The SEC has just released the information below regarding the actions it will take in the wake of the Madoff scandal. Pillsbury is sponsoring a program in San Francisco on this topic, October 8, 2009.
In the wake of the Madoff fraud, the SEC’s Office of the Inspector General launched an internal investigation in December 2008 to determine why the agency did not detect the scheme. While awaiting the report, the SEC has been taking decisive and comprehensive steps to reduce the chances that such frauds will occur or be undetected in the future.
Safeguarding Investors’ Assets: The SEC in May proposed two rules that would better protect clients of investment advisers from theft and abuse. The rules would provide assurance to these clients that their accounts contain the funds that their investment adviser and account statements say they contain. Among other things, the rules would encourage investment advisers to place their clients’ assets in the custody of an independent firm.
Surprise Exams: One proposal would require all investment advisers who control or have custody of their clients’ assets to hire an independent public accountant to conduct an annual “surprise exam” to verify those assets actually exist. This surprise examination would provide another set of eyes on the clients’ assets, thereby offering additional protection against the theft or misuse of funds.
Third Party Reviews: A second proposal would apply to investment advisers who do not use independent firms to maintain their clients’ assets. Such advisers would be required to obtain a third party written report assessing the safeguards that protect the clients’ assets. The report — prepared by an accountant registered and inspected by the Public Company Accounting Oversight Board — would, among other things, describe the controls that are in place to protect the assets, the tests performed on the controls, and the results of those tests. Existing rules make no distinction between an investment adviser whose affiliate holds its clients’ funds and an investment adviser that uses a truly independent custodian.
Revitalizing the Enforcement Division: Under the leadership of a new Enforcement Director, the SEC is restructuring the division to better ensure that it focuses on significant cases that will have a meaningful impact. The restructuring will reduce bureaucracy and speed up the enforcement process by removing a layer of management in the 1,100 person division. The newly structured division will include specialized units that will enable staff in those units to concentrate their expertise in focused areas and help detect patterns, links, trends and motives. In addition, the Division is streamlining internal processes to make investigative procedures more efficient.
Revamping the Handling of Complaints and Tips: In order to improve the handling of hundreds of thousands of complaints, tips, and referrals it receives each year, the SEC has contracted with Mitre, a federally funded research and development center, to help the agency revamp its processes across the agency. After reviewing and analyzing its intake procedures, the SEC is now beginning to improve upon its processes for collecting, recording, investigating, referring and tracking this information. Among other things, the agency is creating a centralized system for handling this information. Once the information and processes are centralized, the agency will apply risk analytics to better enable it to reveal links, trends, statistical deviations and patterns that might not be observable when each complaint is examined one at a time.
Advocating for a Whistleblower Program: The SEC has advocated for expanded authority from Congress to reward whistleblowers who bring forward substantial evidence to the agency about significant federal securities violations. In proposed legislation that the Chairman sent to Congress, a fund would be established to pay whistleblowers using money collected from wrongdoers that is not otherwise distributed to investors.
Conducting Risk-Based Examinations of Financial Firms: The SEC has dispatched its examiners to conduct a “sweep” of firms that present certain risk characteristics to ensure, among other things, that the clients’ assets in fact exist. Such risks include advisers whose clients’ assets are held with an affiliate, as opposed to an independent entity; hedge funds that seem to have “smooth” or outlier returns; firms that use an unknown auditor or no auditor at all; firms with a disciplinary history; and broker-dealers that sell an affiliate’s hedge fund or limited partnership.
Increasing Focus on Agency-Wide Risk Assessment: The SEC is assessing and improving the use of risk assessment techniques, agency-wide, to more proactively identify areas of risk to investors. The agency is increasing collaboration with third parties and other government agencies to identify firms or products that may pose risk to investors or markets. The agency is also improving our ability to monitor the industry — by identifying the data and information that financial firms would submit to the SEC — to allow it to better identify those particular firms that warrant a closer look by examiners and enforcement staff.
Improving Fraud Detection Techniques for Examiners: The SEC instituted measures to improve the ability of examiners to detect fraud and other types of violations. The measures include more rigorous reviews of firms before the examiners enter the premises, and a more complete exam guide that focuses not only on obvious signs of fraud but also more subtle signals that deserve closer inspection, such as a firm using an unknown accountant. The measures also include increased checks on outside entities to verify that assets actually exist there and expanded use of exams of an entire entity when firms have joint or dual registrants such as affiliated broker-dealers and investment advisers.
Recruiting Staff with Specialized Experience: The SEC is working to bring in new staff with diverse skill sets to expand its knowledge base and improve its ability to assess risk, conduct examinations, detect and investigate wrongdoing, and focus our priorities. Some initial examples included:
Senior Specialized Examiners: The agency is hiring new staffers to the examination unit who have specialized experience in areas such as trading, operations, portfolio management, options, compliance, valuation, new instruments and portfolio strategies, and forensic accounting.
Industry and Market Fellows Program: The agency is hiring new staffers who are highly-seasoned financial experts to keep pace with the practices of Wall Street and protect investors. These experts would provide other staffers with new information and perspectives to help them identify emerging issues and understand the ways the industry is changing.
Expanding and Targeting Training: The SEC is providing its staff with targeted training related to hedge funds and specialized products, derivatives and options, complex trading, and investigations of regulated entities. Additionally, the SEC is conducting programs to train hundreds of staffers to become Certified Fraud Examiners, and expanding the availability of programs for staffers to become Certified Financial Analysts.
Seeking More Resources: The SEC has been seeking additional funding to hire more examiners who can go into more financial firms to see whether they are in compliance with the law, as well as for more enforcement staff who can bring more enforcement cases when fraud and other violations of the law are found. In recent years, the SEC has not had adequate resources to oversee the securities industry. For example, the SEC has just over 400 people in its exam program to examine the more than 11,000 regulated investment advisers and 8,000 mutual funds.
Integrating Broker-Dealer and Investment Adviser Examinations: The New York Regional Office has adopted a protocol that will integrate examination teams to make sure people with the right skill sets are assigned to examinations. Under the new protocol, a single team of examiners, drawn from the broker-dealer and investment managements units, will jointly examine selected firms to ensure that the examination team includes those most expert in the subject of the exam. In addition, this initiative includes greater cross-training and coordination between broker-dealer and investment management staff on their examination plans.
Enhancing Licensing, Education and Oversight Regime for “Back-Office” Personnel: Working with senior SEC staff, FINRA has committed to establish a new system to enhance the oversight and professional requirements of personnel performing back-office functions at broker-dealer firms. “Back-office” personnel typically perform critical custody, accounting, transfer agency and account maintenance functions. They have an important role that must be performed with skill and integrity. Under the new regime, certain back-office personnel would be subject to licensing and education requirements as well as enhanced oversight. The new regime will further promote the qualifications and professionalism of those performing back office functions so that client accounts are better protected.
http://www.sec.gov/spotlight/secpostmadoffreforms.htm
Thanks to Jay B. Gould, Partner, Pillsbury Winthrop Shaw Pittman LLP.
2 Sept 2009
Hedge Fund FII Named to Inc. 500/5000 List
Hedge fund firm, Financial Investments Inc. (FII), is to be recognized as one of the 500/5000 winners to be honored at a special event in Washington, the hedge fund will also be featured in the September issue of Inc. magazine.
The Inc. 500 celebrates the fastest-growing private companies in America. FII is a Herndon, Virginia-based Alternative financial investment management firm that has recently garnered national recognition for its growth and outstanding performance. Companies that qualify for the Inc. 500 must have a sales history of four or more years and annual revenues of at least $2 million in 2008.
FII has also been recognized by Virginia Business Magazine as a regional semi-finalist for its Small Business Success Story of the Year. In 2008 and 2009, the Virginia Chamber of Commerce also named FII to their "Fantastic 50" list of the state's 50 fastest growing companies.
"FII was founded in 1997, and has achieved annual revenue growth in excess of 40% each year for the last four years," said Craig Kendall, President and CEO. "Our customer focus and disciplined approach to investments with commodities, equities and equity indexes has resulted in consistent commendable returns for our institutional and private investors. Time and again we have exceeded returns to investors in excess of the S & P 500 during this year's volatile market," he added.
This is the second year that FII has been recognized in the Inc 500/5000 awards program. "FII continued with its growth and improvement of services all during the recent meltdown that the financial markets have experienced. A feat that we are most proud of", stated Kendall.
FII evolved from the original accounting firm of Kendall & Company, CPA's. In 2005, FII created Financial Commodity Investments (FCI) to provide products and services relating to commodity markets. As of July, 2009, the FCI products have generated net positive YTD returns in excess of 20% to investors. In August, 2009 the FCI alternative investment products were also recognized and ranked as one of the top Top Commodity Trading Advisors, CTA's for five year returns as tracked and reported by Barclays in their Barclay Managed Funds Report.
The Inc. 500 celebrates the fastest-growing private companies in America. FII is a Herndon, Virginia-based Alternative financial investment management firm that has recently garnered national recognition for its growth and outstanding performance. Companies that qualify for the Inc. 500 must have a sales history of four or more years and annual revenues of at least $2 million in 2008.
FII has also been recognized by Virginia Business Magazine as a regional semi-finalist for its Small Business Success Story of the Year. In 2008 and 2009, the Virginia Chamber of Commerce also named FII to their "Fantastic 50" list of the state's 50 fastest growing companies.
"FII was founded in 1997, and has achieved annual revenue growth in excess of 40% each year for the last four years," said Craig Kendall, President and CEO. "Our customer focus and disciplined approach to investments with commodities, equities and equity indexes has resulted in consistent commendable returns for our institutional and private investors. Time and again we have exceeded returns to investors in excess of the S & P 500 during this year's volatile market," he added.
This is the second year that FII has been recognized in the Inc 500/5000 awards program. "FII continued with its growth and improvement of services all during the recent meltdown that the financial markets have experienced. A feat that we are most proud of", stated Kendall.
FII evolved from the original accounting firm of Kendall & Company, CPA's. In 2005, FII created Financial Commodity Investments (FCI) to provide products and services relating to commodity markets. As of July, 2009, the FCI products have generated net positive YTD returns in excess of 20% to investors. In August, 2009 the FCI alternative investment products were also recognized and ranked as one of the top Top Commodity Trading Advisors, CTA's for five year returns as tracked and reported by Barclays in their Barclay Managed Funds Report.
Edinburgh Firm Expands Hedge Fund Business
Specialist active equity manager, Martin Currie Investment Management Limited, has expanded its global hedge fund arm with two senior hires, Alastair Barrie and Clayton Cheek.
Barrie joins in the newly created role of global head of hedge fund sales and Cheek joins as US head of hedge fund sales. Both bring with them extensive business development experience and join existing sales director, Mike Gibb.
Alastair pereviously worked at RBS where he was director of institutional business. In this new position he will be responsible for growing their global hedge fund business. Prior to RBS Alastair was director of global hedge fund sales and UK wholesale distribution at Henderson.
Clayton joins Martin Currie’s office in New York. Previously he worked for Man Investments in New York where he was head of institutional sales for the US. Prior to Man, he was managing director, head of client development Americas for Ivy Asset Management.
"We are thrilled that Alastair and Clayton are joining our successful and growing hedge fund business." Allan MacLeod, managing director of sales, marketing and client service at Martin Currie said, "Our hedge fund business is now over nine years old and has over US$1 billion under management across ten funds. It is a clear reflection on the quality of our business that we have been able to attract such high calibre professionals."
Martin Currie manages £10.7 billion ($18 billion) for clients worldwide, with $1.2 billion of that in absolute return funds.
Barrie joins in the newly created role of global head of hedge fund sales and Cheek joins as US head of hedge fund sales. Both bring with them extensive business development experience and join existing sales director, Mike Gibb.
Alastair pereviously worked at RBS where he was director of institutional business. In this new position he will be responsible for growing their global hedge fund business. Prior to RBS Alastair was director of global hedge fund sales and UK wholesale distribution at Henderson.
Clayton joins Martin Currie’s office in New York. Previously he worked for Man Investments in New York where he was head of institutional sales for the US. Prior to Man, he was managing director, head of client development Americas for Ivy Asset Management.
"We are thrilled that Alastair and Clayton are joining our successful and growing hedge fund business." Allan MacLeod, managing director of sales, marketing and client service at Martin Currie said, "Our hedge fund business is now over nine years old and has over US$1 billion under management across ten funds. It is a clear reflection on the quality of our business that we have been able to attract such high calibre professionals."
Martin Currie manages £10.7 billion ($18 billion) for clients worldwide, with $1.2 billion of that in absolute return funds.
1 Sept 2009
Castle Hall Alternatives Publishes White Paper on Hedge Fund Operational Failures
Hedge fund operational due diligence provider, Castle Hall Alternatives, published its latest White Paper, ‘From Manhattan to Madoff: the Causes and Lessons of Hedge Fund Operational Failure.’
The Paper’s analysis and findings are based on HedgeEvent, a comprehensive, web-based database of more than 300 operational events, now available to Castle Hall’s due diligence clients. HedgeEvent supplements HedgeDiligence, the firm’s existing client web portal.
Chris Addy, Castle Hall’s CEO, said “the colossal fraud perpetrated by Bernie Madoff, together with a number of other recent cases, has made investors acutely concerned by the risk of operational ‘blow ups’. However, there has been little systematic study of operational failure, meaning that investors have limited guidance as to the extent of this problem.”
“The creation of HedgeEvent, which has taken more than two years to compile, has enabled us to summarize key metrics related to hedge fund operational failure” said Addy. “From Manhattan to Madoff analyzes operational events by number, estimated loss, causal factor and by the strategy of the funds involved.”
HedgeEvent contains 327 cases of hedge fund operational failure through June 30, 2009. Madoff, with an estimated financial impact of $64 billion, is by far the largest; the remaining cases have an aggregate estimated financial impact of approximately $15 billion. Of the 327 operational events, 121 have an estimated impact of $10 million or more, and 31 of at least $100 million.
“While operational failures are material – Madoff spectacularly so – it does not seem that fraud is pervasive in the hedge fund industry” said Addy. “Investors should, however, be very focused on the lessons which can be learned from those hedge funds which did generate large losses. Many of these were well established firms which attracted capital from reputable investors.”
Across all Events, the most common causes of operational failure are theft and misappropriation followed by existence of assets (the manager claimed to own fake securities or operated a Ponzi scheme where reported assets did not exist). The most common strategies subject to operational failure are long / short equity followed by managed futures. It is notable that investors have traditionally viewed these strategies, holding largely exchange-traded securities, as straightforward with low operational risk.
The Paper’s analysis and findings are based on HedgeEvent, a comprehensive, web-based database of more than 300 operational events, now available to Castle Hall’s due diligence clients. HedgeEvent supplements HedgeDiligence, the firm’s existing client web portal.
Chris Addy, Castle Hall’s CEO, said “the colossal fraud perpetrated by Bernie Madoff, together with a number of other recent cases, has made investors acutely concerned by the risk of operational ‘blow ups’. However, there has been little systematic study of operational failure, meaning that investors have limited guidance as to the extent of this problem.”
“The creation of HedgeEvent, which has taken more than two years to compile, has enabled us to summarize key metrics related to hedge fund operational failure” said Addy. “From Manhattan to Madoff analyzes operational events by number, estimated loss, causal factor and by the strategy of the funds involved.”
HedgeEvent contains 327 cases of hedge fund operational failure through June 30, 2009. Madoff, with an estimated financial impact of $64 billion, is by far the largest; the remaining cases have an aggregate estimated financial impact of approximately $15 billion. Of the 327 operational events, 121 have an estimated impact of $10 million or more, and 31 of at least $100 million.
“While operational failures are material – Madoff spectacularly so – it does not seem that fraud is pervasive in the hedge fund industry” said Addy. “Investors should, however, be very focused on the lessons which can be learned from those hedge funds which did generate large losses. Many of these were well established firms which attracted capital from reputable investors.”
Across all Events, the most common causes of operational failure are theft and misappropriation followed by existence of assets (the manager claimed to own fake securities or operated a Ponzi scheme where reported assets did not exist). The most common strategies subject to operational failure are long / short equity followed by managed futures. It is notable that investors have traditionally viewed these strategies, holding largely exchange-traded securities, as straightforward with low operational risk.
31 Aug 2009
Bluenose Launches Capital Market Neutral Hedge Fund
Hedge fund manager, Bluenose Capital Management Ltd. is launching the Bluenose Capital Market Neutral Fund, aimed at accredited and professional investors.
Going live on October 1st, 2009, the new fund will employ a proprietary factor-based approach to trade highly liquid US & Canadian equities, according to a letter to investors obtained by HedgeCo.
"We strive to generate a 15% annual compound return with less volatility than the S&P/TSX and S&P500 with almost no correlation to the benchmarks," the fund manager said. "Our goal is to achieve absolute returns regardless of market conditions by combining US and Canadian equity market neutral and opportunistic trading strategies. Preservation of capital is of utmost importance." Bluenose said that potential investors should see an investment horizon of at least 5 years.
Bluenose is in September conducting meetings in 13 cities globaly from New York and Irvine to Milan and London.
Their projected timeline for the investment vehicles:
Years 1-3: Live trading of factor-based market neutral strategy: Bluenose Capital
Market Neutral Fund.
Estimated max capacity: $350M.
Years: 3-5: Deployment of statistical arbitrage strategy: Bluenose Star.
Estimated max capacity: $250M.
Year 7: Launch of the convertible arbitrage strategy: Bluenose Converts.
Estimated max capacity: $200M.
Bluenose Capital Ltd. is registered with the British Virgin Islands Financial Services Commission as a Professional Fund under the 1996 Mutual Funds Act.
Going live on October 1st, 2009, the new fund will employ a proprietary factor-based approach to trade highly liquid US & Canadian equities, according to a letter to investors obtained by HedgeCo.
"We strive to generate a 15% annual compound return with less volatility than the S&P/TSX and S&P500 with almost no correlation to the benchmarks," the fund manager said. "Our goal is to achieve absolute returns regardless of market conditions by combining US and Canadian equity market neutral and opportunistic trading strategies. Preservation of capital is of utmost importance." Bluenose said that potential investors should see an investment horizon of at least 5 years.
Bluenose is in September conducting meetings in 13 cities globaly from New York and Irvine to Milan and London.
Their projected timeline for the investment vehicles:
Years 1-3: Live trading of factor-based market neutral strategy: Bluenose Capital
Market Neutral Fund.
