Hedge funds measured by both the Greenwich Global Hedge Fund Index ("GGHFI") and the Greenwich Composite Investable Index ("GI2") significantly outperformed equity indices despite posting their greatest losses since August 1998 during September.
"It was a perfect storm for both credit/equity markets and hedge funds in September," said Thomas Whelan, Greenwich CEO, "The already deflated values of financial firms provided the perfect trap for value investors while government intervention limited the ability of hedge funds to effectively mitigate their risk. Simultaneously, the continued freezing of credit markets combined with investor redemptions forced fixed-income funds to liquidate or otherwise mark down assets at depressed prices. The results of the market turmoil and unpredictable regulatory environment are evident in their returns this month."
Long/Short Equity managers fared better than both US and foreign equity markets during the month, but still were subject to unpredictable market movements, losing -6.69%. Both Growth and Value funds struggled to find profitable trades, returning -8.16% and -7.05%, respectively. Short Selling managers by contrast enjoyed their most profitable month this year, advancing +9.27% on average. Year-to-date, Short Selling funds have gained 17% and remain the best performing subsector of hedge fund strategies.
Market Neutral funds were not immune to market forces during September, as they felt the effects of dysfunctional credit markets, declining -4.49%.
Despite the marked weakness in hedge funds in September, not all hedge fund strategy groups moved lower for the month. Directional Trading funds advanced by +0.51% on average, led by Futures managers who capitalized on declining commodity values. Macro managers did not fare as well, losing -3.62% on the month.
Specialty Strategy managers were the weakest performing strategy group for the month of September, with funds losing -7.33% on average. Emerging Markets funds were once again the main reason behind the losses as these managers shed nearly 10% during the month.
9 Oct 2008
8 Oct 2008
The Group Of Thirty Issues Supervisory Report
The Group of Thirty released a new report, 'The Structure of Financial Supervision: Approaches and Challenges in a Global Marketplace'.
The report was issued after the meeting of G7 finance ministers and central bank governors in Washington DC. The Group of Thirty is an international body composed of central bank governors, leading economists, and private financial sector experts,
"The financial turmoil that has unfolded over the last year has tested the ability of regulatory authorities to respond effectively to financial crises. It is evident that a number of countries need to revise and reform financial regulatory structures," said Paul Volcker, Chairman of the Group of Thirty's Board of Trustees.
Volcker underscored that improvement in regulatory approaches is essential at the national and cross-border levels. The G30 report compares and analyses the financial regulatory approaches of 17 jurisdictions, including the UK, the US and Australia, in order to illustrate the implications of the four principal models of supervisory oversight: (1) the Institutional Approach, (2) the Functional Approach, (3) the Integrated Approach, and (4) the Twin Peaks Approach.
The US structure, which falls outside of these four approaches, combines institutional and functional approaches with the added complexity of a number of state level agencies and actors.
Roger W Ferguson, President and CEO of TIAA-CREF, former Vice Chairman of the US Federal Reserve Board and the Vice Chairman of the G30 Working Group, said, "As we start to re-examine regulatory structures, the G30 report can play a role by building the fact base that regulators, politicians, and financial market participants will consider."
In March, the US Treasury released its 'Blueprint for a Modernized Financial Regulatory Structure', which proposes a major restructuring of financial supervision toward a regulation by objectives approach, in some ways similar to the twin peaks model to supervision and regulation. The UK has already introduced modifications in its highly integrated approach.
In preparing the report, the G30 conducted interviews with key officials in the relevant jurisdictions, as well as practitioners, regulated parties, and those who may have been involved historically in the development of the current regulatory arrangements.
The report was issued after the meeting of G7 finance ministers and central bank governors in Washington DC. The Group of Thirty is an international body composed of central bank governors, leading economists, and private financial sector experts,
"The financial turmoil that has unfolded over the last year has tested the ability of regulatory authorities to respond effectively to financial crises. It is evident that a number of countries need to revise and reform financial regulatory structures," said Paul Volcker, Chairman of the Group of Thirty's Board of Trustees.
Volcker underscored that improvement in regulatory approaches is essential at the national and cross-border levels. The G30 report compares and analyses the financial regulatory approaches of 17 jurisdictions, including the UK, the US and Australia, in order to illustrate the implications of the four principal models of supervisory oversight: (1) the Institutional Approach, (2) the Functional Approach, (3) the Integrated Approach, and (4) the Twin Peaks Approach.
The US structure, which falls outside of these four approaches, combines institutional and functional approaches with the added complexity of a number of state level agencies and actors.
Roger W Ferguson, President and CEO of TIAA-CREF, former Vice Chairman of the US Federal Reserve Board and the Vice Chairman of the G30 Working Group, said, "As we start to re-examine regulatory structures, the G30 report can play a role by building the fact base that regulators, politicians, and financial market participants will consider."
In March, the US Treasury released its 'Blueprint for a Modernized Financial Regulatory Structure', which proposes a major restructuring of financial supervision toward a regulation by objectives approach, in some ways similar to the twin peaks model to supervision and regulation. The UK has already introduced modifications in its highly integrated approach.
In preparing the report, the G30 conducted interviews with key officials in the relevant jurisdictions, as well as practitioners, regulated parties, and those who may have been involved historically in the development of the current regulatory arrangements.
Potential for Hedge Fund Returns Is Still There For Investors - Report
According to a recent survey conducted by the Association of Investment Companies (AIC), a poll of 1,300 sophisticated private investors showed that 15% believed that hedge funds offer the potential for strong returns in the current environment. However they are also concerned about their perceived lack of transparency (17%) and riskiness (17%).
Investors are also cautious about hedge funds because they believe that they are not regulated (14%), and are concerned about the reputation for high charges (12%). Some investors also find them confusing (11%) and believe they are only accessible to the wealthy (5%).
Although some sophisticated private investors are wary of hedge funds, 6% of those surveyed are already investing in hedge funds, 5% have invested in the past and 3% are planning to invest in the future. Interestingly, nearly half (46%) of investors believe they may possibly invest in hedge funds in the future whilst only 29% of investors surveyed would never invest in hedge funds.
"Many of these investors' concerns over hedge funds are addressed through the listed hedge fund and fund of hedge funds sectors," Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC) said, "The listed structure of closed ended hedge funds and fund of funds means investors have access to a much higher level of transparency. Shares in listed funds are available on the stock market just like any other share so they are available to those of modest means as well as the super wealthy."
"This is a real growth area of the industry with the hedge fund sector making up 65% of the assets raised this year in the investment company sector. However, it is still a young sector, so long-term performance records are not available for the majority. Investors need to do their homework to make sure they select the right fund for them in this diverse sector and if they are unsure they should take independent financial advice," she concluded.
Ian Plenderleith, Chairman of BH Macro, said, "Hedge funds who can maintain the necessary standards of investment expertise and risk management have demonstrated that they can deliver superior returns on a consistent basis. Listed hedge fund vehicles give a wider range of investors access to alternative investment strategies through an avenue they are familiar with. They get the benefit of the regulatory safeguards and disclosure obligations, and the secondary market liquidity that go with stock exchange listing."
Robin Bowie, Chairman of Dexion Capital, said: "When dislocation in financial markets reaches the present level, it provides an ideal environment for hedge funds, which are well-placed to make opportunistic investments where they recognise value and can hedge out the market risk. Some of those positions will be illiquid, which will be unsuitable for most managers of open-ended funds. Closed-ended funds employ ‘permanent capital', raised on the stock exchange, which allow managers to blend liquid and illiquid assets and take advantage of the current mismatch in the markets. In essence, closed-ended funds bring liquidity to illiquid situations."
Investors are also cautious about hedge funds because they believe that they are not regulated (14%), and are concerned about the reputation for high charges (12%). Some investors also find them confusing (11%) and believe they are only accessible to the wealthy (5%).
Although some sophisticated private investors are wary of hedge funds, 6% of those surveyed are already investing in hedge funds, 5% have invested in the past and 3% are planning to invest in the future. Interestingly, nearly half (46%) of investors believe they may possibly invest in hedge funds in the future whilst only 29% of investors surveyed would never invest in hedge funds.
"Many of these investors' concerns over hedge funds are addressed through the listed hedge fund and fund of hedge funds sectors," Annabel Brodie-Smith, Communications Director of the Association of Investment Companies (AIC) said, "The listed structure of closed ended hedge funds and fund of funds means investors have access to a much higher level of transparency. Shares in listed funds are available on the stock market just like any other share so they are available to those of modest means as well as the super wealthy."
"This is a real growth area of the industry with the hedge fund sector making up 65% of the assets raised this year in the investment company sector. However, it is still a young sector, so long-term performance records are not available for the majority. Investors need to do their homework to make sure they select the right fund for them in this diverse sector and if they are unsure they should take independent financial advice," she concluded.
Ian Plenderleith, Chairman of BH Macro, said, "Hedge funds who can maintain the necessary standards of investment expertise and risk management have demonstrated that they can deliver superior returns on a consistent basis. Listed hedge fund vehicles give a wider range of investors access to alternative investment strategies through an avenue they are familiar with. They get the benefit of the regulatory safeguards and disclosure obligations, and the secondary market liquidity that go with stock exchange listing."
Robin Bowie, Chairman of Dexion Capital, said: "When dislocation in financial markets reaches the present level, it provides an ideal environment for hedge funds, which are well-placed to make opportunistic investments where they recognise value and can hedge out the market risk. Some of those positions will be illiquid, which will be unsuitable for most managers of open-ended funds. Closed-ended funds employ ‘permanent capital', raised on the stock exchange, which allow managers to blend liquid and illiquid assets and take advantage of the current mismatch in the markets. In essence, closed-ended funds bring liquidity to illiquid situations."
7 Oct 2008
Airline Files For Chap.11 After Petters Arrest
Holiday airline Sun Country filed for bankruptcy yesterday, just 3 days after the arrest of investor Thomas Petters, founder of Petters Group Worldwide, the firm that owns Sun Country among other investments.
Petters was charged with mail and wire fraud, money laundering and obstructing justice.
"We were forced to take this action as a result of recent events at Petters Group Worldwide," said Sun Country Chairman and CEO Stan Gadek. The airline said that it would continue to fly its regular schedule.
A federal judge in Minneapolis order Petters to be held without bail after a taped phone conversation revealed that the disgraced entrepreneur planned to leave the country. A hearing is scheduled for Tuesday.
Petters has stated that he plans to fight to be released from custody and maintains his innocence.
Petters was charged with mail and wire fraud, money laundering and obstructing justice.
"We were forced to take this action as a result of recent events at Petters Group Worldwide," said Sun Country Chairman and CEO Stan Gadek. The airline said that it would continue to fly its regular schedule.
A federal judge in Minneapolis order Petters to be held without bail after a taped phone conversation revealed that the disgraced entrepreneur planned to leave the country. A hearing is scheduled for Tuesday.
Petters has stated that he plans to fight to be released from custody and maintains his innocence.
6 Oct 2008
Blackstone Closes China Investment in Bluestar
State-owned company China National Chemical Corporation (ChemChina) and hedge fund manager the Blackstone Group announced the closing of Blackstone’s investment in ChemChina subsidiary, China National Bluestar Corporation.
Bluestar has also completed its group restructuring and has registered as a Sino-foreign joint stock limited company. Blackstone will invest up to $600 million in Bluestar for a 20% stake. Two Senior Managing Directors of Blackstone, Antony Leung and Ben Jenkins, will join the board of Bluestar.
Headquartered in Beijing, ChemChina was founded in 2004, and administrated by the State-owned Assets Supervision and Administration Commission of the State Council of China. Through fast growth in the last 4 years, ChemChina is now a large group corporation with both asset value and revenue exceeding RMB100 billion ($14.6 billion). ChemChina is ranked 35th among China's top 500 corporations, according to National Bureau of Statistics of China.
The Blackstone Group's alternative asset management businesses include the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds.
