International financial services provider TMF Group has expanded into boutiqe and hedge funds in Australia through the acquisition of Sydney administrator, Kingsway Taitz Fund Administration Pty Ltd, (Kingsway Taitz).
Recognised as a leading provider of boutique and hedge fund administration services in the Asia‐Pacific region, Kingsway Taitz has been top ranked in its peer group for the past two years by the annual Global Custodian Hedge Fund Administrator Survey.
"The increasing demand for our services made it apparent that the next phase of growth required the backing of a global fund administrator with strong financial resources." Brian Taitz, managing director of Kingsway Taitz said “This transaction provides the opportunity to align with a like‐minded global fund administration company that shares our values and culture."
“This transaction brings together two highly successful companies – one global and one local with complementary skills and values, and a shared focus on client service and staff development," managing directors of TMF Eric Koolen and Catherine Caradus, said. TMF has over 175 fund administration clients.
Eric Koolen, who has 20 years of fund administration experience, will lead the combined organisation in Australia. Brian Taitz will continue to be involved on a day to day basis for up to six months to ensure a seamless integration of the two organisations. The company says there will be no immediate changes.
Kingsway Taitz has retained Capital Advice as its financial adviser in relation to this transaction.
20 Aug 2009
Man invests in Hong Kong-based Minerva macro fund
Man Investments’ seeding fund, RMF Global Emerging Managers, has completed its second incubation deal of the last two months, providing a cornerstone investment of $50 million for Hong Kong’s Minerva Macro Fund.
In July RMF GEM invested $50 million in the flagship product of 5:15 Capital Management, an unrelated fixed income arbitrage manager based in Connecticut.
Minerva is managed by Stanley Ku, who founded the Hong Kong office of hedge fund Fortress Investment Group and most recently managed $750 million for Fortress’ Drawbridge Global Macro Fund. Dorothy Lau, Minerva’s risk and business manager, formerly worked for JP Morgan and Goldman Sachs.
“Stanley Ku’s work at Fortress and Goldman Sachs has made him a very well respected money manager in Asia,” said Hans Hurschler, head of Man Investments’ hedge fund Ventures. “We believe that Minerva has the potential to generate solid, stable returns and that it may attract substantial assets.”
Minerva is a discretionary global macro fund, focused on Asia. It trades only highly liquid instruments such as interest rate or bond futures, foreign exchange forwards and equity index futures or sector ETFs. The entire portfolio is designed to be liquidated in 48 hours.
In July RMF GEM invested $50 million in the flagship product of 5:15 Capital Management, an unrelated fixed income arbitrage manager based in Connecticut.
Minerva is managed by Stanley Ku, who founded the Hong Kong office of hedge fund Fortress Investment Group and most recently managed $750 million for Fortress’ Drawbridge Global Macro Fund. Dorothy Lau, Minerva’s risk and business manager, formerly worked for JP Morgan and Goldman Sachs.
“Stanley Ku’s work at Fortress and Goldman Sachs has made him a very well respected money manager in Asia,” said Hans Hurschler, head of Man Investments’ hedge fund Ventures. “We believe that Minerva has the potential to generate solid, stable returns and that it may attract substantial assets.”
Minerva is a discretionary global macro fund, focused on Asia. It trades only highly liquid instruments such as interest rate or bond futures, foreign exchange forwards and equity index futures or sector ETFs. The entire portfolio is designed to be liquidated in 48 hours.
RBC Hedge 250 Index returned 2.10 percent in July 2009
RBC Capital Markets today reported that for the month of July 2009 the RBC Hedge 250 Index(R) had a net return of 2.10 percent. This brings the year-to-date return of the Index to 13.04 percent. These returns are estimated and will be finalized by the middle of next month. The return for June 2009 has been finalized at 0.33 percent.
Comprised of approximately 250 actual hedge funds, the RBC Hedge 250 Index is positioned as a diversified and representative investable index. The Universe on which the Index is based currently consists of 5,242 hedge funds (excludes funds of hedge funds) with aggregate assets under management of $952 billion.
Since its inception on July 1, 2005 through the end of June 2009, the RBC Hedge 250 Index has had an annualized net return of 2.56 percent. In comparison, over the same period, other investable indices have averaged -1.44 percent while non-investable indices have averaged 4.25 percent, according to information reported by the sponsors of those indices.
Comprised of approximately 250 actual hedge funds, the RBC Hedge 250 Index is positioned as a diversified and representative investable index. The Universe on which the Index is based currently consists of 5,242 hedge funds (excludes funds of hedge funds) with aggregate assets under management of $952 billion.
Since its inception on July 1, 2005 through the end of June 2009, the RBC Hedge 250 Index has had an annualized net return of 2.56 percent. In comparison, over the same period, other investable indices have averaged -1.44 percent while non-investable indices have averaged 4.25 percent, according to information reported by the sponsors of those indices.
19 Aug 2009
Hedge Fund Atalaya Expands Investment and Marketing Team
Encouraged by a promising investment environment and accelerated investment pace, New York-based special opportunities fund, Atalaya Capital Management LP, today announced that it has expanded its team, adding three investment professionals and a marketing professional.
“Recent positive changes in our target investment markets have prompted Atalaya to bolster our professional platform in order to capitalize on market conditions and new opportunities,” said Ivan Q. Zinn, Founding Partner & Chief Investment Officer.
Josh Ufberg joined as a Principal from Goldman Sachs’ Special Situations Group, while Rana Mitra and Alex Wang have joined the team responsible for the sourcing and purchase of private credit assets as Senior Associate and Associate, respectively. Ashley Fochtman joined the Firm as a Vice President and will be working in a business development capacity. Previously, Ms. Fochtman worked in hedge fund marketing and at Goldman Sachs as an energy derivatives analyst.
Founded by Mr. Zinn in 2006, Atalaya focuses on the opportunistic purchase of senior secured credit from forced sellers, failed financial institutions and sellers in need of liquidity such as banks, commercial finance companies, and other financial and investment institutions.