Estimated max capacity: $350M.
Years: 3-5: Deployment of statistical arbitrage strategy: Bluenose Star.
Estimated max capacity: $250M.
Year 7: Launch of the convertible arbitrage strategy: Bluenose Converts.
Estimated max capacity: $200M.
Bluenose Capital Ltd. is registered with the British Virgin Islands Financial Services Commission as a Professional Fund under the 1996 Mutual Funds Act.
29 Aug 2009
US Economic Policy as Boost for Hedge Funds - Report
US Economic policy continues to sway the global marketplace, says Global Hedge Fund Group Ltd. (GHF), this has been to the benefit of its hedge funds, and the life insurance settlement fund in particular.
Global Economic data is improving, GHF said, but is still being hampered by a weak housing market. Oil prices are rising again as tension in the Middle East continues. The Obama administration is tabling alternative energy initiatives. Healthcare reform has become a major issue, but many questions remain as to how far reform will go and what portions of the economy may be effected. Potential increased regulation within the financial industry and securities markets can be expected to have a wide-ranging impact on investment opportunities.
“All these factors underpin the continued trend of investors turning to our hedge funds. Our invested assets have grown more in the first half of 2009 than the last three years” said Jeremy Long, GHF Group Economic Analyst.
“There is so much uncertainty in the traditional equity markets. Brief periods of good news are still punctuated with minor corrections. Investors are asking tougher questions and looking for better solutions. These investors make up the majority of our new clients in the last two years.” Said Long.
Global Economic data is improving, GHF said, but is still being hampered by a weak housing market. Oil prices are rising again as tension in the Middle East continues. The Obama administration is tabling alternative energy initiatives. Healthcare reform has become a major issue, but many questions remain as to how far reform will go and what portions of the economy may be effected. Potential increased regulation within the financial industry and securities markets can be expected to have a wide-ranging impact on investment opportunities.
“All these factors underpin the continued trend of investors turning to our hedge funds. Our invested assets have grown more in the first half of 2009 than the last three years” said Jeremy Long, GHF Group Economic Analyst.
“There is so much uncertainty in the traditional equity markets. Brief periods of good news are still punctuated with minor corrections. Investors are asking tougher questions and looking for better solutions. These investors make up the majority of our new clients in the last two years.” Said Long.
28 Aug 2009
GAIM Launches Not-For-Profit Hedge Fund Series
Hedge fund events and information group, GAIM, has launched its first not-for-profit business breakfast briefing session.
In an effort to connect the alternative investment community with up to date information and contact with investors and peers in the industry, GAIM said the session would be the first in a series of breakfast seminars offering senior members of the hedge fund community the opportunity to stay connected between the GAIM flagship events that take place throughout the year.
The first meeting is scheduled for September 22, 2009 in New York at the Omni Berkshire, titled: 'Where the Market Opportunities Will Be and How to Avoid Pitfalls Putting Capital to Work in the Fall'
Speakers include; Ken Akoundi, Head of Pension Strategies, North America, Deutsch Bank Securities Inc, Greggory White, Trustee, Howard University, Jose F. Gonzalez-Heres, Managing Director, Fund of Hedge Funds portfolios and a member of the Investment Committee, Morgan Stanley Alternative Investment Partners.
In an effort to connect the alternative investment community with up to date information and contact with investors and peers in the industry, GAIM said the session would be the first in a series of breakfast seminars offering senior members of the hedge fund community the opportunity to stay connected between the GAIM flagship events that take place throughout the year.
The first meeting is scheduled for September 22, 2009 in New York at the Omni Berkshire, titled: 'Where the Market Opportunities Will Be and How to Avoid Pitfalls Putting Capital to Work in the Fall'
Speakers include; Ken Akoundi, Head of Pension Strategies, North America, Deutsch Bank Securities Inc, Greggory White, Trustee, Howard University, Jose F. Gonzalez-Heres, Managing Director, Fund of Hedge Funds portfolios and a member of the Investment Committee, Morgan Stanley Alternative Investment Partners.
27 Aug 2009
Rabbe Ekholm launches independent hedge fund replicator
Rabbe Ekholm, founder and CEO of True Beta LLC announced the launch of TrueBetaD and is holding a discussion on the importance of hedge fund replication strategies in New York September 15th.
"Institutional investors are reconsidering their traditional investment processes as hedge funds outperformed other asset classes last year, often by wide margins." Ekholm said, "At the same time investors now require greater transparency, risk control and liquidity from their hedge fund investments. They also increasingly want to distinguish between hedge fund alpha and beta."
Ekholm was until recently Chief Commercial Officer and a Member of the Management Board of Saxo Bank, prior to that he was a Managing Director at MSCI Barra, heading its Content Solutions Group.
"This demand is strengthening the important role replication strategies play in the investment process. These strategies allow investors access to hedge fund-like returns with cost effective fees, liquidity, transparency and without the headline risk of manager blow-ups or gates," he concluded.
The conference is scheduled to be held at the Walek & Associates Conference Room, 317 Madison Avenue @ 42nd Street, New York, NY.
TrueBeta LLC develops and markets quantitative financial strategies for institutional clients. Hedge fund replication is its lead offering. TrueBeta is based in Greenwich, Connecticut, USA.
"Institutional investors are reconsidering their traditional investment processes as hedge funds outperformed other asset classes last year, often by wide margins." Ekholm said, "At the same time investors now require greater transparency, risk control and liquidity from their hedge fund investments. They also increasingly want to distinguish between hedge fund alpha and beta."
Ekholm was until recently Chief Commercial Officer and a Member of the Management Board of Saxo Bank, prior to that he was a Managing Director at MSCI Barra, heading its Content Solutions Group.
"This demand is strengthening the important role replication strategies play in the investment process. These strategies allow investors access to hedge fund-like returns with cost effective fees, liquidity, transparency and without the headline risk of manager blow-ups or gates," he concluded.
The conference is scheduled to be held at the Walek & Associates Conference Room, 317 Madison Avenue @ 42nd Street, New York, NY.
TrueBeta LLC develops and markets quantitative financial strategies for institutional clients. Hedge fund replication is its lead offering. TrueBeta is based in Greenwich, Connecticut, USA.
26 Aug 2009
HedgeSphere Launches Software for Funds of Hedge Funds
Funds of hedge funds tech. provider Infonic AG, released the latest version of its software suite for FoHFs, HedgeSphere 4.3.
“For many funds of hedge funds, including those with complex portfolio structures, management and incentive fees are still calculated manually - a time consuming and error-prone process. This is an area of supreme client sensitivity, being the primary source of revenue for the management function and a major factor in liability and credibility in administration. HedgeSphere PAD 4.3 provides advanced automation to simplify and streamline the fee calculation process, providing near-real time availability, improving accuracy and transparency over fees and their attribution to investors,” said Thomas Furrer, Infonic AG’s CEO. “On the front and middle office side, HedgeSphere MO 4.3 provides tools to improve trading workflow and the exchange of information among portfolio managers, as well as enhanced equity exposure analysis.”
In this latest release, HedgeSphere provides enhanced capabilities for the calculation and processing of investor fees, including: in-advance fee calculations, automated fee crystallization and investor equalization tracking. In addition, HedgeSphere PAD now supports natural hedging and provides real-time views of cash available across accounting entities. Version 4.3 of HedgeSphere MO provides improved trading workflow and exchange of information among portfolio managers, as well as enhanced equity exposure analysis.
Headquartered in Switzerland, and with offices in Zug, Zurich and New York, Infonic AG is the provider of HedgeSphere, the leading product suite for operations of Funds of Hedge Funds. Its HedgeSphere product range debuted in 1999 and has been adopted by the largest and most innovative funds of hedge funds asset managers and administrators in the industry.
“For many funds of hedge funds, including those with complex portfolio structures, management and incentive fees are still calculated manually - a time consuming and error-prone process. This is an area of supreme client sensitivity, being the primary source of revenue for the management function and a major factor in liability and credibility in administration. HedgeSphere PAD 4.3 provides advanced automation to simplify and streamline the fee calculation process, providing near-real time availability, improving accuracy and transparency over fees and their attribution to investors,” said Thomas Furrer, Infonic AG’s CEO. “On the front and middle office side, HedgeSphere MO 4.3 provides tools to improve trading workflow and the exchange of information among portfolio managers, as well as enhanced equity exposure analysis.”
In this latest release, HedgeSphere provides enhanced capabilities for the calculation and processing of investor fees, including: in-advance fee calculations, automated fee crystallization and investor equalization tracking. In addition, HedgeSphere PAD now supports natural hedging and provides real-time views of cash available across accounting entities. Version 4.3 of HedgeSphere MO provides improved trading workflow and exchange of information among portfolio managers, as well as enhanced equity exposure analysis.
Headquartered in Switzerland, and with offices in Zug, Zurich and New York, Infonic AG is the provider of HedgeSphere, the leading product suite for operations of Funds of Hedge Funds. Its HedgeSphere product range debuted in 1999 and has been adopted by the largest and most innovative funds of hedge funds asset managers and administrators in the industry.
Hedge Fund Rankings Released
The Hedge Fund Journal’s Funds of Hedge Funds GLOBAL50, produced in association with Newedge Prime Brokerage Group, reports that minus a few exceptions, funds were happy to participate in the survey and submitted their assets under management figures as at 30th June 2009, which goes some way to prove that funds are taking the issue of transparency more seriously. Those funds that declined to participate have been given estimates based on a variety of data and industry sources.
In responding to the survey, many funds wanted to emphasise that liquidity terms were often the key to how a firm had been able to retain assets, the Journal reports. Those funds with more generous liquidity terms believed, rightly, that they were victims of what is now aptly-called the ‘ATM effect’.
The data shows that between 30th September 2008 and 30th June 2009, over $200 billion was withdrawn from the top 50 funds. Most funds lost an average of between 25% - 30% of their assets under management. However, UBS Alternative and Quantitative Investments remains in pole position, despite losing over 33% of its assets: at 30th June, 2009 assets under management stood at $31.4 billion (down from $46.6 billion in September 2008).
The top 50 funds are certainly managing less, but they are not out of the game. Smaller funds, of course, are facing an even tougher time. Chicago-based Hedge Fund Research (HFR) has reported that over 200 funds of hedge funds liquidated in 2009. This is a significant increase on the last quarter and represents an annual attrition rate of over 8%; nearly double the previous record set in Q4 2008. Falling assets and rising costs due to heightened due diligence and compliance demands from investors will continue to have a strong impact on the business viability of smaller funds.
Hitting rock bottom
The crisis has raised some important questions. Having grown at more than 20% a year between 2000 and 2008, the reversal in fortunes has come as a shock to many within the industry. At their peak, assets under management for funds of hedge funds reached $825 billion according to HFR, but by the end of Q2 2009, assets in the sector had dropped to $530 billion. Importantly, that marked a $5 billion gain from 31st March 2009 and may indicate that redemptions have bottomed out.
But is the fund of hedge funds industry a victim of circumstance or is it a flawed business model? The connection between the Madoff scandal and the industry was unfortunate, if not unfair, (although, some notable funds of hedge funds had invested with Madoff) and as investors sought to retrieve money where possible, it was inevitable that funds of hedge funds would be called upon. “What we have seen is the latest phase of an evolutionary process,” says Permal’s Roberto Giuffrida, Senior Vice President, Regional Director Europe. “Since hedge funds first emerged 60 years ago, there have been three waves of growth and decline, and we are fully expecting to see the fourth wave of growth over the next few years.”
But without doubt there are weaknesses within the model. One major area of weakness is the asset liability mismatch. Funds of hedge funds have traditionally managed their portfolios with a mismatch between portfolio liquidity and terms offered to investors. In the event of a sudden rush of redemptions, funds had a credit facility to bridge the two. In reality, this system proved to be wholly unreliable. Funds were unable to meet the redemption requests and were forced to impose gates.
Adapt or die
Issues such as alignment between investors and managers in terms of fees and investment objectives as well as transparency and the due diligence process are also areas where practices are being reviewed and changed. In the current environment investors are able to affect changes and do not have to settle for second best.
But despite the recriminations, in relative terms, hedge fund investment held up well during the crisis. For example, in 2008 the Hennessee Hedge Fund Index and the Barclay Hedge Index fell 22.42% and 21.63% respectively, while the S&P 500 slid 38.49% and the NASDAQ plunged 40.54%. “The fact that hedge fund indices outperformed the long only indices proves that hedge funds offer the downside protection. And in 2009 we are seeing investor allocations into hedge funds and funds of hedge funds,” explains Optima Managing Director, Graham Martin.
Data clearly shows the rate of redemptions is slowing. They were lower during Q1 2009 than in Q4 2008 according to Standard and Poor’s and they were lower still in the second quarter of 2009. HFR notes that in the last year, funds of hedge funds have dropped fees by three basis points to 1.25%. There is also evidence which suggests that funds with lower management fees outperformed the funds with higher fees, although the data on this is fragmentary. What’s more, liquidity profiles are improving: funds have reduced leverage and many are showing positive cash balances.
Could this be the nadir for the industry? HFR, BNY Mellon and Casey Quirk believe so. Many managers and not a few studies are projecting that assets will grow further in the second half of this year. And regardless of the industry setbacks, funds of funds will continue to be a major channel into single manager hedge funds. But Craig Stevenson, Senior Investment Consultant, Watson Wyatt believes that while funds of hedge funds will stage a comeback, they will face increased competition from single manager funds. He attributes this to the fact that before the crisis, funds of funds could offer capacity to those funds that were closed. The current state of the industry means that single managers are looking to build their own portfolio of institutional assets and virtually all funds, even the most successful, are now open.
Clearly, investors who have less resources and alternative asset experience will continue to invest through funds of hedge funds. “Allocating to hedge funds is a good way of diversifying portfolios and with funds of funds on a base fee for the foreseeable future they are as cheap as they have ever been,” says Stevenson. The business model may indeed be more sound than was thought six months ago since with time investors will return. But some funds that stretched the goodwill of investors may find it is difficult to be fully forgiven.
You can access the Global 50 by clicking on the link below:
http://www.thehedgefundjournal.com/magazine/200908/research/global-50-funds-of-hedge-funds.php
The Global 50 is a listing of the largest funds of hedge funds groups ranked by AUM as at 30 June 2009.
In responding to the survey, many funds wanted to emphasise that liquidity terms were often the key to how a firm had been able to retain assets, the Journal reports. Those funds with more generous liquidity terms believed, rightly, that they were victims of what is now aptly-called the ‘ATM effect’.
The data shows that between 30th September 2008 and 30th June 2009, over $200 billion was withdrawn from the top 50 funds. Most funds lost an average of between 25% - 30% of their assets under management. However, UBS Alternative and Quantitative Investments remains in pole position, despite losing over 33% of its assets: at 30th June, 2009 assets under management stood at $31.4 billion (down from $46.6 billion in September 2008).
The top 50 funds are certainly managing less, but they are not out of the game. Smaller funds, of course, are facing an even tougher time. Chicago-based Hedge Fund Research (HFR) has reported that over 200 funds of hedge funds liquidated in 2009. This is a significant increase on the last quarter and represents an annual attrition rate of over 8%; nearly double the previous record set in Q4 2008. Falling assets and rising costs due to heightened due diligence and compliance demands from investors will continue to have a strong impact on the business viability of smaller funds.
Hitting rock bottom
The crisis has raised some important questions. Having grown at more than 20% a year between 2000 and 2008, the reversal in fortunes has come as a shock to many within the industry. At their peak, assets under management for funds of hedge funds reached $825 billion according to HFR, but by the end of Q2 2009, assets in the sector had dropped to $530 billion. Importantly, that marked a $5 billion gain from 31st March 2009 and may indicate that redemptions have bottomed out.
But is the fund of hedge funds industry a victim of circumstance or is it a flawed business model? The connection between the Madoff scandal and the industry was unfortunate, if not unfair, (although, some notable funds of hedge funds had invested with Madoff) and as investors sought to retrieve money where possible, it was inevitable that funds of hedge funds would be called upon. “What we have seen is the latest phase of an evolutionary process,” says Permal’s Roberto Giuffrida, Senior Vice President, Regional Director Europe. “Since hedge funds first emerged 60 years ago, there have been three waves of growth and decline, and we are fully expecting to see the fourth wave of growth over the next few years.”
But without doubt there are weaknesses within the model. One major area of weakness is the asset liability mismatch. Funds of hedge funds have traditionally managed their portfolios with a mismatch between portfolio liquidity and terms offered to investors. In the event of a sudden rush of redemptions, funds had a credit facility to bridge the two. In reality, this system proved to be wholly unreliable. Funds were unable to meet the redemption requests and were forced to impose gates.
Adapt or die
Issues such as alignment between investors and managers in terms of fees and investment objectives as well as transparency and the due diligence process are also areas where practices are being reviewed and changed. In the current environment investors are able to affect changes and do not have to settle for second best.
But despite the recriminations, in relative terms, hedge fund investment held up well during the crisis. For example, in 2008 the Hennessee Hedge Fund Index and the Barclay Hedge Index fell 22.42% and 21.63% respectively, while the S&P 500 slid 38.49% and the NASDAQ plunged 40.54%. “The fact that hedge fund indices outperformed the long only indices proves that hedge funds offer the downside protection. And in 2009 we are seeing investor allocations into hedge funds and funds of hedge funds,” explains Optima Managing Director, Graham Martin.
Data clearly shows the rate of redemptions is slowing. They were lower during Q1 2009 than in Q4 2008 according to Standard and Poor’s and they were lower still in the second quarter of 2009. HFR notes that in the last year, funds of hedge funds have dropped fees by three basis points to 1.25%. There is also evidence which suggests that funds with lower management fees outperformed the funds with higher fees, although the data on this is fragmentary. What’s more, liquidity profiles are improving: funds have reduced leverage and many are showing positive cash balances.
Could this be the nadir for the industry? HFR, BNY Mellon and Casey Quirk believe so. Many managers and not a few studies are projecting that assets will grow further in the second half of this year. And regardless of the industry setbacks, funds of funds will continue to be a major channel into single manager hedge funds. But Craig Stevenson, Senior Investment Consultant, Watson Wyatt believes that while funds of hedge funds will stage a comeback, they will face increased competition from single manager funds. He attributes this to the fact that before the crisis, funds of funds could offer capacity to those funds that were closed. The current state of the industry means that single managers are looking to build their own portfolio of institutional assets and virtually all funds, even the most successful, are now open.
