“Hennessee Group research and discussions with hedge fund managers has lead us to believe that the 20 year secular bull market in bonds is over.” Charles Gradante, Co-Founder of hedge fund investor consultant, Hennessee Group LLC, said of the 9 year high point seen this month in hedge funds.
“We see a problem growing in the bond market. The Government is issuing more debt than it is buying back. This has to lead to rates increasing and equity PE ratios adjusting downward. Our contacts among hedge fund managers continue to buy gold and short Treasuries. However, Hennessee Group expects the Treasury and Fed to put a short squeeze on at an opportune time.”
The Hennessee Hedge Fund Index advanced +5.68% in May (+11.40% YTD), while the S&P 500 increased +5.31% (+1.76% YTD), the Dow Jones Industrial Average advanced +4.07% (-3.14% YTD), and the NASDAQ Composite Index advanced +3.32% (+12.52% YTD). Bonds also rose, as the Barclays Aggregate Bond Index advanced +0.73% (+1.33% YTD).
Managers have been maintaining a conservative investment strategy, which has caused them to lag in the recent market rally. In May, funds also benefited from long positions in energy and commodity-related positions, which performed strongly.
“With hedge funds up +5.68%, May was the best month for hedge funds since February 2000, when the index was up +6.83,” said Lee Hennessee , Managing Principal of Hennessee Group . “Gains were largely driven by arbitrage strategies. However, long/short equity managers, with reduced levels of exposure, also performed well, participating significantly in the market rally while maintaining hedges. With a market correction in the short term being a possibility, we feel that most hedge funds are positioned conservatively and will be able to quickly alter exposures to protect capital if the market experiences a correction.”
“May had the biggest one month run up in commodities in 35 years,” commented Charles Gradante. “It appears to us, from Hennessee Group research and manager conversations, to be speculative and led by commodity ETF demand, which exceeds "real" demand. Furthermore, margin requirements favor the speculators. Hedge funds are betting commodities will continue to rise with many long agriculture commodities, such as sugar and corn.”
4 Jun 2009
Hedge Fund Prime Brokerage Provider Expands To Chicago
NorthPoint Trading Partners, LLC has opened a new office in Chicago, IL., with 12 year industry veteran, Michael Ferro, as head. Ferro has held positions at Genworth Financial, Knight Capital Markets, and X-Change Financial Access. He is experienced in both the trading and operations aspects of the buy and sell side, the company said.
“As we continue to expand our presence nationwide, we are very fortunate to have someone with Michael's talent and experience join our team,” says Douglas Nelson, Chief Executive Officer of NorthPoint Trading Partners, LLC. Atlanta based NorthPoint opened also opened an office in Connecticut earlier in the year.
NorthPoint Trading Partners, LLC is an institutional brokerage and fund services company working with small and medium sized hedge funds.
“As we continue to expand our presence nationwide, we are very fortunate to have someone with Michael's talent and experience join our team,” says Douglas Nelson, Chief Executive Officer of NorthPoint Trading Partners, LLC. Atlanta based NorthPoint opened also opened an office in Connecticut earlier in the year.
NorthPoint Trading Partners, LLC is an institutional brokerage and fund services company working with small and medium sized hedge funds.
3 Jun 2009
Bowne and HedgeOp Join Forces to Deliver Compliance Sopftware
Bowne & Co., Inc. has signed an alliance with HedgeOp Compliance to offer two new compliance solutions for hedge funds and other registered investment advisers.
The first of the hedge fund tools, 'Bowne ComplianceTrak', is an integrated compliance tracking, monitoring and reporting system specifically designed for hedge fund professionals, enabling both SEC-registered and unregistered hedge funds to build a solid foundation for their compliance programs and quickly identify potential compliance issues.
The second tool, 'Bowne Form SH Generator', is a tool for hedge funds meet new Securities and Exchange Commission (SEC) reporting requirements for short sales, reducing the amount of time spent on these tasks by 75% or more. "Bowne Form SH Generator is a huge time-saver for hedge funds and other institutional investment managers," said Bill Penders, President of Bowne. "It takes a three or four hour process, and completes it -- with great accuracy -- in a matter of seconds."
Bowne and HedgeOp Compliance, which entered into a strategic alliance in May, plan to enhance the capabilities of their compliance offerings for hedge funds and other registered investment advisers, and future versions will assist clients with other filing requirements.
The first of the hedge fund tools, 'Bowne ComplianceTrak', is an integrated compliance tracking, monitoring and reporting system specifically designed for hedge fund professionals, enabling both SEC-registered and unregistered hedge funds to build a solid foundation for their compliance programs and quickly identify potential compliance issues.
The second tool, 'Bowne Form SH Generator', is a tool for hedge funds meet new Securities and Exchange Commission (SEC) reporting requirements for short sales, reducing the amount of time spent on these tasks by 75% or more. "Bowne Form SH Generator is a huge time-saver for hedge funds and other institutional investment managers," said Bill Penders, President of Bowne. "It takes a three or four hour process, and completes it -- with great accuracy -- in a matter of seconds."
Bowne and HedgeOp Compliance, which entered into a strategic alliance in May, plan to enhance the capabilities of their compliance offerings for hedge funds and other registered investment advisers, and future versions will assist clients with other filing requirements.
2 Jun 2009
MFA Commits to Reduce Systemic Risk in OTC's
Global alternative investment industry voice, The Managed Funds Association (MFA) announced that it is joining the major derivatives dealers (the Major Dealers) in presenting a letter to global industry regulators. The letter establishes new commitments addressing key concerns raised by global legislators such as the G20, European Commission and the U.S. Department of Treasury.
MFA first joined the Major Dealers in presenting a letter to global regulators detailing operational targets and other industry commitments in March 2008.
Today’s letter outlines a firm commitment towards strengthening the over-the-counter (OTC) derivatives infrastructure under the auspices of the OMG and its constituents and partners, including the newly formed Board Oversight Committee (IBOC) of the International Swaps and Derivatives Association (ISDA). MFA is dedicated to continuing its collaboration with global regulators, the Major Dealers, buy-side institutions and service providers to reduce risk and improve market infrastructure and practices across OTC derivatives and other financial products.
Richard H. Baker, MFA President and CEO, said, “ MFA , on behalf of the alternative investment industry, is committed to proactively developing and advancing these critical commitments for reducing counterparty and systemic risks and improving operational efficiency in OTC derivatives processing. MFA fully endorses the collaborative efforts with global regulators to support commercially viable centralized clearing platforms, to universally report all OTC derivatives trades and to promote sound business practices. MFA considers today’s letter to be an important step forward for OTC derivatives markets and looks forward to continuing our participation in the design of future steps.”
MFA and its co-signatories are committed to implementing changes to risk management, processing and disclosure that will significantly transform the risk profile of these important financial markets. The OTC derivatives markets provide important flexibility in terms of products and execution and will benefit from a strengthened infrastructure.
Commitments to reduce systemic risk in the OTC derivatives markets include:
Implementing data repositories for non-cleared transactions in the OTC derivatives markets to ensure appropriate transparency and disclosure, and to assist global supervisors with oversight and surveillance activities.
Clearing for OTC standardized derivative products.
Enabling customer access to clearing through either direct access as a clearing member or via indirect access, including the benefits of initial margin segregation and position portability.
Delivering robust collateral and margining process, including portfolio reconciliations, metrics on position and market value breaks, and appropriate dispute resolution mechanics.