Bluestar has also completed its group restructuring and has registered as a Sino-foreign joint stock limited company. Blackstone will invest up to $600 million in Bluestar for a 20% stake. Two Senior Managing Directors of Blackstone, Antony Leung and Ben Jenkins, will join the board of Bluestar.
Headquartered in Beijing, ChemChina was founded in 2004, and administrated by the State-owned Assets Supervision and Administration Commission of the State Council of China. Through fast growth in the last 4 years, ChemChina is now a large group corporation with both asset value and revenue exceeding RMB100 billion ($14.6 billion). ChemChina is ranked 35th among China's top 500 corporations, according to National Bureau of Statistics of China.
The Blackstone Group's alternative asset management businesses include the management of corporate private equity funds, real estate opportunity funds, funds of hedge funds, mezzanine funds, senior debt funds, proprietary hedge funds and closed-end mutual funds.
HedgeCo Launches Hedge Fund Calculator
HedgeCo Networks LLC today announced the launch of the next generation online analytical and reporting tool, the Hedge Fund Calculator. Designed for hedge funds and funds of hedge funds, the calculator is available for a monthly or annual subscription service. HedgeCo says, "(the calculator) facilitates the rapid computation of quantitative statistics, net performance numbers and the creation of branded marketing materials."
Aaron Wormus, Managing Director of HedgeCo Networks said, "Through the HedgeCo.Net hedge fund database and Hedge Fund Websites platform, we have worked with thousands of funds worldwide to create statistical performance reports and compelling investor presentations."
"By combining our deep experience with cutting edge development technology, we have been able to deliver a powerful and cost-effective tool that can dramatically enhance marketing and reporting capabilities at any hedge fund firm." Wormus explained.
Key features of the Hedge Fund Calculator include:
* Online Access - Easily create, modify and distribute reports from any web-connected PC
* Branded & Customized Tearsheets - Quickly update fund information, customize statistics, select data points and generate PDF reports with a simple 3-click process
* Contact Manager - Efficiently manage investor and prospective investor lists, email fund marketing materials and track leads with integrated, easy-to-use contact management
* Benchmark Analysis - Compare fund performance to industry standard benchmarks, HedgeCo Indices or add your own benchmarks.
Agecroft Hires Hedge Fund Manager
Hedge fund third party marketing firm, Agecroft Partners has hired its 5th Managing Director, Jarratt Ramsey. Jarratt spent the last 11 years at multi-billion hedge fund Chesapeake Capital Management.
"Jarratt is a wonderful addition to our firm. Our business model is to introduce large well established hedge funds in a consultative manner to institutional investors," Agecroft Partners' Managing Partner Don Steinbrugge said, "It is imperative that the members of our firm are highly technically competent. Jarratt's educational and professional experiences are very impressive. Furthermore, his knowledge of the hedge fund industry, and security markets should give him a lot of credibility with large institutional investors."
Jarratt's responsibilities will include assisting with due diligence on potential hedge funds the firm may represent and introducing the firm's hedge fund clients to large institutional investors located within the Northern region of the United States.
Agecroft Partners recently received the 2008 Third Party Marketer of the Year award. It was founded by Donald A Steinbrugge, CFA, a Founding Principal of Andor Capital Management when it was the 2nd largest hedge fund firm in the world. Don was also Head of Institutional Sales for Merrill Lynch Investment Managers. Agecroft Partners, LLC is a Member FINRA and SIPC.
"Jarratt is a wonderful addition to our firm. Our business model is to introduce large well established hedge funds in a consultative manner to institutional investors," Agecroft Partners' Managing Partner Don Steinbrugge said, "It is imperative that the members of our firm are highly technically competent. Jarratt's educational and professional experiences are very impressive. Furthermore, his knowledge of the hedge fund industry, and security markets should give him a lot of credibility with large institutional investors."
Jarratt's responsibilities will include assisting with due diligence on potential hedge funds the firm may represent and introducing the firm's hedge fund clients to large institutional investors located within the Northern region of the United States.
Agecroft Partners recently received the 2008 Third Party Marketer of the Year award. It was founded by Donald A Steinbrugge, CFA, a Founding Principal of Andor Capital Management when it was the 2nd largest hedge fund firm in the world. Don was also Head of Institutional Sales for Merrill Lynch Investment Managers. Agecroft Partners, LLC is a Member FINRA and SIPC.
2 Oct 2008
Mooring Hedge Fund Gains Amid Losses
Mooring Financial Corp., a private investment firm specializing in the management of alternative assets, has seen its hedge fund, the Mooring Intrepid Opportunity Fund gain 37% year-to-date, while global hedge fund returns have declined almost 10% this year.The fund gained by capitalizing on corrections in the high-yield corporate bond, commercial mortgage-backed securities and subprime residential mortgage markets. The Fund has gained 132.1% since its inception on March 1, 2007, the Fund’s highest gain on investment to date.
"The centerpiece of our objective for Mooring Intrepid Opportunity Fund is the expectation of a repricing of risk in the credit markets," said president and founder John Jacquemin, "We mapped out a strategy two years ago in anticipation of the credit markets debacle now taking place. The fund’s positions are volatile and aggressive, and appropriate only for investors who understand these risks."
In recent weeks, the fund has begun to take additional bearish positions in financial and commercial real estate stocks as well as exchange traded funds in anticipation of continued deterioration within these markets.
"We believed strongly that the credit markets had reached a point of excess never before experienced in modern history." Jacqumin explained, "and we felt strongly that the risk/reward ratio was very much in our favor. This has proven to be the case."
The firm has acquired and managed more than $2 billion of financial assets since inception in 1982. Mooring Financial Corporation manages four funds across different asset classes, including distressed commercial loans, real estate tax liens, publicly traded equities and credit derivatives.
1 Oct 2008
Pharos Funds Resilient, But Drop With Russian Market
Conservatively positioned given the high level of stress that existed on the global financial system, the 3 Pharos Russia Funds' current strategy uses alpha generation which comes from a combination of stock selection and active use of hedging tools available in the marketplace.
The three funds are showing the most resilience among funds in the Russia & CIS universe year-to-date. However, during the month of August, the Pharos Russia Fund was down 7.8%, the Pharos Small Cap Fund was down 8.8% and the Pharos Gas Investment Fund was down 2.3%. Meanwhile the MSCI Russia Index was down 14.7% over the same period.
August saw a continuation in the decline in markets globally, with Russian markets succumbing to the sell-off in global credit markets, continued pressure on commodities and dollar strength.
The Russian authorities have shown a willingness to intervene to protect against domestic dislocations caused by distressed selling. The Russian state has announced a liquidity package of more than $150bn.
It has increased its deposits held at the largest banks and offered them repo lending that references inflated asset valuations. The state-owned Vneshekenom Bank will also provide up to $50bn to Russian companies and banks to help redeem the $65bn of external debt coming due through 1Q'09. Meanwhile the interbank lending market is being supported by a government guarantee against defaults.
"Given the relative size of the economy," Pharos says, "Russia is better positioned than most to withstand a downturn in credit markets with its $581bn of reserves and over $200bn Stabilization Fund."
"Valuations are compelling and we expect to take advantage of these opportunities. We look for catalysts to the market to guide our entry points, such as stability in the industrial commodities markets, a reversal in measures of global risk aversion and global monetary easing."
The three funds are showing the most resilience among funds in the Russia & CIS universe year-to-date. However, during the month of August, the Pharos Russia Fund was down 7.8%, the Pharos Small Cap Fund was down 8.8% and the Pharos Gas Investment Fund was down 2.3%. Meanwhile the MSCI Russia Index was down 14.7% over the same period.
August saw a continuation in the decline in markets globally, with Russian markets succumbing to the sell-off in global credit markets, continued pressure on commodities and dollar strength.
The Russian authorities have shown a willingness to intervene to protect against domestic dislocations caused by distressed selling. The Russian state has announced a liquidity package of more than $150bn.
It has increased its deposits held at the largest banks and offered them repo lending that references inflated asset valuations. The state-owned Vneshekenom Bank will also provide up to $50bn to Russian companies and banks to help redeem the $65bn of external debt coming due through 1Q'09. Meanwhile the interbank lending market is being supported by a government guarantee against defaults.
"Given the relative size of the economy," Pharos says, "Russia is better positioned than most to withstand a downturn in credit markets with its $581bn of reserves and over $200bn Stabilization Fund."
"Valuations are compelling and we expect to take advantage of these opportunities. We look for catalysts to the market to guide our entry points, such as stability in the industrial commodities markets, a reversal in measures of global risk aversion and global monetary easing."
30 Sept 2008
29 Sept 2008
Hedge Fund Manager Launches Lettable Space Park In Romania
Argo Group, an emerging markets investment manager, announced the launch of The Era Shopping Park Iasi. Projected to generate EUR 18 million ($25.7 million) in annual rental income the launch is funded by Argo's private equity fund, the Argo Capital Partners Fund 1, together with a local joint venture partner, Omilos Group."From Argo's perspective this has been an excellent investment," says Argo Capital Management chief investment officer Andreas Rialas. "Through our partnership with Omilos we acquired two excellent sites at a time when property and land prices were relatively low. Since then both projects are well advanced and demonstrating their potential to generate substantial returns."
The Park is the first of two planned retail parks to operate under the Era Shopping Park brand. The Iasi retail park will be the largest outside of Bucharest and the second largest in Romania.
Based in Romania's second largest city, situated in the north-east of the country close to the Moldovan border. The Era Shopping Park Iasi will offer on completion more than 115,000 square metres of gross lettable area.
The second facility planned, the Era Shopping Park Oradea, is located in Oradea in the north-west of Romania, close to the Hungarian border. This smaller project with a gross lettable area of 65,000 square metres is expected to open in March next year. The Oradea site is projected to generate annual rental income of EUR 10.5 million.
"Economically, Romania continues to perform strongly. Following its EU accession, there has been a significant uplift in consumer spending and as demonstrated by tenant demand for Era, western European retailers are increasing their presence in the country," Rialas concluded.
The Argo Group has significant experience in property notably through the Argo Real Estate Opportunities Fund, a Guernsey-domiciled closed-ended investment company that invests in the commercial property markets of Central and Eastern Europe. The AIM-listed company is managed by Argo Capital Management Property, which has offices in London, Bucharest and Kiev.
The Argo Capital Partners Fund I was launched in August 2006 to focus on delivering private equity returns from different types of investments and situations in emerging markets. The fund, which was launched targeting a minimum internal rate of return of 40 per cent, has not yet exited any investments.
Its current portfolio includes Infarmasa, a generics pharmaceutical company in Peru, Nigerian commercial and retail bank Intercontinental Bank, Greek triple-play telecommunications Telecoms and Russian regional bank Probusinessbank as well as the Era Shopping Parks.
26 Sept 2008
Vodia Expands Into Frontier Markets
Reflecting a growth in corporate activities, Vodia Group has rebranded as Finadium. The move was made, the re-named Finadium says, to showcase an ability to develop new ideas and create products and marketing strategies in financial markets, expanding beyond the original scope of Vodia Group.
The Finadium name comes from the abbreviation Fin for finance and the latin word Aedium, meaning house. As Finadium, the firm emphasizes its core value proposition – providing ideas, product development and marketing strategies to the securities and investments industry.
The Finadium name comes from the abbreviation Fin for finance and the latin word Aedium, meaning house. As Finadium, the firm emphasizes its core value proposition – providing ideas, product development and marketing strategies to the securities and investments industry.
Based on proprietary surveys and market knowledge, the company is looking multiple market sectors such as institutional investors, hedge funds and traditional asset managers.
As part of the rebranding, the company are launching a monthly newsletter for portfolio managers, traders and others looking for briefings on prime brokerage, securities finance and custody but who do not need the detail of our full reports.
Also expanding into frontier and emerging markets, Josh Galper, Managing Principal, says “As Finadium, we are pleased to expand our audience in prime brokerage, securities finance and custody to include a broader range of market professionals. We also look forward to tackling the complex subject matter of financial services in frontier and emerging markets.”