Clearly, investors who have less resources and alternative asset experience will continue to invest through funds of hedge funds. “Allocating to hedge funds is a good way of diversifying portfolios and with funds of funds on a base fee for the foreseeable future they are as cheap as they have ever been,” says Stevenson. The business model may indeed be more sound than was thought six months ago since with time investors will return. But some funds that stretched the goodwill of investors may find it is difficult to be fully forgiven.
You can access the Global 50 by clicking on the link below:
http://www.thehedgefundjournal.com/magazine/200908/research/global-50-funds-of-hedge-funds.php
The Global 50 is a listing of the largest funds of hedge funds groups ranked by AUM as at 30 June 2009.
Deutsche Bank Ranked Second in Hedge Fund Administration Survey
Deutsche Bank's Alternative Fund Services, part of the bank's Global Transaction Banking (GTB) division, has ranked second among top administrators in Global Custodian magazine’s 2009 Hedge Fund Administration Survey.
This is the first time Deutsche Bank has participated in the survey, which is published annually and includes responses from 1,370 clients of hedge fund administrators around the globe. It is intended to measure service quality and value in 12 categories including client service, fund accounting and middle office services, across a full range of fund characteristics such as size, strategy and location.
“In our first appearance in the Hedge Fund Administration Survey we are very pleased to have ranked second and scored highly in a range of categories,” said Christopher Nero, Managing Director and co-head of Alternative Fund Services within Global Transaction Banking.
In a write-up accompanying the results, Global Custodian commented, “(GTB) has a long pedigree in hedge fund administration too, with operations scattered across Cayman, Delaware, the Channel Islands, Dublin, Luxembourg, Mauritius and Singapore. But in January last year Deutsche transformed its presence in the industry by the acquisition of California based hedge fund administrator Hedgeworks. With staff in Boston and Cayman as well as the Golden State, Hedgeworks helped Deutsche double the size of its business. As it did for the prime brokerage business, the credit standing of the bank has attracted clients.”
Last month, Deutsche Bank announced that its Global Prime Finance business within its Global Markets division received 127 “Best in Class” and 16 “Top Rated and Commended” awards, the most among all global prime brokerage providers, in the Global Custodian 2009 Prime Brokerage Survey.
This is the first time Deutsche Bank has participated in the survey, which is published annually and includes responses from 1,370 clients of hedge fund administrators around the globe. It is intended to measure service quality and value in 12 categories including client service, fund accounting and middle office services, across a full range of fund characteristics such as size, strategy and location.
“In our first appearance in the Hedge Fund Administration Survey we are very pleased to have ranked second and scored highly in a range of categories,” said Christopher Nero, Managing Director and co-head of Alternative Fund Services within Global Transaction Banking.
In a write-up accompanying the results, Global Custodian commented, “(GTB) has a long pedigree in hedge fund administration too, with operations scattered across Cayman, Delaware, the Channel Islands, Dublin, Luxembourg, Mauritius and Singapore. But in January last year Deutsche transformed its presence in the industry by the acquisition of California based hedge fund administrator Hedgeworks. With staff in Boston and Cayman as well as the Golden State, Hedgeworks helped Deutsche double the size of its business. As it did for the prime brokerage business, the credit standing of the bank has attracted clients.”
Last month, Deutsche Bank announced that its Global Prime Finance business within its Global Markets division received 127 “Best in Class” and 16 “Top Rated and Commended” awards, the most among all global prime brokerage providers, in the Global Custodian 2009 Prime Brokerage Survey.
25 Aug 2009
People Moves: Gabrielle Guttman Leaves Hedge Fund To Launch Consulting Firm
Gabrielle Guttman launched connext consulting inc. after leaving Southridge LLC, where she served as the vice president of business development and marketing of the firm and its hedge funds.
She left the company to pursue the business venture and to launch her own customer base. According to Guttman, who is president of the firm, the new firm will employ an integrated and customized approach to successfully elevate their clients’ businesses to the next level through strategic introductions, business development, marketing and public/ investor relations. Their target market will include financial institutions, professional services firms, minority-owned businesses and not-for-profit organizations.
At Southridge, Gabrielle was responsible for hedge fund marketing, public/investor relations and marketing financial products to global public companies. She previously held Business Development and Marketing roles at Kroll Inc. and Grey Group Inc. Gabrielle's financial career began at Bear, Stearns & Co. Inc. as a Corporate Finance Analyst where she helped execute equity, debt and M&A transactions across a wide range of industries.
Gabrielle graduated Magna Cum Laude from Barnard College, Columbia University. Since 2003 she has held Board and Advisory positions with Barnard Business and Professional Women, a not-for-profit alumnae organization. Throughout her career, Gabrielle has been an active volunteer and currently holds leadership positions with notable not-for-profit and philanthropic organizations focused on the financial services industry, women's initiatives and children's development.
She left the company to pursue the business venture and to launch her own customer base. According to Guttman, who is president of the firm, the new firm will employ an integrated and customized approach to successfully elevate their clients’ businesses to the next level through strategic introductions, business development, marketing and public/ investor relations. Their target market will include financial institutions, professional services firms, minority-owned businesses and not-for-profit organizations.
At Southridge, Gabrielle was responsible for hedge fund marketing, public/investor relations and marketing financial products to global public companies. She previously held Business Development and Marketing roles at Kroll Inc. and Grey Group Inc. Gabrielle's financial career began at Bear, Stearns & Co. Inc. as a Corporate Finance Analyst where she helped execute equity, debt and M&A transactions across a wide range of industries.
Gabrielle graduated Magna Cum Laude from Barnard College, Columbia University. Since 2003 she has held Board and Advisory positions with Barnard Business and Professional Women, a not-for-profit alumnae organization. Throughout her career, Gabrielle has been an active volunteer and currently holds leadership positions with notable not-for-profit and philanthropic organizations focused on the financial services industry, women's initiatives and children's development.
Offshore Hedge Fund Tax Shelter on the “White List”
West Palm Beach (HedgeCo.net) - The Organisation for Economic Cooperation and Development (OECD) added the Cayman Islands to its 'white list' of jurisdictions that implement international tax standards for investors such as hedge funds and other alternative investors.
Jeffrey Owens, Director of the OECD's Centre for Tax Policy and Administration, welcomed the signing of the Cayman Islands' twelfth Tax Information Exchange Agreement (TIEA) with New Zealand, on 13 August 2009 putting it “alongside other countries that have substantially implemented the internationally agreed tax standard.”
In response, the Cayman Islands Government summarized: “For over four decades the
Cayman Islands has steadily earned its place as a world-class international financial
services centre. The Cayman Islands Government sees the OECD's recognition as a
natural outcome of the country’s substantial commitment to uphold an equally worldclass
international cooperation regime in the exchange of tax information.”
Alex Akesson
Editor for HedgeCo.net
alex@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Jeffrey Owens, Director of the OECD's Centre for Tax Policy and Administration, welcomed the signing of the Cayman Islands' twelfth Tax Information Exchange Agreement (TIEA) with New Zealand, on 13 August 2009 putting it “alongside other countries that have substantially implemented the internationally agreed tax standard.”
In response, the Cayman Islands Government summarized: “For over four decades the
Cayman Islands has steadily earned its place as a world-class international financial
services centre. The Cayman Islands Government sees the OECD's recognition as a
natural outcome of the country’s substantial commitment to uphold an equally worldclass
international cooperation regime in the exchange of tax information.”
Alex Akesson
Editor for HedgeCo.net
alex@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
24 Aug 2009
Hedge Fund Brokerage Firm Updates Connectivity
Hedge fund prime broker, Newedge, has started using a Dubai Point of Presence (POP) connection to facilitate their access to the Dubai Gold & Commodity Exchange (DGCX). The new connection has high bandwidth and is more secure than an internet-based connection, the company said.
Amaury de Villemandy, CEO Newedge Europe & Middle East, commented on its fixed line capacity, saying, "Our investment in establishing direct connectivity to DGCX was based on the increased interest among our clients in capitalizing on the commodity and currency trading opportunities offered by the Exchange."
Newedge is a 50/50 joint venture between Societe Generale and Calyon. With a presence in 25 locations in 17 countries, Newedge primarily serves institutional clients, providing access to more than 85 exchanges.
Amaury de Villemandy, CEO Newedge Europe & Middle East, commented on its fixed line capacity, saying, "Our investment in establishing direct connectivity to DGCX was based on the increased interest among our clients in capitalizing on the commodity and currency trading opportunities offered by the Exchange."
Newedge is a 50/50 joint venture between Societe Generale and Calyon. With a presence in 25 locations in 17 countries, Newedge primarily serves institutional clients, providing access to more than 85 exchanges.
21 Aug 2009
TMF Acquires Sydney Boutique Fund Mgr Kingsway Taitz
International financial services provider TMF Group has expanded into boutiqe and hedge funds in Australia through the acquisition of Sydney administrator, Kingsway Taitz Fund Administration Pty Ltd, (Kingsway Taitz).
Recognised as a leading provider of boutique and hedge fund administration services in the Asia‐Pacific region, Kingsway Taitz has been top ranked in its peer group for the past two years by the annual Global Custodian Hedge Fund Administrator Survey.
"The increasing demand for our services made it apparent that the next phase of growth required the backing of a global fund administrator with strong financial resources." Brian Taitz, managing director of Kingsway Taitz said “This transaction provides the opportunity to align with a like‐minded global fund administration company that shares our values and culture."
“This transaction brings together two highly successful companies – one global and one local with complementary skills and values, and a shared focus on client service and staff development," managing directors of TMF Eric Koolen and Catherine Caradus, said. TMF has over 175 fund administration clients.
Eric Koolen, who has 20 years of fund administration experience, will lead the combined organisation in Australia. Brian Taitz will continue to be involved on a day to day basis for up to six months to ensure a seamless integration of the two organisations. The company says there will be no immediate changes.
Kingsway Taitz has retained Capital Advice as its financial adviser in relation to this transaction.
Recognised as a leading provider of boutique and hedge fund administration services in the Asia‐Pacific region, Kingsway Taitz has been top ranked in its peer group for the past two years by the annual Global Custodian Hedge Fund Administrator Survey.
"The increasing demand for our services made it apparent that the next phase of growth required the backing of a global fund administrator with strong financial resources." Brian Taitz, managing director of Kingsway Taitz said “This transaction provides the opportunity to align with a like‐minded global fund administration company that shares our values and culture."
“This transaction brings together two highly successful companies – one global and one local with complementary skills and values, and a shared focus on client service and staff development," managing directors of TMF Eric Koolen and Catherine Caradus, said. TMF has over 175 fund administration clients.
Eric Koolen, who has 20 years of fund administration experience, will lead the combined organisation in Australia. Brian Taitz will continue to be involved on a day to day basis for up to six months to ensure a seamless integration of the two organisations. The company says there will be no immediate changes.
Kingsway Taitz has retained Capital Advice as its financial adviser in relation to this transaction.
20 Aug 2009
Man invests in Hong Kong-based Minerva macro fund
Man Investments’ seeding fund, RMF Global Emerging Managers, has completed its second incubation deal of the last two months, providing a cornerstone investment of $50 million for Hong Kong’s Minerva Macro Fund.
In July RMF GEM invested $50 million in the flagship product of 5:15 Capital Management, an unrelated fixed income arbitrage manager based in Connecticut.
Minerva is managed by Stanley Ku, who founded the Hong Kong office of hedge fund Fortress Investment Group and most recently managed $750 million for Fortress’ Drawbridge Global Macro Fund. Dorothy Lau, Minerva’s risk and business manager, formerly worked for JP Morgan and Goldman Sachs.
“Stanley Ku’s work at Fortress and Goldman Sachs has made him a very well respected money manager in Asia,” said Hans Hurschler, head of Man Investments’ hedge fund Ventures. “We believe that Minerva has the potential to generate solid, stable returns and that it may attract substantial assets.”
Minerva is a discretionary global macro fund, focused on Asia. It trades only highly liquid instruments such as interest rate or bond futures, foreign exchange forwards and equity index futures or sector ETFs. The entire portfolio is designed to be liquidated in 48 hours.
In July RMF GEM invested $50 million in the flagship product of 5:15 Capital Management, an unrelated fixed income arbitrage manager based in Connecticut.
Minerva is managed by Stanley Ku, who founded the Hong Kong office of hedge fund Fortress Investment Group and most recently managed $750 million for Fortress’ Drawbridge Global Macro Fund. Dorothy Lau, Minerva’s risk and business manager, formerly worked for JP Morgan and Goldman Sachs.
“Stanley Ku’s work at Fortress and Goldman Sachs has made him a very well respected money manager in Asia,” said Hans Hurschler, head of Man Investments’ hedge fund Ventures. “We believe that Minerva has the potential to generate solid, stable returns and that it may attract substantial assets.”
Minerva is a discretionary global macro fund, focused on Asia. It trades only highly liquid instruments such as interest rate or bond futures, foreign exchange forwards and equity index futures or sector ETFs. The entire portfolio is designed to be liquidated in 48 hours.
RBC Hedge 250 Index returned 2.10 percent in July 2009
RBC Capital Markets today reported that for the month of July 2009 the RBC Hedge 250 Index(R) had a net return of 2.10 percent. This brings the year-to-date return of the Index to 13.04 percent. These returns are estimated and will be finalized by the middle of next month. The return for June 2009 has been finalized at 0.33 percent.
Comprised of approximately 250 actual hedge funds, the RBC Hedge 250 Index is positioned as a diversified and representative investable index. The Universe on which the Index is based currently consists of 5,242 hedge funds (excludes funds of hedge funds) with aggregate assets under management of $952 billion.
Since its inception on July 1, 2005 through the end of June 2009, the RBC Hedge 250 Index has had an annualized net return of 2.56 percent. In comparison, over the same period, other investable indices have averaged -1.44 percent while non-investable indices have averaged 4.25 percent, according to information reported by the sponsors of those indices.
Comprised of approximately 250 actual hedge funds, the RBC Hedge 250 Index is positioned as a diversified and representative investable index. The Universe on which the Index is based currently consists of 5,242 hedge funds (excludes funds of hedge funds) with aggregate assets under management of $952 billion.
Since its inception on July 1, 2005 through the end of June 2009, the RBC Hedge 250 Index has had an annualized net return of 2.56 percent. In comparison, over the same period, other investable indices have averaged -1.44 percent while non-investable indices have averaged 4.25 percent, according to information reported by the sponsors of those indices.
19 Aug 2009
Hedge Fund Atalaya Expands Investment and Marketing Team
Encouraged by a promising investment environment and accelerated investment pace, New York-based special opportunities fund, Atalaya Capital Management LP, today announced that it has expanded its team, adding three investment professionals and a marketing professional.
“Recent positive changes in our target investment markets have prompted Atalaya to bolster our professional platform in order to capitalize on market conditions and new opportunities,” said Ivan Q. Zinn, Founding Partner & Chief Investment Officer.
Josh Ufberg joined as a Principal from Goldman Sachs’ Special Situations Group, while Rana Mitra and Alex Wang have joined the team responsible for the sourcing and purchase of private credit assets as Senior Associate and Associate, respectively. Ashley Fochtman joined the Firm as a Vice President and will be working in a business development capacity. Previously, Ms. Fochtman worked in hedge fund marketing and at Goldman Sachs as an energy derivatives analyst.
Founded by Mr. Zinn in 2006, Atalaya focuses on the opportunistic purchase of senior secured credit from forced sellers, failed financial institutions and sellers in need of liquidity such as banks, commercial finance companies, and other financial and investment institutions.
About Atalaya Capital Management
Atalaya Capital Management is an alternative investment firm focused on investing in small and middle market credit opportunities. Since inception in early 2006, the Firm has successfully invested over $1 billion through (1) the opportunistic purchase of private, senior secured credit from forced sellers, failed financial institutions and sellers in need of liquidity, and (2) proprietary 'new issue' credit investments including DIP loans and other senior secured financings.
“Recent positive changes in our target investment markets have prompted Atalaya to bolster our professional platform in order to capitalize on market conditions and new opportunities,” said Ivan Q. Zinn, Founding Partner & Chief Investment Officer.
Josh Ufberg joined as a Principal from Goldman Sachs’ Special Situations Group, while Rana Mitra and Alex Wang have joined the team responsible for the sourcing and purchase of private credit assets as Senior Associate and Associate, respectively. Ashley Fochtman joined the Firm as a Vice President and will be working in a business development capacity. Previously, Ms. Fochtman worked in hedge fund marketing and at Goldman Sachs as an energy derivatives analyst.
Founded by Mr. Zinn in 2006, Atalaya focuses on the opportunistic purchase of senior secured credit from forced sellers, failed financial institutions and sellers in need of liquidity such as banks, commercial finance companies, and other financial and investment institutions.
About Atalaya Capital Management
Atalaya Capital Management is an alternative investment firm focused on investing in small and middle market credit opportunities. Since inception in early 2006, the Firm has successfully invested over $1 billion through (1) the opportunistic purchase of private, senior secured credit from forced sellers, failed financial institutions and sellers in need of liquidity, and (2) proprietary 'new issue' credit investments including DIP loans and other senior secured financings.
18 Aug 2009
Salus Alpha Directional Market Funds Outperform
Salus Alpha (SA) announced that their fund, 'The Salus Alpha Directional Markets' stood out from its peers in the Managed Futures space due to its unique approach.
The majority of the managed futures funds, SA said, invests systematically according to computer based trading models. A computer model typically uses different indicators to identify trends on the global financial markets. These models can be characterized as long-term and short-term operating models.
Most managed futures funds use long-term trend following models; this is the reason why most of the famous managed futures funds have had significantly negative performance since the beginning of the year 2009: they didn’t recognize the trend reversal in time.
The Approach of the Salus Alpha Directional Markets Fund differs significantly from competitors – Model Risk is minimized.
"Unlike other firms we do not trust in technical analysis but we forecast futures prices with precision to identify trends. In contrast to other managed futures models the Salus Alpha Directional Markets controls risk on position, sector and portfolio level. Daily risk balancing positions the fund right in stormy weather or trend less markets." SA said.
The majority of the managed futures funds, SA said, invests systematically according to computer based trading models. A computer model typically uses different indicators to identify trends on the global financial markets. These models can be characterized as long-term and short-term operating models.
