Robert Lyster, co-founder of hedge fund Lyster Watson Management Inc. has found a new investment for his hedge fund millions, the land rich, cash poor, winemaking lifestyle.
Wall Street wine mavens interested in purchasing a Burgundy vineyard or expanding their investments, have the opportunity to invest in the some 105 million bottles of chardonnay white wines and 75 million bottles of pinot noir reds produced annually. There are about 4,000 “domaines” and 59 types of soil beneath the Cote d’Or’s 50-kilometer (31-mile) stretch.
The draw for wannabe wine landowners is investing in the legacy of 2,000 years of Cote d’Or winemaking that goes back to Roman times, but the lure of being part of that legacy can can be a fatal attraction, according to a Bloomberg report.
“Owning a domaine is a venture capitalist’s dream, high in risk and if the weather is good and you’re really lucky, you might make a 4 percent return. But owning a domaine is the greatest lifestyle imaginable.” Says Wasserman, a vinyard owner in his own right.
It takes three years after the first harvest for the wine to be ready for market,” says Wasserman, who has been a Burgundy wine trader for 40 of his 62 years. “You’re not making a cent for three years, and then your buyers must wait a minimum of three to four years after that before they can drink it. Perfection wouldn’t appear until the wine is six to eight years old…..The land will cost you $6 million, and that will produce 90 casks of approximately 25,000 bottles of wine.”
Wasserman says it would cost an additional $4 million to revamp the domaine and keep it running for three years with workers, equipment and a new winemaker.
Wholesale, the wine would fetch between 15 euros and 30 euros a bottle, the price more dependent on media hype than quality. On the shelf, the wine would probably retail for $50 to $55 a bottle.
“Your first sale on a $10 million investment at best would net less than $500,000 after three years,....And you’re not going to sell all 25,000 bottles.”
As founding partner of his hedge fund Robert C. Lyster conducts in depth research on the strategies and results of more than 2,400 hedge funds representing all investment styles, hedge funds are not only more complex, but because they are also influenced by market factors in different ways than traditional investments, hedge fund analysis calls for specialization and focus. Lyster Watson has focused exclusively on hedge funds for the last 13 years.
28 Sept 2006
26 Sept 2006
Hedge Funds Cash out on Good weather
So far this year hurricanes are few and far between, but the intensity of last years storms caused hedge funds to bet billions of dollars on reinsurance.
The hedge funds that put these billion dollar bets on another Hurricane Katrina not hitting the U.S. coastline now have high expectations due to the forecasters prediction of a a mild hurricane season. There could be massive returns on their investment in CAT bonds.
A big storm can disrupt energy supplies, causing a major fluctuation in the price of gasoline that sends shock waves through the economy. If a big enough storm hits, the investors could lose everything.
Hedge funds “will have made a bomb”, according to one reinsurance broker. But it is difficult to calculate precisely the returns that hedge funds will make from reinsurance, given that most catastrophe bonds will have been bought and sold in private transactions.
Hedge funds piled into the reinsurance market after last year’s record hurricane season, which inflicted huge losses on the global insurance and reinsurance industries. Sales of catastrophe bonds may triple to $4 billion this year. Hurricane Katrina produced record claims of more than $90 billion last year. Cat bonds emerged after Hurricane Andrew devastated the Florida coast in 1992, triggering record losses of $20 billion.
Hedge funds bought the highest risk bonds, those securities carry the highest reward because they cover multiple perils: North Atlantic hurricanes, European windstorms, terrorist related threats, and earthquakes in California and Japan.
The hedge funds that put these billion dollar bets on another Hurricane Katrina not hitting the U.S. coastline now have high expectations due to the forecasters prediction of a a mild hurricane season. There could be massive returns on their investment in CAT bonds.
A big storm can disrupt energy supplies, causing a major fluctuation in the price of gasoline that sends shock waves through the economy. If a big enough storm hits, the investors could lose everything.
Hedge funds “will have made a bomb”, according to one reinsurance broker. But it is difficult to calculate precisely the returns that hedge funds will make from reinsurance, given that most catastrophe bonds will have been bought and sold in private transactions.
Hedge funds piled into the reinsurance market after last year’s record hurricane season, which inflicted huge losses on the global insurance and reinsurance industries. Sales of catastrophe bonds may triple to $4 billion this year. Hurricane Katrina produced record claims of more than $90 billion last year. Cat bonds emerged after Hurricane Andrew devastated the Florida coast in 1992, triggering record losses of $20 billion.
Hedge funds bought the highest risk bonds, those securities carry the highest reward because they cover multiple perils: North Atlantic hurricanes, European windstorms, terrorist related threats, and earthquakes in California and Japan.
25 Sept 2006
Oil Slump and Hedge funds
Traders said today that the precious metals market is under pressure because of a sharp drop in oil in the recent past. Prices fell more than 3% this week, taking it almost $17 below a record-high of $78.40 in July. Oil prices then spiked on Sept 20, bringing US light crude up 10 cents at $61.76.
Some traders speculate that the volatile surges may be linked to billion dollar losses at prominent hedge funds. “As the market seems to fear that further hedge funds could liquidate long positions, we expect energy prices to test even lower levels during the next days,” Dresdner Kleinwort said in a daily market report. Dresdner Kleinwort is the investment bank of Dresdner Bank AG and a member of Allianz, headquartered in London and Frankfurt
US crude stocks were forecast to fall 1.6 million barrels, which would still leave them in the upper end of the average range for this time of the year, a Reuters poll showed. Gasoline stocks were expected to rise by 100,000 barrels.
Private US weather forecaster AccuWeather said on Sept 19 it expected colder than normal temperatures in the US Northeast, home to 80% of US heating oil demand, and in the Midwest, where gas is the home heating fuel of choice.
Some Opec ministers have signalled a price of $50-$60 a barrel should be sustained, but the cartel has avoided setting a formal target. The Opec basket stood at $58.67 on Sept 18.
Some traders speculate that the volatile surges may be linked to billion dollar losses at prominent hedge funds. “As the market seems to fear that further hedge funds could liquidate long positions, we expect energy prices to test even lower levels during the next days,” Dresdner Kleinwort said in a daily market report. Dresdner Kleinwort is the investment bank of Dresdner Bank AG and a member of Allianz, headquartered in London and Frankfurt
US crude stocks were forecast to fall 1.6 million barrels, which would still leave them in the upper end of the average range for this time of the year, a Reuters poll showed. Gasoline stocks were expected to rise by 100,000 barrels.
Private US weather forecaster AccuWeather said on Sept 19 it expected colder than normal temperatures in the US Northeast, home to 80% of US heating oil demand, and in the Midwest, where gas is the home heating fuel of choice.
