Hedge fund manager Paulson will own 9.9% of private health insurance company Conseco’s common stock after a private share sale, buying $77.9 million in stock and warrants.
Paulson & Co. Inc., on behalf of several hedge funds and accounts he manages will also have certain registration rights in connection with its acquisition of the common stock and warrants.
“This is a bold move,” said Andrew Schneider, founder and co-principal of HedgeCo Networks. “With the current healthcare debate in full swing, the timing is everything. But then, this is the kinds of risk we've come to expect from Paulson." Paulson made $2.5 billion last year, hedging against the U.S. housing market.
Paulson’s warrants will also convert to common stock at $6.50 a share. Conseco rose 78 cents, or 16%, to $5.77 at 7:47 p.m. in late New York trading. The shares have dropped about 68% in the past two years.
Conseco, run by Chief Executive Officer James Prieur, will also file for a public offering of $200 million in new common stock and will sell $293 million in convertible notes. The bond proceeds will be used to repurchase existing notes, the company said. The new debt, due in 2016, will pay investors 7%.
Paulson earned an estimated $2.5 billion last year, according to Institutional Investor’s Alpha Magazine. His Credit Opportunities Fund soared almost sixfold in 2007 on bets that subprime mortgages would plummet. Last year, his flagship fund returned 37 %, compared with a loss of 19% for hedge funds on average.
14 Oct 2009
Hedge Fund Manager Gets 7 Years
Hedge fund manager Michael C. Regan was sentenced in a federal court in Brooklyn, N.Y. to seven years in prison for fraud.
Just last June, Regan settled charges with the SEC on another of his hedge funds, Regan and Regan & Co., which the SEC alleged, he fraudulently obtained at least $15.9 million and ultimately caused investors to lose at least $6.69 million through Regan's misappropriation and trading losses. The settlement was closed without Regan admitting or denying the allegations.
When his hedge fund, River Stream Fund collapsed in April 2008 Regan turned himself in in May 2008 and pleaded guilty to one count of fraud the following month. He began the fund in 1998 with money from friends and acquaintances, according to the prosecution.
While Regan agreed to pay restitution, he filed for bankruptcy protection after turning himself in. The government said it is unlikely his victims will ever be compensated.
The SEC is also filing a civil suite. Regan could face additional criminal charges for failing to file tax returns for 10 years.
Just last June, Regan settled charges with the SEC on another of his hedge funds, Regan and Regan & Co., which the SEC alleged, he fraudulently obtained at least $15.9 million and ultimately caused investors to lose at least $6.69 million through Regan's misappropriation and trading losses. The settlement was closed without Regan admitting or denying the allegations.
When his hedge fund, River Stream Fund collapsed in April 2008 Regan turned himself in in May 2008 and pleaded guilty to one count of fraud the following month. He began the fund in 1998 with money from friends and acquaintances, according to the prosecution.
While Regan agreed to pay restitution, he filed for bankruptcy protection after turning himself in. The government said it is unlikely his victims will ever be compensated.
The SEC is also filing a civil suite. Regan could face additional criminal charges for failing to file tax returns for 10 years.
13 Oct 2009
Hedge Fund Manager's Email Scrutinised For Knowledge of Downturn
The jury selection has begun for the trial of two former Bear Stearns hedge fund managers, Matthew Tannin and Ralph Cioffi, over the alleged hedge fund securities and wire fraud.
Although the prosecution alleges that the hedge fund managers misled investors, they are not being charged with having contributed to the collapse of Bear Stearns. They could face up to 20 years in prison if convicted. Cioffi is charged with an additional count of insider trading for withdrawing $2m from one of the hedge funds.
Tannin's personal Email, which he used as a diary, is being used to prove that he was worried about a possible "blow up" and was under some stress. The evidence also alleges that he had trouble sleeping and was taking some anti-anxiety medication.
The trial is expected to last six weeks. Tannin and Cioffi have denied the charges.
Although the prosecution alleges that the hedge fund managers misled investors, they are not being charged with having contributed to the collapse of Bear Stearns. They could face up to 20 years in prison if convicted. Cioffi is charged with an additional count of insider trading for withdrawing $2m from one of the hedge funds.
Tannin's personal Email, which he used as a diary, is being used to prove that he was worried about a possible "blow up" and was under some stress. The evidence also alleges that he had trouble sleeping and was taking some anti-anxiety medication.
The trial is expected to last six weeks. Tannin and Cioffi have denied the charges.
Hedge Fund Group Fortress Announces Pricing of RailAmerica, Inc. IPO
Fortress Investment Group LLC announced that RailAmerica, Inc.'s initial public offering of 10,500,000 primary shares of common stock, as well as the offering of 11,500,000 secondary shares of common stock of RailAmerica, Inc. by RR Acquisition Holding LLC, an entity wholly-owned by certain private equity funds managed by an affiliate of Fortress Investment Group LLC.
The shares were priced at $15 per share. Fortress funds acquired the company in February 2007 and will continue to own approximately 55.8% of RailAmerica after the closing of the offering.
In connection with the offering, RailAmerica, Inc. granted the underwriters a 30-day option to purchase up to 1,575,000 additional shares of common stock, and RR Acquisition Holding LLC granted the underwriters the option to purchase up to 1,725,000 additional shares of common stock, to cover over-allotments, if any.
The shares will begin trading on October 13, 2009 on the New York Stock Exchange under the symbol "RA." The offering is expected to close on October 16, 2009.
The shares were priced at $15 per share. Fortress funds acquired the company in February 2007 and will continue to own approximately 55.8% of RailAmerica after the closing of the offering.
In connection with the offering, RailAmerica, Inc. granted the underwriters a 30-day option to purchase up to 1,575,000 additional shares of common stock, and RR Acquisition Holding LLC granted the underwriters the option to purchase up to 1,725,000 additional shares of common stock, to cover over-allotments, if any.
The shares will begin trading on October 13, 2009 on the New York Stock Exchange under the symbol "RA." The offering is expected to close on October 16, 2009.
12 Oct 2009
Gulfmena Arab Opportunities Hedge Fund Launch
Gulfmena Investments Limited has launched the first directional absolute return hedge fund focusing specifically on the MENA equity markets to be managed by a GCC based and DFSA regulated asset management business.
The asset manager of the fund, Gulfmena Alternative Investments Limited, was granted a license by the Dubai Financial Services Authority (DFSA) to operate as a DIFC asset management company in August 2009 and is headed by CEO and Fund Manager, Haissam Arabi. Arabi is one of the region’s most respected and prominent fund managers having managed SHUAA Capital’s Arab Gateway Fund from March 2001 to June 2008 and headed its asset management division.
“Today, investor appetite is returning gradually as we can see from recent markets performance, but while everyone would like to take advantage of the recovery story and existing price distortions in the short term, investors remain somewhat sceptical over long term prospects. Therefore risk aversion and liquidity remain high priorities when making investment decisions at least until risk appetite returns and when investors will demand higher risk and relative value type products. This is why a debut flagship fund today should be a conservative hedge fund product, which is absolute return, unconstrained, multi faceted that is designed for both today and tomorrow’s MENA markets. We believe it is the ideal product at the ideal time with the ideal strategy.” commented Haissam Arabi, CEO and fund manager of Gulfmena Alternative Investments Limited.
The fund will adhere to stringent risk management and portfolio construction parameters such as stops and rolling stops in addition to an overlay hedge strategy that is designed to minimise volatility aiming at preserving investment capital during all market conditions. This is particularly important to professional investors during the early days of a market recovery when visibility is still not clear and there remains little appetite for risk. The fund will target annual returns in excess of 15% while it aims not to exceed an annual volatility of 7%. The fund will also observe strict liquidity criteria and capacity over-ride rules which are built into the strategy to ensure high liquidity levels that allow it to be open-ended and to offer weekly liquidity, unique to most hedge funds.
The fund’s operator and sponsor is Gulfmena Investments Limited (Cayman Islands). The Gulfmena Arab Opportunities Fund Limited will be registered as a regulated mutual fund with the Cayman Islands Monetary Authority and is managed by Gulfmena Alternative Investments Limited, a DIFC based MENA specialist asset management company that is regulated by the Dubai Financial Services Authority (DFSA).
The asset manager of the fund, Gulfmena Alternative Investments Limited, was granted a license by the Dubai Financial Services Authority (DFSA) to operate as a DIFC asset management company in August 2009 and is headed by CEO and Fund Manager, Haissam Arabi. Arabi is one of the region’s most respected and prominent fund managers having managed SHUAA Capital’s Arab Gateway Fund from March 2001 to June 2008 and headed its asset management division.
“Today, investor appetite is returning gradually as we can see from recent markets performance, but while everyone would like to take advantage of the recovery story and existing price distortions in the short term, investors remain somewhat sceptical over long term prospects. Therefore risk aversion and liquidity remain high priorities when making investment decisions at least until risk appetite returns and when investors will demand higher risk and relative value type products. This is why a debut flagship fund today should be a conservative hedge fund product, which is absolute return, unconstrained, multi faceted that is designed for both today and tomorrow’s MENA markets. We believe it is the ideal product at the ideal time with the ideal strategy.” commented Haissam Arabi, CEO and fund manager of Gulfmena Alternative Investments Limited.
The fund will adhere to stringent risk management and portfolio construction parameters such as stops and rolling stops in addition to an overlay hedge strategy that is designed to minimise volatility aiming at preserving investment capital during all market conditions. This is particularly important to professional investors during the early days of a market recovery when visibility is still not clear and there remains little appetite for risk. The fund will target annual returns in excess of 15% while it aims not to exceed an annual volatility of 7%. The fund will also observe strict liquidity criteria and capacity over-ride rules which are built into the strategy to ensure high liquidity levels that allow it to be open-ended and to offer weekly liquidity, unique to most hedge funds.
The fund’s operator and sponsor is Gulfmena Investments Limited (Cayman Islands). The Gulfmena Arab Opportunities Fund Limited will be registered as a regulated mutual fund with the Cayman Islands Monetary Authority and is managed by Gulfmena Alternative Investments Limited, a DIFC based MENA specialist asset management company that is regulated by the Dubai Financial Services Authority (DFSA).
9 Oct 2009
Hedge Funds Up In September Despite 3Q Risks
Despite rich equity market multiples and uncertainty surrounding the upcoming 3rd quarter earnings reports, Hennessee Group said that hedge fund investors continued to pile into stocks due to an uptick in merger activity during September.
The Hennessee Long/Short Equity Index gained +3.13% in September (+18.75% YTD), while the S&P 500 index finished September up +3.6%, faring much better than the average loss of -1.2% the S&P has historically posted during the month of September dating back to 1929.
Hedge funds have also taken on additional directional risk in order to participate in the ongoing equity market rally and Hennessee believes they remain cautious and aware that the market could turn sharply to the downside.
“Little of the bail out money given to banks seems to have been passed on to businesses or consumers. It must have gone somewhere, and it is possible that is has gone to the proprietary desks of the banks, which are putting it to work in the markets,” Charles Gradante Co-Founder of Hennessee Group, said. “That could lead to a potential problem if the public and institutions do not join the rally, and the banks eventually have to sell equities into a vacuum.”
“The current debate among hedge fund managers is ‘Deflation versus Inflation’,” Gradante said, “The weak dollar and deficits are inflationary, but the 30 year treasury below 4% (80 bps over the 10 year) points to deflation expectations. Hennessee research is noticing a growing propensity of hedge funds to short 20 and 30 year treasuries as yields break 4%. The U.S. Treasury is currently funding its long term debt with 3 to 10 year Treasuries. The need to finance America ’s debt on the long end of the curve with attractive yields is increasingly obvious.”
The Hennessee Long/Short Equity Index gained +3.13% in September (+18.75% YTD), while the S&P 500 index finished September up +3.6%, faring much better than the average loss of -1.2% the S&P has historically posted during the month of September dating back to 1929.
Hedge funds have also taken on additional directional risk in order to participate in the ongoing equity market rally and Hennessee believes they remain cautious and aware that the market could turn sharply to the downside.
“Little of the bail out money given to banks seems to have been passed on to businesses or consumers. It must have gone somewhere, and it is possible that is has gone to the proprietary desks of the banks, which are putting it to work in the markets,” Charles Gradante Co-Founder of Hennessee Group, said. “That could lead to a potential problem if the public and institutions do not join the rally, and the banks eventually have to sell equities into a vacuum.”
“The current debate among hedge fund managers is ‘Deflation versus Inflation’,” Gradante said, “The weak dollar and deficits are inflationary, but the 30 year treasury below 4% (80 bps over the 10 year) points to deflation expectations. Hennessee research is noticing a growing propensity of hedge funds to short 20 and 30 year treasuries as yields break 4%. The U.S. Treasury is currently funding its long term debt with 3 to 10 year Treasuries. The need to finance America ’s debt on the long end of the curve with attractive yields is increasingly obvious.”
European Hedge Fund Galas Raise Over $500.000
HedgeCo Archives - More than 250 hedge-fund industry leaders gathered together to raise nearly £250,000 ($400,000) at the 100 Women in Hedge Funds 2009 London Charity Gala, held yesterday evening in the UK Foreign & Commonwealth Office’s magnificent Locarno Suite. All proceeds from the event went to SHINE, the UK Support and Help in Education charity.
This follows a spectacular event on 29th September attended by 250 guests from the hedge fund industry in Geneva and beyond in an 18th century mansion overlooking the lake of Geneva, where the 100 Women in Hedge Funds 2009 Geneva Charity Gala raised SFr135,000 ($130,000) for local education charity Association Païdos.
The combined sum of £332,000 ($533,000) raised for these two charities will make a material difference to their work. In the case of SHINE it should be sufficient to fund for an entire year two new SHINE on Saturday programmes, for which there is a queue of eligible, eager participants. For Païdos, it will be able to more than double the number of children accepted onto its "Getting Back into Learning" classroom project.
Sarah Brown, wife of the UK Prime Minister, and a SHINE Patron, said, "Hundreds of young people will benefit from your generosity. For example, children with special educational needs will receive specialised individual tuition to help develop their reading, writing and math skills. For children who are disengaged or simply underachieving, SHINE’s Saturday programmes enrich the school curriculum, making learning fresh, new and exciting. Other SHINE-funded programmes stretch bright teenagers from low income families, to encourage them to raise their horizons and redouble their efforts."
Each year the Association honours an individual in Europe whose achievements are an extraordinary example of success in the hedge fund industry. In 2009, 100 Women in Hedge Funds awarded its European Industry Leadership Award to Mina Gerowin, Managing Director of Paulson Europe and a Partner of Paulson & Co.
"Mina is an exemplary leader at Paulson and in our industry at large," said Effie Datson, Chair of the Board of 100 Women in Hedge Funds. "We are honouring her in recognition of her professional talent, business ethics and demonstration of the kind of passion and dedication that define the hedge fund industry’s standard of excellence."
Ms. Gerowin specializes in European merger and event-driven investment, including directing European activist positions, distressed and restructuring investment and risk arbitrage of both debt and equity. At Paulson, she has led investments such as Stork and Ahold and runs some of the largest positions in their book. As evidence of how highly esteemed she is by her Paulson colleagues, many joined in honouring her at the Gala.
As this year’s theme for 100 Women in Hedge Funds philanthropic efforts globally is education, next month 100 Women in Hedge Funds will be hosting a New York City Gala on November 18th in aid of Computers for Youth.
This follows a spectacular event on 29th September attended by 250 guests from the hedge fund industry in Geneva and beyond in an 18th century mansion overlooking the lake of Geneva, where the 100 Women in Hedge Funds 2009 Geneva Charity Gala raised SFr135,000 ($130,000) for local education charity Association Païdos.
The combined sum of £332,000 ($533,000) raised for these two charities will make a material difference to their work. In the case of SHINE it should be sufficient to fund for an entire year two new SHINE on Saturday programmes, for which there is a queue of eligible, eager participants. For Païdos, it will be able to more than double the number of children accepted onto its "Getting Back into Learning" classroom project.
Sarah Brown, wife of the UK Prime Minister, and a SHINE Patron, said, "Hundreds of young people will benefit from your generosity. For example, children with special educational needs will receive specialised individual tuition to help develop their reading, writing and math skills. For children who are disengaged or simply underachieving, SHINE’s Saturday programmes enrich the school curriculum, making learning fresh, new and exciting. Other SHINE-funded programmes stretch bright teenagers from low income families, to encourage them to raise their horizons and redouble their efforts."
Each year the Association honours an individual in Europe whose achievements are an extraordinary example of success in the hedge fund industry. In 2009, 100 Women in Hedge Funds awarded its European Industry Leadership Award to Mina Gerowin, Managing Director of Paulson Europe and a Partner of Paulson & Co.
"Mina is an exemplary leader at Paulson and in our industry at large," said Effie Datson, Chair of the Board of 100 Women in Hedge Funds. "We are honouring her in recognition of her professional talent, business ethics and demonstration of the kind of passion and dedication that define the hedge fund industry’s standard of excellence."
Ms. Gerowin specializes in European merger and event-driven investment, including directing European activist positions, distressed and restructuring investment and risk arbitrage of both debt and equity. At Paulson, she has led investments such as Stork and Ahold and runs some of the largest positions in their book. As evidence of how highly esteemed she is by her Paulson colleagues, many joined in honouring her at the Gala.
As this year’s theme for 100 Women in Hedge Funds philanthropic efforts globally is education, next month 100 Women in Hedge Funds will be hosting a New York City Gala on November 18th in aid of Computers for Youth.
Credit Suisse/Tremont Hedge Fund Index Estimated to Finish Up +2.67% in September
HedgeCo Archive - Early estimates indicate the Credit Suisse/Tremont Hedge Fund Index (“Broad Index”) will finish up +2.67% in September (based on 65% of assets reporting).