About Atalaya Capital Management
Atalaya Capital Management is an alternative investment firm focused on investing in small and middle market credit opportunities. Since inception in early 2006, the Firm has successfully invested over $1 billion through (1) the opportunistic purchase of private, senior secured credit from forced sellers, failed financial institutions and sellers in need of liquidity, and (2) proprietary 'new issue' credit investments including DIP loans and other senior secured financings.
“Recent positive changes in our target investment markets have prompted Atalaya to bolster our professional platform in order to capitalize on market conditions and new opportunities,” said Ivan Q. Zinn, Founding Partner & Chief Investment Officer.
Josh Ufberg joined as a Principal from Goldman Sachs’ Special Situations Group, while Rana Mitra and Alex Wang have joined the team responsible for the sourcing and purchase of private credit assets as Senior Associate and Associate, respectively. Ashley Fochtman joined the Firm as a Vice President and will be working in a business development capacity. Previously, Ms. Fochtman worked in hedge fund marketing and at Goldman Sachs as an energy derivatives analyst.
Founded by Mr. Zinn in 2006, Atalaya focuses on the opportunistic purchase of senior secured credit from forced sellers, failed financial institutions and sellers in need of liquidity such as banks, commercial finance companies, and other financial and investment institutions.
About Atalaya Capital Management
Atalaya Capital Management is an alternative investment firm focused on investing in small and middle market credit opportunities. Since inception in early 2006, the Firm has successfully invested over $1 billion through (1) the opportunistic purchase of private, senior secured credit from forced sellers, failed financial institutions and sellers in need of liquidity, and (2) proprietary 'new issue' credit investments including DIP loans and other senior secured financings.
18 Aug 2009
Salus Alpha Directional Market Funds Outperform
Salus Alpha (SA) announced that their fund, 'The Salus Alpha Directional Markets' stood out from its peers in the Managed Futures space due to its unique approach.
The majority of the managed futures funds, SA said, invests systematically according to computer based trading models. A computer model typically uses different indicators to identify trends on the global financial markets. These models can be characterized as long-term and short-term operating models.
Most managed futures funds use long-term trend following models; this is the reason why most of the famous managed futures funds have had significantly negative performance since the beginning of the year 2009: they didn’t recognize the trend reversal in time.
The Approach of the Salus Alpha Directional Markets Fund differs significantly from competitors – Model Risk is minimized.
"Unlike other firms we do not trust in technical analysis but we forecast futures prices with precision to identify trends. In contrast to other managed futures models the Salus Alpha Directional Markets controls risk on position, sector and portfolio level. Daily risk balancing positions the fund right in stormy weather or trend less markets." SA said.
The majority of the managed futures funds, SA said, invests systematically according to computer based trading models. A computer model typically uses different indicators to identify trends on the global financial markets. These models can be characterized as long-term and short-term operating models.
Most managed futures funds use long-term trend following models; this is the reason why most of the famous managed futures funds have had significantly negative performance since the beginning of the year 2009: they didn’t recognize the trend reversal in time.
The Approach of the Salus Alpha Directional Markets Fund differs significantly from competitors – Model Risk is minimized.
"Unlike other firms we do not trust in technical analysis but we forecast futures prices with precision to identify trends. In contrast to other managed futures models the Salus Alpha Directional Markets controls risk on position, sector and portfolio level. Daily risk balancing positions the fund right in stormy weather or trend less markets." SA said.
17 Aug 2009
Alternative Investments Report: Identify Demand for Hedge Funds
Research and Markets has announced the addition of the "High Net Worth Alternative Investments" report to their offering.
The report identifies demand for hedge funds, capital protected funds, private equity funds and real estate funds from high net worths, The scope of the report covers France, Germany, Italy, Spain, UK, Nordic region, Belgium/Netherlands, Switzerland, Australia, China, India, Hong Kong, Singapore and Taiwan.
Includings hedge funds, capital protected funds, private equity funds and real estate funds (open ended and closed ended) thr peport shows the results of the Wealth Management Market Leaders survey of 280 wealth management companies worldwide, and on high net worths (those with more than $1m in onshore liquid assets)
HNW alternative investment asset allocations are expected to decline slightly in both Australia and France in the next two years, as high net worths reposition their portfolios. Real estate allocations and commodities allocations will decline among Australian HNWs while both hedge fund and derivative allocations will increase.
While British HNWs plan to increase their exposure to capital protected products and private equity funds, and their wealth managers will devote significant resources to the development of these product areas, they are failing to anticipate their clients demand for closed-ended real estate funds.
At the same time German wealth managers are focusing strongly on capital protected products which, while certainly in demand by most HNWs, will not see a significant increase in terms of portfolio allocations.
The report identifies demand for hedge funds, capital protected funds, private equity funds and real estate funds from high net worths, The scope of the report covers France, Germany, Italy, Spain, UK, Nordic region, Belgium/Netherlands, Switzerland, Australia, China, India, Hong Kong, Singapore and Taiwan.
Includings hedge funds, capital protected funds, private equity funds and real estate funds (open ended and closed ended) thr peport shows the results of the Wealth Management Market Leaders survey of 280 wealth management companies worldwide, and on high net worths (those with more than $1m in onshore liquid assets)
HNW alternative investment asset allocations are expected to decline slightly in both Australia and France in the next two years, as high net worths reposition their portfolios. Real estate allocations and commodities allocations will decline among Australian HNWs while both hedge fund and derivative allocations will increase.
While British HNWs plan to increase their exposure to capital protected products and private equity funds, and their wealth managers will devote significant resources to the development of these product areas, they are failing to anticipate their clients demand for closed-ended real estate funds.
At the same time German wealth managers are focusing strongly on capital protected products which, while certainly in demand by most HNWs, will not see a significant increase in terms of portfolio allocations.
14 Aug 2009
OECD Puts Cayman Islands on Tax 'White List'
The Organisation for Economic Cooperation and Development (OECD) added the Cayman Islands to its ‘white list’ of jurisdictions that substantially implement international tax standards.
The Cayman Islands recognition came about after the country signed its twelfth Tax Information Exchange Agreement (TIEA) with New Zealand, on 13 August 2009.