The Finadium name comes from the abbreviation Fin for finance and the latin word Aedium, meaning house. As Finadium, the firm emphasizes its core value proposition – providing ideas, product development and marketing strategies to the securities and investments industry.
The Finadium name comes from the abbreviation Fin for finance and the latin word Aedium, meaning house. As Finadium, the firm emphasizes its core value proposition – providing ideas, product development and marketing strategies to the securities and investments industry.
Based on proprietary surveys and market knowledge, the company is looking multiple market sectors such as institutional investors, hedge funds and traditional asset managers.
As part of the rebranding, the company are launching a monthly newsletter for portfolio managers, traders and others looking for briefings on prime brokerage, securities finance and custody but who do not need the detail of our full reports.
Also expanding into frontier and emerging markets, Josh Galper, Managing Principal, says “As Finadium, we are pleased to expand our audience in prime brokerage, securities finance and custody to include a broader range of market professionals. We also look forward to tackling the complex subject matter of financial services in frontier and emerging markets.”
25 Sept 2008
Bracewell & Giuliani LLP Announces Legislation Task Force
Bracewell & Giuliani LLP today announced that it has formed a multi-disciplinary Task Force to guide financial institutions, private investment funds, institutional investors and other market participants through the legislative, regulatory and enforcement challenges posed by the Troubled Asset Relief Act and other impending actions by Congress, the Treasury Department, the Federal Reserve and the SEC.
The Task Force will focus in particular on legislation, regulatory actions, enforcement matters and strategic communications to assist market participants in their efforts to navigate one of the most significant governmental actions in the history of the U.S. economy.
Commenting on the formation of the Bracewell Task Force, senior partner Rudy Giuliani said, "Our team of former government officials and experienced attorneys in the fields of legislation, enforcement and finance are equipped to guide institutions in this quickly evolving and complex environment." Mr. Giuliani noted that the Bracewell Task Force includes a former Comptroller of the Currency, a former Assistant Secretary of Legislative Affairs of the U.S. Department of the Treasury, former members of Congress from both political parties, former federal prosecutors, and former SEC enforcement attorneys.
In addition, the Bracewell Task Force will draw heavily upon our resources in the areas of broker-dealer and market regulation, financial restructuring, and corporate and securities.
As part of its services, the Task Force is establishing a blog to relay critical real-time information on the development of policy related to the legislation, regulation and enforcement priorities, and will also be providing periodic updates directly to interested clients.
The Task Force will focus in particular on legislation, regulatory actions, enforcement matters and strategic communications to assist market participants in their efforts to navigate one of the most significant governmental actions in the history of the U.S. economy.
Commenting on the formation of the Bracewell Task Force, senior partner Rudy Giuliani said, "Our team of former government officials and experienced attorneys in the fields of legislation, enforcement and finance are equipped to guide institutions in this quickly evolving and complex environment." Mr. Giuliani noted that the Bracewell Task Force includes a former Comptroller of the Currency, a former Assistant Secretary of Legislative Affairs of the U.S. Department of the Treasury, former members of Congress from both political parties, former federal prosecutors, and former SEC enforcement attorneys.In addition, the Bracewell Task Force will draw heavily upon our resources in the areas of broker-dealer and market regulation, financial restructuring, and corporate and securities.
As part of its services, the Task Force is establishing a blog to relay critical real-time information on the development of policy related to the legislation, regulation and enforcement priorities, and will also be providing periodic updates directly to interested clients.
24 Sept 2008
SGAM Launches Hedge Fund Replicant
SGAM (Société Générale Asset Management) Alternative Investments launched the SGAM ETF T-Rex (for total return exposure), on Euronext Paris."It is possible to build a portfolio of dynamic strategies designed to replicate overall allocations in the hedge funds industry," SGAM says, "and thus attempt to replicate performances by taking up equivalent positions in these asset classes."
The portfolio invests in the main asset classes of equities, bonds and currencies, and is managed dynamically using liquid financial instruments such as futures. The new fund has no minimum subscription, and offers real-time liquidity and total transparency. Launched in a mutual fund format in August 2007, the strategy in an ETF format offers investors a choice between the subscription/redemption channel of a traditional fund and the flexibility of a real-time stock market negotiation via the ETF.
"Based on the concept of alternative beta, involving the replication of estimated hedge fund allocations in traditional asset classes," SGAM says, "academic studies show that hedge fund investments can on the whole be broken down into long/buy positions and short/sell positions in traditional asset classes."
The allocation process of the SGAM ETF T-Rex portfolio is based on a quantitative model, created by SGAM AI's structured asset management team. The model automatically calculates the allocation that optimises correlation to the index, composed of more than 2,000 hedge funds tracked in the HFR database. Positions are reviewed every month.
Société Générale Asset Management had EUR 309 billion ($452 billion) in assets under management at the end of June, including EUR 50 billion ($73.2 billion) in alternative investments.
SGAM Index is a wholly owned Société Générale Asset Management subsidiary that offers passive management, differentiated index management, structured ETFs and alternative beta products, and whose funds are commercialised by SGAM Alternative Investments.
22 Sept 2008
MSCI Barra Joins Morningstar Arrangement
MSCI Barra and Morningstar have entered into an arrangement to calculate and distribute hedge fund indices jointly.“We are delighted to be working with Morningstar, and believe that this exciting development will greatly benefit all users of our hedge fund indices. Going forward they will have access to enhanced hedge fund indices from Morningstar based upon MSCI Barra’s methodology applied to one of the largest hedge fund databases,” said David Brierwood, Chief Operating Officer, MSCI Barra.
“For more than 35 years, MSCI Barra has produced some of the most widely used and well-respected indices in the industry, and we’re pleased to apply the MSCI Hedge Fund Index Methodology to our extensive hedge fund database,” said Liz Kirscher, President of Data Services for Morningstar. “The combination of MSCI Barra’s methodology and Morningstar’s large hedge fund universe will allow us to offer a valuable set of robust benchmarks to both MSCI Barra clients and ours.”
These indices and the Morningstar database will replace the current MSCI Hedge Fund Indices and Database after a brief transition period. MSCI Barra will continue to calculate and distribute the MSCI Investable Hedge Fund Indices and the Barra Hedge Fund Risk Model. Morningstar will continue to calculate and distribute its existing Morningstar Hedge Fund Indices, including the Morningstar® 1000 Hedge Fund Index.
The MSCI Hedge Fund Index Methodology uses primary and secondary hedge fund characteristics to build the indices based on investment process, asset class, geography, and Global Industry Classification Standard (GICS®) sectors. This granularity is unique among hedge fund indices and allows investors to benchmark precise investment opportunities. Morningstar collects 300 data points from 8,500 hedge funds and funds of hedge funds for its database including information about portfolio holdings, strategy allocation and hedging techniques.
MSCI Barra is headquartered in New York, with research and commercial offices around the world. Morgan Stanley, a global financial services firm, is the controlling shareholder of MSCI Barra.
Recently named Index Provider of the Year at the 2008 European Pensions Awards, MSCI Barra is a provider of investment decision support tools worldwide, including indices and portfolio risk and performance analytics.
Morningstar, Inc. is a provider of independent investment research in North America, Europe, Australia, and Asia.
PROXY Governance, Inc.(PGI), a leading proxy advisory firm, has recommended that shareholders support management in the Cleveland-Cliffs proxy battle. 
Cleveland-Cliffs is a mining company that produces iron ore pellets and supplies metallurgical coal to the steelmaking industry; the company also has announced plans to build a biomass fuel plant.
As an Ohio corporation, Cleveland-Cliffs is subject to the state's "control share acquisition," which requires shareholder approval for any acquisition of shares which, when added to its existing ownership stake, would entitle the acquirer to control any of the following ranges of voting power in the election of directors: One-fifth or more but less than one-third, one-third or more but less than a majority, or a majority.
In this instance, Harbinger Capital Partners Master Fund 1, Ltd., and Harbinger Capital Partners Special Situations Fund, LP (“Harbinger”), which presently own approximately 15.6% of outstanding shares, seek to increase their aggregate holdings to greater than 20%, but less than 33 1/3%, of the company’s outstanding common shares.
PGI notes that Harbinger's acquisition could allow it to influence corporate strategy and decision-making, yet provides no immediate or obvious economic advantages to existing shareholders.
Cleveland-Cliffs is a mining company that produces iron ore pellets and supplies metallurgical coal to the steelmaking industry; the company also has announced plans to build a biomass fuel plant.
As an Ohio corporation, Cleveland-Cliffs is subject to the state's "control share acquisition," which requires shareholder approval for any acquisition of shares which, when added to its existing ownership stake, would entitle the acquirer to control any of the following ranges of voting power in the election of directors: One-fifth or more but less than one-third, one-third or more but less than a majority, or a majority.
In this instance, Harbinger Capital Partners Master Fund 1, Ltd., and Harbinger Capital Partners Special Situations Fund, LP (“Harbinger”), which presently own approximately 15.6% of outstanding shares, seek to increase their aggregate holdings to greater than 20%, but less than 33 1/3%, of the company’s outstanding common shares.
PGI notes that Harbinger's acquisition could allow it to influence corporate strategy and decision-making, yet provides no immediate or obvious economic advantages to existing shareholders.
18 Sept 2008
Hedge funds Down in August
The Morningstar 1000 Hedge Fund Index lost 3.12% in August, significantly underperforming U.S. and global equity and bond markets.
August, like July, was characterized by a large drop in emerging markets and commodities. "Even though commodity prices have started to descend, their lofty valuations slowed growth and demand, especially in emerging markets,” said Morningstar Hedge Fund Analyst Nadia Van Dalen. "It was only a matter of time before hedge funds riding these waves crashed."
The Morningstar Emerging Markets Hedge Fund Index lost 7.13% in August while the Global Trend Hedge Fund Index, which profited from a previous upward trend in commodities, lost 5.35%. Both of these indexes experienced similar losses in July. Through July however, these funds continued to receive the largest inflows of assets this year, approximately $10.9 billion.
Unlike emerging market hedge funds, U.S. equity hedge funds fared relatively well. The Morningstar US Equity Hedge Fund Index earned 0.47% in August. Even though these hedge funds performed better than those in other equity categories, they still underperformed the markets—the S&P 500 Index gained 1.45% in August. Similarly, the Morningstar US Small Cap Equity Hedge Fund Index lost 2.81% while the Russell 2000 Index gained 3.61%
The U.S. equity markets were propped up for most of the month by the rising dollar and weakening Euro. Morningstar calculates its hedge fund indexes by converting hedge fund returns into U.S. dollars using the spot rate at the end of the month. This methodology does not hedge U.S. dollar exposure, and reflects the negative impact of Euro-denominated funds.
Along with the Euro, European equity markets dropped in August, reacting to weak economic data. The Morningstar Europe Equity Hedge Fund Index dropped 3.33%. Year to date through July 31, funds in this index have seen the largest outflows, approximately $9.6 billion. Despite the appreciation of the Yen, developed Asian equity markets followed that of emerging markets in general. The Morningstar Developed Asia Equity Hedge Fund Index lost 3.10%. Currency traders on the right side of the dollar, Yen, and Euro trades helped to cushion the blow for the Global Non-trend Hedge Fund Index, which lost 1.63%.
Global bonds, as measured by the Lehman Global Aggregate index ended the month in the red, and the Morningstar Global Debt Hedge Fund Index and the Morningstar Debt Arbitrage Hedge Fund Index both experienced losses of 3.64% and 1.33%, respectively. During the month, credit spreads widened amid financial distress at Fannie Mae and Freddie Mac, hurting funds in these indexes. Volatility in the credit markets also affected funds in the Morningstar Convertible Arbitrage Hedge Fund Index, which lost 1.08%.
Distressed securities funds and corporate event funds continued to wait for a market turn around. The Morningstar Distressed Securities Hedge Fund Index and Corporate Actions Hedge Fund Index dropped 1.28% and 2.34%, respectively. Multi-strategy funds outperformed hedge funds of funds. These indexes fell 2.40% and 3.99%, respectively.
