New York (HedgeCo.net) – A new global report by KPMG and AIMA covered 150 managers with $550bn in assets under management.

Some fundings include
* Almost 60% of global assets under management are now from institutional investors
* Nearly 90% of respondents reported increased due diligence since 2008

The post-2008 influx of institutional money into hedge funds has resulted in a marked increase in the global industry’s operational sophistication and transparency to investors, according to a new report by KPMG, an international network of audit, tax and advisory firms, and the Alternative Investment Management Association (AIMA), the global hedge fund association.

The report, entitled “The Evolution of an Industry”, is based on a survey of and in-depth interviews of 150 hedge fund management firms globally with more than $550bn in combined assets under management. It found that hedge fund management firms have increased their operational infrastructure in areas like investor transparency and regulatory compliance as allocations from institutional investors have increased.

Seventy-six per cent of respondents have observed an increase in investment by pension funds since 2008, while institutional investors as a whole, including funds of funds, accounted for a clear majority (57%) of assets under management.

The report finds that the increase in institutional investment has led to more thorough due diligence and greater demands by investors for transparency, with 90% of respondents reporting an increased demand for due diligence since 2008. Eighty-four per cent of all respondents indicated they had increased transparency to investors since 2008, which is reflected by the fact that the majority of firms have taken on multiple members of staff to respond to these increased investor demands.

The report also found that hedge fund management firms had almost universally increased investment in regulatory compliance since 2008, with 98% of firms hiring additional staff in this area.

“Institutionalisation has been described as the continuing inflow of new institutional capital into the industry, but as this report demonstrates, it is also about the increasing sophistication of operational infrastructure with respect to transparency, compliance and due diligence,” said Andrew Baker, AIMA’s CEO.

Mikael Johnson, lead partner for alternative investments at KPMG in the U.S. said: “Institutions clearly understand the value that hedge funds offer, as evidenced by the record amount of assets they have allocated to these funds. At the same time however, this report shows that investors are signaling that hedge funds need to maintain the same institutional-grade controls as are evident in the investors’ own organizations.”

The new report is the second of a two-part series by AIMA and KPMG on the state of the global hedge fund industry. The first, published in April, looked at hedge fund industry performance, risk and volatility.

Robert Mirsky, lead partner for hedge funds at KPMG in the UK, commented: “The combination of an increase in regulation, the changing nature of the investor base, and the natural evolution of the business has made the industry nearly unrecognisable from only five years ago.”

New York (HedgeCo.net) – Man Group is set to pay up to $142.8 million dollars for FRM Holdings, a global hedge fund research and investment specialist with funds under management of approximately $8.0 billion.

Man and FRM’s combined multi-manager business will have total funds under management of approximately $19 billion, making it the largest independent non-US based fund of hedge funds.

Upon completion, the combined business will trade under the FRM brand and will be led by Luke Ellis, Chief Executive of Man Multi-Manager and previously Managing Director of FRM. Luke’s knowledge of both businesses will accelerate integration and ensure continuity for fund investors. Blaine Tomlinson, founder of FRM, will become non-executive Chairman of the combined business.

“This financially compelling transaction provides us with the opportunity to significantly improve the profitability of our multi-manager business.” Peter Clarke, Chief Executive of Man, said, “By combining the complementary investor bases of the two businesses and pairing FRM’s well regarded investment process with Man’s managed accounts infrastructure, we can increase revenues with no material change to Man’s current cost base.”

Alex Akesson
Editor for HedgeCo.net
alex@hedgeco.net
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New York (HedgeCo.net) – Bryn Mawr Bank Corporation, parent of The Bryn Mawr Trust Company, today announced the completion of its previously announced acquisition of the Davidson Trust Company from Boston Private Financial Holdings, Inc. and members of the Company’s management group.

The acquisition increases the Bank’s Wealth Management Division assets under management by approximately $1 billion, or more than 19%. Ted Peters, Chairman and Chief Executive Officer of the Corporation, commented, “We have been working closely with the Davidson team over the past few months. As a result of this interaction, I am even more
excited about this acquisition today than when it was first announced.”