“For over four decades the Cayman Islands has steadily earned its place as a world-class international financial services centre." Leader of Government Business/Premier Designate, the Honourable McKeeva Bush said, "The Cayman Islands Government sees the OECD’s recognition as a natural outcome of the country’s substantial commitment to uphold an equally world-class international cooperation regime in the exchange of tax information.”
Jeffrey Owens, Director of the OECD’s Centre for Tax Policy and Administration, welcomed the signing which puts Cayman Islands “alongside other countries that have substantially implemented the internationally agreed tax standard.”
The Cayman Islands’ maintains 12 bilateral tax information arrangements with the following countries: Denmark, Faroe Islands, Finland, Greenland, Iceland, Ireland, Netherlands, New Zealand, Norway, Sweden, United Kingdom and the United States.
The Cayman Islands recognition came about after the country signed its twelfth Tax Information Exchange Agreement (TIEA) with New Zealand, on 13 August 2009.
“For over four decades the Cayman Islands has steadily earned its place as a world-class international financial services centre." Leader of Government Business/Premier Designate, the Honourable McKeeva Bush said, "The Cayman Islands Government sees the OECD’s recognition as a natural outcome of the country’s substantial commitment to uphold an equally world-class international cooperation regime in the exchange of tax information.”
Jeffrey Owens, Director of the OECD’s Centre for Tax Policy and Administration, welcomed the signing which puts Cayman Islands “alongside other countries that have substantially implemented the internationally agreed tax standard.”
The Cayman Islands’ maintains 12 bilateral tax information arrangements with the following countries: Denmark, Faroe Islands, Finland, Greenland, Iceland, Ireland, Netherlands, New Zealand, Norway, Sweden, United Kingdom and the United States.
SEC Amends Rules to Issue More Subpoenas
Off-shore hedge fund law firm, Sadis & Goldberg LLP, sent out a letter to their clients announcing that the Securities and Exchange Commission (SEC) appears determined to issue more subpoenas and give people more incentives to cooperate with investigations as it works to enhance its oversight of the financial markets.
The letter, obtained by HedgeCo, explains, "Don't be surprised if you receive a subpoena or are contacted by the SEC." Daniel G. Viola, spokesperson for Sadis and Glodbrg, said, "The SEC has significantly increased its enforcement efforts since the recent discovery of certain high profile Ponzi schemes."
Effective August 11, 2009, the SEC has also made it easier for its staff attorneys to issue subpoenas. Thus, the SEC staff attorneys will no longer have to obtain formal approvals to issue subpoenas; instead, they will simply need approval from their senior supervisor.
"If you receive an inquiry letter or subpoena from the SEC, remain calm." Viola said, "This is not uncommon given the current regulatory climate. Above all, do not respond without first contacting legal counsel."
The The SEC generally has broad powers to conduct investigations of potential violations of the federal securities laws and often works with the Department of Justice in connection with joint proceedings, often known as "parallel proceedings."
The law firms Regulatory Practice Group consists of former SEC personnel and litigators with experience regarding civil and criminal proceedings.
Contact info:
Daniel G. Viola at 212.573.8038 (or dviola@sglawyers.com)
Christiaan Johnson-Green at 212.573.8169 (or cjohnson-green@sglawyers.com)
The letter, obtained by HedgeCo, explains, "Don't be surprised if you receive a subpoena or are contacted by the SEC." Daniel G. Viola, spokesperson for Sadis and Glodbrg, said, "The SEC has significantly increased its enforcement efforts since the recent discovery of certain high profile Ponzi schemes."
Effective August 11, 2009, the SEC has also made it easier for its staff attorneys to issue subpoenas. Thus, the SEC staff attorneys will no longer have to obtain formal approvals to issue subpoenas; instead, they will simply need approval from their senior supervisor.
"If you receive an inquiry letter or subpoena from the SEC, remain calm." Viola said, "This is not uncommon given the current regulatory climate. Above all, do not respond without first contacting legal counsel."
The The SEC generally has broad powers to conduct investigations of potential violations of the federal securities laws and often works with the Department of Justice in connection with joint proceedings, often known as "parallel proceedings."
The law firms Regulatory Practice Group consists of former SEC personnel and litigators with experience regarding civil and criminal proceedings.
Contact info:
Daniel G. Viola at 212.573.8038 (or dviola@sglawyers.com)
Christiaan Johnson-Green at 212.573.8169 (or cjohnson-green@sglawyers.com)
13 Aug 2009
Please join us for the HedgeCo's Summer Networking Event
The end of the summer season is quickly approaching, and August is the perfect time to enjoy what is left of warm, sunny evenings! The HedgeCo Summer Networking Event is a chance for investors, hedge fund managers, and other industry professionals to come together and enjoy a night of sharing ideas and meeting new contacts. Recognized as having the largest attendance for any type of event in the hedge fund industry, the HedgeCo Networking Events have quickly become the top destination for generating new business and meeting new industry contacts. Come celebrate the end of summer, contribute to Hedge Funds Care, eat, drink and network with other members of the alternative investments community.
Click here to RSVP for HedgeCo's Summer Networking Event
Venue:
Aspen Social Club
157 W 47th St
New York, NY 10036
www.aspensocialclub.com
Date: August 19th, 2009
Time: 6-10 PM
Cash Bar
Click here to RSVP for HedgeCo's Summer Networking Event
Venue:
Aspen Social Club
157 W 47th St
New York, NY 10036
www.aspensocialclub.com
Date: August 19th, 2009
Time: 6-10 PM
Cash Bar
AIMA Launches Directive Centre Media Resoure
The Alternative Investment Management Association, (AIMA) has launched a Directive Centre on their website as part of an on-going campaign to have the European Commission's draft directive on Alternative Investment Fund Managers revised.
It is intended as a resource for journalists and members of the public and contains everything relevant for our campaign, including press releases, guidance notes, FAQs and other resource materials issued by AIMA; speeches and articles on the directive and links to relevant documents, including the European Commission’s directive and details of its legislative process; and a quotations section featuring a host of different figures expressing their concern about the directive.
Those quoted expressing concern or reported as doing so include pension funds and pension fund industry groups, European institutional investors, global banks, international law firms, commercial real estate groups, private equity, Swedish and UK ministers, Irish officials, the chair of the European Parliament’s ECON committee, the US Treasury, the UK Conservative party, the Mayor of London, the German Funds association, the Financial Times and the Economist, and even Robert Peston, Jacques de Larosière and Charles McCreevy.