Most managed futures funds use long-term trend following models; this is the reason why most of the famous managed futures funds have had significantly negative performance since the beginning of the year 2009: they didn’t recognize the trend reversal in time.
The Approach of the Salus Alpha Directional Markets Fund differs significantly from competitors – Model Risk is minimized.
"Unlike other firms we do not trust in technical analysis but we forecast futures prices with precision to identify trends. In contrast to other managed futures models the Salus Alpha Directional Markets controls risk on position, sector and portfolio level. Daily risk balancing positions the fund right in stormy weather or trend less markets." SA said.
17 Aug 2009
Alternative Investments Report: Identify Demand for Hedge Funds
Research and Markets has announced the addition of the "High Net Worth Alternative Investments" report to their offering.
The report identifies demand for hedge funds, capital protected funds, private equity funds and real estate funds from high net worths, The scope of the report covers France, Germany, Italy, Spain, UK, Nordic region, Belgium/Netherlands, Switzerland, Australia, China, India, Hong Kong, Singapore and Taiwan.
Includings hedge funds, capital protected funds, private equity funds and real estate funds (open ended and closed ended) thr peport shows the results of the Wealth Management Market Leaders survey of 280 wealth management companies worldwide, and on high net worths (those with more than $1m in onshore liquid assets)
HNW alternative investment asset allocations are expected to decline slightly in both Australia and France in the next two years, as high net worths reposition their portfolios. Real estate allocations and commodities allocations will decline among Australian HNWs while both hedge fund and derivative allocations will increase.
While British HNWs plan to increase their exposure to capital protected products and private equity funds, and their wealth managers will devote significant resources to the development of these product areas, they are failing to anticipate their clients demand for closed-ended real estate funds.
At the same time German wealth managers are focusing strongly on capital protected products which, while certainly in demand by most HNWs, will not see a significant increase in terms of portfolio allocations.
The report identifies demand for hedge funds, capital protected funds, private equity funds and real estate funds from high net worths, The scope of the report covers France, Germany, Italy, Spain, UK, Nordic region, Belgium/Netherlands, Switzerland, Australia, China, India, Hong Kong, Singapore and Taiwan.
Includings hedge funds, capital protected funds, private equity funds and real estate funds (open ended and closed ended) thr peport shows the results of the Wealth Management Market Leaders survey of 280 wealth management companies worldwide, and on high net worths (those with more than $1m in onshore liquid assets)
HNW alternative investment asset allocations are expected to decline slightly in both Australia and France in the next two years, as high net worths reposition their portfolios. Real estate allocations and commodities allocations will decline among Australian HNWs while both hedge fund and derivative allocations will increase.
While British HNWs plan to increase their exposure to capital protected products and private equity funds, and their wealth managers will devote significant resources to the development of these product areas, they are failing to anticipate their clients demand for closed-ended real estate funds.
At the same time German wealth managers are focusing strongly on capital protected products which, while certainly in demand by most HNWs, will not see a significant increase in terms of portfolio allocations.
14 Aug 2009
OECD Puts Cayman Islands on Tax 'White List'
The Organisation for Economic Cooperation and Development (OECD) added the Cayman Islands to its ‘white list’ of jurisdictions that substantially implement international tax standards.
The Cayman Islands recognition came about after the country signed its twelfth Tax Information Exchange Agreement (TIEA) with New Zealand, on 13 August 2009.
“For over four decades the Cayman Islands has steadily earned its place as a world-class international financial services centre." Leader of Government Business/Premier Designate, the Honourable McKeeva Bush said, "The Cayman Islands Government sees the OECD’s recognition as a natural outcome of the country’s substantial commitment to uphold an equally world-class international cooperation regime in the exchange of tax information.”
Jeffrey Owens, Director of the OECD’s Centre for Tax Policy and Administration, welcomed the signing which puts Cayman Islands “alongside other countries that have substantially implemented the internationally agreed tax standard.”
The Cayman Islands’ maintains 12 bilateral tax information arrangements with the following countries: Denmark, Faroe Islands, Finland, Greenland, Iceland, Ireland, Netherlands, New Zealand, Norway, Sweden, United Kingdom and the United States.
The Cayman Islands recognition came about after the country signed its twelfth Tax Information Exchange Agreement (TIEA) with New Zealand, on 13 August 2009.
“For over four decades the Cayman Islands has steadily earned its place as a world-class international financial services centre." Leader of Government Business/Premier Designate, the Honourable McKeeva Bush said, "The Cayman Islands Government sees the OECD’s recognition as a natural outcome of the country’s substantial commitment to uphold an equally world-class international cooperation regime in the exchange of tax information.”
Jeffrey Owens, Director of the OECD’s Centre for Tax Policy and Administration, welcomed the signing which puts Cayman Islands “alongside other countries that have substantially implemented the internationally agreed tax standard.”
The Cayman Islands’ maintains 12 bilateral tax information arrangements with the following countries: Denmark, Faroe Islands, Finland, Greenland, Iceland, Ireland, Netherlands, New Zealand, Norway, Sweden, United Kingdom and the United States.
SEC Amends Rules to Issue More Subpoenas
Off-shore hedge fund law firm, Sadis & Goldberg LLP, sent out a letter to their clients announcing that the Securities and Exchange Commission (SEC) appears determined to issue more subpoenas and give people more incentives to cooperate with investigations as it works to enhance its oversight of the financial markets.
The letter, obtained by HedgeCo, explains, "Don't be surprised if you receive a subpoena or are contacted by the SEC." Daniel G. Viola, spokesperson for Sadis and Glodbrg, said, "The SEC has significantly increased its enforcement efforts since the recent discovery of certain high profile Ponzi schemes."
Effective August 11, 2009, the SEC has also made it easier for its staff attorneys to issue subpoenas. Thus, the SEC staff attorneys will no longer have to obtain formal approvals to issue subpoenas; instead, they will simply need approval from their senior supervisor.
"If you receive an inquiry letter or subpoena from the SEC, remain calm." Viola said, "This is not uncommon given the current regulatory climate. Above all, do not respond without first contacting legal counsel."
The The SEC generally has broad powers to conduct investigations of potential violations of the federal securities laws and often works with the Department of Justice in connection with joint proceedings, often known as "parallel proceedings."
The law firms Regulatory Practice Group consists of former SEC personnel and litigators with experience regarding civil and criminal proceedings.
Contact info:
Daniel G. Viola at 212.573.8038 (or dviola@sglawyers.com)
Christiaan Johnson-Green at 212.573.8169 (or cjohnson-green@sglawyers.com)
The letter, obtained by HedgeCo, explains, "Don't be surprised if you receive a subpoena or are contacted by the SEC." Daniel G. Viola, spokesperson for Sadis and Glodbrg, said, "The SEC has significantly increased its enforcement efforts since the recent discovery of certain high profile Ponzi schemes."
Effective August 11, 2009, the SEC has also made it easier for its staff attorneys to issue subpoenas. Thus, the SEC staff attorneys will no longer have to obtain formal approvals to issue subpoenas; instead, they will simply need approval from their senior supervisor.
"If you receive an inquiry letter or subpoena from the SEC, remain calm." Viola said, "This is not uncommon given the current regulatory climate. Above all, do not respond without first contacting legal counsel."
The The SEC generally has broad powers to conduct investigations of potential violations of the federal securities laws and often works with the Department of Justice in connection with joint proceedings, often known as "parallel proceedings."
The law firms Regulatory Practice Group consists of former SEC personnel and litigators with experience regarding civil and criminal proceedings.
Contact info:
Daniel G. Viola at 212.573.8038 (or dviola@sglawyers.com)
Christiaan Johnson-Green at 212.573.8169 (or cjohnson-green@sglawyers.com)
13 Aug 2009
Please join us for the HedgeCo's Summer Networking Event
The end of the summer season is quickly approaching, and August is the perfect time to enjoy what is left of warm, sunny evenings! The HedgeCo Summer Networking Event is a chance for investors, hedge fund managers, and other industry professionals to come together and enjoy a night of sharing ideas and meeting new contacts. Recognized as having the largest attendance for any type of event in the hedge fund industry, the HedgeCo Networking Events have quickly become the top destination for generating new business and meeting new industry contacts. Come celebrate the end of summer, contribute to Hedge Funds Care, eat, drink and network with other members of the alternative investments community.
Click here to RSVP for HedgeCo's Summer Networking Event
Venue:
Aspen Social Club
157 W 47th St
New York, NY 10036
www.aspensocialclub.com
Date: August 19th, 2009
Time: 6-10 PM
Cash Bar
Click here to RSVP for HedgeCo's Summer Networking Event
Venue:
Aspen Social Club
157 W 47th St
New York, NY 10036
www.aspensocialclub.com
Date: August 19th, 2009
Time: 6-10 PM
Cash Bar
AIMA Launches Directive Centre Media Resoure
The Alternative Investment Management Association, (AIMA) has launched a Directive Centre on their website as part of an on-going campaign to have the European Commission's draft directive on Alternative Investment Fund Managers revised.
It is intended as a resource for journalists and members of the public and contains everything relevant for our campaign, including press releases, guidance notes, FAQs and other resource materials issued by AIMA; speeches and articles on the directive and links to relevant documents, including the European Commission’s directive and details of its legislative process; and a quotations section featuring a host of different figures expressing their concern about the directive.
Those quoted expressing concern or reported as doing so include pension funds and pension fund industry groups, European institutional investors, global banks, international law firms, commercial real estate groups, private equity, Swedish and UK ministers, Irish officials, the chair of the European Parliament’s ECON committee, the US Treasury, the UK Conservative party, the Mayor of London, the German Funds association, the Financial Times and the Economist, and even Robert Peston, Jacques de Larosière and Charles McCreevy.
It is intended as a resource for journalists and members of the public and contains everything relevant for our campaign, including press releases, guidance notes, FAQs and other resource materials issued by AIMA; speeches and articles on the directive and links to relevant documents, including the European Commission’s directive and details of its legislative process; and a quotations section featuring a host of different figures expressing their concern about the directive.
Those quoted expressing concern or reported as doing so include pension funds and pension fund industry groups, European institutional investors, global banks, international law firms, commercial real estate groups, private equity, Swedish and UK ministers, Irish officials, the chair of the European Parliament’s ECON committee, the US Treasury, the UK Conservative party, the Mayor of London, the German Funds association, the Financial Times and the Economist, and even Robert Peston, Jacques de Larosière and Charles McCreevy.
People Moves: Two Hedge Fund Specialists Join Probitas Partners
Hedge Fund veterans James Coleman and Vincent Le Hodey have joined global alternative investment firm Probitas Partners at its London office.
“We are very excited to have James and Vincent join Probitas Partners. They are seasoned industry veterans and well respected in their market." Greg Hausler, a Founding Partner at Probitas Partners, commented, "The current global environment is as tough as it has ever been for capital raising and executing secondary mandates. The addition of James and Vincent to our London office advances our capabilities to provide the very best research, advice, fund offerings and liquidity management to European Limited Partners.”
Coleman, a Managing Director at Probitas Partners, will lead the firm's efforts in Europe by managing key Limited Partner relationships, sourcing new General Partner clients and facilitating secondary sales activities. Le Hodey, a Director at Probitas Partners, will focus his efforts on relationship management and secondary fund advisory for Probitas Partners’ Limited Partner client base. Before joining Probitas Partners, Coleman was a Partner at Deloitte and headed its Fund Placement Advisory Group. Le Hodey also was formerly with Deloitte’s Fund Placement Advisory Group as a Director.
"Probitas Partners provides Vincent and me with a dynamic global platform from which to serve our European clients. We believe accessing Probitas Partners' top-quality fund sponsors, its industry-leading market research, and its deep experience in the secondary advisory business will reward European Limited Partners." Coleman concluded.
“We are very excited to have James and Vincent join Probitas Partners. They are seasoned industry veterans and well respected in their market." Greg Hausler, a Founding Partner at Probitas Partners, commented, "The current global environment is as tough as it has ever been for capital raising and executing secondary mandates. The addition of James and Vincent to our London office advances our capabilities to provide the very best research, advice, fund offerings and liquidity management to European Limited Partners.”
Coleman, a Managing Director at Probitas Partners, will lead the firm's efforts in Europe by managing key Limited Partner relationships, sourcing new General Partner clients and facilitating secondary sales activities. Le Hodey, a Director at Probitas Partners, will focus his efforts on relationship management and secondary fund advisory for Probitas Partners’ Limited Partner client base. Before joining Probitas Partners, Coleman was a Partner at Deloitte and headed its Fund Placement Advisory Group. Le Hodey also was formerly with Deloitte’s Fund Placement Advisory Group as a Director.
"Probitas Partners provides Vincent and me with a dynamic global platform from which to serve our European clients. We believe accessing Probitas Partners' top-quality fund sponsors, its industry-leading market research, and its deep experience in the secondary advisory business will reward European Limited Partners." Coleman concluded.
12 Aug 2009
Bandon Flagship Strategy Gains Momentum, 5th Year Reached
Bandon Capital Management has reached it's 5th year for its hedge fund flagship investment strategy, 'Directional Interest Rate Strategy', (DIRS) producing annualized returns of +7.09% net of all fees, comparatively over the same time period the S&P 500 has lost -2.15%.
The strategy provides investors with absolute returns, uncorrelated with the equity and fixed income markets, by investing in the US Treasury Market using ETF’s or mutual funds and is available to non-accredited investors.
“We’re incredibly proud of this milestone. This is an investment area where there is a tremendous amount of product development activity and innovation." Bill Woodruff, Founder and Managing Principal said, "As advisors and their clients increasingly seek non-correlated, absolute return strategies we stand out for both the length and strength of our track record.”
The strategy provides investors with absolute returns, uncorrelated with the equity and fixed income markets, by investing in the US Treasury Market using ETF’s or mutual funds and is available to non-accredited investors.
“We’re incredibly proud of this milestone. This is an investment area where there is a tremendous amount of product development activity and innovation." Bill Woodruff, Founder and Managing Principal said, "As advisors and their clients increasingly seek non-correlated, absolute return strategies we stand out for both the length and strength of our track record.”
Hedge Fund Models Need to Evolve- Deloitte Research
A new research paper by Deloitte LLC: "How Hedge Funds Are Becoming the Ultimate Networked Enterprise," focuses on how hedge fund methods of interacting with prime brokers and third-party administrators needs to be rethought in order to remain profitable as the roles of prime brokers and third-party administrators evolve.
"As investors demand increased transparency and operational risk management, hedge funds are faced with redefining their relationships with prime brokers and third-party administrators," Cary Stier, Deloitte's U.S. Asset Management Services leader explained.
"While attraction and retention of capital remains a top priority for fund managers, in today's market performance isn't the only bull's-eye a fund has to hit to accomplish these goals. Investors want assurance that the fund's operating model has taken into consideration the events of the last year and has adjusted accordingly. At the same time, prime brokers, administrators and custodians are looking for new ways to serve managers," said Adam Broun, Deloitte's Asset Management Services Consulting leader.
The report outlines five areas of focus for both prime brokers and third-party administrators:
Build the Middle-Office that Fits your Operating Strategy
Hedge funds need to determine their optimal operating strategy and factor in roles various service providers will play in providing necessary capabilities. Although most large firms will build their own middle-office, service offerings from fund administrators and custody players will prove to be compelling from both a cost and capability standpoint. Managing the network of service providers will require additional capabilities that the hedge funds will need to build and staff in-house.
Add Horsepower to Your Collateral Management
The multiprime model will only increase the need for improved collateral management. Some hedge funds will benefit by outsourcing to enterprise collateral management service providers or implementing vendor solutions to efficiently manage their collateral across various parties. In addition to spreading collateral across parties, independent valuation of illiquid assets, zero over-collateralization and optimal collateral composition will be the key focus areas.
Plan Risk Management
Risk management will see a balance of focus between market risk for investment strategies and counterparty risk. In a multiprime model, a single broker's risk report will show only a partial picture of the risk profile. Risk management will need to be a central function that aggregates positions across all providers. Take this opportunity to separate risk management from investment management.
Choose the Right Mix of Prime Brokers
The choice of prime brokers should be guided by aligning the fund manager's needs to the prime
broker's capabilities -- balance sheet strength, execution platform, geographic presence, flexible financing/margining options and product coverage.
Get the Most From Your Third-Party Administrator
Third-party administrators can help hedge funds outsource several middle- and back-office functions. With the increased complexity of the middle- and back-office, hedge funds should at least understand the range of services available from their administrators.
Implications for Prime Brokers
Prime brokers are experiencing a major shift in their business model. Their focus on developing deep relationships with a few hedge fund clients is no longer working in a multiprime environment, where risk diversification and access to capital is taking center stage. As lending stays constrained, prime brokers will be required to improve capabilities to deal with new clients and existing capabilities may lose favor among the hedge funds adopting the multiprime model.
Implications for Third-Party Administrators
Third-party administrators are being challenged by handling increased product complexities, technology scalability and international growth. While hedge funds outsource middle-offices and evaluate ways to reduce costs, third-party administrators will need to cut costs and potentially look into moving their back offices to cost-effective locations. Some may offer prime broker-like services to improve profitability and further increase competition in the market or go global; others will more closely align with custodians or consolidate for scale.
"As investors demand increased transparency and operational risk management, hedge funds are faced with redefining their relationships with prime brokers and third-party administrators," Cary Stier, Deloitte's U.S. Asset Management Services leader explained.
"While attraction and retention of capital remains a top priority for fund managers, in today's market performance isn't the only bull's-eye a fund has to hit to accomplish these goals. Investors want assurance that the fund's operating model has taken into consideration the events of the last year and has adjusted accordingly. At the same time, prime brokers, administrators and custodians are looking for new ways to serve managers," said Adam Broun, Deloitte's Asset Management Services Consulting leader.
The report outlines five areas of focus for both prime brokers and third-party administrators:
Build the Middle-Office that Fits your Operating Strategy
Hedge funds need to determine their optimal operating strategy and factor in roles various service providers will play in providing necessary capabilities. Although most large firms will build their own middle-office, service offerings from fund administrators and custody players will prove to be compelling from both a cost and capability standpoint. Managing the network of service providers will require additional capabilities that the hedge funds will need to build and staff in-house.