Long/Short Equity and Emerging Markets managers experienced another positive month driven by equity market gains in September. At the end of the best quarter since 1998 for the Dow Jones Index, which had a gain of nearly 15%, market sentiment was bolstered by several positive macro indicators, such as an increase in the Global Purchasing Managers’ Index (PMI) that signaled expanding manufacturing output and pointed to a continuing stabilization of global economic activity. Inflation continued its moderate downward trend in the U.S. and in the Organization for Economic Co-operation and Development (OECD) countries, while central banks overall maintained low interest rates in the face of a weak recovery. Many equity indices finished in positive territory, although there were some late market corrections following reports of worse-than-expected U.S. home sales.
A number of Global Macro quantitative managers had a positive month, driven by long currency trades in the Yen and Euro and decreased FX volatility. Yield curves did not move significantly and therefore front end positions had relatively little impact on performance.
Credit-oriented managers in the Fixed Income Arbitrage and Event Driven sectors had a positive month, with performance coming from mortgage-related bonds, corporate bonds (especially financials), swap spread trades (which have been normalization trades focusing on the narrowing in the spread between LIBOR rates vs. Treasuries) and opportunities in government bond auctions.
Managed Futures also had another positive month, giving the strategy its third positive month for the year, as many trend followers’ models gained traction. Equity Market Neutral managers were also up in September. The value factor contributed positively to performance while factors such as momentum detracted from performance.
Long/Short Equity and Emerging Markets managers experienced another positive month driven by equity market gains in September. At the end of the best quarter since 1998 for the Dow Jones Index, which had a gain of nearly 15%, market sentiment was bolstered by several positive macro indicators, such as an increase in the Global Purchasing Managers’ Index (PMI) that signaled expanding manufacturing output and pointed to a continuing stabilization of global economic activity. Inflation continued its moderate downward trend in the U.S. and in the Organization for Economic Co-operation and Development (OECD) countries, while central banks overall maintained low interest rates in the face of a weak recovery. Many equity indices finished in positive territory, although there were some late market corrections following reports of worse-than-expected U.S. home sales.
A number of Global Macro quantitative managers had a positive month, driven by long currency trades in the Yen and Euro and decreased FX volatility. Yield curves did not move significantly and therefore front end positions had relatively little impact on performance.
Credit-oriented managers in the Fixed Income Arbitrage and Event Driven sectors had a positive month, with performance coming from mortgage-related bonds, corporate bonds (especially financials), swap spread trades (which have been normalization trades focusing on the narrowing in the spread between LIBOR rates vs. Treasuries) and opportunities in government bond auctions.
Managed Futures also had another positive month, giving the strategy its third positive month for the year, as many trend followers’ models gained traction. Equity Market Neutral managers were also up in September. The value factor contributed positively to performance while factors such as momentum detracted from performance.
8 Oct 2009
Preview of Brighton House Q3 Hedge Fund Research Report
The upcoming BHA Q3 report indicates that throughout the third quarter, over 37 percent of investors profiled cited a specific interest in event-driven hedge funds, primarily in the merger arbitrage and distressed fixed income areas.
During the third quarter, BHA noted a 20% increase in investors actively evaluating with the intention to invest in fund of hedge funds relative to Q2.
During the third quarter, BHA found that of those investors actively investing in private equity 18% were wealth advisors, 13% were government pension funds, and 15% were family offices and insurance companies. Nearly 50% of the private equity investors that were interviewed indicated that they were looking to speak with new venture capital managers.
The full report is due to be released on October 20th, 2009.
During the third quarter, BHA noted a 20% increase in investors actively evaluating with the intention to invest in fund of hedge funds relative to Q2.
During the third quarter, BHA found that of those investors actively investing in private equity 18% were wealth advisors, 13% were government pension funds, and 15% were family offices and insurance companies. Nearly 50% of the private equity investors that were interviewed indicated that they were looking to speak with new venture capital managers.
The full report is due to be released on October 20th, 2009.
Capstone Charity Event Raised Over $150,000
Capstone Global Markets First Annual Charity Day, with participation of the New Jersey Nets, was a success, raising over $150,000 for The Jasper Against Batten Fund.
Pictured from left: New Jersey Nets President Rod Thorn, CEO and Chief Risk Officer of Capstone Holdings Group L.L.C. Paul Britton, and New Jersey Nets General Manager Kiki Vandeweghe.
On October 1st, The First Annual Capstone Global Markets Charity Day supported research focused on finding a cure to Batten Disease, a rare but fatal neurodegenerative disorder affecting children. The boutique derivatives broker dealer donated 100% of its net commissions, for a total of $155,000, to The Jasper Against Batten Fund. This is the largest donation that the charitable organization has ever received. Jasper Duinstra is a 4-year old boy who was diagnosed with Batten Disease in March 2009, and has subsequently been experiencing seizures, deteriorating vision, limited vocabulary and paralysis in his legs.
Representatives of the New Jersey Nets who participated in the event included President Rod Thorn, General Manager (and former New York Knicks player) Kiki Vandeweghe, the New Jersey Nets dance team and the New Jersey Nets mascot.
Each was involved in thanking clients for their business and discussing the importance of the cause. The newly created annual event is part of the commitment from Capstone Global Markets to give back to the global community regardless of the macro financial environment. Every year, Capstone Global Markets will select specific charities to donate to, each with the common goal of helping children.
7 Oct 2009
Charles Schwab and Hedge Fund Founder Ken Fisher Recipients of Tiburon's Inaugural CEO Summit Awards
HedgeCo Archives - "Never yet done" practices - rather than 'best practices' - hold the key to break-out performance in the asset management industry, Ken Fisher, Founder and CEO of Fisher Investments, said in remarks prepared for more than 120 leading industry executives at Tiburon Strategic Advisors' CEO Summit XVII on October 7 at the Ritz Carlton Hotel in San Francisco.
Fisher will be honored along with Charles Schwab as recipients of Tiburon's Inaugural CEO Summit Awards, recognizing their contributions to "Focusing on Customer Needs" and "Challenging Conventional Wisdom."
"So-called 'best practices' aren't," Mr. Fisher said in his prepared remarks. "They are a fine way for a D-quality firm to become a B-quality firm. But in asset management, to become an A-quality firm you have to ban 'best practices' from your lexicon, think more in terms of innovation and challenging conventional wisdom by establishing practices that have never been done before."
Fisher is also the author of three New York Times best-sellers, including his current best-seller "How to Smell a Rat: The Five Signs of Financial Fraud" (Wiley, August 2009). For the past 25 years, he has also written Forbes' "Portfolio Strategy" column, making him the fourth longest-running columnist in the magazine's history.
Fisher will be honored along with Charles Schwab as recipients of Tiburon's Inaugural CEO Summit Awards, recognizing their contributions to "Focusing on Customer Needs" and "Challenging Conventional Wisdom."
"So-called 'best practices' aren't," Mr. Fisher said in his prepared remarks. "They are a fine way for a D-quality firm to become a B-quality firm. But in asset management, to become an A-quality firm you have to ban 'best practices' from your lexicon, think more in terms of innovation and challenging conventional wisdom by establishing practices that have never been done before."
Fisher is also the author of three New York Times best-sellers, including his current best-seller "How to Smell a Rat: The Five Signs of Financial Fraud" (Wiley, August 2009). For the past 25 years, he has also written Forbes' "Portfolio Strategy" column, making him the fourth longest-running columnist in the magazine's history.
6 Oct 2009
People Moves: Ms. Sandra Urie Appointed to 100 Women In Hedge Fund's Board
HedgeCo Archives - Ms. Sandra A. Urie has beein appointed to the board of 100 Women In Hedge Funds, further augmenting the organization’s network. Ms. Urie is the President and Chief Executive Officer of Cambridge Associates LLC, a global provider of independent investment advice and research to institutional investors and private clients.
Ms. Urie has held various positions at Cambridge Associates since 1985 and, before assuming the role as CEO, she served as the Chief Operating Officer and was responsible for directing the firm’s consulting practice. She is a member and vice-chair of the Investors’ Committee of the President’s Working Group on Financial Markets, which has worked to develop detailed guidelines that would define "best practices" for investors in private pools of capital in order to enhance investor protection and systemic risk safeguards. She currently serves on the Board of Advisors for the Yale School of Management, the Board of Overseers of the DeCordova Museum, and the Board of Visitors of the New England Baptist Hospital. In addition, she sits on the boards of The Plymouth Rock Company and Homesite Group Incorporated. She formerly served on the boards of Phillips Academy, Belmont Day School and Buckingham, Browne & Nichols School.
Before joining Cambridge Associates, Ms. Urie worked as a member of the faculty at Phillips Academy (Andover), where she taught Russian and served on the Admissions Office staff. She also served in the Phillips Academy development office where she was responsible for capital fund raising, and eventually she assumed the position of Associate Secretary of the Academy with responsibility for the school’s annual giving and alumni programs.
Anne Popkin, Chair of the Board of 100 Women in Hedge Funds and Principal, BlueCrest Capital, said, "We are pleased to welcome such a well-respected industry leader to our Board. We believe Sandra’s investment advisory experience coupled with her involvement in initiatives such as the President’s Working Group help us continue to represent, strengthen, and expand our investor member base."
Ms. Urie said, "I look forward to working with the Board to strengthen 100 Women in Hedge Funds’ initiatives on member education, professional development, and philanthropy."
Ms. Urie graduated from Stanford University and received a Master of Public and Private Management graduate degree from the Yale School of Organization and Management. Additionally, she holds the Chartered Financial Analyst designation.
Ms. Urie has held various positions at Cambridge Associates since 1985 and, before assuming the role as CEO, she served as the Chief Operating Officer and was responsible for directing the firm’s consulting practice. She is a member and vice-chair of the Investors’ Committee of the President’s Working Group on Financial Markets, which has worked to develop detailed guidelines that would define "best practices" for investors in private pools of capital in order to enhance investor protection and systemic risk safeguards. She currently serves on the Board of Advisors for the Yale School of Management, the Board of Overseers of the DeCordova Museum, and the Board of Visitors of the New England Baptist Hospital. In addition, she sits on the boards of The Plymouth Rock Company and Homesite Group Incorporated. She formerly served on the boards of Phillips Academy, Belmont Day School and Buckingham, Browne & Nichols School.
Before joining Cambridge Associates, Ms. Urie worked as a member of the faculty at Phillips Academy (Andover), where she taught Russian and served on the Admissions Office staff. She also served in the Phillips Academy development office where she was responsible for capital fund raising, and eventually she assumed the position of Associate Secretary of the Academy with responsibility for the school’s annual giving and alumni programs.
Anne Popkin, Chair of the Board of 100 Women in Hedge Funds and Principal, BlueCrest Capital, said, "We are pleased to welcome such a well-respected industry leader to our Board. We believe Sandra’s investment advisory experience coupled with her involvement in initiatives such as the President’s Working Group help us continue to represent, strengthen, and expand our investor member base."
Ms. Urie said, "I look forward to working with the Board to strengthen 100 Women in Hedge Funds’ initiatives on member education, professional development, and philanthropy."
Ms. Urie graduated from Stanford University and received a Master of Public and Private Management graduate degree from the Yale School of Organization and Management. Additionally, she holds the Chartered Financial Analyst designation.
FRM Seeds Asia Focused Hedge Fund
HedgeCo Archive - Global fund of hedge funds group, Financial Risk Management and its seeding arm, (FCA), has entered into a strategic relationship with an Asian hedge fund expected to launch at the beginning of December with between $50 and $75 million in assets under management.
The FoHF group will make a significant investment in the first fund to be launched by Isometric Capital Management, owned and managed by Sanjiv Bhatia, the former head of Deephaven Capital Management's Asia office. The fund is
The fund will use a fundamental research strategy to identify investment opportunities in Asian companies where it can identify a catalyst which will drive investment returns. The fund will invest predominantly in equities although positions will range across the capital structure.
"This deal reinforces the global nature of FCA's business and is the first investment we have made outside of the US and Europe." Neil Mason, CIO, FCA says, "Asia is an important focus in our manager research. Asian economies have shown their strength and there are numerous market inefficiencies that hedge funds can profit from. The industry has grown significantly in recent years and there are a number of high quality managers with interesting investment strategies.
Isometric is the third seeding deal announced by FCA in the past four months having previously agreed strategic relationships with JD Capital and WestSpring Advisors.
The FoHF group will make a significant investment in the first fund to be launched by Isometric Capital Management, owned and managed by Sanjiv Bhatia, the former head of Deephaven Capital Management's Asia office. The fund is
The fund will use a fundamental research strategy to identify investment opportunities in Asian companies where it can identify a catalyst which will drive investment returns. The fund will invest predominantly in equities although positions will range across the capital structure.
"This deal reinforces the global nature of FCA's business and is the first investment we have made outside of the US and Europe." Neil Mason, CIO, FCA says, "Asia is an important focus in our manager research. Asian economies have shown their strength and there are numerous market inefficiencies that hedge funds can profit from. The industry has grown significantly in recent years and there are a number of high quality managers with interesting investment strategies.
Isometric is the third seeding deal announced by FCA in the past four months having previously agreed strategic relationships with JD Capital and WestSpring Advisors.
5 Oct 2009
Fueling Growth: Outsourcing Solutions for Hedge Funds
HedgeCo Archive - A new whitepaper published by Pershing LLC, a BNY Mellon company, and Aite Group LLC examines critical hedge fund operations, entitled, Fueling Growth: Outsourcing Solutions for Hedge Funds, reports that an increase in client redemption requests is threatening the viability of even the most well-managed hedge funds.
Key findings from the whitepaper include:
* Choosing the Proper Outsourcing Model
* Smaller Hedge Funds Challenged by Resource Restrictions
* The Role of the Prime Broker
* Consider Disaster and Recovery Planning in Vendor Selection
"It is important for hedge funds to develop a thoughtful, long-term outsourcing strategy to ensure that its needs for support during various stages of the fund's lifecycle are closely aligned with its goals and objectives to serve investors well." Craig Messinger, managing director of Pershing Prime Services, said, "Employing this type of approach will enable hedge fund managers to focus on generating profitable returns for their clients and help them grow their businesses in a more productive manner."
To help hedge fund managers better understand business continuity and disaster recovery planning processes and principles, Pershing Prime Services, in collaboration with Eze Castle Integration and its colleagues across BNY Mellon, has developed a guidebook entitled, Establishing Business Continuity and Disaster Recovery Plans: A Hedge Fund Manager's Guide.
Key findings from the whitepaper include:
* Choosing the Proper Outsourcing Model
* Smaller Hedge Funds Challenged by Resource Restrictions
* The Role of the Prime Broker
* Consider Disaster and Recovery Planning in Vendor Selection
"It is important for hedge funds to develop a thoughtful, long-term outsourcing strategy to ensure that its needs for support during various stages of the fund's lifecycle are closely aligned with its goals and objectives to serve investors well." Craig Messinger, managing director of Pershing Prime Services, said, "Employing this type of approach will enable hedge fund managers to focus on generating profitable returns for their clients and help them grow their businesses in a more productive manner."
To help hedge fund managers better understand business continuity and disaster recovery planning processes and principles, Pershing Prime Services, in collaboration with Eze Castle Integration and its colleagues across BNY Mellon, has developed a guidebook entitled, Establishing Business Continuity and Disaster Recovery Plans: A Hedge Fund Manager's Guide.
Global Hedge Fund AUM Slip In First Half of 2009
HedgeCo Archive - There has been a continuing decline in global hedge fund industry AUM during the first half of 2009, slipping a further 8.5% during the first half of 2009 to reach a total figure of $1.67 trillion by July, according to the latest research conducted by HedgeFund Intelligence (HFI).
From a peak figure of almost $2.7 trillion reached during the first half of 2008, global hedge fund assets have now fallen by some 38%.
In the first half of this year, however, performance was generally robust, with a median return from hedge funds globally of over 5%. This implies that net redemptions from hedge funds were continuing at a fairly rapid rate between January and June – with as much as 15% of investor money being pulled from the industry during the first half, and the further overall decline only partially offset by positive performance.
Neil Wilson, editorial director at HedgeFund Intelligence, said “Following a period of strong performance during the third quarter and plenty of anecdotal evidence that the majority of funds have begun to see net inflows again, we would not be surprised to see industry assets rise from the midyear levels by at least 10% before the end of
2009.”
During the first half, the number of firms that run hedge fund assets of $1 billion or more went down from 395 in the first half of 2008 to 311 at the beginning of 2009 and now to 291 at the mid-year point. The combined assets of these ‘billion dollar club’ firms also shrank further – from $1.46 trillion in January to $1.37 trillion by July.
New York remains by some distance the top global centre for hedge funds. Though New York’s total number of billion dollar firms slipped a little, from 123 to 118, during the first half, its share of assets remained almost unchanged at nearly 47%.
London is still comfortably the second biggest centre, but its number of billion dollar firms dropped more steeply in the first half – from 65 to 55, as several UK-based firms slipped below the $1 billion mark. London’s share of the global billion dollar club’s total assets thus slipped from over 17% to under 15%.
Connecticut is still in third place, with a share of assets slightly up at nearly 10.5%. The figures for other global hedge fund centres were largely unchanged, with centres on the increase this year including Hong Kong and Singapore.
From a peak figure of almost $2.7 trillion reached during the first half of 2008, global hedge fund assets have now fallen by some 38%.
In the first half of this year, however, performance was generally robust, with a median return from hedge funds globally of over 5%. This implies that net redemptions from hedge funds were continuing at a fairly rapid rate between January and June – with as much as 15% of investor money being pulled from the industry during the first half, and the further overall decline only partially offset by positive performance.
Neil Wilson, editorial director at HedgeFund Intelligence, said “Following a period of strong performance during the third quarter and plenty of anecdotal evidence that the majority of funds have begun to see net inflows again, we would not be surprised to see industry assets rise from the midyear levels by at least 10% before the end of
2009.”