It is intended as a resource for journalists and members of the public and contains everything relevant for our campaign, including press releases, guidance notes, FAQs and other resource materials issued by AIMA; speeches and articles on the directive and links to relevant documents, including the European Commission’s directive and details of its legislative process; and a quotations section featuring a host of different figures expressing their concern about the directive.
Those quoted expressing concern or reported as doing so include pension funds and pension fund industry groups, European institutional investors, global banks, international law firms, commercial real estate groups, private equity, Swedish and UK ministers, Irish officials, the chair of the European Parliament’s ECON committee, the US Treasury, the UK Conservative party, the Mayor of London, the German Funds association, the Financial Times and the Economist, and even Robert Peston, Jacques de Larosière and Charles McCreevy.
People Moves: Two Hedge Fund Specialists Join Probitas Partners
Hedge Fund veterans James Coleman and Vincent Le Hodey have joined global alternative investment firm Probitas Partners at its London office.
“We are very excited to have James and Vincent join Probitas Partners. They are seasoned industry veterans and well respected in their market." Greg Hausler, a Founding Partner at Probitas Partners, commented, "The current global environment is as tough as it has ever been for capital raising and executing secondary mandates. The addition of James and Vincent to our London office advances our capabilities to provide the very best research, advice, fund offerings and liquidity management to European Limited Partners.”
Coleman, a Managing Director at Probitas Partners, will lead the firm's efforts in Europe by managing key Limited Partner relationships, sourcing new General Partner clients and facilitating secondary sales activities. Le Hodey, a Director at Probitas Partners, will focus his efforts on relationship management and secondary fund advisory for Probitas Partners’ Limited Partner client base. Before joining Probitas Partners, Coleman was a Partner at Deloitte and headed its Fund Placement Advisory Group. Le Hodey also was formerly with Deloitte’s Fund Placement Advisory Group as a Director.
"Probitas Partners provides Vincent and me with a dynamic global platform from which to serve our European clients. We believe accessing Probitas Partners' top-quality fund sponsors, its industry-leading market research, and its deep experience in the secondary advisory business will reward European Limited Partners." Coleman concluded.
“We are very excited to have James and Vincent join Probitas Partners. They are seasoned industry veterans and well respected in their market." Greg Hausler, a Founding Partner at Probitas Partners, commented, "The current global environment is as tough as it has ever been for capital raising and executing secondary mandates. The addition of James and Vincent to our London office advances our capabilities to provide the very best research, advice, fund offerings and liquidity management to European Limited Partners.”
Coleman, a Managing Director at Probitas Partners, will lead the firm's efforts in Europe by managing key Limited Partner relationships, sourcing new General Partner clients and facilitating secondary sales activities. Le Hodey, a Director at Probitas Partners, will focus his efforts on relationship management and secondary fund advisory for Probitas Partners’ Limited Partner client base. Before joining Probitas Partners, Coleman was a Partner at Deloitte and headed its Fund Placement Advisory Group. Le Hodey also was formerly with Deloitte’s Fund Placement Advisory Group as a Director.
"Probitas Partners provides Vincent and me with a dynamic global platform from which to serve our European clients. We believe accessing Probitas Partners' top-quality fund sponsors, its industry-leading market research, and its deep experience in the secondary advisory business will reward European Limited Partners." Coleman concluded.
12 Aug 2009
Bandon Flagship Strategy Gains Momentum, 5th Year Reached
Bandon Capital Management has reached it's 5th year for its hedge fund flagship investment strategy, 'Directional Interest Rate Strategy', (DIRS) producing annualized returns of +7.09% net of all fees, comparatively over the same time period the S&P 500 has lost -2.15%.
The strategy provides investors with absolute returns, uncorrelated with the equity and fixed income markets, by investing in the US Treasury Market using ETF’s or mutual funds and is available to non-accredited investors.
“We’re incredibly proud of this milestone. This is an investment area where there is a tremendous amount of product development activity and innovation." Bill Woodruff, Founder and Managing Principal said, "As advisors and their clients increasingly seek non-correlated, absolute return strategies we stand out for both the length and strength of our track record.”
The strategy provides investors with absolute returns, uncorrelated with the equity and fixed income markets, by investing in the US Treasury Market using ETF’s or mutual funds and is available to non-accredited investors.
“We’re incredibly proud of this milestone. This is an investment area where there is a tremendous amount of product development activity and innovation." Bill Woodruff, Founder and Managing Principal said, "As advisors and their clients increasingly seek non-correlated, absolute return strategies we stand out for both the length and strength of our track record.”
Hedge Fund Models Need to Evolve- Deloitte Research
A new research paper by Deloitte LLC: "How Hedge Funds Are Becoming the Ultimate Networked Enterprise," focuses on how hedge fund methods of interacting with prime brokers and third-party administrators needs to be rethought in order to remain profitable as the roles of prime brokers and third-party administrators evolve.
"As investors demand increased transparency and operational risk management, hedge funds are faced with redefining their relationships with prime brokers and third-party administrators," Cary Stier, Deloitte's U.S. Asset Management Services leader explained.
"While attraction and retention of capital remains a top priority for fund managers, in today's market performance isn't the only bull's-eye a fund has to hit to accomplish these goals. Investors want assurance that the fund's operating model has taken into consideration the events of the last year and has adjusted accordingly. At the same time, prime brokers, administrators and custodians are looking for new ways to serve managers," said Adam Broun, Deloitte's Asset Management Services Consulting leader.
The report outlines five areas of focus for both prime brokers and third-party administrators:
Build the Middle-Office that Fits your Operating Strategy
Hedge funds need to determine their optimal operating strategy and factor in roles various service providers will play in providing necessary capabilities. Although most large firms will build their own middle-office, service offerings from fund administrators and custody players will prove to be compelling from both a cost and capability standpoint. Managing the network of service providers will require additional capabilities that the hedge funds will need to build and staff in-house.
