Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
Wall Street Journal: Brevan Howard Asset Management LLP, one of Europe’s biggest hedge funds, is betting against the euro as Greece’s debt crisis nears a boiling point.
The London-based firm, which manages over $32 billion in assets, recently purchased put contracts to sell euros in exchange for dollars, according to two traders. These contracts give the fund the right, but not the obligation, to sell the currency at a fixed price by a specific date in the future.
Brevan Howard’s bets, which are short-term wagers, involve exchanging more than $1 billion and cost several million dollars each, according to one of the traders. If the euro heads south against the dollar in the next few days, the fund would stand to make a big profit.
A spokesman for Brevan Howard declined to comment. The firm’s overall position on the euro is unclear and market observers say Brevan Howard’s bearish bets are likely modest—at least for them—and have trailed off recently. Some of the fund’s traders may also be making bullish euro bets.
Still, the fund’s bearish bets are the latest sign that investors are nervous about the future of the euro in anticipation of a key vote in Greece’s parliament Wednesday on a five-year austerity and privatization plan that the country needs to receive expanded aid and try avoiding a messy default.
New York (HedgeCo.net) – Hedge fund governance firm, dms Management Ltd. (DMS), is expanding its global presence with the opening of an office in Sao Paulo, Brazil: dms Management (Brasil) Assessoria Empresarial Ltda. The establishment of the Brazil office marks the firm’s foray into South America and is an important part of the firm’s global strategy and commitment to localized client service and innovative growth.
“This global reach, combined with DMS’ exclusive combination of market-leading proprietary fund governance methodologies and technologies, will provide unparalleled accessibility for our already existing strong client base in the Latin American region.” Don Seymour, founder and a Managing Director of DMS, said,”The Brazilian investment funds industry is evolving and has experienced strong growth recently. We have extensive experience advising Brazilian clients over the last decade and our new Brazil office will ensure that we continue to deliver exceptional service in facilitating this demand within cultural expectations.”
DMS Brazil will deliver multiple offshore products and services for Brazilian and Latin American clientele, including comprehensive consulting advice, from concept through launch, to Brazilian sponsors seeking to efficiently structure and operate offshore hedge funds.
Previously based at DMS’ headquarters in the Cayman Islands, Francine Balbina, Director, recently relocated to her native Brazil to lead DMS’ new office. She commented, “Our unique advantage is serving as a single point of contact to ensure efficient and seamless service delivery, on our clients’ terms, in their language. Nothing gets lost in translation across multiple service providers.”
New York (HedgeCo.net) – The Cayman Islands signed its twenty-second Tax Information Exchange Agreement (TIEA) with India yesterday.
The Cayman Islands is on the Organisation for Economic Cooperation and Development’s (OECD) ’white list’ of jurisdictions that implement international tax standards for investors such as hedge funds and other alternative investors.
“Our Government has a strong working relationship with our Indian counterparts, and we look forward to implementing the terms of this TIEA”, Premier W. McKeeva Bush said.
Signing the agreement on behalf of India was India’s High Commissioner to The Bahamas, the Cayman Islands and Jamaica, Mohinder S. Grover.
“Both countries are members of the OECD Global Forum Global Forum on Transparency and Exchange of Information for Tax Purposes, and are involved in the Peer Review Process; therefore ensuring the effective implementation of the international standards of transparency and exchange of information for tax purposes,” the Premier added.
Speaking on behalf of the Cayman Islands International Tax Cooperation Team, George McCarthy commented, “It is further anticipated that this Agreement will continue to pave the way in enhancing the business relationship between our two countries. The TIEA will provide a common ground upon which the Cayman Islands and India can exercise mutual cooperation and focus on increasing investment funds business in the Cayman Islands.”
New York (HedgeCo.net) – Frankfrurt-based nanotechnology investor, Nanostart Investments, has managed to achieve their capital objectives for 2010 in the first half of the year. The company also obtained a gross cash influx of nearly 1.3 million euros ($1.75 million) through a capital increase in April 2010.
Nanotechnology has recently experienced a stage of exponential growth. The National Science Foundation has forecast that $1 trillion in nanotechnology-enabled products will be on the world market by 2015. CEO Marco Beckmann manages the company’s global portfolio and business activities with his investment team.
The company’s supervisory board, which consists of figures from the worlds of business and technology, actively participate in all important decisions. Nanostart AG has a branch office in Berlin, and in 2008 it established a wholly owned subsidiary in Singapore, Nanostart Asia Pte Ltd.