Some Opec ministers have signalled a price of $50-$60 a barrel should be sustained, but the cartel has avoided setting a formal target. The Opec basket stood at $58.67 on Sept 18.
Harvard Hedge Fund hits 29 billion
The Harvard University investment arm, Harvard Management Co., manages the largest education based endowment in the world. Harvard has a long record of success in beating the market, but this years $29.2 billion rate of returns falls slightly from last years high. Big gains in commodities and foreign stocks were among the endowment’s investment highlights.
Harvard’s hedge fund endowment grew $3.3 billion during the fiscal year ending June 30, reaching an all time high of $29.2 billion, returning 16.7% on its investments.
Harvard Management said its most recent annual performance was particularly strong in emerging markets, included gains of 37.8% in emerging market stocks, which includes industrializing economies such as India, China, Russia, and Brazil.
The report also showed gains of 26.7% in commodities, 26.5% in more developed foreign stock markets, and 22.7% in real estate. It earned 22.7 percent in private equity investments and 15 percent in hedge funds categorized as “absolute return and special situations.”
El Erian, the new head at the Harvard hedge fund, since Jack R. Meyer left in September, said that investors are copying Harvard’s endowment strategies. “The minute something becomes attractive in terms of showing that it results in consistent returns, a lot of people want to do it,” he said.
Harvard’s hedge fund endowment grew $3.3 billion during the fiscal year ending June 30, reaching an all time high of $29.2 billion, returning 16.7% on its investments.
Harvard Management said its most recent annual performance was particularly strong in emerging markets, included gains of 37.8% in emerging market stocks, which includes industrializing economies such as India, China, Russia, and Brazil.
The report also showed gains of 26.7% in commodities, 26.5% in more developed foreign stock markets, and 22.7% in real estate. It earned 22.7 percent in private equity investments and 15 percent in hedge funds categorized as “absolute return and special situations.”
El Erian, the new head at the Harvard hedge fund, since Jack R. Meyer left in September, said that investors are copying Harvard’s endowment strategies. “The minute something becomes attractive in terms of showing that it results in consistent returns, a lot of people want to do it,” he said.
20 Sept 2006
Congressman calls for Hedge Fund Study
Mike Castle, a congressman from Delaware and president of the republican main street partnership, introduced a bill last week requiring regulators to study and make recommendations about hedge funds, Castle’s office said Monday. The study should focus on disclosure of information, the congressman said.
Mike Castle serves on the House Financial Services Committee, which has jurisdiction over banking with the securities and insurance industries. Among Castle’s other priorities are immigration reform, stem cell research and deficit reduction.
“Transparency in our financial system is important for market discipline and investor confidence,” Castle said. Castle’s bill comes as a hedge fund based in Greenwich, Conneticut, Amaranth Advisors LLC is reportedly shutting down and returning investors’ money following heavy losses on natural gas investments. In June, a U.S. court overturned an SEC rule requiring hedge fund advisers to register with the agency.
Mike Castle serves on the House Financial Services Committee, which has jurisdiction over banking with the securities and insurance industries. Among Castle’s other priorities are immigration reform, stem cell research and deficit reduction.
“Transparency in our financial system is important for market discipline and investor confidence,” Castle said. Castle’s bill comes as a hedge fund based in Greenwich, Conneticut, Amaranth Advisors LLC is reportedly shutting down and returning investors’ money following heavy losses on natural gas investments. In June, a U.S. court overturned an SEC rule requiring hedge fund advisers to register with the agency.
Deutsche Bank to open Japan Hedge Fund
Hedge funds are seeking opportunities in Japan after the recent cut backs in corporate debt has improved the chances of companies increasing dividends and buying back shares.
There are about 220 Japan-focused hedge funds overseeing a total of $35 billion assets, up from 100 funds managing $6 billion of investments in 2002, according to Eurekahedge, a Singapore-based research company.
Ed Rogers, who ran Deutsche Bank AG’s Japan hedge fund brokerage unit until May, is raising $500 million to give U.S. money managers access to some of his former clients in the world’s second-largest economy.
In an ivterview with Bloomberg press, he said, “It’s a great time for this product since Japan is finally emerging from a 14-year economic slump.” Rogers set up Rogers Investment Advisors this year in Tokyo and is advising Wolver Hill Asset Management Ltd., a New York-based company, to raise $500 million within a year, mostly from U.S. investors. Rogers also said Wolver Hill also plans to start an Asia-focused fund of funds that may raise another $500 million by February, he said.
Wolver Hill Japan Multi-strategy Fund will be the first fund of hedge funds located in Japan that’s open to investors in the U.S., Rogers said. The Wolver Hill fund will invest in 10 to 20 local hedge funds.
The fund will put half of its assets into equities, including short positions in which investors sell borrowed stock in the anticipation they can buy it back at a lower price. The rest will be committed to strategies that profit from price differences of related corporate securities, or so-called arbitrage funds.
Hedge funds in Japan have faced more difficult conditions this year. The Eurekahedge Japan Hedge Fund Index, which tracks 123 funds, fell 4.18 percent in the eight months through August, preliminary data show. The Eurekahedge Asian Hedge Fund Index is up 5.35 percent. The Nikkei 225 Stock Average, which gained 41.5 percent in 2005, has slipped 1.5 percent this year.
There are about 220 Japan-focused hedge funds overseeing a total of $35 billion assets, up from 100 funds managing $6 billion of investments in 2002, according to Eurekahedge, a Singapore-based research company.
Ed Rogers, who ran Deutsche Bank AG’s Japan hedge fund brokerage unit until May, is raising $500 million to give U.S. money managers access to some of his former clients in the world’s second-largest economy.
In an ivterview with Bloomberg press, he said, “It’s a great time for this product since Japan is finally emerging from a 14-year economic slump.” Rogers set up Rogers Investment Advisors this year in Tokyo and is advising Wolver Hill Asset Management Ltd., a New York-based company, to raise $500 million within a year, mostly from U.S. investors. Rogers also said Wolver Hill also plans to start an Asia-focused fund of funds that may raise another $500 million by February, he said.
Wolver Hill Japan Multi-strategy Fund will be the first fund of hedge funds located in Japan that’s open to investors in the U.S., Rogers said. The Wolver Hill fund will invest in 10 to 20 local hedge funds.
The fund will put half of its assets into equities, including short positions in which investors sell borrowed stock in the anticipation they can buy it back at a lower price. The rest will be committed to strategies that profit from price differences of related corporate securities, or so-called arbitrage funds.