Updating industry governance to be more inclusive of buy-side participants through collaborative partnerships among the Major Dealers, MFA and other trade associations.
Continuing to drive improvement in industry infrastructure, as well as engage and partner with supervisors, globally, to expand upon the substantial improvements that have developed since 2005.
MFA members are professionals in hedge funds, funds of funds and managed futures funds, as well as industry service providers. MFA is headquartered in Washington , D.C. , with an office in New York.
MFA first joined the Major Dealers in presenting a letter to global regulators detailing operational targets and other industry commitments in March 2008.
Today’s letter outlines a firm commitment towards strengthening the over-the-counter (OTC) derivatives infrastructure under the auspices of the OMG and its constituents and partners, including the newly formed Board Oversight Committee (IBOC) of the International Swaps and Derivatives Association (ISDA). MFA is dedicated to continuing its collaboration with global regulators, the Major Dealers, buy-side institutions and service providers to reduce risk and improve market infrastructure and practices across OTC derivatives and other financial products.
Richard H. Baker, MFA President and CEO, said, “ MFA , on behalf of the alternative investment industry, is committed to proactively developing and advancing these critical commitments for reducing counterparty and systemic risks and improving operational efficiency in OTC derivatives processing. MFA fully endorses the collaborative efforts with global regulators to support commercially viable centralized clearing platforms, to universally report all OTC derivatives trades and to promote sound business practices. MFA considers today’s letter to be an important step forward for OTC derivatives markets and looks forward to continuing our participation in the design of future steps.”
MFA and its co-signatories are committed to implementing changes to risk management, processing and disclosure that will significantly transform the risk profile of these important financial markets. The OTC derivatives markets provide important flexibility in terms of products and execution and will benefit from a strengthened infrastructure.
Commitments to reduce systemic risk in the OTC derivatives markets include:
Implementing data repositories for non-cleared transactions in the OTC derivatives markets to ensure appropriate transparency and disclosure, and to assist global supervisors with oversight and surveillance activities.
Clearing for OTC standardized derivative products.
Enabling customer access to clearing through either direct access as a clearing member or via indirect access, including the benefits of initial margin segregation and position portability.
Delivering robust collateral and margining process, including portfolio reconciliations, metrics on position and market value breaks, and appropriate dispute resolution mechanics.
Updating industry governance to be more inclusive of buy-side participants through collaborative partnerships among the Major Dealers, MFA and other trade associations.
Continuing to drive improvement in industry infrastructure, as well as engage and partner with supervisors, globally, to expand upon the substantial improvements that have developed since 2005.
MFA members are professionals in hedge funds, funds of funds and managed futures funds, as well as industry service providers. MFA is headquartered in Washington , D.C. , with an office in New York.
Hedge Fund Expert to Run ATC's Cayman Operations
Ali Mudeen has joined hedge fund provider ATC Group as managing director of its Cayman Islands operations.
Mudeen will oversee and build the firm’s Private Clients and Corporate Services practices in the region, as well as work closely at a group level with ATC’s hegde fund administration practice.
Mudeen brings over 20 years of international experience to ATC, having worked in the US, South America and the Caribbean in banking, legal and trust services. He joins ATC from Caledonian Global, where he was a director and shareholder and had overall responsibility for marketing and business and strategic development.
“Ali’s industry expertise and leadership make him an invaluable addition to the ATC executive team." Robert Govaerts, ATC’s chairman, said, "His broad knowledge base and commitment to client service will significantly enhance ATC’s leadership position in the industry.”
“ATC is an impressive financial services company with a clear vision for the future, having enjoyed strong growth even in these unprecedented economic conditions,” Mudeen said. “I am delighted to join a company which has such a strong focus on client services and on its people.”
Serving international business, private clients, capital markets and alternative investment funds, ATC was established in 1893. ATC employs over 350 professionals in 17 offices across Europe, the Caribbean and the Asia Pacific region.
Mudeen will oversee and build the firm’s Private Clients and Corporate Services practices in the region, as well as work closely at a group level with ATC’s hegde fund administration practice.
Mudeen brings over 20 years of international experience to ATC, having worked in the US, South America and the Caribbean in banking, legal and trust services. He joins ATC from Caledonian Global, where he was a director and shareholder and had overall responsibility for marketing and business and strategic development.
“Ali’s industry expertise and leadership make him an invaluable addition to the ATC executive team." Robert Govaerts, ATC’s chairman, said, "His broad knowledge base and commitment to client service will significantly enhance ATC’s leadership position in the industry.”
“ATC is an impressive financial services company with a clear vision for the future, having enjoyed strong growth even in these unprecedented economic conditions,” Mudeen said. “I am delighted to join a company which has such a strong focus on client services and on its people.”
Serving international business, private clients, capital markets and alternative investment funds, ATC was established in 1893. ATC employs over 350 professionals in 17 offices across Europe, the Caribbean and the Asia Pacific region.
1 Jun 2009
StarInvest Acquires Hedge Fund Provider EXX
Stock transfer agency, StarInvest Group, Inc (STIV) has completed the acquisition of a privately held hedge fund provider EXX.COM.
“This acquisition will unleash the value of STIV management, and relationships in our effort to grow revenues and increase the value of our company for its shareholders. In line with our recent acquisition of My Transfer Agent, LLC (‘MTA’), EXX will offer a recurring revenue model by servicing brokerage firms, hedge funds, trading firms, or individuals on a single platform that interlinks all current trading systems and clearing houses thus yeilding the best execution services for all of its clients.”
EXX is a specialized in providing connectivity and software solutions to small and medium sized stock brokerage, arbitrage, investment banking firms, and hedge funds in major American markets. The company's main business is customizing proprietary platforms so from one program STP is enabled across all the financial networks.
“This acquisition will unleash the value of STIV management, and relationships in our effort to grow revenues and increase the value of our company for its shareholders. In line with our recent acquisition of My Transfer Agent, LLC (‘MTA’), EXX will offer a recurring revenue model by servicing brokerage firms, hedge funds, trading firms, or individuals on a single platform that interlinks all current trading systems and clearing houses thus yeilding the best execution services for all of its clients.”
EXX is a specialized in providing connectivity and software solutions to small and medium sized stock brokerage, arbitrage, investment banking firms, and hedge funds in major American markets. The company's main business is customizing proprietary platforms so from one program STP is enabled across all the financial networks.
Spice Finance and 3 Degrees Launches Singapore/India Special Situations Private Equity Fund
Spice Finance, the financial services arm of the $1.5 billion B. K. Modi Group, has entered into a first-of-its-kind strategic joint venture with Singapore-based 3 Degrees Asset Management to launch the Spice 3 Degrees Special Opportunities Fund.
Chaired by turnaround management specialist, Dr Divya Modi, Executive Director of Spice Finance, the fund will hold a first closing of $21 million comprised of commitments from Spice and 3 Degrees. A final closing will be held once third party commitments reach $100 million.
“Spice Finance will invest Rs. 500 crore ($100 million) in distressed assets and special situations, as well as other niche businesses such as remittances and over-the-counter exchanges," said Modi. "Our strategic alliance with 3 Degrees is the first significant step in our goal to achieve a $1 billion valuation for Spice Finance within the next few years,”
The new fund will invest in distressed assets and special situations spanning India and Southeast Asia. “Asia’s distressed asset market is highly inefficient, very large and growing rapidly,” said Moe Ibrahim, Founder of distressed specialist 3 Degrees. “With over $2 trillion in opportunities and only a handful of sophisticated players, the Asian distressed asset market epitomizes the inefficiencies we seek to exploit as a firm. Although the market is enormous, competition is negligible due to the relationship intensive nature of the opportunity set.”