Add Horsepower to Your Collateral Management
The multiprime model will only increase the need for improved collateral management. Some hedge funds will benefit by outsourcing to enterprise collateral management service providers or implementing vendor solutions to efficiently manage their collateral across various parties. In addition to spreading collateral across parties, independent valuation of illiquid assets, zero over-collateralization and optimal collateral composition will be the key focus areas.
Plan Risk Management
Risk management will see a balance of focus between market risk for investment strategies and counterparty risk. In a multiprime model, a single broker's risk report will show only a partial picture of the risk profile. Risk management will need to be a central function that aggregates positions across all providers. Take this opportunity to separate risk management from investment management.
Choose the Right Mix of Prime Brokers
The choice of prime brokers should be guided by aligning the fund manager's needs to the prime
broker's capabilities -- balance sheet strength, execution platform, geographic presence, flexible financing/margining options and product coverage.
Get the Most From Your Third-Party Administrator
Third-party administrators can help hedge funds outsource several middle- and back-office functions. With the increased complexity of the middle- and back-office, hedge funds should at least understand the range of services available from their administrators.
Implications for Prime Brokers
Prime brokers are experiencing a major shift in their business model. Their focus on developing deep relationships with a few hedge fund clients is no longer working in a multiprime environment, where risk diversification and access to capital is taking center stage. As lending stays constrained, prime brokers will be required to improve capabilities to deal with new clients and existing capabilities may lose favor among the hedge funds adopting the multiprime model.
Implications for Third-Party Administrators
Third-party administrators are being challenged by handling increased product complexities, technology scalability and international growth. While hedge funds outsource middle-offices and evaluate ways to reduce costs, third-party administrators will need to cut costs and potentially look into moving their back offices to cost-effective locations. Some may offer prime broker-like services to improve profitability and further increase competition in the market or go global; others will more closely align with custodians or consolidate for scale.
"As investors demand increased transparency and operational risk management, hedge funds are faced with redefining their relationships with prime brokers and third-party administrators," Cary Stier, Deloitte's U.S. Asset Management Services leader explained.
"While attraction and retention of capital remains a top priority for fund managers, in today's market performance isn't the only bull's-eye a fund has to hit to accomplish these goals. Investors want assurance that the fund's operating model has taken into consideration the events of the last year and has adjusted accordingly. At the same time, prime brokers, administrators and custodians are looking for new ways to serve managers," said Adam Broun, Deloitte's Asset Management Services Consulting leader.
The report outlines five areas of focus for both prime brokers and third-party administrators:
Build the Middle-Office that Fits your Operating Strategy
Hedge funds need to determine their optimal operating strategy and factor in roles various service providers will play in providing necessary capabilities. Although most large firms will build their own middle-office, service offerings from fund administrators and custody players will prove to be compelling from both a cost and capability standpoint. Managing the network of service providers will require additional capabilities that the hedge funds will need to build and staff in-house.
Add Horsepower to Your Collateral Management
The multiprime model will only increase the need for improved collateral management. Some hedge funds will benefit by outsourcing to enterprise collateral management service providers or implementing vendor solutions to efficiently manage their collateral across various parties. In addition to spreading collateral across parties, independent valuation of illiquid assets, zero over-collateralization and optimal collateral composition will be the key focus areas.
Plan Risk Management
Risk management will see a balance of focus between market risk for investment strategies and counterparty risk. In a multiprime model, a single broker's risk report will show only a partial picture of the risk profile. Risk management will need to be a central function that aggregates positions across all providers. Take this opportunity to separate risk management from investment management.
Choose the Right Mix of Prime Brokers
The choice of prime brokers should be guided by aligning the fund manager's needs to the prime
broker's capabilities -- balance sheet strength, execution platform, geographic presence, flexible financing/margining options and product coverage.
Get the Most From Your Third-Party Administrator
Third-party administrators can help hedge funds outsource several middle- and back-office functions. With the increased complexity of the middle- and back-office, hedge funds should at least understand the range of services available from their administrators.
Implications for Prime Brokers
Prime brokers are experiencing a major shift in their business model. Their focus on developing deep relationships with a few hedge fund clients is no longer working in a multiprime environment, where risk diversification and access to capital is taking center stage. As lending stays constrained, prime brokers will be required to improve capabilities to deal with new clients and existing capabilities may lose favor among the hedge funds adopting the multiprime model.
Implications for Third-Party Administrators
Third-party administrators are being challenged by handling increased product complexities, technology scalability and international growth. While hedge funds outsource middle-offices and evaluate ways to reduce costs, third-party administrators will need to cut costs and potentially look into moving their back offices to cost-effective locations. Some may offer prime broker-like services to improve profitability and further increase competition in the market or go global; others will more closely align with custodians or consolidate for scale.
11 Aug 2009
2009 European Industry Leadership Award Goes To Paulson Director
Mina Gerowin, Managing Director of Paulson Europe, is this year's recipient of the 100 Women in Hedge Funds 2009 European Industry Leadership Award. In recognition of outstanding professional talent and business ethics, Ms. Gerowin will be presented with the award at a 100 Women in Hedge Funds fundraiser in London on October 7th, 2009, to benefit the UK education charity, SHINE.
"We are thrilled that Mina Gerowin will accept the 100 Women in Hedge Funds' European Industry Leadership Award," said Effie K. Datson, Chair of 100 Women in Hedge Funds’ London Board. "Mina has demonstrated the type of leadership and entrepreneurial acumen that has become synonymous with the industry; moreover, she is committed to contributing to the non profit activities that she is equally passionate about."
Mina Gerowin is Managing Director of Paulson Europe and a partner of Paulson & Co., specialising in European merger and event-driven investment, including distressed and restructuring investment and the risk arbitrage of both debt and equity. At Paulson she has led investments, including Stork and Ahold, and runs their large European positions.
"We are thrilled that Mina Gerowin will accept the 100 Women in Hedge Funds' European Industry Leadership Award," said Effie K. Datson, Chair of 100 Women in Hedge Funds’ London Board. "Mina has demonstrated the type of leadership and entrepreneurial acumen that has become synonymous with the industry; moreover, she is committed to contributing to the non profit activities that she is equally passionate about."