Hedge funds in Japan have faced more difficult conditions this year. The Eurekahedge Japan Hedge Fund Index, which tracks 123 funds, fell 4.18 percent in the eight months through August, preliminary data show. The Eurekahedge Asian Hedge Fund Index is up 5.35 percent. The Nikkei 225 Stock Average, which gained 41.5 percent in 2005, has slipped 1.5 percent this year.
Hedge Fund suspect in Stock Manipulation Investigation
Hedge fund Aeneas, and it’s founder Thomas Grossman, are under scrutiny in Malaysia as the Securities Commission is probing allegations of stock manipulation.
The $400 million hedge fund firm specializes in long-short emerging markets strategies. The “investigations relating to the manipulation of certain shares are ongoing and individuals acquainted with the facts of the cases have been called in to assist,” a Securities Commission spokeswoman told Dow Jones Newswires.
Hedge fund Aeneas Capital Management L.P. suffered big losses that reportedly followed investments in Malaysian shares such as smart card maker Iris Corp., poultry producer Farm’s Best Bhd., and Internet related systems provider Mobif Bhd. According to Bursa filings from early 2006, Aeneas bought and sold substantial amounts of shares in these companies.
The official, speaking on condition of anonymity, declined to say if the commission is working with the U.S. Securities and Exchange Commission in its probe.
The $400 million hedge fund firm specializes in long-short emerging markets strategies. The “investigations relating to the manipulation of certain shares are ongoing and individuals acquainted with the facts of the cases have been called in to assist,” a Securities Commission spokeswoman told Dow Jones Newswires.
Hedge fund Aeneas Capital Management L.P. suffered big losses that reportedly followed investments in Malaysian shares such as smart card maker Iris Corp., poultry producer Farm’s Best Bhd., and Internet related systems provider Mobif Bhd. According to Bursa filings from early 2006, Aeneas bought and sold substantial amounts of shares in these companies.
The official, speaking on condition of anonymity, declined to say if the commission is working with the U.S. Securities and Exchange Commission in its probe.
19 Sept 2006
Hedge Funds and US Elections
Hedge funds are proving to be a growing power in the political arena, complicating the issues by pouring funding into the Democratic side of the playing field, giving mostly to candidates and causes that interest them personally, rather than targeting key lawmakers with influence over regulating the industry.
Hedge funds priorities seldom align with those of others in a sector already full of conflict. The rise of hedge fund managers as a political force is expanding the financial sector’s Washington presence.
“The hedge funds have tremendous political clout but they also have significant enemies. The mutual funds hate the hedge funds … The corporate community sees them as destabilizing,” said Columbia University Law School Professor John Coffee in an interview with Reuters.
Campaign finance records show 20 of the most successful U.S. hedge fund managers have pumped more than $3.1 million into campaigns so far in 2005-2006, up from about $1.1 million by the same group in the last mid-term election cycle.
Donors such as George Soros, of Soros Fund Management, has given more than $2.3 million, according to PoliticalMoneyLine, a campaign finance research group. D.E. Shaw & Co. has given $78,600 so far and the Gaine group has donated $122,500 in this cycle.
James Chanos, president of hedge fund Kynikos Associates, set up a group called the Coalition of Private Investment Companies to urge hedge fund managers to be more politically active. Hillary Clinton is also a frequent recipient of hedge fund donations.
Hedge fund giving is still not as strategically targeted as donations made by bankers, insurers and other, older financial interests, which are generally more pro-Republican.
Hedge funds priorities seldom align with those of others in a sector already full of conflict. The rise of hedge fund managers as a political force is expanding the financial sector’s Washington presence.
“The hedge funds have tremendous political clout but they also have significant enemies. The mutual funds hate the hedge funds … The corporate community sees them as destabilizing,” said Columbia University Law School Professor John Coffee in an interview with Reuters.
Campaign finance records show 20 of the most successful U.S. hedge fund managers have pumped more than $3.1 million into campaigns so far in 2005-2006, up from about $1.1 million by the same group in the last mid-term election cycle.
Donors such as George Soros, of Soros Fund Management, has given more than $2.3 million, according to PoliticalMoneyLine, a campaign finance research group. D.E. Shaw & Co. has given $78,600 so far and the Gaine group has donated $122,500 in this cycle.
James Chanos, president of hedge fund Kynikos Associates, set up a group called the Coalition of Private Investment Companies to urge hedge fund managers to be more politically active. Hillary Clinton is also a frequent recipient of hedge fund donations.
Hedge fund giving is still not as strategically targeted as donations made by bankers, insurers and other, older financial interests, which are generally more pro-Republican.
Hedge Fund's double Bond Trading
In a report late last week by Greenwich Associates, 45% of annual trading in emerging market bonds, 47% of distressed debt and 55% of credit derivatives in the 12 months were reported to be hedge fund trading of bonds and derivatives in the US, more than doubling the tolal in the past year, giving the hedge funds so much influence that some markets can’t operate efficiently without them.
The report’s surveyed 1,281 investors, including 174 hedge funds. The investors surveyed accounted for $19.6 trillion in annual trading, according to the report.
Karan Sampson, a Greenwich consultant who cowrote the report said, “Because of the huge portion of the market that they represent, in some respects they (hedge funds) are becoming the market maker…..the broker is going to have to come up with faster and better products to retain the activity of the hedge fund,” Sampson said.
Hedge funds represented 15% of all trading in bonds and derivatives in the 12-month period, attracting $42.1 billion in investment in the second quarter, the most since 2003, and have returned 7% to investors this year through August, according to the Chicago based Hedge Fund Research.
Derivatives are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates. Of course, speculators may trade with other speculators as well as with hedgers. In most financial derivatives markets, the value of speculative trading is far higher than the value of true hedge trading. As well as outright speculation, derivatives traders may also look for arbitrage opportunities between different derivatives on identical or closely related underlying securities.
Other uses of derivatives are to gain an economic exposure to an underlying security in situations where direct ownership of the underlying is too costly or is prohibited by legal or regulatory restrictions, or to create a synthetic short position.
The increasing influence of hedge funds is causing investors to worry that they are increasing risk, or creating more uncertainty, in financial markets, the report said.
The report’s surveyed 1,281 investors, including 174 hedge funds. The investors surveyed accounted for $19.6 trillion in annual trading, according to the report.
Karan Sampson, a Greenwich consultant who cowrote the report said, “Because of the huge portion of the market that they represent, in some respects they (hedge funds) are becoming the market maker…..the broker is going to have to come up with faster and better products to retain the activity of the hedge fund,” Sampson said.
Hedge funds represented 15% of all trading in bonds and derivatives in the 12-month period, attracting $42.1 billion in investment in the second quarter, the most since 2003, and have returned 7% to investors this year through August, according to the Chicago based Hedge Fund Research.