Add Horsepower to Your Collateral Management
The multiprime model will only increase the need for improved collateral management. Some hedge funds will benefit by outsourcing to enterprise collateral management service providers or implementing vendor solutions to efficiently manage their collateral across various parties. In addition to spreading collateral across parties, independent valuation of illiquid assets, zero over-collateralization and optimal collateral composition will be the key focus areas.
Plan Risk Management
Risk management will see a balance of focus between market risk for investment strategies and counterparty risk. In a multiprime model, a single broker's risk report will show only a partial picture of the risk profile. Risk management will need to be a central function that aggregates positions across all providers. Take this opportunity to separate risk management from investment management.
Choose the Right Mix of Prime Brokers
The choice of prime brokers should be guided by aligning the fund manager's needs to the prime
broker's capabilities -- balance sheet strength, execution platform, geographic presence, flexible financing/margining options and product coverage.
Get the Most From Your Third-Party Administrator
Third-party administrators can help hedge funds outsource several middle- and back-office functions. With the increased complexity of the middle- and back-office, hedge funds should at least understand the range of services available from their administrators.
Implications for Prime Brokers
Prime brokers are experiencing a major shift in their business model. Their focus on developing deep relationships with a few hedge fund clients is no longer working in a multiprime environment, where risk diversification and access to capital is taking center stage. As lending stays constrained, prime brokers will be required to improve capabilities to deal with new clients and existing capabilities may lose favor among the hedge funds adopting the multiprime model.
Implications for Third-Party Administrators
Third-party administrators are being challenged by handling increased product complexities, technology scalability and international growth. While hedge funds outsource middle-offices and evaluate ways to reduce costs, third-party administrators will need to cut costs and potentially look into moving their back offices to cost-effective locations. Some may offer prime broker-like services to improve profitability and further increase competition in the market or go global; others will more closely align with custodians or consolidate for scale.
11 Aug 2009
2009 European Industry Leadership Award Goes To Paulson Director
Mina Gerowin, Managing Director of Paulson Europe, is this year's recipient of the 100 Women in Hedge Funds 2009 European Industry Leadership Award. In recognition of outstanding professional talent and business ethics, Ms. Gerowin will be presented with the award at a 100 Women in Hedge Funds fundraiser in London on October 7th, 2009, to benefit the UK education charity, SHINE.
"We are thrilled that Mina Gerowin will accept the 100 Women in Hedge Funds' European Industry Leadership Award," said Effie K. Datson, Chair of 100 Women in Hedge Funds’ London Board. "Mina has demonstrated the type of leadership and entrepreneurial acumen that has become synonymous with the industry; moreover, she is committed to contributing to the non profit activities that she is equally passionate about."
Mina Gerowin is Managing Director of Paulson Europe and a partner of Paulson & Co., specialising in European merger and event-driven investment, including distressed and restructuring investment and the risk arbitrage of both debt and equity. At Paulson she has led investments, including Stork and Ahold, and runs their large European positions.
"We are thrilled that Mina Gerowin will accept the 100 Women in Hedge Funds' European Industry Leadership Award," said Effie K. Datson, Chair of 100 Women in Hedge Funds’ London Board. "Mina has demonstrated the type of leadership and entrepreneurial acumen that has become synonymous with the industry; moreover, she is committed to contributing to the non profit activities that she is equally passionate about."
Mina Gerowin is Managing Director of Paulson Europe and a partner of Paulson & Co., specialising in European merger and event-driven investment, including distressed and restructuring investment and the risk arbitrage of both debt and equity. At Paulson she has led investments, including Stork and Ahold, and runs their large European positions.
Hedge Funds Try to Keep Pace With Equities Market
Hedge fund manager consultant, Hennessee Group LLC, reported that managers benefited as international equities rallied in July, while the unpredictability of government intervention continues to be one of the greatest concerns for hedge funds.
“We have expected greater scrutiny and new regulation for the financial industry, and specifically for hedge funds, in 2009,” commented Charles Gradante, Co-Founder of Hennessee Group. “In the energy markets, regulators are calling for hard position limits on financially settled energy contracts set by NYMEX, starting as soon as September. While the goal is to reduce speculation and volatility in the energy markets, this could potentially reduce transparency by shifting trading to over-the-counter markets and decrease liquidity. The unpredictability of government intervention continues to be one of the greatest concerns for hedge funds.”
"The deterioration of the economy has clearly slowed, however we continue to see positive signs that we are on the road to recovery, including increases in new home sales, new orders, and production." Gradante said, "I am still cautious and see emerging signs of ‘protectionism’ in the form of dramatic reductions in external lending by G-7 institutions, which could stifle a global economic recovery."
“Hedge funds underperformed in July, as we would expect, but were able to capture a good portion of the market rally in July,” said Lee Hennessee , Managing Principal of Hennessee Group. “Managers opened up their net exposures to participate, but also benefited from a better than expected earnings season. However, managers remain vigilant, knowing that the markets could crack and crack quickly. The VIX is at pre-crisis August 2008 levels and that worries many.”
The Hennessee Hedge Fund Index advanced +3.37% in July (+15.50% YTD), while the S&P 500 increased +7.41%.
“We have expected greater scrutiny and new regulation for the financial industry, and specifically for hedge funds, in 2009,” commented Charles Gradante, Co-Founder of Hennessee Group. “In the energy markets, regulators are calling for hard position limits on financially settled energy contracts set by NYMEX, starting as soon as September. While the goal is to reduce speculation and volatility in the energy markets, this could potentially reduce transparency by shifting trading to over-the-counter markets and decrease liquidity. The unpredictability of government intervention continues to be one of the greatest concerns for hedge funds.”
"The deterioration of the economy has clearly slowed, however we continue to see positive signs that we are on the road to recovery, including increases in new home sales, new orders, and production." Gradante said, "I am still cautious and see emerging signs of ‘protectionism’ in the form of dramatic reductions in external lending by G-7 institutions, which could stifle a global economic recovery."
“Hedge funds underperformed in July, as we would expect, but were able to capture a good portion of the market rally in July,” said Lee Hennessee , Managing Principal of Hennessee Group. “Managers opened up their net exposures to participate, but also benefited from a better than expected earnings season. However, managers remain vigilant, knowing that the markets could crack and crack quickly. The VIX is at pre-crisis August 2008 levels and that worries many.”
The Hennessee Hedge Fund Index advanced +3.37% in July (+15.50% YTD), while the S&P 500 increased +7.41%.
10 Aug 2009
Charlotte Hedge Fund Forum Started by Headline Capital
Headline Capital Management, LLC is spearheading a series of capital introduction events showcasing the largest gathering of hedge fund managers from the Charlotte region. Aegis Funds Management, Afton Capital Management, Blackhawk Capital Management, Charlotte Global Advisors, Gorelick Brothers Capital, Keane Capital Management plus other hedge funds in the Charlotte region are also participating.
As the nation’s second largest banking center, Charlotte is also an attractive haven for hedge funds. Some of the nation’s most talented investment professionals relocated here to work for Bank of America and Wachovia, now a wholly-owned subsidiary and east coast headquarters for Wells Fargo. Many of these former bankers and traders stayed here to start their own hedge funds, especially after merger-related layoffs.
What is truly unique about the Charlotte Hedge Fund Forum is that in a highly competitive market, 7+ hedge fund managers from the same city have the foresight to jointly promoting a series of capital introduction events. “We’re still competitors. By working together, however, we can leverage our marketing dollars to attract more investors than we could alone,” says Mark McClanahan, the marketing director at Headline Capital Management.
The Charlotte Hedge Fund Forum provides more value than the traditional cap intro event by showcasing several hedge fund managers from the same city. The Charlotte showcase is more efficient for institutional investors with tight travel budgets who want to meet several managers at the same time. Wealthy families and high net worth individuals who are more comfortable investing in managers located closer to home, especially in this post-Madoff era, will also benefit from this Charlotte showcase. The real payoff is after the event when the investor needs to visit each hedge fund’s office for due diligence. Investors who attend the Charlotte Hedge Fund Forum will save time and money following up with several Charlotte-based managers during one trip.
The Charlotte Hedge Fund Forum is scheduled for September 23, 2009 at the historic Duke Mansion where tobacco baron James B. Duke founded The Duke Endowment. Mark Yusko, President and CIO of Morgan Creek Capital of Chapel Hill, North Carolina will deliver the Keynote Speech on “Alternative Thinking for Investments” during a complimentary luncheon. Afterwards, each hedge fund manager will deliver a formal 10-12 minute podium presentation and then meet with investors during a series of 30-minute, informal “meet the manager” roundtable discussions.
As the nation’s second largest banking center, Charlotte is also an attractive haven for hedge funds. Some of the nation’s most talented investment professionals relocated here to work for Bank of America and Wachovia, now a wholly-owned subsidiary and east coast headquarters for Wells Fargo. Many of these former bankers and traders stayed here to start their own hedge funds, especially after merger-related layoffs.
What is truly unique about the Charlotte Hedge Fund Forum is that in a highly competitive market, 7+ hedge fund managers from the same city have the foresight to jointly promoting a series of capital introduction events. “We’re still competitors. By working together, however, we can leverage our marketing dollars to attract more investors than we could alone,” says Mark McClanahan, the marketing director at Headline Capital Management.
The Charlotte Hedge Fund Forum provides more value than the traditional cap intro event by showcasing several hedge fund managers from the same city. The Charlotte showcase is more efficient for institutional investors with tight travel budgets who want to meet several managers at the same time. Wealthy families and high net worth individuals who are more comfortable investing in managers located closer to home, especially in this post-Madoff era, will also benefit from this Charlotte showcase. The real payoff is after the event when the investor needs to visit each hedge fund’s office for due diligence. Investors who attend the Charlotte Hedge Fund Forum will save time and money following up with several Charlotte-based managers during one trip.
The Charlotte Hedge Fund Forum is scheduled for September 23, 2009 at the historic Duke Mansion where tobacco baron James B. Duke founded The Duke Endowment. Mark Yusko, President and CIO of Morgan Creek Capital of Chapel Hill, North Carolina will deliver the Keynote Speech on “Alternative Thinking for Investments” during a complimentary luncheon. Afterwards, each hedge fund manager will deliver a formal 10-12 minute podium presentation and then meet with investors during a series of 30-minute, informal “meet the manager” roundtable discussions.
Hedge Fund Group Group Awarded Private Equity By Korean Sovereign Wealth Fund
Swiss-based alternative asset manager, Partners Group, has been selected as the manager for a private equity secondary mandate by the sovereign wealth fund Korea Investment Corporation (KIC).
KIC aims to profit from current dislocations in the secondary market which offers high discounts to net asset value and attractive return potential. The hedge fund firm has four offices located in the Asia-Pacific region, with Singapore being the second-largest office worldwide.
''We are very pleased to launch this secondary investment mandate with Partners
Group.'' Dong-Ik Lee, Head of the Alternative Investment Team at KIC, said, ''We believe that leveraging a very strong and experienced manager like Partners Group is the right way to explore and profit from this market.''
Steffen Meister, CEO of Partners Group, added, ''We are extremely pleased and honored to work with the Korea Investment Corporation, which we consider to be one of the most prestigious sovereign wealth funds around the world and one of the most sophisticated investors in Asia.''
Partners Group has over CHF 24 billion ($22 billion) in investment programs under management in private equity, private debt, private real estate, private infrastructure, absolute return strategies and listed alternatives.
KIC aims to profit from current dislocations in the secondary market which offers high discounts to net asset value and attractive return potential. The hedge fund firm has four offices located in the Asia-Pacific region, with Singapore being the second-largest office worldwide.
''We are very pleased to launch this secondary investment mandate with Partners
Group.'' Dong-Ik Lee, Head of the Alternative Investment Team at KIC, said, ''We believe that leveraging a very strong and experienced manager like Partners Group is the right way to explore and profit from this market.''
Steffen Meister, CEO of Partners Group, added, ''We are extremely pleased and honored to work with the Korea Investment Corporation, which we consider to be one of the most prestigious sovereign wealth funds around the world and one of the most sophisticated investors in Asia.''
Partners Group has over CHF 24 billion ($22 billion) in investment programs under management in private equity, private debt, private real estate, private infrastructure, absolute return strategies and listed alternatives.
7 Aug 2009
Declines In External Debt Elevates Concern For Global Recovery
Hennessee Group LLC, an adviser to hedge fund investors, voiced concern in early 2009 that the global financial crisis could enter a new and more dangerous phase, one that could push several international countries to the brink of failure and further hinder the global economic recovery.
Of particular concern to the Hennessee Group was the dramatic growth in external debt exposures of G7 and emerging countries and the increasing risk of another outright failure similar to that of Iceland when they had a debt to GDP ratio exceeding 900%. However, Hennessee Group research now indicates that this risk has begun to subside as the majority of countries have experienced a decline in their overall external debt exposure in recent months after reaching all time highs in 2008. That said, the Hennessee Group now believes this development could come at the cost of economic growth as the majority of the decline in external debt has been due to a dramatic drop off in bank lending to foreign institutions.
Charles Gradante, Co-Founder of the Hennessee Group, noted “While the decline in external debt, particularly for countries like the U.K., is a positive development and is likely to reduce the risk of another Iceland, we fear the primary driver behind the external debt reduction, specifically the drop off in external bank lending, could ultimately slow the pace of the global economic recovery.” The Hennessee Group believes it is essential to global growth that banks resume prudent external lending to businesses and individuals to further alleviate the financial crisis and promote economic growth.
In its February 2009 research paper, the Hennessee Group highlighted numerous countries, particularly in the euro zone, that appeared to be building uncomfortably high external debt levels in recent years relative to their economic output. The bright spot, at that time, was the low level of U.S. external debt to GDP output (84%).
The Netherlands reached an external debt to GDP ratio of approximately 328%, while Ireland had a similar exposure ratio to that of Iceland, a staggering 900%. The UK’s debt to GDP ratio reached 456% while Switzerland’s rose to 433%.
Gradante stated, “We believe the build up in external debt was both alarming and unsustainable, particularly for many European countries, and that if the trend continued we could be at risk of a major systemic event.” Gradante continued, “Since our initial analysis, the majority of countries have started to reduce external lending.
The U.K. has decreased its external debt by nearly $3.5 trillion from its high of $12.1 trillion in the first quarter of 2008. While we believe this is a positive development from the perspective that it alleviates our initial concern regarding another Iceland; a closer look at the underlying numbers has revealed a new concern. The vast majority of the reduction is due to a decline in external bank lending, which we believe will present additional challenges going forward. Of the $3.5 trillion decline in the U.K. external debt, $2 trillion can be attributed to a drop off in external bank lending. This could present additional challenges to an economic recovery.”
The Hennessee Group believes this new trend is not just a problem isolated to the U.K. but rather a worldwide issue. In a recent press release by the Bank for International Settlements, they stated, “After a relatively small change in total outstanding stocks in the third quarter, banks’ external claims shrank by 5.4% in the fourth quarter of 2008 ($1.8 trillion at constant exchange rates), to $31 trillion.” They added, “This was the largest reduction ever recorded.” The global economy may very well struggle to recover if the banks remain unwilling to increase external debt lending and may result in a resurrection of protectionism.
Of particular concern to the Hennessee Group was the dramatic growth in external debt exposures of G7 and emerging countries and the increasing risk of another outright failure similar to that of Iceland when they had a debt to GDP ratio exceeding 900%. However, Hennessee Group research now indicates that this risk has begun to subside as the majority of countries have experienced a decline in their overall external debt exposure in recent months after reaching all time highs in 2008. That said, the Hennessee Group now believes this development could come at the cost of economic growth as the majority of the decline in external debt has been due to a dramatic drop off in bank lending to foreign institutions.
Charles Gradante, Co-Founder of the Hennessee Group, noted “While the decline in external debt, particularly for countries like the U.K., is a positive development and is likely to reduce the risk of another Iceland, we fear the primary driver behind the external debt reduction, specifically the drop off in external bank lending, could ultimately slow the pace of the global economic recovery.” The Hennessee Group believes it is essential to global growth that banks resume prudent external lending to businesses and individuals to further alleviate the financial crisis and promote economic growth.
In its February 2009 research paper, the Hennessee Group highlighted numerous countries, particularly in the euro zone, that appeared to be building uncomfortably high external debt levels in recent years relative to their economic output. The bright spot, at that time, was the low level of U.S. external debt to GDP output (84%).
The Netherlands reached an external debt to GDP ratio of approximately 328%, while Ireland had a similar exposure ratio to that of Iceland, a staggering 900%. The UK’s debt to GDP ratio reached 456% while Switzerland’s rose to 433%.
Gradante stated, “We believe the build up in external debt was both alarming and unsustainable, particularly for many European countries, and that if the trend continued we could be at risk of a major systemic event.” Gradante continued, “Since our initial analysis, the majority of countries have started to reduce external lending.
The U.K. has decreased its external debt by nearly $3.5 trillion from its high of $12.1 trillion in the first quarter of 2008. While we believe this is a positive development from the perspective that it alleviates our initial concern regarding another Iceland; a closer look at the underlying numbers has revealed a new concern. The vast majority of the reduction is due to a decline in external bank lending, which we believe will present additional challenges going forward. Of the $3.5 trillion decline in the U.K. external debt, $2 trillion can be attributed to a drop off in external bank lending. This could present additional challenges to an economic recovery.”
The Hennessee Group believes this new trend is not just a problem isolated to the U.K. but rather a worldwide issue. In a recent press release by the Bank for International Settlements, they stated, “After a relatively small change in total outstanding stocks in the third quarter, banks’ external claims shrank by 5.4% in the fourth quarter of 2008 ($1.8 trillion at constant exchange rates), to $31 trillion.” They added, “This was the largest reduction ever recorded.” The global economy may very well struggle to recover if the banks remain unwilling to increase external debt lending and may result in a resurrection of protectionism.
Miller Heads Up New NorthPoint Dallas Office
Atlanta based hedge fund prime brokerage firm, NorthPoint Trading Partners, LLC, has opened an office in Dallas, Texas, led by industry veteran Chip Miller.
Miller joins NorthPoint from Stadium Capital where he was head trader for 4 years. He will head up both the prime brokerage and the sales trading operations in the region. Miller will report directly to Michael DeJarnette, President of NorthPoint.
“As we continue to expand our presence nationwide, we are very fortunate to have someone join our team who is as talented and experienced as Chip,” says Douglas Nelson, Chief Executive Officer of NorthPoint.
