HedgeCo News - International hedge fund advisory firm, Rothstein Kass, released a survey report "A Call to Action" on key trends impacting the fund of funds sector. Findings suggest that the hedge fund industry expects intense competition for investment capital as firms work to enhance transparency.
Nearly half of survey respondents indicated that they anticipate increased competition from single-manager vehicles, and over 45 percent expect greater competition from institutional investors replicating fund of funds. As the sector confronts this challenge, 60 percent of fund of funds are providing greater transparency to investors in response to market conditions.
"The growth of the fund of funds sector was propelled by its ability to offer portfolio diversification, superior results consistent with specific risk profiles and to some extent, peace of mind. Though investor resolve was shaken by market events and high-profile incidents of malfeasance, the fund of funds industry was sustained by an institutional investment community that recognized that the fundamental benefits were unchanged by short-term market volatility," said Howard Altman, Co-CEO and Co-Managing Principal of Rothstein Kass.
"As they seek to raise new capital, however, fund of funds managers are finding that institutional investors are placing a greater emphasis on due diligence processes. By continuing to act institutional themselves, fund of funds can provide a window into their operating environment to restore investor confidence and effectively compete with single manager vehicles and fund of funds replication strategies that are more aggressively pursuing institutional assets."
Results were based on online and telephone interviews with 103 fund of fund managers and executives representing a total of 93 companies and 294 funds.
Rothstein Kass commissioned market research firm Infosurv to conduct the research to gain insight into the trends shaping the fund of funds space and the outlook for the future. 34 percent of participants' underlying funds reported assets under management under $50 million, with 36 percent reporting assets under management between $50 and $150 million. 19 percent of survey respondents indicated assets under management between $150 and $500 million, with the balance, 11 percent reporting assets under management over $500 million. Survey participation included but was not limited to Rothstein Kass clients.
Notable findings include:
-- 60 percent of respondents indicated that they are providing increased
transparency in response to market conditions
-- 58 percent of survey participants would consider lowering fees in
exchange for longer investment lock-up periods
-- 34 percent of fund of funds are providing increased liquidity in
response to market conditions
-- 47 percent of respondents suggested that of existing service
providers, they would be most likely to review or change their fund
administrator relationship this year
-- 25 percent of participants indicated that they would be most likely to
review or change their custodian, with 28 percent most likely to
review or change their auditor or legal counsel
"The institutional investment community's trust in the alternative investment sector has not been shattered, but it's fair to say it has been rattled. As they work to thoroughly address the market-driven demand for greater transparency, for many fund of funds, the dynamics of the relationship have changed," said Jeff Kollin, a Director in the Financial Services practice of the Rothstein Kass Business Advisory Services Group. "Fund of fund managers also understand that they will be judged, to a greater extent, on the quality of professional relationships. As a result alignment with reputable third-parties has become a key differentiator in the marketing of these investment vehicles."
28 May 2010
Hedge Fund Adviser & Politician Charged in Fraud Case
HedgeCo News - Hedge fund adviser Kenneth Starr has been charged with investment fraud in an alleged $30 million scheme in which Andrew Stein, a former New York City politician, has also been described as an "associate", the Wall Street Journal reports.
Starr, who has advised Wesley Snipes and Goldie Hawn, was named in a criminal complaint filed by federal prosecutors, allegedly using his access to hedge funds and celebrities, to "burnish an image of trustworthiness", according to the Journal.
"The criminal complaint didn't name the alleged victims, but described them as an unnamed hedge fund manager and well-known philanthropist, an actress, a former executive of a talent agency, an elderly heiress and a jeweler who is a convicted felon." The paper reported.
The SEC said Starr provided investment adviser services to more than 30 high net worth individuals and has AUM over $700 million.
Starr remains detained while Stein, who is accused of making false statements to the IRS, was released on a $250,000 bond.
Starr, who has advised Wesley Snipes and Goldie Hawn, was named in a criminal complaint filed by federal prosecutors, allegedly using his access to hedge funds and celebrities, to "burnish an image of trustworthiness", according to the Journal.
"The criminal complaint didn't name the alleged victims, but described them as an unnamed hedge fund manager and well-known philanthropist, an actress, a former executive of a talent agency, an elderly heiress and a jeweler who is a convicted felon." The paper reported.
The SEC said Starr provided investment adviser services to more than 30 high net worth individuals and has AUM over $700 million.
Starr remains detained while Stein, who is accused of making false statements to the IRS, was released on a $250,000 bond.
26 May 2010
Comada Partners with Custom House to Deliver Online Transaction Tracking Platform for Hedge Fund Investors
HedgeCo News - Transaction technology developer Comada today announced that it has partnered with hedge fund administrator Custom House to launch a new platform for fund managers and their investors. Launched this week, the platform allows investors in hedge funds administered by Custom House to invest, track and receive investment and redemption confirmations electronically. Most importantly, it achieves this via browser-based architecture that precludes the need to download software to a desktop computer, seamlessly integrating with, and extending in-house legacy technology.
"The hedge fund industry has needed an application like this for some time now," said Rupert Vaughan Williams, Co-Founder of Comada. "We are delighted to be working with Custom House who are committed to best of breed technology. This platform significantly raises the bar for hedge fund investing. Users of this technology can now rely on robust infrastructure that electronically processes and reconciles transactions from a single reference point. It is specifically designed to minimise the operational risks of the day to day management of portfolios of alternative investments."
Comada specialises in designing and delivering transaction-based solutions for the managed assets industry, particularly hedge funds. Its core management team has been working together in the industry for almost two decades. It provides both bespoke and off-the-shelf solutions for hedge fund managers and their clients. Comada partnered with Custom House to deliver an advanced platform that would further integrate investors into the investment cycle and help reduce operational risk.