The investment manager anticipates a considerable increase in sales for the rest of 2010 and expects positive overall numbers for the year thanks to results-improving effects created by the formation of joint ventures and subsidiaries.
Nanostart has already sold eight portfolio companies, more than any other venture capital firm investing in nanotechnology.
New York (HedgeCo.net) – The world’s largest domicile for hedge funds, healthcare insurance captives and catastrophe bond transactions, has been named the top specialised financial center by The Banker, a banking and finance magazine, in it’s 2010 IFC Rankings released this month.
Cayman, for the second year running, has been awarded first place by an increased margin over other jurisdictions such as Bermuda, Jersey, Guernsey, Malta, Gibraltar, Monaco and Cyprus.
The Banker’s ranking of international financial centres is based not simply on the size of the financial services industry in each location, but focuses instead on the level of international business and the value offered to institutions seeking to expand their overseas operations.
“This is yet another objective finding that reinforces the fact that Cayman is regarded by institutions, if not by stubborn popular press, as a successful and transparent tax neutral jurisdiction from which to base international operations.” Anthony Travers, OBE, Chairman of Cayman Finance said.
“This result comes at a time when Cayman has just signed its twentieth tax information exchange agreement and statistics from the Islands’ regulating body CIMA show a continuingly robust performance by the financial services industry over the past year. Most importantly the financial crisis has been negotiated without the need to introduce corporate, income, capital gains, payroll or property taxes, the absence of which is likely to enhance Cayman’s attraction in the immediate future.” Travers said.
Statistics from the Cayman Islands Monetary Authority (CIMA) note that Cayman still maintains US$1.795 trillion in deposits and interbank bookings.
New York (HedgeCo.net) – U.S. registered investment manager Galtere has launched an agribusiness private equity strategy that aims to take advantage of the shift in global market dynamics and a growing worldwide demand for commodities from institutional investors.
The agribusiness strategy makes direct investments in industrial scale commodity production facilities in Brazil, Uruguay and Australia. The strategy employs a long-term investment horizon of seven years to increase efficiency, production and profit of its projects, before monetizing its investments via trade sale or IPO. Galtere is aiming to raise US$1 billion of assets from institutions, endowments and family offices.
The strategy is lead-managed by portfolio manager Renatto Barbieri who had previously spearheaded the development of Deutsche Bank Global Markets’ natural resource private equity business, and whose 20-year track record spans five continents across a wide-range of commodity markets.
“At Galtere, we have always advocated a long term view on commodities markets, rather than reacting to short term changes, and this is an ideal strategy for investors who share that view.” Barbieri said, “I believe the geography, supply and demand conditions and resources of the countries we have targeted present a wealth of attractive agricultural projects, and we have already begun to invest in projects that offer excellent long term growth potential. The current global and financial conditions make it an ideal time to be launching this strategy, and we are excited at what we can achieve for our investors.”
The strategy aims to capitalise on a market trend the firm has termed ‘inverse stagflation’, where deflation in financial assets such as equities coincides with inflation in real assets, such as agricultural commodities.
In addition, the strategy will take advantage of a favourable supply/demand dynamic for agricultural commodities as sources of food and fuel. The UN has predicted global population to be 7.7 billion by 2020, while arable land is expected to decrease by 100 million hectares in the same time. The resulting increase in the value of production facilities for soft commodities will allow the strategy to maximise the returns from its investments.
New York (HedgeCo.net) – Geneva based hedge fund advisory company, NARA Capital, announced plans to release its UCITS Alternative Index to the public. A series of indices aims to track the performance UCITS hedge funds and funds of funds.
”NARA has been tracking the emergence of UCITS hedge funds for more than two years and has constructed and developed what is probably the most comprehensive database of that universe.” Louis Zanolin, Partner at NARA Capital said, “The trend for more regulated and liquid alternative strategies will increase the demand for UCITS alternative funds over the coming year, so will the need for independent comparative tools. We have therefore decided to publicly release the index performance.”
The UCITS Alternative Index series are equally weighted. The performance for any particular month will accessible on the UCITS Alternative Index® website www.ucits-alternative.com generally on the 5th business day of the following month. The inception date of the index is 1st January 2008.
As of February 2009 the UCITS Alternative Index was tracking close to 400 UCITS hedge funds and funds of hedge funds totaling more than 63 billion EUR assets under management. Only funds pursuing hedge fund like strategies are taken into account for the index calculation. Absolute return funds with no shorting capabilities as well as 130/30 and passive hedge funds index UCITS funds are excluded from the
index.
