said.

Alex Akesson

Editor for

Conyers Named Offshore Law Firm of the Year

Hedge fund law firm Conyers Dill & Pearman was named Offshore Law Firm of the Year at 2009 The Lawyer Awards.

According to the judges’ criteria, the award is presented to the firm which demonstrates superior strategic clarity, growth of market share, technical legal excellence and quality of service. Conyers fulfilled each of those categories and the firm was commended for an “outstanding year”.

Christopher Johnson-Gilbert, managing partner of Conyers’ London office, collected the award at the ceremony which was held at Grosvenor House and attended by over 1000 lawyers. Johnson-Gilbert commented: “We are delighted to receive this award, which reflects the hard work of everyone across the firm over the past year in providing the highest quality legal advice on the leading offshore jurisdictions of the Cayman Islands, British Virgin Islands, Bermuda and Mauritius. Our strategic purpose and our balanced business model have seen continued success even in times of global difficulties.”

The past year has been one of significant expansion for Conyers during which it has advised on a number of high profile deals, consolidated its position in relation to the BRIC markets with new offices in Moscow and São Paolo, and the addition of a Mauritius office and a global Mauritius practice. Conyers has also gained market share in the Cayman Islands and British Virgin Islands, and maintained its dominance in the Bermuda market. Conyers continues to expand with new hires, and now numbers nearly 600 staff with over 150 lawyers located in 11 offices worldwide.

8 Jul 2009

Hedge Funds Increase +0.64% In June - Hennessee

Hedge fund investor consultant and adviser, Hennessee Group LLC, today announced some highlights from the first half of 2009 and the month of June, excerpts follow:

“Most hedge fund managers are not buying into the ‘Green Shoots’,” commented Charles Gradante, Co-Founder of Hennessee Group. “While markets rallied sharply in April and May, most managers remained conservative. I think we have reached an inflection point as momentum seems to have faded. We should see a return to stock picking based on fundamentals, which are rather negative. In addition, the technicals are also bad, leading us to believe in a summer correction.”

“Hedge funds have outperformed equity benchmarks by a 10% margin in the first half of 2009,” said Lee Hennessee, Managing Principal of Hennessee Group. “The outperformance is largely due to the ability of hedge funds to profit from their short portfolios, as we saw in January and February. While hedge funds are routinely publicized as high risk vehicles, the reality of the situation is that the average hedge fund has demonstrated significantly less volatility than traditional asset classes for the 22 years we have been advising investors.”

Despite a flat June, the second quarter gain was the strongest quarterly gain since 1998. In June, energy and materials sectors declined as worries mounted that the global economy could experience a drawn out recovery after the World Bank cut the global growth forecast.

Managers remain concerned that the recent rally in the financial markets and resurgence in confidence is built on hope supported by government stimulus rather than a real improvement in fundamentals (i.e., employment and housing).

Long/short equity funds will continue to rely on individual security selection while maintaining low levels of directional exposure as the official second quarter earnings season gets under way with the Alcoa earnings announcement on July 8th. Many managers are overweight technology in long portfolios, the top performing sector for the month and the year, while maintaining short positions in consumer and financial sectors.

Managers have found opportunities in strategic acquisition activity as well as distressed merger and acquisition activity.

After three months of strong gains, emerging markets cooled, declining slightly in June, but are substantially positive year to date. China was one of the few bright spots in June as the equity markets continued to advance. The Hennessee Macro Index declined -1.08% in June (+7.10% YTD).

While May was a record breaking month for commodities, June brought a sharp pull back. Positions in gold, silver, and agricultural commodities all detracted from performance as prices fell. Managers also suffered losses as the U.S. dollar rallied versus most currencies on speculation that the current market rally has ended and reports that the Fed will not expand its purchases of Treasuries. Oil was a positive, up +5.4% in June; although, many believe that prices are being driven by speculation and expect profit taking as oil is up +56.4% thus far this year.

Ex Morgan Stanley Launches Georgia Hedge Fund Advisory Company

Hedge fund and alternative investment advisory company, Tru/Alpha Capital Advisors (TACA), is being launched to specialize in international alternative markets, advising institutional and corporate clients, as well as high-net worth individuals.

