Canadian hedge fund manager, Rival Capital Management launched the Rival North American Growth Fund and since 2007 it has gained more than 80 accredited investors and $15 million in assets under management (AUM).
Headquartered in Winnipeg, Manitoba, the hedge fund is focused on small/midcap Canadian as well as US growth companies, with up to $2 billion Canadian market cap and $10 billion US. Also under development by Rival Capital Management is the Rival North American RRSP Growth Fund, which will buy units in the underlying Rival.
The fund uses a combination of a technical and a fundamental approach, using a proprietary filtering routine that accesses a database of 8,000 US companies and 2,000 CDN companies tracking approximately 2,000 variables, focusing on leading industries and stocks within those industries. The fund also focuses on protecting downside risk through strategies to limit leverage and limit losses.
While the S&P/TSX SmallCap index is down 43.23% year-to-date (to Oct 31, 2008 ) the Rival North American Growth Fund has used its proprietary risk management strategies to keep its loses to a minimum (-9.82 %) during this unprecedented period of volatility and downward pressured markets. When asked about conditions that may cause the hedge fund to sell, CIO Tony Warzel said, "We normally look for a change or reversal in the underlying attributes that caused us to originally take a position in a stock. For example, if the momentum is slowing we can usually directly attribute the change in sentiment in one or more of our predefined triggers such as sales or earnings. The sell message can be very clear and come very quickly which is why we monitor our portfolio continuously and very closely."
"Because we keep our portfolio small we know each company well and we pay close attention to their chart action," Warzel said when asked about risk management, "We also have proprietary risk mitigation techniques and tools available to us. If warranted, we will use limits on the way up and the way down. In addition, we limit the size of each holding and will use shorts to counteract what we see as an overweight in a particular area. Once we generate alpha, we like to protect it. Therefore if we make a bad trade we work to exit quickly and minimize the downside. We have a 10% rule where if we are down 10% on an initial trade we sell out the position. Yes you can occasionally get whipsawed but that one rule alone has saved us an immense amount of pain this year. In addition, we do not add to losing positions, based on our style averaging down is something we avoid; given the market action this year that too has worked well for us." Warzel concluded.
Warzel has experience as a Small and MidCap Equity Manager, managing AUM in excess of $1.3 billion for a variety of funds.
2 Dec 2008
Redemptions Halted by one of the Worlds Largest Hedge Funds
One of the world's largest hedge funds has temporarily halted redemptions according to reports. Tudor Investment Corp's flagship portfolio, has been reported to have halted redemptions so they can segregate difficult-to-sell assets in the fund from those they can offload more easily.
Bloomberg reports that the move was made by the the fund to avoid having to raise cash in falling markets to pay out withdrawing investors. Tudor Investment Corp, the hedge fund manager established by Paul Tudor Jones, was also reported by Bloomberg as having temporarily suspended redemptions from the portfolio.
Tudor is reportedly allotting to the investors in Tudor BVI Global shares in Legacy, with a view to selling the assets in Legacy over time to hand money back to those clients.
Founded in 1980 by Paul Tudor Jones II, the firm currently manages $15.4 billion. The firm's investment strategies include global macro trading, fundamental equity investing in the U.S. and Europe, emerging markets, venture capital, commodities, event driven strategies and technical trading systems.
Bloomberg reports that the move was made by the the fund to avoid having to raise cash in falling markets to pay out withdrawing investors. Tudor Investment Corp, the hedge fund manager established by Paul Tudor Jones, was also reported by Bloomberg as having temporarily suspended redemptions from the portfolio.
Tudor is reportedly allotting to the investors in Tudor BVI Global shares in Legacy, with a view to selling the assets in Legacy over time to hand money back to those clients.
Founded in 1980 by Paul Tudor Jones II, the firm currently manages $15.4 billion. The firm's investment strategies include global macro trading, fundamental equity investing in the U.S. and Europe, emerging markets, venture capital, commodities, event driven strategies and technical trading systems.
1 Dec 2008
Administration plans to issue 20 highly contentious rules in last weeks
With the economy tumbling and American troops fighting in Iraq and Afghanistan, President Bush has promised to cooperate with Obama to make the transition "as smooth as possible." But that has not stopped his administration from trying, in its final days, to cement in place a diverse array of new regulations.
A Labor Department proposal that would make it much harder for the government to regulate toxic substances and hazardous chemicals to which workers are exposed on the job is one of about 20 highly contentious rules the Bush administration is planning to issue in its final weeks. The rules deal with issues as diverse as abortion, auto safety and the environment. One rule would make it easier to build power plants near national parks and wilderness areas. Another would reduce the role of federal wildlife scientists in deciding whether dams, highways and other projects pose a threat to endangered species.
Obama and his advisers have already signaled their wariness of last-minute efforts by the Bush administration to embed its policies into the Code of Federal Regulations, a collection of rules having the force of law. The advisers have also said that Mr. Obama plans to look at a number of executive orders issued by Mr. Bush.
A new president can unilaterally reverse executive orders issued by his predecessors, as Bush and President Bill Clinton did in selected cases. But it is much more difficult for a new president to revoke or alter final regulations put in place by a predecessor. A new administration must solicit public comment and supply "a reasoned analysis" for such changes, as if it were issuing a new rule, the Supreme Court has said.
Excerpt from; Eleventh-Hour Rush to Enact a Rule That Obama Fought
A Labor Department proposal that would make it much harder for the government to regulate toxic substances and hazardous chemicals to which workers are exposed on the job is one of about 20 highly contentious rules the Bush administration is planning to issue in its final weeks. The rules deal with issues as diverse as abortion, auto safety and the environment. One rule would make it easier to build power plants near national parks and wilderness areas. Another would reduce the role of federal wildlife scientists in deciding whether dams, highways and other projects pose a threat to endangered species.
Obama and his advisers have already signaled their wariness of last-minute efforts by the Bush administration to embed its policies into the Code of Federal Regulations, a collection of rules having the force of law. The advisers have also said that Mr. Obama plans to look at a number of executive orders issued by Mr. Bush.
A new president can unilaterally reverse executive orders issued by his predecessors, as Bush and President Bill Clinton did in selected cases. But it is much more difficult for a new president to revoke or alter final regulations put in place by a predecessor. A new administration must solicit public comment and supply "a reasoned analysis" for such changes, as if it were issuing a new rule, the Supreme Court has said.
Excerpt from; Eleventh-Hour Rush to Enact a Rule That Obama Fought
Job Search Digest Research Reveals Hedge Fund Employees Knew About Market Shift Ahead of Time
A survey conducted by Job Search Digest, publishers of Hedge Fund Jobs Digest, revealed a shift in the hedge fund industry. Given the current state of the market, the results tell an interesting story and show that key players in hedge fund careers knew trouble was on the horizon earlier this year.
Some findings of interest are that despite no significant increase in compensation, there was a substantial increase in satisfaction with hedge fund compensation. This indicates that well before Wall Street's meltdown, hedge fund employees knew the market had shifted. This year's report reveals that 42% of hedge fund employees are happy with their current level of compensation – up from a mere 25% last year.
The survey also found that pay is not correlating with fund performance. When the fund performs well, employees are paid well – most of the time. The hedge funds reporting this year performed well with the majority reporting more than 10% return (and many reporting over 25% return). firms reporting flat performance (that is, zero return) had the highest average pay.
Although the hedge fund industry is often referred to as a meritocracy, many respondents to the survey indicated their bonus is disconnected from their individual performance and, instead, based on overall firm performance.
Job Searcg Digest also found that people are attracted to hedge fund careers because of a huge potential upside. Last year, dissatisfaction with compensation was primarily driven by the desire for greater upside. Now, with all the nervousness in the market, many hedge fund employees feel lucky simply to still be working in the industry.
The full report comes out at Job Search Digest on December 3rd.
Some findings of interest are that despite no significant increase in compensation, there was a substantial increase in satisfaction with hedge fund compensation. This indicates that well before Wall Street's meltdown, hedge fund employees knew the market had shifted. This year's report reveals that 42% of hedge fund employees are happy with their current level of compensation – up from a mere 25% last year.
The survey also found that pay is not correlating with fund performance. When the fund performs well, employees are paid well – most of the time. The hedge funds reporting this year performed well with the majority reporting more than 10% return (and many reporting over 25% return). firms reporting flat performance (that is, zero return) had the highest average pay.
Although the hedge fund industry is often referred to as a meritocracy, many respondents to the survey indicated their bonus is disconnected from their individual performance and, instead, based on overall firm performance.