In 2009, the UCITS Alternative Index® Global returned +9.27% while the UCITS Alternative Index Fund of Funds returned + 1.64%.
With +34.68%, the UCITS Alternative Index Emerging Markets was the best performing strategy in 2009. It was followed by the UCITS Alternative Index Fixed Income which returned +11.83%. The least performing index in 2009 was the UCITS Alternative Index Equity Market Neutral with a -0.57%.
At the end of January 2010, Macro hedge funds represented the largest assets under management with 27.3 billion EUR ($ 36.9 billion). It was followed by Fixed Income and Long/Short Equity Funds with respectively 26.7 and 20.7 billion EUR ($36.1 and $28 billion). In term of jurisdiction, 48% of the funds were based in Luxemburg, 20% in Ireland 17% and in France.
New York (HedgeCo.net) – Independent, factor-based hedge fund replication service, TrueBeta, is launching a dynamic leverage model for hedge fund replication. The company says the application will improve it’s correlation to broad hedge fund performance.
“TrueBeta is setting a benchmark for the replication accuracy,” TrueBeta CEO Rabbe Ekholm said. “The new dynamic leverage model will enable TrueBeta to explicitly reflect the impact of variations in leverage across market cycles.”
The model is based on return trends in major market indices, primarily the S&P 500, adjusted monthly. The company said that through extensive quantitative testing that changes in leverage are primarily driven by broad trends in market returns. TrueBeta’s leverage will move between 1 and 2, compared with a fixed 1.5 of the original model.
For calendar year 2009, the new dynamic leverage model showed a correlation of 0.95 with the industry-standard Hedge Fund Research Index compared to 0.91 of the original TrueBeta model. The dynamic model had a compound 2009 return of 13.7 percent after fees, versus the 10.9 percent achieved by the original model.
TrueBeta will publish both its standard and enhanced methodologies until May 2010, after which the enhanced methodology will become the new standard. During the transition period, it may adjust aspects of the dynamic leverage model based on feedback from clients and other market participants.
TrueBeta LLC develops and markets quantitative financial strategies for institutional clients. It is the first replication offering created expressly with the goal of serving as a benchmark for the hedge fund industry, and it is the only replication strategy with a fully transparent, completely rules-based methodology. True Beta is fully independent and available through licensing to all market participants, including white label options to banks and other financial institutions.
New York (HedgeCo.net) – New regulations and laws, including the recently enacted anti-money laundering and know-your-client laws are making the outsourcing of hedge fund administration more and more common, according to Joe Goldstein President of G&S Fund Services, who said “When administrating their own fund, many fund managers find they are in over their head.”
“Last week there were expansions, as back and middle office service providers globally, caught up with the trend.” Andrew Schneider, founder and co-principal of hedge fund research and services firm, HedgeCo Networks, said.
Privately owned hedge fund administration company, Opus Fund Services, today opened a Chicago office, appointing Stephen Giannone as the firms President. He has previously worked in senior management positions at Bear Stearns and Deutsche Bank and most recently at hedge fund administrators Spectrum and Omnium (formerly Citadel Solutions). Opus Fund Services is headquartered in Bermuda and has offices in New York, the United Kingdom, and the Cayman Islands.
And also in the off-shore news, hedge fund law firm, Conyers Dill & Pearman, announced an expansion into Cyprus. Conyers will launch its Cyprus practice out of its Moscow office and will advise on all aspects of Cyprus corporate law.
Cypriot law firm Antis Triantafyllides & Sons LLC (ATS) has entered into an arrangement with Conyers for mutual co-operation on Cyprus, Bermuda, British Virgin Islands, Cayman Islands and Mauritius work, and will assign a lawyer from their Cyprus office to Conyers’ Moscow office.
West Palm Beach (HedgeCo.net) – On June 12, three IRS personnel participated in a teleconference designed to address open questions regarding the Report of Foreign Bank and Financial Accounts (FBARs) for calendar year 2008 that must be filed by June 30. It was their position that an offshore hedge fund is a “foreign financial account” for FBAR purposes and that, therefore, every U.S. investor in an offshore hedge fund should file an FBAR, whether or not the fund has any offshore bank or securities accounts.
The FBAR needs to be filed by U.S. persons that have a financial interest in, or signature or other authority over, a foreign financial account or accounts if the aggregate value of the account(s) exceeds $10,000 at any time during the year. The instructions to the FBAR provide that foreign financial accounts include “any accounts in which the assets are held in a commingled fund, and the account owner holds an equity interest in the fund (including mutual funds).” In the teleconference, the IRS personnel took the position that offshore hedge funds are foreign financial accounts for FBAR purposes.