The fund will target companies whose shareholders are struggling or where the debt holders are foreclosing. “We will focus on companies with excellent long-term growth prospects, but where short-term liquidity and management issues have caused the company to fail. Spice has a 30 years rich history of using technology and training in turning around troubled companies. We have the business acumen and resources to make companies successful,” said Modi.
Chaired by turnaround management specialist, Dr Divya Modi, Executive Director of Spice Finance, the fund will hold a first closing of $21 million comprised of commitments from Spice and 3 Degrees. A final closing will be held once third party commitments reach $100 million.
“Spice Finance will invest Rs. 500 crore ($100 million) in distressed assets and special situations, as well as other niche businesses such as remittances and over-the-counter exchanges," said Modi. "Our strategic alliance with 3 Degrees is the first significant step in our goal to achieve a $1 billion valuation for Spice Finance within the next few years,”
The new fund will invest in distressed assets and special situations spanning India and Southeast Asia. “Asia’s distressed asset market is highly inefficient, very large and growing rapidly,” said Moe Ibrahim, Founder of distressed specialist 3 Degrees. “With over $2 trillion in opportunities and only a handful of sophisticated players, the Asian distressed asset market epitomizes the inefficiencies we seek to exploit as a firm. Although the market is enormous, competition is negligible due to the relationship intensive nature of the opportunity set.”
The fund will target companies whose shareholders are struggling or where the debt holders are foreclosing. “We will focus on companies with excellent long-term growth prospects, but where short-term liquidity and management issues have caused the company to fail. Spice has a 30 years rich history of using technology and training in turning around troubled companies. We have the business acumen and resources to make companies successful,” said Modi.
29 May 2009
Conyers Hosts Launch Function in Brazil
Over 100 of São Paulo’s senior legal and business executives attended a launch function held by offshore financial law firm Conyers Dill & Pearman, in celebration of the formation of their new Brazil partnership.
The event was held on at the newly re-opened Casa Fasano Jardins on Haddock Lobo.
While addressing the audience Conyers Chairman, John Collis, spoke of the firm’s international growth. "Over the past decade, Conyers has seen a marked increase in the use of offshore structures by South and Latin American clients, as well as clients seeking to do business in those regions. The decision to open in São Paulo is part of the firm’s strategy of positioning itself in the world’s leading financial centres in order to provide responsive, timely and thorough advice to clients."
“We are pleased to have the regulatory approval to move ahead with the São Paulo office, which will facilitate even greater personal contact with our clients.”
Alan Dickson, managing partner of Conyers’ São Paulo office, said.
The new São Paulo office is located on Rua Jeronimo Da Veiga, 384 and will provide general corporate, company and commercial advice, with particular emphasis on investment funds, public company listings, initial public offerings and holding company incorporations providing clients with direct access to the jurisdictions of the Cayman Islands, British Virgin Islands, Bermuda and Mauritius.
The event was held on at the newly re-opened Casa Fasano Jardins on Haddock Lobo.
While addressing the audience Conyers Chairman, John Collis, spoke of the firm’s international growth. "Over the past decade, Conyers has seen a marked increase in the use of offshore structures by South and Latin American clients, as well as clients seeking to do business in those regions. The decision to open in São Paulo is part of the firm’s strategy of positioning itself in the world’s leading financial centres in order to provide responsive, timely and thorough advice to clients."
“We are pleased to have the regulatory approval to move ahead with the São Paulo office, which will facilitate even greater personal contact with our clients.”
Alan Dickson, managing partner of Conyers’ São Paulo office, said.
The new São Paulo office is located on Rua Jeronimo Da Veiga, 384 and will provide general corporate, company and commercial advice, with particular emphasis on investment funds, public company listings, initial public offerings and holding company incorporations providing clients with direct access to the jurisdictions of the Cayman Islands, British Virgin Islands, Bermuda and Mauritius.
Larger/Younger Hedge Funds Reported Better Returns for 2008: Study
While previous research has confirmed the widely held belief that emerging funds tend to outperform older and larger funds, hedge fund performance in 2008 saw a partial reversal of that trend, according to PerTrac Financial Solutions in its third annual study that examines hedge fund returns, volatility and risk, based on age and size.
“Last year was a difficult one for hedge funds of all ages and sizes, but once again we saw younger funds outperforming older ones, confirming our findings from earlier studies,” said Meredith Jones, managing director at PerTrac. “However, when it comes to hedge fund performance as a function of fund size, we saw a reversal of the trend established from 1996 through 2007. During 2008, funds with the least assets actually performed the worst, while larger funds posted better returns.”
As in past studies, PerTrac conducted two different analyses: one based on a fund’s asset size, and the other based on a fund’s age. Monthly hedge fund returns were compiled from leading hedge fund databases and analyzed using the proprietary PerTrac Analytical Platform software. In each analysis, funds were re-categorized into one of three assets under management (AUM) size groups: up to $100 million; $100 million to $500 million; and over $500 million. The funds were also categorized into one of three age groups: up to 2 years; 2 to 4 years; and over 4 years. The mean fund return was calculated for each group in each month, creating three size-based monthly indexes and three age-based monthly indexes. Various risk and return statistics were calculated on the returns of each index to evaluate historical performance, and Monte Carlo simulations were run on each index to indicate probable ranges of future returns and drawdowns.
Small Hedge Funds Underperformed Larger Funds for the First Time Since Beginning of Study Data.
The study reveals that small funds averaged a loss of -17.03% in 2008, while medium-sized and large funds fared better, with average losses of -16.04% and -14.10% for the year, respectively. However, over the full history of the indexes, from 1996 through 2008, small funds performed best, with an annualized return of 13.05% versus 9.99% for medium-sized funds and 9.28% for large funds. Along with its stronger returns, the small fund index also showed greater volatility over the 13-year period with an annualized standard deviation of 6.96% versus just 5.92% and 6.05% for the medium-sized and large fund indexes, respectively.
“There are several possible reasons why small funds underperformed their larger peers for the first time ever in 2008. Due to losses across the board, hedge funds experienced heavy redemption requests last year. Larger funds generally have more cash on hand and greater access to lines of credit than small funds, better enabling them to handle redemption requests without compromising their portfolios’ performance,” noted Jones. “The recent market crash also appears to have prompted a ‘flight to quality’ among investors, with surveys indicating that hedge fund investors have become more interested in larger, more ‘institutional’ funds. So it’s likely that smaller funds had to deal with relatively greater redemptions than did their larger peers. We also noted a larger differential in the number of large managers reporting in both the prior and current studies, with a larger percentage of small managers participating in both updates. As a result, there is heavier survivor bias in the large fund group. Other possible reasons include infrastructure considerations, greater reliance on beleaguered prime brokers, and larger redemptions from poor performers pushing more managers into lower asset bands.”
“However, one year does not make a trend,” concluded Jones. “It will be interesting to see whether the small funds’ underperformance in 2008 proves to be a short-term exception to the rule or the start of an official trend.”
