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.
Business Standard – Hedge funds and foreign currency convertible bonds (FCCBs) are replacing real estate as popular offshore investment destinations for India’s richest.
Hedge funds are investment funds which employ various strategies to produce absolute returns. These strategies could be long- short, event driven, arbitrage or of various other types. A long-short strategy involves buying stocks which are assumed to perform high and selling stocks which are assumed to perform low.
As hedge funds are considered to be a high risk asset class, they are recommended to only a few “ultra high net worth and sophisticated” clients only. "Currently we are recommending 10-15 per cent allocation in strategies such as long -short and arbitrage to well-informed HNIs", said the head of a private bank. The returns range from 12-15 per cent annually in dollar terms.
West Palm Beach (HedgeCo.net) - The AlphaMetrix STTI tracker fund, launched in mid-December 2008 by AlphaMetrix LLC currently has approximately $70 million under management, with additional commitments from large institutional investors expected in the coming months, according to the company. In January 2009, its first full month, the fund was up 1.94%.
"Short-term strategies have little to no correlation to any traditional or alternative investments, making them appealing to investors seeking to add pure ‘liquid alpha’ to their portfolios," said Aleks Kins, CEO of AlphaMetrix. "Further, the Short-Term Traders Index includes a wide range of diversified trading strategies, with each CTA heavily vetted, highly liquid and completely transparent."
Interest in short-term trading strategies is rising for many reasons, including unease over the lack of liquidity in other alternative investments such as hedge funds, the counter party guarantee offered by the exchange-traded derivatives market, historically strong risk-adjusted returns, limited downside risk and low volatility.
"The index is a highly practical application of our research into the best ways to construct portfolios,” said Galen Burghardt, head of research for Newedge. “We expected short-term futures traders to demonstrate valuable diversifying properties, and we have been very satisfied with the results. We expect the index to produce results that continue to be uncorrelated to every major asset class and expect the average correlation of returns in the index to remain low. As a result, we expect the index to track returns in this space with very low volatility."
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Guardian Unlimited – Japan’s public pension fund, the world’s largest, said on Thursday it needs a deeper study of diversifying into alternative investments, such as hedge funds and real estate, after seeing the asset class hit by the financial crisis.
Takahiro Kawase, president of the Government Pension Investment Fund (GPIF), denied a media report last week that it was planning to start investments in real estate funds from the business year beginning on April 1, 2010.
Globe and Mail – The market meltdown has claimed another hedge fund, with Silvercreek Management into workout mode on a convertible bond fund that featured a who’s who of Canadian finance backers.
Silvercreek oversees an estimated $300-million, and ran into trouble in November when the wheels came off the convertible bond market. This debt, which can be flipped into equity, constituted the single worst performing asset class for hedge funds in 2008. That makes converts, as they are known on the Street, the baddest of a very bad lot.
Convertible funds were down an average of 26 per cent last year, according to the U.S. bible for the industry, Absolute Return. The average performance was a loss of just 6.9 per cent.
Gold Seek – This January was one of the worst on record for financial markets. US Treasuries crashed after enjoying a recession-beating run in 2008. Gold and silver were the only major asset class to end the month higher.
Hedge funds that previously ignored precious metals have become converts, with hedge fund star Greenlight Capital buying the yellow metal for the first time.
Another money manager Osmium Capital Management is offering a hedge fund priced in ounces of gold to protect it from exchange rate fluctuations. Subscriptions are in dollars, euros or pounds and then converted into gold.
West Palm Beach (HedgeCo.net) – Deutsche Bank’s foreign exchange (FX) trading platform, dbFX.com, reported a surge in customer numbers in 2008 as FX grew as an asset class of choice for investors amid the financial crisis.
The trading platform saw customer numbers increase by over 250%, as investors looked to FX as an alternative, and uncorrelated, asset class to equities and bonds. Volumes also notably increased from 2007, as investors took advantage of significant volatility in the market.
From a currency perspective, the EUR/USD was the most popular currency pair on the platform accounting for 41% of all trades, versus 20% of volume the previous year.
"Retail FX’s popularity as an asset class truly soared in 2008 from a customer and trading perspective," Betsy Waters, Global Director of dbFX.com, commented, "Looking ahead, we’re very bullish about the long term prospects for retail FX. As active traders become disenchanted with the equity markets they will turn to the FX markets for trading opportunities. In many countries, retail traders can only buy and hold equities, while FX markets offer the ability to buy and sell currencies based on your market views."
"Ultimately, FX is proven to be uncorrelated to bond and equity markets so it’s no surprise that retail investors are looking to FX, which is a proven asset class with institutional investors as a means of generating returns.” Waters concluded.
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West palm Beach (HedgeCo.net) – Two prominent carbon and CDM Experts, Peter C. Fusaro, Dr. Prabhu Dayal are presenting the ‘EUEC 2009′ in Phoenix, Arizona, the Carbon Trading course includes practical case studies for the design and development of CDM Projects and Certified Emission Reductions (CERs).
Aletrnative investment strategist, Global Change Associates, says the workshop will provide insights on the state of carbon trading markets and finance in the US and Europe and what some of the investment opportunities are in this emerging asset class for investors.
Case studies of renewable energy projects being developed by C TRADE in the Philippines will be used to illustrate the certification process for CERs, where methane gas emissions are avoided and electric power generated using waste methane bio-digester gas recovered from animal manure.
Fusaro is a Global Change Associates carbon expert and best selling author of "What Went Wrong at Enron", Dayal is President of C TRADE and Chair for EUEC.
ArabianBusiness.com – A record $155 billion was pulled out of hedge funds last year, punishing the once red-hot asset class for delivering its worst-ever returns, according to numbers released on Wednesday.
Chicago-based tracking firm Hedge Fund Research said hedge funds around the world now manage an estimated $1.4 trillion, the same sum they managed in 2006 and far less than the $1.93 trillion they invested in the middle of 2008.
This is only the second time since 1990 that the exclusive and often secretive hedge fund industry suffered net outflows for the full year, HFR said.
Seekingalpha.com – The tide has gone out for hedge funds. Many have indicated that they "feel" X% of the hedge fund industry will go under. Perhaps a little data and a crude stab at a model will improve a rather dire debating point.
The term hedge fund basically means anyone who believes they can manage money and get away with justifying a 1-2% management fee and 15-44% performance fee, it has become more compensation class than asset class and has been for years for many.