Job Searcg Digest also found that people are attracted to hedge fund careers because of a huge potential upside. Last year, dissatisfaction with compensation was primarily driven by the desire for greater upside. Now, with all the nervousness in the market, many hedge fund employees feel lucky simply to still be working in the industry.
The full report comes out at Job Search Digest on December 3rd.
Green Hedge Fund Directory Launched By EHFC
The Energy Hedge Fund Center (EHFC) announced that it has added a 'green' hedge fund directory to its product inventory. EHFC's Directory of Energy Hedge Funds was launched four years ago, but with the interest in 'green' hedge funds, the company has created a new green directory for investors. The directory includes carbon, renewable, cleantech, forestry, water and weather derivative funds.
"We decided that now was the time for a standalone green directory and will be offering it for prepublication in January 2009," said Peter Fusaro, co-principal of the EHFC. "The market is now large enough and growing to warrant this service with over 100 green hedge funds."
"EHFC has received innumerable requests for such a product this last 12-months or so as investor appetite for environmental and alternative energy has increased," reports Dr. Gary M. Vasey, Co-Principal, EHFC. "As a result we have complied with that demand and have now added a new directory that focuses on just the 'green' hedge funds."
"We decided that now was the time for a standalone green directory and will be offering it for prepublication in January 2009," said Peter Fusaro, co-principal of the EHFC. "The market is now large enough and growing to warrant this service with over 100 green hedge funds."
"EHFC has received innumerable requests for such a product this last 12-months or so as investor appetite for environmental and alternative energy has increased," reports Dr. Gary M. Vasey, Co-Principal, EHFC. "As a result we have complied with that demand and have now added a new directory that focuses on just the 'green' hedge funds."
27 Nov 2008
100 Women in Hedge Funds Raise Funds for Cancer Care and Prevention
Leaders across the hedge fund industry gathered together and raised more than $1.7 million at the 100 Women in Hedge Funds 2008 New York Charity Gala at Cipriani in New York City last Wednesday night.
"We’re pleased that 100 Women in Hedge Funds has been able to support Dr. Freeman and the Center’s extraordinary programs,"Mimi Drake, a Director of the Board of 100 Women in Hedge Funds said, "Through the hard work, dedication and perseverance of the Gala committee, led by Gala Chair, Kristin Mott, we’re now able to help support these critical health initiatives in the New York, Chicago and San Francisco regions, three regions where our own 100 Women in Hedge Funds’ membership is well represented."
All proceeds from the evening will go to support the Ralph Lauren Center to expand its existing Screening and Patient Navigation Programs in the areas of breast, cervical and colon cancer and leverage its expertise to establish two satellite Patient Navigation Programs in medically underserved communities in Chicago, Illinois, and in San Francisco/Oakland, California.
The Patient Navigation Program was pioneered over seventeen years ago in Harlem by the Center’s founder and president, Harold P. Freeman, MD. A cancer surgeon in Harlem for more than 40 years, Dr. Freeman is a nationally recognized authority on the interrelationship of race, poverty and cancer. He served as the Chair of the US President’s Cancer Panel for 11 years under Presidents Bush and Clinton, and is a past President of the American Cancer Society.
Dr. Freeman said, "We know that poor and uninsured Americans are much more likely to die of cancer. Responding to this challenge and despite a severe economic downturn, 100 Women in Hedge Funds, in one festive evening at Cipriani's, raised more than $1.7 million to support the life saving Patient Navigation programs of Ralph Lauren Center for Cancer Care and Prevention. The funds will be used to promote timely access to diagnosis and treatment of cancer for underserved populations in Harlem, NY, Chicago and San Francisco. Many lives will be saved."
Sonia Gardner, Effecting Change Award Honoree, said "I am honored and humbled to be in the same company as so many past honorees and I want to thank the Board of Directors of 100 Women in Hedge Funds for this wonderful honor. It’s a testament to everyone who supported the event that, despite these difficult times, they all made the effort to support such a meaningful cause as the Ralph Lauren Center for Cancer Care and Prevention. In a business like ours, which is literally defined by volatility and risk, I’ve found it to be essential, irrespective of what is going on around you, to keep things in perspective and to always remain calm and focused. While this obviously is being put to the test in these unprecedented times, it’s an important principle whose power cannot be overstated."
Generous contributions were made by the 2008 Chairs, Avenue Capital Group and Ricks & Ray Partners LLC, and 2008 Vice Chairs, Blue Ridge Foundation, New York, Eton Park, Moore Capital Management and an anonymous benefactor -- as well as other corporations and individuals who generously supported the event.
In addition to last week’s New York Gala, 100 Women in Hedge Funds also hosted a successful Charity Gala in London and fundraiser in Geneva in September this year. These charity events raised over £630,000 ($1.2 million) for Wellbeing of Women, a UK charity focused on women’s health issues. Wellbeing of Women was one of two charities selected by the 2008 Lord Mayor’s appeal, and through the generosity of the industry and volunteer efforts of its members, 100 Women in Hedge Funds’ contribution represented the largest single donation to the Appeal this year.
"We’re pleased that 100 Women in Hedge Funds has been able to support Dr. Freeman and the Center’s extraordinary programs,"Mimi Drake, a Director of the Board of 100 Women in Hedge Funds said, "Through the hard work, dedication and perseverance of the Gala committee, led by Gala Chair, Kristin Mott, we’re now able to help support these critical health initiatives in the New York, Chicago and San Francisco regions, three regions where our own 100 Women in Hedge Funds’ membership is well represented."
All proceeds from the evening will go to support the Ralph Lauren Center to expand its existing Screening and Patient Navigation Programs in the areas of breast, cervical and colon cancer and leverage its expertise to establish two satellite Patient Navigation Programs in medically underserved communities in Chicago, Illinois, and in San Francisco/Oakland, California.
The Patient Navigation Program was pioneered over seventeen years ago in Harlem by the Center’s founder and president, Harold P. Freeman, MD. A cancer surgeon in Harlem for more than 40 years, Dr. Freeman is a nationally recognized authority on the interrelationship of race, poverty and cancer. He served as the Chair of the US President’s Cancer Panel for 11 years under Presidents Bush and Clinton, and is a past President of the American Cancer Society.
Dr. Freeman said, "We know that poor and uninsured Americans are much more likely to die of cancer. Responding to this challenge and despite a severe economic downturn, 100 Women in Hedge Funds, in one festive evening at Cipriani's, raised more than $1.7 million to support the life saving Patient Navigation programs of Ralph Lauren Center for Cancer Care and Prevention. The funds will be used to promote timely access to diagnosis and treatment of cancer for underserved populations in Harlem, NY, Chicago and San Francisco. Many lives will be saved."
Sonia Gardner, Effecting Change Award Honoree, said "I am honored and humbled to be in the same company as so many past honorees and I want to thank the Board of Directors of 100 Women in Hedge Funds for this wonderful honor. It’s a testament to everyone who supported the event that, despite these difficult times, they all made the effort to support such a meaningful cause as the Ralph Lauren Center for Cancer Care and Prevention. In a business like ours, which is literally defined by volatility and risk, I’ve found it to be essential, irrespective of what is going on around you, to keep things in perspective and to always remain calm and focused. While this obviously is being put to the test in these unprecedented times, it’s an important principle whose power cannot be overstated."
Generous contributions were made by the 2008 Chairs, Avenue Capital Group and Ricks & Ray Partners LLC, and 2008 Vice Chairs, Blue Ridge Foundation, New York, Eton Park, Moore Capital Management and an anonymous benefactor -- as well as other corporations and individuals who generously supported the event.
In addition to last week’s New York Gala, 100 Women in Hedge Funds also hosted a successful Charity Gala in London and fundraiser in Geneva in September this year. These charity events raised over £630,000 ($1.2 million) for Wellbeing of Women, a UK charity focused on women’s health issues. Wellbeing of Women was one of two charities selected by the 2008 Lord Mayor’s appeal, and through the generosity of the industry and volunteer efforts of its members, 100 Women in Hedge Funds’ contribution represented the largest single donation to the Appeal this year.
26 Nov 2008
FoHF Lighthouse Expands Through Integration with GlobeOp
Fund of hedge funds Lighthouse Partners announced that it is expanding its partnership with GlobeOp Financial Services to a full-service fund administration relationship.