Young Funds Continued to Outperform Older Funds in 2008
An examination of the relationship between fund age and performance revealed no surprises for 2008. Hedge funds with the shortest track record continued their trend of superior performance last year as the young fund index lost -11.31% for the year compared to much larger losses of -19.46% and -17.85% by the mid-age and older fund indexes, respectively. Over the full history of the indexes from 1996 through 2008, young funds have generated an annualized return of 15.74% while mid-age and older funds have trailed with annualized returns of 11.48% and 10.12%, respectively. Young funds have also fared best from a risk perspective over the long term; the young fund index has produced an annualized standard deviation of just 6.47% over the 13-year period while the mid-age and older fund indexes have proved more volatile with annualized standard deviations of 7.11% and 6.72%, respectively.
The new study is the latest in a growing body of research produced by PerTrac Financial Solutions for the investment community. The company is devoted to advancing the study of hedge funds and other investments by publishing original research as well as providing free access to their PerTrac Analytical Platform software to academic professors, students, and selected researchers through the PerTrac Educational Use Program.
Editing by Alex Akesson
For HedgeCo.Net
Email: alex@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
“Last year was a difficult one for hedge funds of all ages and sizes, but once again we saw younger funds outperforming older ones, confirming our findings from earlier studies,” said Meredith Jones, managing director at PerTrac. “However, when it comes to hedge fund performance as a function of fund size, we saw a reversal of the trend established from 1996 through 2007. During 2008, funds with the least assets actually performed the worst, while larger funds posted better returns.”
As in past studies, PerTrac conducted two different analyses: one based on a fund’s asset size, and the other based on a fund’s age. Monthly hedge fund returns were compiled from leading hedge fund databases and analyzed using the proprietary PerTrac Analytical Platform software. In each analysis, funds were re-categorized into one of three assets under management (AUM) size groups: up to $100 million; $100 million to $500 million; and over $500 million. The funds were also categorized into one of three age groups: up to 2 years; 2 to 4 years; and over 4 years. The mean fund return was calculated for each group in each month, creating three size-based monthly indexes and three age-based monthly indexes. Various risk and return statistics were calculated on the returns of each index to evaluate historical performance, and Monte Carlo simulations were run on each index to indicate probable ranges of future returns and drawdowns.
Small Hedge Funds Underperformed Larger Funds for the First Time Since Beginning of Study Data.
The study reveals that small funds averaged a loss of -17.03% in 2008, while medium-sized and large funds fared better, with average losses of -16.04% and -14.10% for the year, respectively. However, over the full history of the indexes, from 1996 through 2008, small funds performed best, with an annualized return of 13.05% versus 9.99% for medium-sized funds and 9.28% for large funds. Along with its stronger returns, the small fund index also showed greater volatility over the 13-year period with an annualized standard deviation of 6.96% versus just 5.92% and 6.05% for the medium-sized and large fund indexes, respectively.
“There are several possible reasons why small funds underperformed their larger peers for the first time ever in 2008. Due to losses across the board, hedge funds experienced heavy redemption requests last year. Larger funds generally have more cash on hand and greater access to lines of credit than small funds, better enabling them to handle redemption requests without compromising their portfolios’ performance,” noted Jones. “The recent market crash also appears to have prompted a ‘flight to quality’ among investors, with surveys indicating that hedge fund investors have become more interested in larger, more ‘institutional’ funds. So it’s likely that smaller funds had to deal with relatively greater redemptions than did their larger peers. We also noted a larger differential in the number of large managers reporting in both the prior and current studies, with a larger percentage of small managers participating in both updates. As a result, there is heavier survivor bias in the large fund group. Other possible reasons include infrastructure considerations, greater reliance on beleaguered prime brokers, and larger redemptions from poor performers pushing more managers into lower asset bands.”
“However, one year does not make a trend,” concluded Jones. “It will be interesting to see whether the small funds’ underperformance in 2008 proves to be a short-term exception to the rule or the start of an official trend.”
Young Funds Continued to Outperform Older Funds in 2008
An examination of the relationship between fund age and performance revealed no surprises for 2008. Hedge funds with the shortest track record continued their trend of superior performance last year as the young fund index lost -11.31% for the year compared to much larger losses of -19.46% and -17.85% by the mid-age and older fund indexes, respectively. Over the full history of the indexes from 1996 through 2008, young funds have generated an annualized return of 15.74% while mid-age and older funds have trailed with annualized returns of 11.48% and 10.12%, respectively. Young funds have also fared best from a risk perspective over the long term; the young fund index has produced an annualized standard deviation of just 6.47% over the 13-year period while the mid-age and older fund indexes have proved more volatile with annualized standard deviations of 7.11% and 6.72%, respectively.
The new study is the latest in a growing body of research produced by PerTrac Financial Solutions for the investment community. The company is devoted to advancing the study of hedge funds and other investments by publishing original research as well as providing free access to their PerTrac Analytical Platform software to academic professors, students, and selected researchers through the PerTrac Educational Use Program.
Editing by Alex Akesson
For HedgeCo.Net
Email: alex@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Future of Hedge Funds Highlighted at the 6th Annual SS&C Hedge Fund Symposium
More than 85 hedge fund professionals last week attended the 6th Annual Hedge Fund Symposium hosted by financial software provider SS&C Technologies in London.
The panel was moderated by Richard Greensted, Editor of Script Issue, and participants included Simon Hookway, CEO of MSS Capital and Managing Partner of MAG capital; Jon Mills, Partner at KPMG; Duncan Crawford, Head of Capital Introductions, Prime Brokerage at Newedge Group; Peter Astleford, Partner at Dechert; and Joe Seet, Senior Partner at Sigma Partnership.
"The proposed directive on alternative investment funds was prepared in too great a hurry and is too ambitious." Peter Astleford, Partner at Dechert, advised on the topic of regulation, "However there are some useful parts that will help restore confidence to the industry and improve marketing opportunities in Continental Europe."
On a more positive note for the industry, Jon Mills, Partner at KPMG, commented, "There really are plenty of reasons for the hedge fund industry to be optimistic in 2009 and beyond - we are seeing improving performance during Q1, institutional investors continuing to allocate assets to alternative investments, a healthy pipeline of new fund launches and recognition from regulatory bodies that hedge funds were not the cause of the financial crisis."
"Although the alternatives industry as well as the global financial services industry as a whole is going through arguably the biggest change it has seen, there are still many challenges and opportunities for the remaining participants,” host of the event Edwin Parker, Business Development Manager of SS&C Funds Services EMEA, an independent Fund Administration service provider, explained. “Alternative investments will continue to remain a pivotal part of any investment portfolio diversification. Having the right service provider and technology partner helps ensure that managers stay ahead of the game. As one of the largest independent administrators globally, SS&C Fund Services delivers big firm resources with small firm responsiveness."
The panel was moderated by Richard Greensted, Editor of Script Issue, and participants included Simon Hookway, CEO of MSS Capital and Managing Partner of MAG capital; Jon Mills, Partner at KPMG; Duncan Crawford, Head of Capital Introductions, Prime Brokerage at Newedge Group; Peter Astleford, Partner at Dechert; and Joe Seet, Senior Partner at Sigma Partnership.
"The proposed directive on alternative investment funds was prepared in too great a hurry and is too ambitious." Peter Astleford, Partner at Dechert, advised on the topic of regulation, "However there are some useful parts that will help restore confidence to the industry and improve marketing opportunities in Continental Europe."
On a more positive note for the industry, Jon Mills, Partner at KPMG, commented, "There really are plenty of reasons for the hedge fund industry to be optimistic in 2009 and beyond - we are seeing improving performance during Q1, institutional investors continuing to allocate assets to alternative investments, a healthy pipeline of new fund launches and recognition from regulatory bodies that hedge funds were not the cause of the financial crisis."