Dermot Butler, Chairman of hedge fund administrator Custom House commented: "We wanted to deliver a service to our customers which they could rely on. It is now possible for both managers and investors to track the progress of investments and redemptions electronically, real time, 24 hours a day. Thanks to our partnership with Comada, we believe we are the first hedge fund administrator to be able to offer this particular kind of service."
Custom House is responsible for the administration of more than $40 billion in hedge fund assets globally, across a range of different investment strategies. It has established its credentials as being a first mover and innovator in the arena of hedge fund administration.
"The hedge fund industry has needed an application like this for some time now," said Rupert Vaughan Williams, Co-Founder of Comada. "We are delighted to be working with Custom House who are committed to best of breed technology. This platform significantly raises the bar for hedge fund investing. Users of this technology can now rely on robust infrastructure that electronically processes and reconciles transactions from a single reference point. It is specifically designed to minimise the operational risks of the day to day management of portfolios of alternative investments."
Comada specialises in designing and delivering transaction-based solutions for the managed assets industry, particularly hedge funds. Its core management team has been working together in the industry for almost two decades. It provides both bespoke and off-the-shelf solutions for hedge fund managers and their clients. Comada partnered with Custom House to deliver an advanced platform that would further integrate investors into the investment cycle and help reduce operational risk.
Dermot Butler, Chairman of hedge fund administrator Custom House commented: "We wanted to deliver a service to our customers which they could rely on. It is now possible for both managers and investors to track the progress of investments and redemptions electronically, real time, 24 hours a day. Thanks to our partnership with Comada, we believe we are the first hedge fund administrator to be able to offer this particular kind of service."
Custom House is responsible for the administration of more than $40 billion in hedge fund assets globally, across a range of different investment strategies. It has established its credentials as being a first mover and innovator in the arena of hedge fund administration.
24 May 2010
Silk Invest To Launch Fronteir Fund Including Pakistan Reigon
HedgeCo News - Specialist asset management boutique Silk Invest has announced the launch of a new UCITS III frontier fund, The Silk Road Equities fund, which will invest in Africa, the Middle East and the Caucasus and Caspian region. The fund is to be launched later this year, according to hedge fund industry magazine, FundStrategy.
These regions have traditionally been shunned by emerging market funds as being too illiquid. "We have handled such illiquidity in the past with the award winning Silk Road Fixed Income fund, which covers the same geographies." Silk Invest said.
"Pakistan is the 27th largest economy in the world and still classified as a frontier market." Daniel Broby, the chief investment officer said. "Investment in the Caucasus and Caspian region have tended to focus on the oil and gas resources of the region. We, however, are focused on the opportunity afforded by the strong growth of the consumer."
The fund will have both institutional and retail share classes and will charge a 20% performance fee above a hurdle rate of 8%.
These regions have traditionally been shunned by emerging market funds as being too illiquid. "We have handled such illiquidity in the past with the award winning Silk Road Fixed Income fund, which covers the same geographies." Silk Invest said.
"Pakistan is the 27th largest economy in the world and still classified as a frontier market." Daniel Broby, the chief investment officer said. "Investment in the Caucasus and Caspian region have tended to focus on the oil and gas resources of the region. We, however, are focused on the opportunity afforded by the strong growth of the consumer."
The fund will have both institutional and retail share classes and will charge a 20% performance fee above a hurdle rate of 8%.
2 Year Sentence In Hedge Fund Fraud Case
HedgeCo News - Wall Street Journal reports that Mark Kurland, former partner at hedge fund New Castle Funds LLC was sentenced to over two years in prison. Kurland pled guilty to insider trading in January with connections to the Galleon/Rajaratnam case.
The insider trading case involves the employees of some of America’s best-known companies, including International Business Machines Corp, McKinsey & Co and Intel Capital, an arm of Intel Corp, and Danielle Chiesi, an executive at New Castle Funds LLC was also indicted on multiple counts of conspiracy and securities fraud.
At a hearing Friday, Judge Victor Marrero said, "He had a choice. As a leader of the financial industry, he could have led by law-abiding example. Instead, he chose to follow," the judge also said, according to WSJ, that Kurland surrendered "to a spree of the financial market's virtual mob mentality that nearly brought down this country's financial industry in the quest for ever bigger and faster gains."
The judge als ordered a forfeit of $900,000 in proceeds from the alleged scheme the Journal reported.
Kurland reports to prison on July 23.
The insider trading case involves the employees of some of America’s best-known companies, including International Business Machines Corp, McKinsey & Co and Intel Capital, an arm of Intel Corp, and Danielle Chiesi, an executive at New Castle Funds LLC was also indicted on multiple counts of conspiracy and securities fraud.
At a hearing Friday, Judge Victor Marrero said, "He had a choice. As a leader of the financial industry, he could have led by law-abiding example. Instead, he chose to follow," the judge also said, according to WSJ, that Kurland surrendered "to a spree of the financial market's virtual mob mentality that nearly brought down this country's financial industry in the quest for ever bigger and faster gains."
The judge als ordered a forfeit of $900,000 in proceeds from the alleged scheme the Journal reported.
Kurland reports to prison on July 23.
19 May 2010
Hedge Fund Industry Review: May 2010
HedgeCo News - North American hedge funds' assets under management crossed the $1 trillion mark for the first time since November 2008, the May 2010 Eurekahedge Report announced.
Global hedge funds' assets also exceeded the $1.5 trillion mark and are on track to surpass $1.75 trillion by year-end and distressed debt hedge funds saw 13th consecutive month of positive returns, up 50.34% since March 2009 the report said.