________________________________
August, like July, was characterized by a large drop in emerging markets and commodities. "Even though commodity prices have started to descend, their lofty valuations slowed growth and demand, especially in emerging markets,” said Morningstar Hedge Fund Analyst Nadia Van Dalen. "It was only a matter of time before hedge funds riding these waves crashed."
The Morningstar Emerging Markets Hedge Fund Index lost 7.13% in August while the Global Trend Hedge Fund Index, which profited from a previous upward trend in commodities, lost 5.35%. Both of these indexes experienced similar losses in July. Through July however, these funds continued to receive the largest inflows of assets this year, approximately $10.9 billion.
Unlike emerging market hedge funds, U.S. equity hedge funds fared relatively well. The Morningstar US Equity Hedge Fund Index earned 0.47% in August. Even though these hedge funds performed better than those in other equity categories, they still underperformed the markets—the S&P 500 Index gained 1.45% in August. Similarly, the Morningstar US Small Cap Equity Hedge Fund Index lost 2.81% while the Russell 2000 Index gained 3.61% The U.S. equity markets were propped up for most of the month by the rising dollar and weakening Euro. Morningstar calculates its hedge fund indexes by converting hedge fund returns into U.S. dollars using the spot rate at the end of the month. This methodology does not hedge U.S. dollar exposure, and reflects the negative impact of Euro-denominated funds.
Along with the Euro, European equity markets dropped in August, reacting to weak economic data. The Morningstar Europe Equity Hedge Fund Index dropped 3.33%. Year to date through July 31, funds in this index have seen the largest outflows, approximately $9.6 billion. Despite the appreciation of the Yen, developed Asian equity markets followed that of emerging markets in general. The Morningstar Developed Asia Equity Hedge Fund Index lost 3.10%. Currency traders on the right side of the dollar, Yen, and Euro trades helped to cushion the blow for the Global Non-trend Hedge Fund Index, which lost 1.63%.
Global bonds, as measured by the Lehman Global Aggregate index ended the month in the red, and the Morningstar Global Debt Hedge Fund Index and the Morningstar Debt Arbitrage Hedge Fund Index both experienced losses of 3.64% and 1.33%, respectively. During the month, credit spreads widened amid financial distress at Fannie Mae and Freddie Mac, hurting funds in these indexes. Volatility in the credit markets also affected funds in the Morningstar Convertible Arbitrage Hedge Fund Index, which lost 1.08%.
Distressed securities funds and corporate event funds continued to wait for a market turn around. The Morningstar Distressed Securities Hedge Fund Index and Corporate Actions Hedge Fund Index dropped 1.28% and 2.34%, respectively. Multi-strategy funds outperformed hedge funds of funds. These indexes fell 2.40% and 3.99%, respectively.
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16 Sept 2008
Brotman Boldly Launches Market Timing Fund
Brotman Capital Management has chosen this, the worst year for hedge funds in over a decade, to launch its flagship Market Timing Fund.Since inception through August 2008 the fund is up 14% net of fees. The fund has a $100,000 minimum investment, 2% Management fee and a 20% Incentive allocation.
Domiciled in Boca Raton, Florida, Brotman Capital Partners began trading in January 2008. The proprietary Trend Timing Model that the hedge fund employs dictates when the partnership should be long, short, or retained in cash.
Although trend timing is certainly not a mainstream Wall Street philosophy, the General Partner believes that the Trend Timing Model is valid and will deliver superior returns in the long run when compared to a “just buy and hold the S&P 500” philosophy.
"Even though most market gurus believe nobody can “Time the Market” correctly and consistently," Dr. Randy Brotman, Chairman and CEO, stated, "We are very pleased with our performance and we never use margin to enhance our results."
SEC Plans to Protect Lehman Investors
While coordinating with overseas regulators to protect Lehman's customers and maintain orderly markets, the SEC staff who have been on-site at the U.S. broker-dealer will remain in place to oversee the orderly transfer of customer assets to one or more SIPC-insured brokerage firms.In cases such as this, the SEC says, Lehman Brothers' customers will benefit from their extensive protections under SEC rules, including segregation of customer securities and cash as well as insurance by the Securities Investor Protection Corporation. These safeguards are designed to ensure that a broker-dealer's customers will be protected.
"For several days, we have worked closely with regulators around the world including the FSA in the United Kingdom, the BaFin in Germany, and the FSA in Japan, as well as our counterparts in other markets around the world, to coordinate our actions in the interest of orderly markets," said SEC Chairman Christopher Cox. "In doing so we have also worked closely with the Treasury and the Federal Reserve and market participants. We are committed to using our regulatory and supervisory authorities to reduce the potential for dislocations from Lehman's unwinding, and to maintain the smooth functioning of the financial markets."
In the meantime, Lehman Brothers Holdings Inc. will continue to operate while the bankruptcy process facilitates the reconciliation of claims and the realization of value from its assets in an orderly fashion, according to the SEC.
15 Sept 2008
Lehman Goes Banktrupt in High Profile Casualty Case
Lehman Brothers, Wall Street's fourth biggest investment bank has filed for bankruptcy, making it the largest and highest-profile casualty of the global credit crisis, with approximately $639 billion in assets.
The bank said the Chapter 11 filing will not include its broker-dealer operations and other units, including Neuberger Berman. Lehman is looking at selling its broker-dealer operations, and is still in advanced discussions with a number of potential buyers of its investment management division.
Investors in recent weeks had grown increasingly jittery about Lehman's $46 billion of mortgages and asset-backed securities, as well as its credit rating and its ability to raise capital.
Bankruptcy also represents a bad end to Chief Executive Dick Fuld's four-decade career at Lehman. Fuld, who piloted the investment bank through prior crises with aplomb, was widely seen as too slow to recognize Lehman's need to raise capital and shed bad assets.
Lehman listed its biggest unsecured creditors as Citigroup Inc, Bank of New York Mellon Corp, Aozora Bank, and Mizuho Financial Group Inc. Citi and Bank of New York Mellon are trustees for Lehman bonds.
The firm said that as of May 31, it owed about $110.5 billion on account of senior unsecured notes, about $12.6 billion on account of subordinated unsecured notes and about $5 billion on account of junior subordinated notes.
The bank said the Chapter 11 filing will not include its broker-dealer operations and other units, including Neuberger Berman. Lehman is looking at selling its broker-dealer operations, and is still in advanced discussions with a number of potential buyers of its investment management division.
Investors in recent weeks had grown increasingly jittery about Lehman's $46 billion of mortgages and asset-backed securities, as well as its credit rating and its ability to raise capital. Bankruptcy also represents a bad end to Chief Executive Dick Fuld's four-decade career at Lehman. Fuld, who piloted the investment bank through prior crises with aplomb, was widely seen as too slow to recognize Lehman's need to raise capital and shed bad assets.
Lehman listed its biggest unsecured creditors as Citigroup Inc, Bank of New York Mellon Corp, Aozora Bank, and Mizuho Financial Group Inc. Citi and Bank of New York Mellon are trustees for Lehman bonds.
The firm said that as of May 31, it owed about $110.5 billion on account of senior unsecured notes, about $12.6 billion on account of subordinated unsecured notes and about $5 billion on account of junior subordinated notes.
WhiteRock Says Markets May Be Rollercoastering but Recruitment is Accelerating
Recruiters at WhiteRock Group are seeing increased opportunity for job-seekers and hiring firms. The meltdown in sub-prime mortgages, and the ensuing credit crunch, has led to uncertainty and turmoil throughout financial markets worldwide, says WhiteRock, but as with any deal, what’s bad news for one party is often very good news for another.
"There’s never been a better time to look for a job on Wall Street, or the Asian financial markets," says Gustavo Dolfino, founder and chief executive officer of WhiteRock Group. And amazingly, there’s never been a better time to be looking for talent either."
To understand why the recruitment business is booming even as the industry appears to be retrenching, one must understand that the overheated markets of the past few years have actually made recruiting more difficult.
Dolfino, who was quoted last week in Crain’s New York Business as well as the Wall Street Journal and is frequently interviewed for market perspective by CNBC, Bloomberg News and other financial news services, explains.
"With markets soaring these past few years, the price of top talent went through the roof. Everyone had golden handcuffs. Nobody wanted to work for anything but a top-tier firm. Now, you’ve got a situation where suddenly all those people who were ‘unhirable’ might be available. And they don’t necessarily want to work at a top-tier firm – those are the ones who’ve been in the paper everyday, mostly with bad news. Right now, the smart money is picking people up."
Dolfino pointed out that the greatest growth is currently in Asia, especially China, where "If you can get a CFO on the phone, you can get a job." He adds, "And we have everyone’s phone number."
To keep up with this still exploding demand, WhiteRock Group has opened three new offices, all in Asia, and brought on more top recruiting talent. The company is now nearly fifty professionals strong and expects to add to that number before year’s end.
12 Sept 2008
Insider uncorks secret liquor store code
The highly descriptive terms used to describe wines sold by Sweden's alcohol retail monopoly Systembolaget are riddled with secret code, according to an inside source.
read more | digg story
read more | digg story
Hedge Funds Hit An All Time Low
New investments in hedge funds for the first six months of 2008 was below $30 billion, according to Hedge Fund Research, way below the $118 billion raised for the same period the year before, making 2008 is the worst year on record for the industry as the average hedge fund dropped off more than 4%.According to research, the unexpected downturn will lead investors to rethink their investments or ask fund managers to lower their fees from the current rate of 2% and reduce their 20& cut on profits. Problems at hedge funds may also invite a government probe.
Dan McAllister, treasurer and tax collector of San Diego County, attributed the hedge fund's popularity to it being seen as a panacea and a sure way to earn big money fast. "But maybe it's time to be a little cautious, and it's time to look at things with a more discreet eye," McAllister told the New York Times.
In anticipation of harder times ahead, fund managers are cutting employee Christmas bonuses, said a study slated to be released this week by Glocap, a hedge fund recruitment company. Recruiting firms like Heidrick and Struggle are maintaining a watch list of problematic hedge funds. Tim Holt, a partner in Heidrick who supervises the company's Wall Street recruitment task, has 100 hedge funds on its watch list and expects 50 to 80 to be added in the next few months.
Pegasus' Auto Loan Fund Shows Positive Trend
Hedge fund advisor and manager American Pegasus LDG, LCC., is seeing the 36th subsequent month of positive returns for the Pegasus Auto Loan Fund, which invests in US subprime auto loans.
The fund has returned an average of 1.55% per month with 100% positive months since inception in September of 2005.
Providing the opportunity to profit from stable high yields via sub-prime auto loans with collateral in the form of automobiles, the fund currently has $89 million under management and uses no leverage.
"In the $200 billion auto industry there is high demand for auto loan originations." The Pegasus preformance sheet shows, "In 2005, 4.7% of U.S. workers used public transportation and 90% workers own a car; 1/3 households own > 1 car; Average 1.9 cars/household"
That number rises and falls according to energy fluctuations, according to the Energy Information Administration, "Transportation costs have increased due to many factors related to travel and prices paid for transportation fuel, while being somewhat offset by improved fuel economy." But the numbers remain viable ant the US now has 765 motor vehicles per 1000 capita.
The American Pegasus Auto Loan Fund directly sources fully, collateralized sub prime US auto loans. Underwriting criteria is strictly enforced along with well designed risk controls.
Pegasus was founded in 1997 as an investment advisory firm focusing on equity investment in managed accounts. The advisory firm launched first equity long–short hedge fund was established in the same year. In 2001, Pegasus began to manage portfolios in currencies and commodities, launching a series of life settlement funds., followed by the American Pegasus Auto Loan Fund in 2005. American Pegasus Investment Management is registered with the SEC as an investment advisor.
The fund has returned an average of 1.55% per month with 100% positive months since inception in September of 2005.Providing the opportunity to profit from stable high yields via sub-prime auto loans with collateral in the form of automobiles, the fund currently has $89 million under management and uses no leverage.