"Although the alternatives industry as well as the global financial services industry as a whole is going through arguably the biggest change it has seen, there are still many challenges and opportunities for the remaining participants,” host of the event Edwin Parker, Business Development Manager of SS&C Funds Services EMEA, an independent Fund Administration service provider, explained. “Alternative investments will continue to remain a pivotal part of any investment portfolio diversification. Having the right service provider and technology partner helps ensure that managers stay ahead of the game. As one of the largest independent administrators globally, SS&C Fund Services delivers big firm resources with small firm responsiveness."
28 May 2009
AIMA To Mobilise Hedge Fund Industry On EC Directive
The Alternative Investment Management Association (AIMA) – the global hedge fund industry association – has announced plans to mobilise the world’s hedge fund industry on the European Commission’s draft directive for Alternative Investment Fund Managers.
“There are provisions in this directive with potentially serious consequences for managers, investors, service providers and advisers internationally." Andrew Baker, AIMA CEO, said, "As the global trade body for the industry it is right therefore that AIMA takes the lead in mobilising resources in order to secure the best possible outcome for the industry on the directive."
"The feedback we’re getting from our members, who manage more than 75% of hedge fund industry assets globally, is that the draft directive has created enormous confusion. Because of the lack of proper consultation the directive presumes a structure for the industry which bears little relationship to reality. Implementation in its current form could prove to be unworkable. It also appears to be in conflict with much of existing EC financial services legislation." Baker said.
"We will therefore call for urgent effort to be devoted to re-drafting this directive." Baker continued, "To achieve this, AIMA will be announcing a series of initiatives to mobilise the industry. We will not oppose everything in the directive; some of the provisions, such as manager authorisation and registration, are already supported by us and measures which increase transparency to assist the authorities in the understanding of systemic risk issues are to be welcomed."
"We want to work with the Commission, EU governments and the European Parliament on this. We are not opposed to the directive per se, we just want the final directive to be practical and realistic.” Baker concluded.
“There are provisions in this directive with potentially serious consequences for managers, investors, service providers and advisers internationally." Andrew Baker, AIMA CEO, said, "As the global trade body for the industry it is right therefore that AIMA takes the lead in mobilising resources in order to secure the best possible outcome for the industry on the directive."
"The feedback we’re getting from our members, who manage more than 75% of hedge fund industry assets globally, is that the draft directive has created enormous confusion. Because of the lack of proper consultation the directive presumes a structure for the industry which bears little relationship to reality. Implementation in its current form could prove to be unworkable. It also appears to be in conflict with much of existing EC financial services legislation." Baker said.
"We will therefore call for urgent effort to be devoted to re-drafting this directive." Baker continued, "To achieve this, AIMA will be announcing a series of initiatives to mobilise the industry. We will not oppose everything in the directive; some of the provisions, such as manager authorisation and registration, are already supported by us and measures which increase transparency to assist the authorities in the understanding of systemic risk issues are to be welcomed."
"We want to work with the Commission, EU governments and the European Parliament on this. We are not opposed to the directive per se, we just want the final directive to be practical and realistic.” Baker concluded.
27 May 2009
Europe's Top 50 Hedge Fund Firms
Alpha Magazine unveiled the 2009 Europe Hedge Fund top 50, showing that that Europe was not immune to investor angst over hedge funds. A wave of investor withdrawals shapes the magazine's annual ranking of the 50 biggest European single-manager hedge fund firms, as total assets fell to $285 billion as of January 1, 2009, from $405 billion a year earlier, a 30% drop.
Europe's hedge fund business may be looking at an encouraging longer-term picture, however. The region boasts five of the world's 20 biggest hedge fund firms -- led by two London-based powerhouses, Brevan Howard Asset Management and Man Investments.
Brevan Howard's total assets surged from $21 billion at the end of 2007 to $26.8 billion when this year began, elevating the firm from third to first in Alpha's 2009 Europe Hedge Fund 50. Man Investments had a similarly strong year; its overall assets grew from $20.9 billion to $24.4 billion, lifting the firm two rungs to second place.
The two top European hedge fund firms in last year's ranking have been taken down a few notches. Barclays Global Investors falls from No. 1 to No. 3, and GLG Partners drops from No. 2 to No. 8; the firms saw their assets drop, respectively, 35 percent and 52 percent.
Alpha's Europe Hedge Fund Top 5
Rank Firm Total Capital ($ millions)
1 Brevan Howard Asset Management $26,840
2 Man Investments 24,400
3 Barclays Global Investors 17,000
4 BlueBay Asset Management 16,700
5 Bluecrest Capital Management 13,273
Click on Alpha's 2009 Europe Hedge Fund 50 to view the complete rankings of all 50 firms.
How the Ranking Was Compiled
For Alpha's 2009 Europe Hedge Fund 50, data was gathered through questionnaires completed by hedge fund managers, supplemented by extensive Alpha staff research. We provide each manager's total assets under management as of January 1, 2009, unless otherwise indicated. Where possible, we also show assets at the individual fund level, with 2008 net returns, for the five biggest funds run by a firm.
Europe's hedge fund business may be looking at an encouraging longer-term picture, however. The region boasts five of the world's 20 biggest hedge fund firms -- led by two London-based powerhouses, Brevan Howard Asset Management and Man Investments.
Brevan Howard's total assets surged from $21 billion at the end of 2007 to $26.8 billion when this year began, elevating the firm from third to first in Alpha's 2009 Europe Hedge Fund 50. Man Investments had a similarly strong year; its overall assets grew from $20.9 billion to $24.4 billion, lifting the firm two rungs to second place.
The two top European hedge fund firms in last year's ranking have been taken down a few notches. Barclays Global Investors falls from No. 1 to No. 3, and GLG Partners drops from No. 2 to No. 8; the firms saw their assets drop, respectively, 35 percent and 52 percent.
Alpha's Europe Hedge Fund Top 5
Rank Firm Total Capital ($ millions)
1 Brevan Howard Asset Management $26,840
2 Man Investments 24,400
3 Barclays Global Investors 17,000
4 BlueBay Asset Management 16,700
5 Bluecrest Capital Management 13,273
Click on Alpha's 2009 Europe Hedge Fund 50 to view the complete rankings of all 50 firms.
How the Ranking Was Compiled
For Alpha's 2009 Europe Hedge Fund 50, data was gathered through questionnaires completed by hedge fund managers, supplemented by extensive Alpha staff research. We provide each manager's total assets under management as of January 1, 2009, unless otherwise indicated. Where possible, we also show assets at the individual fund level, with 2008 net returns, for the five biggest funds run by a firm.
Barclay Hedge Fund Rankings Rate Tranen #1 in Fixed Income Asset Backed Lending
British Virgin Islands based hedge fund manager Tranen Capital took the lead in the Fixed Income - Asset-Backed Lending category for March 2009 with a return of 2.49%.
In addition to the March performance, the fund, 'Tranen Capital Alternative Investment Fund Ltd.' posted a YTD (through April) change in NAV of 11.5%.
“Investors are keenly aware of the dismal and unstable returns from the major financial markets. They are demanding alternatives and absolute returns. The Barclay ranking certainly highlights the strategy’s excellent returns but more importantly, it demonstrates that the funds’ performance is non-correlated to financial markets. The Fund’s NAV has increased 27% since July 2008, which has been independently determined by our actuaries, Data Life, and confirmed by our Administrator Commonwealth Fund Services. Additionally, we have also recently delivered our first independent audit to investors, “says Kenneth Landgaard, Portfolio Manager.