During the first half, the number of firms that run hedge fund assets of $1 billion or more went down from 395 in the first half of 2008 to 311 at the beginning of 2009 and now to 291 at the mid-year point. The combined assets of these ‘billion dollar club’ firms also shrank further – from $1.46 trillion in January to $1.37 trillion by July.
New York remains by some distance the top global centre for hedge funds. Though New York’s total number of billion dollar firms slipped a little, from 123 to 118, during the first half, its share of assets remained almost unchanged at nearly 47%.
London is still comfortably the second biggest centre, but its number of billion dollar firms dropped more steeply in the first half – from 65 to 55, as several UK-based firms slipped below the $1 billion mark. London’s share of the global billion dollar club’s total assets thus slipped from over 17% to under 15%.
Connecticut is still in third place, with a share of assets slightly up at nearly 10.5%. The figures for other global hedge fund centres were largely unchanged, with centres on the increase this year including Hong Kong and Singapore.
2 Oct 2009
Offshore Law Update: BVI Upgrades Annual Fund Returns Procedure
HedgeCo Archive - The British Virgin Islands Financial Services Commission this week announced a new electronic reporting system for filing annual fund returns, in a move which will facilitate its regulation and monitoring of the British Virgin Islands (“BVI”) funds industry while providing a significantly more efficient and secure environment for filing annual returns.
The new electronic reporting system supports submissions by segregated portfolio companies as well umbrella structures with improved formatting and the ability to save entries for later submission. The information obtained from the filing is consolidated and used for statistical purposes.
The deadline for filing is October 15, 2009 for the reporting period ending December 31, 2008, but any fund which has already submitted a hard copy of the return is not required to re-file. Rather, such funds may use the online application for the next reporting period ending December 31, 2009 whose filing deadline will be June 30, 2010.
Anyone requiring further information about the electronic filing system or annual returns which must be filed by BVI funds may contact Robert Briant, Managing Partner of Conyers Dill & Pearman’s BVI office.
The new electronic reporting system supports submissions by segregated portfolio companies as well umbrella structures with improved formatting and the ability to save entries for later submission. The information obtained from the filing is consolidated and used for statistical purposes.
The deadline for filing is October 15, 2009 for the reporting period ending December 31, 2008, but any fund which has already submitted a hard copy of the return is not required to re-file. Rather, such funds may use the online application for the next reporting period ending December 31, 2009 whose filing deadline will be June 30, 2010.
Anyone requiring further information about the electronic filing system or annual returns which must be filed by BVI funds may contact Robert Briant, Managing Partner of Conyers Dill & Pearman’s BVI office.
New Zealand Hedge Fund Partners Offshore Investors With Local Clean Tech Experts
HedgeCo Archive - A new hedge fund is offering to bridge the distance barrier between New Zealand and the rest of the world. Milestone Capital has established the Rutherford Innovation Fund to raise capital and back innovative companies which need financial assistance and business skills to commercialise their ideas on the international stage.
“The Rutherford Innovation Fund provides offshore investors with an experienced local co-investment partner to bridge the geographic gap to New Zealand as these companies are not on the radar of international investors,” Milestone Capital principal Kenji Steven says.
The Rutherford Innovation Fund sees the best opportunities for investment as being those that benefit from the massive changes being driven by the growth of Clean Tech – products, services and technologies that provide solutions to urgent global problems around energy, water, carbon and pollution.
The fund is named after Ernest Rutherford, the Kiwi who was the first person to split the atom and the father of modern nuclear physics. It’s a portfolio of private equity companies which include algae fuel manufacturer Aquaflow Bionomic Corporation, carbon sequestration firm Carbonscape and ‘top five’ international climate change website Celsias.
“The key limiting factor in New Zealand is capital. For private companies investment capital is scarce so there is attractive pricing and little competition for deals. The capital markets are also under-developed so approximately 80% of the top 200 New Zealand companies are private,” Steven says. The fund is targeting a capital raising of NZ$50 million over the next two years.
“The Rutherford Innovation Fund provides offshore investors with an experienced local co-investment partner to bridge the geographic gap to New Zealand as these companies are not on the radar of international investors,” Milestone Capital principal Kenji Steven says.
The Rutherford Innovation Fund sees the best opportunities for investment as being those that benefit from the massive changes being driven by the growth of Clean Tech – products, services and technologies that provide solutions to urgent global problems around energy, water, carbon and pollution.
The fund is named after Ernest Rutherford, the Kiwi who was the first person to split the atom and the father of modern nuclear physics. It’s a portfolio of private equity companies which include algae fuel manufacturer Aquaflow Bionomic Corporation, carbon sequestration firm Carbonscape and ‘top five’ international climate change website Celsias.
“The key limiting factor in New Zealand is capital. For private companies investment capital is scarce so there is attractive pricing and little competition for deals. The capital markets are also under-developed so approximately 80% of the top 200 New Zealand companies are private,” Steven says. The fund is targeting a capital raising of NZ$50 million over the next two years.
1 Oct 2009
Infiniti Capital's Hedge Fund Ranking Method
Hong Kong-based hedge funds of funds shop Infiniti Capital believes it has found a better way to quantitatively rank the risk adjusted returns of hedge funds than that used by traditional methods.
The new ranking method, called the Infiniti Single Fund Analysis (SFA) score, is included as a risk adjusted performance measure (RAPM) in Infiniti’s recently launched Infiniti Analytics Suite (IAS).
“We believe this method to be superior to most others in use." Infiniti chief investment officer and IAS project originator Peter Urbani says, "Infiniti Capital has been using this method for the past two years.”
The effectiveness of any such method, based purely on historical data, is in how well today’s ranking predicts what happens tomorrow or at some future out-of-sample period. In statistical speak this is known as the predictive power of the method.
The one major advantage of any quantitative method is that users can test its performance against all other known methods quickly and easily. In a recent study, the IAS development team did exactly that, comparing the performance of a portfolio built using the SFA total score as the objective to maximize versus three other widely used RAPMs.
This study showed that by using the SFA total score as an objective function, annual returns of up to 500 basis points (5%) per year higher than those using other traditional methods were achievable.
The database used was a common set of 36 hedge funds. Significantly, the returns achieved in 2008 were much higher than those for both the equally weighted portfolio and actual hedge fund of funds which generated average returns of -19% last year.
The ratio of the absolute realised risk adjusted returns, denoted as the Compound Annual Growth Rate (CAGR) over the absolute value of the peak to trough drawdown (downside risk), was also the best for the SFA portfolio.
“The predictive power of the SFA score comes from its innovative construction, proprietary weighting and ability to identify some of the non-linear effects common to hedge funds,” Urbani says.
Unlike traditional performance measures, the SFA score is both conditional on the time period being used and relative to a large reference data set of other hedge funds. Where other methods typically standardize everything back to a normal or Gaussian distribution, the IAS uses the best fitting distributions throughout. This has the effect of calibrating the range of scores more closely to real-world data.
Urbani stresses that the method is not perfect. “The SFA scores will not provide the best returns over each and every single time period, however, over any meaningful length of time they will tend to out-perform.”
He says, “We do not force people to use the SFA scores. This is a key point of differentiation between the IAS and other software packages. Just because we have a good idea doesn’t mean everyone should use it. That’s why this is an option in the IAS along with the ability to use just about any other known RAPM for optimisation purposes or to build your own.”
The new ranking method, called the Infiniti Single Fund Analysis (SFA) score, is included as a risk adjusted performance measure (RAPM) in Infiniti’s recently launched Infiniti Analytics Suite (IAS).
“We believe this method to be superior to most others in use." Infiniti chief investment officer and IAS project originator Peter Urbani says, "Infiniti Capital has been using this method for the past two years.”
The effectiveness of any such method, based purely on historical data, is in how well today’s ranking predicts what happens tomorrow or at some future out-of-sample period. In statistical speak this is known as the predictive power of the method.
The one major advantage of any quantitative method is that users can test its performance against all other known methods quickly and easily. In a recent study, the IAS development team did exactly that, comparing the performance of a portfolio built using the SFA total score as the objective to maximize versus three other widely used RAPMs.
This study showed that by using the SFA total score as an objective function, annual returns of up to 500 basis points (5%) per year higher than those using other traditional methods were achievable.
The database used was a common set of 36 hedge funds. Significantly, the returns achieved in 2008 were much higher than those for both the equally weighted portfolio and actual hedge fund of funds which generated average returns of -19% last year.
The ratio of the absolute realised risk adjusted returns, denoted as the Compound Annual Growth Rate (CAGR) over the absolute value of the peak to trough drawdown (downside risk), was also the best for the SFA portfolio.
“The predictive power of the SFA score comes from its innovative construction, proprietary weighting and ability to identify some of the non-linear effects common to hedge funds,” Urbani says.
Unlike traditional performance measures, the SFA score is both conditional on the time period being used and relative to a large reference data set of other hedge funds. Where other methods typically standardize everything back to a normal or Gaussian distribution, the IAS uses the best fitting distributions throughout. This has the effect of calibrating the range of scores more closely to real-world data.
Urbani stresses that the method is not perfect. “The SFA scores will not provide the best returns over each and every single time period, however, over any meaningful length of time they will tend to out-perform.”
He says, “We do not force people to use the SFA scores. This is a key point of differentiation between the IAS and other software packages. Just because we have a good idea doesn’t mean everyone should use it. That’s why this is an option in the IAS along with the ability to use just about any other known RAPM for optimisation purposes or to build your own.”
Former President Bill Clinton Honors Alternative Investor LeapFrog
In the Closing Plenary of the Clinton Global Initiative 2009, former President Bill Clinton featured LeapFrog Investments, which raised the world's first microinsurance fund.
"LeapFrog's team is widely recognized as having opened up a new frontier in microfinance and alternative investment." The former President noted, "The fund has raised $44 million from both private and public investors, towards an ultimate target of $100 million."
Before an audience of 1000 global leaders, President Clinton drew a direct link between the work of Nobel Laureate Muhammad Yunus to bring microcredit to millions of people, the 'Banker to the Poor,' and the work of LeapFrog as the global leader in microinsurance: "LeapFrog is quickly becoming the 'Insurer to the Poor'. Just like Yunus, [LeapFrog] is the first out of the gate, the first microinsurance fund in the world."
"For those 25 million clients, LeapFrog means the ability to leap out of poverty permanently." Dr. Andrew Kuper, President and Founder of LeapFrog said. "For our portfolio companies, LeapFrog means leaping to the next stage of growth and impact. For our investors, LeapFrog does mean the next frontier of microfinance and alternative investment."
Pierre Omidyar, Founder of EBay, immediately concurred with a post on Twitter, saying that it was "Great to see LeapFrog . . . recognized by President Clinton for work in microinsurance." The Omidyar Network is a lead investor in the fund, together with the European Investment Bank, FMO, Triodos, and Accion International.
LeapFrog's fund is now developing investment opportunities in key emerging markets such as India, Indonesia, the Philippines, South Africa, Ghana, and Kenya.
"LeapFrog's team is widely recognized as having opened up a new frontier in microfinance and alternative investment." The former President noted, "The fund has raised $44 million from both private and public investors, towards an ultimate target of $100 million."
Before an audience of 1000 global leaders, President Clinton drew a direct link between the work of Nobel Laureate Muhammad Yunus to bring microcredit to millions of people, the 'Banker to the Poor,' and the work of LeapFrog as the global leader in microinsurance: "LeapFrog is quickly becoming the 'Insurer to the Poor'. Just like Yunus, [LeapFrog] is the first out of the gate, the first microinsurance fund in the world."
"For those 25 million clients, LeapFrog means the ability to leap out of poverty permanently." Dr. Andrew Kuper, President and Founder of LeapFrog said. "For our portfolio companies, LeapFrog means leaping to the next stage of growth and impact. For our investors, LeapFrog does mean the next frontier of microfinance and alternative investment."
Pierre Omidyar, Founder of EBay, immediately concurred with a post on Twitter, saying that it was "Great to see LeapFrog . . . recognized by President Clinton for work in microinsurance." The Omidyar Network is a lead investor in the fund, together with the European Investment Bank, FMO, Triodos, and Accion International.
LeapFrog's fund is now developing investment opportunities in key emerging markets such as India, Indonesia, the Philippines, South Africa, Ghana, and Kenya.
Hedge Fund Manager Launches Fixed Income Frontier Fund
In a move that shows that product innovation is still alive and well, Silk Invest, an asset management firm regulated by the FSA, has just announced the launch of its new UCITS Luxembourg domiciled fund.
Focused on frontier markets, the new fund will be named The Silk Road Income Fund. Silk Invest also has previously launched equities hedge funds African Lions and Arab Falcons.
"The Silk Road markets are under-represented in investor’s portfolios. The timing of our launch is perfect for investors as it enables them to take advantage of the re-pricing of risk in these markets.”Daniel Broby, Chief Investment Officer of Silk Invest, said, "Recent history shows that the collective Silk Route countries have consistently grown GDP faster than developed economies."
As part of the fund development, Silk Invest conducted a survey of fixed income securities across the target regions, covering over 4,100 bonds and $480bn in total debt volumes. From this list the firm was able to filter out the most lucrative and liquid target asset universe, using a combination of credit and market-oriented stress tests.
"We aim to manage 60-80 holdings across 25 countries in the fund and are currently showing portfolio yields of over 16.5% with duration of 3.4 years." John Bates, Head of Fixed Income at Silk Invest, said.
Baldwin Berges, Director of Business Development at Silk Invest, noted “Despite tough market conditions, we are seeing strong investor appetite for fixed income in these frontier regions as investors seek reliable returns from a diversified pool of assets. With Daniel Broby’s longstanding investment management track record, John Bates’ experience as a credit analyst and Patrick Landi’s experience in origination, we have put together a formidable team of people, all with hands-on experience in frontier markets”
Focused on frontier markets, the new fund will be named The Silk Road Income Fund. Silk Invest also has previously launched equities hedge funds African Lions and Arab Falcons.
"The Silk Road markets are under-represented in investor’s portfolios. The timing of our launch is perfect for investors as it enables them to take advantage of the re-pricing of risk in these markets.”Daniel Broby, Chief Investment Officer of Silk Invest, said, "Recent history shows that the collective Silk Route countries have consistently grown GDP faster than developed economies."
As part of the fund development, Silk Invest conducted a survey of fixed income securities across the target regions, covering over 4,100 bonds and $480bn in total debt volumes. From this list the firm was able to filter out the most lucrative and liquid target asset universe, using a combination of credit and market-oriented stress tests.
"We aim to manage 60-80 holdings across 25 countries in the fund and are currently showing portfolio yields of over 16.5% with duration of 3.4 years." John Bates, Head of Fixed Income at Silk Invest, said.
Baldwin Berges, Director of Business Development at Silk Invest, noted “Despite tough market conditions, we are seeing strong investor appetite for fixed income in these frontier regions as investors seek reliable returns from a diversified pool of assets. With Daniel Broby’s longstanding investment management track record, John Bates’ experience as a credit analyst and Patrick Landi’s experience in origination, we have put together a formidable team of people, all with hands-on experience in frontier markets”
30 Sept 2009
Bookstaber To Speak At HedgeWorld As The Number of Hedge Funds Rise
Hedge fund manager Richard Bookstaber will be speaking at is year's HedgeWorld Fall Conference. He is the author of “A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Financial Innovation,” a book that pinpointed the market weaknesses that spun out of control to create today's financial crisis.
“A Demon of Our Own Design” ranked number one on Amazon in finance and was selected as a finalist for the prestigious Loeb Award. Bookstaber was named to this year's Conde Nast Portfolio list of top 25 technical innovators, joining the ranks of Steve Jobs, Jeff Bezos, Jeffrey Katzenberg and Eric Schmidt.
He has testified before the House and Senate, calling for greater transparency and improved regulation for Wall Street long before it was fashionable. BOOKSTABER recently worked at Bridgewater Associates, the world's largest hedge fund, and before that ran the Quantitative Equity Fund at FrontPoint Partners.
He was in charge of risk management at Moore Capital Management, another hedge fund with over $10 billion in assets. He served as the managing director in charge of firm-wide risk management at Salomon Brothers and was a member of Salomon's powerful Risk Management Committee. Bookstaber also spent ten years at Morgan Stanley, first designing and marketing derivative instruments, then as a proprietary trader, and concluding his tenure there as Morgan Stanley's first market risk manager. In addition to A Demon of Our Own Design (Wiley, 2007), he is the author of three other books and scores of articles on finance topics ranging from option theory to risk management. He has won the Graham and Dodd Scroll from the Financial Analysts Federation and the Roger F. Murray Award from the Institute for Quantitative Research in Finance for his research. Bookstaber has a Ph.D in Economics from M.I.T.
The conference is being held at the Metropolitan Club in New York on October 6th, 2009.
“A Demon of Our Own Design” ranked number one on Amazon in finance and was selected as a finalist for the prestigious Loeb Award. Bookstaber was named to this year's Conde Nast Portfolio list of top 25 technical innovators, joining the ranks of Steve Jobs, Jeff Bezos, Jeffrey Katzenberg and Eric Schmidt.
He has testified before the House and Senate, calling for greater transparency and improved regulation for Wall Street long before it was fashionable. BOOKSTABER recently worked at Bridgewater Associates, the world's largest hedge fund, and before that ran the Quantitative Equity Fund at FrontPoint Partners.
He was in charge of risk management at Moore Capital Management, another hedge fund with over $10 billion in assets. He served as the managing director in charge of firm-wide risk management at Salomon Brothers and was a member of Salomon's powerful Risk Management Committee. Bookstaber also spent ten years at Morgan Stanley, first designing and marketing derivative instruments, then as a proprietary trader, and concluding his tenure there as Morgan Stanley's first market risk manager. In addition to A Demon of Our Own Design (Wiley, 2007), he is the author of three other books and scores of articles on finance topics ranging from option theory to risk management. He has won the Graham and Dodd Scroll from the Financial Analysts Federation and the Roger F. Murray Award from the Institute for Quantitative Research in Finance for his research. Bookstaber has a Ph.D in Economics from M.I.T.