More than 20 professionals from the Lighthouse operations team in Florida will work jointly with approximately 85 GlobeOp counterparts in Connecticut, New York State and Mumbai, India to deliver “around the clock” post-trade processing for more than 60 managed accounts and five funds.
"During the past three and half years Lighthouse has strategically converted from the standard fund of fund model to a managed account model that we believe will be the future of hedge fund investing," said Sean McGould, Lighthouse president and co-chief investment officer. "Our team has developed strong portfolio and risk management skills over the last 15 years. Combining that expertise with managed account investing is already providing the increased transparency and risk reporting required by institutional investors."
Rob Swan added that the long-term, continued growth of the Lighthouse program required an established partner to effectively handle post-trade processing, administration and reporting. "Underlying Lighthouse managers already greatly benefit from the integration with GlobeOp’s comprehensive, web-based middle-and back-office trade processing services. This partnership also provides our fund managers and investors with the increased independence, timeliness and transparency they require."
Founded in June 1999, Lighthouse Partners is a fund of hedge funds with more than $6 billion in assets under management, over 65 employees and offices in Palm Beach Gardens, Chicago, New York, London and Hong Kong. Lighthouse manages multi-strategy fund of funds along with a stable of focused funds across Credit, Global Equity Long/Short, and Managed Futures. Currently, Lighthouse also has over 60 managed accounts and five funds that are structured wholly in managed accounts.
More than 20 professionals from the Lighthouse operations team in Florida will work jointly with approximately 85 GlobeOp counterparts in Connecticut, New York State and Mumbai, India to deliver “around the clock” post-trade processing for more than 60 managed accounts and five funds.
"During the past three and half years Lighthouse has strategically converted from the standard fund of fund model to a managed account model that we believe will be the future of hedge fund investing," said Sean McGould, Lighthouse president and co-chief investment officer. "Our team has developed strong portfolio and risk management skills over the last 15 years. Combining that expertise with managed account investing is already providing the increased transparency and risk reporting required by institutional investors."
Rob Swan added that the long-term, continued growth of the Lighthouse program required an established partner to effectively handle post-trade processing, administration and reporting. "Underlying Lighthouse managers already greatly benefit from the integration with GlobeOp’s comprehensive, web-based middle-and back-office trade processing services. This partnership also provides our fund managers and investors with the increased independence, timeliness and transparency they require."
Founded in June 1999, Lighthouse Partners is a fund of hedge funds with more than $6 billion in assets under management, over 65 employees and offices in Palm Beach Gardens, Chicago, New York, London and Hong Kong. Lighthouse manages multi-strategy fund of funds along with a stable of focused funds across Credit, Global Equity Long/Short, and Managed Futures. Currently, Lighthouse also has over 60 managed accounts and five funds that are structured wholly in managed accounts.
25 Nov 2008
Hedge Fund Group Gottex Opens Office in Dubai, Hires Ex-Lehman Manager
Independent alternative asset and hedge fund management group, Gottex Fund Management Holdings Limited, announced the opening of an office in Dubai to capitalise on the growth opportunities in the region.
In addition, Gottex appointed Wassim Nasrallah as Managing Director responsible for sales and marketing in the Middle Eastern region. With significant business lines already in the Middle East, Gottex says the region is one of its core growth areas over the coming years. The region and office will be managed by Hashem Arouzi, Managing Director and a founding partner of Gottex. Wassim Nasrallah, who recently joined Gottex from Lehman Brothers, will work alongside Hashem Arouzi in Dubai and co-manage the region.
"We are very pleased to announce the opening of our new Dubai office which will enable us to better service and expand our Middle Eastern customer base," Joachim Gottschalk, Chairman and CEO of Gottex, said, "Similarly, we welcome Wassim to Gottex, who, with his extensive experience in the Gulf region, will be essential to our growth plans in the Middle East."
Before joining Gottex, Wassim Nasrallah worked for Lehman Brothers International, where he was Head of Generalist Sales in Dubai for Capital Markets and Investment Management products. While at Lehman he was involved in Private Investment Management in Boston, New York and Dubai.
Incorporated in Guernsey, Gottex provides investment management services to a diversified range of hedge funds and funds of hedge funds. The Gottex group also structures and manages specialised fund of hedge funds, managed accounts, real asset funds and provides related investment advisory services. As of 30 September 2008, Gottex had $13.5 billion in assets under management (AUM).
In addition, Gottex appointed Wassim Nasrallah as Managing Director responsible for sales and marketing in the Middle Eastern region. With significant business lines already in the Middle East, Gottex says the region is one of its core growth areas over the coming years. The region and office will be managed by Hashem Arouzi, Managing Director and a founding partner of Gottex. Wassim Nasrallah, who recently joined Gottex from Lehman Brothers, will work alongside Hashem Arouzi in Dubai and co-manage the region.
"We are very pleased to announce the opening of our new Dubai office which will enable us to better service and expand our Middle Eastern customer base," Joachim Gottschalk, Chairman and CEO of Gottex, said, "Similarly, we welcome Wassim to Gottex, who, with his extensive experience in the Gulf region, will be essential to our growth plans in the Middle East."
Before joining Gottex, Wassim Nasrallah worked for Lehman Brothers International, where he was Head of Generalist Sales in Dubai for Capital Markets and Investment Management products. While at Lehman he was involved in Private Investment Management in Boston, New York and Dubai.
Incorporated in Guernsey, Gottex provides investment management services to a diversified range of hedge funds and funds of hedge funds. The Gottex group also structures and manages specialised fund of hedge funds, managed accounts, real asset funds and provides related investment advisory services. As of 30 September 2008, Gottex had $13.5 billion in assets under management (AUM).
New Yorker Review; Ben Bernanke and the Financial Crisis
Coming in the December 1, 2008, issue of The New Yorker, “Anatomy of the Meltdown”, John Cassidy provides a comprehensive look at the progression of the economic crisis and speaks with Ben Bernanke, the chairman of the Federal Reserve, who tells Cassidy, “I and others were mistaken early on in saying that the subprime crisis would be contained.
Bernanke, who began his tenure as Fed chairman in 2006 by upholding the hands-off free-market principles of his predecessor, Alan Greenspan, “was more concerned about inflation and unemployment, the Fed’s traditional areas of focus, than he was about the growth of mortgage securities,” Cassidy writes.
While some economists warned that a nationwide housing slump could trigger a recession, Bernanke and his colleagues thought this was unlikely. In August 2007, after trading in the mortgage-securities market had dried up, Cassidy writes, Bernanke finally “realized that the subprime crisis posed a grave threat to some of the country’s biggest financial institutions and that Greenspan-era policies were insufficient to contain it.”
He and the Fed came up with a two-part plan (later referred to as the Bernanke Doctrine): they lowered the federal funds rate and instituted novel programs to lend money directly to institutions. Dean Baker, of the Center for Economic and Policy Research, tells Cassidy, “He was behind the curve at every stage of the story. He didn’t see the housing bubble until after it burst. Until as late as this summer, he downplayed all the risks involved.”
In early 2008, the Fed was faced with the collapse of Bear Stearns, which Bernanke and Treasury Secretary Henry Paulson elected to save by helping facilitate the sale of the company to J. P. Morgan at a cut rate and absorbing its twenty-nine-billion-dollar portfolio of subprime securities. “It quickly became clear that an important precedent had been set: the Bernanke doctrine now included preventing the failure of major financial institutions,” Cassidy writes. “I think we did the right thing to try to preserve financial stability,” Bernanke tells Cassidy. “That’s our job. Yes, it’s moral-hazard-inducing, but the right way to address this question is not to let institutions fail and have a financial meltdown.”
The Bear Stearns rescue brought widespread criticism from the media, conservative economists, and other Fed officials. Bernanke was also criticized when the Fed moved to prop up Fannie Mae and Freddie Mac, as the move was seen as a poor use of taxpayer money. Cassidy writes, “Bernanke couldn’t say so publicly, but he agreed with some of the critics. For years, the Fed had warned that Fannie and Freddie were squeezing out competitors and engaging in risky mortgage-lending practices.” Yet, Cassidy notes, “despite their financial problems, Fannie and Freddie still had many powerful allies in Congress, and Bernanke was determined that the plan be approved quickly, in order to restore confidence in the markets.”