Francis J. Leto, Executive Vice President and head of the Wealth Management Division, added, “We are getting a very talented staff and a wonderful group of clients. The investment management business is very important to us and we expect significant growth as a result of the synergy from this combination.”

James M. Davidson, Chairman and Founder of Davidson Trust Company, commented, “Our clients are very familiar with Bryn Mawr Trust, and they were pleased to learn that we would be joining such a fine company. This is a very good opportunity for everyone involved.”

The Bank will continue to operate the Company’s business from its current location at 20 N. Waterloo Road, Devon, PA and clients will continue to be supported by the investment advisors and client service teams with whom they have worked in the past.

New York (HedgeCo.net) – Hedge fund law firm Schulte Roth & Zabel LLP (“SRZ”), which specializes in regulatory compliance, is undergoing a major expansion of its New York office with the addition of a group of leading private equity and real estate attorneys joining the firm from Dewey & LeBoeuf LLP.

Joseph A. Smith and Marshall S. Brozost join as partners, Sanford W. Morhouse joins as of counsel, and Russel G. Perkins, Shawn R. McCune and David C. Miller join as special counsel. In addition, Jason L. Behrens, Geoffrey L. Butler, Lauren E. Cook, Lauren King and Jennifer M. Lew are joining the firm as associates.

“This is the largest group ever to join our firm at one time which speaks to the high regard that we have for these lawyers. They are simply terrific and we cannot be more thrilled to welcome them,” said Alan S. Waldenberg, a member of the firm’s executive committee and chair of the tax group. “Their practices greatly enhance our existing investment management and real estate groups and align nicely with our strategic focus on the financial services industry.”

“We are delighted to combine our private fund formation and real estate practices with the broad capabilities of the SRZ platform,” said Mr. Smith, who served as the global chair for Dewey & LeBoeuf’s private equity practice group. “We believe that SRZ’s uniform commitment to excellence and the collegial nature of their partnership will ensure the highest standards of service to our clients.”

Stephanie R. Breslow, a member of the executive committee and co-chair of the investment management group added, “We look forward to working with these outstanding lawyers. Together we will grow our private equity practice to the benefit of our expanding and highly successful client base.”

“We are pleased to have such highly-regarded real estate attorneys join our thriving practice. This group will further strengthen our depth of service to real estate owners/developers, pension funds, REITS, financial institutions and related entities that choose Schulte Roth & Zabel for best in class services,” commented Jeffrey A. Lenobel, a member of the firm’s executive committee and chair of the real estate group.

Washington, D.C. – Private equity firms invested more than $144 billion in 1,702 U.S.-based companies in 2011, according to an analysis released today by the Private Equity Growth Capital Council.

The top five states in terms of investment were Texas, New York, California, North Carolina and Oklahoma. Additional states that made the top 20 include Florida, Colorado, Ohio, Virginia, and Nevada.

This is the PEGCC’s second annual report examining the geographic dispersion of private equity investment, providing new information about the number of companies infused with capital from private equity investors, the number of active private equity firms and the total deal value by region, country, state and congressional district. According to this year’s analysis, private equity firms invested $14 billion in 47 companies is New York’s 14th Congressional District, represented by Democrat Carolyn Maloney, more than any other U.S. congressional district. Congressional districts represented by Reps. John Sullivan (R-OK), Charles Gonzalez (D-TX), Patrick McHenry (R-NC) and Nancy Pelosi (D-CA) rounded out the top five.

“This report shows that despite the challenging economic environment private equity continues to be a critical source of capital for U.S. companies looking to grow or retool,” said Steve Judge, President of the PEGCC. “Over the next several months, we expect the general election to amplify the conversation about private equity, but one thing is clear, private equity drives economic activity and growth across the U.S. economy. These numbers are an unambiguous reminder that, at its core, private equity is about investing in and strengthening American companies.”