Derivatives are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates. Of course, speculators may trade with other speculators as well as with hedgers. In most financial derivatives markets, the value of speculative trading is far higher than the value of true hedge trading. As well as outright speculation, derivatives traders may also look for arbitrage opportunities between different derivatives on identical or closely related underlying securities.
Other uses of derivatives are to gain an economic exposure to an underlying security in situations where direct ownership of the underlying is too costly or is prohibited by legal or regulatory restrictions, or to create a synthetic short position.
The increasing influence of hedge funds is causing investors to worry that they are increasing risk, or creating more uncertainty, in financial markets, the report said.
18 Sept 2006
Banks and Asian Central Hedge Funds
A number of Asian central banks, among the biggest investors in U.S. government debt, are looking at alternative targets for their vast dollar holdings.
Since 1997, currency reserves at Asia’s central banks have risen to about $3 trillion, leaving fewer dollar denominated securities in which hedge funds can trade, putting hedge funds on the defensive.
A report showing the U.S. economy is holding its ground may drive the dollar higher. Central banks such as the People’s Bank of China may see that as a perfect opportunity to sell a chunk of their U.S. holdings, pushing the market in a direction that traders don’t expect.
Central banks often carefully choose the moments when they expect an increase in market liquidity, when Federal Reserve officials speak or Japan releases inflation data, to make adjustments in their holdings. More and more, it’s turning Asia’s central banks into market heavyweights.
In the last couple of years, many speculators bet on a drop in U.S. debt prices. That left plenty of securities for purchases by foreign central banks.
The issue may be high on the list of topics discussed at next week’s IMF meeting in Singapore. It’s not about looking out for hedge funds; it’s about taming volatility in economies. Yet it’s also about exploring the wisdom of central banks amassing ever-growing stockpiles of reserves.
A recent paper from the Bank for International Settlements underlines the urgency. In it, BIS staffers Madhusudan Mohanty and Philip Turner express surprise that the reserve buildup hasn’t caused inflation.
In Taiwan, the current system for managing the nation’s $206.63 billion in reserves, the third-largest in the world, “might not be an efficient use of our resources,” says government minister Hu Sheng-cheng. Taiwan’s central bank has accumulated “too much” foreign exchange from Taiwanese exporters and from inflows to its capital markets, he says. Mr. Hu is heading a task force that will announce in the next few weeks details of a plan to use reserves to help local companies buy machinery and intellectual property rights overseas, he says.
Elsewhere in Asia in recent weeks, however, some governments have begun discussing plans to chip away at their dollar mountains. The initial amounts are small, but taken together they send a clear signal. South Korea’s plans are the most ambitious and could have the biggest impact on the dollar.
The International Monetary Fund’s last meeting in Asia was in 1997 and featured a debate about hedge funds. U.S. Treasury Secretary Robert Rubin argued that hedge funds were a vital source of liquidity when markets dry up. Asian policy makers saw them as predators causing undue volatility and overwhelming central banks. Either way, hedge funds are taking a backseat in Asia to the new Asian central banks.
Since 1997, currency reserves at Asia’s central banks have risen to about $3 trillion, leaving fewer dollar denominated securities in which hedge funds can trade, putting hedge funds on the defensive.
A report showing the U.S. economy is holding its ground may drive the dollar higher. Central banks such as the People’s Bank of China may see that as a perfect opportunity to sell a chunk of their U.S. holdings, pushing the market in a direction that traders don’t expect.
Central banks often carefully choose the moments when they expect an increase in market liquidity, when Federal Reserve officials speak or Japan releases inflation data, to make adjustments in their holdings. More and more, it’s turning Asia’s central banks into market heavyweights.
In the last couple of years, many speculators bet on a drop in U.S. debt prices. That left plenty of securities for purchases by foreign central banks.
The issue may be high on the list of topics discussed at next week’s IMF meeting in Singapore. It’s not about looking out for hedge funds; it’s about taming volatility in economies. Yet it’s also about exploring the wisdom of central banks amassing ever-growing stockpiles of reserves.
A recent paper from the Bank for International Settlements underlines the urgency. In it, BIS staffers Madhusudan Mohanty and Philip Turner express surprise that the reserve buildup hasn’t caused inflation.
In Taiwan, the current system for managing the nation’s $206.63 billion in reserves, the third-largest in the world, “might not be an efficient use of our resources,” says government minister Hu Sheng-cheng. Taiwan’s central bank has accumulated “too much” foreign exchange from Taiwanese exporters and from inflows to its capital markets, he says. Mr. Hu is heading a task force that will announce in the next few weeks details of a plan to use reserves to help local companies buy machinery and intellectual property rights overseas, he says.
Elsewhere in Asia in recent weeks, however, some governments have begun discussing plans to chip away at their dollar mountains. The initial amounts are small, but taken together they send a clear signal. South Korea’s plans are the most ambitious and could have the biggest impact on the dollar.
The International Monetary Fund’s last meeting in Asia was in 1997 and featured a debate about hedge funds. U.S. Treasury Secretary Robert Rubin argued that hedge funds were a vital source of liquidity when markets dry up. Asian policy makers saw them as predators causing undue volatility and overwhelming central banks. Either way, hedge funds are taking a backseat in Asia to the new Asian central banks.
Fund of Hedge Fund Investment
According to a Reuters poll this week, funds of hedge fund managers have downgraded expectations for returns over the next six months as global growth and a commodities bull run cooled.
A fund of hedge funds is an investment company that invests in hedge funds, rather than investing in individual securities. Not all funds of hedge funds register with the SEC. Many registered funds of hedge funds have much lower investment minimums (e.g., $25,000) than individual hedge funds. Some investors that would be unable to invest in a hedge fund directly may be able to purchase shares of registered funds of hedge funds.
The quarterly survey of 13 funds of hedge fund managers, which together manage more than $100 billion, showed they expected average returns, with only a few strategies, such as emerging markets, anticipated to bring above average results.
The poll, carried out between August 30 and September 8, showed a shift down in sentiment from the last survey, when half of all strategies were forecast to deliver superior returns in one or both of the following two quarters.
While some managers expect to benefit from an increase in volatility that has gripped markets in recent months, most are turning to strategies that aim to offer consistent returns in any market cycle, such as multi-strategy hedge funds which allocate funds to various sectors and regions.
And while managers trimmed down their exposure to emerging markets, they also forecast above average returns there in the fourth quarter this year.
These funds accounted for 44 percent of new money in 2005, down from 50 percent a year before. Total assets covered by the survey stood at $1.26 trillion (670 billion pounds) last year, up by about a fifth on 2004.
Investors have been encouraged to look beyond the traditional asset strongholds of listed equities, bonds and cash in recent years to reduce exposure to volatile stocks and be sure of getting income they need as populations age.