An industry veteran since 1993, Chip has held positions at Jefferies and Co., Clover Partners and Stadium Capital Management. He is experienced in the trading, operational and regulatory aspects of the buy and sell side.
Miller joins NorthPoint from Stadium Capital where he was head trader for 4 years. He will head up both the prime brokerage and the sales trading operations in the region. Miller will report directly to Michael DeJarnette, President of NorthPoint.
“As we continue to expand our presence nationwide, we are very fortunate to have someone join our team who is as talented and experienced as Chip,” says Douglas Nelson, Chief Executive Officer of NorthPoint.
An industry veteran since 1993, Chip has held positions at Jefferies and Co., Clover Partners and Stadium Capital Management. He is experienced in the trading, operational and regulatory aspects of the buy and sell side.
6 Aug 2009
People Moves: Global Fund Exchange Hires Hedge Fund Specialist
Alternative investment manager Global Fund Exchange has hired A. Michael D’Arpino as Director of Business Development, a new position at the firm. D'Arpino joins Global Fund Exchange from hedge fund manager Clinton Group, Inc.
"We are very excited to have Michael join our team," said Lauralouise Duffy, CEO, Global Fund Exchange Group. "He brings a wealth of hedge fund and Wall Street broker-dealer experience, outstanding leadership capabilities and the expert analytical, planning and communications skills that are so critically important to our investors."
Prior to joining Global Fund Exchange, D'Arpino was Managing Director, Clinton Group, Inc., where he held responsibility for all marketing functions including identifying and mitigating business and operational risks, compliance, business development and investor relations.
"I am pleased to join Global Fund Exchange, which is comprised of a unique group of industry veterans dedicated to providing a distinct approach to alternative and traditional energy opportunities globally through the Earth Wind & Fire Funds," said D’Arpino. "The firm’s strategy, using a multi-manager global macro approach to investing across the entire spectrum of energy and resources, represents a compelling opportunity for investors who seek access to the alternative energy and renewable resources sectors while offering the benefits of diversified and uncorrelated portfolios."
"We are very excited to have Michael join our team," said Lauralouise Duffy, CEO, Global Fund Exchange Group. "He brings a wealth of hedge fund and Wall Street broker-dealer experience, outstanding leadership capabilities and the expert analytical, planning and communications skills that are so critically important to our investors."
Prior to joining Global Fund Exchange, D'Arpino was Managing Director, Clinton Group, Inc., where he held responsibility for all marketing functions including identifying and mitigating business and operational risks, compliance, business development and investor relations.
"I am pleased to join Global Fund Exchange, which is comprised of a unique group of industry veterans dedicated to providing a distinct approach to alternative and traditional energy opportunities globally through the Earth Wind & Fire Funds," said D’Arpino. "The firm’s strategy, using a multi-manager global macro approach to investing across the entire spectrum of energy and resources, represents a compelling opportunity for investors who seek access to the alternative energy and renewable resources sectors while offering the benefits of diversified and uncorrelated portfolios."
5 Aug 2009
Credit Suisse Alternative Index Replication Suggests a Positive Month for Hedge Funds
Long/Short Equity hedge funds continued to increase overall net exposures in July, enabling managers to capitalize on market upswings early in the month, according to Jordan Drachman, Head of Research for Alternative Beta Strategies at Credit Suisse.
Dr. Drachman noted, ''As risk appetite returns to the market, many Long/Short Equity hedge fund managers have increased their overall net exposures, which enabled them to generate positive returns as equity markets bounced back early in July. Despite mid-month volatility, managers were able to preserve gains to finish up for the month. The Credit Suisse Long/Short Equity Replication Index was up 1.96% (net) for the month, while the Credit Suisse Global Macro Replication Index finished up 0.03% over the same period.”
AIR Indices seek to replicate the performance of major hedge fund strategies and enable investors to gain liquid, transparent insight into the Global Macro and Long/Short Equity sectors of the Credit Suisse/Tremont Hedge Fund Index. The AIR platform also offers inverse indices that seek to approximate short exposure to the aggregate returns of the universe of Long/Short Equity and Global Macro hedge fund managers.
Performances for the AIR Global Macro and Long/Short Equity Indices are calculated daily and shown net of a 1.15% per annum calculation fee.
Dr. Drachman noted, ''As risk appetite returns to the market, many Long/Short Equity hedge fund managers have increased their overall net exposures, which enabled them to generate positive returns as equity markets bounced back early in July. Despite mid-month volatility, managers were able to preserve gains to finish up for the month. The Credit Suisse Long/Short Equity Replication Index was up 1.96% (net) for the month, while the Credit Suisse Global Macro Replication Index finished up 0.03% over the same period.”
AIR Indices seek to replicate the performance of major hedge fund strategies and enable investors to gain liquid, transparent insight into the Global Macro and Long/Short Equity sectors of the Credit Suisse/Tremont Hedge Fund Index. The AIR platform also offers inverse indices that seek to approximate short exposure to the aggregate returns of the universe of Long/Short Equity and Global Macro hedge fund managers.
Performances for the AIR Global Macro and Long/Short Equity Indices are calculated daily and shown net of a 1.15% per annum calculation fee.
4 Aug 2009
Hedge Fund Industry Assets Surge - HFR
Assets invested in the hedge fund industry increased by $100 billion in the second quarter of 2009, ending at $1.43 trillion, according to figures released by Hedge Fund Research (HFR). This is the first quarterly increase in assets since 2Q 08, when total industry capital peaked at $1.93 trillion.
The strong performance was led by strategies focusing on Emerging Markets, Convertible Arbitrage and Energy/Basic Materials. These three areas were among the weakest performers in 2008, showing the dramatic shift in market dynamics that has taken place this year.
Investors redeemed $42.8 billion from hedge funds in the second quarter, approximately 60% less than the $103 billion that was redeemed in 1Q 09 and an even more significant drop from the $152 billion that was withdrawn in 4Q 08.
Funds of Hedge Funds continued to experience a higher percentage of capital redemptions than single-manager strategies, as investors withdrew $33 billion from Funds of Hedge Funds in the second quarter. Total capital invested in hedge funds via Funds of Hedge Funds currently stands at $530 billion, 37 percent of the industry’s total capital and well below the $825 billion which were invested through Funds of Funds at their peak level in mid-2008.
HFR also reports that the number of hedge funds, including both single-manager and funds of funds, remained approximately flat during the quarter at just over 8,900. The performance of the HFRI Fund Weighted Composite is now available hedged into four foreign currencies, including Euro, British Pound Sterling, Swiss Franc and Japanese Yen.
"Reflecting the diverse drivers of hedge fund industry performance, recent gains have occurred in an environment in which developed equity markets have been essentially flat", Kenneth J. Heinz, President of Hedge Fund Research Inc, said. "Improved liquidity in credit markets contributed to narrowing some of the pricing dislocations that were created near the end of 2008, and the combination of improved credit markets, gains in emerging markets, and decreased risk aversion have driven broad-based gains in 2009."
The strong performance was led by strategies focusing on Emerging Markets, Convertible Arbitrage and Energy/Basic Materials. These three areas were among the weakest performers in 2008, showing the dramatic shift in market dynamics that has taken place this year.
Investors redeemed $42.8 billion from hedge funds in the second quarter, approximately 60% less than the $103 billion that was redeemed in 1Q 09 and an even more significant drop from the $152 billion that was withdrawn in 4Q 08.
Funds of Hedge Funds continued to experience a higher percentage of capital redemptions than single-manager strategies, as investors withdrew $33 billion from Funds of Hedge Funds in the second quarter. Total capital invested in hedge funds via Funds of Hedge Funds currently stands at $530 billion, 37 percent of the industry’s total capital and well below the $825 billion which were invested through Funds of Funds at their peak level in mid-2008.
HFR also reports that the number of hedge funds, including both single-manager and funds of funds, remained approximately flat during the quarter at just over 8,900. The performance of the HFRI Fund Weighted Composite is now available hedged into four foreign currencies, including Euro, British Pound Sterling, Swiss Franc and Japanese Yen.
"Reflecting the diverse drivers of hedge fund industry performance, recent gains have occurred in an environment in which developed equity markets have been essentially flat", Kenneth J. Heinz, President of Hedge Fund Research Inc, said. "Improved liquidity in credit markets contributed to narrowing some of the pricing dislocations that were created near the end of 2008, and the combination of improved credit markets, gains in emerging markets, and decreased risk aversion have driven broad-based gains in 2009."
Merlin Merger Provides Hedge Fund Managers Access to Network of Industry Experts
Hedge fund prime broker Merlin Securities and financial tech group Gerson Lehrman, announced an exclusive research partnership which will allow Merlin to provide emerging managers with access to Gerson Lehrman Group’snetwork of more than 200,000 experts. As a result of the partnership, Gerson Lehrman Group’s platform will be much more accessible to fund managers with assets of up to $150 million.
”We are very pleased to announce this exclusive partnership with Gerson Lehrman
Group,” Stephan Vermut, founder and managing partner of Merlin Securities, said,
”Gerson Lehrman Group is a trusted name and resource for generating alpha, and as
leaders in our respective markets, the combination of Gerson Lehrman Group’s worldrenowned expert network with Merlin’s prime, multi-prime and analytical solutions represents an extremely powerful offering for emerging managers.”
”The decision to offer services to emerging managers was a natural one,” Alexander Saint-Amand, president and chief executive officer of Gerson Lehrman Group, said, ”Like our current clients, emerging managers greatly value the sophisticated expertise offered through our global network. We are excited to be working with Merlin as our partner in providing Gerson Lehrman Group services to emerging managers.”
Merlin was recognized as the #1 prime broker for funds less than $1 billion by Alpha
magazine’s 2008 hedge fund service provider survey for the second year running. Merlin was also the top-ranked non-algorithmic-driven firm and second overall among brokerages trading NYSE stocks as measured by arrival price, according to the 2008 Elkins/McSherry annual transaction cost survey.
”We are very pleased to announce this exclusive partnership with Gerson Lehrman
Group,” Stephan Vermut, founder and managing partner of Merlin Securities, said,
”Gerson Lehrman Group is a trusted name and resource for generating alpha, and as
leaders in our respective markets, the combination of Gerson Lehrman Group’s worldrenowned expert network with Merlin’s prime, multi-prime and analytical solutions represents an extremely powerful offering for emerging managers.”
”The decision to offer services to emerging managers was a natural one,” Alexander Saint-Amand, president and chief executive officer of Gerson Lehrman Group, said, ”Like our current clients, emerging managers greatly value the sophisticated expertise offered through our global network. We are excited to be working with Merlin as our partner in providing Gerson Lehrman Group services to emerging managers.”
Merlin was recognized as the #1 prime broker for funds less than $1 billion by Alpha
magazine’s 2008 hedge fund service provider survey for the second year running. Merlin was also the top-ranked non-algorithmic-driven firm and second overall among brokerages trading NYSE stocks as measured by arrival price, according to the 2008 Elkins/McSherry annual transaction cost survey.
3 Aug 2009
Hedge Funds Strategy Demand Q2 2009: Brighton House Associates Q2 Report
During the first quarter, most alternative investors spent their time rebalancing their portfolios, redeeming with current managers, and waiting for the market to correct itself. This process freed up capital and uncovered gaps in portfolios, ultimately leading to a significant increase in alternative investment interest in the second quarter, according to a report by Brighton House Associates (BHA), a hedge fund and FoHF reserach firm.
Fixed-income strategies and volatility arbitrage were sought after, and experienced a significant boom in interest, as investors looked to take advantage of pricing inefficiencies created by rebounding markets, the report said. Investors’ concerns were evident by a push for greater liquidity, transparency, and access from managers of alternative funds. This shift manifested itself in conversations BHA analysts had with the global investor community.
Nearly a quarter of all real estate fund interest in Q2 came from wealth advisors. Consultants and government pension plans also showed significant interest. 48% of the real estate investors that BHA spoke were specifically targeting the commercial sector. In terms of strategy; most investors were looking opportunistically at any type of real estate exposure, and the majority of investors were focused on core and value-added strategies.
The second quarter of 2009 was very strong for alternative investment funds. Funds of hedge funds in particular saw an increase in investor interest after a disastrous Q1. In the first quarter, BHA received 108 mandates for funds of funds from investors; in the second quarter that number jumped over 40%. Several factors contributed to this change, including increased investor tolerance for lock-ups and longer redemption periods, increased investor interest in single-strategy funds of funds, and various investor types looking to increase their funds of funds exposure.
Many investors that spent the first quarter on the sidelines outlined active mandates while others committed capital to funds. Investors reported interest not only in funds with which they had long standing relationships, but also in new funds to which they were introduced in the past few months.
While many strategies realized increased interest during the quarter, volatility arbitrage and fixed income were two of the most intriguing, the report said. The rise in interest in volatility arbitrage is of little surprise. As the push for liquidity, focused investors on highly liquid, short-term trading-oriented funds. Investors also increasingly favored the relative stability and predictable returns that fixed-income funds provide. In the private equity space, venture capital showed signs of rebounding after a rough start to the year.
During the second quarter, 57% of investors profiled by BHA analysts maintained minimum asset requirements of $1 million to $200 million for potential funds, and 19% looking for funds with a minimum of $21 million to $75 million. During the second quarter, 57% of investors profiled by BHA analysts maintained minimum asset requirements of $1 million to $200 million for potential funds, and 19 percent looking for funds with a minimum of $21 million to $75 million.
Investors and managers are hoping to build on the momentum created during the second quarter and carry it forward into the second half of the year, the report concluded.
Brighton House Associates is an alternative investment research firm that speaks to investors across the globe about their current interest and activity in alternative investment funds. Brighton House works with a network of over 100 fund managers and assists in indentifying qualified investors for their internal marketing campaigns.
Each quarter, BHA analysts collect detailed profiles from more than 1,000 investors globaly that are actively making investments in hedge funds, private equity and real estate funds, and related funds of funds. These investors'(AUM) range from less than $100 million to more than $10 billion dedicated towards alternative investments.
Fixed-income strategies and volatility arbitrage were sought after, and experienced a significant boom in interest, as investors looked to take advantage of pricing inefficiencies created by rebounding markets, the report said. Investors’ concerns were evident by a push for greater liquidity, transparency, and access from managers of alternative funds. This shift manifested itself in conversations BHA analysts had with the global investor community.
Nearly a quarter of all real estate fund interest in Q2 came from wealth advisors. Consultants and government pension plans also showed significant interest. 48% of the real estate investors that BHA spoke were specifically targeting the commercial sector. In terms of strategy; most investors were looking opportunistically at any type of real estate exposure, and the majority of investors were focused on core and value-added strategies.
The second quarter of 2009 was very strong for alternative investment funds. Funds of hedge funds in particular saw an increase in investor interest after a disastrous Q1. In the first quarter, BHA received 108 mandates for funds of funds from investors; in the second quarter that number jumped over 40%. Several factors contributed to this change, including increased investor tolerance for lock-ups and longer redemption periods, increased investor interest in single-strategy funds of funds, and various investor types looking to increase their funds of funds exposure.
Many investors that spent the first quarter on the sidelines outlined active mandates while others committed capital to funds. Investors reported interest not only in funds with which they had long standing relationships, but also in new funds to which they were introduced in the past few months.
While many strategies realized increased interest during the quarter, volatility arbitrage and fixed income were two of the most intriguing, the report said. The rise in interest in volatility arbitrage is of little surprise. As the push for liquidity, focused investors on highly liquid, short-term trading-oriented funds. Investors also increasingly favored the relative stability and predictable returns that fixed-income funds provide. In the private equity space, venture capital showed signs of rebounding after a rough start to the year.
During the second quarter, 57% of investors profiled by BHA analysts maintained minimum asset requirements of $1 million to $200 million for potential funds, and 19% looking for funds with a minimum of $21 million to $75 million. During the second quarter, 57% of investors profiled by BHA analysts maintained minimum asset requirements of $1 million to $200 million for potential funds, and 19 percent looking for funds with a minimum of $21 million to $75 million.
Investors and managers are hoping to build on the momentum created during the second quarter and carry it forward into the second half of the year, the report concluded.
Brighton House Associates is an alternative investment research firm that speaks to investors across the globe about their current interest and activity in alternative investment funds. Brighton House works with a network of over 100 fund managers and assists in indentifying qualified investors for their internal marketing campaigns.
Each quarter, BHA analysts collect detailed profiles from more than 1,000 investors globaly that are actively making investments in hedge funds, private equity and real estate funds, and related funds of funds. These investors'(AUM) range from less than $100 million to more than $10 billion dedicated towards alternative investments.
Bandon Provides Smaller Investors Access To Flagship Hedge Fund Strategy
Hedge fund manager Bandon Capital Management, LLC, has made it’s flagship investment strategy, DIRS - Directional Interest Rate Strategy - available to investment advisors through Adhesion’s WealthADV UMA platform.
The flagship strategy, celebrating it’s 5th year anniversary at the end of this month, seeks to provide investors with absolute returns, uncorrelated with the equity and fixed income markets by investing in the US Treasury Market using ETF’s or mutual funds and is available to non-accredited investors.
Bandon is focused on delivering the attractive investment characteristics of alternative investing – absolute returns with low correlations – to the mass affluent and small institutional investors while minimizing or eliminating many of the structural negatives including high minimums, high fees, long lock ups and lack of liquidity and transparency.
Bill Woodruff, Founder and Managing Principal said “every day we hear from advisors sharing the frustration of their clients, whose account balances have been decimated and are not yet reflecting the economic recovery they keep hearing about. Increasingly, advisors are recognizing the benefit of allocating a portion of their portfolio to absolute return strategies - just like large institutional and ultra HNW investors – and are knocking on our door. We could not be more pleased with the opportunity to be included on the Adhesion platform which has many benefits including an open custody approach that enables advisors and their clients to access Bandon’s strategies through Schwab Institutional, Fidelity, TD Ameritrade and Pershing”.
Michael Stier, President and CEO of Adhesion said “We continue to see increasing demand for absolute return oriented, non market correlated strategies from our advisors and their clients, and could not be more pleased to have one of the leaders in this emerging area, join our platform”.
The flagship strategy, celebrating it’s 5th year anniversary at the end of this month, seeks to provide investors with absolute returns, uncorrelated with the equity and fixed income markets by investing in the US Treasury Market using ETF’s or mutual funds and is available to non-accredited investors.