Tranen Capital’s strategy is to trade life insurance policies in the Life Markets Space, more commonly referred to as the Life Settlements Market. The Life Markets Space enables seniors to sell their life insurance contracts for more than the cash surrender value than they would otherwise receive from the Insurance Company. The credit crisis has helped create more supply as Seniors (65 or older) are looking for other ways to generate cash. In fact, the life settlements market is expected to grow to over $160 billion over the next several years, according to a Sanford Bernstein report.
Arthur Bowen, Director and in-house counsel explained, “The growth in the life settlement market confirms the validity of this asset class and we continue to see great interest from institutional investors. These sophisticated investors understand the strategy and they appreciate that Tranen has gone to great lengths to provide an institutional quality product with a great level of transparency.”
Tranen Capital offers qualified offshore investors access to the Tranen Capital Alternative Investment Fund Ltd. with a 1% acquisition fee and a 20% incentive fee. The minimum investment is $100k USD.
In addition to the March performance, the fund, 'Tranen Capital Alternative Investment Fund Ltd.' posted a YTD (through April) change in NAV of 11.5%.
“Investors are keenly aware of the dismal and unstable returns from the major financial markets. They are demanding alternatives and absolute returns. The Barclay ranking certainly highlights the strategy’s excellent returns but more importantly, it demonstrates that the funds’ performance is non-correlated to financial markets. The Fund’s NAV has increased 27% since July 2008, which has been independently determined by our actuaries, Data Life, and confirmed by our Administrator Commonwealth Fund Services. Additionally, we have also recently delivered our first independent audit to investors, “says Kenneth Landgaard, Portfolio Manager.
Tranen Capital’s strategy is to trade life insurance policies in the Life Markets Space, more commonly referred to as the Life Settlements Market. The Life Markets Space enables seniors to sell their life insurance contracts for more than the cash surrender value than they would otherwise receive from the Insurance Company. The credit crisis has helped create more supply as Seniors (65 or older) are looking for other ways to generate cash. In fact, the life settlements market is expected to grow to over $160 billion over the next several years, according to a Sanford Bernstein report.
Arthur Bowen, Director and in-house counsel explained, “The growth in the life settlement market confirms the validity of this asset class and we continue to see great interest from institutional investors. These sophisticated investors understand the strategy and they appreciate that Tranen has gone to great lengths to provide an institutional quality product with a great level of transparency.”
Tranen Capital offers qualified offshore investors access to the Tranen Capital Alternative Investment Fund Ltd. with a 1% acquisition fee and a 20% incentive fee. The minimum investment is $100k USD.
26 May 2009
MENA Equity Fund Launch
Hedge fund manager, Majid Al Futtaim Asset Management, is launching its first Middle East and North Africa (MENA) equity fund, the Luxembourg domiciled 'Elite MENA Equity Fund'.
Investors can invest alongside the family office of Majid Al Futtaim and gain access to the services of the portfolio management team responsible for the MENA equity investments. The Majid Al Futtaim family office has seeded the fund with Dh550 million ($150 million), making it one of the largest MENA equity funds available to investors.
"Investors deserve to have the best home for their money in both turbulent and stable investment environments." Iyad Malas, Chief Executive, Majid Al Futtaim Asset Management, said, "By opening the doors to the services of the portfolio management team responsible for Majid Al Futtaim's family office, we offer investors a tried and tested place to invest. The Elite MENA Equity Fund offers investors an opportunity to invest with a team whose performance speaks for itself."
The new ‘long-only' open-ended fund aims to achieve long-term asset growth and capital preservation through a ‘Risk-Managed Growth' approach to MENA investments.
Investors can invest alongside the family office of Majid Al Futtaim and gain access to the services of the portfolio management team responsible for the MENA equity investments. The Majid Al Futtaim family office has seeded the fund with Dh550 million ($150 million), making it one of the largest MENA equity funds available to investors.
"Investors deserve to have the best home for their money in both turbulent and stable investment environments." Iyad Malas, Chief Executive, Majid Al Futtaim Asset Management, said, "By opening the doors to the services of the portfolio management team responsible for Majid Al Futtaim's family office, we offer investors a tried and tested place to invest. The Elite MENA Equity Fund offers investors an opportunity to invest with a team whose performance speaks for itself."
The new ‘long-only' open-ended fund aims to achieve long-term asset growth and capital preservation through a ‘Risk-Managed Growth' approach to MENA investments.
The Change Imperative for Hedge Fund Reporting: Webinar
Principal at Rothstein Kass, Charles F. Plaveczky will be speaking at a webinar for hedge fund managers interested in meeting the growing demands for increased reporting transparency and control, according to fund manager and host Confluence.
“As the April 30 hedge fund financial reporting cycle clearly demonstrated, prevailing error-prone manual processes for hedge fund reporting are far too brittle and inflexible—and they lack the scalability to meet increasingly complex reporting requirements,” said Plaveczky. “The pressure for greater flexibility and control will only increase with the adoption of additional reporting rules, and challenge current processes even more.”
The webinar entitled “The Change Imperative for Hedge Fund Reporting” and will take place on Friday, May 29 at 11:00 am EDT.
Kirk Botula, Chief Operating Officer of Confluence, will also provide information on new hedge fund reporting trends and challenges, discussing processes to maximize accuracy, efficiency and control in the reporting process as hedge funds deal with a variety of reporting requirements—such as FAS 157 fair market reporting, FAS 161 disclosures about derivative instruments and hedging activities, and how new International Financial Accounting Standards from IASB will challenge prevailing back-office reporting processes.
“Multiple stakeholders are demanding greater reporting diligence from hedge funds and their administrators. Regulators are clearly focused on greater transparency, investors are demanding additional disclosures and more frequent reporting, and accounting and auditor firms are mandating improved process control and documentation,” said Botula. “Hedge funds must consider how technology and automation can improve their reporting processes in order to provide the speed, control and flexibility needed to weather a new era of reporting transparency and control.”
Hedge fund companies and their fund administration service providers can register for this complimentary webinar at www.confluence.com/GETCONTROL. Individuals who register will also receive Confluence’s new whitepaper, Hedge Fund Reporting: The Change Imperative.
“As the April 30 hedge fund financial reporting cycle clearly demonstrated, prevailing error-prone manual processes for hedge fund reporting are far too brittle and inflexible—and they lack the scalability to meet increasingly complex reporting requirements,” said Plaveczky. “The pressure for greater flexibility and control will only increase with the adoption of additional reporting rules, and challenge current processes even more.”
The webinar entitled “The Change Imperative for Hedge Fund Reporting” and will take place on Friday, May 29 at 11:00 am EDT.
Kirk Botula, Chief Operating Officer of Confluence, will also provide information on new hedge fund reporting trends and challenges, discussing processes to maximize accuracy, efficiency and control in the reporting process as hedge funds deal with a variety of reporting requirements—such as FAS 157 fair market reporting, FAS 161 disclosures about derivative instruments and hedging activities, and how new International Financial Accounting Standards from IASB will challenge prevailing back-office reporting processes.
“Multiple stakeholders are demanding greater reporting diligence from hedge funds and their administrators. Regulators are clearly focused on greater transparency, investors are demanding additional disclosures and more frequent reporting, and accounting and auditor firms are mandating improved process control and documentation,” said Botula. “Hedge funds must consider how technology and automation can improve their reporting processes in order to provide the speed, control and flexibility needed to weather a new era of reporting transparency and control.”