Funds of hedge funds allow investors to spread their money among a variety of hedge fund strategies in a single package deal.
Last year, pension funds globally invested more than $77 billion pounds of new money in alternative assets, up from $62 billion in 2004.
Property took the biggest share of pension funds’ new money to alternatives, at 35 percent, followed by 34 percent into funds of hedge funds.
Retirement funds are the single largest holder of alternative assets, accounting for about $465 billion, or 37 percent, of the total assets covered by the survey.
A fund of hedge funds is an investment company that invests in hedge funds, rather than investing in individual securities. Not all funds of hedge funds register with the SEC. Many registered funds of hedge funds have much lower investment minimums (e.g., $25,000) than individual hedge funds. Some investors that would be unable to invest in a hedge fund directly may be able to purchase shares of registered funds of hedge funds.
The quarterly survey of 13 funds of hedge fund managers, which together manage more than $100 billion, showed they expected average returns, with only a few strategies, such as emerging markets, anticipated to bring above average results.
The poll, carried out between August 30 and September 8, showed a shift down in sentiment from the last survey, when half of all strategies were forecast to deliver superior returns in one or both of the following two quarters.
While some managers expect to benefit from an increase in volatility that has gripped markets in recent months, most are turning to strategies that aim to offer consistent returns in any market cycle, such as multi-strategy hedge funds which allocate funds to various sectors and regions.
And while managers trimmed down their exposure to emerging markets, they also forecast above average returns there in the fourth quarter this year.
These funds accounted for 44 percent of new money in 2005, down from 50 percent a year before. Total assets covered by the survey stood at $1.26 trillion (670 billion pounds) last year, up by about a fifth on 2004.
Investors have been encouraged to look beyond the traditional asset strongholds of listed equities, bonds and cash in recent years to reduce exposure to volatile stocks and be sure of getting income they need as populations age.
Funds of hedge funds allow investors to spread their money among a variety of hedge fund strategies in a single package deal.
Last year, pension funds globally invested more than $77 billion pounds of new money in alternative assets, up from $62 billion in 2004.
Property took the biggest share of pension funds’ new money to alternatives, at 35 percent, followed by 34 percent into funds of hedge funds.
Retirement funds are the single largest holder of alternative assets, accounting for about $465 billion, or 37 percent, of the total assets covered by the survey.
15 Sept 2006
AmericaVest Lauches "10/10" Hedge Fund
AmericaVest Capital Management LLC has announced the launching of its new flagship hedge fund, the AmericaVest “10/10 Fund”. Drawing on over 70 years of collective experience in financial services, wealth management and asset backed investing.
The hedge fund offers investors the opportunity for a fixed priority annual return of 10%. The strategy is designed to target absolute returns and outperform traditional equity and bond markets, with low volatility. The hedge fund believes that diversification, low correlation and consistent capital appreciation can be achieved through active portfolio management and exposure to a combination of carefully selected pools of mortgage loans.
AmericaVest Capital Management doesn’t participate in any of the performance of the portfolio until after investors have received their priority return on a quarter over quarter basis. Once the specified fixed annualized priority return is achieved, investors then share in 10% of the hedge fund’s net profits, the proirity return has a high water mark.
The AmericaVest 10/10 Fund aim is to provide investors with consistent steady returns according to released statement. The minimum investment requirement is $250,000. Additions are monthly, with a 36 month lockup and quarterly redemptions.
AmericaVest Capital’s management team will also tailor Structured Portfolios to meet the specific requirements of qualified accredited, private and institutional investors.
The hedge fund’s goal is to acquire, manage, securitize and liquidate pools of performing,underperforming or distressed mortgages and hard money loans, for both commercial and residential. The fund provides diversification through an asset class which has low-correlation to other traditional assets classes
The new hedge fund will be managed by two veteran managers, Robert D.Damigella, Nelson A. Garcia and and their experienced portfolio management team.
Mr. Damigella has nearly 25 years experience in financial services and serves as co-managing member of AmericaVest Capital Management, LLC, the General Partner of AmericaVest Partners, LP. During most of the first 10 years of his career, Mr. Damigella was a vice president for Lehman Brothers.
Mr. Garcia has over 23 years experience in financial services and serves as co-managing member of AmericaVest Capital Management, LLC, the General Partner of AmericaVest Partners, LP. Mr.Garcia’s primary experience is in fixed income where he began his career at Glickenhaus & Co and then moved on to Gruntal & Co where he distributed fixed income investments to institutions and high net worth individuals.
AmericaVest Capital Managements portfolio management team, is the architect behind the fund’s core investment strategy. The team has over 24 years of experience with real estate investments. For the past 10 years,they has been managers of more than 50 individual investment funds.
More Details on the AmericaVest 10/10 Fund visit www.americavest.net and can be found in the fund’s listing on the HedgeCo.Net Free Hedge Fund Database found at www.hedgeco.net.
The hedge fund offers investors the opportunity for a fixed priority annual return of 10%. The strategy is designed to target absolute returns and outperform traditional equity and bond markets, with low volatility. The hedge fund believes that diversification, low correlation and consistent capital appreciation can be achieved through active portfolio management and exposure to a combination of carefully selected pools of mortgage loans.
AmericaVest Capital Management doesn’t participate in any of the performance of the portfolio until after investors have received their priority return on a quarter over quarter basis. Once the specified fixed annualized priority return is achieved, investors then share in 10% of the hedge fund’s net profits, the proirity return has a high water mark.
The AmericaVest 10/10 Fund aim is to provide investors with consistent steady returns according to released statement. The minimum investment requirement is $250,000. Additions are monthly, with a 36 month lockup and quarterly redemptions.
AmericaVest Capital’s management team will also tailor Structured Portfolios to meet the specific requirements of qualified accredited, private and institutional investors.
The hedge fund’s goal is to acquire, manage, securitize and liquidate pools of performing,underperforming or distressed mortgages and hard money loans, for both commercial and residential. The fund provides diversification through an asset class which has low-correlation to other traditional assets classes
The new hedge fund will be managed by two veteran managers, Robert D.Damigella, Nelson A. Garcia and and their experienced portfolio management team.
Mr. Damigella has nearly 25 years experience in financial services and serves as co-managing member of AmericaVest Capital Management, LLC, the General Partner of AmericaVest Partners, LP. During most of the first 10 years of his career, Mr. Damigella was a vice president for Lehman Brothers.
Mr. Garcia has over 23 years experience in financial services and serves as co-managing member of AmericaVest Capital Management, LLC, the General Partner of AmericaVest Partners, LP. Mr.Garcia’s primary experience is in fixed income where he began his career at Glickenhaus & Co and then moved on to Gruntal & Co where he distributed fixed income investments to institutions and high net worth individuals.