In the U.S., private equity investment was dispersed throughout the country. More than $20 billion was invested in 206 companies in Texas, the most of any state during 2011. Oregon rounds out the top 20 with 16 companies receiving more than $1 billion. Overall, 20 states received more than $134 billion in private equity capital during 2011. A complete breakdown of private equity investment by state is available at www.pegcc.org.

This year, the Private Equity Growth Capital Council unveiled its new Private Equity at Work Campaign, a new initiative aimed at educating media, policy makers and the public about the private equity industry and its positive contributions to the American economy. The campaign is anchored by a new website and resource center, www.PrivateEquityAtWork.com, featuring educational content, industry data and an in-depth look at specific private equity investments that are driving growth and creating jobs.

The PEGCC’s geographic dispersion analysis was conducted using data provided by Thomson Reuters and Pitchbook, with an analysis by the Council. The full report can be found at www.pegcc.org.

About the Private Equity Growth Capital Council

The Private Equity Growth Capital Council (PEGCC) is an advocacy, communications and research organization and resource center established to develop, analyze and distribute information about the private equity and growth capital investment industry and its contributions to the national and global economy. Established in 2007 and formerly known as the Private Equity Council, the PEGCC is based in Washington, D.C. The members of the PEGCC are 36 of the world‘s leading private equity and growth capital firms united by their commitment to growing and strengthening the businesses in which they invest.

New York (HedgeCo.net) – The gross return of the GlobeOp Hedge Fund Performance Index for April, 2012 measured 0.51%.

·   Current month, flash estimate 0.51%*

·   Year-to-date (YTD) performance 3.66%*

·   Last 12 month (LTM) performance 1.22%*

·   Live to date (LTD) performance 64.52%*

*gross

“The GlobeOp Hedge Fund Performance Index was positive in April,” said Hans Hufschmid, chief executive officer, GlobeOp Financial Services. “The data supports the pattern of low equity market correlation that the Performance Index has established since inception in 2006. It also underlines the Index’s value as a proxy for a diversified portfolio of hedge fund investments.”

The GlobeOp Hedge Fund Performance Index is an asset-weighted, independent monthly window on hedge fund performance. On the 10th business day of each month it provides a flash estimate of the gross aggregate performance of funds for which GlobeOp provides monthly administration services. Interim and final values, both gross and net, are provided in each of the two following months, respectively. Online data can be segmented by gross and net performance, and by time periods. The GlobeOp Hedge Fund Performance Index is transparent, consistent in data processing, and free from selection or survivorship bias. Its inception date is January 1, 2006.

New York (HedgeCo.net) – Total inflows amounted to $28.13 billion while client redemptions added to $17.72 billion. The MSCI World Index dropped 1.62% on the back of rising eurozone sovereign yields, weak US economic data and slow Chinese growth.

Key highlights from this month’s report:

• The asset-weighted Mizuho-Eurekahedge Top 100 Index increased 0.28% in April 2012, signaling a better month for larger funds.
• Hedge funds attracted $10.4 billion during the month of April.
• Assets in North American hedge funds have increased by nearly $40 billion since the start of the year.
• Relative value and fixed income hedge funds are a bright light in the industry – they have now witnessed five consecutive months of positive returns with gains of 5.91% and 4.56% respectively.
• Launch activity remained strong in 2012 with more than 150 funds launched worldwide as at the end of April 2012.
• Assets in distressed debt hedge funds were back above $60 billion.
• The Eurekahedge Latin American Hedge Fund Index saw a surge of 6.45% at end-April 2012.

Managers added $1.34 billion through performance with Latin American focused and relative value mandates delivering the highest returns. Total assets under management rose back above the $1.76 trillion mark primarily due to asset gains seen in long/short equity and North American funds.

Performance update
The Eurekahedge Hedge Fund Index was down 0.17% in April; a month that saw risk-aversion return to global markets. Most regional mandates provided downside protection to their investors and outperformed the underlying market indices with the average hedge fund manager finishing the month ahead by 1.45%. The MSCI World Index declined 1.62% during the month.

Negative returns in April affected most regional hedge funds as market sentiment became more risk-averse leading to declines across global markets. After a short few months of strong growth, attention returned to European debt issues, soft US economic data and slowing Chinese growth. Although most regional hedge fund indices ended the month in the red, they delivered notable outperformance to their respective underlying market indices.