In late August, 2008, “Bernanke still believed that his finger-in-the-dike strategy was working,” Cassidy writes. “A lot can still go wrong, but at least I can see a path that will bring us out of this entire episode relatively intact,” he told a visitor to his office in August. Then, in September, Bernanke and Paulson were faced with the collapse of Lehman Brothers. “Remarkably, once the potential bidders dropped out, Bernanke and Paulson never seriously considered mounting a government rescue of Lehman,” Cassidy writes. “Bernanke and other Fed officials say that they lacked the legal authority to save the bank.” “It’s really hard for me to accept that they couldn’t have come up with something,” Baker tells Cassidy. “They’ve been doing things of dubious legal authority all year. Who would have sued them?” “At the time, a popular interpretation of Lehman Brothers’ demise was that Bernanke and Paulson had finally drawn a line in the sand,” Cassidy writes, but, less than forty-eight hours later, the Fed agreed to extend up to eighty-five billion dollars to the failing insurance giant A.I.G.
“We felt we could say that this was a well-secured loan and that we were not putting fiscal resources at risk,” a senior Fed official tells Cassidy, who notes that A.I.G. was also a much bigger and more complex firm than Lehman Brothers was. Yet the bailout of A.I.G. could not calm the markets. “The subprime virus was infecting parts of the financial system that had appeared immune to it—including the most risk-averse institutions,” Cassidy writes.
On September 17th, Bernanke asked Paulson to accompany him to Capitol Hill and make the case for a congressional bailout of the entire banking industry. “We can’t keep doing this,” Bernanke told Paulson. “Both because we at the Fed don’t have the necessary resources and for reasons of democratic legitimacy, it’s important that the Congress come in and take control of the situation.” “It was a very important step,” Bernanke tells Cassidy. “It greatly diminished the threat of a global financial meltdown. But as Hank Paulson said publicly, ‘You don’t get much credit for averting a disaster.’ ” Yet there is indication that the disaster may not have been averted. “Last week, the stock market plunged to its lowest level in eleven years, auto executives flew into Washington on their corporate jets to demand a bailout, and Wall Street analysts warned that the political vacuum between Administrations could create more turmoil,” Cassidy writes.
“Paulson’s and Bernanke’s efforts to prop up the financial system have so far had little effect on the housing slump, which is the source of the trouble. Until that problem is addressed, the financial sector will remain under great stress.”
Bernanke, who began his tenure as Fed chairman in 2006 by upholding the hands-off free-market principles of his predecessor, Alan Greenspan, “was more concerned about inflation and unemployment, the Fed’s traditional areas of focus, than he was about the growth of mortgage securities,” Cassidy writes.
While some economists warned that a nationwide housing slump could trigger a recession, Bernanke and his colleagues thought this was unlikely. In August 2007, after trading in the mortgage-securities market had dried up, Cassidy writes, Bernanke finally “realized that the subprime crisis posed a grave threat to some of the country’s biggest financial institutions and that Greenspan-era policies were insufficient to contain it.”
He and the Fed came up with a two-part plan (later referred to as the Bernanke Doctrine): they lowered the federal funds rate and instituted novel programs to lend money directly to institutions. Dean Baker, of the Center for Economic and Policy Research, tells Cassidy, “He was behind the curve at every stage of the story. He didn’t see the housing bubble until after it burst. Until as late as this summer, he downplayed all the risks involved.”
In early 2008, the Fed was faced with the collapse of Bear Stearns, which Bernanke and Treasury Secretary Henry Paulson elected to save by helping facilitate the sale of the company to J. P. Morgan at a cut rate and absorbing its twenty-nine-billion-dollar portfolio of subprime securities. “It quickly became clear that an important precedent had been set: the Bernanke doctrine now included preventing the failure of major financial institutions,” Cassidy writes. “I think we did the right thing to try to preserve financial stability,” Bernanke tells Cassidy. “That’s our job. Yes, it’s moral-hazard-inducing, but the right way to address this question is not to let institutions fail and have a financial meltdown.”
The Bear Stearns rescue brought widespread criticism from the media, conservative economists, and other Fed officials. Bernanke was also criticized when the Fed moved to prop up Fannie Mae and Freddie Mac, as the move was seen as a poor use of taxpayer money. Cassidy writes, “Bernanke couldn’t say so publicly, but he agreed with some of the critics. For years, the Fed had warned that Fannie and Freddie were squeezing out competitors and engaging in risky mortgage-lending practices.” Yet, Cassidy notes, “despite their financial problems, Fannie and Freddie still had many powerful allies in Congress, and Bernanke was determined that the plan be approved quickly, in order to restore confidence in the markets.”
In late August, 2008, “Bernanke still believed that his finger-in-the-dike strategy was working,” Cassidy writes. “A lot can still go wrong, but at least I can see a path that will bring us out of this entire episode relatively intact,” he told a visitor to his office in August. Then, in September, Bernanke and Paulson were faced with the collapse of Lehman Brothers. “Remarkably, once the potential bidders dropped out, Bernanke and Paulson never seriously considered mounting a government rescue of Lehman,” Cassidy writes. “Bernanke and other Fed officials say that they lacked the legal authority to save the bank.” “It’s really hard for me to accept that they couldn’t have come up with something,” Baker tells Cassidy. “They’ve been doing things of dubious legal authority all year. Who would have sued them?” “At the time, a popular interpretation of Lehman Brothers’ demise was that Bernanke and Paulson had finally drawn a line in the sand,” Cassidy writes, but, less than forty-eight hours later, the Fed agreed to extend up to eighty-five billion dollars to the failing insurance giant A.I.G.
“We felt we could say that this was a well-secured loan and that we were not putting fiscal resources at risk,” a senior Fed official tells Cassidy, who notes that A.I.G. was also a much bigger and more complex firm than Lehman Brothers was. Yet the bailout of A.I.G. could not calm the markets. “The subprime virus was infecting parts of the financial system that had appeared immune to it—including the most risk-averse institutions,” Cassidy writes.
On September 17th, Bernanke asked Paulson to accompany him to Capitol Hill and make the case for a congressional bailout of the entire banking industry. “We can’t keep doing this,” Bernanke told Paulson. “Both because we at the Fed don’t have the necessary resources and for reasons of democratic legitimacy, it’s important that the Congress come in and take control of the situation.” “It was a very important step,” Bernanke tells Cassidy. “It greatly diminished the threat of a global financial meltdown. But as Hank Paulson said publicly, ‘You don’t get much credit for averting a disaster.’ ” Yet there is indication that the disaster may not have been averted. “Last week, the stock market plunged to its lowest level in eleven years, auto executives flew into Washington on their corporate jets to demand a bailout, and Wall Street analysts warned that the political vacuum between Administrations could create more turmoil,” Cassidy writes.
“Paulson’s and Bernanke’s efforts to prop up the financial system have so far had little effect on the housing slump, which is the source of the trouble. Until that problem is addressed, the financial sector will remain under great stress.”
24 Nov 2008
International Regulators to Discuss Short Selling, Derivatives Regulation
Securities and Exchange Commission Chairman Christopher Cox announced a meeting of the International Organization of Securities Commissions (IOSCO) Technical Committee today, Monday, November 24 by teleconference to discuss urgent regulatory issues in the ongoing credit crisis.
"In addressing turbulent market conditions, it is essential not only that regulators act against securities law violations, including abusive short selling, but also that there be close coordination among international markets to avoid regulatory gaps and unintended consequences," said Chairman Cox. "This high-level coordination among international regulators will allow us to review the steps we have taken thus far and ensure that our ongoing and future actions are effective and mutually reinforcing."
The Technical Committee meeting will consider Short Selling and the effectiveness of recent regulatory responses in reducing manipulative short selling without stifling legitimate short selling activity, also explore possible coordination on rules relating to naked short sales, in particular with regard to position reporting and delivery and pre-borrowing requirements.
The teleconference also covers Under-Regulated or Unregulated Products. Development and disclosure principles to promote transparency in OTC markets for derivatives and other financial instruments which will contribute to enhanced investor protection and mitigating systemic risk.
The meeting also will focus on Credit Rating Agencies. Assessing members' progress in adopting rules based on IOSCO's revised Code of Conduct, and accelerating work on developing a common examination module.
Also covered are, International Accounting Standards, ensuring that the process of developing international accounting standards continues to take account of the interests of investors.
"In addressing turbulent market conditions, it is essential not only that regulators act against securities law violations, including abusive short selling, but also that there be close coordination among international markets to avoid regulatory gaps and unintended consequences," said Chairman Cox. "This high-level coordination among international regulators will allow us to review the steps we have taken thus far and ensure that our ongoing and future actions are effective and mutually reinforcing."