Mina Gerowin is Managing Director of Paulson Europe and a partner of Paulson & Co., specialising in European merger and event-driven investment, including distressed and restructuring investment and the risk arbitrage of both debt and equity. At Paulson she has led investments, including Stork and Ahold, and runs their large European positions.
Hedge Funds Try to Keep Pace With Equities Market
Hedge fund manager consultant, Hennessee Group LLC, reported that managers benefited as international equities rallied in July, while the unpredictability of government intervention continues to be one of the greatest concerns for hedge funds.
“We have expected greater scrutiny and new regulation for the financial industry, and specifically for hedge funds, in 2009,” commented Charles Gradante, Co-Founder of Hennessee Group. “In the energy markets, regulators are calling for hard position limits on financially settled energy contracts set by NYMEX, starting as soon as September. While the goal is to reduce speculation and volatility in the energy markets, this could potentially reduce transparency by shifting trading to over-the-counter markets and decrease liquidity. The unpredictability of government intervention continues to be one of the greatest concerns for hedge funds.”
"The deterioration of the economy has clearly slowed, however we continue to see positive signs that we are on the road to recovery, including increases in new home sales, new orders, and production." Gradante said, "I am still cautious and see emerging signs of ‘protectionism’ in the form of dramatic reductions in external lending by G-7 institutions, which could stifle a global economic recovery."
“Hedge funds underperformed in July, as we would expect, but were able to capture a good portion of the market rally in July,” said Lee Hennessee , Managing Principal of Hennessee Group. “Managers opened up their net exposures to participate, but also benefited from a better than expected earnings season. However, managers remain vigilant, knowing that the markets could crack and crack quickly. The VIX is at pre-crisis August 2008 levels and that worries many.”
The Hennessee Hedge Fund Index advanced +3.37% in July (+15.50% YTD), while the S&P 500 increased +7.41%.
“We have expected greater scrutiny and new regulation for the financial industry, and specifically for hedge funds, in 2009,” commented Charles Gradante, Co-Founder of Hennessee Group. “In the energy markets, regulators are calling for hard position limits on financially settled energy contracts set by NYMEX, starting as soon as September. While the goal is to reduce speculation and volatility in the energy markets, this could potentially reduce transparency by shifting trading to over-the-counter markets and decrease liquidity. The unpredictability of government intervention continues to be one of the greatest concerns for hedge funds.”
"The deterioration of the economy has clearly slowed, however we continue to see positive signs that we are on the road to recovery, including increases in new home sales, new orders, and production." Gradante said, "I am still cautious and see emerging signs of ‘protectionism’ in the form of dramatic reductions in external lending by G-7 institutions, which could stifle a global economic recovery."
“Hedge funds underperformed in July, as we would expect, but were able to capture a good portion of the market rally in July,” said Lee Hennessee , Managing Principal of Hennessee Group. “Managers opened up their net exposures to participate, but also benefited from a better than expected earnings season. However, managers remain vigilant, knowing that the markets could crack and crack quickly. The VIX is at pre-crisis August 2008 levels and that worries many.”
The Hennessee Hedge Fund Index advanced +3.37% in July (+15.50% YTD), while the S&P 500 increased +7.41%.
10 Aug 2009
Charlotte Hedge Fund Forum Started by Headline Capital
Headline Capital Management, LLC is spearheading a series of capital introduction events showcasing the largest gathering of hedge fund managers from the Charlotte region. Aegis Funds Management, Afton Capital Management, Blackhawk Capital Management, Charlotte Global Advisors, Gorelick Brothers Capital, Keane Capital Management plus other hedge funds in the Charlotte region are also participating.
As the nation’s second largest banking center, Charlotte is also an attractive haven for hedge funds. Some of the nation’s most talented investment professionals relocated here to work for Bank of America and Wachovia, now a wholly-owned subsidiary and east coast headquarters for Wells Fargo. Many of these former bankers and traders stayed here to start their own hedge funds, especially after merger-related layoffs.
What is truly unique about the Charlotte Hedge Fund Forum is that in a highly competitive market, 7+ hedge fund managers from the same city have the foresight to jointly promoting a series of capital introduction events. “We’re still competitors. By working together, however, we can leverage our marketing dollars to attract more investors than we could alone,” says Mark McClanahan, the marketing director at Headline Capital Management.
The Charlotte Hedge Fund Forum provides more value than the traditional cap intro event by showcasing several hedge fund managers from the same city. The Charlotte showcase is more efficient for institutional investors with tight travel budgets who want to meet several managers at the same time. Wealthy families and high net worth individuals who are more comfortable investing in managers located closer to home, especially in this post-Madoff era, will also benefit from this Charlotte showcase. The real payoff is after the event when the investor needs to visit each hedge fund’s office for due diligence. Investors who attend the Charlotte Hedge Fund Forum will save time and money following up with several Charlotte-based managers during one trip.
The Charlotte Hedge Fund Forum is scheduled for September 23, 2009 at the historic Duke Mansion where tobacco baron James B. Duke founded The Duke Endowment. Mark Yusko, President and CIO of Morgan Creek Capital of Chapel Hill, North Carolina will deliver the Keynote Speech on “Alternative Thinking for Investments” during a complimentary luncheon. Afterwards, each hedge fund manager will deliver a formal 10-12 minute podium presentation and then meet with investors during a series of 30-minute, informal “meet the manager” roundtable discussions.
As the nation’s second largest banking center, Charlotte is also an attractive haven for hedge funds. Some of the nation’s most talented investment professionals relocated here to work for Bank of America and Wachovia, now a wholly-owned subsidiary and east coast headquarters for Wells Fargo. Many of these former bankers and traders stayed here to start their own hedge funds, especially after merger-related layoffs.
What is truly unique about the Charlotte Hedge Fund Forum is that in a highly competitive market, 7+ hedge fund managers from the same city have the foresight to jointly promoting a series of capital introduction events. “We’re still competitors. By working together, however, we can leverage our marketing dollars to attract more investors than we could alone,” says Mark McClanahan, the marketing director at Headline Capital Management.