"In the $200 billion auto industry there is high demand for auto loan originations." The Pegasus preformance sheet shows, "In 2005, 4.7% of U.S. workers used public transportation and 90% workers own a car; 1/3 households own > 1 car; Average 1.9 cars/household"
That number rises and falls according to energy fluctuations, according to the Energy Information Administration, "Transportation costs have increased due to many factors related to travel and prices paid for transportation fuel, while being somewhat offset by improved fuel economy." But the numbers remain viable ant the US now has 765 motor vehicles per 1000 capita.
The American Pegasus Auto Loan Fund directly sources fully, collateralized sub prime US auto loans. Underwriting criteria is strictly enforced along with well designed risk controls.
Pegasus was founded in 1997 as an investment advisory firm focusing on equity investment in managed accounts. The advisory firm launched first equity long–short hedge fund was established in the same year. In 2001, Pegasus began to manage portfolios in currencies and commodities, launching a series of life settlement funds., followed by the American Pegasus Auto Loan Fund in 2005. American Pegasus Investment Management is registered with the SEC as an investment advisor.
11 Sept 2008
International regulators and financial industry players continue to join the membership of the IFSB
The Council of the Islamic Financial Services Board (IFSB) has resolved to admit Korea's regulatory and supervisory authorities as the latest inclusion to the membership of the IFSB. The admission of the two Korean authorities, together with other new members has increased the IFSB membership to 175.
The newly admitted members are as follows:
1. Financial Services Commission & Financial Supervisory Service, Korea
2. Khaleeji Commercial Bank B.S.C.(c), Bahrain
3. Kuwait International Bank, Kuwait
4. Unicorn International Islamic Bank, Malaysia
5. Commercial Bank of Dubai, United Arab Emirates
6. Deutsche Bank AG, United Arab Emirates
7. Emirates Islamic Bank, United Arab Emirates
8. Tokio Marine Insurance Middle East, United Arab Emirates
9. Gatehouse Bank plc, United Kingdom
The new admissions reflect the continuing interest of the Islamic financial services industry in the work undertaken by the IFSB. The IFSB members now total 175 organisations from 34 jurisdictions comprising 42 regulatory and supervisory authorities, six international inter-governmental organisations and 127 market players and professional firms. The full list of the 175 IFSB members can be seen on www.ifsb.org. Their roles and responsibilities (by category) are detailed in the IFSB Articles of Agreement which is downloadable from the website.
The IFSB is an international standard-setting organisation that promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry, broadly defined to include banking, capital markets and insurance sectors.
The newly admitted members are as follows:
1. Financial Services Commission & Financial Supervisory Service, Korea
2. Khaleeji Commercial Bank B.S.C.(c), Bahrain
3. Kuwait International Bank, Kuwait
4. Unicorn International Islamic Bank, Malaysia
5. Commercial Bank of Dubai, United Arab Emirates
6. Deutsche Bank AG, United Arab Emirates
7. Emirates Islamic Bank, United Arab Emirates
8. Tokio Marine Insurance Middle East, United Arab Emirates
9. Gatehouse Bank plc, United Kingdom
The new admissions reflect the continuing interest of the Islamic financial services industry in the work undertaken by the IFSB. The IFSB members now total 175 organisations from 34 jurisdictions comprising 42 regulatory and supervisory authorities, six international inter-governmental organisations and 127 market players and professional firms. The full list of the 175 IFSB members can be seen on www.ifsb.org. Their roles and responsibilities (by category) are detailed in the IFSB Articles of Agreement which is downloadable from the website.
The IFSB is an international standard-setting organisation that promotes and enhances the soundness and stability of the Islamic financial services industry by issuing global prudential standards and guiding principles for the industry, broadly defined to include banking, capital markets and insurance sectors.
Lend America Launches Exit Strategy
Lend America announced the launch of an exit strategy to help leading Wall Street firms and hedge funds quickly monetize their residential mortgage portfolios. As the 12th largest direct-to-consumer FHA lender in the US, Lend America is offering investors the opportunity to refinance performing mortgage portfolios within 10 days and work with non-performing portfolios to maximize cash flow and deliver a profitable exit strategy.
"Lend America is already working with leading Wall Street firms and hedge funds who are trading and or holding adjustable rate or other performing paper, "commented Michael Ashley, Chief Business Strategist of Lend America. "Because of our significant number of highly trained loan specialist in FHA lending and our ability to place loans directly into GNMA Mortgage Backed Securities, many major investment firms consider Lend America one of the best resources to turn to for help and work with from spreadsheet to closing."
Lend America's model was developed to help any financial institution or investor looking to quickly monetize or improve cash flow from a residential mortgage portfolio.
Ashley continued, "Many investors are looking for instant liquidity or increased cash flow from mortgage investments in this challenging environment."
KP Secutiries and Sophie Capital Join Forces to Raise Funds
Hedge fund managers KP Securities and Sophia Capital Securities announced that they are joining forces, enhancing the 2 firms ability to raise capital for alternative investment managers. The transaction between the two firms was finalized on September 1, 2008.
The new combined company, Belvedere Global Investors LLC, is headquartered in Belvedere, California, a short distance from the San Francisco financial district. The company is a distribution boutique focused on alternative investments. It raises capital for investment manager clients that include hedge, private equity and venture capital funds and funds of funds, as well as for private companies seeking direct investments.
"This transaction will allow our team to continue deepening its geographic coverage of investing clients and fund managers, bringing under one roof a truly global collection of relationships", said Keith Pagan of KP Securities.
Over the past 4 years, the combined team, now run by Keith Pagan and Patrick Beaudan, the principals of Belvedere, has raised over $1.5 billion in capital for alternative investment managers in the U.S., Europe and Asia, working with investors in over 50 different countries.
"The combination of our firms enhances the depth of the professional assets we can deploy in supporting the capital raising efforts of an increasing range of clients in the alternative investment space, while preserving our focus on delivering top-notch investor relations services", said Patrick Beaudan.
As part of its activities, Belvedere also organizes private roundtables, where institutional investors meet select alternative investment managers over the course of a high-quality, one-day event that excludes vendors and the press.
The new combined company, Belvedere Global Investors LLC, is headquartered in Belvedere, California, a short distance from the San Francisco financial district. The company is a distribution boutique focused on alternative investments. It raises capital for investment manager clients that include hedge, private equity and venture capital funds and funds of funds, as well as for private companies seeking direct investments.
"This transaction will allow our team to continue deepening its geographic coverage of investing clients and fund managers, bringing under one roof a truly global collection of relationships", said Keith Pagan of KP Securities.
Over the past 4 years, the combined team, now run by Keith Pagan and Patrick Beaudan, the principals of Belvedere, has raised over $1.5 billion in capital for alternative investment managers in the U.S., Europe and Asia, working with investors in over 50 different countries.
"The combination of our firms enhances the depth of the professional assets we can deploy in supporting the capital raising efforts of an increasing range of clients in the alternative investment space, while preserving our focus on delivering top-notch investor relations services", said Patrick Beaudan.
As part of its activities, Belvedere also organizes private roundtables, where institutional investors meet select alternative investment managers over the course of a high-quality, one-day event that excludes vendors and the press.
9 Sept 2008
Hedge Fund Man Group Hires New Middle East CEO
The CEO of Man Group, Peter Clarke, announced the appointment of the new CEO of the Middle East arm as Patrick Merville, to take effect from 1 October, following the retirement of Antoine Massad.
Man, a global leader in alternative investments, was the first hedge fund provider to open a local office in the Middle East 22 years ago. Under the leadership of Massad, Man has broken new ground and today enjoys clear leadership in the region.
Merville joined Man three years ago as deputy regional CEO and head of institutional business. He succeeds Antoine Massad who has decided to retire after nearly 20 years' service with Man to pursue private interests.
Mr Clarke said the appointment was testament to Man's ability to attract the best talent in the industry.
"Patrick takes the reins of the leading alternative investment firm in the Middle East at a time when sophisticated private and institutional investors are, increasingly, seeking an alternative to the traditional investment classes," he said.
"For Patrick, this is as a step up in his long career in alternatives. Patrick's continuing goal will drive the business to new levels of success in the region on the back of Man's range of innovative products and the region's growing role in the global economy."
Before joining Man, Mr Merville was a director at Merrill Lynch in London, where he spent six years, first as an institutional salesperson in emerging market equities and then in the hedge fund prime brokerage sales group. An experienced banker with exposure to hedge funds and alternative investments throughout his career he has also held roles at HSBC in New York as vice-president in institutional sales, emerging market equities, and at Credit Agricole where he was an associate in the private equity business.
Merville holds a BA in Economics from the American University of Beirut and an MBA in Finance from Columbia Business School.
Man, a global leader in alternative investments, was the first hedge fund provider to open a local office in the Middle East 22 years ago. Under the leadership of Massad, Man has broken new ground and today enjoys clear leadership in the region.
Merville joined Man three years ago as deputy regional CEO and head of institutional business. He succeeds Antoine Massad who has decided to retire after nearly 20 years' service with Man to pursue private interests.
Mr Clarke said the appointment was testament to Man's ability to attract the best talent in the industry.
"Patrick takes the reins of the leading alternative investment firm in the Middle East at a time when sophisticated private and institutional investors are, increasingly, seeking an alternative to the traditional investment classes," he said.
"For Patrick, this is as a step up in his long career in alternatives. Patrick's continuing goal will drive the business to new levels of success in the region on the back of Man's range of innovative products and the region's growing role in the global economy."
Before joining Man, Mr Merville was a director at Merrill Lynch in London, where he spent six years, first as an institutional salesperson in emerging market equities and then in the hedge fund prime brokerage sales group. An experienced banker with exposure to hedge funds and alternative investments throughout his career he has also held roles at HSBC in New York as vice-president in institutional sales, emerging market equities, and at Credit Agricole where he was an associate in the private equity business.
Merville holds a BA in Economics from the American University of Beirut and an MBA in Finance from Columbia Business School.
Wall Street Jounal Columnist Speaks at Hedge Fund Summit
Wall Street Journal columnist Gregory Zuckerman and Ely Razin, senior director of strategy, Westlaw Business, will deliver a luncheon presentation on "State of the Hedge Funds for 2008" at a upcoming Hedge Fund General Counsel Summit, according to Incisive Media, publisher of Corporate Counsel magazine.
The event will take place September 25, 2008 at The Sheraton Hotel in Stamford, Connecticut. Targeted to general counsel and deputy counsel in the hedge fund industry, the one-day conference will present insights into the current state of the industry in today's uncertain times.
Zuckerman writes the "Heard on the Street" column for the Wall Street Journal and authored two recent articles on hedge funds: "Shakeout Roils Hedge Fund World" and "Hedge Funds Are Caught in a Tight Spot." He recently won the NY Press Club Journalism award, and was nominated for a 2008 Gerald Loeb award for coverage of the mortgage meltdown. Zuckerman is a frequent commentator for CNBC on hedge funds and stocks.
Additional industry experts and practitioners who will be speaking at the conference include, Tia Breakley, vice president, The Blackstone Group LP, David Brooks, managing director & deputy GC, Fortress Investment Group LLC, and Simon Lorne, vice chairman and chief legal officer, Millennium Management LLC.
Corporate Counsel's Hedge Fund General Counsel Summit is part of Incisive Media Conferences & Trade Shows, a producer of educational and networking events for business leaders and professionals.
The event will take place September 25, 2008 at The Sheraton Hotel in Stamford, Connecticut. Targeted to general counsel and deputy counsel in the hedge fund industry, the one-day conference will present insights into the current state of the industry in today's uncertain times. Zuckerman writes the "Heard on the Street" column for the Wall Street Journal and authored two recent articles on hedge funds: "Shakeout Roils Hedge Fund World" and "Hedge Funds Are Caught in a Tight Spot." He recently won the NY Press Club Journalism award, and was nominated for a 2008 Gerald Loeb award for coverage of the mortgage meltdown. Zuckerman is a frequent commentator for CNBC on hedge funds and stocks.