The Technical Committee meeting will consider Short Selling and the effectiveness of recent regulatory responses in reducing manipulative short selling without stifling legitimate short selling activity, also explore possible coordination on rules relating to naked short sales, in particular with regard to position reporting and delivery and pre-borrowing requirements.
The teleconference also covers Under-Regulated or Unregulated Products. Development and disclosure principles to promote transparency in OTC markets for derivatives and other financial instruments which will contribute to enhanced investor protection and mitigating systemic risk.
The meeting also will focus on Credit Rating Agencies. Assessing members' progress in adopting rules based on IOSCO's revised Code of Conduct, and accelerating work on developing a common examination module.
Also covered are, International Accounting Standards, ensuring that the process of developing international accounting standards continues to take account of the interests of investors.
GlobeOp Hires Hedge Fund Expert As Risk Manager
Hedge fund expert Tony Glickman has joined GlobeOp Financial Services as as global head of Risk Services. Glickman will report to Vernon Barback, GlobeOp president and COO, and will be based in the company's New York City office. He will also join GlobeOp's Operating Committee.
"Tony's experience in leading hedge funds and financial risk management teams creates an in-depth understanding of our clients' requirements for risk reporting services," said Vernon Barback. "The current turbulent market underlines the importance of risk measurement, analytics and reporting to hedge funds and investors alike. This presents GlobeOp with significant opportunities. We look forward to Tony's leadership and vision in further strengthening our risk expertise and services as the market evolution continues."
Glickman brings more than 25 years of financial market-related experience to GlobeOp. He began his career as a proprietary trader at Bankers Trust and at Chemical Bank. He also served as head of proprietary trading, and later as treasurer and head of portfolio risk management, during eight years with the Canadian Imperial Bank of Commerce (CIBC). Prior to and following CIBC, he launched and led funds specializing in bond arbitrage, volatility-arbitrage and global macro strategies. In addition, he has served extensively as a consultant to asset managers, public pension funds, central bankers and regulators on strategic risk management issues.
Glickman earned an MBA in finance from the Stern School of Business of New York University, where he was a University Fellow.
"Tony's experience in leading hedge funds and financial risk management teams creates an in-depth understanding of our clients' requirements for risk reporting services," said Vernon Barback. "The current turbulent market underlines the importance of risk measurement, analytics and reporting to hedge funds and investors alike. This presents GlobeOp with significant opportunities. We look forward to Tony's leadership and vision in further strengthening our risk expertise and services as the market evolution continues."
Glickman brings more than 25 years of financial market-related experience to GlobeOp. He began his career as a proprietary trader at Bankers Trust and at Chemical Bank. He also served as head of proprietary trading, and later as treasurer and head of portfolio risk management, during eight years with the Canadian Imperial Bank of Commerce (CIBC). Prior to and following CIBC, he launched and led funds specializing in bond arbitrage, volatility-arbitrage and global macro strategies. In addition, he has served extensively as a consultant to asset managers, public pension funds, central bankers and regulators on strategic risk management issues.
Glickman earned an MBA in finance from the Stern School of Business of New York University, where he was a University Fellow.
Short Selling Outperforms FOHFs as Investors Withdraw Over $40 Billion from Hedge Funds
According to data released by Hedge Fund Research (HFR), the global financial and economic crises accelerated in October, contributing to continued losses in the hedge fund industry, with the HFRI Fund Weighted Composite Index falling nearly 6% for the month.
“Performance of the hedge fund industry has declined over 17% since October 2007, making the current performance drawdown the largest in history,” said Kenneth J. Heinz, President of Hedge Fund Research. “The industry has now registered five consecutive months of losses, another inauspicious first. Consolidation is likely to continue into 2009 as investors across all asset classes indiscriminately liquidate assets to move portfolios into cash holdings.”
Investors withdrew over $40 billion from hedge funds in the month of October which, in addition to $115 billion in performance-based asset losses, reduced the industry capital base by $155 billion. Assets under management in the global hedge fund industry declined to $1.56 trillion at the end of October, a level last seen at the end of Q4 2006.
As of the end of Q3 2008, HFR estimates the entire hedge fund industry to contain more than 10,000 funds, which includes more than 7,400 single-manager funds. October losses follow a challenging third quarter during which global hedge fund capital fell by $210 billion.
The largest capital reductions during the month came from Funds of Hedge Funds, from which investors withdrew over $22 billion. Funds of Hedge Funds have underperformed the overall industry so far this year, with the HFRI Fund of Funds Index posting an 18.50% decline, compared to a loss of 16% for the HFRI Fund Weighted Composite Index.
Performance losses were most significant in funds focused on Emerging Markets, Relative Value Arbitrage and Energy/Basic Materials equities.
Short Selling has posted a strong gain of over 22% for the year. Macro Systematic strategies, which employ quantitative trend-following programs, gained over 6.5% in October and nearly 15% year to date.
Fifty-two percent of October capital outflows were from firms with greater than $5 billion under management; these largest funds represent only 5.5% of the number of funds in the industry but control over 58% of all hedge fund capital.
“Performance of the hedge fund industry has declined over 17% since October 2007, making the current performance drawdown the largest in history,” said Kenneth J. Heinz, President of Hedge Fund Research. “The industry has now registered five consecutive months of losses, another inauspicious first. Consolidation is likely to continue into 2009 as investors across all asset classes indiscriminately liquidate assets to move portfolios into cash holdings.”
Investors withdrew over $40 billion from hedge funds in the month of October which, in addition to $115 billion in performance-based asset losses, reduced the industry capital base by $155 billion. Assets under management in the global hedge fund industry declined to $1.56 trillion at the end of October, a level last seen at the end of Q4 2006.
As of the end of Q3 2008, HFR estimates the entire hedge fund industry to contain more than 10,000 funds, which includes more than 7,400 single-manager funds. October losses follow a challenging third quarter during which global hedge fund capital fell by $210 billion.
The largest capital reductions during the month came from Funds of Hedge Funds, from which investors withdrew over $22 billion. Funds of Hedge Funds have underperformed the overall industry so far this year, with the HFRI Fund of Funds Index posting an 18.50% decline, compared to a loss of 16% for the HFRI Fund Weighted Composite Index.
Performance losses were most significant in funds focused on Emerging Markets, Relative Value Arbitrage and Energy/Basic Materials equities.
Short Selling has posted a strong gain of over 22% for the year. Macro Systematic strategies, which employ quantitative trend-following programs, gained over 6.5% in October and nearly 15% year to date.
Fifty-two percent of October capital outflows were from firms with greater than $5 billion under management; these largest funds represent only 5.5% of the number of funds in the industry but control over 58% of all hedge fund capital.
20 Nov 2008
New Zealand's Absolute Return Managers Index Surge in October
The Ernst and Young New Zealand Absolute Return index surged to its second highest level since inception in October, gaining 2.83% for the month, putting year to date performance at +15.8%, and year on year performance at +18.07%.
Profitable performance from those managers with a positive exposure to the serial correlation of market returns (what some call “trend following”), and implied volatility contributed to a substantial proportion of the month’s gain. A long-short commodities component also surprised with a positive performance, even in the face of weaker commodity markets.
New Zealand Absolute Return Association (NZARA) Chairman Anthony Limbrick, who is also Chief Investment Officer of Pure Capital, one of the contributing managers, said, “The Ernst & Young New Zealand Absolute Return Index was developed to do two things. The first was to raise both offshore and domestic awareness of the small but innovative New Zealand industry. This is an ongoing process but we are confident we are making progress. The second, to highlight the competence of New Zealand managers, continues to be reinforced by the strong performance of the index, both in outright terms, and in relative terms against our global peers”.
The Ernst and Young New Zealand Absolute Return Index is based on a concept of simple averages i.e. each of the seven constituent managers presents an “NZARA Average”, an average of the performance of all their funds or programs that are available for new money. In some cases a manager is presenting an average of several products. This collection of averages is then compiled again as a simple average to create the index. Ernst and Young compiles the index but is not a verification agent and does not guarantee the veracity of the performance numbers presented by the individual managers.
The index documentation was compiled by law firm Minter Ellison Rudd Watts.
Profitable performance from those managers with a positive exposure to the serial correlation of market returns (what some call “trend following”), and implied volatility contributed to a substantial proportion of the month’s gain. A long-short commodities component also surprised with a positive performance, even in the face of weaker commodity markets.