Japanese hedge funds gained 2.99% in the month and 7.23% YTD – the best April YTD returns since 2004. Winners of the Asian Hedge Fund Awards 2010 will be published on Eurekahedge, Friday, 21st May 2010.
The report details analyses and insights into the state of the hedge fund industry in recent months up to April through a comprehensive qualitative and quantitative presentation of the industry’s asset flows and performance, with a special feature on key trends in funds of hedge funds.
Global hedge funds' assets also exceeded the $1.5 trillion mark and are on track to surpass $1.75 trillion by year-end and distressed debt hedge funds saw 13th consecutive month of positive returns, up 50.34% since March 2009 the report said.
Japanese hedge funds gained 2.99% in the month and 7.23% YTD – the best April YTD returns since 2004. Winners of the Asian Hedge Fund Awards 2010 will be published on Eurekahedge, Friday, 21st May 2010.
The report details analyses and insights into the state of the hedge fund industry in recent months up to April through a comprehensive qualitative and quantitative presentation of the industry’s asset flows and performance, with a special feature on key trends in funds of hedge funds.
Hedge Fund Lawyers: SEC Proposes Stock-by-Stock Circuit Breaker Rule
HedgeCo News - The SEC is filing proposed rules under which they would pause trading in certain individual stocks if the price moves 10% or more in a five-minute period, according to hedge fund law firm Pillsbury Investment Funds.
In consultation with FINRA, the SEC wants to set uniform market-wide standards for individual securities in the S&P 500 Index that experience a rapid price movement, the attorneys said.
These proposed rules reflect a consensus that was achieved among the exchanges and FINRA after SEC Chairman Mary Schapiro convened a meeting of exchange leaders and FINRA at the SEC early last week. That meeting took place after the market dropped significantly and after approximately 30 S&P 500 Index stocks fell at least 10 percent in a five-minute period.
"The market disruption of May 6 was exacerbated by disparate trading rules and conventions across the exchanges, and that it is important that all the exchanges quickly reach a consensus on a set of uniform circuit breakers that would be triggered when needed." Chairman Schapiro said.
Under the proposed rules, which are subject to SEC approval following the completion of the comment period, trading in a stock would pause across U.S. equity markets for a five-minute period in the event that the stock experiences a 10 percent change in price over the preceding five minutes. The pause would give the markets the opportunity to attract new trading interest in an affected stock, establish a reasonable market price, and resume trading in a fair and orderly fashion. Initially, these new rules would be in effect on a pilot basis through Dec. 10, 2010.
The markets will use the pilot period to make appropriate adjustments to the parameters or operation of the circuit breaker as warranted based on their experience, and to expand the scope to securities beyond the S&P 500 (including ETFs) as soon as practicable.
The SEC intends to promptly publish the proposed rules for a 10-day public comment period, and determine whether to approve them shortly thereafter.
During the pilot period, Chairman Schapiro has asked the SEC staff to consider ways to address the risks of market orders and their potential to contribute to sudden price moves, as well as to consider steps to deter or prohibit the use by market makers of "stub" quotes, which are not intended to indicate actual trading interest.
The staff will study the impact of other trading protocols at the exchanges, including the use of trading pauses and self-help rules. The SEC staff also will continue to work with the exchanges and FINRA to improve the process for breaking erroneous trades, by assuring speed and consistency across markets.
"The SEC staff is working with the markets to consider recalibrating market-wide circuit breakers currently on the books — none of which were triggered on May 6. These circuit breakers apply across all equity trading venues and the futures markets," the Pillsbury Investment Funds attorneys concluded.
In consultation with FINRA, the SEC wants to set uniform market-wide standards for individual securities in the S&P 500 Index that experience a rapid price movement, the attorneys said.
These proposed rules reflect a consensus that was achieved among the exchanges and FINRA after SEC Chairman Mary Schapiro convened a meeting of exchange leaders and FINRA at the SEC early last week. That meeting took place after the market dropped significantly and after approximately 30 S&P 500 Index stocks fell at least 10 percent in a five-minute period.
"The market disruption of May 6 was exacerbated by disparate trading rules and conventions across the exchanges, and that it is important that all the exchanges quickly reach a consensus on a set of uniform circuit breakers that would be triggered when needed." Chairman Schapiro said.
Under the proposed rules, which are subject to SEC approval following the completion of the comment period, trading in a stock would pause across U.S. equity markets for a five-minute period in the event that the stock experiences a 10 percent change in price over the preceding five minutes. The pause would give the markets the opportunity to attract new trading interest in an affected stock, establish a reasonable market price, and resume trading in a fair and orderly fashion. Initially, these new rules would be in effect on a pilot basis through Dec. 10, 2010.
The markets will use the pilot period to make appropriate adjustments to the parameters or operation of the circuit breaker as warranted based on their experience, and to expand the scope to securities beyond the S&P 500 (including ETFs) as soon as practicable.
The SEC intends to promptly publish the proposed rules for a 10-day public comment period, and determine whether to approve them shortly thereafter.
During the pilot period, Chairman Schapiro has asked the SEC staff to consider ways to address the risks of market orders and their potential to contribute to sudden price moves, as well as to consider steps to deter or prohibit the use by market makers of "stub" quotes, which are not intended to indicate actual trading interest.
The staff will study the impact of other trading protocols at the exchanges, including the use of trading pauses and self-help rules. The SEC staff also will continue to work with the exchanges and FINRA to improve the process for breaking erroneous trades, by assuring speed and consistency across markets.
"The SEC staff is working with the markets to consider recalibrating market-wide circuit breakers currently on the books — none of which were triggered on May 6. These circuit breakers apply across all equity trading venues and the futures markets," the Pillsbury Investment Funds attorneys concluded.