Hedge fund companies and their fund administration service providers can register for this complimentary webinar at www.confluence.com/GETCONTROL. Individuals who register will also receive Confluence’s new whitepaper, Hedge Fund Reporting: The Change Imperative.
25 May 2009
S&P Research Arm Bought By Hedge Fund Provider
Hedge fund research provider, Guidepoint Global, LLC, has acquired tech and media company, Vista Research, Inc. from Standard & Poor’s.
“In the current economic climate, investors and business decision makers are increasingly seeking on-demand knowledge and insights through expert networks,” said Albert Sebag, CEO of Guidepoint Global. “Guidepoint’s acquisition of Vista, a pioneer in the expert network field, gives our clients access to one of the most comprehensive primary research networks in the world, delivered with the single-minded focus on customized service that they have come to expect.”
Guidepoint has over 130,000 global experts and a compliance framework supported by a proprietary IT platform, as well as one of the most advanced online client interfaces.
With the acquisition of Vista Research, Guidepoint Global said it will expand its team of client service professionals and recruiters to support a client base that includes many of the world’s leading private equity firms, mutual funds, hedge funds, strategy consultancies and multinational companies.
“In the current economic climate, investors and business decision makers are increasingly seeking on-demand knowledge and insights through expert networks,” said Albert Sebag, CEO of Guidepoint Global. “Guidepoint’s acquisition of Vista, a pioneer in the expert network field, gives our clients access to one of the most comprehensive primary research networks in the world, delivered with the single-minded focus on customized service that they have come to expect.”
Guidepoint has over 130,000 global experts and a compliance framework supported by a proprietary IT platform, as well as one of the most advanced online client interfaces.
With the acquisition of Vista Research, Guidepoint Global said it will expand its team of client service professionals and recruiters to support a client base that includes many of the world’s leading private equity firms, mutual funds, hedge funds, strategy consultancies and multinational companies.
22 May 2009
Tel Aviv Conference to Serve as International Economic Collaboration Platform
West Palm Beach (HedgeCo.net) - The organizing committee of The International Organization of Securities Commissions (IOSCO) is to host more than 500 of the leading securities regulators and economic experts from more than 65 countries at this year's conference in Tel Aviv, Israel, June 8-11.
"We are honored to host the world's leading regulatory experts, from Albania to Zambia, in Israel for this important event," said Spokeswoman Yael Almog. "Israel 's sophisticated local market regulation and high levels of investor protection make it a great setting for this historical event. We believe that IOSCO 2009 will not only help restore strength in the world’s regulatory system, but more importantly, it will foster renewed confidence among the international investment community."
Conference participants include SEC Chairwoman Mary Schapiro, Goldman Sachs CEO Lloyd Blankfein, S&P President Deven Sharma and UK FSA Chairman Lord Adair Turner and Mario Draghi, Governor of Banca d’talia and Chairman of the Financial Stability Forum.
The conference provides the opportunity, IOSCO said, for regulators from both emerging and developed markets to address the global effects of the financial crisis on the financial and securities system and the stability of the world economy. In addition, it will emphasize the role emerging markets will play in the global recovery process and will outline the need and importance for new partnerships between developed and developing markets.
The conference will be hosted by the Israel Securities Authority (ISA) and the Tel Aviv Stock Exchange (TASE).
"We are honored to host the world's leading regulatory experts, from Albania to Zambia, in Israel for this important event," said Spokeswoman Yael Almog. "Israel 's sophisticated local market regulation and high levels of investor protection make it a great setting for this historical event. We believe that IOSCO 2009 will not only help restore strength in the world’s regulatory system, but more importantly, it will foster renewed confidence among the international investment community."
Conference participants include SEC Chairwoman Mary Schapiro, Goldman Sachs CEO Lloyd Blankfein, S&P President Deven Sharma and UK FSA Chairman Lord Adair Turner and Mario Draghi, Governor of Banca d’talia and Chairman of the Financial Stability Forum.
The conference provides the opportunity, IOSCO said, for regulators from both emerging and developed markets to address the global effects of the financial crisis on the financial and securities system and the stability of the world economy. In addition, it will emphasize the role emerging markets will play in the global recovery process and will outline the need and importance for new partnerships between developed and developing markets.
The conference will be hosted by the Israel Securities Authority (ISA) and the Tel Aviv Stock Exchange (TASE).
21 May 2009
Stanford Completes Second Phase of Hedge Fund Case Study
The second phase of a hedge fund business model case study has been finalized by the Stanford University’s Graduate School of Business. GlobeOp is the first hedge fund administrator to be featured in a case study developed for classroom use by Stanford.
‘GlobeOp: Structuring for Hedge Fund Growth, 2003-2008’ follows the initial study that documented GlobeOp’s foundation, strategic decisions and activities during the first three years following its foundation in 2000.
The new chapter documents GlobeOp’s five-year growth from a young business with 400 employees and 82 hedge fund clients, representing more than $26 billion in assets under administration (AuA), to a publicly-listed company with a global service network on three continents. Today GlobeOp employs 1,600 people in 10 facilities worldwide and serves more than 180 clients representing $91 billion in AuA.
"The five-year period discussed in the new chapter details strategic milestones for GlobeOp that were also important learning experiences for us as entrepreneurs and as a service provider." Hans Hufschmid, CEO of GlobeOp, said, "As it concludes at the beginning of a year of unprecedented turmoil for our clients and financial markets in general, we hope this latest installment will provide students with useful insight into the vision, nimbleness and innovation needed as market opportunities and challenges develop. With new market fundamentals now emerging, we believe the focus on client service and transparency detailed in the case study will position us well for the future."
Professor Glenn R. Carroll, who led the study, noted that, "This second GlobeOp case provides an exceptional opportunity to see how an entrepreneurial start-up in financial services was transformed into a mature global organization without losing its technological advantage. We are very grateful to GlobeOp for allowing us access and know that students everywhere will gain from studying the case.”
The case study was supervised by Professor Carroll, Laurence W. Lane professor of Organizations in the Graduate School of Business and (by courtesy) professor of Sociology in the School of Humanities and Sciences, Stanford University; and written by Victoria Chang, a Graduate School of Business researcher.
This latest case study segment documents how GlobeOp established a significant presence in India to provide clients with 24/5 services through scale and time zone optimization; hired a chief operating officer to create structured people and process management; and became a publicly-listed company. It also discusses the development of GlobeOp’s focus on people, processes and technology and the creation of new revenue streams through unbundled services in response to new market opportunities.
The study can be accessed on the on the GlobeOp website, it will be distributed by Harvard Business School Publishing.
‘GlobeOp: Structuring for Hedge Fund Growth, 2003-2008’ follows the initial study that documented GlobeOp’s foundation, strategic decisions and activities during the first three years following its foundation in 2000.
The new chapter documents GlobeOp’s five-year growth from a young business with 400 employees and 82 hedge fund clients, representing more than $26 billion in assets under administration (AuA), to a publicly-listed company with a global service network on three continents. Today GlobeOp employs 1,600 people in 10 facilities worldwide and serves more than 180 clients representing $91 billion in AuA.