New Zealand Absolute Return Association (NZARA) Chairman Anthony Limbrick, who is also Chief Investment Officer of Pure Capital, one of the contributing managers, said, “The Ernst & Young New Zealand Absolute Return Index was developed to do two things. The first was to raise both offshore and domestic awareness of the small but innovative New Zealand industry. This is an ongoing process but we are confident we are making progress. The second, to highlight the competence of New Zealand managers, continues to be reinforced by the strong performance of the index, both in outright terms, and in relative terms against our global peers”.
The Ernst and Young New Zealand Absolute Return Index is based on a concept of simple averages i.e. each of the seven constituent managers presents an “NZARA Average”, an average of the performance of all their funds or programs that are available for new money. In some cases a manager is presenting an average of several products. This collection of averages is then compiled again as a simple average to create the index. Ernst and Young compiles the index but is not a verification agent and does not guarantee the veracity of the performance numbers presented by the individual managers.
The index documentation was compiled by law firm Minter Ellison Rudd Watts.
Tech provider GlobeOp ranked in FinTech 100 and RiskTech 100
Hedge fund technology and administration provider GlobeOp Financial Services has been ranked in both the FinTech 100 and the RiskTech 100.
"Technology is central to GlobeOp's hedge fund services and this dual recognition is timely as current market uncertainty underlines the value of a robust, risk-driven technology infrastructure to fund managers and their investors," said Bob Schwartz, GlobeOp chief technology officer. "Our platform represents more than 500 man-years of development. Just as client services benefit from the Wall Street experience of GlobeOp's senior management, we also apply front office technology techniques to operations processing to achieve risk reduction benefits for our clients."
Addressing current market challenges for hedge funds, Vernon Barback, GlobeOp chief operating officer added, "New market fundamentals - such as risk diversification and cost-efficiency - are accelerating the outsourcing trend as a means of mitigating operational risk. The FinTech 100 and RiskTech 100 rankings are useful benchmarks as funds seek independent, un-conflicted service providers, which can combine technology management and innovation, deep domain knowledge in operations and risk measurement, scalable infrastructure and a healthy balance sheet."
The FinTech 100, published by American Banker and research firm Financial Insights, ranked GlobeOp in 51st position after analyzing more than 400 companies who derive more than a third of revenues from financial services.
The RiskTech 100, published by Chartis Research, recognizes leading global technology firms active in risk management services. Ranking 52nd, GlobeOp earned one of the highest scores for innovation in the RiskTech 100, and strong scores for core technology, customer satisfaction and organizational strength. The 2008 report identified 100 leading companies from 3,200 initial candidates, more than 800 risk technology buyer surveys, and interviews with vendors and buyers across 15 countries.
GlobeOp today serves over 180 clients worldwide, representing $108 billion in assets under administration (AuA). With headquarters in London and New York, GlobeOp employs 1,800 people on three continents; offices are also located in Dublin, Ireland; George Town, Cayman Islands; Harrison, NY and Hartford, CT, U.S.A.; and Mumbai (Bombay), India.
"Technology is central to GlobeOp's hedge fund services and this dual recognition is timely as current market uncertainty underlines the value of a robust, risk-driven technology infrastructure to fund managers and their investors," said Bob Schwartz, GlobeOp chief technology officer. "Our platform represents more than 500 man-years of development. Just as client services benefit from the Wall Street experience of GlobeOp's senior management, we also apply front office technology techniques to operations processing to achieve risk reduction benefits for our clients."
Addressing current market challenges for hedge funds, Vernon Barback, GlobeOp chief operating officer added, "New market fundamentals - such as risk diversification and cost-efficiency - are accelerating the outsourcing trend as a means of mitigating operational risk. The FinTech 100 and RiskTech 100 rankings are useful benchmarks as funds seek independent, un-conflicted service providers, which can combine technology management and innovation, deep domain knowledge in operations and risk measurement, scalable infrastructure and a healthy balance sheet."
The FinTech 100, published by American Banker and research firm Financial Insights, ranked GlobeOp in 51st position after analyzing more than 400 companies who derive more than a third of revenues from financial services.
The RiskTech 100, published by Chartis Research, recognizes leading global technology firms active in risk management services. Ranking 52nd, GlobeOp earned one of the highest scores for innovation in the RiskTech 100, and strong scores for core technology, customer satisfaction and organizational strength. The 2008 report identified 100 leading companies from 3,200 initial candidates, more than 800 risk technology buyer surveys, and interviews with vendors and buyers across 15 countries.
GlobeOp today serves over 180 clients worldwide, representing $108 billion in assets under administration (AuA). With headquarters in London and New York, GlobeOp employs 1,800 people on three continents; offices are also located in Dublin, Ireland; George Town, Cayman Islands; Harrison, NY and Hartford, CT, U.S.A.; and Mumbai (Bombay), India.
19 Nov 2008
Dubai Real Estate Ruled by 'Natural Selection'
In a recent real estate seminar, sponsored by World Class Group in Dubai, the keynote speaker said that the future of the real estate market will be based on Darwin's law of natural selection.
Michael J. Tolan, CEO of World Class Group was addressing representatives from over 30 real estate related companies attending the forum, 'Beating the Economic Meltdown, Wrestling Alligators in Dubai'. The seminar was attended by hedge fund managers, property developers and real estate agents.
Tolan said that Developers who will continue to use the models of the past 18 months in the market could be in for a severe correction in their performance numbers, "The trends of the market will follow Darwin's Theory of Natural Selection and the entire model of the market will transform." he said.
"Developers will take lessons from the past recessions and will innovate new packaging and offerings to comply to investor demand," Tolan Said, "More rent to own schemes, attractive and flexible in-house finance, and real estate investment trusts will emerge to lure investors back into the stormy and uncertain waters of the real estate market."
Tolan also highlighted the advent of fractional ownership and timeshare schemes which will evolve in the Dubai UAE markets to offset the oversupply of unsold inventory and attract a new class of investors and speculators.
"In the past, the lucrative Dubai real estate market has succeeded on the heals of market euphoria and innuendo, which has created an artificial hype. Vanity selling has been the main culprit," he said.
The market value today exceeds 4 trillion dollars of existing or pipeline projects, including the world tallest building and projects like the Palm Islands which feature Trump Towers, Atlantis and the new World Islands.
"Developers and agents in the future must address the fear factor that may prevent investors to plunge into the market, and good solid regulations that Dubai has now adopted will go far to overcome consumer protection issues often absent in the past."
"Real estate consumers will respond when they have a big enough incentive to do so, therefore the more flexible and innovative the offering, combined with stringent measures of safety and protection,the better the outcome for the future of prosperity in the Dubai market arena," he added. "The Dubai market is experiencing a slow down, however is dynamic, amazing and full of promise."
Michael J. Tolan, CEO of World Class Group was addressing representatives from over 30 real estate related companies attending the forum, 'Beating the Economic Meltdown, Wrestling Alligators in Dubai'. The seminar was attended by hedge fund managers, property developers and real estate agents.
Tolan said that Developers who will continue to use the models of the past 18 months in the market could be in for a severe correction in their performance numbers, "The trends of the market will follow Darwin's Theory of Natural Selection and the entire model of the market will transform." he said.
"Developers will take lessons from the past recessions and will innovate new packaging and offerings to comply to investor demand," Tolan Said, "More rent to own schemes, attractive and flexible in-house finance, and real estate investment trusts will emerge to lure investors back into the stormy and uncertain waters of the real estate market."
Tolan also highlighted the advent of fractional ownership and timeshare schemes which will evolve in the Dubai UAE markets to offset the oversupply of unsold inventory and attract a new class of investors and speculators.
"In the past, the lucrative Dubai real estate market has succeeded on the heals of market euphoria and innuendo, which has created an artificial hype. Vanity selling has been the main culprit," he said.
The market value today exceeds 4 trillion dollars of existing or pipeline projects, including the world tallest building and projects like the Palm Islands which feature Trump Towers, Atlantis and the new World Islands.
"Developers and agents in the future must address the fear factor that may prevent investors to plunge into the market, and good solid regulations that Dubai has now adopted will go far to overcome consumer protection issues often absent in the past."
"Real estate consumers will respond when they have a big enough incentive to do so, therefore the more flexible and innovative the offering, combined with stringent measures of safety and protection,the better the outcome for the future of prosperity in the Dubai market arena," he added. "The Dubai market is experiencing a slow down, however is dynamic, amazing and full of promise."