The conference is being held at the Metropolitan Club in New York on October 6th, 2009.
BNY Mellon/Dreyfus Launch Two Fund of Funds
The Dreyfus Corporation, part of BNY Mellon Asset Management, announced the introduction of the Dreyfus Satellite Alpha Fund and the Dreyfus Diversified Global Fund.
"Many individual investors are seeking a professionally managed solution that enables them to invest in non-traditional asset classes that have low correlations to traditional asset classes, especially in the wake of the recent financial crisis," said Phil Maisano, Vice Chairman and Chief Investment Officer for Dreyfus and Chief Investment Strategist for BNY Mellon Asset Management. "Dreyfus Satellite Alpha has been constructed within a 1940-Act platform to provide exposure to non-traditional asset classes such as commodities, currencies and real estate in addition to inflation-protected securities and global stocks and bonds.
"Dreyfus Diversified Global fund is distinctive among global funds; the underlying funds are managed by an array of BNY Mellon Asset Management affiliates with different points of view and investment philosophies which differentiate this fund from other global funds that only deliver a single viewpoint," Maisano said.
The Dreyfus Corporation, established in 1951 and headquartered in New York City, is one a leading asset management and distribution company, currently managing more than $400 billion in mutual funds and separately managed accounts.
BNY Mellon Asset Management is the umbrella organization for BNY Mellon's affiliated investment management firms and global distribution companies.
"Many individual investors are seeking a professionally managed solution that enables them to invest in non-traditional asset classes that have low correlations to traditional asset classes, especially in the wake of the recent financial crisis," said Phil Maisano, Vice Chairman and Chief Investment Officer for Dreyfus and Chief Investment Strategist for BNY Mellon Asset Management. "Dreyfus Satellite Alpha has been constructed within a 1940-Act platform to provide exposure to non-traditional asset classes such as commodities, currencies and real estate in addition to inflation-protected securities and global stocks and bonds.
"Dreyfus Diversified Global fund is distinctive among global funds; the underlying funds are managed by an array of BNY Mellon Asset Management affiliates with different points of view and investment philosophies which differentiate this fund from other global funds that only deliver a single viewpoint," Maisano said.
The Dreyfus Corporation, established in 1951 and headquartered in New York City, is one a leading asset management and distribution company, currently managing more than $400 billion in mutual funds and separately managed accounts.
BNY Mellon Asset Management is the umbrella organization for BNY Mellon's affiliated investment management firms and global distribution companies.
29 Sept 2009
Hedge Funds Team Up To Provide Investor Access To Prime Brokerage Platform
Hedge fund prime brokers Northern Trust and Merlin Securities have set up an agreement which enhances Merlin’s existing broker-dealer custody relationships with Goldman Sachs Execution and Clearing and J.P. Morgan Clearing Corp. Merlin’s clients now have easy access to all three providers through Merlin’s award-winning multi-prime reporting platform.
“In today’s market, managers and investors are seeking custodial solutions that reduce their counterparty risk and provide fully integrated, multi-custodian reporting analytics and risk data,” said Stephan Vermut, Founder and Managing Partner of Merlin. “Our agreement with Northern Trust addresses this need for our clients and grants seamless access to a bank custody provider with an unparalleled reputation for quality, safety and stability.”
“Northern Trust is delighted to add Merlin and its clients to our growing hedge fund custody and administration business – which now provides asset servicing for more than $90 billion in assets worldwide,” said Peter Cherecwich , Chief Operating Officer for Corporate and Institutional Services at Northern Trust. “Merlin’s technology, risk analytics, and multi-custody reporting capabilities are a strong complement to Northern Trust’s hedge fund services.”
As of June 30, 2009 , Northern Trust had assets under custody of US$3.2 trillion, and assets under investment management of $558.9 billion.
Merlin Securities has offices in New York and San Francisco and is a member of FINRA and SIPC. 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 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.
“In today’s market, managers and investors are seeking custodial solutions that reduce their counterparty risk and provide fully integrated, multi-custodian reporting analytics and risk data,” said Stephan Vermut, Founder and Managing Partner of Merlin. “Our agreement with Northern Trust addresses this need for our clients and grants seamless access to a bank custody provider with an unparalleled reputation for quality, safety and stability.”
“Northern Trust is delighted to add Merlin and its clients to our growing hedge fund custody and administration business – which now provides asset servicing for more than $90 billion in assets worldwide,” said Peter Cherecwich , Chief Operating Officer for Corporate and Institutional Services at Northern Trust. “Merlin’s technology, risk analytics, and multi-custody reporting capabilities are a strong complement to Northern Trust’s hedge fund services.”
As of June 30, 2009 , Northern Trust had assets under custody of US$3.2 trillion, and assets under investment management of $558.9 billion.
Merlin Securities has offices in New York and San Francisco and is a member of FINRA and SIPC. 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 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.
ALTSO’s 6th Annual Hedge Fund Rocktoberfest Draws Corporate Sponsors
New York (HedgeCo.net) - This year marks the sixth anniversary of A Leg To Stand On’s (ALTSO) annual benefit, Hedge Fund Rocktoberfest, which is fast becoming one of ALTSO's most successful fund raisers to date, with more corporate sponsors signing on than ever before.
As one of Wall Street’s most popular annual events, Hedge Fund Rocktoberfest features bands whose members work in the hedge fund and finance industry. All of the five bands scheduled to perform on the main stage at this year’s event are competing to raise the most for ALTSO; vying for the lead currently are JAM Partners and The Cause.
“I’m extremely grateful to everyone who has given to ALTSO,” says C. Mead Welles, co-founder of ALTSO and managing partner of New York hedge fund Octagon Asset Management. “What we do has such a big impact on these children’s lives and it costs so little to do so much.” ALTSO improves the lives of children with limb disabilities in emerging countries by providing free surgeries and prosthetic limbs.
The money raised from last year’s Hedge Fund Rocktoberfest helped ALTSO expand its efforts and clinics in India, Bangladesh, Haiti, Nepal, Nigeria, Colombia, and Ecuador. Revenue raised this year will go toward fulfilling ALTSO’s goal of helping level the playing field for 1,000 more children in 2010, bringing their total of children helped to nearly 6,000 in under eight years.
“The bands are working extra hard to bring in donations this year,” says Chris Heasman, a director and portfolio manager with Lazard Asset Management in New York who performs with The Subscribers, which has played at every Hedge Fund Rocktoberfest
since the event began and is scheduled to perform again this year. “Sure, Rocktoberfest is about having fun, but it’s more about raising money for ALTSO so they can continue their work with children in developing countries.”
Other long time supporters of the charity include Deutsche Bank, Credit Suisse, and Jacobs Asset Management, LLC.
As one of Wall Street’s most popular annual events, Hedge Fund Rocktoberfest features bands whose members work in the hedge fund and finance industry. All of the five bands scheduled to perform on the main stage at this year’s event are competing to raise the most for ALTSO; vying for the lead currently are JAM Partners and The Cause.
“I’m extremely grateful to everyone who has given to ALTSO,” says C. Mead Welles, co-founder of ALTSO and managing partner of New York hedge fund Octagon Asset Management. “What we do has such a big impact on these children’s lives and it costs so little to do so much.” ALTSO improves the lives of children with limb disabilities in emerging countries by providing free surgeries and prosthetic limbs.
The money raised from last year’s Hedge Fund Rocktoberfest helped ALTSO expand its efforts and clinics in India, Bangladesh, Haiti, Nepal, Nigeria, Colombia, and Ecuador. Revenue raised this year will go toward fulfilling ALTSO’s goal of helping level the playing field for 1,000 more children in 2010, bringing their total of children helped to nearly 6,000 in under eight years.
“The bands are working extra hard to bring in donations this year,” says Chris Heasman, a director and portfolio manager with Lazard Asset Management in New York who performs with The Subscribers, which has played at every Hedge Fund Rocktoberfest
since the event began and is scheduled to perform again this year. “Sure, Rocktoberfest is about having fun, but it’s more about raising money for ALTSO so they can continue their work with children in developing countries.”
Other long time supporters of the charity include Deutsche Bank, Credit Suisse, and Jacobs Asset Management, LLC.
28 Sept 2009
Suzanne Sunshine Goes Solo With Brokerage For Nonprofits
New York reak estate broker Suzanne Sunshine has left the world of global brokerages to launch Sunshine & Associates LLC. The full-service brokerage handles office, retail, industrial leasing, acquisitions and sales exclusively for nonprofits. The firm also provides strategic planning and financial analysis.
Operating a boutique brokerage also provides her with the financial flexibility to donate a portion of her commissions back to her clients, a corporate practice considered unique in the commercial real estate world.
"To be able to achieve its mission, a nonprofit organization must make the right decisions about real estate," said Ms. Sunshine, the firm's president. "Nonprofits benefit from the counsel of an experienced professional who understands their mission and can also maximize the value of their real estate, a major item on their balance sheets."
The company also offers residential real estate services for nonprofit staff, volunteers and board members.
Suzanne Sunshine previously served as vice president of the New York nonprofit practice group at CB Richard Ellis. Prior to that, she was director of the New York nonprofit advisory group at Cushman & Wakefield. Ms. Sunshine also provided tenant representation services to nonprofit organizations at Time Equities, and worked as executive vice president for new business development at the Sunshine Group, a company led by her mother, Louise Sunshine.
Ms. Sunshine worked within the nonprofit sector on behalf of Equitable Real Estate and the Local Initiatives Support Corporation, where she helped the two organizations raise a total of $125 million in support of inner-city neighborhoods.
Her clients have included the American Ballet Theatre, the Andrew Mellon Foundation, the Ms. Foundation for Women Poets & Writers, the Correctional Association of New York, Housing Works Thrift Shops, the Mental Health Association of NY, the Anne Frank Center, and many others.
Ms. Sunshine holds a bachelor's degree in international relations from Brown University and an MBA in real estate from Columbia University.
For more information about S. Sunshine & Associates, please visit the brokerage online at: www.sunshineassoc.com.
Operating a boutique brokerage also provides her with the financial flexibility to donate a portion of her commissions back to her clients, a corporate practice considered unique in the commercial real estate world.
"To be able to achieve its mission, a nonprofit organization must make the right decisions about real estate," said Ms. Sunshine, the firm's president. "Nonprofits benefit from the counsel of an experienced professional who understands their mission and can also maximize the value of their real estate, a major item on their balance sheets."
The company also offers residential real estate services for nonprofit staff, volunteers and board members.
Suzanne Sunshine previously served as vice president of the New York nonprofit practice group at CB Richard Ellis. Prior to that, she was director of the New York nonprofit advisory group at Cushman & Wakefield. Ms. Sunshine also provided tenant representation services to nonprofit organizations at Time Equities, and worked as executive vice president for new business development at the Sunshine Group, a company led by her mother, Louise Sunshine.
Ms. Sunshine worked within the nonprofit sector on behalf of Equitable Real Estate and the Local Initiatives Support Corporation, where she helped the two organizations raise a total of $125 million in support of inner-city neighborhoods.
Her clients have included the American Ballet Theatre, the Andrew Mellon Foundation, the Ms. Foundation for Women Poets & Writers, the Correctional Association of New York, Housing Works Thrift Shops, the Mental Health Association of NY, the Anne Frank Center, and many others.
Ms. Sunshine holds a bachelor's degree in international relations from Brown University and an MBA in real estate from Columbia University.
For more information about S. Sunshine & Associates, please visit the brokerage online at: www.sunshineassoc.com.
Holon Fund Gains 1.86% in August, 25.25% YTD
Hedge fund manager Quantum Global Financial Corp. (QGF) reports a 1.86% gain in August for its Holon Fund, bringing the year-to-date return to 25.25% and the rolling 12-month return to 29.18%.
For the same 12 months, the CSFB Managed Futures Index gained 2.45% (correlation -.093) and the Barclay Multi Strategy Hedge Fund index gained 0.05% (correlation .202). Negative or low correlations demonstrate Holon fund’s diversification properties.
The Holon Fund employs proprietary forecasting technology with automated order entry that performed over 7000 market operations over the last 14 months. Using a low average leverage ratio of 1.5, QGF has returned 54.65% since its inception, after commissions and fees.
The development of their own quantitative analysis technology has allowed QGF to deliver absolute performance over the economic cycle, the company said. QGF believes that transparency, liquidity and forming partnerships based upon ethical compliance and global sustainability are essential to the fund’s growth.
For the same 12 months, the CSFB Managed Futures Index gained 2.45% (correlation -.093) and the Barclay Multi Strategy Hedge Fund index gained 0.05% (correlation .202). Negative or low correlations demonstrate Holon fund’s diversification properties.
The Holon Fund employs proprietary forecasting technology with automated order entry that performed over 7000 market operations over the last 14 months. Using a low average leverage ratio of 1.5, QGF has returned 54.65% since its inception, after commissions and fees.
The development of their own quantitative analysis technology has allowed QGF to deliver absolute performance over the economic cycle, the company said. QGF believes that transparency, liquidity and forming partnerships based upon ethical compliance and global sustainability are essential to the fund’s growth.
'Insights for Investors' Conference Draws Hedge Fund Managers
The GlobeOp seminar drew a capacity audience of hedge fund investors and managers, representing approximately $260 billion in assets under management, in New York City over the weekend.
Speakers representing Lighthouse Investment Partners, Lyxor Asset Management, Waterstone Capital Management, Bracewell & Giuliani, Newedge Group and GlobeOp offered insights on hedge fund manager selection, legal requirements, middle-back office services, controls and monitoring.
Excepts from the presentations include:
Sean McGould, president and co-chief investment officer, Lighthouse Partners “We transitioned to managed accounts over the last five years for the added benefits of transparency, flexibility, and control. Full transparency allows for a deeper focus than has traditionally been the case, especially during the manager selection process. For prospective managers, there are three primary considerations. First, does the manager offer real diversification or do they merely compound existing risks? This can only be accurately measured by layering a prospect’s daily position level data into the portfolio and conducting a deep statistical analysis. Second, is the portfolio highly correlated to the most widely held names or other dominant themes within the hedge fund universe? Having the ability to confirm the uniqueness of a prospect’s portfolio is of great benefit and increases the level of overall diversification. Finally, if the manager meets these tests, is there a willingness to commit the resources necessary to make a managed account feasible and the on-boarding process as seamless as possible? …Flexibility is key to remaining opportunistic and taking advantage of market dislocations. …The benefit of control speaks for itself after a year like 2008.
Nathanael Benzaken, managing director, Lyxor Asset Management “The two main risks for investors are market risk and operations risk - one to manage and the other to mitigate… The challenge with transparency is how to exploit it. To understand risk, investors need robust software, experienced risk managers, and an appropriate risk methodology. Only scenario and stress test models can help assess tail risk in dislocated markets. VaR is not appropriate, unless perhaps for manager-level portfolio construction… The managed account’s segregation facilitates operational risk management. This is the most important risk to eliminate because it creates a short put equivalent position for investors - it’s the ‘dark side’…. All managed accounts and platforms are not equal. Some are ‘Madoff-able;’ some are ‘Amaranth-able.’ For full transparency and to identify risk and/or style drift early, in-depth and regular due diligence should be done on the underlying managers, the platform structure and infrastructure - at inception and throughout the life of the relationships.
Risk monitoring is nothing, what really matters is risk management. The goal is not to second- guess or intervene in portfolio management, but to understand and take clear action when it’s necessary - for instance in the case of mitigating counterparty risk or when confidence in the manager is lost (e.g. breach of mandate).”
Martin Kalish, chief operating officer, chief financial officer, Waterstone Capital Management “Managed accounts are not for everyone - does it fit your business plan? The manager seeks a long-term investor; the investor requires assurance of the manager’s experience in running a managed account. Consider whether the investor will understand and be responsible for the portfolio information they receive — is more support time needed than for other fund investors? …The mandate is also key - its definitions can significantly impact asset allocation, concentrations, leverage, liquidity, operations and risk management compared to the flagship fund.
Cost and resources also matter. Managed accounts are about data management. Operational systems are needed to create reporting transparency. Is there sufficient operational staff for trade allocation, valuation and settlement, portfolio accounting and programming? …It’s very difficult to run multiple funds without investing in technology. Trade allocations should be automated to mitigate manual intervention. … Investors also need resources to execute managed accounts - it requires two-three months, including the key challenges of the legal aspects and establishing prime broker accounts.”
John Brunjes, partner, Bracewell & Giuliani “The structure and terms an investor prefers in the managed account involve a fully-negotiated process. For the investment advisor, a managed account is a separate client under the Investment Advisors act. At the level of 15 clients, the advisor must become SEC-registered and operate in a registered environment - a new challenge for some. For the investor, the arrangement gives power of attorney to the manager to trade the account, subject to restrictions the investor defines. It is a fee-for-service arrangement as opposed to the two-and-twenty structure traditional in pooled capital. Many investors, in consultation with their managers, create a special purpose vehicle, usually a limited liability company. To avoid project execution risk, investors should ensure the manager has already strategically decided to undertake managed account arrangements and is prepared for what it entails.
The mandate or operating agreement defines the type of trading authorisations and restrictions governing the manager, including sector, concentrations or company specifics. As the direct owner of the securities, the investor also assumes liability and compliance responsibilities.
Investors increasingly specify independent administrators to provide checks and balances on managers, including asset and portfolio valuation, daily position and risk reporting, etc. The registered environment also stipulates administrative, infrastructure and reporting requirements. Independent involvement in providing transparency, checks and balances to various managed account components can offer more comfort to investors, which is why these vehicles are increasingly attractive.”