The Eurekahedge North American Hedge Fund Index finished the month with positive returns of 0.08%, beating the S&P 500 by 0.83%. Managers with positive returns banked on upbeat corporate earnings and the end of April saw a surge caused by speculation of further stimulus from the US Federal Reserve. European hedge funds provided significant outperformance during the month declining only 0.17% while the MSCI Europe Index lost 2.91%.

Asset flows update
Hedge fund returns were flat to slightly negative in April as most regions and strategies witnessed marginal movements during the month. As managers provided downturn protection amid declining markets globally, the Eurekahedge Hedge Fund Index was down 0.17%1and the MSCI World Index declined 1.62%2.

Total assets under management (AUM) increased by over $11 billion in April, taking the size of the global hedge fund industry back above $1.76 trillion. The sector attracted $10 billion from investors during the month and most of this increase came from positive net asset flows as investors reallocated recently withdrawn capital. Managers also chalked up performance-based gains of $1.3 billion during the month with most of the gains posted by some of the larger, globally investing hedge funds.

New York (HedgeCo.net) – Credit Suisse’s Asset Management Division has announced the launch of the Credit Suisse Liquid Alternative Fund. The fund seeks to offer access to hedge fund-like returns, with the flexibility of daily liquidity, increased transparency and 1099 tax reporting. The fund is intended to complement the suite of alternatives-focused mutual fund offerings available through the Asset Management division of Credit Suisse.

Jordan Drachman, Head of Research for Credit Suisse Alternative Beta Strategies, said, “Hedge funds offer the potential to improve diversification and reduce correlation and portfolio volatility; however, investors needing access to capital are often constrained by hedge funds’ illiquid nature, and the process for investing in offshore vehicles can be tax restrictive, lengthy and expensive.” Drachman continued, “For investors seeking to enhance the efficiency of their portfolios, we believe the Credit Suisse Liquid Alternative Fund may provide a liquid alternative for accessing the risk and return characteristics of hedge funds without the structural impediments of Limited Partnerships.”

Robert Alderman, Head of Retail Distribution for Credit Suisse Asset Management in the Americas, added, “We consider alternative investments to be a critical component of a well-diversified portfolio and we are proud to lead the market with investor-friendly products that fill a void for clients seeking more liquid, transparent and cost efficient access to the alternatives space.” Alderman went on to say, “Credit Suisse’s Asset Management division has a long history of expertise in alternatives and is one of the industry’s largest hedge fund allocators and most established alternative investment solution providers. The Credit Suisse Liquid Alternative Fund is an ideal addition to our product platform.”

New York (HedgeCo.net) – Hedge fund flows as measured by the GlobeOp Capital Movement Index advanced 1.24% in May.

“May produced another month of positive net flows into hedge funds,” said Hans Hufschmid, chief executive officer, GlobeOp Financial Services (LSE:GO.). “Gross inflows and outflows were moderate.”

The GlobeOp Capital Movement Index represents the monthly net of hedge fund subscriptions and redemptions administered by GlobeOp.

This monthly net is divided by the total assets under administration (AuA) for GlobeOp’s fund administration clients.

Cumulatively, the GlobeOp Capital Movement Index for May 2012 stands at 146.10 points, an increase of 1.24 points over April 2012. The Index has advanced 13.47 points over the past 12 months. The next publication date is June 14, 2012.

New York (HedgCo.net) – Neuberger Berman, one of the world’s leading employee-owned money managers, has introduced the Neuberger Berman Long Short Fund (“the Fund”) (tickers: NLSAX, NLSCX, NLSIX), providing investors with a long-short investment strategy that seeks long-term capital appreciation and principal preservation, and is available with daily liquidity at a minimum investment of $1,000.

The Fund employs a fundamentally driven investment approach with the flexibility to invest long and short. The Fund’s managers may invest in fixed income securities and in equities of both U.S. and non-U.S. companies. The Fund seeks both long-term capital appreciation and principal preservation, and may serve as a complement to traditional equity and fixed income strategies.