18 May 2010
Hedge Fund Launch: QQP's Global Equity Strategies Fund
HedgeCo News - Luxembourg based Global Equity Strategies Fund (QQP) has launched operations today May 18th, 2010.
The new global long-short equity fund, has a member of the Hedge Fund Association (AIMA), TQ Capital Partners Limited (TQCP) as its investment advisor. The hedge fund
aims to achieve superior risk adjusted returns through a systematic investment strategy.
QQP is a Specialised Investment Fund (SIF) incorporated in Luxembourg as a SICAV and administered by Pictet & Cie (Europe) S.A. QQP is an open-end long-short equity investment fund authorised and regulated by the Luxembourg Commission de Surveillance du Secteur Financier (CSSF).
"We are proud to advise QQP on investment strategies which aim to generate superior risk-adjusted returns and to assist in creating a leading investment fund." The managing partners of TQCP stated.
TQCP is a London based long-short equity fund advisor authorised and regulated by the UK Financial Services Authority (FSA). TQCP has a global investment approach, combining top-down macro-economic analysis with bottom-up investment principles. A combination of quantitative and qualitative risk-management measures is applied to protect invested funds.
The new global long-short equity fund, has a member of the Hedge Fund Association (AIMA), TQ Capital Partners Limited (TQCP) as its investment advisor. The hedge fund
aims to achieve superior risk adjusted returns through a systematic investment strategy.
QQP is a Specialised Investment Fund (SIF) incorporated in Luxembourg as a SICAV and administered by Pictet & Cie (Europe) S.A. QQP is an open-end long-short equity investment fund authorised and regulated by the Luxembourg Commission de Surveillance du Secteur Financier (CSSF).
"We are proud to advise QQP on investment strategies which aim to generate superior risk-adjusted returns and to assist in creating a leading investment fund." The managing partners of TQCP stated.
TQCP is a London based long-short equity fund advisor authorised and regulated by the UK Financial Services Authority (FSA). TQCP has a global investment approach, combining top-down macro-economic analysis with bottom-up investment principles. A combination of quantitative and qualitative risk-management measures is applied to protect invested funds.
Chicago Hedge Fund Manager Showcase
HedgeCo.net - "We are very excited about the turnout for our Chicago Manager Showcase." Evan Rapoport, Co-Founder of HedgeCo Networks said, "We had a nice mix of high net worth investors, family offices, fund of funds and institutions."
Each manager had five minutes to introduce themselves to the entire room, before breaking down into smaller groups. The interaction between the hedge fund managers and guests was successful and both parties seemed to be totally engaged.
The keynote speaker, Rob Stein, gave a dissertation on the current climate of the economy. Other speakers at the event included Steve Hall from Lattice Capital Management, Lonny Bernath from Headline Capital Management, Kevin Lennil from Exagroup, Bruce Bernstein from Rockmore Capital Management, and Kurt Hovan from Hovan Capital Management.
After the presentations, hedge fund managers, hosts and speakers mingled during a networking hour. Enjoying excellent food and an open bar, the social aspect of the event lasted longer than planned.
"There ended up being an 11 to 1 ratio of investors to fund managers, this is something you just don't see at other similar conferences. Our managers also really seemed to enjoy sitting down face to face with small groups of investors, rather than presenting to the whole room at once." Rapoport said.
Each manager had five minutes to introduce themselves to the entire room, before breaking down into smaller groups. The interaction between the hedge fund managers and guests was successful and both parties seemed to be totally engaged.
The keynote speaker, Rob Stein, gave a dissertation on the current climate of the economy. Other speakers at the event included Steve Hall from Lattice Capital Management, Lonny Bernath from Headline Capital Management, Kevin Lennil from Exagroup, Bruce Bernstein from Rockmore Capital Management, and Kurt Hovan from Hovan Capital Management.
After the presentations, hedge fund managers, hosts and speakers mingled during a networking hour. Enjoying excellent food and an open bar, the social aspect of the event lasted longer than planned.
"There ended up being an 11 to 1 ratio of investors to fund managers, this is something you just don't see at other similar conferences. Our managers also really seemed to enjoy sitting down face to face with small groups of investors, rather than presenting to the whole room at once." Rapoport said.
17 May 2010
IMC Expands Investment Grade Credit Team
HedgeCo - Specialist asset management company, IMC asset management, announced the hiring of a team of four senior investment professionals, and the launch of investment grade corporate capability platform.
The investment grade platform consisting of a long/short and a long-only capability, it will be formally launched and open to clients on 1st June 2010.
The team joins from Lombard Odier Darier Hentsch (LODH). Rodrigo Araya, who joins IMCam as Head of Investment Grade Credit Strategies, was responsible for the entire fixed income business at LODH while continuing to directly head the credit business.
The other team members joining are Oscar Jansen (who joins as Senior Portfolio Manager), Robert Manning (Head of Investment Grade Credit analysis) and Henk Wiersma (Senior Investment Grade Credit Analyst), who were running several high performing credit mandates and funds at LODH.
“The addition of this highly experienced and successful team will significantly expand the scope of asset management credit strategies delivered by IMCam to our institutional and HNWI client base." Sander Nieuwland, CEO of IMCam commented, "We are delighted to welcome such high quality individuals, with a very strong nine year track record, and a shared vision of excellence. We believe credit is an important area of opportunity for investors and in these turbulent markets there is a greater need for talent and experience than ever."
IMCam, part of the IMC Group, established in 1998, is a specialist asset manager of European and US credit products, including distressed debt and asset-backed securities.