Based in Midtown Atlanta, Georgia, TACA is headed by Harvard-graduate and past Morgan Stanley executive Monty Bruell. Mixing its full-scale advisory expertise and network of reputable partners, TACA's team brings years of experience, credentials and proven performance in the alternative and International investment marketplace.

The company is one of few African-American owned wealth and asset management companies in the southeast.

Tru/Alpha's niche in the international and alternative markets offers more focused insight and expertise on strategies such as international equities, international fixed-income, structured notes, commodities and hedge funds among others.

7 Jul 2009

Alternative Investment Draft Directive 'Needs Major Surgery' - Paul Myners

Paul Myners, the UK Financial Services Secretary to the Treasury, speaking at an Alternative Investment Management Association (AIMA) event this morning in London, said, “the UK is not in the business of blocking more stringent regulation, contrary to what some in Europe may say.”

Lord Myners said the UK government’s aim was “a framework which allows efficient, well run and well regulated fund managers to compete for business without restriction across the EU and to make the EU a base from which to compete in global markets.” But he said that the draft directive, “needs major surgery before this can be delivered”.

He also expressed concern about the protectionist impact of the directive and argued that, “to deny institutional investors a global choice of fund manager would come at a direct cost to pension savers and others who rely on the returns from institutional investment funds”. He said of the custody elements of the directive that “imposing strict liability for delegated custodians would impose large capital costs, make investing in some emerging markets impractical and increase costs to investors”. And on the leverage caps within the directive, he argued that “systemic risks posed by the leverage of any one fund can only be assessed in the context of wider market conditions so capping leverage on a fund-by-fund basis cannot be an effective protection”, adding that it could even be counter-productive.

Lord Myners said that the UK government was, “reaching out bilaterally to leverage natural alliances and win over others” in Europe. But he pointed out that managers threatening to quit the UK “will make my job harder” and would not be well received in Europe. And he called on institutional investors to make their voices heard on the directive. He said, “if institutional investors can make clear which regulatory safeguards they want to see applied to their fund managers and which they find to be costly and unnecessary, this will send a powerful message to policymakers”.

The UK Financial Services Secretary to the Treasury concluded by arguing that, “an open single market in fund management must be a major opportunity for Europe and we must all do our bit to ensure we deliver the best possible result for EU investors and for the future of the EU funds industry”.

Hedge Fund Fraudster Faces Up To 10 Years

'Hedge fund operator' Rod Stringer has pleaded guilty to money laundering, in a $14 million Ponzi scheme, federal prosecutors say.

He allegedly took money from 44 victims over 8 years, claiming to be "a day trader and hedge fund operator, although he was not a licensed securities broker," the U.S. Attorney's Office said.

According to the Securities and Exchange Commission, Stringer doled out about half the money from the phoney Texas hedge fund to some victims, but kept $6.9 million for himself.

"He solicited and enticed individuals to invest money with him by making false representations and promises, such as: the return on investors' money would be approximately 50% profit; he was a day trader and had a foolproof system; the return on investors' money would be better than a savings account; the accounts were liquid and investors could withdraw their money anytime; and he had several computers that watched the trend line of stocks automatically and advised him when he should move money in and out of the market," a written statement from prosecutors said.

Stringer faces up to 10 years in prison, a $250,000 fine and restitution. The plea agreement calls for Stringer to forfeit more than $1.5 million.

Dubai Hedge Funds, Commodities Investors Required To Move To JLT Free Zone

Registered Members of Dubai Multi Commodities Centre (DMCC), have been asked to join the commodities community at Jumeirah Lakes Towers (JLT). All member companies, including those awaiting membership approvals, will be brought together to form a physical commodities cluster within the 200-acre JLT free zone community.

According to the announcement, DMCC member companies, which until now have been operating from locations across Dubai, will now be required to relocate to the JLT free zone on completion of the first year of operations. The renewal of licences for existing members currently operating outside the free zone will be linked to their relocation to JLT.