Cary Goldstein, associate director, Newedge USA, Prime Brokerage Group “A managed account platform will have more than one hedge fund manager trading for multiple vehicles, multiple prime broker relationships and a single administrator across all accounts. From a trading perspective, the most significant implication for each fund manager is the need for a trade allocation process to split trades appropriately between the managed accounts and the flagship fund. For liquid, listed instruments, this is fairly straight-forward. But it can be more complex for OTC and illiquid instruments - distinct trades may be needed for each managed account and flagship fund, with good monitoring to mitigate tracking errors… In a managed account, investors view the ability to control of the amount of leverage utilised to be an advantage.”
Vernon Barback, president, chief operating officer, GlobeOp Financial Services “Administration for managed accounts should focus on what the investor wants and needs. Best practice requires a very deep level of service. Helping the investor manage and mitigate risk across all portfolios is key; reducing overall operational risk is the greatest value-add. The investor should approach the administrator in a demanding and thoughtful manner, as a partner who helps to mitigate operational risks and provide transparency so the investor can ensure that the manager is adhering to the agreed investment principles.
Due diligence is not a “tick the box” exercise. Rather, it needs to be an ongoing and in-depth process. There are seven administration areas where an investor should conduct deep due diligence. Is technology a source of innovation and target of continuous investment? Are processes subject to a control environment and is real-time transparency accessible to investors and administrator management? Is domain experience and scale being developed in the human resource pool? Visit off-shore teams and operations to ensure they are integral and adding value to operations. Ask for a personal presentation of the SAS 70 to ensure it is a single document whose scope covers all services & controls the managed account requires, in all offices. Reconciliations should be run daily, with breaks corrected with the manager, and root causes should be investigated to prevent repetition. As the devil is in the detail of the security master, verify that customized risk reports can be run by the administration organization keeping the managed account’s books & records.”
Speakers representing Lighthouse Investment Partners, Lyxor Asset Management, Waterstone Capital Management, Bracewell & Giuliani, Newedge Group and GlobeOp offered insights on hedge fund manager selection, legal requirements, middle-back office services, controls and monitoring.
Excepts from the presentations include:
Sean McGould, president and co-chief investment officer, Lighthouse Partners “We transitioned to managed accounts over the last five years for the added benefits of transparency, flexibility, and control. Full transparency allows for a deeper focus than has traditionally been the case, especially during the manager selection process. For prospective managers, there are three primary considerations. First, does the manager offer real diversification or do they merely compound existing risks? This can only be accurately measured by layering a prospect’s daily position level data into the portfolio and conducting a deep statistical analysis. Second, is the portfolio highly correlated to the most widely held names or other dominant themes within the hedge fund universe? Having the ability to confirm the uniqueness of a prospect’s portfolio is of great benefit and increases the level of overall diversification. Finally, if the manager meets these tests, is there a willingness to commit the resources necessary to make a managed account feasible and the on-boarding process as seamless as possible? …Flexibility is key to remaining opportunistic and taking advantage of market dislocations. …The benefit of control speaks for itself after a year like 2008.
Nathanael Benzaken, managing director, Lyxor Asset Management “The two main risks for investors are market risk and operations risk - one to manage and the other to mitigate… The challenge with transparency is how to exploit it. To understand risk, investors need robust software, experienced risk managers, and an appropriate risk methodology. Only scenario and stress test models can help assess tail risk in dislocated markets. VaR is not appropriate, unless perhaps for manager-level portfolio construction… The managed account’s segregation facilitates operational risk management. This is the most important risk to eliminate because it creates a short put equivalent position for investors - it’s the ‘dark side’…. All managed accounts and platforms are not equal. Some are ‘Madoff-able;’ some are ‘Amaranth-able.’ For full transparency and to identify risk and/or style drift early, in-depth and regular due diligence should be done on the underlying managers, the platform structure and infrastructure - at inception and throughout the life of the relationships.
Risk monitoring is nothing, what really matters is risk management. The goal is not to second- guess or intervene in portfolio management, but to understand and take clear action when it’s necessary - for instance in the case of mitigating counterparty risk or when confidence in the manager is lost (e.g. breach of mandate).”
Martin Kalish, chief operating officer, chief financial officer, Waterstone Capital Management “Managed accounts are not for everyone - does it fit your business plan? The manager seeks a long-term investor; the investor requires assurance of the manager’s experience in running a managed account. Consider whether the investor will understand and be responsible for the portfolio information they receive — is more support time needed than for other fund investors? …The mandate is also key - its definitions can significantly impact asset allocation, concentrations, leverage, liquidity, operations and risk management compared to the flagship fund.
Cost and resources also matter. Managed accounts are about data management. Operational systems are needed to create reporting transparency. Is there sufficient operational staff for trade allocation, valuation and settlement, portfolio accounting and programming? …It’s very difficult to run multiple funds without investing in technology. Trade allocations should be automated to mitigate manual intervention. … Investors also need resources to execute managed accounts - it requires two-three months, including the key challenges of the legal aspects and establishing prime broker accounts.”
John Brunjes, partner, Bracewell & Giuliani “The structure and terms an investor prefers in the managed account involve a fully-negotiated process. For the investment advisor, a managed account is a separate client under the Investment Advisors act. At the level of 15 clients, the advisor must become SEC-registered and operate in a registered environment - a new challenge for some. For the investor, the arrangement gives power of attorney to the manager to trade the account, subject to restrictions the investor defines. It is a fee-for-service arrangement as opposed to the two-and-twenty structure traditional in pooled capital. Many investors, in consultation with their managers, create a special purpose vehicle, usually a limited liability company. To avoid project execution risk, investors should ensure the manager has already strategically decided to undertake managed account arrangements and is prepared for what it entails.
The mandate or operating agreement defines the type of trading authorisations and restrictions governing the manager, including sector, concentrations or company specifics. As the direct owner of the securities, the investor also assumes liability and compliance responsibilities.
Investors increasingly specify independent administrators to provide checks and balances on managers, including asset and portfolio valuation, daily position and risk reporting, etc. The registered environment also stipulates administrative, infrastructure and reporting requirements. Independent involvement in providing transparency, checks and balances to various managed account components can offer more comfort to investors, which is why these vehicles are increasingly attractive.”
Cary Goldstein, associate director, Newedge USA, Prime Brokerage Group “A managed account platform will have more than one hedge fund manager trading for multiple vehicles, multiple prime broker relationships and a single administrator across all accounts. From a trading perspective, the most significant implication for each fund manager is the need for a trade allocation process to split trades appropriately between the managed accounts and the flagship fund. For liquid, listed instruments, this is fairly straight-forward. But it can be more complex for OTC and illiquid instruments - distinct trades may be needed for each managed account and flagship fund, with good monitoring to mitigate tracking errors… In a managed account, investors view the ability to control of the amount of leverage utilised to be an advantage.”
Vernon Barback, president, chief operating officer, GlobeOp Financial Services “Administration for managed accounts should focus on what the investor wants and needs. Best practice requires a very deep level of service. Helping the investor manage and mitigate risk across all portfolios is key; reducing overall operational risk is the greatest value-add. The investor should approach the administrator in a demanding and thoughtful manner, as a partner who helps to mitigate operational risks and provide transparency so the investor can ensure that the manager is adhering to the agreed investment principles.
Due diligence is not a “tick the box” exercise. Rather, it needs to be an ongoing and in-depth process. There are seven administration areas where an investor should conduct deep due diligence. Is technology a source of innovation and target of continuous investment? Are processes subject to a control environment and is real-time transparency accessible to investors and administrator management? Is domain experience and scale being developed in the human resource pool? Visit off-shore teams and operations to ensure they are integral and adding value to operations. Ask for a personal presentation of the SAS 70 to ensure it is a single document whose scope covers all services & controls the managed account requires, in all offices. Reconciliations should be run daily, with breaks corrected with the manager, and root causes should be investigated to prevent repetition. As the devil is in the detail of the security master, verify that customized risk reports can be run by the administration organization keeping the managed account’s books & records.”
25 Sept 2009
People Moves: G&S Fund Services Grows with Additional Key Personnel
Hedge fund administration company, G&S Fund Services has expanded with the hire of Kairey Chen as hedge fund accountant.
Kairey Chen will be a valued addition to help support the rapid growth that G&S is experiencing. "Joe Goldstein, Executive Vice President of G&S Services, said.
Chen came to G&S after serving as an auditor with Ernst & Young and has 7 years experience. Her education includes a Bachelor of Science from Fordham University, where she majored in accounting.
US domiciled, G&S Fund Services is a leader in hedge fund administration, accounting and tax services. Catering to firms of all sizes, both on and off-shore, G&S provides professional fund servicing, designed to fit the specific and growing needs of the hedge fund industry.
Kairey Chen will be a valued addition to help support the rapid growth that G&S is experiencing. "Joe Goldstein, Executive Vice President of G&S Services, said.
Chen came to G&S after serving as an auditor with Ernst & Young and has 7 years experience. Her education includes a Bachelor of Science from Fordham University, where she majored in accounting.
US domiciled, G&S Fund Services is a leader in hedge fund administration, accounting and tax services. Catering to firms of all sizes, both on and off-shore, G&S provides professional fund servicing, designed to fit the specific and growing needs of the hedge fund industry.
Man Research Laboratory and Oxford-Man Institute of Quantitative Finance Expansion
Man Research Laboratory (MRL) and the Oxford-Man Institute of Quantitative Finance (OMI) opened new, larger premises in Jericho, Oxford, on 24 September, demonstrating that the two groups’ unique collaboration is flourishing as it moves into its third year.
In a ceremony held in Oxford, The Chancellor of Oxford University, Lord Patten of Barnes announced the official opening of new offices for the MRL and the OMI. At the new offices, AHL’s researchers and the Oxford University academics of the OMI will continue to share purpose designed premises, creating a stimulating environment that fosters day-to-day interactions between the two groups.
AHL is one of world’s largest managed futures managers and a wholly owned subsidiary of Man Group. Its two decade track record of consistent double digit gains for investors is based on an unstinting dedication to research.
The University of Oxford and Man Group were brought together in 2007 when Man provided the cornerstone funding for the first academic institute dedicated to quantitative finance and co-located it with its own commercial researchers. AHL’s research in Oxford is a commercial undertaking while the OMI pursues academic excellence, independent of Man. This arrangement remains the first and only co-location of its kind between Oxford University and a commercial entity.
“AHL is already trading billions of dollars using advanced trading concepts developed at AHL in Oxford,” said Dr Anthony Ledford, Chief Scientist of the MRL. “The collaboration benefits us enormously and allows us to hear about OMI’s academic theories first and share ideas with some of the world’s best quantitative finance academics; promote our name as an exciting and innovative employer within Oxford’s academic community and research our own ideas in a stimulating environment,” he added.
In a ceremony held in Oxford, The Chancellor of Oxford University, Lord Patten of Barnes announced the official opening of new offices for the MRL and the OMI. At the new offices, AHL’s researchers and the Oxford University academics of the OMI will continue to share purpose designed premises, creating a stimulating environment that fosters day-to-day interactions between the two groups.
AHL is one of world’s largest managed futures managers and a wholly owned subsidiary of Man Group. Its two decade track record of consistent double digit gains for investors is based on an unstinting dedication to research.
The University of Oxford and Man Group were brought together in 2007 when Man provided the cornerstone funding for the first academic institute dedicated to quantitative finance and co-located it with its own commercial researchers. AHL’s research in Oxford is a commercial undertaking while the OMI pursues academic excellence, independent of Man. This arrangement remains the first and only co-location of its kind between Oxford University and a commercial entity.
“AHL is already trading billions of dollars using advanced trading concepts developed at AHL in Oxford,” said Dr Anthony Ledford, Chief Scientist of the MRL. “The collaboration benefits us enormously and allows us to hear about OMI’s academic theories first and share ideas with some of the world’s best quantitative finance academics; promote our name as an exciting and innovative employer within Oxford’s academic community and research our own ideas in a stimulating environment,” he added.
24 Sept 2009
Prime Brokerage Services Division Launch For Hedge Funds and Investment Advisers
TradeStation Securities, Inc., has launched the TradeStation Prime Services division to fill the growing need of start-up to mid-sized hedge funds, the company said today.
TradeStation Prime Services will be co-headed by Lance Baraker and William Katts, as senior managing directors, from a new TradeStation office in mid-town Manhattan, TradeStation will also now have a full membership and direct access operation on the floor of the New York Stock Exchange to accommodate clients who make some of their trades on the NYSE floor.
"We believe that our award-winning trading platform technology, ability to provide custody and clearing, and the strength of our balance sheet will give us a strong offering to the small- to mid-sized hedge funds and investment advisers who need services no longer being provided by the larger firms," said Salomon Sredni, CEO of TradeStation Group. "This is a market opportunity for TradeStation that did not really exist until recently, and we look forward to maximizing the value we believe we can create by entering this segment of the institutional trader space."
"We are extremely excited about joining TradeStation," added Baraker. "The downfall of many financial firms in 2008 has created a rare opportunity for another custodian to enter and succeed in the prime brokerage market. William and I look forward to combining our experience and relationships built over the years with TradeStation's industry-leading technology to create a leading, powerful prime brokerage platform for the buy-side institutional trader."
TradeStation Prime Services will be co-headed by Lance Baraker and William Katts, as senior managing directors, from a new TradeStation office in mid-town Manhattan, TradeStation will also now have a full membership and direct access operation on the floor of the New York Stock Exchange to accommodate clients who make some of their trades on the NYSE floor.
"We believe that our award-winning trading platform technology, ability to provide custody and clearing, and the strength of our balance sheet will give us a strong offering to the small- to mid-sized hedge funds and investment advisers who need services no longer being provided by the larger firms," said Salomon Sredni, CEO of TradeStation Group. "This is a market opportunity for TradeStation that did not really exist until recently, and we look forward to maximizing the value we believe we can create by entering this segment of the institutional trader space."
"We are extremely excited about joining TradeStation," added Baraker. "The downfall of many financial firms in 2008 has created a rare opportunity for another custodian to enter and succeed in the prime brokerage market. William and I look forward to combining our experience and relationships built over the years with TradeStation's industry-leading technology to create a leading, powerful prime brokerage platform for the buy-side institutional trader."
Equity Market Neutral Strategy May Act as a Diversifier Across Market Cycles
Credit Suisse’s Quantitative Equities Group released a new whitepaper, “Equity Market Neutral: Diversifier Across Market Cycles,” outlining the potential benefits of an Equity Market Neutral strategy. The paper details the various types of Equity Market Neutral funds as well as the traits which have historically helped the best managers stand out.
Equity Market Neutral (EMN) funds have been generally successful in profiting from a variety of environments and have provided an effective counterbalance in diversified portfolios during periods of market volatility, such as following the Lehman Brothers bankruptcy in September 2008. The findings of the paper suggest that:
EMN is a potential diversifier given the low beta it showed to the 2008 equity markets in what was a historically volatile year
EMN has lower annualized volatility than other hedge fund strategies over the long term and has provided generally positive risk-adjusted returns over the last ten years
After the significant market dislocation experienced by quantitatively managed funds in August 2007, many managers increased the range of data used, including building proprietary data and risk models, in an effort to try to mitigate the effects of a future mass deleveraging event
In order to achieve diversification within the strategy, investors should seek managers who work with a range of uncorrelated factors and proprietary models in order to avoid crowded trades. This diversification of factors and models was a key element in the strategy’s ability to weather market volatility in 2008 and will likely remain the cornerstone of alpha generation for the strategy going forward in the near term
EMN managers see the post-Lehman landscape as opportunity-rich for the strategy because there is less capital being deployed as well as less competition in program and high-frequency trading.
Equity Market Neutral (EMN) funds have been generally successful in profiting from a variety of environments and have provided an effective counterbalance in diversified portfolios during periods of market volatility, such as following the Lehman Brothers bankruptcy in September 2008. The findings of the paper suggest that:
EMN is a potential diversifier given the low beta it showed to the 2008 equity markets in what was a historically volatile year
EMN has lower annualized volatility than other hedge fund strategies over the long term and has provided generally positive risk-adjusted returns over the last ten years
After the significant market dislocation experienced by quantitatively managed funds in August 2007, many managers increased the range of data used, including building proprietary data and risk models, in an effort to try to mitigate the effects of a future mass deleveraging event
In order to achieve diversification within the strategy, investors should seek managers who work with a range of uncorrelated factors and proprietary models in order to avoid crowded trades. This diversification of factors and models was a key element in the strategy’s ability to weather market volatility in 2008 and will likely remain the cornerstone of alpha generation for the strategy going forward in the near term
EMN managers see the post-Lehman landscape as opportunity-rich for the strategy because there is less capital being deployed as well as less competition in program and high-frequency trading.
23 Sept 2009
New Jersey Nets to Join Charity Event
The First Annual Capstone Global Markets Charity Day will support research focused on finding a cure to Batten Disease, a rare but fatal neurodegenerative disorder affecting children, October 1st, 2009.
The boutique derivatives broker dealer has committed to donating 100% of its net commissions that day to The Jasper Against Batten Fund. Jasper Duinstra is a 4-year old boy who was diagnosed with Batten Disease in March 2009, and has subsequently been experiencing seizures, deteriorating vision, limited vocabulary and paralysis in his legs.
After the urgency of finding a cure for Batten Disease was brought to the attention of representatives of The New Jersey Nets, the basketball team committed to joining Capstone Global Markets on October 1st to raise money for the cause.
The New Jersey Nets’ involvement at the fundraiser will be highlighted by the participation of Nets president Rod Thorn, general manager (and former New York Knicks player) Kiki Vandeweghe, the Nets dance team and the Nets mascot. Each will be involved in thanking clients for their business and discussing the importance of the cause.
“We created this event to bring public awareness of this devastating disease and the urgency of Jasper’s need for support,” said Paul Britton, CEO of Capstone Holdings Group, LLC. “We are pleased with the enthusiasm from our clients to join us in this mission to help Jasper and other children affected by Batten Disease. Capstone Global Markets is committed to helping charities dedicated to helping children.”