Companies and Markets Reports on Hedge Funds in Europe 2008
Companiesandmarkets.com has released a report presentig views on the market for hedge fund investment based on a survey of 100 leading asset managers across Europe.
The report, which covers mass market, high net worth and institutional customer groups, forms part of a series looking at the market for alternative investments in Europe. Looking at the onshore hedge fund market in France, Germany, Italy, Spain and
the UK, the report provides forecasts to 2012, analysing legislative developments and their implications for growth in the European hedge fund market. The report also dentifies the primary client segments and appropriate marketing and distribution strategies for individual countries.
There will be strong growth in funds of hedge funds over the next year, the report states, with less demand for single hedge funds according to 65% of asset managers in Europe. Asset managers in Spain and Italy believe most strongly that the demand for funds of hedge funds will outstrip that for single hedge funds, followed by France, Germany and finally the UK.
Across the five core economies in Western Europe – France, Germany, Italy, Spain and the UK – institutional investors now dominate the market for hedge funds. On average, slightly more than two-thirds of asset managers confirmed that this group represents their biggest customer segment for hedge funds today. In Italy, mass market investors may also be put off by the price of hedge fund investment, according to 40% of asset managers there. In Spain, on the other hand, demand from mass market clients is being limited by competition from capital-protected and structured products and inadequate promotion of hedge fund products by banks and advisors.
The report, which covers mass market, high net worth and institutional customer groups, forms part of a series looking at the market for alternative investments in Europe. Looking at the onshore hedge fund market in France, Germany, Italy, Spain and
the UK, the report provides forecasts to 2012, analysing legislative developments and their implications for growth in the European hedge fund market. The report also dentifies the primary client segments and appropriate marketing and distribution strategies for individual countries.
There will be strong growth in funds of hedge funds over the next year, the report states, with less demand for single hedge funds according to 65% of asset managers in Europe. Asset managers in Spain and Italy believe most strongly that the demand for funds of hedge funds will outstrip that for single hedge funds, followed by France, Germany and finally the UK.
Across the five core economies in Western Europe – France, Germany, Italy, Spain and the UK – institutional investors now dominate the market for hedge funds. On average, slightly more than two-thirds of asset managers confirmed that this group represents their biggest customer segment for hedge funds today. In Italy, mass market investors may also be put off by the price of hedge fund investment, according to 40% of asset managers there. In Spain, on the other hand, demand from mass market clients is being limited by competition from capital-protected and structured products and inadequate promotion of hedge fund products by banks and advisors.
18 Nov 2008
European-domiciled Hedge Funds Administration Services Strengthened by GlobeOp
GlobeOp announced the strengthening its European-domiciled hedge fund administration services following the licensing of its Dublin office by the Irish Financial Services Regulatory Authority, expanding the company’s existing fund administration network based in the Cayman Islands and the USA.
The office is led by Jim Casey, GlobeOp’s global head of investor relations,"Ireland is a strategically important administrative center for European domiciled funds," Casey said, "Despite market turbulence this past year, the European funds sector continues to develop its long-term potential. I look forward to building a Dublin team whose best practices further strengthen our fund administration services globally.”
"The GlobeOp Ireland license allows us to directly service Irish domiciled funds and support European hedge fund clients and their investors with full fund administration services," Vernon Barback, GlobeOp president and chief operating officer said, "This includes independent and transparent fund performance reporting.”
The GlobeOp Ireland license allows GlobeOp to directly service Irish domiciled funds and support European hedge fund clients and their investors with full fund administration services.
With $108 billion in assets under administration, GlobeOp has more than 14,000 investors globally. Earlier this year the company opened a new hurricane-proof office in Caymana Bay, Cayman Islands and appointed Gary Linford, former head of the Investment & Securities Division of the Cayman Islands Monetary Authority (CIMA), to its Cayman Islands subsidiary board.
The office is led by Jim Casey, GlobeOp’s global head of investor relations,"Ireland is a strategically important administrative center for European domiciled funds," Casey said, "Despite market turbulence this past year, the European funds sector continues to develop its long-term potential. I look forward to building a Dublin team whose best practices further strengthen our fund administration services globally.”
"The GlobeOp Ireland license allows us to directly service Irish domiciled funds and support European hedge fund clients and their investors with full fund administration services," Vernon Barback, GlobeOp president and chief operating officer said, "This includes independent and transparent fund performance reporting.”
The GlobeOp Ireland license allows GlobeOp to directly service Irish domiciled funds and support European hedge fund clients and their investors with full fund administration services.
With $108 billion in assets under administration, GlobeOp has more than 14,000 investors globally. Earlier this year the company opened a new hurricane-proof office in Caymana Bay, Cayman Islands and appointed Gary Linford, former head of the Investment & Securities Division of the Cayman Islands Monetary Authority (CIMA), to its Cayman Islands subsidiary board.
Hedge Fund Manager OakRun Launches Short Term Fund
Hedge fund Manager OakRun Capital LLC, has announced the launch of a receivables refactoring fund, the 'Short Term Fund'.
The 'Short Term Fund', a Cayman Islands exempted fund, launched on October 1st and came in at 9.48% annualized in its first month.
The fund's objective is to generate above average current income with a lower overall credit risk profile and maintain a stable NAV.
With JP Morgan & Wachovia Bank as Custodian, the fund has a 1% management fee, 10% performance fee, quarterly redemptions, an initial lock-up period of 6 months and a minimum investment of $1,000,000. Shares are offered for subscription to eligible non-U.S. persons.
Managed by a board of directors responsible for the overall supervision and control, the fund has engaged OakRun Capital to perform management and administrative functions.
"We do not believe that simply managing for relative performance is satisfactory to our clients or ourselves." says Scott Rhodenizer, Founder, CEO, and Chief Investment Officer, "While we work to outperform the markets, we strive to do so without excessive risk.”
The fund will seek to achieve its objective through a process known as factoring. In markets for debt instruments, higher relative yields generally indicate greater levels of credit risk than lower yielding instruments. However, OakRun believes that the trade receivables purchased by the fund present an opportunity to achieve higher yields with moderate risk.
Rhodenizer is former Managing Director at Deutsche Bank Securities with over 16 years of experience within the investment industry. He advised on over $2.5 billion in institutional assets at Deutsche Bank Securities in Miami, Florida and has experience in traditional and structured investments, such as fixed income securities, derivatives, global equities, and commodities.
At least 50% of the portfolio is insured by Euler American Credit Indemnity, an Allianz company and insurer of domestic and foreign accounts receivable covering US sales in excess of $150 billion annually. Euler is North America’s leading credit insurer, rated AA- by Standard & Poor’s. It is a subsidiary of Paris-based Euler incorporated in 1891 with current net assets in excess of $3.0 billion.
The 'Short Term Fund', a Cayman Islands exempted fund, launched on October 1st and came in at 9.48% annualized in its first month.
The fund's objective is to generate above average current income with a lower overall credit risk profile and maintain a stable NAV.
With JP Morgan & Wachovia Bank as Custodian, the fund has a 1% management fee, 10% performance fee, quarterly redemptions, an initial lock-up period of 6 months and a minimum investment of $1,000,000. Shares are offered for subscription to eligible non-U.S. persons.
Managed by a board of directors responsible for the overall supervision and control, the fund has engaged OakRun Capital to perform management and administrative functions.
"We do not believe that simply managing for relative performance is satisfactory to our clients or ourselves." says Scott Rhodenizer, Founder, CEO, and Chief Investment Officer, "While we work to outperform the markets, we strive to do so without excessive risk.”
The fund will seek to achieve its objective through a process known as factoring. In markets for debt instruments, higher relative yields generally indicate greater levels of credit risk than lower yielding instruments. However, OakRun believes that the trade receivables purchased by the fund present an opportunity to achieve higher yields with moderate risk.
Rhodenizer is former Managing Director at Deutsche Bank Securities with over 16 years of experience within the investment industry. He advised on over $2.5 billion in institutional assets at Deutsche Bank Securities in Miami, Florida and has experience in traditional and structured investments, such as fixed income securities, derivatives, global equities, and commodities.
At least 50% of the portfolio is insured by Euler American Credit Indemnity, an Allianz company and insurer of domestic and foreign accounts receivable covering US sales in excess of $150 billion annually. Euler is North America’s leading credit insurer, rated AA- by Standard & Poor’s. It is a subsidiary of Paris-based Euler incorporated in 1891 with current net assets in excess of $3.0 billion.