"The five-year period discussed in the new chapter details strategic milestones for GlobeOp that were also important learning experiences for us as entrepreneurs and as a service provider." Hans Hufschmid, CEO of GlobeOp, said, "As it concludes at the beginning of a year of unprecedented turmoil for our clients and financial markets in general, we hope this latest installment will provide students with useful insight into the vision, nimbleness and innovation needed as market opportunities and challenges develop. With new market fundamentals now emerging, we believe the focus on client service and transparency detailed in the case study will position us well for the future."
Professor Glenn R. Carroll, who led the study, noted that, "This second GlobeOp case provides an exceptional opportunity to see how an entrepreneurial start-up in financial services was transformed into a mature global organization without losing its technological advantage. We are very grateful to GlobeOp for allowing us access and know that students everywhere will gain from studying the case.”
The case study was supervised by Professor Carroll, Laurence W. Lane professor of Organizations in the Graduate School of Business and (by courtesy) professor of Sociology in the School of Humanities and Sciences, Stanford University; and written by Victoria Chang, a Graduate School of Business researcher.
This latest case study segment documents how GlobeOp established a significant presence in India to provide clients with 24/5 services through scale and time zone optimization; hired a chief operating officer to create structured people and process management; and became a publicly-listed company. It also discusses the development of GlobeOp’s focus on people, processes and technology and the creation of new revenue streams through unbundled services in response to new market opportunities.
The study can be accessed on the on the GlobeOp website, it will be distributed by Harvard Business School Publishing.
Hedge Fund Performance for April 2009
In a preliminary hedge fund performance report for April 2009 and asset flows through March, morningstar reported the largest one month-return since January 2006—bringing hedge fund returns into positive territory for 2009.
"Over the last two months, the bulls have dominated the markets, and stories of green shoots in the economy colored the financial media. The rally was led by higher-risk asset classes, including small-cap, financial sector, and emerging market stocks, as well as high-yield bonds and leveraged loans. Many hedge fund managers weren't confident in the sustainability of the rally, and invested with a more conservative market exposure," said Nadia Papagiannis, Morningstar hedge fund analyst.
U.S. convertible bonds benefited from the trend toward higher-risk, low-credit-quality investments. According to the Merrill Lynch All U.S. Convertibles Index, these securities enjoyed their best month since 1987, with speculative-grade convertibles returning more than double the gains of investment-grade securities. The Morningstar Convertible Arbitrage Hedge Fund Index, the best-performing Morningstar hedge fund index this year, rose 5.1% in April and 12.5% year to date.
Also in the lower-quality field, the Morningstar Distressed Securities Hedge Fund Index increased 2.1% in April, the largest since the beginning of the credit crunch in mid 2007.
In emerging market equities, Eastern European countries produced the best returns in April, although this region is still recovering from its early 2009 nosedive. The only losers in April were the Morningstar Global Trend and Global Non-Trend Hedge Fund Indexes, which dropped 1.7% and 0.5% respectively.
According to Morningstar’s database, hedge funds overall continued to show a decline in outflows. In January, investors withdrew more than $29 billion from hedge funds, but February outflows totaled less than $6 billion, while March's preliminary figure showed an even lower amount, at $3.6 billion. Despite the overall March trend of outflows, developed Asia equity hedge funds actually had net inflows of $4.1 billion in March, and investors were rewarded. The Morningstar MSCI Japan Hedge Fund Index increased 2.5% in April, while the broader Morningstar Developed Asia Equity Hedge Fund Index jumped 5.2%.
"Over the last two months, the bulls have dominated the markets, and stories of green shoots in the economy colored the financial media. The rally was led by higher-risk asset classes, including small-cap, financial sector, and emerging market stocks, as well as high-yield bonds and leveraged loans. Many hedge fund managers weren't confident in the sustainability of the rally, and invested with a more conservative market exposure," said Nadia Papagiannis, Morningstar hedge fund analyst.
U.S. convertible bonds benefited from the trend toward higher-risk, low-credit-quality investments. According to the Merrill Lynch All U.S. Convertibles Index, these securities enjoyed their best month since 1987, with speculative-grade convertibles returning more than double the gains of investment-grade securities. The Morningstar Convertible Arbitrage Hedge Fund Index, the best-performing Morningstar hedge fund index this year, rose 5.1% in April and 12.5% year to date.
Also in the lower-quality field, the Morningstar Distressed Securities Hedge Fund Index increased 2.1% in April, the largest since the beginning of the credit crunch in mid 2007.
In emerging market equities, Eastern European countries produced the best returns in April, although this region is still recovering from its early 2009 nosedive. The only losers in April were the Morningstar Global Trend and Global Non-Trend Hedge Fund Indexes, which dropped 1.7% and 0.5% respectively.
According to Morningstar’s database, hedge funds overall continued to show a decline in outflows. In January, investors withdrew more than $29 billion from hedge funds, but February outflows totaled less than $6 billion, while March's preliminary figure showed an even lower amount, at $3.6 billion. Despite the overall March trend of outflows, developed Asia equity hedge funds actually had net inflows of $4.1 billion in March, and investors were rewarded. The Morningstar MSCI Japan Hedge Fund Index increased 2.5% in April, while the broader Morningstar Developed Asia Equity Hedge Fund Index jumped 5.2%.
Hedge Fund Industry Expert Hired to run Distressed Mortgage Securities Tool
LoanInsights, a San Francisco-based financial services and technology company, has hired James Sias as Director of Business Development. Sias will be responsible for working with banks, hedge funds and US government entities to help them leverage the newly launched LoanInsights SMART (Secured Mortgage Asset Resolution Tool).
The new SMART platform enables financial institutions, investors and the government to value and manage optimally the $1 trillion-plus in so-called “toxic assets” that are a primary cause of the nation’s severe economic downturn and continue to be a major drag on the hoped for recovery.
"James’ real-world experience will be critical to our efforts in reaching out to hedge funds, banks and other investors to demonstrate how our new tools can help them effectively and profitably manage their distressed mortgage assets,” said Jonathan Strike, President and Co-Founder of LoanInsights. “In addition, with his deep knowledge of the mortgage industry and underlying process, James clearly understands what the various players need to do now to solve the toxic assets problem and help get credit flowing again."
The LoanInsights team has been working for the past eight months with investor groups, including hedge funds and private investors, to test the SMART process and technology platform in beta mode. During this time, the investors realized an unleveraged annual return on equity in excess of 30% on those portfolios analyzed and liquidated through the platform. In addition, the homeowners who were part of the program refinanced into lower, fixed-rate mortgages, and in some cases actually reduced their overall mortgage balances.
The new SMART platform enables financial institutions, investors and the government to value and manage optimally the $1 trillion-plus in so-called “toxic assets” that are a primary cause of the nation’s severe economic downturn and continue to be a major drag on the hoped for recovery.
"James’ real-world experience will be critical to our efforts in reaching out to hedge funds, banks and other investors to demonstrate how our new tools can help them effectively and profitably manage their distressed mortgage assets,” said Jonathan Strike, President and Co-Founder of LoanInsights. “In addition, with his deep knowledge of the mortgage industry and underlying process, James clearly understands what the various players need to do now to solve the toxic assets problem and help get credit flowing again."
The LoanInsights team has been working for the past eight months with investor groups, including hedge funds and private investors, to test the SMART process and technology platform in beta mode. During this time, the investors realized an unleveraged annual return on equity in excess of 30% on those portfolios analyzed and liquidated through the platform. In addition, the homeowners who were part of the program refinanced into lower, fixed-rate mortgages, and in some cases actually reduced their overall mortgage balances.
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