The Charlotte Hedge Fund Forum provides more value than the traditional cap intro event by showcasing several hedge fund managers from the same city. The Charlotte showcase is more efficient for institutional investors with tight travel budgets who want to meet several managers at the same time. Wealthy families and high net worth individuals who are more comfortable investing in managers located closer to home, especially in this post-Madoff era, will also benefit from this Charlotte showcase. The real payoff is after the event when the investor needs to visit each hedge fund’s office for due diligence. Investors who attend the Charlotte Hedge Fund Forum will save time and money following up with several Charlotte-based managers during one trip.
The Charlotte Hedge Fund Forum is scheduled for September 23, 2009 at the historic Duke Mansion where tobacco baron James B. Duke founded The Duke Endowment. Mark Yusko, President and CIO of Morgan Creek Capital of Chapel Hill, North Carolina will deliver the Keynote Speech on “Alternative Thinking for Investments” during a complimentary luncheon. Afterwards, each hedge fund manager will deliver a formal 10-12 minute podium presentation and then meet with investors during a series of 30-minute, informal “meet the manager” roundtable discussions.
Hedge Fund Group Group Awarded Private Equity By Korean Sovereign Wealth Fund
Swiss-based alternative asset manager, Partners Group, has been selected as the manager for a private equity secondary mandate by the sovereign wealth fund Korea Investment Corporation (KIC).
KIC aims to profit from current dislocations in the secondary market which offers high discounts to net asset value and attractive return potential. The hedge fund firm has four offices located in the Asia-Pacific region, with Singapore being the second-largest office worldwide.
''We are very pleased to launch this secondary investment mandate with Partners
Group.'' Dong-Ik Lee, Head of the Alternative Investment Team at KIC, said, ''We believe that leveraging a very strong and experienced manager like Partners Group is the right way to explore and profit from this market.''
Steffen Meister, CEO of Partners Group, added, ''We are extremely pleased and honored to work with the Korea Investment Corporation, which we consider to be one of the most prestigious sovereign wealth funds around the world and one of the most sophisticated investors in Asia.''
Partners Group has over CHF 24 billion ($22 billion) in investment programs under management in private equity, private debt, private real estate, private infrastructure, absolute return strategies and listed alternatives.
KIC aims to profit from current dislocations in the secondary market which offers high discounts to net asset value and attractive return potential. The hedge fund firm has four offices located in the Asia-Pacific region, with Singapore being the second-largest office worldwide.
''We are very pleased to launch this secondary investment mandate with Partners
Group.'' Dong-Ik Lee, Head of the Alternative Investment Team at KIC, said, ''We believe that leveraging a very strong and experienced manager like Partners Group is the right way to explore and profit from this market.''
Steffen Meister, CEO of Partners Group, added, ''We are extremely pleased and honored to work with the Korea Investment Corporation, which we consider to be one of the most prestigious sovereign wealth funds around the world and one of the most sophisticated investors in Asia.''
Partners Group has over CHF 24 billion ($22 billion) in investment programs under management in private equity, private debt, private real estate, private infrastructure, absolute return strategies and listed alternatives.
7 Aug 2009
Declines In External Debt Elevates Concern For Global Recovery
Hennessee Group LLC, an adviser to hedge fund investors, voiced concern in early 2009 that the global financial crisis could enter a new and more dangerous phase, one that could push several international countries to the brink of failure and further hinder the global economic recovery.
Of particular concern to the Hennessee Group was the dramatic growth in external debt exposures of G7 and emerging countries and the increasing risk of another outright failure similar to that of Iceland when they had a debt to GDP ratio exceeding 900%. However, Hennessee Group research now indicates that this risk has begun to subside as the majority of countries have experienced a decline in their overall external debt exposure in recent months after reaching all time highs in 2008. That said, the Hennessee Group now believes this development could come at the cost of economic growth as the majority of the decline in external debt has been due to a dramatic drop off in bank lending to foreign institutions.
Charles Gradante, Co-Founder of the Hennessee Group, noted “While the decline in external debt, particularly for countries like the U.K., is a positive development and is likely to reduce the risk of another Iceland, we fear the primary driver behind the external debt reduction, specifically the drop off in external bank lending, could ultimately slow the pace of the global economic recovery.” The Hennessee Group believes it is essential to global growth that banks resume prudent external lending to businesses and individuals to further alleviate the financial crisis and promote economic growth.
In its February 2009 research paper, the Hennessee Group highlighted numerous countries, particularly in the euro zone, that appeared to be building uncomfortably high external debt levels in recent years relative to their economic output. The bright spot, at that time, was the low level of U.S. external debt to GDP output (84%).
The Netherlands reached an external debt to GDP ratio of approximately 328%, while Ireland had a similar exposure ratio to that of Iceland, a staggering 900%. The UK’s debt to GDP ratio reached 456% while Switzerland’s rose to 433%.
Gradante stated, “We believe the build up in external debt was both alarming and unsustainable, particularly for many European countries, and that if the trend continued we could be at risk of a major systemic event.” Gradante continued, “Since our initial analysis, the majority of countries have started to reduce external lending.
The U.K. has decreased its external debt by nearly $3.5 trillion from its high of $12.1 trillion in the first quarter of 2008. While we believe this is a positive development from the perspective that it alleviates our initial concern regarding another Iceland; a closer look at the underlying numbers has revealed a new concern. The vast majority of the reduction is due to a decline in external bank lending, which we believe will present additional challenges going forward. Of the $3.5 trillion decline in the U.K. external debt, $2 trillion can be attributed to a drop off in external bank lending. This could present additional challenges to an economic recovery.”
The Hennessee Group believes this new trend is not just a problem isolated to the U.K. but rather a worldwide issue. In a recent press release by the Bank for International Settlements, they stated, “After a relatively small change in total outstanding stocks in the third quarter, banks’ external claims shrank by 5.4% in the fourth quarter of 2008 ($1.8 trillion at constant exchange rates), to $31 trillion.” They added, “This was the largest reduction ever recorded.” The global economy may very well struggle to recover if the banks remain unwilling to increase external debt lending and may result in a resurrection of protectionism.