Based on the instructions to the FBAR and this insight from IRS personnel, until further guidance is issued by the IRS, we recommend that an FBAR should be filed by the following persons or entities with respect to offshore funds:
• Every U.S. investor, including U.S. tax-exempt entities, in an offshore hedge fund (this includes both stand-alone offshore hedge funds and the offshore feeder in master/feeder hedge fund structure)
• U.S. feeder funds that invest in offshore master funds, and any U.S. investor that owns more than 50% of the U.S. feeder
• Any direct U.S. investor in an offshore master fund
• Investment managers that have a financial interest (for example, through their carry) in any offshore hedge funds (whether stand-alone, feeder or master)
This requirement is in addition to FBAR requirements applicable to U.S. persons or entities that have a direct or indirect interest in an offshore bank, securities or securities derivatives account. Therefore, any U.S. person or entity (for example, a U.S. hedge fund) that has a financial interest in such foreign financial account or owns more than 50% of the equity of an entity that has a foreign financial account needs to file the FBAR. Similarly, anyone with signature or other similar authority over such foreign financial accounts needs to file the FBAR.
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West Palm Beach (HedgeCo.net) – In a bizarre hedge fund story sent to me by a reader, an ex JP Morgan Director and ex trader for hedge funds Tudor and Brevan Howard has been traced by his ex wife’s investigators to Singapore where he allegedly has done work for JP Morgan.
According to the Sydney Morning Herald, Simon Sywak, who now lives in a Sydney suburb, was caught on video working in Singapore for the investment bank. Sywak had gotten out of paying maintenance for his children in Britain by saying he was a trainee bus driver and so poor he was forced to live with his mother-in-law.
Sywak’s ex wife, Helen Sywak, has started bankruptcy proceedings in Australia for $250,000 of court costs he failed to pay.
"If he doesn’t pay this amount in the next few weeks, it will bankrupt him and he will have to drop his case suing Westpac Bank for $1.3 million and upwards." Helen said in a letter to the Editor.
Sywak is suing derivatives trader Westpac in Sydney in the Federal Court, arguing that it still owes him a $1.3 million sign-on bonus that it had promised him, however he never started work with the bank because he failed its probity checks, according to the Herald.
His side of the story has yet to surface.
Alex Akesson
Edtior for HedgeCo.Net Email: alex@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
West Palm Beach (HedgeCo.net) – Cayman Island law firm Solomon Harris is today hosting its inaugural Webinar on the highly topical subject of ‘Managing Distressed Cayman Funds and lessons learned for new funds’.
"This fits in perfectly with our firm’s progressive approach to business and our focus on keeping our clients up-to-date and informed. This is particularly so as our firm tends to work directly with investment managers and the more informed our clients are, the better for us as their legal advisers," says Sophia Harris, the firm’s Managing Partner.
"The recent significant stresses placed upon hedge funds, particularly in Q4 of 2008, have given our investment funds group invaluable insight into the issues facing managers with liquidity problems and the legal and practical tools available to them." Paul Scrivener, partner and head of the investment funds group, said, "We were keen to share our experiences in a practical way with those involved in the industry and we felt the medium of the webinar was the ideal way to reach the widest possible audience."
Also helping with with the presentation is KPMG, locally known for the provision of US tax services to Cayman funds. Paul Hotchkiss of KPMG will be covering recent tax changes in the UK and the possible impact on Cayman Islands investment funds.
"I visited Cayman recently to undertake a series of seminars on these and similar topics and I am delighted to be asked by Solomon Harris to participate in their inaugural Webinar." Hotchkiss said, "UK taxation of offshore funds is undergoing significant change and also there has been an increased interest from HM Revenue and Customs in the structuring of such funds. As Cayman has been historically, and is still, widely used as jurisdiction of choice to establish funds with a UK focus, I hope my comments will be relevant to the participants who are involved with funds with a UK focus."
As investment funds are such a major part of the firm’s practice, the firm also launched its fund-specific website, ‘CaymanHedgeFundWorld.com’ late last year also with a view to keeping the firm’s clients better informed.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
The UCITS Alternative Index series are equally weighted. The performance for any particular month will accessible on the UCITS Alternative Index® website www.ucits-alternative.com generally on the 5th business day of the following month. The inception date of the index is 1st January 2008.