The newly created annual event is part of Capstone’s commitment to giving back to the global community regardless of the macro financial environment. Every year the hedge fund will select specific charities to donate to, each with the common goal of helping children.
Capstone Global Markets, LLC is an affiliate of Capstone Holdings Group, LLC. Capstone Global Markets is a boutique broker dealer specializing in volatility trading strategies.
The boutique derivatives broker dealer has committed to donating 100% of its net commissions that day to The Jasper Against Batten Fund. Jasper Duinstra is a 4-year old boy who was diagnosed with Batten Disease in March 2009, and has subsequently been experiencing seizures, deteriorating vision, limited vocabulary and paralysis in his legs.
After the urgency of finding a cure for Batten Disease was brought to the attention of representatives of The New Jersey Nets, the basketball team committed to joining Capstone Global Markets on October 1st to raise money for the cause.
The New Jersey Nets’ involvement at the fundraiser will be highlighted by the participation of Nets president Rod Thorn, general manager (and former New York Knicks player) Kiki Vandeweghe, the Nets dance team and the Nets mascot. Each will be involved in thanking clients for their business and discussing the importance of the cause.
“We created this event to bring public awareness of this devastating disease and the urgency of Jasper’s need for support,” said Paul Britton, CEO of Capstone Holdings Group, LLC. “We are pleased with the enthusiasm from our clients to join us in this mission to help Jasper and other children affected by Batten Disease. Capstone Global Markets is committed to helping charities dedicated to helping children.”
The newly created annual event is part of Capstone’s commitment to giving back to the global community regardless of the macro financial environment. Every year the hedge fund will select specific charities to donate to, each with the common goal of helping children.
Capstone Global Markets, LLC is an affiliate of Capstone Holdings Group, LLC. Capstone Global Markets is a boutique broker dealer specializing in volatility trading strategies.
22 Sept 2009
Hedge Fund Performance for August - Morningstar
Hedge funds' good fortunes persisted in August according to a preliminary hedge fund performance report from Morninstar.
"Hedge fund returns in August were driven by strong equity markets throughout the developed world," said Nadia Papagiannis, Morningstar hedge fund analyst. “Many hedge funds claim to be uncorrelated to the markets, but it appears that the rising tide of the market has lifted all boats, including hedge funds.”
The Morningstar 1000 Hedge Fund Index and the currency-hedged Morningstar MSCI Composite Hedge Fund Index rose 1.6% and 1.5%, respectively in August. For the year to date through August, these indexes increased 13.7% and 9.5%, respectively.
Developed countries' stock markets rallied for the sixth straight month on positive news in areas such as manufacturing. The Morningstar MSCI Developed Markets Hedge Fund Index appreciated in August by 1.9%, with the Morningstar MSCI Europe Equity Hedge Fund Index outperforming with an increase of 2.9%, as European stock markets hit 11-month highs on better-than-expected economic data in France and Germany. In the United States, continuing the year-long trend, smaller-company equities outperformed larger-cap stocks. The Morningstar US Small Cap Equity Hedge Fund Index rose 1.9% versus the Morningstar US Equity Hedge Fund Index's 1.4% rise.
Emerging market equities stagnated in August, with gains in Eastern Europe and certain other countries offset by steep losses in China. The Shanghai Composite Index experienced a severe sell-off, dropping nearly 7% on the last day of the month to its lowest level since May. The sell-off was fueled by fears that the Chinese government may curb stimulus measures. The Morningstar Emerging Markets Equity Hedge Fund Index rose 1.6%, as many funds in this index had lighter weightings in China than did the index.
The big winners in August were hedge funds that trade distressed securities. Credit markets, notably the more speculative ones, continued to rebound in August, though the pace of appreciation has slowed. Global corporate bond issuance broke 2007 levels in August, improving liquidity, and leveraged loan prices reached 12-month highs with some new issues. The Morningstar Distressed Securities Hedge Fund Index rallied 4.1%.
August returns and July asset flows for the Morningstar Hedge Fund Indexes are based on funds that reported as of Sept. 17, 2009. Returns for the Morningstar MSCI Hedge Fund Indexes are based on funds that reported August performance as of Sept. 14, 2009.
"Hedge fund returns in August were driven by strong equity markets throughout the developed world," said Nadia Papagiannis, Morningstar hedge fund analyst. “Many hedge funds claim to be uncorrelated to the markets, but it appears that the rising tide of the market has lifted all boats, including hedge funds.”
The Morningstar 1000 Hedge Fund Index and the currency-hedged Morningstar MSCI Composite Hedge Fund Index rose 1.6% and 1.5%, respectively in August. For the year to date through August, these indexes increased 13.7% and 9.5%, respectively.
Developed countries' stock markets rallied for the sixth straight month on positive news in areas such as manufacturing. The Morningstar MSCI Developed Markets Hedge Fund Index appreciated in August by 1.9%, with the Morningstar MSCI Europe Equity Hedge Fund Index outperforming with an increase of 2.9%, as European stock markets hit 11-month highs on better-than-expected economic data in France and Germany. In the United States, continuing the year-long trend, smaller-company equities outperformed larger-cap stocks. The Morningstar US Small Cap Equity Hedge Fund Index rose 1.9% versus the Morningstar US Equity Hedge Fund Index's 1.4% rise.
Emerging market equities stagnated in August, with gains in Eastern Europe and certain other countries offset by steep losses in China. The Shanghai Composite Index experienced a severe sell-off, dropping nearly 7% on the last day of the month to its lowest level since May. The sell-off was fueled by fears that the Chinese government may curb stimulus measures. The Morningstar Emerging Markets Equity Hedge Fund Index rose 1.6%, as many funds in this index had lighter weightings in China than did the index.
The big winners in August were hedge funds that trade distressed securities. Credit markets, notably the more speculative ones, continued to rebound in August, though the pace of appreciation has slowed. Global corporate bond issuance broke 2007 levels in August, improving liquidity, and leveraged loan prices reached 12-month highs with some new issues. The Morningstar Distressed Securities Hedge Fund Index rallied 4.1%.
August returns and July asset flows for the Morningstar Hedge Fund Indexes are based on funds that reported as of Sept. 17, 2009. Returns for the Morningstar MSCI Hedge Fund Indexes are based on funds that reported August performance as of Sept. 14, 2009.
Open Europe Hedge Fund Survey Findings
Based on two surveys of private equity managers and hedge fund managers, carried out during August 2009, Open Europe has published the most comprehensive study to date of the likely impact of the EU's proposed Alternative Investment Fund Managers (AIFM) Directive. Among the findings is that the hedge fund and private equity industries contribute €9 billion ($13.3 billion) in tax revenues to European Union (EU) governments.
Open Europe said that the €9 billion ($13.3 billion) tax contribution would be enough to fund the EU’s entire overseas aid budget for 12 years. The tax contribution also matches the value of the EU’s Cohesion and Aid Programmes for Poland and is just short of the subsidy that France receives each year under the EU’s Common Agricultural Policy.
“Alternative investment fund managers provide investments and create growth, jobs and more efficient markets across Europe,” the report said.
The survey also found that the UK hedge fund and private equity industries contribute about €6.1 billion ($9 billion) in tax revenues to HMRC. Open Europe said this would be enough to pay for more than 200,000 nurses, 45,000 hospital consultants or 165,000 teachers. In just two years, the tax revenues generated by alternative investment fund managers would be able to pay for the entire 2012 London Olympics, according to Open Europe. But if the tax revenues were to disappear, Open Europe said it would take a 20% increase in council tax in order to make up the shortfall.
The European Commission’s Alternative Investment Fund Managers (AIFM) directive would cost the hedge fund and private equity industries in the EU between €1.3 billion and €1.9 billion ($1.9 billion and $2.8 billion) in its first year, if implemented in its current form. The annual recurring cost would be between €689 million and €985 million ($1 billion and $1.4 billion). Respondents said their total compliance costs would increase by almost one-third on average.
The report commented: “Our surveys show that unless a range of amendments take place, the AIFM directive will impose substantial costs across the board, without offering sufficient benefits for the industry, investors and the wider economy… In a worst-case scenario, thousands of jobs and millions in tax revenues could be at stake.”
Open Europe received 121 responses from hedge fund managers and fund of fund managers representing $342 billion assets under management. Just over half of the respondents came from managers located in the UK, while over one-fifth came from the rest of the EU and around one-quarter from the rest of the world. Open Europe also received 41 responses from private equity managers primarily based in the UK, representing funds under management of over $204 billion.
The report can be downloaded from Open Europe’s website at http://www.openeurope.org.uk/research/aifmd.pdf.
Open Europe said that the €9 billion ($13.3 billion) tax contribution would be enough to fund the EU’s entire overseas aid budget for 12 years. The tax contribution also matches the value of the EU’s Cohesion and Aid Programmes for Poland and is just short of the subsidy that France receives each year under the EU’s Common Agricultural Policy.
“Alternative investment fund managers provide investments and create growth, jobs and more efficient markets across Europe,” the report said.
The survey also found that the UK hedge fund and private equity industries contribute about €6.1 billion ($9 billion) in tax revenues to HMRC. Open Europe said this would be enough to pay for more than 200,000 nurses, 45,000 hospital consultants or 165,000 teachers. In just two years, the tax revenues generated by alternative investment fund managers would be able to pay for the entire 2012 London Olympics, according to Open Europe. But if the tax revenues were to disappear, Open Europe said it would take a 20% increase in council tax in order to make up the shortfall.
The European Commission’s Alternative Investment Fund Managers (AIFM) directive would cost the hedge fund and private equity industries in the EU between €1.3 billion and €1.9 billion ($1.9 billion and $2.8 billion) in its first year, if implemented in its current form. The annual recurring cost would be between €689 million and €985 million ($1 billion and $1.4 billion). Respondents said their total compliance costs would increase by almost one-third on average.
The report commented: “Our surveys show that unless a range of amendments take place, the AIFM directive will impose substantial costs across the board, without offering sufficient benefits for the industry, investors and the wider economy… In a worst-case scenario, thousands of jobs and millions in tax revenues could be at stake.”
Open Europe received 121 responses from hedge fund managers and fund of fund managers representing $342 billion assets under management. Just over half of the respondents came from managers located in the UK, while over one-fifth came from the rest of the EU and around one-quarter from the rest of the world. Open Europe also received 41 responses from private equity managers primarily based in the UK, representing funds under management of over $204 billion.
The report can be downloaded from Open Europe’s website at http://www.openeurope.org.uk/research/aifmd.pdf.
21 Sept 2009
CME Partners With Hedge Funds in Restructuring Clearing Services
CME Group is restructuring its credit default swap (CDS) with hedge fund Citadel Investment Group as a strategic program targeted at providing clearing-only services for the nearly $27 trillion CDS market.
Key features developed as part of the joint effort with Citadel, which was known as CMDX, will be carried forward in the clearing-only service, including state-of-the-art trade booking and legacy trade migration facilities.
"We remain committed to bringing stability and transparency to the CDS market, while further enhancing confidence in the financial marketplace," said Terry Duffy, Executive Chairman, CME Group. "Over the past several months, we have been working closely with all market participants. Both buy-side and sell-side participants have expressed an interest in continuing to execute their CDS transactions the same as they do today, but with the added benefit of central counterparty clearing."
Citadel remains a founding member of the newly restructured CDS initiative. The other buy-side founding members are: AllianceBernstein, BlackRock, BlueMountain Capital Management, the D. E. Shaw group and PIMCO. A number of leading sell-side participants are in the process of becoming founding members. CME Group plans to announce the launch of the clearing initiative's pilot program in the weeks ahead. CME's clearing solution builds on the existing over-the-counter (OTC) market.
Key features developed as part of the joint effort with Citadel, which was known as CMDX, will be carried forward in the clearing-only service, including state-of-the-art trade booking and legacy trade migration facilities.
"We remain committed to bringing stability and transparency to the CDS market, while further enhancing confidence in the financial marketplace," said Terry Duffy, Executive Chairman, CME Group. "Over the past several months, we have been working closely with all market participants. Both buy-side and sell-side participants have expressed an interest in continuing to execute their CDS transactions the same as they do today, but with the added benefit of central counterparty clearing."
Citadel remains a founding member of the newly restructured CDS initiative. The other buy-side founding members are: AllianceBernstein, BlackRock, BlueMountain Capital Management, the D. E. Shaw group and PIMCO. A number of leading sell-side participants are in the process of becoming founding members. CME Group plans to announce the launch of the clearing initiative's pilot program in the weeks ahead. CME's clearing solution builds on the existing over-the-counter (OTC) market.
10-Year Mark for Mooring's Flagship Hedge Fund
The second quarter of 2009 marked the 10th year of operation for Washington, DC-based hedge fund, Mooring Capital Fund, which delivered a quarterly compounded return of 12.40% per year.
“Our flagship Mooring Capital Fund has provided a consistent record of performance to investors since inception 10 years ago." John Jacquemin, founder and President of Mooring Financial Corporation, commented,"We are very pleased with the fund’s sound long-term performance, demonstrated by a total return of 242.51 percent over the last decade.”
For the same period, the S&P 500 posted an annual compounded return of -1.70% and the Credit Suisse/Tremont Hedge Fund Index reported a quarterly compounded annual return of 6.89 %.
Mooring Capital Fund acquires and manages distressed, sub-performing and performing commercial loans. The portfolio is diversified by both asset type and geography. Mooring Capital Fund also takes long and short equity positions in the financial and real estate markets for up to 20% of its assets. As of June 30, 2009 Mooring Capital Fund had over $62 million in total gross assets.
“Our flagship Mooring Capital Fund has provided a consistent record of performance to investors since inception 10 years ago." John Jacquemin, founder and President of Mooring Financial Corporation, commented,"We are very pleased with the fund’s sound long-term performance, demonstrated by a total return of 242.51 percent over the last decade.”
For the same period, the S&P 500 posted an annual compounded return of -1.70% and the Credit Suisse/Tremont Hedge Fund Index reported a quarterly compounded annual return of 6.89 %.
Mooring Capital Fund acquires and manages distressed, sub-performing and performing commercial loans. The portfolio is diversified by both asset type and geography. Mooring Capital Fund also takes long and short equity positions in the financial and real estate markets for up to 20% of its assets. As of June 30, 2009 Mooring Capital Fund had over $62 million in total gross assets.
18 Sept 2009
Investment in Precious Metals Surge as Investors Buy Gold
In a Sunday Times article this weekend, Bryan Collings, who manages the Investment Fund for Ingnis International Hexam Global Emerging Markets, predicted an increase in the price of precious metals of 25% over the next 18 months. He forecasts that the price of gold will rise 20% to $1,200 an ounce by 2010. Remarkably, other commentators are predicting an even more significant rise to $1,500 an ounce within the next two years.
Gold was pushed to its highest level in the last six months because investors are keen to buy gold as a hedge against inflation. Gold has always been seen as a good investment in times of economic uncertainty. With continued concerns about inflation, the gold markets show no signs of cooling unlike the currency markets which continue to fluctuate.
Jason Cozens, Managing Director of Au, the online gold exchange said, "This is consistent with our predictions for the price of gold as investors are undoubtedly keen to buy gold at the moment. We are seeing an increase in enquiries from all kinds of investors. Media reports, like the Sunday Times article, are encouraging investors and we believe that it is prudent for individuals to invest up to 40% of their total portfolio in gold".
Similarly, the price of other precious metals has soared since the beginning of the year. Silver has also strengthened with figures from the S&P GSCI Silver index showing a gain of 46.4% since the start of 2009. Copper has risen 102% since the beginning of the year and experts are predicting that with a shortage in supply and growing demand the price will continue to go up. Uranium prices are also expected to rise with an increase in demand for the metal, which is used in the production of nuclear energy.
Gold was pushed to its highest level in the last six months because investors are keen to buy gold as a hedge against inflation. Gold has always been seen as a good investment in times of economic uncertainty. With continued concerns about inflation, the gold markets show no signs of cooling unlike the currency markets which continue to fluctuate.
Jason Cozens, Managing Director of Au, the online gold exchange said, "This is consistent with our predictions for the price of gold as investors are undoubtedly keen to buy gold at the moment. We are seeing an increase in enquiries from all kinds of investors. Media reports, like the Sunday Times article, are encouraging investors and we believe that it is prudent for individuals to invest up to 40% of their total portfolio in gold".
Similarly, the price of other precious metals has soared since the beginning of the year. Silver has also strengthened with figures from the S&P GSCI Silver index showing a gain of 46.4% since the start of 2009. Copper has risen 102% since the beginning of the year and experts are predicting that with a shortage in supply and growing demand the price will continue to go up. Uranium prices are also expected to rise with an increase in demand for the metal, which is used in the production of nuclear energy.
17 Sept 2009
Hedgeable's Search for America's Worst Investor
On a humorous note, Hedgeable.com launched today with the "Search for America's Worst Investor," a nationwide contest to find three people with the portfolios hit hardest by the financial crisis.
"As the crisis revealed, retail investors are lost when it comes to implementing strategies to protect their wealth," said Hedgeable CEO and co-founder Michael Kane, formerly an analyst at Spruce Private Investors, a $2 billion ultra-high net worth money manager. "We want to guide investors on how to decide when to sell, eliminate major losses, and realize portfolio growth in up or down markets."
Americans are still trying to recover from the unprecedented loss of wealth of 2007-2009. Hedgeable.com, which is offering a free trial of its service, advocates the need for investors to make periodic trades to help protect and grow their portfolios.
The Search for "America's Worst Investor"
The contest, which runs from September 16 to September 30, 2009, is open to anyone who registers free of charge on the Hedgeable.com site. The top three individuals whose portfolio performance earns them the distinction of "Worst Investor in America" will receive the following prizes:
-- First Prize: An all-expenses-paid vacation for two to Rome, Italy,
where they will find similarities between the U.S.'s current economic
situation and the Roman Empire's collapse due to leverage, taxes, a
de-valued currency, and massive debt.