Commenting on the new initiative, Sudhakar Tomar, Managing Director, HAKAN AGRO DMCC, a DMCCA member company, said: “We consider this a wise move. Operating from the JLT Zone as a community will streamline commodities trading activity in Dubai. The free zone advantages and the state-of-the-art facilities are sure to provide a competitive edge to companies.”

(DMCC members have access to the Almas Gold and Diamond vaults, market infrastructure and trading platforms like the Dubai Gold and Commodities Exchange, Dubai Diamond Exchange, Dubai Pearl Exchange, Dubai tea Trading Centre and Dubai Cotton Centre, and a range of commodities backed financial investment tools including Shariah compliant hedge funds and Dubai Gold Securities.)

The move is also in response to the impressive rise in the number of registrations at DMCC and JLT, following the progress in the free zone’s development and the increasing interest from investors to set up offices, DMCCA said.

DMCCA is also working closely with the sub-developers of the Jumeirah Lake Towers project to ensure that the towers and office facilities are completed on schedule, which will help companies finalise their relocation strategy.

6 Jul 2009

State Street Report Examines Hedge Fund Industry Challenges - Preview

State Street Corporation released two papers on alternative investments as part of its Vision series of thought-leadership reports. The papers examine two key components of alternative investments, hedge funds and private equity, and their future prospects amid the global economic downturn.

While both industries have been hard-hit by the financial crisis, they will likely adapt to the changed investment environment and continue to provide significant long-term opportunities for institutional investors, State Street says.

“With so much debate within these sectors as complexity has heightened over the past year, we want to help identify the actual market conditions and trends that will determine the future of hedge funds and private equity,” said Jack Klinck, executive vice president and global head of State Street’s Alternative Investment Solutions team. “The research and insights presented in these reports will help institutional investors as they make their investing decisions.”

“New Views of the Hedge Fund Industry” cites two major trends affecting the industry: a migration to third-party administration and custody services and increased regulatory oversight. While hedge fund redemptions are expected to continue through 2009, according to the report, “anecdotal evidence suggests that investors are starting to regain confidence.”

“The hedge fund industry will emerge from the financial crisis – smaller, in terms of the number of funds, but eventually larger in terms of assets under management,” the report states.

State Street’s second Vision paper, “Private Equity at the Cross Roads,” notes that although the industry is currently under pressure from the financial crisis and recession, “many believe that private equity is about to enter a new phase of more sustainable growth. Over the long-term, investors and governments will look to private equity for its significant capital resources, management expertise, and high risk tolerance to help restore economic strength as impaired assets are wound down and fresh investments are required for new and expanding businesses.”

With approximately $252 billion in hedge fund assets as of March 31, 2009, State Street provides a complete set of servicing and management solutions for hedge funds, including recordkeeping, fund accounting, valuation, risk management and regulatory reporting.

2 Jul 2009

Viathon Capital Launches New Credit Hedge Fund

Viathon Capital, LP has officially launched the Whitewater Master Fund, LP, a credit opportunity fund focused on non-correlated absolute returns.

Employing a fundamental, credit-intensive research process in order to identify long and short investment opportunities in the United States and Europe, the hedge fund’s objective is to seek long term capital appreciation by investing in high yield and investment grade corporate bonds and bank debt.

As part of this launch, Viathon Capital has affiliates of Citigroup Alternative Investments, LLC (CAI) as its seed investor in this new fund. The fund launched in May of 2009 with $50 million in capital and had a net return of +0.92 % for the month of May and estimates +2.10% for June bringing it’s inception to date return to approximately +3.02%.

Viathon Capital's team includes four investment professionals and two
trade support/back office personnel with backgrounds from Marathon Asset Management,
Goldman Sachs, Merrill Lynch, Neuberger Berman, SAC/Sigma, Providence Investment
Management and Lehman Brothers.

Swiss Hedge Fund Manager's Indice Tops Charts

Hedge fund performance specialist Alternative-Index Ltd., fully owned by hedge fund manager, Salus Alpha Group AG, reported that the Relative Value Index (RVX) is the top performing Alternative Investment Indices (AI-Index) in June 2009 with a month-to-date performance of +0.52% listed on the Vienna Stock Exchange.

The RVX outperformed the German equity index for the month to date by +1.49%.