Additional industry experts and practitioners who will be speaking at the conference include, Tia Breakley, vice president, The Blackstone Group LP, David Brooks, managing director & deputy GC, Fortress Investment Group LLC, and Simon Lorne, vice chairman and chief legal officer, Millennium Management LLC.
Corporate Counsel's Hedge Fund General Counsel Summit is part of Incisive Media Conferences & Trade Shows, a producer of educational and networking events for business leaders and professionals.
8 Sept 2008
Hedge Fund Gartmore Launches Absolute Return Fund
Hedge Fund manager Gartmore Investment Management Limited is launching the Gartmore European Absolute Return Fund, to be co-managed by Roger Guy and Guillaume Rambourg, subject to regulatory approval.
The new fund will be a UCITS III limited issue vehicle with capacity set at £200 million, the fund's three week offer period starts on 6th October before its launch on 31st October 2008.
The Gartmore European Absolute Return Fund, the first in a series of absolute return offerings planned by Gartmore, will seek to deliver positive absolute returns over the long-term in all market conditions by taking long and short positions in equities and derivatives. It will be managed using a similar strategy to Gartmore's flagship European equity long/short hedge fund - the Gartmore AlphaGen Capella Fund.
Commenting on the proposed launch, Richard Pursglove, Head of UK Retail at Gartmore, said: "Over the last decade we have transformed our business into a specialist provider of long-only and alternative products. This latest development is an important strategic addition to our retail fund range, and has been driven by substantial client interest from discretionary asset managers, wealth managers and IFAs seeking uncorrelated, positive returns."
He concluded: "Gartmore's substantial experience in shorting, combined with it long established hedge fund infrastructure, will be attractive to investors looking for absolute returns."
Gartmore is a leading provider of long-only and alternative investment solutions and one of the pioneers of managing hedge funds on behalf of institutional investors. Since entering the hedge fund arena in 1999, Gartmore has built an $11billon** hedge fund business and is one of the largest hedge fund providers in Europe.
The new fund will be a UCITS III limited issue vehicle with capacity set at £200 million, the fund's three week offer period starts on 6th October before its launch on 31st October 2008.
The Gartmore European Absolute Return Fund, the first in a series of absolute return offerings planned by Gartmore, will seek to deliver positive absolute returns over the long-term in all market conditions by taking long and short positions in equities and derivatives. It will be managed using a similar strategy to Gartmore's flagship European equity long/short hedge fund - the Gartmore AlphaGen Capella Fund.
Commenting on the proposed launch, Richard Pursglove, Head of UK Retail at Gartmore, said: "Over the last decade we have transformed our business into a specialist provider of long-only and alternative products. This latest development is an important strategic addition to our retail fund range, and has been driven by substantial client interest from discretionary asset managers, wealth managers and IFAs seeking uncorrelated, positive returns."
He concluded: "Gartmore's substantial experience in shorting, combined with it long established hedge fund infrastructure, will be attractive to investors looking for absolute returns."
Gartmore is a leading provider of long-only and alternative investment solutions and one of the pioneers of managing hedge funds on behalf of institutional investors. Since entering the hedge fund arena in 1999, Gartmore has built an $11billon** hedge fund business and is one of the largest hedge fund providers in Europe.
Venus Capital Launches Venus (India) Index Plus Fund
Venus Capital Management, Inc. has launched the Venus Index Plus Fund. The general objective of the Fund is to outperform the S&P CNX Nifty India Index without changing the weights in the Index.Venus Capital, after conducting a detailed analysis of India-dedicated hedge funds, found that most India funds, both inside and outside of India, underperformed the S&P CNX Nifty India index on a risk-adjusted basis. They have high Beta with a low Sharpe ratio. This became even more evident this year when the Indian markets dropped approximately 40% and a typical India fund lost 40-55% in the first six months of the year. Venus has segregated Alpha from Beta and has products for investors seeking either. However, Venus feels that “2 and 20” fees should not be paid to obtain Beta and hence, have launched the flat fee Index fund.
The Index fund is engineered to track and outperform the benchmark Indian Index without changing the weights of the Index constituents. It will be available in unlevered, 1x, 2x levered and short versions with daily liquidity, enabling institutional investors to time the market and take advantage of their macro views and also use as a hedge against exposure to long biased India managers.
Venus Capital expects this product to outperform the S&P CNX Nifty India index since the S&P CNX Nifty India Index futures typically roll at a discount to fair value of the underlying S&P CNX Nifty India index on a monthly basis and the left over cash (as futures require only 25% margin) can be deployed in short-term instruments..
The fund offers beta exposure to one of the fastest growing economies, in a cost efficient manner compared to traditional mutual funds and hedge funds. “We do not believe investors should pay 2 and 20 fees for Beta” said Vik, CEO of Venus Capital Management, Inc. Venus Capital has been in business since 1994 and is the oldest India-focused hedge fund company. The founder and CEO, Vik Mehrotra, has over 20 years of investment experience and is assisted by over 20 analysts and traders.
Investors can request a private placement memorandum for the Venus (India) Index Plus Fund by visiting the manager's website. The fund is open to accredited and qualified investors only and the minimum initial investment amount is $1,000,000.
Venus Capital Management, Inc. was founded in 1994. The company was registered with the Securities & Exchange Commission in the United States as a Registered Investment Advisory company in 2000. From inception and until today, the firm manages wealth for several family offices and institutions with an emphasis on increased allocations to Asia in a risk averse manner. Over the years, the firm has evolved from solely a money management firm for wealthy families to a more specialized firm today focused on making investments in Asia. This investment focus enables us to leverage the strengths of our investment team and capitalize upon the growth potential of the global markets.
5 Sept 2008
Hedge Fund TriAlpha Explores Diversified Fund Launches
TriAlpha recently a launched property hedge fund of hedge funds, the TriAlpha Global Property Strategy Fund in June this year. The fund seeks absolute returns by focusing on hedge fund managers that specialise in the global property sector. In its first month the fund outperformed the FTSE EPRA Global Index by an estimated 11%.
Included in the portfolio are recognised names such as Credit Suisse, Thames River and New Star Property hedge funds.
“We are already seeing a high level of interest in the TriAlpha Global Property Strategy Fund and by having the fund available through Transact we are broadening the availability of this exciting new offering,” commented Cobus Kruger, director at TriAlpha.
Minimum investment for the TriAlpha Global Property Strategy Fund is $5 million (or equivalent).
Trialpha's five sub funds of the 'TriAlpha Alternative Strategy Unit Trust' have been also approved as restricted recognised schemes for distribution in Singapore.
"With our roots in Stonehage (our private wealth management parent company,) we have extensive experience in dealing with and providing investment solutions to private clients."
Cobus Kruger, Director at TriAlpha, says, "Our hedge fund of funds products have been received well by these clients, fitting in neatly with their investment objectives and risk profiles. With increasing numbers of private banks in Singapore we believe that our hedge fund of funds products will be an appropriate solution for their clients."
The five absolute return funds offer investors a variety of risk profiles and investment strategies, the 'TriAlpha Relative Value Fund', which invests in market-neutral, multi-strategy event driven, multi-strategy arbitrage and option arbitrage; aims to achieve stable, absolute returns with volatility similar to the Citigroup World Government Bond Index.
The 'TriAlpha Multi Strategy Fund' invests across Asia, European and U.S. hedge strategies, emerging markets, macro, event driven and arbitrage; aims to offer stable, absolute returns with volatility similar to the Citigroup World Government Bond Index.
The 'TriAlpha Growth Strategy Fund', which invests in Asia, European and US hedge strategies as well as emerging markets and macro hedge funds with a smaller exposure to arbitrage strategies than the Multi Strategy fund; looks to achieve absolute returns with lower volatility than the MSCI World Equity Index.
The 'TriAlpha Hedge Equity Fund' which invests in Asia, European and US hedge strategies; offers investors absolute returns with lower volatility than the MSCI World Equity Index.
And finaly, the 'TriAlpha Global Property Strategy Fund' will focus on hedge fund managers that specialise in the global property sector.
Included in the portfolio are recognised names such as Credit Suisse, Thames River and New Star Property hedge funds.
“We are already seeing a high level of interest in the TriAlpha Global Property Strategy Fund and by having the fund available through Transact we are broadening the availability of this exciting new offering,” commented Cobus Kruger, director at TriAlpha.
Minimum investment for the TriAlpha Global Property Strategy Fund is $5 million (or equivalent).
Trialpha's five sub funds of the 'TriAlpha Alternative Strategy Unit Trust' have been also approved as restricted recognised schemes for distribution in Singapore."With our roots in Stonehage (our private wealth management parent company,) we have extensive experience in dealing with and providing investment solutions to private clients."
Cobus Kruger, Director at TriAlpha, says, "Our hedge fund of funds products have been received well by these clients, fitting in neatly with their investment objectives and risk profiles. With increasing numbers of private banks in Singapore we believe that our hedge fund of funds products will be an appropriate solution for their clients."
The five absolute return funds offer investors a variety of risk profiles and investment strategies, the 'TriAlpha Relative Value Fund', which invests in market-neutral, multi-strategy event driven, multi-strategy arbitrage and option arbitrage; aims to achieve stable, absolute returns with volatility similar to the Citigroup World Government Bond Index.
The 'TriAlpha Multi Strategy Fund' invests across Asia, European and U.S. hedge strategies, emerging markets, macro, event driven and arbitrage; aims to offer stable, absolute returns with volatility similar to the Citigroup World Government Bond Index.
The 'TriAlpha Growth Strategy Fund', which invests in Asia, European and US hedge strategies as well as emerging markets and macro hedge funds with a smaller exposure to arbitrage strategies than the Multi Strategy fund; looks to achieve absolute returns with lower volatility than the MSCI World Equity Index.
The 'TriAlpha Hedge Equity Fund' which invests in Asia, European and US hedge strategies; offers investors absolute returns with lower volatility than the MSCI World Equity Index.
And finaly, the 'TriAlpha Global Property Strategy Fund' will focus on hedge fund managers that specialise in the global property sector.
4 Sept 2008
Unigestion Hires Former Julius Baer Manager as Head of hedge Funds
Privately owned asset manager, Unigestion, has appointed Konstantinos Iordanidis as Managing Director and Head of Hedge Funds. Unigestion has $11 billion invested in hedge funds, private equity funds and quantitative equity strategies.Iordanidis is a co-founder of Z.I. Investment, LLC, a global macro hedge fund in Chicago and former Head of Asset Allocation at Julius Baer Asset Management in Zurich from 2003 to 2005. He joins from Olympia Capital Management in Paris where he has been Co-Chief Investment Officer since 2005.
Based in Geneva, his role will be to lead the development of Unigestion’s fund of hedge funds business which comprises 43 investment professionals based in Geneva, London, New York, Paris, Singapore and Guernsey.
The arrival of Iordanidis will provide the opportunity for Bernard Sabrier, Chairman of Unigestion, and Patrick Fenal, CEO, to devote more time to the overall management of the Group focusing on the strategic direction of Unigestion over the next decade. Both will continue to have a key involvement in the fund of hedge fund business, including close relationships with hedge fund managers and Unigestion’s clients.
"It is a natural move for us to reinforce our management structure as we continue to build a multi-disciplinary, multi-cultural and multi-geographic hedge fund team delivering superior quality products to our clients in a consistent and disciplined way." Patrick Fenal, CEO of Unigestion said.
"We are proud to have attracted such a talented individual to strengthen our team." Chairman of Unigestion Bernard Sabrier added, "No doubt he and the team will build on our existing expertise and continue to provide our clients with a combination of products and client service at the leading edge of the fund of hedge fund industry."
Hedge Fund Consolidation
A survey released Wednesday by Global Custodian ranked the world's top hedge fund administrators and found the industry could be in for consolidation in the near future.