AmericaVest Capital Managements portfolio management team, is the architect behind the fund’s core investment strategy. The team has over 24 years of experience with real estate investments. For the past 10 years,they has been managers of more than 50 individual investment funds.
More Details on the AmericaVest 10/10 Fund visit www.americavest.net and can be found in the fund’s listing on the HedgeCo.Net Free Hedge Fund Database found at www.hedgeco.net.
14 Sept 2006
Citigroup offers Alternative Investment Hedge Fund arm in Asia
Citigroup offers Alternative Investment Hedge Fund arm in Asia
Citigroup has launched an administration business hedge fund in Asia Pacific. The service will benefit hedge fund mangers by easing their administration burden. In effect clients will be outsourcing their administration requirements to Citigroup.
In a statement, Matthew Brown, Asia Pacific head of fund services said, “Hedge fund managers increasingly want an integrated service provider. The combination of prime brokerage and alternative investment administration services means Citigroup is able to offer clients the complete transaction banking service. From fund administration, to global custody and cash management to prime brokerage, Citigroup can now offer the full service to clients in Asia Pacific,”
Asia Pacific is one of the fastest growing regions in terms of funds under management. According to Eurekahedege, the number of new fund launches is forecast to hit 216 in 2006, up from 95 in 2003 and assets under management have doubled since 2003, according to data from Eurekahedge.
The business will compete with firms including HSBC Holdings Plc, and Fortis to provide accounting, valuation, record keeping, reporting and other services for Asian hedge funds.
The Citigroup division, which has about 150 employees globally, already administers about $45 billion in hedge fund assets. The hedge fund administration in Asia is under the local command of managing director Matt Brown.
The firm already offers these services elsewhere in the world, as the world’s largest bank, Citibank said it had launched its hedge fund administration business into Asia, hoping to win a slice of the fast growing market. It established its hedge-fund administration services originally in the United States in December 2004, and now has $45 billion in assets under administration and employs a roster of 150 staff.
Citigroup is a leading provider of alternative investment around the world and the launch of this servicing capability in Asia Pacific will complement the growth of the emerging markets.
Citigroup has launched an administration business hedge fund in Asia Pacific. The service will benefit hedge fund mangers by easing their administration burden. In effect clients will be outsourcing their administration requirements to Citigroup.
In a statement, Matthew Brown, Asia Pacific head of fund services said, “Hedge fund managers increasingly want an integrated service provider. The combination of prime brokerage and alternative investment administration services means Citigroup is able to offer clients the complete transaction banking service. From fund administration, to global custody and cash management to prime brokerage, Citigroup can now offer the full service to clients in Asia Pacific,”
Asia Pacific is one of the fastest growing regions in terms of funds under management. According to Eurekahedege, the number of new fund launches is forecast to hit 216 in 2006, up from 95 in 2003 and assets under management have doubled since 2003, according to data from Eurekahedge.
The business will compete with firms including HSBC Holdings Plc, and Fortis to provide accounting, valuation, record keeping, reporting and other services for Asian hedge funds.
The Citigroup division, which has about 150 employees globally, already administers about $45 billion in hedge fund assets. The hedge fund administration in Asia is under the local command of managing director Matt Brown.
The firm already offers these services elsewhere in the world, as the world’s largest bank, Citibank said it had launched its hedge fund administration business into Asia, hoping to win a slice of the fast growing market. It established its hedge-fund administration services originally in the United States in December 2004, and now has $45 billion in assets under administration and employs a roster of 150 staff.
Citigroup is a leading provider of alternative investment around the world and the launch of this servicing capability in Asia Pacific will complement the growth of the emerging markets.
Singapore Encouraging Hedge Fund Growth
Tokyo is currently Asia’s biggest currency market, bur Singapore now too will target hedge funds, commodities trading and Islamic finance to sustain growth, said Heng Swee Keat, managing director of the Central Bank of Singapore.
After seeing the booming economies of emerging BRIC markets; India and China, Singapore is also trying to cash in on the region’s growing number of millionaires.
The Monetary Authority of Singapore predicts “very strong growth” in asset management, which stood at $458 billion in 2005 after five years of expansion. The $118 billion economy expanded 6.4 percent in 2005. Financial services account for about 10 percent of gross domestic product.
Singapore beat 174 other nations to take first place in the World Bank’s annual ranking of business conditions, which looks at property rights, taxes, access to credit, labor laws and regulations on customs and licenses.
The Singapore government is also offering tax breaks as incentives to attract hedge funds and companies engaged in derivatives trading. There are over 100 hedge funds in Singapore overseeing about $10 billion in total assets, according to the central bank.
After seeing the booming economies of emerging BRIC markets; India and China, Singapore is also trying to cash in on the region’s growing number of millionaires.
The Monetary Authority of Singapore predicts “very strong growth” in asset management, which stood at $458 billion in 2005 after five years of expansion. The $118 billion economy expanded 6.4 percent in 2005. Financial services account for about 10 percent of gross domestic product.
Singapore beat 174 other nations to take first place in the World Bank’s annual ranking of business conditions, which looks at property rights, taxes, access to credit, labor laws and regulations on customs and licenses.
The Singapore government is also offering tax breaks as incentives to attract hedge funds and companies engaged in derivatives trading. There are over 100 hedge funds in Singapore overseeing about $10 billion in total assets, according to the central bank.
Fink Steps Down from MAN Hedge Fund
Stanley Fink, the chief executive of Man Group hedge fund is stepping down as chief executive after almost twenty years at the company. He will be succeeded on 1 April 2007, by Peter Clarke, the firm’s finance director, according to MAN group.
Mr Fink took over as chief executive in 2000 and led the transformation of Man Group from a commodities trader into a hedge fund manager. During his tenure as CEO the firm has seen its investment funds under management grow from $4.7 billion to over $54 billion at 30 June 2006, while pretax profits have risen to $1.2 billion.
Mr Clarke has worked at Man for the past 13 years, has been finance director for the last six. Analysts said the transition at the top would do little to shake investor confidence.
Clarke studied law at Queens’ College in Cambridge, England, and became a solicitor in 1985. After a stint at the law firm of Slaughter and May in London, he worked in mergers and acquisitions at Morgan Grenfell and Citicorp.
Harvey McGrath, Chairman of Man Group said in a statement, “Stanley has indicated to the board his wishes to become nonexecutive, not least in order to be able to commit more time to personal interests, in particular his philanthropic activities,”
Stanley Fink is valued to be worth around £8.3 billion, with his personal shareholding in value to £111 million.
