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West Palm Beach (HedgeCo.net) – Hedge funds of varying sizes report being given notice by prime brokers that OTC derivative give up arrangements will end – quickly. Funds ranging in size from $25M to $2.5B are being told new derivative trades "done away" will no longer be accepted near the end of the first quarter and that give up relationships will end completely in April.
‘Give up arrangements’ are where the executing broker writes trade tickets on behalf of both counterparties to the trade – provided hedge funds with three advantages: easier post-trade operations, cross margining and credit intermediation.
“Challenged by investors to provide increasing levels of transparency, independent validation and reporting frequency, funds would also have to find the operational bandwidth and capability to efficiently manage the complexities of OTC trade processing involving multiple instruments, high volumes and multiple counterparties." Hans Hufschmid, CEO of GlobeOp Financial Services commented, "And the February 28 deadline after which major dealers will not accept novation consents by email looms.”
GlobeOp also noted that during the Lehman Brothers crisis in September 2008, hedge funds began diversifying counterparty risk by abandoning the practice of single prime broker give ups and converting to multiple direct counterparty relationships.
Now, Hufschmid observes, “Intense revenue pressure on banks and on credit risk overall is forcing banks with prime broking activities to take a very tough approach to profitability. Give ups were, for many, never a core business, used to support the profitable business of lending securities to hedge funds. As risk tolerances and the lending business have become less attractive, the reasons for providing low or non- profitable support services like give ups are falling away."
“If the initial signals become a trend as financial markets and the hedge fund sector restructure, out sourcing will increase in appeal as hedge funds simultaneously face increased investor demand for independent administration and robust infrastructure declining fund performance and management fees to fund or ramp up the required technology and people resources continued attractive opportunities for strategies involving OTC derivatives.”
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New York Post – Former Goldman Sachs exec Steve Mandis has left the $12 billion hedge fund Halcyon Asset Management – one of the oldest hedge funds on Wall Street, according to an investor letter.
Mandis was vice chairman and chief investment officer at Halcyon Structured Asset Management LP, a lending subsidiary of Halcyon that he helped co-found about four years ago with about $1 billion in capital.
According to an investor letter issued Tuesday and obtained by The Post, Mandis’ departure is "effective immediately," and the firm expects to announce a succession plan "as soon as possible."
Although the official reason for Mandis’ departure could not be learned, people familiar with the matter said his lending subsidiary had been performing poorly and was drawing the ire of some of the firm’s biggest institutional investors.
Reuters Tokyo- Japan’s Nippon Life Insurance plans to invest about 30 billion yen ($282 million) in Russell Investments and form a business alliance with the U.S. investment and index group, sources familiar with the matter said.
Nippon Life, Japan’s top life insurer with about 46 trillion yen of assets, hopes the tie-up will help it bolster its ability to manage a broader range of assets including emerging market shares, the sources said, speaking on condition of anonymity.
Russell Investments is headquartered in Tacoma, Washington, and is a subsidiary of Northwestern Mutual Life Insurance Co. It had $211 billion of assets under management as of June 30, according to its website.
West Palm Beach (HedgeCo.net)- The DMX, Directional Markets Index, heads the list of investable Alternative Investment Indices provided by Alternative-Index Ltd, with a month-to-date performance of +0.71% and a stellar year-to-date performance of +16.61%. DMX is listed on the Vienna Stock Exchange.
The best performing sector for the DMX was the Interest Rates sector with a month-to-date attribution of +0.62%.
The DMX outperformed its peer, the FTSE Hedge Directional Index month-to-date by 2.13% (0.71% vs. -1.42%) and year-to-date by 21.42% (16.61% vs. -4.81%). The DMX also outperformed the MSCI Systematic Trading Index year-to-date by 12.17% (16.61% vs. 4.44%). The DMX’s performance surpassed the HFRX Market Directional Index’s performance month-to-date by 1.22% (0.71% vs. -0.51%) and year-to-date by 15.67% (16.61% vs. 0.94%).
Alternative-Index Ltd. is an Index specialist and provides investable Indices that represent the risk and return of investable alternative strategies and asset classes. The company is a 100% subsidiary of Swiss Alternative Investment expert Salus Alpha Group AG.
Isle of Man Today- An Isle of Man hedge fund has won a prestigious industry award on the third occasion it was shortlisted.
Oceanic Hedge Fund was named Best Energy Hedge Fund on a Risk Adjusted Basis at the eighth annual Hedge Funds Review’s European Performance Awards in 2008.
The fund – which focuses on energy and shipping – was launched in August 2002 with less than US$ 5 million in net assets, but now has assets of $1.7 billion.
Its investment manager is Oceanic Investment Management, a subsidiary of Tufton Oceanic, based at St George’s Court in Douglas.
