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22 Jan 2009

Novices Given $1 Million to Start a Hedge Fund on TV

Avanta is making its UK television debut with Million Dollar Traders on BBC2. Aired for 3 weeks in January, the series will play out at Avanta's Austin Friars business centre in London.

The program gives eight ordinary people a million dollars and two weeks of intensive training to help prepare them to launch their own hedge fund and try to make their fortune in the stocks and shares market.

The traders set up camp in one of the buildings grade A office suites, buying and selling in the stock market in an attempt to make their millions.

Avanta was formed in 2004 by David Alberto, previously with Regus and former Managing Director at MWB Business Exchange. The company offers unbranded office space with advanced and competitively priced technology. In the UK it currently manages over 670,000 sq ft of office space in prime locations in London, the Thames Valley, Manchester, Birmingham and Edinburgh. Avanta’s first international business centre in New Delhi, India opened in September 2008 and a further two centres are now open in Mumbai.

Fidelity Launches Indian Fund of Hedge Funds

Fidelity International is launching the Fidelity Wealth Builder Fund through it's Indian asset management arm, the new fund is an open ended fund of funds scheme offering asset allocation options with three plans.

The investment objective of the fund is to seek to generate reasonable returns based on the plan selected with minimum and maximum asset allocation between debt and equity. The fund manager will use a two-tier investment approach – asset allocation and fund selection – to invest in Fidelity’s funds. The NFO will be open from January 14 to February 5, 2009. The Fund will open for ongoing purchases and redemptions from March 2, 2009

“Asset allocation decisions can drive as much as 91.5% of investment returns variability, as studies have shown." Ashu Suyash, Managing Director and Country Head - India, Fidelity International, said, "In the current market conditions of heightened volatility, a fund like the Fidelity Wealth Builder Fund provides investors a convenient route to benefit from disciplined asset allocation. We are in an environment where attractive returns are likely in the bond market and there is potential for bear-market rallies in equities on the back of increasingly attractive valuations.”

Ms. Suyash added, “To encourage investors who have turned risk averse, the Fidelity Wealth Builder Fund is a fund with no entry load. Whether investors invest through their advisers or directly, they will not be charged an entry load. Moreover, the Fund also offers investors free switch-in and switch-out facility between the Plans, if, over time, investors’ outlook for debt and equity changes.”

The Fund will offer Growth and Dividend options. A dividend is proposed to be declared, subject to availability of distributable surplus, on a Quarterly basis under Plan A and Plan B. Under Plan C, the dividend may be declared by the Trustee, at its discretion, from time to time subject to the availability of distributable surplus.

The minimum initial investment is Rs.5000.($100K )Investors can invest in the Fidelity Wealth Builder Fund even through the SIP route with a minimum amount of Rs. 500 per installment with the total of all installments not being less than Rs.5000. In addition, the systematic transfer and systematic withdrawal plans are also available.

FIL Fund Management Private Limited is the Indian arm of Fidelity International, one of the world's leading global investment management companies with operations in 23 countries and more than $197.9 billion in assets under management.

Morningstar Reviews 2008's Losses and Gains

In their summary of hedge fund performance for the fourth quarter and full year of 2008 as well as asset flows through November, Morningstar reported that 2008's low returns wiped out the last two years gains.

Investors lost their appetite for hedge funds in 2008, Morningstar says, as the vehicles intended to deliver absolute returns were forced to resort to relative claims of success.

"In 2008, hedge fund managers generally failed to deliver," said Morningstar Hedge Fund Analyst Nadia Papagiannis. "The average hedge fund may have lost less than the stock market, thanks in part to large cash allocations, but this level of performance was not why investors agreed to pay 2% management fees and 20% performance fees."

Hedge fund inflows peaked in June 2007 and bottomed in October 2008, when more than $21 billion left the industry. In November 2008, another $19.4 billion flowed out of hedge funds, setting the year-to-date outflows at more than $44 billion.

The number of funds dropping out of Morningstar`s database increased more than 150% in 2008 from 2007—1,158 single-manager funds and 490 funds of funds were removed in 2008 compared to 434 single-manager funds and 208 funds of funds in 2007. (Funds are removed from Morningstar’s database if the fund liquidates, if the manager wishes to stop reporting returns, or if funds fail to report returns for six months.)

Emerging market equities proved to be the worst strategy in 2008, along with convertible arbitrage funds, which took a big hit in 2008.

The best-performing strategy this year was global trend following, a systematic strategy that tracks price trends in liquid derivatives such as futures, options, and currency forwards.

Morningstar has approximately 8,400 hedge funds and funds of hedge funds in its database.