The Relative Value Index is an investable benchmark of the performance of the Alternative Investment Sub-Strategies Fixed Income Arbitrage, Long/Short Credit and Convertible Bond Arbitrage.

The Alternative Investment Indices target to offer investors an unbiased reference of the performance of alternative asset classes. Daily index prices are calculated by the Vienna Stock Exchange, and are also available via Reuters, Bloomberg and other data terminals.

Salus Alpha Group AG is a Swiss Alternative Investment expert and manages capital for institutional clients and High Net Worth Individuals since 2002. The Group was the first Asset Manager worldwide to introduce a synthetic fund of hedge funds as a UCITS fund in 2003.

1 Jul 2009

Brummer & Partners Asia Hedge Fund Launch

Swedish hedge fund manager, Brummer & Partners, is expanding its offering of hedge funds by launching Karakoram, a new long-short Asia fund today.

The Fund will take both long and short positions in liquid equities on Asian markets such as Hong Kong, China, India, South Korea, Taiwan and Singapore. The Fund will base its positions on fundamental equity research, complemented with transaction-focused macroeconomic-analysis.

The new Fund’s aim is to consistently deliver a positive return for its unitholders, regardless of stock market performance in general, with a better risk-adjusted return than that of traditional equity portfolios.

Domiciled in Singapore, Ee Toh Chia is the Managing Director and a Partner of the Fund management company and is responsible for the management team. Ee Toh has 15 years of experience from Asian capital markets and has been involved in the management of the Zenit Fund’s Asian holdings since January 2008.

Karakoram has approximately SEK 300 million ($39 milllion) in assets under management. As Karakoram is a Bermuda-based fund a minimum investment of one million kronor ($131,000) is required. Brummer Multi-Strategy will initially invest a small proportion of its fund capital in the Karakoram Fund.

Hedge Fund Survey On Obama Regulations

A survey by RSM McGladrey, a financial services consultancy, found that hedge fund managers are surprisingly ready to work with SEC regulators to cooperate with authority, despite wide-spread wariness about over-excessive regulation from the Obama administration.

However, the Obama financial regulatory plan was a top concern with 75%, fearing that further regulation will go too far and stifle the market’s recovery.

The survey polled more than 100 hedge fund managers during the last month and focused on hedge fund industry sentiment toward the Obama administration regulation.

Nearly half of the respondents (42%) thought that the SEC should be given more regulatory authority than it currently has. Slightly less (37%) felt that the hedge fund industry should be subject to more direct regulatory authority.

Fund managers are also optimistic about the industry’s prospects, according to the survey. 60% believe the current environment provides more investment opportunities than challenges. An overwhelming majority (69%) see the U.S. economy returning to positive growth by Q2 2010.

Hedge fund managers' opinion on the Public Private Investment Program (PPIP), showed nearly 80% of fund managers believe there can be a successful market for toxic assets, such as underwater mortgage backed securities. However, only 33% of the funds speculated that they would be at all interested in purchasing these securities in the future, raising some concerns about the level of private investor participation.

The full report is available for download on the RSM McGladrey Web site.

UCITS Fund Launch By FX Concepts

New York-based currency manager FX Concepts is launching a new Luxembourg-domiciled fund investing in its flagship Global Currency Program (GCP). The fund has been set up in conjunction with Deutsche Bank.

“Investor interest in active currency strategies has been very strong this year, and we’re delighted to make our Global Currency Program available to investors in UCITS format” said John R. Taylor, Chairman and CEO of FX Concepts. The new fund offers daily liquidity and has a €25,000 minimum ($35,000). Investments are fully collateralized and ring-fenced in accordance with the UCITS III directive. The fund will offer share classes in Euro, US Dollars, Sterling and Yen.

“In the current financial climate, investors are looking for strategies which offer maximum liquidity and transparency”, says Daniel Szor, Managing Director and head of FX Concepts’ London office. “FX fits these criteria very well, and now clients can participate through a fund which offers daily liquidity and minimized counterparty risk”.

The Global Currency Program invests in a diversified portfolio of 20-25 currency positions chosen from a universe of over 30 currencies. The program targets annualized returns of 10-15% with low volatility and has a track record of over eight years.