The survey queried clients of 56 hedge fund administrators and received nearly 1,200 responses. It was the largest number of administrators the survey had ever analyzed and more hedge fund clients responded than ever before.
Among large firms, Citco Fund Services received the highest scores from its clients, followed by Goldman Sachs Administrative Services, IFS and PNC Global Investment Servicing. Smaller firms, however, scored somewhat higher with their clients. Kaufman Rossin Fund Services topped the list of smaller administrators, followed by ATC Fund Services, AIS Fund Administration and Pinnacle Fund Administration.
Despite the fact smaller firms tended to have more satisfied customers, Dominic Hobson, editor of Global Custodian, predicted greater merger and acquisition activity among administrators. He said it would be surprising if the industry were able to continue to support large numbers of providers.
"There is now evidence that a renewed round of consolidation is in the offing," Hobson said. "In any event, the buyers are likely to be different from the banks which dominated the acquisition process in the early years of this century."
Hobson predicts that in addition to administrators buying each other up, new firms will continue to form through back office spin-offs. There are also likely to be new start-ups looking to serve the smaller hedge funds now being dropped by major providers.
The survey queried clients of 56 hedge fund administrators and received nearly 1,200 responses. It was the largest number of administrators the survey had ever analyzed and more hedge fund clients responded than ever before.
Among large firms, Citco Fund Services received the highest scores from its clients, followed by Goldman Sachs Administrative Services, IFS and PNC Global Investment Servicing. Smaller firms, however, scored somewhat higher with their clients. Kaufman Rossin Fund Services topped the list of smaller administrators, followed by ATC Fund Services, AIS Fund Administration and Pinnacle Fund Administration.
Despite the fact smaller firms tended to have more satisfied customers, Dominic Hobson, editor of Global Custodian, predicted greater merger and acquisition activity among administrators. He said it would be surprising if the industry were able to continue to support large numbers of providers."There is now evidence that a renewed round of consolidation is in the offing," Hobson said. "In any event, the buyers are likely to be different from the banks which dominated the acquisition process in the early years of this century."
Hobson predicts that in addition to administrators buying each other up, new firms will continue to form through back office spin-offs. There are also likely to be new start-ups looking to serve the smaller hedge funds now being dropped by major providers.
3 Sept 2008
Morgan Stanley's Frontier Fund Issues Over 7 Million Shares
The Morgan Stanley Frontier Emerging Markets Fund, Inc. (the “Fund”) has issued 7,100,000 shares of common stock at a price of $20 per share resulting in gross proceeds to the Fund of approximately $142,000,000. The Fund’s shares began trading on August 25, 2008 on the New York Stock Exchange under the symbol “FFD.”The newly organized, non-diversified closed-end fund’s investment objective is to seek long-term capital appreciation. "There can be no assurance that the Fund’s investment objective will be achieved." Morgan Stanley said as the Fund’s lead underwriter.
The Fund will seek to achieve its investment objective by investing, under normal circumstances, at least 80% of its net assets in equity securities of companies operating in frontier emerging market countries.
Frontier emerging market countries in which the Fund currently intends to invest include: Bahrain, Bangladesh, Botswana, Bulgaria, Croatia, Ecuador, Estonia, Ghana, Jamaica, Jordan, Kazakhstan, Kenya, Kuwait, Latvia, Lebanon, Lithuania, Macao, Mauritius, Namibia, Nigeria, Oman, Panama, Qatar, Romania, Saudi Arabia, Serbia, Slovenia, Sri Lanka, Trinidad and Tobago, Tunisia, Ukraine, United Arab Emirates and Vietnam.
The Fund's assets are managed within Morgan Stanley Investment Management's Emerging Markets Equity team. “We have a long tradition of emerging markets investing dating back to the mid-1980’s, with the objective of helping investors capture growth opportunities in developing economies,” said Ruchir Sharma, a Managing Director of Morgan Stanley Investment Management.
“We launched a Frontier Fund to invest in markets that we believe are continuing to grow and are not currently on most investors' radar screens. The Fund's registration in over 30 frontier markets across geographical regions gives us a wide footprint to make active country allocation decisions, and we are excited about the potential opportunities."
2 Sept 2008
Endowment Model Approach to Asset Allocation and Investment
100 Women in hedge funds is presenting Notre Dame's Scott Malpass to discuss how endowments approach investments and stay the course in these curious and uncertain times. The event is being held at the Chicago Mercantile Exchange in Chicago on September 4, 2008.
"Staying ahead of the curve is critical for endowments, as performance will affect future gifts and their ability to properly fulfill their obligations."
Scott C. Malpass is vice president and chief investment officer at the University of Notre Dame, responsible for investment of the University's endowment, working capital, pension and life income assets of almost $7 billion. The endowment of some $6.2 billion is the 14th largest in American higher education and the largest at a Catholic university.
Having served as chief investment officer since 1989, Mr. Malpass works closely with the investment committee of the University's Board of Trustees in partnering with the most sophisticated investment management organizations throughout the world. The portfolio is widely diversified, with one of the highest allocations to alternative assets within the endowment community, and has accomplished top tier investment performance over both short and long-term time periods.
For the fiscal year ended June 30, 2000, the endowment returned a record 57.9 percent, the highest return for any American university and the subject of extensive media coverage in The Wall Street Journal, The Chronicle of Higher Education, U.S. News & World Report, The New York Times, and on CNBC. The University is recognized for its leadership in international, private capital and alternative investing, and its philosophy of building relationships with leading edge investment management firms and identifying niche investment opportunities that provide opportunities for superior investment performance.
Mr. Malpass is one of 12 leading chief investment officers profiled in the book Foundation and Endowment Investing: Philosophies and Strategies of Top Investors and Institutions, written by Lawrence E. Kochard and Cathleen M. Rittereiser and published by John Wiley and Sons in December 2007.
100 Women in Hedge Funds serves over 8,000 alternative investment management investors and practitioners through educational, professional leverage and philanthropic initiatives. Since its first session in 2002, 100 Women in Hedge Funds has hosted more than 150 events globally.
"Staying ahead of the curve is critical for endowments, as performance will affect future gifts and their ability to properly fulfill their obligations."
Scott C. Malpass is vice president and chief investment officer at the University of Notre Dame, responsible for investment of the University's endowment, working capital, pension and life income assets of almost $7 billion. The endowment of some $6.2 billion is the 14th largest in American higher education and the largest at a Catholic university. Having served as chief investment officer since 1989, Mr. Malpass works closely with the investment committee of the University's Board of Trustees in partnering with the most sophisticated investment management organizations throughout the world. The portfolio is widely diversified, with one of the highest allocations to alternative assets within the endowment community, and has accomplished top tier investment performance over both short and long-term time periods.
For the fiscal year ended June 30, 2000, the endowment returned a record 57.9 percent, the highest return for any American university and the subject of extensive media coverage in The Wall Street Journal, The Chronicle of Higher Education, U.S. News & World Report, The New York Times, and on CNBC. The University is recognized for its leadership in international, private capital and alternative investing, and its philosophy of building relationships with leading edge investment management firms and identifying niche investment opportunities that provide opportunities for superior investment performance.
Mr. Malpass is one of 12 leading chief investment officers profiled in the book Foundation and Endowment Investing: Philosophies and Strategies of Top Investors and Institutions, written by Lawrence E. Kochard and Cathleen M. Rittereiser and published by John Wiley and Sons in December 2007.
100 Women in Hedge Funds serves over 8,000 alternative investment management investors and practitioners through educational, professional leverage and philanthropic initiatives. Since its first session in 2002, 100 Women in Hedge Funds has hosted more than 150 events globally.
30 under 30 Top Traders
Trader Monthly submitted an annual roundup of the top trading talent age 30 or younger, the third 30 Under 30 club, "an eclectic group spanning all manner of gender, ethnicity, geography, product space and trading technique. Such diversity, mind you, was not preordained; our picks were based solely on money, pedigree and skills — although we did afford extra credit to those brave souls who trade their own dough."
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1 Sept 2008
Professor Rajan Proposes Hedge Funds For India
In the April 2008, Draft Report of the Committee on Financial Sector Reforms headed by Professor Raghuram Rajan, it was proposed by the high-level committee that, “The presence of hedge funds would induce greater competitive pressure for other regulated fund management channels such as mutual funds.”
In an article by investment strategist Venkatesh, the strategist comments on the proposal, saying how hedge funds could improve asset price efficiency. "Besides," Venkatanesh says, "such funds, by virtue of their diverse investment styles, could provide investors an opportunity to enhance their risk-adjusted portfolio returns."
Included are some comments and reports on the subject;
Suppose a long-only (mutual fund) manager and a hedge fund manager both have a negative view on SBI, a positive view on HDFC Bank and a neutral view on ITC.
Long-only active managers will buy ITC in the same weight as their benchmark index, may overweight HDFC Bank and may not take any exposure in SBI. There is a reason for such a strategy. Active managers strive to beat their benchmark index. But they do not take too many active bets, lest their bets go wrong. Often, active funds tail the benchmark index with few active bets. Importantly, such managers cannot short-sell to take advantage of their negative view on a stock.
Hedge fund managers’ do not suffer from such constraint. In the above example, the hedge fund manager may overweight HDFC Bank, short-sell SBI and not take any exposure in ITC.
Better still, to neutralise any market risk, the hedge fund manager may buy HDFC Bank and short-sell SBI in such a way that the market risk in HDFC Bank is offset by short-selling SBI. Often, neutralising market risk on a portfolio would mean short-selling Nifty futures.
Making the most of a range-bound market
Exploiting price inefficiency
Hedge funds identify mispriced assets and exploit any price inefficiency. One way to do this is to employ statistical arbitrage.
Suppose a hedge fund manager finds that combination of one share of HDFC Bank and two short shares of SBI (1HDFC – 2SBI) has a stable statistical distribution. If the “spread” wanders far away from its mean, a hedge fund manager would set-up this strategy with a view that the “spread” will tighten. Such relative-value strategies can help arbitrate away asset price inefficiencies in a “normal” market.
Besides, hedge funds employ strategies to arbitrage price differentials between the derivatives and the spot market. Suppose a stock is trading at Rs 1,480 in the spot market. Assume that the hedge fund manager, based on her proprietary model, believes that the futures price should be only Rs 1,470 against its current market price of Rs 1,510.
The fund manager will short the futures contract and simultaneously buy the stock in the spot market. The trade will be profitable as long as difference between the spot price and the futures price is less than Rs 40.
As more hedge funds exploit such price differentials, disconnect between the spot and derivative markets could gradually reduce. And that could attract long-term hedgers to the market.
Using options to time investments
Higher risk-adjusted returns
Hedge funds create value for investors through their diverse investment styles. Here are some examples.
Relative-value strategies such as fixed-income arbitrage and market-neutral style strive to back-out beta exposure and provide alpha returns. Such strategies typically carry lower volatility than government bonds but generate higher returns. They, hence, act as returns-enhancers when combined with a bond portfolio.
The long-short investment style (such as 130 per cent long position and 30 per cent short position in equity) is a high-risk high-return strategy. The volatility of this strategy is lower than that of the traditional equity strategy. This strategy, hence, acts as return-enhancers when combined with equity portfolios.
The managed-futures investment style primarily takes exposure in commodity futures. This style acts as a risk-diversifier for an equity portfolio.
Of course, there are risks with such investments. Hedge funds typically employ high leverage. This causes a systemic risk in the event a fund folds because of high drawdowns. Besides, monitoring such managers is important because many of them may charge alpha fees for beta exposure.
It is not surprising that the committee has recommended that hedge fund investments be offered only to those who can invest Rs 1 and above. A similar such rule exists in the US.
Conclusion
It is important to understand that arbitraging price inefficiencies does not mean that hedge funds will prevent formation of market crashes or asset price bubbles. Hedge fund managers can be as irrational as the professional long-only managers and investors.