Other recent key hires which reinforce IMCam’s ambitious growth plans and expansion into new business areas include W. Gregory Drennen – Head of US Structured Debt (ex Clinton Group, Goldman Sachs and Citigroup), Jan-Hein Cremers – Head of Behavioural Quantitative Management (FDO Partners and State Street) and Vivina Berla – MD Business Development and Investor Relations (ex Merrill Lynch and Gartmore)
The investment grade platform consisting of a long/short and a long-only capability, it will be formally launched and open to clients on 1st June 2010.
The team joins from Lombard Odier Darier Hentsch (LODH). Rodrigo Araya, who joins IMCam as Head of Investment Grade Credit Strategies, was responsible for the entire fixed income business at LODH while continuing to directly head the credit business.
The other team members joining are Oscar Jansen (who joins as Senior Portfolio Manager), Robert Manning (Head of Investment Grade Credit analysis) and Henk Wiersma (Senior Investment Grade Credit Analyst), who were running several high performing credit mandates and funds at LODH.
“The addition of this highly experienced and successful team will significantly expand the scope of asset management credit strategies delivered by IMCam to our institutional and HNWI client base." Sander Nieuwland, CEO of IMCam commented, "We are delighted to welcome such high quality individuals, with a very strong nine year track record, and a shared vision of excellence. We believe credit is an important area of opportunity for investors and in these turbulent markets there is a greater need for talent and experience than ever."
IMCam, part of the IMC Group, established in 1998, is a specialist asset manager of European and US credit products, including distressed debt and asset-backed securities.
Other recent key hires which reinforce IMCam’s ambitious growth plans and expansion into new business areas include W. Gregory Drennen – Head of US Structured Debt (ex Clinton Group, Goldman Sachs and Citigroup), Jan-Hein Cremers – Head of Behavioural Quantitative Management (FDO Partners and State Street) and Vivina Berla – MD Business Development and Investor Relations (ex Merrill Lynch and Gartmore)
Man Merger Launches $63 Billion Hedge Fund
HedgeCo News - Hedge fund giant Man Group has created a hedge fund managing $63 billion after acquiring rival $23.7 billion hedge fund GLG Partners in a $1.6 billion in deal.
“I am delighted to announce Man's proposed acquisition of GLG to create a diversified, world-leading alternative investment manager with $63 billion in funds under management." Jon Aisbitt, Chairman of Man, said, "It is central to Man's stated strategy of acquiring high quality discretionary investment management capability to broaden our range of diversified, liquid strategies for the benefit of our investors."
The acquisition will be implemented by way of a merger, creating a diversified, world-leading alternative investment manager with an emphasis on liquid strategies, positioned to benefit from the expected continued growth in onshore hedge funds globally.
"The structure of the transaction allows us to retain vital focus and commitment to performance whilst integrating Man's leading structuring and distribution capabilities to the advantage of investors and shareholders alike." Peter Clarke, Chief Executive of Man, said, "We have deployed surplus capital in an earnings enhancing transaction to access savings, balance our investment strategies, and created a powerful business from which we can grow organically.
The deal will be closed by the end of September.
“I am delighted to announce Man's proposed acquisition of GLG to create a diversified, world-leading alternative investment manager with $63 billion in funds under management." Jon Aisbitt, Chairman of Man, said, "It is central to Man's stated strategy of acquiring high quality discretionary investment management capability to broaden our range of diversified, liquid strategies for the benefit of our investors."
The acquisition will be implemented by way of a merger, creating a diversified, world-leading alternative investment manager with an emphasis on liquid strategies, positioned to benefit from the expected continued growth in onshore hedge funds globally.
"The structure of the transaction allows us to retain vital focus and commitment to performance whilst integrating Man's leading structuring and distribution capabilities to the advantage of investors and shareholders alike." Peter Clarke, Chief Executive of Man, said, "We have deployed surplus capital in an earnings enhancing transaction to access savings, balance our investment strategies, and created a powerful business from which we can grow organically.
The deal will be closed by the end of September.
5 May 2010
Public Pension Plans to Top Corporate Plans In US Hedge Fund Allocation
HedgeCo News – Agecroft Partners predicts that United States public pension funds will increase their allocation to hedge funds at faster rate than corporate pension plans due to sweeping new corporate pension legislation that is just beginning to take hold in the industry.
“The new legislation does not directly impact public pension funds.” Don Steinbrugge, Managing Member at Agecroft Partners, LLC, said in an interview this morning, “Corporate pension fund allocations have historically targeted a higher risk and return profile than public pension funds, but that may be changing due to the passage of the 2006 Pension Protection Act that became effective in 2008.”
This was the most dramatic pension legislation in the US since the passage of ERISA back in the early 1970s and the legislation will have major implications for corporate pension funds asset allocation, the structure of corporate pension plans and the retirement burden on society.
5 main points Steinbrugge focused on during the interview are as follows:
1. Public pension funds will increase their allocation to hedge funds at faster rate than corporate pension plans due to sweeping new corporate pension legislation that is just beginning to take hold in the industry.
2. The new legislation does not directly impact public pension funds.
3. The new extensive and complex pension legislation includes two provisions which will alter how many corporate pension fund assets are managed.
4. Many corporate defined benefit plans are moving away from maximizing return by utilizing the efficient frontier strategy of portfolio construction to a liability matching strategy for their portfolio which features a significant increase in their allocation to long duration fixed income securities in order to reduce the variability of annual contributions.
5. This increased expense will enhance the speed of corporations terminating or freezing their defined benefit plans and replacing them with 401k plans.
Historically, Steinbrugge explained, a vast majority of defined benefit pension funds used a static discounts rate of approximately 7.5% to 8% to determine the present value of their future liabilities. By keeping the discount rate constant year after year and by amortizing unfunded liabilities over a 20 to 30 year period, it allowed for a fairly consistent required contribution to a defined benefit plan on an annual basis.