The Fund is managed by Charles Kantor, an 18-year investment industry veteran who is a managing director at Neuberger Berman and leads the firm’s Kantor Group, which invests approximately $850 million for individuals and institutions. The Fund’s portfolio management team includes William Muller, CFA, Charles Nguyen, CFA, and Marc Regenbaum, three Kantor Group research analysts with over thirty years of combined industry experience, and is further supported by Neuberger Berman’s global resources, including a global trading desk, a centralized global equity research department, and risk oversight specialists.

While this mutual fund opened to investors on December, 29, 2011, Mr. Kantor and his colleagues have been employing a similar investment strategy since March 2008. From the beginning of this year through April 30, 2012, the Neuberger Berman Long Short Fund A shares class has ranked within the top decile of its multi-alternative fund category, according to fund tracker Morningstar Inc.

New York (HedgeCo.net) - Global hedge fund Man Group plc, announced an addition to the management team at AHL, its industry-leading quantitative managed futures manager.

Dr. Douglas Greenig will become AHL’s Chief Risk Officer and a member of the AHL Management Committee. Doug has a distinguished 20-year career in the industry, having held senior trading and management roles at leading institutions, including RBS Greenwich Capital and Fortress.

Matthew Sargaison, currently CRO, will become AHL’s Chief Investment Officer. In this capacity Matthew will assume responsibility for approving and monitoring strategies in client trading.

Tim Wong, AHL Chief Executive said: “I am pleased to announce a further strengthening of both the team at AHL and the Management Committee, with the appointment of Douglas Greenig as Chief Risk Officer.

Meanwhile, Matthew Sargaison’s new role as Chief Investment Officer will allow him to apply the experience he has gained over the past three years as CRO more directly to client trading. I look forward to working with both Doug and Matthew in their new roles. ”

Doug Greenig has a Ph.D in Mathematics from the University of California, Berkeley and a degree in economics from Princeton University. He is a Fellow of New York University’s Courant Institute, where he taught risk management and econometrics.

Matthew Sargaison holds an MA in Mathematics from the University of Cambridge and an MSc in Computer Science from the University of Sheffield. He re-joined AHL in 2009, having spent 13 years working in major financial institutions, following an initial stint at AHL between 1992 and 1995.

New York (HedgeCo.net)– Hennessee Group LLC, an adviser to hedge fund investors, announced today that the Hennessee Hedge Fund Index declined -0.38% in April (+4.02% YTD), while the S&P 500 fell -0.75% (+11.16% YTD), the Dow Jones Industrial Average increased +0.01% (+8.16% YTD), and the NASDAQ Composite Index declined -1.46% (+16.94%). Bonds rallied, as the Barclays Aggregate Bond Index increased +1.11% (+1.42% YTD) and the Barclays High Yield Credit Bond Index advanced +1.05% (+6.44%).

“Hedge funds declined in April, along with equity markets, due to renewed concerns that the European sovereign-debt crisis would worsen and global economic growth would slow,” commented Charles Gradante, Managing Principal of Hennessee Group. “After a strong rally in the first quarter, hedge fund managers were positioned cautiously with lower net and gross exposures. However, managers still suffered losses as volatility spiked and correlations among securities increased regardless of fundamentals.”

“After a strong first quarter, investor risk appetite has started to wane. Managers have shifted their focus back to the Eurozone where they are concerned about the combination of economic recession and sovereign debt issues,” said Lee Hennessee, Managing Principal of Hennessee Group. “In addition, there are concerns about the European elections. Those elected will attempt to reduce austerity and stop the cuts in government spending, which will add additional uncertainty and complexity to fiscal issues.”