Yet, the introduction of hedge funds will be a welcome move to the Indian markets for two reasons — such funds can provide higher risk-adjusted returns for investors and can facilitate better asset price efficiency.
enhancek@gmail.com
alex@hedgeco.net
In an article by investment strategist Venkatesh, the strategist comments on the proposal, saying how hedge funds could improve asset price efficiency. "Besides," Venkatanesh says, "such funds, by virtue of their diverse investment styles, could provide investors an opportunity to enhance their risk-adjusted portfolio returns."
Included are some comments and reports on the subject;
Suppose a long-only (mutual fund) manager and a hedge fund manager both have a negative view on SBI, a positive view on HDFC Bank and a neutral view on ITC.Long-only active managers will buy ITC in the same weight as their benchmark index, may overweight HDFC Bank and may not take any exposure in SBI. There is a reason for such a strategy. Active managers strive to beat their benchmark index. But they do not take too many active bets, lest their bets go wrong. Often, active funds tail the benchmark index with few active bets. Importantly, such managers cannot short-sell to take advantage of their negative view on a stock.
Hedge fund managers’ do not suffer from such constraint. In the above example, the hedge fund manager may overweight HDFC Bank, short-sell SBI and not take any exposure in ITC.
Better still, to neutralise any market risk, the hedge fund manager may buy HDFC Bank and short-sell SBI in such a way that the market risk in HDFC Bank is offset by short-selling SBI. Often, neutralising market risk on a portfolio would mean short-selling Nifty futures.
Making the most of a range-bound market
Exploiting price inefficiency
Hedge funds identify mispriced assets and exploit any price inefficiency. One way to do this is to employ statistical arbitrage.
Suppose a hedge fund manager finds that combination of one share of HDFC Bank and two short shares of SBI (1HDFC – 2SBI) has a stable statistical distribution. If the “spread” wanders far away from its mean, a hedge fund manager would set-up this strategy with a view that the “spread” will tighten. Such relative-value strategies can help arbitrate away asset price inefficiencies in a “normal” market.
Besides, hedge funds employ strategies to arbitrage price differentials between the derivatives and the spot market. Suppose a stock is trading at Rs 1,480 in the spot market. Assume that the hedge fund manager, based on her proprietary model, believes that the futures price should be only Rs 1,470 against its current market price of Rs 1,510.
The fund manager will short the futures contract and simultaneously buy the stock in the spot market. The trade will be profitable as long as difference between the spot price and the futures price is less than Rs 40.
As more hedge funds exploit such price differentials, disconnect between the spot and derivative markets could gradually reduce. And that could attract long-term hedgers to the market.
Using options to time investments
Higher risk-adjusted returns
Hedge funds create value for investors through their diverse investment styles. Here are some examples.
Relative-value strategies such as fixed-income arbitrage and market-neutral style strive to back-out beta exposure and provide alpha returns. Such strategies typically carry lower volatility than government bonds but generate higher returns. They, hence, act as returns-enhancers when combined with a bond portfolio.
The long-short investment style (such as 130 per cent long position and 30 per cent short position in equity) is a high-risk high-return strategy. The volatility of this strategy is lower than that of the traditional equity strategy. This strategy, hence, acts as return-enhancers when combined with equity portfolios.The managed-futures investment style primarily takes exposure in commodity futures. This style acts as a risk-diversifier for an equity portfolio.
Of course, there are risks with such investments. Hedge funds typically employ high leverage. This causes a systemic risk in the event a fund folds because of high drawdowns. Besides, monitoring such managers is important because many of them may charge alpha fees for beta exposure.
It is not surprising that the committee has recommended that hedge fund investments be offered only to those who can invest Rs 1 and above. A similar such rule exists in the US.
Conclusion
It is important to understand that arbitraging price inefficiencies does not mean that hedge funds will prevent formation of market crashes or asset price bubbles. Hedge fund managers can be as irrational as the professional long-only managers and investors.
Yet, the introduction of hedge funds will be a welcome move to the Indian markets for two reasons — such funds can provide higher risk-adjusted returns for investors and can facilitate better asset price efficiency.
enhancek@gmail.com
alex@hedgeco.net
African Agricultural Land Fund Launch
Emergent Asset Management launched the African Agricultural Land Fund in August 2008, with a second closing to take place in September 2008. The fund has raised almost €2 billion already ($2.9 billion), and wants to raise a total of €3 billion and is canvassing a range of investors. Minimum investment size is €500,000 for private investors and €5m for institutional investors.
The African Land Fund will offer investors the opportunity to participate in the growing Sub-Saharan agricultural sector. It will apply modern management disciplines and introduce improved farmland techniques to increase crop yields and investment returns.
Initially, the investment focus will be in South Africa. The portfolio will be expanded within Africa to include (but not limited to) countries such as Botswana, Zambia, Mozambique, Swaziland and the DRC.
Emergent has partnered with Grainvest, a firm of professional agricultural traders and one of the top five participants on the South African Securities Exchange, involved in agriculture locally, including farming, manufacturing, and transport and trading.
The Fund’s targeted return is 25% pa and will be denominated in Euros.
The Fund qualifies as a socially responsible Investment in keeping with the co-managers’ investment philosophy, endeavouring to make a positive contribution to the well-being of the local community.
29 Aug 2008
FINCAD Targets Hedge Funds With Webinar
FINCAD is hosting a webinar specifically targeted towards hedge funds titled, 'Hedge Funds: Scenario and Risk Analysis for your OTC Derivatives Portfolio' and will feature analysts from FINCADs professional services team.
"This is a rapidly growing and important customer sector for FINCAD, in the last year alone we have sold analytics software and support to nearly 100 hedge funds," said Bill Stewart, Global VP of sales. "Clearly, market conditions combined with investor demands for pricing transparency and consolidated risk assessment are all driving a growing need for comprehensive, easy to use analytic solutions."
The hour long webinar will include a demonstration of how to use some of FINCAD XL's latest pre-built workbook solutions to perform scenario and risk analysis on multi-asset class portfolios. It is being held on September 04, 2008 at 11:00am EDT.
"This a great opportunity for anyone in the derivatives industry to not only preview what our software has to offer but also see what FINCAD Professional Services has to offer," said Ben Clum, Director of Professional Services.
26 Aug 2008
Hedge Fund buy-out and Launch of New Fund
The Directors of Cayman based Camelot Global Investments announced a management buy-out of their hedge fund, in cooperation with Merlin Global Enterprise.Camelot will join Arkanar Financial Holdings, with the head office being relocated to Tallinn, Estonia. A branch will remain in Caymans.
The key staff members will stay, "It is important that we were able to maintain all trading and administrative staff," the board announced, "We have only lost the former majority shareholders who decided to retire and leave the industry."
Bob Torkelund has joined as Managing Director and co-shareholder, he will head the entire promotion, distribution and the servicing of funds. Torkelund will also lead the launches of new products according to market demand.
"I am really delighted to be able to be part of this young, dynamic team especially because we have been working together for a while on a consulting basis and have got to know each other very well and know where to support each other. The combination of my experience and contact network makes it a thrilling opportunity for both parties”, Torkelund said.
Apart from Torkelund, head trader Thomas Feldt and Jevgeni Geller are still shareholders and directors in the company. Having contributed largely to the past success of Camelot, they and are enthusiastic about the challenge. Geller will concentrate on business development, overseeing all operations to ensure continuity in performance and service. Feldt will continue to head the trading desk and will be responsible for investment strategy.
The investment strategy will reflect Camelot's previous success. Feldt analyses systematic trading and global macro strategy, making adjustments in conjunction with market change in order to ensure constant development in the returns.
On September 15th 2008 Arkanar Financial will be launching their first Cayman licensed fund in cooperation with Capita Financial, Gibraltar.
One of the significant differences with non-regulated funds is that they can offer investments from as little as $10 000 and subsequent deals from $1000.
Arkanar Financial Holdings also utilises electronic clearing facilities ( Euroclear /Clearstream), accepting deals on a -payment against delivery- basis which opens basically for a large number of Europeans banks to be able to invest on behalf of their clients, a big step for the more general investment population to be able to test hedge funds without having to risk a large part of their portfolio on one position.
The initial offering period will be running till September 30th.
Luxembourg platform smoothes way for hedge funds
A platform for asset managers and advisers to create SICAV SIF funds in Luxembourg has been launched by KMG SICAV SIF. The platform caters to all asset classes, including hedge funds. There are no restrictions on leverage.
Thee process allows managers to focus on investment management, the process allows managers to focus on investment management. . The platform takes care of incorporation, custody, transfers and administration. In addition it can also offer a Luxembourg address and office for the fund, organise annual general meetings of shareholders and supply investors with statements, day-to-day management and general organization as well as order placing and execution, investment performance reports, promotion and distribution and corporate branding.
The open-architecture platform provides a faster route to market with funds established and open for capital within a few weeks rather than months, which it usually takes for a traditional fund. The platform can also provide all back office support, administration and other services for funds.
The KMG SICAV SIF platform is an off the shelf solution, licensed and regulated in Luxembourg. Entities establishing a fund through the platform do not have to apply for additional licences.
Thee process allows managers to focus on investment management, the process allows managers to focus on investment management. . The platform takes care of incorporation, custody, transfers and administration. In addition it can also offer a Luxembourg address and office for the fund, organise annual general meetings of shareholders and supply investors with statements, day-to-day management and general organization as well as order placing and execution, investment performance reports, promotion and distribution and corporate branding.
The open-architecture platform provides a faster route to market with funds established and open for capital within a few weeks rather than months, which it usually takes for a traditional fund. The platform can also provide all back office support, administration and other services for funds.
The KMG SICAV SIF platform is an off the shelf solution, licensed and regulated in Luxembourg. Entities establishing a fund through the platform do not have to apply for additional licences.
25 Aug 2008
Weekend News Update
Interesting story here by DanFonds on frontier markets; 'Ecobank's USD 2.5bn capital raising begins today.'And here by Seth Berlin; 'Does Mimicking behavior lead to market crashes?'
Finaly, Avalon Capital Holdings Corporation has initiated alpha testing of its proprietary ECN system for the Forex market.
The system will be ideal, Avalon says, for traders seeking to execute large orders of a billion or more across many banks and hedge funds simultaneously.
Forex Market Platform Launch By Avalon
Avalon Capital Holdings Corporation, and its wholly owned subsidiary, Traders Development LLC, announced that it has initiated alpha testing of its proprietary ECN system.
The Avalon ECN is a liquidity aggregator, which takes the best prices from an unlimited number of price providers, and allows traders to execute off the best prices in the market. The system will be ideal for traders seeking to execute large orders of a billion or more across many banks and hedge funds simultaneously.
"The overall goal of the Avalon ECN is to significantly improve the institutional liquidity in the Forex Market by applying the latest software technologies in the Foreign Exchange Industry." Dr. Vladimir Karpenkov, Chairman of Avalon Capital Holdings Corporation said. "Additionally, the Avalon ECN is designed to reduce the cost for Retail Forex brokerages that are seeking interbank liquidity."
"The Forex Market is about reducing overhead, managing risk and acquiring new trading clients. With Avalon technology, companies ought to increase their profitability while reducing risk." Alex De Khtyar, President of Avalon Capital Holdings Corporations added.
The Avalon ECN is a liquidity aggregator, which takes the best prices from an unlimited number of price providers, and allows traders to execute off the best prices in the market. The system will be ideal for traders seeking to execute large orders of a billion or more across many banks and hedge funds simultaneously.
"The overall goal of the Avalon ECN is to significantly improve the institutional liquidity in the Forex Market by applying the latest software technologies in the Foreign Exchange Industry." Dr. Vladimir Karpenkov, Chairman of Avalon Capital Holdings Corporation said. "Additionally, the Avalon ECN is designed to reduce the cost for Retail Forex brokerages that are seeking interbank liquidity."
"The Forex Market is about reducing overhead, managing risk and acquiring new trading clients. With Avalon technology, companies ought to increase their profitability while reducing risk." Alex De Khtyar, President of Avalon Capital Holdings Corporations added.
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