In order for the pension fund to achieve investment returns equal to the discount rate, pension funds used modern portfolio theory to constructed diversified portfolios along the efficient frontier which allowed them to maximize return for a targeted level of volatility. Over the years, this efficient frontier was enhanced as more asset classes were utilized and through the adoption of alternative investments within their portfolios. Over long periods of time, this investment strategy was effective at reaching their return objectives. In addition, this strategy of maximizing long term returns had reduced the long term cost of funding these defined benefit plans.
The new extensive and complex pension legislation includes two provisions which will alter how many corporate pension fund assets are managed.
* The first provision effects how companies determine the present value of the future liability stream, which includes many variables, but is dominated by the discount rate. The new regulation states that the discount rate will be derived from a “yield curve” of investment-grade corporate bonds averaged over the most recent 24 months, which is updated on an annual basis. This has had major implications for corporate defined benefit plans. The average discount rate to calculate future unfunded liabilities has been significantly reduced from what corporations have used historically. This has caused their unfunded liability to increase significantly. It has also added significant variability to future pension fund contributions because of the unpredictability of future discount rates.
* The second provision reduced the time period that corporations could amortize these liabilities from 20 to 30 years down to half that time period. The effect of combining these two provisions has been to significantly increase annual funding for many plans over previous levels at a time when many corporations can least afford to incur additional liabilities.
“As a result,” Steinbrugge wrote in a release on the subject, “many corporate defined benefit plans are moving away from maximizing return by utilizing the efficient frontier strategy of portfolio construction to a liability matching strategy for their portfolio which features a significant increase in their allocation to long duration fixed income securities in order to reduce the variability of annual contributions. Agecroft Partners believes that this increased allocation to long duration fixed income will be funded primarily through a reduction in corporate pension funds allocation to shorter duration fixed income and long only equity managers. Some of the more sophisticated corporate plans might match the duration of their assets to liabilities through the derivative markets which will allow them to continue to manage the underlying portfolio on a total return basis.”
“Unfortunately, this duration matching strategy for US corporate pension funds will reduce the long term expected returns of their portfolios from the 7.5% to 8% range down to 5% to 6.5% which will significantly increase the expense of these plans. This increased expense will enhance the speed of corporations terminating or freezing their defined benefit plans and replacing them with 401k plans. The problem with 401k plans is that they typically do not provide a large enough lump sum distribution to provide for retirement. Additionally, the average retiree lacks the discipline to spend these assets over their expected life span. The end result may very well be that many individuals will run out of their retirement savings and rely on government program for their retirement needs. Another unfortunate aspect of this new legislation is that many corporations are locking in long duration fixed income portfolios while interest rates are at their lowest point in decades. If the massive government deficient creates inflation causing interest rates to spike these long duration portfolio could lose a significant percent of their value.”
“Public pension funds will not be affected by this legislation and will have no incentive to move away from the efficient frontier structure of investing.” Steinbrugge said, “Given most state and local government’s shaky budgets and large unfunded liabilities they need to maximize their investment returns on their portfolios in order to reduce the financial burden on their constituencies. As a result of this we will see a significant divergence between the asset allocations of corporate and public pension funds.”
“Public pension funds will steadily increase their allocation to alternative investments over the next decade, where hedge funds may represent as much as 20% of their portfolio while corporations will also increase their alternative portfolio, but at a slower rate due to their growing allocation to longer duration fixed income.” Steinbrugge concluded.
Agecroft Partners is a consulting and third party marketing firm which specializes solely in the alternative investment arena with a particular focus on hedge funds.
“The new legislation does not directly impact public pension funds.” Don Steinbrugge, Managing Member at Agecroft Partners, LLC, said in an interview this morning, “Corporate pension fund allocations have historically targeted a higher risk and return profile than public pension funds, but that may be changing due to the passage of the 2006 Pension Protection Act that became effective in 2008.”
This was the most dramatic pension legislation in the US since the passage of ERISA back in the early 1970s and the legislation will have major implications for corporate pension funds asset allocation, the structure of corporate pension plans and the retirement burden on society.
5 main points Steinbrugge focused on during the interview are as follows:
1. Public pension funds will increase their allocation to hedge funds at faster rate than corporate pension plans due to sweeping new corporate pension legislation that is just beginning to take hold in the industry.
2. The new legislation does not directly impact public pension funds.
3. The new extensive and complex pension legislation includes two provisions which will alter how many corporate pension fund assets are managed.
4. Many corporate defined benefit plans are moving away from maximizing return by utilizing the efficient frontier strategy of portfolio construction to a liability matching strategy for their portfolio which features a significant increase in their allocation to long duration fixed income securities in order to reduce the variability of annual contributions.
5. This increased expense will enhance the speed of corporations terminating or freezing their defined benefit plans and replacing them with 401k plans.
Historically, Steinbrugge explained, a vast majority of defined benefit pension funds used a static discounts rate of approximately 7.5% to 8% to determine the present value of their future liabilities. By keeping the discount rate constant year after year and by amortizing unfunded liabilities over a 20 to 30 year period, it allowed for a fairly consistent required contribution to a defined benefit plan on an annual basis.
In order for the pension fund to achieve investment returns equal to the discount rate, pension funds used modern portfolio theory to constructed diversified portfolios along the efficient frontier which allowed them to maximize return for a targeted level of volatility. Over the years, this efficient frontier was enhanced as more asset classes were utilized and through the adoption of alternative investments within their portfolios. Over long periods of time, this investment strategy was effective at reaching their return objectives. In addition, this strategy of maximizing long term returns had reduced the long term cost of funding these defined benefit plans.
The new extensive and complex pension legislation includes two provisions which will alter how many corporate pension fund assets are managed.