17 Nov 2008
Hedge Funds Praise The Receivables Exchange
Receivables Exchange, the world’s first online marketplace for real-time trading of accounts receivable, today announced that it has launched its proprietary patent-pending trading platform to conduct live trading of accounts receivable.
“The Receivables Exchange is a phenomenal idea that has hit the asset based finance industry by storm,” said Michael Scanlon, Managing Director of HedgeCo.net and Member of the Board for The Hedge Fund Association. “Through its centralized, transparent marketplace, it is transforming an industry that has long been based on one-to-one relationships, effectively making the sale of commercial receivables a completely transparent and globally competitive marketplace.”
At The Receivables Exchange, U.S. businesses (Sellers) are able to increase their cash flow and free up their working capital by having their outstanding receivables bid on in real-time by a global network of institutional investors (Buyers).
“The Receivables Exchange was founded on the fundamental belief that America’s small and mid-sized businesses should have better access to working capital,” said Justin Brownhill, co-founder and chief executive officer of The Receivables Exchange. “In today’s credit crisis, we’re hearing from CEOs and CFOs across the country that the need has never been greater for them to identify alternative funding sources to reinvest into their businesses in order to maintain their success.”
Companies of all sizes – from under $10 million to over $150 million - have been signing up to use their receivables to accelerate cash flow. Members span a diverse range of dozens of industries, including manufacturing, technology, transportation, distribution and staffing – all realizing the strategic advantage of monetizing their accounts receivable, particularly in today’s troubling credit crunch.
Commercial banks, hedge funds and asset-based lenders can take advantage of the centralized, competitive marketplace to realize a stable, high growth investment opportunity.
“The Receivables Exchange allows us to extend our asset-based finance investment strategies to include short-term receivables,” said Sam Adams, managing director of Cedar Lane, a New York based asset based hedge fund. “The Exchange offers a unique opportunity to obtain returns better than money-market but with shorter tenures than the traditional entertainment and media loan positions in our funds’ portfolios. Through The Receivables Exchange platform we can invest funds on a short-term basis to a qualified pool of Sellers at a more attractive rate of return than cash alternatives without diverging from our investment strategy.”
“The Receivables Exchange is a phenomenal idea that has hit the asset based finance industry by storm,” said Michael Scanlon, Managing Director of HedgeCo.net and Member of the Board for The Hedge Fund Association. “Through its centralized, transparent marketplace, it is transforming an industry that has long been based on one-to-one relationships, effectively making the sale of commercial receivables a completely transparent and globally competitive marketplace.”
At The Receivables Exchange, U.S. businesses (Sellers) are able to increase their cash flow and free up their working capital by having their outstanding receivables bid on in real-time by a global network of institutional investors (Buyers).
“The Receivables Exchange was founded on the fundamental belief that America’s small and mid-sized businesses should have better access to working capital,” said Justin Brownhill, co-founder and chief executive officer of The Receivables Exchange. “In today’s credit crisis, we’re hearing from CEOs and CFOs across the country that the need has never been greater for them to identify alternative funding sources to reinvest into their businesses in order to maintain their success.”
Companies of all sizes – from under $10 million to over $150 million - have been signing up to use their receivables to accelerate cash flow. Members span a diverse range of dozens of industries, including manufacturing, technology, transportation, distribution and staffing – all realizing the strategic advantage of monetizing their accounts receivable, particularly in today’s troubling credit crunch.
Commercial banks, hedge funds and asset-based lenders can take advantage of the centralized, competitive marketplace to realize a stable, high growth investment opportunity.
“The Receivables Exchange allows us to extend our asset-based finance investment strategies to include short-term receivables,” said Sam Adams, managing director of Cedar Lane, a New York based asset based hedge fund. “The Exchange offers a unique opportunity to obtain returns better than money-market but with shorter tenures than the traditional entertainment and media loan positions in our funds’ portfolios. Through The Receivables Exchange platform we can invest funds on a short-term basis to a qualified pool of Sellers at a more attractive rate of return than cash alternatives without diverging from our investment strategy.”
Pharos Hedge Fund Launches Office In Dubai
Pharos Financial Advisors Limited, a specialist emerging markets fund manager, announced that it has been granted a license by the Dubai Financial Services Authority (DFSA) to operate as an authorised firm within the Dubai International Financial Centre (DIFC).
Founded in 1997 by US national, Peter M. Halloran, with seed capital from Soros Fund Management and CS First Boston, Pharos Financial Group currently runs three funds - the Pharos Russia Fund, the Pharos Small Cap Fund, and the Pharos Gas Investment Fund.
"We are delighted to receive a license from DFSA, particularly as the first ever fund manager with a Russian/CIS focus to join DIFC," Halloran said, "Pharos intends to fill the niche as the market leader in emerging markets fund management. Already we have seen tremendous appetite from GCC investors for our Russian-focused investment opportunities."
Prior to founding Pharos Financial Group, Halloran was the principal contributor toward building the #1 ranked CS First Boston equity and fixed income brokerage businesses in Russia and the CIS. He has been a leader in the development of the Russian capital markets since their inception in 1994, bringing more than $8 billion to the markets through debt, equity and private placements including Russia's first local IPO and more than $2 billion of privatisation initiatives.
Welcoming Pharos to DIFC, Nasser Al Shaali, CEO, commented, "We welcome Pharos Financial Group to the Dubai International Financial Centre. DIFC will provide Pharos with a supportive environment to advance their business growth in the Middle East. The world-class regulatory framework in DIFC will give them additional credibility as a specialist emerging market fund manager."
The Pharos investment team brings more than 90 years of combined expertise in emerging markets to its new operations in DIFC. Moreover, Pharos has sat on 40 seats of Russian company boards. Two Pharos Funds were ranked among the top 15 hedge funds globally by Bloomberg and Eurohedge. Currently, the three Pharos funds are ranked 1-2-3 among best performers in Russia this year.
The Dubai International Financial Centre (DIFC) is an onshore hub for global finance. It bridges the time gap between the financial centres of Hong Kong and London and services a region with the largest untapped emerging market for financial services. In just three years, over 700 firms have registered at the DIFC.
Pharos Financial Group ranks as the world's leading fund manager having a focus on Russia and the CIS with a successful track record of over 11 years. With offices in Moscow and now Dubai, Pharos Financial Group has produced superior absolute returns over the years while providing institutions and private investors an opportunity to gain exposure in the emerging markets of Russia and the CIS.
Founded in 1997 by US national, Peter M. Halloran, with seed capital from Soros Fund Management and CS First Boston, Pharos Financial Group currently runs three funds - the Pharos Russia Fund, the Pharos Small Cap Fund, and the Pharos Gas Investment Fund.
"We are delighted to receive a license from DFSA, particularly as the first ever fund manager with a Russian/CIS focus to join DIFC," Halloran said, "Pharos intends to fill the niche as the market leader in emerging markets fund management. Already we have seen tremendous appetite from GCC investors for our Russian-focused investment opportunities."
Prior to founding Pharos Financial Group, Halloran was the principal contributor toward building the #1 ranked CS First Boston equity and fixed income brokerage businesses in Russia and the CIS. He has been a leader in the development of the Russian capital markets since their inception in 1994, bringing more than $8 billion to the markets through debt, equity and private placements including Russia's first local IPO and more than $2 billion of privatisation initiatives.
Welcoming Pharos to DIFC, Nasser Al Shaali, CEO, commented, "We welcome Pharos Financial Group to the Dubai International Financial Centre. DIFC will provide Pharos with a supportive environment to advance their business growth in the Middle East. The world-class regulatory framework in DIFC will give them additional credibility as a specialist emerging market fund manager."
The Pharos investment team brings more than 90 years of combined expertise in emerging markets to its new operations in DIFC. Moreover, Pharos has sat on 40 seats of Russian company boards. Two Pharos Funds were ranked among the top 15 hedge funds globally by Bloomberg and Eurohedge. Currently, the three Pharos funds are ranked 1-2-3 among best performers in Russia this year.
The Dubai International Financial Centre (DIFC) is an onshore hub for global finance. It bridges the time gap between the financial centres of Hong Kong and London and services a region with the largest untapped emerging market for financial services. In just three years, over 700 firms have registered at the DIFC.
Pharos Financial Group ranks as the world's leading fund manager having a focus on Russia and the CIS with a successful track record of over 11 years. With offices in Moscow and now Dubai, Pharos Financial Group has produced superior absolute returns over the years while providing institutions and private investors an opportunity to gain exposure in the emerging markets of Russia and the CIS.
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