Of particular concern to the Hennessee Group was the dramatic growth in external debt exposures of G7 and emerging countries and the increasing risk of another outright failure similar to that of Iceland when they had a debt to GDP ratio exceeding 900%. However, Hennessee Group research now indicates that this risk has begun to subside as the majority of countries have experienced a decline in their overall external debt exposure in recent months after reaching all time highs in 2008. That said, the Hennessee Group now believes this development could come at the cost of economic growth as the majority of the decline in external debt has been due to a dramatic drop off in bank lending to foreign institutions.
Charles Gradante, Co-Founder of the Hennessee Group, noted “While the decline in external debt, particularly for countries like the U.K., is a positive development and is likely to reduce the risk of another Iceland, we fear the primary driver behind the external debt reduction, specifically the drop off in external bank lending, could ultimately slow the pace of the global economic recovery.” The Hennessee Group believes it is essential to global growth that banks resume prudent external lending to businesses and individuals to further alleviate the financial crisis and promote economic growth.
In its February 2009 research paper, the Hennessee Group highlighted numerous countries, particularly in the euro zone, that appeared to be building uncomfortably high external debt levels in recent years relative to their economic output. The bright spot, at that time, was the low level of U.S. external debt to GDP output (84%).
The Netherlands reached an external debt to GDP ratio of approximately 328%, while Ireland had a similar exposure ratio to that of Iceland, a staggering 900%. The UK’s debt to GDP ratio reached 456% while Switzerland’s rose to 433%.
Gradante stated, “We believe the build up in external debt was both alarming and unsustainable, particularly for many European countries, and that if the trend continued we could be at risk of a major systemic event.” Gradante continued, “Since our initial analysis, the majority of countries have started to reduce external lending.
The U.K. has decreased its external debt by nearly $3.5 trillion from its high of $12.1 trillion in the first quarter of 2008. While we believe this is a positive development from the perspective that it alleviates our initial concern regarding another Iceland; a closer look at the underlying numbers has revealed a new concern. The vast majority of the reduction is due to a decline in external bank lending, which we believe will present additional challenges going forward. Of the $3.5 trillion decline in the U.K. external debt, $2 trillion can be attributed to a drop off in external bank lending. This could present additional challenges to an economic recovery.”
The Hennessee Group believes this new trend is not just a problem isolated to the U.K. but rather a worldwide issue. In a recent press release by the Bank for International Settlements, they stated, “After a relatively small change in total outstanding stocks in the third quarter, banks’ external claims shrank by 5.4% in the fourth quarter of 2008 ($1.8 trillion at constant exchange rates), to $31 trillion.” They added, “This was the largest reduction ever recorded.” The global economy may very well struggle to recover if the banks remain unwilling to increase external debt lending and may result in a resurrection of protectionism.
Miller Heads Up New NorthPoint Dallas Office
Atlanta based hedge fund prime brokerage firm, NorthPoint Trading Partners, LLC, has opened an office in Dallas, Texas, led by industry veteran Chip Miller.
Miller joins NorthPoint from Stadium Capital where he was head trader for 4 years. He will head up both the prime brokerage and the sales trading operations in the region. Miller will report directly to Michael DeJarnette, President of NorthPoint.
“As we continue to expand our presence nationwide, we are very fortunate to have someone join our team who is as talented and experienced as Chip,” says Douglas Nelson, Chief Executive Officer of NorthPoint.
An industry veteran since 1993, Chip has held positions at Jefferies and Co., Clover Partners and Stadium Capital Management. He is experienced in the trading, operational and regulatory aspects of the buy and sell side.
Miller joins NorthPoint from Stadium Capital where he was head trader for 4 years. He will head up both the prime brokerage and the sales trading operations in the region. Miller will report directly to Michael DeJarnette, President of NorthPoint.
“As we continue to expand our presence nationwide, we are very fortunate to have someone join our team who is as talented and experienced as Chip,” says Douglas Nelson, Chief Executive Officer of NorthPoint.
An industry veteran since 1993, Chip has held positions at Jefferies and Co., Clover Partners and Stadium Capital Management. He is experienced in the trading, operational and regulatory aspects of the buy and sell side.
6 Aug 2009
People Moves: Global Fund Exchange Hires Hedge Fund Specialist
Alternative investment manager Global Fund Exchange has hired A. Michael D’Arpino as Director of Business Development, a new position at the firm. D'Arpino joins Global Fund Exchange from hedge fund manager Clinton Group, Inc.
"We are very excited to have Michael join our team," said Lauralouise Duffy, CEO, Global Fund Exchange Group. "He brings a wealth of hedge fund and Wall Street broker-dealer experience, outstanding leadership capabilities and the expert analytical, planning and communications skills that are so critically important to our investors."
Prior to joining Global Fund Exchange, D'Arpino was Managing Director, Clinton Group, Inc., where he held responsibility for all marketing functions including identifying and mitigating business and operational risks, compliance, business development and investor relations.
"I am pleased to join Global Fund Exchange, which is comprised of a unique group of industry veterans dedicated to providing a distinct approach to alternative and traditional energy opportunities globally through the Earth Wind & Fire Funds," said D’Arpino. "The firm’s strategy, using a multi-manager global macro approach to investing across the entire spectrum of energy and resources, represents a compelling opportunity for investors who seek access to the alternative energy and renewable resources sectors while offering the benefits of diversified and uncorrelated portfolios."
"We are very excited to have Michael join our team," said Lauralouise Duffy, CEO, Global Fund Exchange Group. "He brings a wealth of hedge fund and Wall Street broker-dealer experience, outstanding leadership capabilities and the expert analytical, planning and communications skills that are so critically important to our investors."
Prior to joining Global Fund Exchange, D'Arpino was Managing Director, Clinton Group, Inc., where he held responsibility for all marketing functions including identifying and mitigating business and operational risks, compliance, business development and investor relations.
"I am pleased to join Global Fund Exchange, which is comprised of a unique group of industry veterans dedicated to providing a distinct approach to alternative and traditional energy opportunities globally through the Earth Wind & Fire Funds," said D’Arpino. "The firm’s strategy, using a multi-manager global macro approach to investing across the entire spectrum of energy and resources, represents a compelling opportunity for investors who seek access to the alternative energy and renewable resources sectors while offering the benefits of diversified and uncorrelated portfolios."
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