Mr Fink took over as chief executive in 2000 and led the transformation of Man Group from a commodities trader into a hedge fund manager. During his tenure as CEO the firm has seen its investment funds under management grow from $4.7 billion to over $54 billion at 30 June 2006, while pretax profits have risen to $1.2 billion.
Mr Clarke has worked at Man for the past 13 years, has been finance director for the last six. Analysts said the transition at the top would do little to shake investor confidence.
Clarke studied law at Queens’ College in Cambridge, England, and became a solicitor in 1985. After a stint at the law firm of Slaughter and May in London, he worked in mergers and acquisitions at Morgan Grenfell and Citicorp.
Harvey McGrath, Chairman of Man Group said in a statement, “Stanley has indicated to the board his wishes to become nonexecutive, not least in order to be able to commit more time to personal interests, in particular his philanthropic activities,”
Stanley Fink is valued to be worth around £8.3 billion, with his personal shareholding in value to £111 million.
Canada Reports Suspicious Activty in Debt Market
The Bank of Canada warned 19 of the countries largest bond dealers not to take advantage of Canadian debt by manipulating the bond market. The bank suspected a hedge fund might have bought up a large share of the issue and used that stake to manipulate prices in its favour.
The bank issued a public statement and is making no secret of the fact that it doesn’t like to see irregular trading activity on the secondary bond market. Dealers and hedge funds could face fines of $5 million or more, or up to three times the amount of money illicitly gained. Dealers can also be kicked out of the organization, losing their rights to buy and sell bonds.
At stake is Canada’s reputation as a stable place to invest. The fact that the central bank is calling this gathering points to just how easy it has become for even small financial players and hedge funds to influence the fixed income market.
The meeting stems from an investigation of suspicious bond trading activity in the last three weeks of May, when the price spiked on benchmark government of Canada 10-year debt and derivates priced off that bond.
There are $10-billion of these bonds outstanding, but the IDA’s initial investigation turned up “insufficient grounds” for further digging.
The federal government has billions of dollars at stake in the bond market, and a smoothly functioning bond trade is crucial for the country’s economic health.
The bank issued a public statement and is making no secret of the fact that it doesn’t like to see irregular trading activity on the secondary bond market. Dealers and hedge funds could face fines of $5 million or more, or up to three times the amount of money illicitly gained. Dealers can also be kicked out of the organization, losing their rights to buy and sell bonds.
At stake is Canada’s reputation as a stable place to invest. The fact that the central bank is calling this gathering points to just how easy it has become for even small financial players and hedge funds to influence the fixed income market.
The meeting stems from an investigation of suspicious bond trading activity in the last three weeks of May, when the price spiked on benchmark government of Canada 10-year debt and derivates priced off that bond.
There are $10-billion of these bonds outstanding, but the IDA’s initial investigation turned up “insufficient grounds” for further digging.
The federal government has billions of dollars at stake in the bond market, and a smoothly functioning bond trade is crucial for the country’s economic health.
Emerging Markets see continued Hedge Fund Intrest
Recent TABB survey forcasts, surveying 81 U.S. hedge funds managing some $89 billion in early 2006, confirming research which suggests that money continues to flow into emerging market hedge funds, largely from institutional investors looking for above market returns.
Hedge fund industry assets are variously estimated to be anywhere from $1.2 trillion to $1.5 trillion. U.S. hedge funds are expected to dramatically raise their investment in overseas markets in coming years as domestic markets get more crowded and returns diminish, according to analysis released on late last week.
The biggest percentage investment increases are expected to be in Asia Pacific markets, which could see U.S. hedge fund assets nearly double to $107 billion from 2006 to 2008, according to TABB Group, an independent research firm.
But in dollars, European markets are expected to be the biggest beneficiaries of U.S. hedge fund investment, seen growing to $437 billion in 2008 from some $330 billion in 2006, TABB said.
There are currently approximately 8,500 hedge funds, they are usually private and don’t publicly disclose assets.
TABB also forecasted Latin American investment by U.S. hedge funds will grow to $29 billion in 2008 from $19 billion in 2006, while investment in other emerging markets will grow to $21 billion from $14 billion during that period.
Adam Sussman, TABB senior research analyst, said U.S. hedge funds are less likely to be concerned about recent volatility in emerging markets than retail investors.
Overseas investing “is a continuing trend. I don’t think they are going to be scared off by a few volatile months,” said Sussman in an interview with Reuters. “Long term, more and more hedge funds are going to be invested in emerging markets.”
Hedge fund industry assets are variously estimated to be anywhere from $1.2 trillion to $1.5 trillion. U.S. hedge funds are expected to dramatically raise their investment in overseas markets in coming years as domestic markets get more crowded and returns diminish, according to analysis released on late last week.
The biggest percentage investment increases are expected to be in Asia Pacific markets, which could see U.S. hedge fund assets nearly double to $107 billion from 2006 to 2008, according to TABB Group, an independent research firm.
But in dollars, European markets are expected to be the biggest beneficiaries of U.S. hedge fund investment, seen growing to $437 billion in 2008 from some $330 billion in 2006, TABB said.
There are currently approximately 8,500 hedge funds, they are usually private and don’t publicly disclose assets.
TABB also forecasted Latin American investment by U.S. hedge funds will grow to $29 billion in 2008 from $19 billion in 2006, while investment in other emerging markets will grow to $21 billion from $14 billion during that period.
Adam Sussman, TABB senior research analyst, said U.S. hedge funds are less likely to be concerned about recent volatility in emerging markets than retail investors.
Overseas investing “is a continuing trend. I don’t think they are going to be scared off by a few volatile months,” said Sussman in an interview with Reuters. “Long term, more and more hedge funds are going to be invested in emerging markets.”
Islamic Hedge Fund Niche
Hedge fund Shariah Capital, is looking for strategic partners in the Middle East among the local banks with international funds, and major investment institutions and high net worth individuals. “Hedge funds are all about diversification” they say.
But wealthy Muslim investors in the Gulf Arab region and Asia have traditionally frowned on hedge funds because they adopt strategies that are considered forbidden by Shariah.
So several fund managers have been trying to develop Shariah compliant strategies that will emulate the strong returns of hedge funds and tap some of the estimated $750bn in Islamic assets parked equity and property related funds.
The ideal ‘fund of caution’ for the Arabian investor is an Islamic hedge fund of funds, argues Eric Meyer, President and CEO of US based Shariah Capital who visited Dubai for the Islamic Funds World Conference to promote what is believed to be the first Shariah compliant fund of hedge funds.
“Islamic hedge funds have the advantage of not being highly borrowed, unlike many hedge funds. This is one reason for their strength. It is true that borrowing by hedge funds improves return in a bull market but this will also magnify losses in a downturn.” Meyer said.