-- Second Prize: A trip for two to picturesque Iceland, a country that
has seen its stock market lose 97% of its value due to leveraged bets
and excessive debt.
-- Third Prize: A trip for two to Las Vegas, the "foreclosure and
gambling capital of America."
"The anniversary of Lehman's demise should remind us of the huge risk in not managing a hedged portfolio," Kane concluded. "If the U.S. continues on its current path, it's the everyday investor who will be affected the most, by a second collapse that could make the Roman Empire seem like small potatoes."
Hedgeable Inc. is registered as an investment advisor with the SEC.
"As the crisis revealed, retail investors are lost when it comes to implementing strategies to protect their wealth," said Hedgeable CEO and co-founder Michael Kane, formerly an analyst at Spruce Private Investors, a $2 billion ultra-high net worth money manager. "We want to guide investors on how to decide when to sell, eliminate major losses, and realize portfolio growth in up or down markets."
Americans are still trying to recover from the unprecedented loss of wealth of 2007-2009. Hedgeable.com, which is offering a free trial of its service, advocates the need for investors to make periodic trades to help protect and grow their portfolios.
The Search for "America's Worst Investor"
The contest, which runs from September 16 to September 30, 2009, is open to anyone who registers free of charge on the Hedgeable.com site. The top three individuals whose portfolio performance earns them the distinction of "Worst Investor in America" will receive the following prizes:
-- First Prize: An all-expenses-paid vacation for two to Rome, Italy,
where they will find similarities between the U.S.'s current economic
situation and the Roman Empire's collapse due to leverage, taxes, a
de-valued currency, and massive debt.
-- Second Prize: A trip for two to picturesque Iceland, a country that
has seen its stock market lose 97% of its value due to leveraged bets
and excessive debt.
-- Third Prize: A trip for two to Las Vegas, the "foreclosure and
gambling capital of America."
"The anniversary of Lehman's demise should remind us of the huge risk in not managing a hedged portfolio," Kane concluded. "If the U.S. continues on its current path, it's the everyday investor who will be affected the most, by a second collapse that could make the Roman Empire seem like small potatoes."
Hedgeable Inc. is registered as an investment advisor with the SEC.
Bankers Open $12 Billion CaymanToxic Asset Hedge Fund
A group of 45 bankers have plans to avoid new strict rules on pay and bonuses, making more than £240 million ($400 million) between them, according to TimesOnline.
Led by British bankers Michael Keely and Stephen King, sources say they will quit Barclays to take on a contract managing £7.5 billion ($12.3 billion) of Barclays’ most toxic debt in a fund registered in the Cayman Islands. Barclays will lend $12.6 billion to Protium, a newly created Cayman Islands-registered hedge fund, to buy the toxic assets.
Barclays said in a press release that the shift of assets did not remove any risk from its balance sheet, but guaranteed it a more steady stream of income from them.
London analysts admitted they were puzzled by the scheme and could not see any great immediate benefit in it for Barclays, according to the London Evening Standard. Traders in other investment banks are quitting to avoid likely curbs on bonuses. About 20 from Société Générale left this week to set up a hedge fund called Nexar Capital to escape the bonus crackdown being threatened by Nicolas Sarkozy, the UK paper said.
Led by British bankers Michael Keely and Stephen King, sources say they will quit Barclays to take on a contract managing £7.5 billion ($12.3 billion) of Barclays’ most toxic debt in a fund registered in the Cayman Islands. Barclays will lend $12.6 billion to Protium, a newly created Cayman Islands-registered hedge fund, to buy the toxic assets.
Barclays said in a press release that the shift of assets did not remove any risk from its balance sheet, but guaranteed it a more steady stream of income from them.
London analysts admitted they were puzzled by the scheme and could not see any great immediate benefit in it for Barclays, according to the London Evening Standard. Traders in other investment banks are quitting to avoid likely curbs on bonuses. About 20 from Société Générale left this week to set up a hedge fund called Nexar Capital to escape the bonus crackdown being threatened by Nicolas Sarkozy, the UK paper said.
Deloitte Adds Hedge Fund Heavyweights Schubert and Iler
Hedge fund pioneers Ellen C. Schubert and Ray J. Iler have joined the hedge fund team of Deloitte LLP's Asset Management Services practice.
Schubert joined Deloitte in the newly-created role of Chief Advisor to the Asset Management Services practice and is based in New York. Prior to joining Deloitte, Schubert was a managing director and global head of the Fixed Income Hedge Fund Business for UBS Investment Bank from 2006 until 2008.
Iler rejoined Deloitte as the Northwest Pacific hedge fund leader and is based in San Francisco. From 2001 to 2006, he founded the tax practice and served as Audit Partner for Deloitte’s Grand Cayman practice.
The new hires are the latest in a series of strategic growth initiatives executed over the last 18 months by Cary Stier, Deloitte’s U.S. Head of Asset Management Services.
"Challenging times call for new ideas. The breadth of our practice offers us the perspective vital to designing new solutions that help clients prepare for the unforeseen. There has been too much surprise in the market, a trend that cannot continue," Stier added.
Ten current Deloitte partners have been newly-dedicated to Deloitte's hedge fund team, joining the global bench of talent in accounting and tax, valuation, anti-fraud, governance and oversight, regulatory and compliance, risk management, technology and operations, structuring, and third party administrator/prime brokerage relationships.
Schubert joined Deloitte in the newly-created role of Chief Advisor to the Asset Management Services practice and is based in New York. Prior to joining Deloitte, Schubert was a managing director and global head of the Fixed Income Hedge Fund Business for UBS Investment Bank from 2006 until 2008.
Iler rejoined Deloitte as the Northwest Pacific hedge fund leader and is based in San Francisco. From 2001 to 2006, he founded the tax practice and served as Audit Partner for Deloitte’s Grand Cayman practice.
The new hires are the latest in a series of strategic growth initiatives executed over the last 18 months by Cary Stier, Deloitte’s U.S. Head of Asset Management Services.
"Challenging times call for new ideas. The breadth of our practice offers us the perspective vital to designing new solutions that help clients prepare for the unforeseen. There has been too much surprise in the market, a trend that cannot continue," Stier added.
Ten current Deloitte partners have been newly-dedicated to Deloitte's hedge fund team, joining the global bench of talent in accounting and tax, valuation, anti-fraud, governance and oversight, regulatory and compliance, risk management, technology and operations, structuring, and third party administrator/prime brokerage relationships.
16 Sept 2009
No country for stimulus packages - Silkinvest on MENA Hedge Funds
In an update from MENA hedge fund investor SilkInvest, CEO Baldwin Berges writes, "While the major economies are still fuelled on policy support level, there are several economies in our region of focus that benefit from authentic internal growth drivers that are not always in need of extra stimulus."
"During the month of August, in anticipation of a possible correction of the summer rally in the majors, we have been taking some profits across our holdings, thereby increasing our cash levels in both our Arab and African equity funds to levels of around 15% and 13% respectively." Berges says, "In hindsight, this decision seems to be paying off. Both funds arguably continue to be amongst the most diversified across markets and sectors within the fund peer groups. We retain the flexibility to invest in the right opportunities as they present themselves."
Regarding the MENA markets, he said, "a development, although not very influential to stock prices, caught our attention: Yahoo, the popular Internet search engine, agreed to buy Arabic-language Internet venture Maktoob.com as it seeks to enter the Middle East market. Yahoo did not disclose the terms of the agreement. The transaction is set to be completed in the fourth quarter of this year. This is interesting because Yahoo sees tremendous growth opportunities for Arabic content in the region and sees in excess of 30% annual growth in internet users in the region over the years to come."
"During the month of August, in anticipation of a possible correction of the summer rally in the majors, we have been taking some profits across our holdings, thereby increasing our cash levels in both our Arab and African equity funds to levels of around 15% and 13% respectively." Berges says, "In hindsight, this decision seems to be paying off. Both funds arguably continue to be amongst the most diversified across markets and sectors within the fund peer groups. We retain the flexibility to invest in the right opportunities as they present themselves."
Regarding the MENA markets, he said, "a development, although not very influential to stock prices, caught our attention: Yahoo, the popular Internet search engine, agreed to buy Arabic-language Internet venture Maktoob.com as it seeks to enter the Middle East market. Yahoo did not disclose the terms of the agreement. The transaction is set to be completed in the fourth quarter of this year. This is interesting because Yahoo sees tremendous growth opportunities for Arabic content in the region and sees in excess of 30% annual growth in internet users in the region over the years to come."
Nexar Capital Group Hedge Fund Launch
Global hedge fund group, Nexar Capital Group SCA, announced the launch of an investment from funds managed by Aquiline Capital Partners LLC, a New York-based private equity firm.
The hedge fund firm was founded by industry veterans who built a market-leading hedge fund business at Société Générale Asset Management Alternative Investments, led by Arié Assayag, Chief Executive Officer; Eric Attias, Chief Investment Officer; and Bernard Kalfon, Head of Volatility Strategies.
“As an independent company, Nexar has a long-term approach that aligns our interests with those of our clients and allows us to provide them with superior investment management,” said Mr. Assayag. “Aquiline’s depth of investment management experience immediately gives us the strength and stability of an institutional platform, thus making Aquiline an ideal partner as we build our business.”
“Nexar’s team built its strong reputation in the industry through its success in growing and managing a leading hedge fund business,” said Jeff Greenberg, Chief Executive of Aquiline. “Recent market turmoil has underscored the importance of transparency, liquidity and true alpha generation, which are core elements of Nexar’s approach.”
The hedge fund firm was founded by industry veterans who built a market-leading hedge fund business at Société Générale Asset Management Alternative Investments, led by Arié Assayag, Chief Executive Officer; Eric Attias, Chief Investment Officer; and Bernard Kalfon, Head of Volatility Strategies.
“As an independent company, Nexar has a long-term approach that aligns our interests with those of our clients and allows us to provide them with superior investment management,” said Mr. Assayag. “Aquiline’s depth of investment management experience immediately gives us the strength and stability of an institutional platform, thus making Aquiline an ideal partner as we build our business.”
“Nexar’s team built its strong reputation in the industry through its success in growing and managing a leading hedge fund business,” said Jeff Greenberg, Chief Executive of Aquiline. “Recent market turmoil has underscored the importance of transparency, liquidity and true alpha generation, which are core elements of Nexar’s approach.”
15 Sept 2009
Hedge Fund Rocktoberfest WildCard Play-Off
This year marks the sixth anniversary of A Leg To Stand On’s annual benefit, Hedge Fund Rocktoberfest, being held at B.B. King Blues Club in New York on Thursday, October 8. This event unites a rapidly growing number of A Leg To Stand On supporters for a unique night of rock-and-roll performances by members of the hedge fund and financial communities.
The Rocktoberfest Wildcard Play-Off is being held tomorrow, September 16 at Sullivan Hall in New York, where four bands made up of hedge fund and related industry professionals will battle it out to perform at Rocktoberfest.
Since 2004, Hedge Fund Rocktoberfest has proudly served as A Leg To Stand On’s signature fundraising benefit. Due in large part to the support received through this one night, A Leg To Stand On has been able to directly help over 3,000 children through the provision of free corrective surgeries and prosthetic and orthotic devices.
An estimated 10,000 children have been helped through A Leg To Stand On’s training workshops, aimed at teaching innovative best-practices in orthopedic care to in-country medical providers. In January of 2009, A Leg To Stand On committed to helping a total of 11 project partners in Haiti, Nigeria, India, Bangladesh, Nepal, Colombia, Ecuador and Peru.
Capintro Outlines Opportunities Available to Hedge Fund Investors in 2009/2010
A new study by Capintro Partners, analyzing the impact of the events of 2008 on the hedge fund industry, indicates that the crisis may have led to structural changes which could benefit hedge funds.
The report makes a compelling case for having hedge funds as a strategic long term investment within a diversified portfolio. Capintro Partners highlights five key changes in the industry:
1) Assets in the industry have substantially declined due to investor redemptions, weak performance and flight to quality. The reduction in assets allows for outsized positive performance due to reduced competition among hedge fund managers within the same strategy.
2) The number of managers in the industry has also decreased, further reducing competition leading to wider spreads and an opportunity for larger gains.
3) Hedge funds have historically outperformed post crises and have performed well preserving capital throughout historical crisis events.
4) Hedge fund returns have varied more widely causing dispersion among manager returns to increase and correlation among managers and hedge fund strategies to decrease. This allows for greater diversification benefits to investors and leads to higher risk adjusted returns.
5) In order to attract new assets, managers are offering investors various incentives that may include access to closed funds, higher levels of liquidity, greater transparency and/or reduced fees.
Strategies that trade liquid securities and are able to take advantage of the volatility in global markets will be better positioned to outperform. Capintro favors the following strategies for the remainder of 2009:
1) Global Macro
2) Arbitrage
3) Equity Hedge
“It’s important for investors to realize that the current environment presents substantial opportunities for hedge fund managers and in turn for them. Our objective is to help uncover these opportunities, specifically in the aftermath of the events of 2008 and the massive de-leveraging that took place within the financial system” said Mahmoud Al-Khawaja, CEO of Capintro Partners.
About Capintro Partners, Ltd.
Headquartered in the United Kingdom with a representative office in Dubai, Capintro undertakes a range of activities including, but not limited to, placement services of actively managed funds and direct investments in the alternative investment industry including hedge funds. Aiming to become a leader in the investment product placement business, Capintro will bridge a gap between global investment managers and institutional and high net worth clients throughout the MENA (Middle East and North Africa) region.
The report makes a compelling case for having hedge funds as a strategic long term investment within a diversified portfolio. Capintro Partners highlights five key changes in the industry:
1) Assets in the industry have substantially declined due to investor redemptions, weak performance and flight to quality. The reduction in assets allows for outsized positive performance due to reduced competition among hedge fund managers within the same strategy.
2) The number of managers in the industry has also decreased, further reducing competition leading to wider spreads and an opportunity for larger gains.
3) Hedge funds have historically outperformed post crises and have performed well preserving capital throughout historical crisis events.
4) Hedge fund returns have varied more widely causing dispersion among manager returns to increase and correlation among managers and hedge fund strategies to decrease. This allows for greater diversification benefits to investors and leads to higher risk adjusted returns.
5) In order to attract new assets, managers are offering investors various incentives that may include access to closed funds, higher levels of liquidity, greater transparency and/or reduced fees.
Strategies that trade liquid securities and are able to take advantage of the volatility in global markets will be better positioned to outperform. Capintro favors the following strategies for the remainder of 2009:
1) Global Macro
2) Arbitrage
3) Equity Hedge
“It’s important for investors to realize that the current environment presents substantial opportunities for hedge fund managers and in turn for them. Our objective is to help uncover these opportunities, specifically in the aftermath of the events of 2008 and the massive de-leveraging that took place within the financial system” said Mahmoud Al-Khawaja, CEO of Capintro Partners.
About Capintro Partners, Ltd.
Headquartered in the United Kingdom with a representative office in Dubai, Capintro undertakes a range of activities including, but not limited to, placement services of actively managed funds and direct investments in the alternative investment industry including hedge funds. Aiming to become a leader in the investment product placement business, Capintro will bridge a gap between global investment managers and institutional and high net worth clients throughout the MENA (Middle East and North Africa) region.
14 Sept 2009
Trinity Fund Administration expands into Cayman
Hedge fund manager, Trinity Fund Administration has expanded by opening an office in the Cayman Islands after receiving a full Fund Administrators license from the Cayman Islands Monetary Authority.
Brad Cowdroy has been appointed Head of the new Cayman office and will have overall responsibility for local service offerings and the principal management of all North American account business. Brad joins from Goldman Sachs, where he was a Vice President in Fund Administration Services. Prior to this, Brad held positions at CIBC and PricewaterhouseCoopers in the Cayman Islands, where both roles focused in the funds area. Brad qualified as a Chartered Accountant in Sydney, Australia whilst working at BDO and has a Bachelor of Commerce (Accounting) degree from the University of Western Sydney, Hawkesbury.
John McCann, Managing Director of Trinity commented, “We are absolutely delighted to have someone of Brad’s calibre and experience heading up our new Cayman office and joining the Trinity group. Brad brings a wealth of experience in alternative fund servicing, as well as a broad knowledge of administrative and regulatory issues affecting our clients. We have no doubt he will make a significant contribution to the organisation’s growth moving forward”.
Trinity provides the full range of hedge fund administration services to investment groups based around the globe, which operate fund structures domiciled in a range of jurisdictions, including Ireland, Cyprus, Cayman Islands, Bahamas, Bermuda, BVI, Malta and the Channel Islands. A significant portion of its business comes from Cayman registered funds.
The firm’s expansion into Cayman comes in response to strong client demand, particularly from emerging managers, and will provide a local point for firms to access Trinity’s broad suite of services. Equally this befits a natural expansion of the business which will give Trinity better access to managers in North America.
John McCann added, “This is a major step forward in terms of Trinity’s expansion plans. We have always offered a complete suite of services to Cayman-domiciled funds and this brings us that much closer to this important component of our business”.
Trinity was also recently nominated for two awards from International Custody and Fund Administration and was voted number one in its class, within the recent prestigious annual Global Custodial Survey.
Brad Cowdroy has been appointed Head of the new Cayman office and will have overall responsibility for local service offerings and the principal management of all North American account business. Brad joins from Goldman Sachs, where he was a Vice President in Fund Administration Services. Prior to this, Brad held positions at CIBC and PricewaterhouseCoopers in the Cayman Islands, where both roles focused in the funds area. Brad qualified as a Chartered Accountant in Sydney, Australia whilst working at BDO and has a Bachelor of Commerce (Accounting) degree from the University of Western Sydney, Hawkesbury.
John McCann, Managing Director of Trinity commented, “We are absolutely delighted to have someone of Brad’s calibre and experience heading up our new Cayman office and joining the Trinity group. Brad brings a wealth of experience in alternative fund servicing, as well as a broad knowledge of administrative and regulatory issues affecting our clients. We have no doubt he will make a significant contribution to the organisation’s growth moving forward”.