Equity long/short posted losses in April, as the Hennessee Long/Short Equity Index declined -0.61% (+3.88% YTD). Equity markets also declined, with the S&P 500 ending the month down -0.75%. Performance was mixed across sectors, with energy and cyclicals posting advances while financials and technology posted declines. Equity markets had been down significantly more, but pared losses with four straight days of gains at month end. Economic data in April suggested the economy may slow in the summer months and caused the market to pull back from the four-year high reached in early April. Worries about Europe’s debt troubles and concerns about U.S. economic growth brought the return of the “risk on, risk off” trade. Volatility picked up in April, with six triple-digit moves in the Dow Jones Industrial Average. Correlation between individual stocks rose to 0.38 from 0.12 in early February. Implied correlation is now at 0.48, up 20% in the past month and near levels seen in the middle of 2011. Managers are cautiously optimistic as valuation gaps between long and short opportunities are significant. However, there are many macro concerns and most expect politics and fiscal issues to result in greater volatility for the rest of the year. Both gross and net exposures have declined due to the combination of profit taking after a strong first quarter rally and increased caution going into summer.

“Investors should start to focus on the U.S. political situation,” commented Charles Gradante. “The economy faces a ‘Fiscal Cliff’ next year. At the beginning of 2013, the Bush tax cuts and payroll tax reduction are set to expire. In addition, there are mandated spending cuts that become effective as a result of the debt ceiling negotiation last year. If these policies are not extended, they have the potential to subtract -3% from GDP. To make matters worse, it also looks like they will have to re-address the U.S. debt ceiling as early as this summer.”

The Hennessee Arbitrage/Event Driven Index declined -0.04% (+4.67% YTD) in April. Risk assets were generally weaker in April with credit and equity markets recovering towards the end of the month. Bonds rallied, as the Barclays Aggregate Bond Index increased +1.11% (+1.42% YTD) and the Barclays High Yield Credit Bond Index advanced +1.05% (+6.44%). Treasuries posted strong gains as the yield on the 10 year declined from 2.23% to 1.95%. High yield bonds also performed well, but the spread over Treasuries widened 5 basis points from 5.99% to 6.05%. The Hennessee Distressed Index fell -1.02% in April (+4.44% YTD). The flight to quality resulted in losses for several core distressed positions in April. The Hennessee Merger Arbitrage Index decreased -0.28% in April (+2.73% YTD). Managers posted small losses as deal spreads widened amid heighted volatility. The Hennessee Convertible Arbitrage Index returned +0.20% (+4.89% YTD). The Merrill Lynch Convertible Index registered a small cheapening but valuations were stable, outperforming other risk assess. Tighter spreads and equity hedges drove gains. New issuance was respectable, amounting to $3.4 billion globally.

“While gold prices have been stuck in a trading range, many managers remain bullish for the long term. The U.S. dollar has maintained its strength as Europe continues to struggle, which has put pressure on gold prices,” commented Charles Gradante. “However, central banks, including China and other emerging economies, have increased their purchases of gold substantially in recent months. There is significant new demand which is not being reflected in gold prices yet.”

The Hennessee Global/Macro Index declined -0.41% (+3.69% YTD) in April. Global equities experienced losses, as the MSCI All-Country World Index fell -1.1% in April. International hedge fund managers posted losses, as the Hennessee International Index fell -0.51% (+4.97% YTD). Emerging market also declined in April with the MSCI Emerging Markets Index falling -1.42% (+13.65%). Hedge fund managers experienced losses in equities and currencies, as the Hennessee Emerging Market Index declined -0.75% (+4.16% YTD). Gains in China were offset by losses in Latin America and emerging Europe. Macro managers were up modestly in April, as the Hennessee Macro Index advanced +0.10% (+0.68% YTD). Macro strategies continue to struggle as managers experience difficulty taking advantage of trends. Long positions in the Euro-Bund and 10-year U.S. Treasury Note were significant contributors to positive performance. U.S. yields declined sharply with the yield on the 2-year falling 6 basis points from 0.33% to 0.27% and the yield on the 10-year Treasury falling 28 basis points from 2.23% to 1.95%. The U.S. dollar declined against the Japanese Yen and British Pound, but strengthened against the Euro. Commodities were mixed, with the Dow Jones-UBS Commodity Index falling -0.43% for the month of April. Gold prices fell slightly as the dollar strengthened.