Bandon is focused on delivering the attractive investment characteristics of alternative investing – absolute returns with low correlations – to the mass affluent and small institutional investors while minimizing or eliminating many of the structural negatives including high minimums, high fees, long lock ups and lack of liquidity and transparency.
Bill Woodruff, Founder and Managing Principal said “every day we hear from advisors sharing the frustration of their clients, whose account balances have been decimated and are not yet reflecting the economic recovery they keep hearing about. Increasingly, advisors are recognizing the benefit of allocating a portion of their portfolio to absolute return strategies - just like large institutional and ultra HNW investors – and are knocking on our door. We could not be more pleased with the opportunity to be included on the Adhesion platform which has many benefits including an open custody approach that enables advisors and their clients to access Bandon’s strategies through Schwab Institutional, Fidelity, TD Ameritrade and Pershing”.
Michael Stier, President and CEO of Adhesion said “We continue to see increasing demand for absolute return oriented, non market correlated strategies from our advisors and their clients, and could not be more pleased to have one of the leaders in this emerging area, join our platform”.
31 Jul 2009
Hedge Fund Shareholder Joins Board of Directors
Hedge fund founder J. Winder Hughes, III, has joined wastewater treatment and power generation technology company, ThermoEnergy Corporation, on the Company's Board of Directors.
Hughes is the Managing Director of the private equity firm of Hughes Capital Investors, LLC. In 2000, Hughes formed the Focus Fund, LP, a Florida-based, highly concentrated equity partnership that focuses on publicly-traded emerging growth companies. Over the past two years, the Focus Fund has become one of the largest investors in ThermoEnergy Corporation.
"We are extremely pleased that Mr. Hughes accepted our invitation to join the board of ThermoEnergy Corporation," said Dennis C. Cossey, ThermoEnergy's Chairman and CEO. "With his extensive background in corporate finance and investment banking, Mr. Hughes represents a tremendous resource on which the ThermoEnergy management team can rely on."
"Given that the Company is on the cusp of commercial prosperity with its wastewater treatment business and at the forefront of achieving value-creating milestones with its Babcock-Thermo Carbon Capture joint venture," said Mr. Hughes, "I look forward to working with the management team to strengthen the company's financial stability and improve business performance for the benefit of all its stakeholders."
Hughes is the Managing Director of the private equity firm of Hughes Capital Investors, LLC. In 2000, Hughes formed the Focus Fund, LP, a Florida-based, highly concentrated equity partnership that focuses on publicly-traded emerging growth companies. Over the past two years, the Focus Fund has become one of the largest investors in ThermoEnergy Corporation.
"We are extremely pleased that Mr. Hughes accepted our invitation to join the board of ThermoEnergy Corporation," said Dennis C. Cossey, ThermoEnergy's Chairman and CEO. "With his extensive background in corporate finance and investment banking, Mr. Hughes represents a tremendous resource on which the ThermoEnergy management team can rely on."
"Given that the Company is on the cusp of commercial prosperity with its wastewater treatment business and at the forefront of achieving value-creating milestones with its Babcock-Thermo Carbon Capture joint venture," said Mr. Hughes, "I look forward to working with the management team to strengthen the company's financial stability and improve business performance for the benefit of all its stakeholders."
30 Jul 2009
Changing Attitudes Towards Risk
HedgeCo.net (New York) - "Attitudes towards hedge fund risk are poised to change," Sara Grillo, Founder of the Coalition for Safer Hedge Funds said in a paper examining proposed improvements in risk measurement, "The evolution will have positive results for the industry."
The paper also analyses the consequences of risk on portfolio performance, the report predicts that regulatory scrutiny will be the catalyst that forces risk levels down and ultimately drives the industry toward a period of maturity. Within this more stable environment, inflows from retail and institutional investors will surge, leading to the emergence of hedge funds as a more popular investment choice amongst the investing public.
Many academics believe that hedge fund returns are not predictable, and that the only persistent factor in performance history is risk itself. Research conducted by Martin Herzberg and Maim Mozes articulates the notion that less risky funds persistently are more likely to outperform riskier ones in the long term. Riskier managers are likely to take large directional “bets” which may crash when the market trends reverse. Less risky funds base decisions on fundamental skill and are less correlated with markets.
The role of high risk funds, Herzberg and Mozes believe, should be to diversify a portfolio rather than act as the main source of return. Aside from investment style, Herzberg and Mozes cite the other factors that affect returns such as the fund size, growth in assets under management, and length of investment history. They note that funds with shorter track records tend to exhibit higher returns than ones with longer track records. They identify the reasons to be their more experimental style, lack of controls, lack of auditing, and self-selection. Herzberg and Mozes hypothesise that funds with lower levels of assets under management tend to outperform, but this tendency fades as assets increase. Additional assets are placed in cash or must be placed with secondary managers, dragging down alpha.
The show is not over yet, she says. In fact, it is just beginning. As attitudes towards risk evolve, there is still plenty more room for the industry to grow. Although industry scandals have left investors reeling, scepticism will fade as industry regulation will increase transparency.
Increased scrutiny by industry watchdogs will lead to the normalisation of risk and return, which will ultimately decrease the level of hedge fund volatility. As volatility levels normalise, hedge funds will become more popular with retail investors and pension funds.
This surge in demand will propel the industry through its lifecycle until it reaches its ultimate maturation level. Regulatory developments and their effect on risk will be the catalyst that leads to the emergence of hedge funds as a prominent investment option amongst the investing public at large.
Sara Grillo earned her B.A. from Harvard University with honors. She is currently enrolled in a M.B.A program at the New York University Stern School of Business. She passed the CFA Level One examination in June 2003, and is a affiliate member of the New York Society of Securities Analysts and the CFA Institute.
The paper also analyses the consequences of risk on portfolio performance, the report predicts that regulatory scrutiny will be the catalyst that forces risk levels down and ultimately drives the industry toward a period of maturity. Within this more stable environment, inflows from retail and institutional investors will surge, leading to the emergence of hedge funds as a more popular investment choice amongst the investing public.
Many academics believe that hedge fund returns are not predictable, and that the only persistent factor in performance history is risk itself. Research conducted by Martin Herzberg and Maim Mozes articulates the notion that less risky funds persistently are more likely to outperform riskier ones in the long term. Riskier managers are likely to take large directional “bets” which may crash when the market trends reverse. Less risky funds base decisions on fundamental skill and are less correlated with markets.
The role of high risk funds, Herzberg and Mozes believe, should be to diversify a portfolio rather than act as the main source of return. Aside from investment style, Herzberg and Mozes cite the other factors that affect returns such as the fund size, growth in assets under management, and length of investment history. They note that funds with shorter track records tend to exhibit higher returns than ones with longer track records. They identify the reasons to be their more experimental style, lack of controls, lack of auditing, and self-selection. Herzberg and Mozes hypothesise that funds with lower levels of assets under management tend to outperform, but this tendency fades as assets increase. Additional assets are placed in cash or must be placed with secondary managers, dragging down alpha.
The show is not over yet, she says. In fact, it is just beginning. As attitudes towards risk evolve, there is still plenty more room for the industry to grow. Although industry scandals have left investors reeling, scepticism will fade as industry regulation will increase transparency.
Increased scrutiny by industry watchdogs will lead to the normalisation of risk and return, which will ultimately decrease the level of hedge fund volatility. As volatility levels normalise, hedge funds will become more popular with retail investors and pension funds.
This surge in demand will propel the industry through its lifecycle until it reaches its ultimate maturation level. Regulatory developments and their effect on risk will be the catalyst that leads to the emergence of hedge funds as a prominent investment option amongst the investing public at large.
Sara Grillo earned her B.A. from Harvard University with honors. She is currently enrolled in a M.B.A program at the New York University Stern School of Business. She passed the CFA Level One examination in June 2003, and is a affiliate member of the New York Society of Securities Analysts and the CFA Institute.
BTIG Launches Fixed Income Prime Brokerage
BTIG LLC. announced that it has expanded its Prime Brokerage group to offer fixed income services, including trading and portfolio financing. The expansion into fixed income is in conjunction with the launch of BTIG’s Global Fixed Income Group in February of this year, which focuses on sales and trading of credit products across the full credit spectrum from investment grade to distressed debt.
BTIG Prime Brokerage previously covered equity and equity options and made the move to fixed income to better meet the needs of its hedge fund clients in today’s market.
“As our clients became more interested in fixed income products, we saw a huge need and opportunity to expand our services,” Justin Press, Managing Director and Co-Head of Prime Brokerage, said. “We have created a one-of-a-kind fixed income offering that will bridge the gap for hedge fund managers who have traditionally been operating in equities only.”
BTIG’s Prime Brokerage clients also benefit from the firm’s full range of expertise and services, including Outsource Trading, Market Intelligence, International Trading, and access to the Equity Derivatives team, Capital Introduction team and Commission Management services. The Prime Brokerage group was launched in January 2004 and caters to start-up and existing long/short equity hedge funds. Prime Brokerage and middle office operations have a combined 40+ professionals.
The Global Fixed Income Group has added 50+ professionals since its launch earlier this year.
BTIG Prime Brokerage previously covered equity and equity options and made the move to fixed income to better meet the needs of its hedge fund clients in today’s market.
“As our clients became more interested in fixed income products, we saw a huge need and opportunity to expand our services,” Justin Press, Managing Director and Co-Head of Prime Brokerage, said. “We have created a one-of-a-kind fixed income offering that will bridge the gap for hedge fund managers who have traditionally been operating in equities only.”
BTIG’s Prime Brokerage clients also benefit from the firm’s full range of expertise and services, including Outsource Trading, Market Intelligence, International Trading, and access to the Equity Derivatives team, Capital Introduction team and Commission Management services. The Prime Brokerage group was launched in January 2004 and caters to start-up and existing long/short equity hedge funds. Prime Brokerage and middle office operations have a combined 40+ professionals.
The Global Fixed Income Group has added 50+ professionals since its launch earlier this year.
29 Jul 2009
Halfway There: New Hedge Fund Research From Credit Suisse/Tremont
Credit Suisse Tremont Index LLC released a new research piece, 1H 2009 Hedge Fund Update: Halfway There, a review of how hedge funds have repositioned themselves in the first half of 2009 to generate positive returns for five out of the first six months of the year.
The report discusses how hedge funds have generated year-to-date returns of 7.2% through June 30, outperforming, with lower volatility, both key equity and bond indices. Some key takeaways from the report include:
* The Convertible Arbitrage, Emerging Markets, and Global Macro sectors have received increased attention as investors began to regain their appetite for risk and global markets rallied.
* Performance has improved across most sectors, with the bulk of returns for many strategies moving into positive territory for the year, with 80% of all funds reporting positive returns for the second quarter.
* Overall industry assets under management have dropped approximately $18 billion since the end of the first quarter of 2009; we estimate industry assets totaled $1.3 trillion as of June 30 - down from $1.5 trillion at the end of 2008.
* As of June 30, 2009, an estimated 9.6% of funds were classified as impaired, meaning they have either suspended redemptions, imposed gate provisions or sidepocketed assets.
Credit Suisse is comprised of a number of legal entities around the world and is headquartered in Zurich. The registered shares of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares, in New York.
The report discusses how hedge funds have generated year-to-date returns of 7.2% through June 30, outperforming, with lower volatility, both key equity and bond indices. Some key takeaways from the report include:
* The Convertible Arbitrage, Emerging Markets, and Global Macro sectors have received increased attention as investors began to regain their appetite for risk and global markets rallied.
* Performance has improved across most sectors, with the bulk of returns for many strategies moving into positive territory for the year, with 80% of all funds reporting positive returns for the second quarter.
* Overall industry assets under management have dropped approximately $18 billion since the end of the first quarter of 2009; we estimate industry assets totaled $1.3 trillion as of June 30 - down from $1.5 trillion at the end of 2008.
* As of June 30, 2009, an estimated 9.6% of funds were classified as impaired, meaning they have either suspended redemptions, imposed gate provisions or sidepocketed assets.
Credit Suisse is comprised of a number of legal entities around the world and is headquartered in Zurich. The registered shares of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares, in New York.
28 Jul 2009
BHA Q1 2009 Alternative Investor Report
Working with a group of 150 alternative investment managers, alternative investor research company, Brighton House Associates,(BHA) published its Quarterly Research Report highlighting insights and trends from this research that are most pertinent to industry professionals.
In summary of the report, the markets continued their downward trend in Q1, but the ability of hedge fund managers and alternative investors to adapt and position properly is what allows investment managers to produce returns in even the most difficult markets. Throughout the alternative industry there are still managers making money and using alpha to produce uncorrelated return streams, and investors are conscious of this and judiciously seeking investment with them, the report said.
Currently, many alternative investors are turning towards short-term CTA and global macro managers because they can nimbly navigate these uncertain markets while providing excellent liquidity terms, according to BHA. Investors are also increasingly interested in the relative stability and unique opportunities that private equity funds provide. Investors are looking for generalist funds that can provide them with diversified exposure and buyout funds that can take advantage of drastically undervalued opportunities.
In the real estate space, according to the report, investors are looking for managers that are aggressively taking advantage of the depressed real estate market to acquire undervalued assets.
Investors and managers are eagerly anticipating a market turnaround in the second half of 2009 that should lead to a significant influx of capital into alternative markets, BHA said. Investors that are currently sitting on high levels of cash said that they are actively researching the proper opportunities to put some of that capital to effective use in 2009.
BHA works directly with a wide range of investment managers on a daily basis. These managers range from hedge funds and funds of hedge funds to private equity, real estate, and venture capital funds. They also range in size and experience from emerging managers to some of the most established firms in the industry.
Each quarter, BHA analysts collect detailed profiles from more than 1,000 investors that are actively making investments in hedge funds, private equity and real estate funds, and related funds of funds. These investors are located all across the globe; their assets under management range from less than $100 million to more than $10 billion. The Q2 research is scheduled for release early next week.
In summary of the report, the markets continued their downward trend in Q1, but the ability of hedge fund managers and alternative investors to adapt and position properly is what allows investment managers to produce returns in even the most difficult markets. Throughout the alternative industry there are still managers making money and using alpha to produce uncorrelated return streams, and investors are conscious of this and judiciously seeking investment with them, the report said.
Currently, many alternative investors are turning towards short-term CTA and global macro managers because they can nimbly navigate these uncertain markets while providing excellent liquidity terms, according to BHA. Investors are also increasingly interested in the relative stability and unique opportunities that private equity funds provide. Investors are looking for generalist funds that can provide them with diversified exposure and buyout funds that can take advantage of drastically undervalued opportunities.
In the real estate space, according to the report, investors are looking for managers that are aggressively taking advantage of the depressed real estate market to acquire undervalued assets.
Investors and managers are eagerly anticipating a market turnaround in the second half of 2009 that should lead to a significant influx of capital into alternative markets, BHA said. Investors that are currently sitting on high levels of cash said that they are actively researching the proper opportunities to put some of that capital to effective use in 2009.
BHA works directly with a wide range of investment managers on a daily basis. These managers range from hedge funds and funds of hedge funds to private equity, real estate, and venture capital funds. They also range in size and experience from emerging managers to some of the most established firms in the industry.
Each quarter, BHA analysts collect detailed profiles from more than 1,000 investors that are actively making investments in hedge funds, private equity and real estate funds, and related funds of funds. These investors are located all across the globe; their assets under management range from less than $100 million to more than $10 billion. The Q2 research is scheduled for release early next week.
'Green' Hedge Fund of Funds Launched by Hedge Fund Veteran
Richard Bookbinder is launching TerraVerde Capital Partners LLC, one of the first “green” hedge fund of funds in the United States. Bookbinder is Managing Member of Bookbinder Capital Management, a New York-based hedge fund of funds, and a founding Principal of Sandler, O’Neill & Partners, L.P.
TerraVerde allocates capital to hedge funds devoted solely to reducing carbon emissions through clean-tech, renewable energy and other environmental sectors such as carbon trading, energy, solar, wind, water, reforestation and more.
“We’re in the early stages of a long-term, multi-generational growth cycle for carbon reduction strategies,” Bookbinder said. “TerraVerde is focused on those green strategies that are capitalizing on the business potential driven by the need for energy security and clean energy use.”
While managing one of Bookbinder Capital’s other hedge fund of funds, Bookbinder studied the emergence of investment opportunities in the “green” space. After an in-depth analysis of the industry, including meeting with hedge fund managers, green private equity funds, scientists, historians, and others, he came to the realization: investment funds with an environmental focus offer sufficient, attractive long-term investment opportunities to dedicate an entire strategy focused solely on the “green” space.
TerraVerde allocates capital to hedge funds devoted solely to reducing carbon emissions through clean-tech, renewable energy and other environmental sectors such as carbon trading, energy, solar, wind, water, reforestation and more.
“We’re in the early stages of a long-term, multi-generational growth cycle for carbon reduction strategies,” Bookbinder said. “TerraVerde is focused on those green strategies that are capitalizing on the business potential driven by the need for energy security and clean energy use.”
While managing one of Bookbinder Capital’s other hedge fund of funds, Bookbinder studied the emergence of investment opportunities in the “green” space. After an in-depth analysis of the industry, including meeting with hedge fund managers, green private equity funds, scientists, historians, and others, he came to the realization: investment funds with an environmental focus offer sufficient, attractive long-term investment opportunities to dedicate an entire strategy focused solely on the “green” space.
AIMA Warns Of Global Impact Of EU Hedge Fund Directive
The Alternative Investment Management Association (AIMA), the global hedge fund industry association, has warned that the European Commission’s draft directive on Alternative Investment Fund Managers would hit fund managers and investors around the world if enacted into European law.
The hedge fund assiciation argues that the directive creates potentially major difficulties for non-EU funds and/or non-EU managers in accessing the EU market. Marketing of funds by managers will only be allowed with a special marketing passport that the directive creates. However the directive also delays its introduction by three years and imposes significant obstacles (such as demonstrating regulatory and tax equivalence) to obtaining it.
AIMA suggests that the directive makes it so difficult and costly for non-EU funds and managers to access the EU market that it is clearly protectionist in effect, if not in intent. This will have major consequences for non-EU funds and managers (particularly in North America and Asia-Pacific) who will face a major loss of business in the EU. Investors will face loss of choice, increased costs and diminished returns.
Andrew Baker, CEO of AIMA, said, “Funds and managers outside the EU face being locked out of the EU market with extremely worrying consequences. Global industry centres such as the United States , Canada , Switzerland , Hong Kong , Singapore , Japan , Australia and South Africa , will all be affected by this. This is not just an internal EU matter.