* The first provision effects how companies determine the present value of the future liability stream, which includes many variables, but is dominated by the discount rate. The new regulation states that the discount rate will be derived from a “yield curve” of investment-grade corporate bonds averaged over the most recent 24 months, which is updated on an annual basis. This has had major implications for corporate defined benefit plans. The average discount rate to calculate future unfunded liabilities has been significantly reduced from what corporations have used historically. This has caused their unfunded liability to increase significantly. It has also added significant variability to future pension fund contributions because of the unpredictability of future discount rates.
* The second provision reduced the time period that corporations could amortize these liabilities from 20 to 30 years down to half that time period. The effect of combining these two provisions has been to significantly increase annual funding for many plans over previous levels at a time when many corporations can least afford to incur additional liabilities.
“As a result,” Steinbrugge wrote in a release on the subject, “many corporate defined benefit plans are moving away from maximizing return by utilizing the efficient frontier strategy of portfolio construction to a liability matching strategy for their portfolio which features a significant increase in their allocation to long duration fixed income securities in order to reduce the variability of annual contributions. Agecroft Partners believes that this increased allocation to long duration fixed income will be funded primarily through a reduction in corporate pension funds allocation to shorter duration fixed income and long only equity managers. Some of the more sophisticated corporate plans might match the duration of their assets to liabilities through the derivative markets which will allow them to continue to manage the underlying portfolio on a total return basis.”
“Unfortunately, this duration matching strategy for US corporate pension funds will reduce the long term expected returns of their portfolios from the 7.5% to 8% range down to 5% to 6.5% which will significantly increase the expense of these plans. This increased expense will enhance the speed of corporations terminating or freezing their defined benefit plans and replacing them with 401k plans. The problem with 401k plans is that they typically do not provide a large enough lump sum distribution to provide for retirement. Additionally, the average retiree lacks the discipline to spend these assets over their expected life span. The end result may very well be that many individuals will run out of their retirement savings and rely on government program for their retirement needs. Another unfortunate aspect of this new legislation is that many corporations are locking in long duration fixed income portfolios while interest rates are at their lowest point in decades. If the massive government deficient creates inflation causing interest rates to spike these long duration portfolio could lose a significant percent of their value.”
“Public pension funds will not be affected by this legislation and will have no incentive to move away from the efficient frontier structure of investing.” Steinbrugge said, “Given most state and local government’s shaky budgets and large unfunded liabilities they need to maximize their investment returns on their portfolios in order to reduce the financial burden on their constituencies. As a result of this we will see a significant divergence between the asset allocations of corporate and public pension funds.”
“Public pension funds will steadily increase their allocation to alternative investments over the next decade, where hedge funds may represent as much as 20% of their portfolio while corporations will also increase their alternative portfolio, but at a slower rate due to their growing allocation to longer duration fixed income.” Steinbrugge concluded.
Agecroft Partners is a consulting and third party marketing firm which specializes solely in the alternative investment arena with a particular focus on hedge funds.
3 May 2010
100 Women in Hedge Funds: La Parisienne Race in Support of Breast Cancer Research
Sunday, September 12, 2010 at 10 AM Paris
Registration is 35 Euros and this includes access to several optional training sessions, our team logo and the chance to run with your friends in finance. Part of the registration fee will be donated by the Race organizers to Breast Cancer Research (Fondation Recherche Médicale, Action Cancer du Sein). You can help raise more funds through sponsorship, individually or through your company, details available on request. PARIS@100womeninhedgefunds.org
The Race will start at 10AM; groups will form near the Pont d’Iena beginning at 9AM.
CELEBRATE and NETWORK at a post-race brunch (Cost, location and time to be provided.)
Annoa Cirian, from HDF Finance, ran the Parisienne last year, here is her story:
"Some of you might already know about the race that is becoming a major event in Paris; you might even have run it before! All women are welcome, from 7 to 77 years old, Parisian or not. The idea is to share a truly fun and enjoyable event and help raise awareness and funding for Breast Cancer Research.
The challenge IS manageable!!!! It is only 6 kms from the start, on the Iéna bridge, to the finish line under the Eiffel Tower! If you are generally fit and reasonably in shape, you should be able to run this in under 40 minutes and walking is permitted. I myself am not a marathoner (!) and only trained a few times before participating last year and I finished!!!! There were 17.499 other ladies running with me; the positive and emotional atmosphere was something that cannot be forgotten; it moved me to tears.
As in the past, the Village area opens up on the Friday before the race, with many stands from the main sponsors (Nike, Weleda, Fitness . . . )
Every Sunday morning, Nike organizes free training sessions; just meet up at 9h45 at their Champ Elysees store! They also offer a few evening shopping sessions and special rebates for runners registered for the Parisienne!
Registration is 35 Euros and this includes access to several optional training sessions, our team logo and the chance to run with your friends in finance. Part of the registration fee will be donated by the Race organizers to Breast Cancer Research (Fondation Recherche Médicale, Action Cancer du Sein). You can help raise more funds through sponsorship, individually or through your company, details available on request. PARIS@100womeninhedgefunds.org
The Race will start at 10AM; groups will form near the Pont d’Iena beginning at 9AM.
CELEBRATE and NETWORK at a post-race brunch (Cost, location and time to be provided.)
Annoa Cirian, from HDF Finance, ran the Parisienne last year, here is her story:
"Some of you might already know about the race that is becoming a major event in Paris; you might even have run it before! All women are welcome, from 7 to 77 years old, Parisian or not. The idea is to share a truly fun and enjoyable event and help raise awareness and funding for Breast Cancer Research.