Trinity provides the full range of hedge fund administration services to investment groups based around the globe, which operate fund structures domiciled in a range of jurisdictions, including Ireland, Cyprus, Cayman Islands, Bahamas, Bermuda, BVI, Malta and the Channel Islands. A significant portion of its business comes from Cayman registered funds.
The firm’s expansion into Cayman comes in response to strong client demand, particularly from emerging managers, and will provide a local point for firms to access Trinity’s broad suite of services. Equally this befits a natural expansion of the business which will give Trinity better access to managers in North America.
John McCann added, “This is a major step forward in terms of Trinity’s expansion plans. We have always offered a complete suite of services to Cayman-domiciled funds and this brings us that much closer to this important component of our business”.
Trinity was also recently nominated for two awards from International Custody and Fund Administration and was voted number one in its class, within the recent prestigious annual Global Custodial Survey.
Man Investments & Dexion Launch Man AHL Diversity
Alternative asset manager, Man Investments, and UK hedge fund advisory and marketing firm, Dexion Capital Group, announced the launch of a new UCITS III trend following product, Man AHL Diversity.
“Historically, the performance of trend following managers has tended to be uncorrelated to traditional stock and bond markets." Tim Wong, Chief Executive Officer of AHL, said, "We saw that with AHL’s highly impressive performance last year when its best performing fund delivered 33% at the same time as some equity markets fell 40%.”
Investors will be able to access the sterling denominated product with a minimum initial investment of £100 from the product’s launch in October 2009.
Founded in 1987, AHL manages $20.4 billion (as at 31 March 2009) and has delivered a strong track record of performance. Based on past data and adjusted for structure, fees and costs, Man AHL Diversity would have delivered annualised returns of over 14% during the past 14 years. AHL managed funds have produced a positive return in every calendar year since inception.
AHL’s track record has been greatly reinforced through Man’s funding of the Oxford-Man Institute (OMI) and the creation of AHL Oxford, the compny says.
The Oxford University academics of the OMI and AHL’s researchers in AHL Oxford share purpose designed premises, where AHL’s researchers have already developed several valuable commercial applications. Now in its second year, this arrangement has created a stimulating environment that fosters day-to-day interactions between AHL and the university's academics and students, and has provided AHL with exposure to leading academic thinking from a worldwide network of experts and wide spectrum of disciplines.
Trend followers – often known as managed futures managers – seek to exploit persistent trends and other market inefficiencies in a systematic way using highly liquid futures markets. Their funds are designed to perform whether prices trend up or down with the result that returns tend to be uncorrelated with traditional stock or bond markets.
“Historically, the performance of trend following managers has tended to be uncorrelated to traditional stock and bond markets." Tim Wong, Chief Executive Officer of AHL, said, "We saw that with AHL’s highly impressive performance last year when its best performing fund delivered 33% at the same time as some equity markets fell 40%.”
Investors will be able to access the sterling denominated product with a minimum initial investment of £100 from the product’s launch in October 2009.
Founded in 1987, AHL manages $20.4 billion (as at 31 March 2009) and has delivered a strong track record of performance. Based on past data and adjusted for structure, fees and costs, Man AHL Diversity would have delivered annualised returns of over 14% during the past 14 years. AHL managed funds have produced a positive return in every calendar year since inception.
AHL’s track record has been greatly reinforced through Man’s funding of the Oxford-Man Institute (OMI) and the creation of AHL Oxford, the compny says.
The Oxford University academics of the OMI and AHL’s researchers in AHL Oxford share purpose designed premises, where AHL’s researchers have already developed several valuable commercial applications. Now in its second year, this arrangement has created a stimulating environment that fosters day-to-day interactions between AHL and the university's academics and students, and has provided AHL with exposure to leading academic thinking from a worldwide network of experts and wide spectrum of disciplines.
Trend followers – often known as managed futures managers – seek to exploit persistent trends and other market inefficiencies in a systematic way using highly liquid futures markets. Their funds are designed to perform whether prices trend up or down with the result that returns tend to be uncorrelated with traditional stock or bond markets.
11 Sept 2009
Swedbank Robur Reduces Fund of Hedge Fund Fees
Scandinavian fund of hedge fund manager, Swedbank Robur announced that it is lowering fees by .2% to .4% on its 5 funds, effective October 1st.
"These reductions are in line with our ambition to offer an attractive product range with competitive prices." Mats Lagerqvist, President of Swedbank Robur, said, "We are always looking for improvements and when it comes to these funds we have identified an opportunity to adjust the fees. It is our strong belief that this new fee structure will be more distinct for our customers since it is easier to understand the relationship between the fund fee and the risk level of the fund".
Swedbank Robur offers fund of funds under the product name Access. This product category is specifically developed for customers who do not have the time to change their fund portfolio from one day to the other.
"These products are highly appreciated by customers who want a well diversified portfolio. The customers also get access to markets which are otherwise rather inaccessible. The funds deliver not only diversification but also an active reallocation of the underlying funds. Altogether Swedbank Roburs Access funds are an attractive investment alternative for many of our customers and through the reduction of fees we will be even more competitive in terms of pricing", Lagerqvist said.
Swedbank Robur is a wholly owned subsidiary of Swedbank. Founded in 1967, Robur was one of the first fund managers in Sweden. Managing the capital of 3.1 million investors, in the Swedish mutual fund market, Swedbank Robur has approximately 27% of assets under management.
"These reductions are in line with our ambition to offer an attractive product range with competitive prices." Mats Lagerqvist, President of Swedbank Robur, said, "We are always looking for improvements and when it comes to these funds we have identified an opportunity to adjust the fees. It is our strong belief that this new fee structure will be more distinct for our customers since it is easier to understand the relationship between the fund fee and the risk level of the fund".
Swedbank Robur offers fund of funds under the product name Access. This product category is specifically developed for customers who do not have the time to change their fund portfolio from one day to the other.
"These products are highly appreciated by customers who want a well diversified portfolio. The customers also get access to markets which are otherwise rather inaccessible. The funds deliver not only diversification but also an active reallocation of the underlying funds. Altogether Swedbank Roburs Access funds are an attractive investment alternative for many of our customers and through the reduction of fees we will be even more competitive in terms of pricing", Lagerqvist said.
Swedbank Robur is a wholly owned subsidiary of Swedbank. Founded in 1967, Robur was one of the first fund managers in Sweden. Managing the capital of 3.1 million investors, in the Swedish mutual fund market, Swedbank Robur has approximately 27% of assets under management.
Palladio Alternative Research goes live
Swiss-based Palladio Alternative Research Group has started operations in August 2009 via its first Geneva-based subsidiary.
Designed to provide outsourcing solutions for hedge fund research and due diligence, Palladio Alternative Research Group will be headed by Sarah Clar-Boson, founding partner and a former Senior hedge fund analyst at Optifin SA and UBP Alternative Asset Management Group.
The firm's two other partners include successful established hedge fund entrepreneurs: Christophe Reech, CEO and Chairman of Reech AiM Group, recently awarded Emerging Manager of the year 2009 by Institutional Investor, and Jean-Marc Emden, CEO of Nassau-based Autana Capital, who has extensive experience in alternative investments since 1992.
In addition, Palladio Alternative Research Group has set up strategic agreements with Lotus Peak Capital PTE Ltd (Singapore) for Asian research coverage and with Castle Hall Alternatives (Canada) for detailed operational due diligence upon request.
"The opportunity set for unbiased, professional hedge fund advice and analysis is a direct outcome of the 2008 crisis, given the obvious conflict of interests between advisory and investment, the Madoff debacle and the failure to complete continuous
in-depth due diligence services," commented Mrs Clar-Boson.
"There is an acute shortage of independent alternative research providers: going forward, investors are demanding a more dynamic and personalized dialog to replace their disappointing relationships with large, traditional organisations. The ongoing complexity and sophistication of hedge fund analysis drives the need for truly neutral third-party specialists and Palladio Alternative Research Group aims to progressively become a significant and trusted player in the space." she concluded.
Designed to provide outsourcing solutions for hedge fund research and due diligence, Palladio Alternative Research Group will be headed by Sarah Clar-Boson, founding partner and a former Senior hedge fund analyst at Optifin SA and UBP Alternative Asset Management Group.
The firm's two other partners include successful established hedge fund entrepreneurs: Christophe Reech, CEO and Chairman of Reech AiM Group, recently awarded Emerging Manager of the year 2009 by Institutional Investor, and Jean-Marc Emden, CEO of Nassau-based Autana Capital, who has extensive experience in alternative investments since 1992.
In addition, Palladio Alternative Research Group has set up strategic agreements with Lotus Peak Capital PTE Ltd (Singapore) for Asian research coverage and with Castle Hall Alternatives (Canada) for detailed operational due diligence upon request.
"The opportunity set for unbiased, professional hedge fund advice and analysis is a direct outcome of the 2008 crisis, given the obvious conflict of interests between advisory and investment, the Madoff debacle and the failure to complete continuous
in-depth due diligence services," commented Mrs Clar-Boson.
"There is an acute shortage of independent alternative research providers: going forward, investors are demanding a more dynamic and personalized dialog to replace their disappointing relationships with large, traditional organisations. The ongoing complexity and sophistication of hedge fund analysis drives the need for truly neutral third-party specialists and Palladio Alternative Research Group aims to progressively become a significant and trusted player in the space." she concluded.
10 Sept 2009
Cayman Hedge Fund Results Up For US Equity Market Neutral Fund
Global Hedge Fund Group said that their flagship fund, the US Equity Market Neutral Fund showed annual returns of between 22-45%, accompanied with a volatility of 8-12% per annum.
The fund commenced trading on 20 August 2001 with initial assets of $14 million from institutional investors. The strategy employs a proprietary factor model which measures trends in observed stock prices and expects to profit from market inefficiencies over time.
Global Hedge Fund Group works in close association with research firms, hedge fund managers, and brokerage houses.
The fund commenced trading on 20 August 2001 with initial assets of $14 million from institutional investors. The strategy employs a proprietary factor model which measures trends in observed stock prices and expects to profit from market inefficiencies over time.
Global Hedge Fund Group works in close association with research firms, hedge fund managers, and brokerage houses.
Butterfield Fulcrum Partners With Risk Fundamentals
Alternative fund administration company, Butterfield Fulcrum, has partnered with hedge fund software firm Risk Fundamentals, to provide comprehensive risk analytics to hedge fund managers.
“As independent administrators we sit at the junction where transparency and confidentiality have traditionally opposed each other,” said Akshaya Bhargava, Butterfield Fulcrum's CEO.
“Risk Fundamentals is a state of the art risk management and transparency solution for hedge funds, funds of funds and institutional investors,” said Ben Weston, Risk Fundamentals’ Chairman. “This collaboration fulfills a longstanding need in the marketplace for new and effective ways to understand and manage risk.”
Butterfield Fulcrum said the product will measure liquidity and leverage, the primary sources of hedge fund collapse.
“As independent administrators we sit at the junction where transparency and confidentiality have traditionally opposed each other,” said Akshaya Bhargava, Butterfield Fulcrum's CEO.
“Risk Fundamentals is a state of the art risk management and transparency solution for hedge funds, funds of funds and institutional investors,” said Ben Weston, Risk Fundamentals’ Chairman. “This collaboration fulfills a longstanding need in the marketplace for new and effective ways to understand and manage risk.”
Butterfield Fulcrum said the product will measure liquidity and leverage, the primary sources of hedge fund collapse.
9 Sept 2009
Hedge funds attract $4.5 billion in Aug 2009
Preliminary reporting from Eurekahedge finds that August marks the 6th consecutive month of positive returns for hedge funds (up 13.1% YTD); hedge funds up 2.6% for the last 12 months, while the MSCI AC World Index is down 18.5% for the same period.
Net inflows for hedge funds reached $4.5 billion in August, with over 50% of the reporting funds attracting capital during the month.
Most hedge funds recorded gains averaging close to or over 2% during August, with European managers (2.6%) delivering the best gains, on average. North American and Latin American funds ended the month with gains averaging 1.8% and 2.1%. Asian managers, on the other hand, underperformed most others, with Japan-specific funds up 0.7% and their Asia ex-Japan-investing counterparts down 1.1%.
There were over 300 new hedge fund launches and 400 fund closures confirmed by Eurekahedge so far this year.
Net inflows for hedge funds reached $4.5 billion in August, with over 50% of the reporting funds attracting capital during the month.
Most hedge funds recorded gains averaging close to or over 2% during August, with European managers (2.6%) delivering the best gains, on average. North American and Latin American funds ended the month with gains averaging 1.8% and 2.1%. Asian managers, on the other hand, underperformed most others, with Japan-specific funds up 0.7% and their Asia ex-Japan-investing counterparts down 1.1%.
There were over 300 new hedge fund launches and 400 fund closures confirmed by Eurekahedge so far this year.
Hedge Funds Lag as Equity Market Rally Continues - Hennessee
There was good economic news in August, specifically housing and manufacturing data, according to hedge fund research specialist Hennessee Group.
"Government spending continues to drive demand, while the private sector has been largely absent. This dynamic is not sustainable,” commented Charles Gradante, Co-Founder of Hennessee Group. “In addition, equity markets are no longer undervalued. With September being one of the worst months historically, we are cautious of a pull back in the markets.”
The Hennessee Hedge Fund Index advanced +1.85% in August (+17.30% YTD), while the S&P 500 increased +3.36% (+12.99% YTD), the Dow Jones Industrial Average increased +3.54% (+8.20% YTD), and the NASDAQ Composite Index advanced +1.54% (+27.40% YTD). The Barclays Aggregate Bond Index advanced +1.04% (+4.62% YTD).
“Hedge funds continued to lag the surging equity markets, as we would expect given their short portfolios and hedges,” said Lee Hennessee, Managing Principal of Hennessee Group. “Managers have opened up their exposures to benefit from the market rally. However, given the uncertainty around the economy, most managers are looking to generate gains due to stock selection, rather than beta exposure as there is potential for a correction.”
"Government spending continues to drive demand, while the private sector has been largely absent. This dynamic is not sustainable,” commented Charles Gradante, Co-Founder of Hennessee Group. “In addition, equity markets are no longer undervalued. With September being one of the worst months historically, we are cautious of a pull back in the markets.”
The Hennessee Hedge Fund Index advanced +1.85% in August (+17.30% YTD), while the S&P 500 increased +3.36% (+12.99% YTD), the Dow Jones Industrial Average increased +3.54% (+8.20% YTD), and the NASDAQ Composite Index advanced +1.54% (+27.40% YTD). The Barclays Aggregate Bond Index advanced +1.04% (+4.62% YTD).
“Hedge funds continued to lag the surging equity markets, as we would expect given their short portfolios and hedges,” said Lee Hennessee, Managing Principal of Hennessee Group. “Managers have opened up their exposures to benefit from the market rally. However, given the uncertainty around the economy, most managers are looking to generate gains due to stock selection, rather than beta exposure as there is potential for a correction.”
Peak Oil Investing Hedge Fund Launch
Hedge fund investor, logi ENERGY LLC., has announced the formation of The Peak Oil Value Fund. Launched September 8, the new hedge fund is the first of its kind aimed at institutional and accredited investors.
“We believe that the effects of Peak Oil on the markets are a temporary Global Macro series of events” Larry Ortega CIO of the Peak Oil Value Fund said, “We only have a few years to take advantage of these opportunities.“
The fund's investment strategy employs five approaches: 1) Publicly Traded Equities and Equity Options; 2) Investment in oil in storage; 3) Investment in Oil, Gasoline and Heating Oil spreads in the Futures Markets; 4) Private Investment in Public Equities of Oil and Gas Exploration Companies; and 5) Private Investment in Private Companies or Oil and Gas Fields.
“Our superb models developed by our deep, complex team of expert geophysicists, mathematicians, oil professionals and oil traders have been able to predict and identify the fluctuations of oil prices and indicate when we expect prices to move based on both fundamentals of oil production and demand as well as storage, refinery processing, price action and economic utilization." Ortega said, "They are not perfect, but we’re extremely pleased with the results. We invest like Warren Buffett, which is we make our money when we purchase our positions at deep value, thus the effects of our errors are minimal. Our difference is that in most of our strategies we also hedge nearly every position we take.”
The fund’s goal is to purchase or make significant investments in oil and gas exploration firms for their reserve positions while supporting their production and exploration efforts with direct investment in their fields and then hedge position value, reserves and future production. The fund expects to invest based on fundamental valuation of each position they take.
“We believe that the effects of Peak Oil on the markets are a temporary Global Macro series of events” Larry Ortega CIO of the Peak Oil Value Fund said, “We only have a few years to take advantage of these opportunities.“
The fund's investment strategy employs five approaches: 1) Publicly Traded Equities and Equity Options; 2) Investment in oil in storage; 3) Investment in Oil, Gasoline and Heating Oil spreads in the Futures Markets; 4) Private Investment in Public Equities of Oil and Gas Exploration Companies; and 5) Private Investment in Private Companies or Oil and Gas Fields.
“Our superb models developed by our deep, complex team of expert geophysicists, mathematicians, oil professionals and oil traders have been able to predict and identify the fluctuations of oil prices and indicate when we expect prices to move based on both fundamentals of oil production and demand as well as storage, refinery processing, price action and economic utilization." Ortega said, "They are not perfect, but we’re extremely pleased with the results. We invest like Warren Buffett, which is we make our money when we purchase our positions at deep value, thus the effects of our errors are minimal. Our difference is that in most of our strategies we also hedge nearly every position we take.”
The fund’s goal is to purchase or make significant investments in oil and gas exploration firms for their reserve positions while supporting their production and exploration efforts with direct investment in their fields and then hedge position value, reserves and future production. The fund expects to invest based on fundamental valuation of each position they take.
Subscribe to:
Posts (Atom)