This will also have a very significant impact on investors. EU investors, in particular, face a situation where they can use only EU asset managers of EU domiciled funds investing assets under an EU custodian. And international investors with EU funds or managers will find that their costs will go up and their returns will go down because of the restrictions and compliance costs the directive imposes.
We believe that the provisions of the draft directive with protectionist consequences will not only hit the industry worldwide but weaken the competitiveness of the EU in investment management and make the EU a less attractive destination for international investment. Naturally, we hope that it can be revised to avoid this.”
The hedge fund assiciation argues that the directive creates potentially major difficulties for non-EU funds and/or non-EU managers in accessing the EU market. Marketing of funds by managers will only be allowed with a special marketing passport that the directive creates. However the directive also delays its introduction by three years and imposes significant obstacles (such as demonstrating regulatory and tax equivalence) to obtaining it.
AIMA suggests that the directive makes it so difficult and costly for non-EU funds and managers to access the EU market that it is clearly protectionist in effect, if not in intent. This will have major consequences for non-EU funds and managers (particularly in North America and Asia-Pacific) who will face a major loss of business in the EU. Investors will face loss of choice, increased costs and diminished returns.
Andrew Baker, CEO of AIMA, said, “Funds and managers outside the EU face being locked out of the EU market with extremely worrying consequences. Global industry centres such as the United States , Canada , Switzerland , Hong Kong , Singapore , Japan , Australia and South Africa , will all be affected by this. This is not just an internal EU matter.
This will also have a very significant impact on investors. EU investors, in particular, face a situation where they can use only EU asset managers of EU domiciled funds investing assets under an EU custodian. And international investors with EU funds or managers will find that their costs will go up and their returns will go down because of the restrictions and compliance costs the directive imposes.
We believe that the provisions of the draft directive with protectionist consequences will not only hit the industry worldwide but weaken the competitiveness of the EU in investment management and make the EU a less attractive destination for international investment. Naturally, we hope that it can be revised to avoid this.”
SEC To Curtail Abusive Short Sales
The SEC announced several actions protecting against short sales and make more short sale information available to the public.
"Today's actions demonstrate the Commission's determination to address short selling abuses while at the same time increasing public disclosure of short selling activities that affect our markets," said SEC Chairman Mary Schapiro.
First, the Commission made permanent a rule, that seeks to reduce the potential for abusive "naked" short selling in the securities market. The new rule, Rule 204, requires broker-dealers to promptly purchase or borrow securities to deliver on a short sale. The temporary rule, approved by the SEC in the fall of 2008, was set to expire on July 31.
Second, the Commission and its staff are working together with several self-regulatory organizations (SRO) to make short sale volume and transaction data available through the SRO Web sites. This effort will result in an increase over the amount of information presently required by another temporary rule, known as Temporary 10a-3T. That rule, which will expire on August 1, applies only to certain institutional money managers and does not require public disclosure.
Apart from these measures, the Commission is continuing to actively consider proposals on a short sale price test and circuit breaker restrictions.
Third, the Commission intends to hold a public roundtable on September 30 to discuss securities lending, pre-borrowing, and possible additional short sale disclosures. The roundtable will consider, among other topics, the potential impact of a program requiring short sellers to pre-borrow their securities, possibly on a pilot basis, and adding a short sale indicator to the tapes to which transactions are reported for exchange-listed securities.
Short selling often can play an important role, the SEC said, in the market for a variety of reasons, including contributing to efficient price discovery, mitigating market bubbles, increasing market liquidity, promoting capital formation, facilitating hedging and other risk management activities, and importantly, limiting upward market manipulations. There are, however, circumstances in which short selling can be used as a tool to manipulate the market.
"Today's actions demonstrate the Commission's determination to address short selling abuses while at the same time increasing public disclosure of short selling activities that affect our markets," said SEC Chairman Mary Schapiro.
First, the Commission made permanent a rule, that seeks to reduce the potential for abusive "naked" short selling in the securities market. The new rule, Rule 204, requires broker-dealers to promptly purchase or borrow securities to deliver on a short sale. The temporary rule, approved by the SEC in the fall of 2008, was set to expire on July 31.
Second, the Commission and its staff are working together with several self-regulatory organizations (SRO) to make short sale volume and transaction data available through the SRO Web sites. This effort will result in an increase over the amount of information presently required by another temporary rule, known as Temporary 10a-3T. That rule, which will expire on August 1, applies only to certain institutional money managers and does not require public disclosure.
Apart from these measures, the Commission is continuing to actively consider proposals on a short sale price test and circuit breaker restrictions.
Third, the Commission intends to hold a public roundtable on September 30 to discuss securities lending, pre-borrowing, and possible additional short sale disclosures. The roundtable will consider, among other topics, the potential impact of a program requiring short sellers to pre-borrow their securities, possibly on a pilot basis, and adding a short sale indicator to the tapes to which transactions are reported for exchange-listed securities.
Short selling often can play an important role, the SEC said, in the market for a variety of reasons, including contributing to efficient price discovery, mitigating market bubbles, increasing market liquidity, promoting capital formation, facilitating hedging and other risk management activities, and importantly, limiting upward market manipulations. There are, however, circumstances in which short selling can be used as a tool to manipulate the market.
27 Jul 2009
Uzbeki/Khazakh Hedge Fund Market's Decline Slowing
Uzbekistan hedge fund manager, Ansher Fund Management, has reported that their flagship hedge fund, Ansher Regional Property Fund, (ARPF) has maintained its performance moderately stable at –0.37% during April-June 2009 despite the still lagging property markets around the globe.
"Property markets in the region, especially Kazakhstan residential segment, continued slowing in the quarter owing to still limited or expensive mortgage facilities for buyers," Khurshid Kholov, hedge fund manager and CIO said. "However, the decline rate in the region has been slower during the 2nd quarter as compared with previous quarters, showing signs of market recovery. Thanks to active portfolio management ARPF is still up by 0.80% since inception, thus comfortably outperforming all three benchmarks."
Despite the fact that the economy of Kazakhstan has been under pressure amid the global financial turmoil, a slight signs of economic recovery has been observed in the country, the fund manager said. It’s expected that the GDP of this oil rich country will not post negative growth for the year 2009, owing to currently recovering oil and commodity prices in the world markets.
This is the result of the antirecessionary measures the Government undertook in which $25 billion of funds were injected into the economy. About $4 billion out
of this amount was directed particularly into the real estate sector of the country.
ARPF has seen new investment opportunities in the hotel sector after the residential real estate market dropped out. "The hotel sector is immature and currently existing 4 five star hotels in Almaty operate with 90% occupancy rate," ARPF said.
A sharp deficit is expected to emerge with the Asian Winter Games which will take place in Almaty in 2011. Real estate sector of this energy house country still offers promising investment opportunities for property investors in the long term.
"Property markets in the region, especially Kazakhstan residential segment, continued slowing in the quarter owing to still limited or expensive mortgage facilities for buyers," Khurshid Kholov, hedge fund manager and CIO said. "However, the decline rate in the region has been slower during the 2nd quarter as compared with previous quarters, showing signs of market recovery. Thanks to active portfolio management ARPF is still up by 0.80% since inception, thus comfortably outperforming all three benchmarks."
Despite the fact that the economy of Kazakhstan has been under pressure amid the global financial turmoil, a slight signs of economic recovery has been observed in the country, the fund manager said. It’s expected that the GDP of this oil rich country will not post negative growth for the year 2009, owing to currently recovering oil and commodity prices in the world markets.
This is the result of the antirecessionary measures the Government undertook in which $25 billion of funds were injected into the economy. About $4 billion out
of this amount was directed particularly into the real estate sector of the country.
ARPF has seen new investment opportunities in the hotel sector after the residential real estate market dropped out. "The hotel sector is immature and currently existing 4 five star hotels in Almaty operate with 90% occupancy rate," ARPF said.
A sharp deficit is expected to emerge with the Asian Winter Games which will take place in Almaty in 2011. Real estate sector of this energy house country still offers promising investment opportunities for property investors in the long term.
Swiss Hedge Fund & FoHFs Provider Expands To US
Swiss based hedge fund and FoHFs provider, Infonic AG, has expanded to the US by establishing a New York office. Infonic named IT specialist Nolan Phillips as Chief Operating Officer, and financial expert, Bridget Piraino, Head of Global Marketing & Sales.
“I’m delighted to welcome Nolan Phillips and Bridget Piraino to the executive team. Adding to the depth of our management team demonstrates Infonic’s commitment to becoming the trusted operational backbone of the institutional hedge fund investor industry,” said Tom Furrer, Infonic’s CEO. “With the establishment of a New York office we will expand our presence delivering innovative products and dedicated client services to asset managers and administrators of funds of hedge funds.”
Nolan has held executive and consulting positions at Coopers and Lybrand, Union Bank of Switzerland, Société Générale, Bankers Trust, IQ Financial Systems and Bank of Bermuda, Alternative Investments Program.
Piraino's career has included Aregon International, the UK financial data delivery system provider, and Goldman Sachs and Co’s Fixed Income Research group. She held senior technical management and financial services marketing positions with Sybase, TIBCO Financial Systems and SeeBeyond.
Headquartered in Switzerland with offices in Zurich and New York, Infonic AG is the provider of HedgeSphere, a product suite for operations of funds of hedge funds.
“I’m delighted to welcome Nolan Phillips and Bridget Piraino to the executive team. Adding to the depth of our management team demonstrates Infonic’s commitment to becoming the trusted operational backbone of the institutional hedge fund investor industry,” said Tom Furrer, Infonic’s CEO. “With the establishment of a New York office we will expand our presence delivering innovative products and dedicated client services to asset managers and administrators of funds of hedge funds.”
Nolan has held executive and consulting positions at Coopers and Lybrand, Union Bank of Switzerland, Société Générale, Bankers Trust, IQ Financial Systems and Bank of Bermuda, Alternative Investments Program.
Piraino's career has included Aregon International, the UK financial data delivery system provider, and Goldman Sachs and Co’s Fixed Income Research group. She held senior technical management and financial services marketing positions with Sybase, TIBCO Financial Systems and SeeBeyond.
Headquartered in Switzerland with offices in Zurich and New York, Infonic AG is the provider of HedgeSphere, a product suite for operations of funds of hedge funds.
24 Jul 2009
Multi-strategy Malta Hedge Fund Launch
Malta-based Golden Hedge Umbrella Sicav has launched a multi-strategy hedge fund and is currently looking for prospective seed investors.
The Golden Hedge Multi-Strategy Fund is the first subfund of the umbrella structure, run by Andreas Koettner and Dr. Bernhard Goetsch, the new hedge find specializes in relative value commodity trading and stock index arbitrage strategies.
Targeting an annualized return of 15% with volatility at 8%.The quantitative strategies are designed to generate returns with low correlation to traditional CTA and hedge fund styles. Inception of trading was in May 2009.
Minimum investment starts at EUR100,000 ($142,000) with monthly liquidity. The auditor is Ernst & Young, prime broker MF Global and fund administrator Valletta Fund Services.
The Golden Hedge Multi-Strategy Fund is the first subfund of the umbrella structure, run by Andreas Koettner and Dr. Bernhard Goetsch, the new hedge find specializes in relative value commodity trading and stock index arbitrage strategies.
Targeting an annualized return of 15% with volatility at 8%.The quantitative strategies are designed to generate returns with low correlation to traditional CTA and hedge fund styles. Inception of trading was in May 2009.
Minimum investment starts at EUR100,000 ($142,000) with monthly liquidity. The auditor is Ernst & Young, prime broker MF Global and fund administrator Valletta Fund Services.
23 Jul 2009
Cayman Islands Hedge Funds and Capital Markets in India
A study by Dennis S. Ryan and Sonia Xavier of offshore law specialist, Conyers Dill & Pearman has come out 'Cayman Islands Funds - Entering the Gateway to Capital Markets in India.' The team describes the history and challenges of what Cayman Islands domiciled investment funds have faced when seeking to invest into Indian capital markets.
One of the major hurdles in this regard has been addressed by the 10 June 2009 admission of the Cayman Islands Monetary Authority (“CIMA”) as an ordinary (i.e., full) member of the International Organization of Securities Commissions (“IOSCO”), according to the report.
By way of background, the IOSCO Objectives and Principles of Securities Regulation were endorsed by its member regulators of various securities and futures markets in 1998, and generally are viewed by securities regulators as the key international benchmark on sound principles and practices for securities regulation. Currently, IOSCO members regulate the vast majority of the world's securities markets.
To access the Indian markets, an investment fund must register as a Foreign Institutional Investor (“FII”) with The Securities and Exchange Board of India (“SEBI”). In the past, since CIMA was not a member of IOSCO, SEBI often engaged in extensive due diligence and inquiries before allowing registration of a Cayman fund as a FII. As a result, few Cayman Islands funds have registered with SEBI. CIMA’s admission to IOSCO looks set to change this trend in favour of Cayman Islands funds.
The timing could not be better, the report says, with emerging markets competing to attract liquidity, the Cayman Islands, with over 9,000 CIMA registered investment funds, a proven track record with investors and an excellent and sophisticated service infrastructure, has a great deal to offer India and investors that wish to access its markets.
One remaining challenge is that the Cayman Islands do not currently have a tax treaty with India, the law fim asid. Mauritius, on the other hand, has long been the preferred jurisdiction for investment into India as a consequence of the favourable double taxation agreement between those countries (the “Mauritius-India DTAA”), contributing to around 44% of foreign direct investment (“FDI”) into India.
Investment funds from non-tax treaty jurisdictions have developed a structure involving a wholly owned Mauritius subsidiary for purposes of Indian investment. Typically, this structure requires a Cayman Islands (or other non-treaty jurisdiction) investment fund to register with SEBI as a FII. The Mauritius subsidiary fund will then be registered with SEBI as a sub-account of the FII, permitting it to invest directly in Indian securities via SEBI.
The Mauritius fund will be set up as a Global Business Company Category 1 (“GBC1”) that is resident in Mauritius for tax purposes. As a Mauritius tax resident, this fund is subject to tax on income at the flat rate of 15%. However it is entitled to claim a credit for foreign tax on income not derived from Mauritius against the Mauritius tax payable, resulting in an effective tax rate generally ranging between 3% and nil. As a tax resident GBC1, the fund is also entitled to take advantage of Mauritius’ network of tax treaties, including the Mauritius-India DTAA.
One of the major hurdles in this regard has been addressed by the 10 June 2009 admission of the Cayman Islands Monetary Authority (“CIMA”) as an ordinary (i.e., full) member of the International Organization of Securities Commissions (“IOSCO”), according to the report.
By way of background, the IOSCO Objectives and Principles of Securities Regulation were endorsed by its member regulators of various securities and futures markets in 1998, and generally are viewed by securities regulators as the key international benchmark on sound principles and practices for securities regulation. Currently, IOSCO members regulate the vast majority of the world's securities markets.
To access the Indian markets, an investment fund must register as a Foreign Institutional Investor (“FII”) with The Securities and Exchange Board of India (“SEBI”). In the past, since CIMA was not a member of IOSCO, SEBI often engaged in extensive due diligence and inquiries before allowing registration of a Cayman fund as a FII. As a result, few Cayman Islands funds have registered with SEBI. CIMA’s admission to IOSCO looks set to change this trend in favour of Cayman Islands funds.
The timing could not be better, the report says, with emerging markets competing to attract liquidity, the Cayman Islands, with over 9,000 CIMA registered investment funds, a proven track record with investors and an excellent and sophisticated service infrastructure, has a great deal to offer India and investors that wish to access its markets.
One remaining challenge is that the Cayman Islands do not currently have a tax treaty with India, the law fim asid. Mauritius, on the other hand, has long been the preferred jurisdiction for investment into India as a consequence of the favourable double taxation agreement between those countries (the “Mauritius-India DTAA”), contributing to around 44% of foreign direct investment (“FDI”) into India.
Investment funds from non-tax treaty jurisdictions have developed a structure involving a wholly owned Mauritius subsidiary for purposes of Indian investment. Typically, this structure requires a Cayman Islands (or other non-treaty jurisdiction) investment fund to register with SEBI as a FII. The Mauritius subsidiary fund will then be registered with SEBI as a sub-account of the FII, permitting it to invest directly in Indian securities via SEBI.
The Mauritius fund will be set up as a Global Business Company Category 1 (“GBC1”) that is resident in Mauritius for tax purposes. As a Mauritius tax resident, this fund is subject to tax on income at the flat rate of 15%. However it is entitled to claim a credit for foreign tax on income not derived from Mauritius against the Mauritius tax payable, resulting in an effective tax rate generally ranging between 3% and nil. As a tax resident GBC1, the fund is also entitled to take advantage of Mauritius’ network of tax treaties, including the Mauritius-India DTAA.
Hedge Fund Managers as Registered SEC Advisors
"One of the focal points of the Obama Administration’s Financial System Regulatory Reform Plan is to seek the passage of legislation that would require hedge fund managers (as well as other private fund managers) to become registered as investment advisors with the SEC and be in compliance with the applicable requirements under the Investment Advisers Act." HedgeOp Compliance said, announcing the launch of a new service to help managers deal with current registration issues.
There are presently three bills pending in Congress and a recent proposal from the Treasury that would achieve that goal if passed. “We are seeing a lot of activity as hedge fund managers look to get ahead of the curve on these requirements and starting the process sooner rather than later." Bill Mulligan, the CEO of HedgeOp said, "In addition to allowing for key thoughtful planning, addressing the registration issue early will provide a great deal of comfort to investors and prospective investors."
The newly launched ADVassist is designed to provide focused registration and compliance guidance, the hedge fund consulting firm said, to not only complete the registration process, but also to create a foundation for development of a compliance culture and infrastructure.
There are presently three bills pending in Congress and a recent proposal from the Treasury that would achieve that goal if passed. “We are seeing a lot of activity as hedge fund managers look to get ahead of the curve on these requirements and starting the process sooner rather than later." Bill Mulligan, the CEO of HedgeOp said, "In addition to allowing for key thoughtful planning, addressing the registration issue early will provide a great deal of comfort to investors and prospective investors."
The newly launched ADVassist is designed to provide focused registration and compliance guidance, the hedge fund consulting firm said, to not only complete the registration process, but also to create a foundation for development of a compliance culture and infrastructure.
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