The challenge IS manageable!!!! It is only 6 kms from the start, on the Iéna bridge, to the finish line under the Eiffel Tower! If you are generally fit and reasonably in shape, you should be able to run this in under 40 minutes and walking is permitted. I myself am not a marathoner (!) and only trained a few times before participating last year and I finished!!!! There were 17.499 other ladies running with me; the positive and emotional atmosphere was something that cannot be forgotten; it moved me to tears.
As in the past, the Village area opens up on the Friday before the race, with many stands from the main sponsors (Nike, Weleda, Fitness . . . )
Every Sunday morning, Nike organizes free training sessions; just meet up at 9h45 at their Champ Elysees store! They also offer a few evening shopping sessions and special rebates for runners registered for the Parisienne!
The 8th Annual Hedge Fund Industry Award Nominees
HedgeCo News - Institutional Investor magazine is presenting the 8th Annual Hedge Fund Industry Awards, which will recognize the hedge funds, hedge funds of funds, seeder firms, investment consultants, endowments, foundations, family offices, corporate funds and public funds who stood out for their innovation, achievements and contributions to the industry in 2009.
Award nominees will be honored and winners will be announced and awarded at a dinner and awards ceremony at the Mandarin Oriental in New York City on Monday, June 21, 2010.
Lifetime Achievement Award
Julian Robertson Jr., Founder and ChairmanTiger Management Corp.
Outstanding Contribution Award
Orin Kramer, Chairman, New Jersey State Investment Council
2010 MANAGER AWARD CATEGORIES & NOMINEES:
Institutional Hedge Fund Firm of the Year
* D.E. Shaw & Co.
* Highbridge Capital Management
* Och-Ziff Capital Management Group
* Paulson & Co.
* York Capital Management
Emerging Hedge Fund Firm of the Year
* 1798 Global Partners
* Arrowhawk Capital Partners
* Atalaya Capital Management
* HealthCor Management
* Merchants' Gate Capital
Equity-Focused Hedge Fund of the Year
* Lansdowne Partners
* Pershing Square Capital Management
* SAC Capital Advisors
* Stelliam Investment Management
* Viking Global Investors
Credit-Focused Hedge Fund of the Year
* Appaloosa Management
* Avenue Capital Group
* Canyon Capital Advisors
* Centerbridge Partners
* Pacific Investment Management Co.
Macro-Focused Hedge Fund of the Year
* BlueCrest Capital Management
* BlueGold Capital Management
* Moore Capital Management
* Pharo Management
* Tudor Investment Corp.
Multistrategy Hedge Fund of the Year
* D.E. Shaw & Co.
* Hudson Bay Capital Management
* Millennium Management
* Och-Ziff Capital Management Group
* Perry Capital
Relative Value Hedge Fund of the Year
* Barnegat Fund Management
* BlueMountain Capital Management
* Citadel Investment Group
* CQS
* Pine River Capital Management
Large Fund of Hedge Funds Firm of the Year
* Blackstone Alternative Asset Management
* Lighthouse Partners
* Morgan Stanley Alternative Investment Partners
* Permal Group
* Prisma Capital Partners
Small Fund of Hedge Funds Firm of the Year
* Corbin Capital Partners
* Greenlight Masters
* Magnitude Capital
* NewFinance Capital
* SSARIS Advisors
Hedge Fund Seeder Firm of the Year
* Investcorp Investment Advisers
* Larch Lane Advisors
* Paloma Partners Management Co.
* Protégé Partners
* SkyBridge Capital
Award nominees will be honored and winners will be announced and awarded at a dinner and awards ceremony at the Mandarin Oriental in New York City on Monday, June 21, 2010.
Lifetime Achievement Award
Julian Robertson Jr., Founder and ChairmanTiger Management Corp.
Outstanding Contribution Award
Orin Kramer, Chairman, New Jersey State Investment Council
2010 MANAGER AWARD CATEGORIES & NOMINEES:
Institutional Hedge Fund Firm of the Year
* D.E. Shaw & Co.
* Highbridge Capital Management
* Och-Ziff Capital Management Group
* Paulson & Co.
* York Capital Management
Emerging Hedge Fund Firm of the Year
* 1798 Global Partners
* Arrowhawk Capital Partners
* Atalaya Capital Management
* HealthCor Management
* Merchants' Gate Capital
Equity-Focused Hedge Fund of the Year
* Lansdowne Partners
* Pershing Square Capital Management
* SAC Capital Advisors
* Stelliam Investment Management
* Viking Global Investors
Credit-Focused Hedge Fund of the Year
* Appaloosa Management
* Avenue Capital Group
* Canyon Capital Advisors
* Centerbridge Partners
* Pacific Investment Management Co.
Macro-Focused Hedge Fund of the Year
* BlueCrest Capital Management
* BlueGold Capital Management
* Moore Capital Management
* Pharo Management
* Tudor Investment Corp.
Multistrategy Hedge Fund of the Year
* D.E. Shaw & Co.
* Hudson Bay Capital Management
* Millennium Management
* Och-Ziff Capital Management Group
* Perry Capital
Relative Value Hedge Fund of the Year
* Barnegat Fund Management
* BlueMountain Capital Management
* Citadel Investment Group
* CQS
* Pine River Capital Management
Large Fund of Hedge Funds Firm of the Year
* Blackstone Alternative Asset Management
* Lighthouse Partners
* Morgan Stanley Alternative Investment Partners
* Permal Group
* Prisma Capital Partners
Small Fund of Hedge Funds Firm of the Year
* Corbin Capital Partners
* Greenlight Masters
* Magnitude Capital
* NewFinance Capital
* SSARIS Advisors
Hedge Fund Seeder Firm of the Year
* Investcorp Investment Advisers
* Larch Lane Advisors
* Paloma Partners Management Co.
* Protégé Partners
* SkyBridge Capital
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