Amiri, a UK-based Islamic investment manager with a partner in Bahrain, believes it has found a Sharia compliant way to emulate one of the conventional hedge fund strategies short selling. He plans to launch a global long short equity hedge fund in 2007 that it says will comply with Shariah.
A conventional short is forbidden by shariah because it requires a hedge fund to sell something it does not own, while pay out interest to brokers, considered usury in Islam.
UK-based investment manager said the $1.3tn global hedge fund industry plans to develop a viable $50bn Islamic niche market in the next three years.
But wealthy Muslim investors in the Gulf Arab region and Asia have traditionally frowned on hedge funds because they adopt strategies that are considered forbidden by Shariah.
So several fund managers have been trying to develop Shariah compliant strategies that will emulate the strong returns of hedge funds and tap some of the estimated $750bn in Islamic assets parked equity and property related funds.
The ideal ‘fund of caution’ for the Arabian investor is an Islamic hedge fund of funds, argues Eric Meyer, President and CEO of US based Shariah Capital who visited Dubai for the Islamic Funds World Conference to promote what is believed to be the first Shariah compliant fund of hedge funds.
“Islamic hedge funds have the advantage of not being highly borrowed, unlike many hedge funds. This is one reason for their strength. It is true that borrowing by hedge funds improves return in a bull market but this will also magnify losses in a downturn.” Meyer said.
Amiri, a UK-based Islamic investment manager with a partner in Bahrain, believes it has found a Sharia compliant way to emulate one of the conventional hedge fund strategies short selling. He plans to launch a global long short equity hedge fund in 2007 that it says will comply with Shariah.
A conventional short is forbidden by shariah because it requires a hedge fund to sell something it does not own, while pay out interest to brokers, considered usury in Islam.
UK-based investment manager said the $1.3tn global hedge fund industry plans to develop a viable $50bn Islamic niche market in the next three years.
Hedge Fund Hurricane
Hedge funds are embracing the risk of CAT, or catostrophe bonds, as insurers sell more of the securities to protect themselves from increasingly unstable weather triggered by global warming.
After seeing yields of as much as 40 percentage points more than investment grade debt, investors forecast sales of catastrophe bonds may triple to $4 billion this year. Hurricane Katrina produced record claims of more than $90 billion last year.
A CAT, or catastrophe bond is high yield debt instrument that usually pays higher yields because investors may lose their entire stake in the event of a disastert it is usually insurance linked and meant to raise money in case of a catastrophe such as a hurricane or earthquake. Interest generally ranges between 4 percent and 16 percent.
Invented after Hurricane Andrew devastated the Florida coast in 1992, triggering record losses of $20 billion, catastrophe bonds remained a minor tool for spreading insurance risk for the next decade.
Hedge funds bought the highest risk bonds, those securities carry the highest reward because they cover multiple perils: North Atlantic hurricanes, European windstorms, terrorist related threats, and earthquakes in California and Japan.
Now these investors have placed a billion-dollar bet that another Hurricane Katrina won’t hit the U.S. coastline. A big storm can disrupt energy supplies, causing a major fluctuation in the price of gasoline that sends shock waves through the economy.
After the busy 2004 storm season, in which four hurricanes hit Florida, and last year, when hurricanes Katrina and Rita devastated the Gulf Coast, more cat bonds are being issued than ever. If a big-enough storm hits, the investors could lose everything.
While politicians and scientists argue over the extent to which global warming is changing the planet, the insurance industry has concluded the phenomenon is real.
Comments
After seeing yields of as much as 40 percentage points more than investment grade debt, investors forecast sales of catastrophe bonds may triple to $4 billion this year. Hurricane Katrina produced record claims of more than $90 billion last year.
A CAT, or catastrophe bond is high yield debt instrument that usually pays higher yields because investors may lose their entire stake in the event of a disastert it is usually insurance linked and meant to raise money in case of a catastrophe such as a hurricane or earthquake. Interest generally ranges between 4 percent and 16 percent.
Invented after Hurricane Andrew devastated the Florida coast in 1992, triggering record losses of $20 billion, catastrophe bonds remained a minor tool for spreading insurance risk for the next decade.
Hedge funds bought the highest risk bonds, those securities carry the highest reward because they cover multiple perils: North Atlantic hurricanes, European windstorms, terrorist related threats, and earthquakes in California and Japan.
Now these investors have placed a billion-dollar bet that another Hurricane Katrina won’t hit the U.S. coastline. A big storm can disrupt energy supplies, causing a major fluctuation in the price of gasoline that sends shock waves through the economy.
After the busy 2004 storm season, in which four hurricanes hit Florida, and last year, when hurricanes Katrina and Rita devastated the Gulf Coast, more cat bonds are being issued than ever. If a big-enough storm hits, the investors could lose everything.
While politicians and scientists argue over the extent to which global warming is changing the planet, the insurance industry has concluded the phenomenon is real.
Comments
Oppenheim to launch internal Hedge Fund
Sal Oppenheim Jr. & Cie. has plans to invest E 150 million with a Zurich based hedge fund that will operate a long short global equities investment. The hedge fund is aiming to raise E 300 million to E 400 million in funds managed, according to sources.
Oppenheim’s investment involves just over 1% of its overall E 136 billion in assets under management. Of Oppenheim’s E 136 billion total assets, £6.3 billion is managed by their Swiss subsidiary.
The in house hedge fund is part of a push at Oppenheim’s Swiss bank into investment banking under Siegfried Piel, a partner in the Swiss subsidiary.
Other private banks such as EFG International, which last week saw its CMA Global Hedge PCC Ltd. raise $402 million in an initial public offering. Vontobel Holding AG, bought a large stake in hedge fund house Harcourt last year, and larger banks such as Swiss giant UBS, have financed hedge funds within their operations as a way of stemming defections of key executives and traders for hedge funds.
Shares at Oppenheim are up in price at period end 2006, at E 81.90, compared with last years E 65.32.
Oppenheim’s investment involves just over 1% of its overall E 136 billion in assets under management. Of Oppenheim’s E 136 billion total assets, £6.3 billion is managed by their Swiss subsidiary.
The in house hedge fund is part of a push at Oppenheim’s Swiss bank into investment banking under Siegfried Piel, a partner in the Swiss subsidiary.
Other private banks such as EFG International, which last week saw its CMA Global Hedge PCC Ltd. raise $402 million in an initial public offering. Vontobel Holding AG, bought a large stake in hedge fund house Harcourt last year, and larger banks such as Swiss giant UBS, have financed hedge funds within their operations as a way of stemming defections of key executives and traders for hedge funds.
Shares at Oppenheim are up in price at period end 2006, at E 81.90, compared with last years E 65.32.
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