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.
Bloomberg – First came the biggest bear market since the 1930s, then Bernard Madoff’s $65 billion Ponzi scheme and the threat of increased regulation. Now hedge funds have a new concern: getting caught on tape as the government expands its use of wiretaps to ferret out insider trading.
Prosecutors, using secretly recorded phone conversations for the first time against hedge funds, alleged Oct. 16 that billionaire Raj Rajaratnam and five others made $20 million by swapping material inside information on companies such as Hilton Hotels Corp. and Google Inc. They may charge at least 10 more people soon, people familiar with the matter said last week.
Bloomberg – Alphex Investments Co., the adviser to Japan’s first short-biased hedge fund, plans to sell exporters’ shares, wagering they’ll fall on a rising yen and weak global economy, boosting the fund that started in March.
“What we’re seeing right now is nothing more than a bear- market rally,” Ichiro Takamatsu, 44, chief executive officer of the Tokyo-based hedge fund advisory firm, said in an interview yesterday. “We’re going to see a really bad yen rally this year, and that will create an opportunity to profit on exporters.”
The firm started its ASB Opportunity Fund on March 3 with $25 million of seed funding from a New York fund-of-funds seeking to diversify its portfolio, said Takamatsu. The ASB fund, with a net short position at all times, is the first of its kind in Japan, he said.
Stuff – Mauled by the carnage on Wall Street, mutual funds are copying hedge fund strategies in an effort to regain some of the shine they have lost this decade.
Many investors have been burned investing in a single asset class and withdrew $234 billion (148 billion pounds) from U.S. stock funds last year as the deep bear market sparked the first annual outflow of long-term investment in mutual funds since 1988.
But as stocks sank, hedge funds soared. The Standard & Poor’s 500 Index, a benchmark for the broad U.S. stock market, returned a negative 40 percent this decade through the end of 2008. Hedge funds, meanwhile, gained 55 percent over the same period, Hedge Fund Research’s fund-weighted composite index shows.
Reuters UK – Mauled by the carnage on Wall Street, mutual funds are copying hedge fund strategies in an effort to regain some of the shine they have lost this decade.
Many investors have been burned investing in a single asset class and withdrew $234 billion (148 billion pounds) from U.S. stock funds last year as the deep bear market sparked the first annual outflow of long-term investment in mutual funds since 1988.
But as stocks sank, hedge funds soared. The Standard & Poor’s 500 Index .SPX, a benchmark for the broad U.S. stock market, returned a negative 40 percent this decade through the end of 2008. Hedge funds, meanwhile, gained 55 percent over the same period, Hedge Fund Research’s fund-weighted composite index shows.
Telegraph.co.uk – The stockmarket bulls have been very quiet of late, but that might be about to change. The FTSE100, made of up Britain’s biggest companies closed last week at an 11-week high at 4,243 and some fund managers are beginning to talk up a bull market.
One such bull is Anthony Bolton, who is worth listening to. Mr Bolton recently stepped down from running one of the UK’s most popular unit trusts, Fidelity Special Situations. The reason for its popularity was simple. Under Bolton’s stewardship the fund turned an outlay £1,000 into £147,000 over a 28 year period.
Mr Bolton says that "all the things are in place for the bear market to have ended". And "when there’s a strong consensus, a very negative one, and cash positions are very high, as they are at the moment, I’d like to bet against that".
Forbes – The current rally in stock markets may be the start of a new bull market, said hedge fund manager Crispin Odey, founding partner at Odey Asset Management and one of the hedge fund industry’s highest profile figures.
‘Opinion is divided over whether this is a bear market rally or the beginning of a new bull market. I think it has the chance to be a new bull market,’ Odey said in a note to clients.
‘In little over a month much has changed’, following a sharp rally in stocks led by banks and base materials stocks, he said.
This is Money – Hedge will be one of those words forever linked to the great financial crisis of 2008. The hedge funds were supposedly money-minting schemes whereby fantastically intelligent financial whiz kids write fantastically complex programmes to ensure they make a profit whatever the direction of the market.
That many hedge funds were spectacularly successful in the 2003-7 bull run and then spectacularly crashed in the current bear market indicates "hedging" may have had little bearing.
Hedging is rife too in the energy markets, widely used to attempt to control industrial costs and nowhere more starkly than in the aviation fuel market.
Houston Chronicle – Hedge funds, historically an investment reserved for big-ticket investors, are seemingly like mutual funds in that they typically invest in stocks and bonds. They have the added glamour and allure, however, of taking significant risks and gambles with their investments. Hedge funds may take risks by purchasing derivatives, or they may bet on the fall in price of particular securities by selling the securities short. (When you short sell, you borrow a security from a broker, sell it and then hope to buy it back later at a lower price.) Some hedge funds even invest in other hedge funds.
Earlier this decade, hedge funds got lots of attention, and plenty of wealthier investors were throwing big bucks into them. The allure was hedge funds claiming to have sidestepped the bear market in the early 2000s.
West Palm Beach (HedgeCo.net) – Fidelity International is launching the Fidelity Wealth Builder Fund through it’s Indian asset management arm, the new fund is an open ended fund of funds scheme offering asset allocation options with three plans.
The investment objective of the fund is to seek to generate reasonable returns based on the plan selected with minimum and maximum asset allocation between debt and equity. The fund manager will use a two-tier investment approach – asset allocation and fund selection – to invest in Fidelity’s funds. The NFO will be open from January 14 to February 5, 2009. The Fund will open for ongoing purchases and redemptions from March 2, 2009
“Asset allocation decisions can drive as much as 91.5% of investment returns variability, as studies have shown." Ashu Suyash, Managing Director and Country Head – India, Fidelity International, said, "In the current market conditions of heightened volatility, a fund like the Fidelity Wealth Builder Fund provides investors a convenient route to benefit from disciplined asset allocation. We are in an environment where attractive returns are likely in the bond market and there is potential for bear-market rallies in equities on the back of increasingly attractive valuations.”
Ms. Suyash added, “To encourage investors who have turned risk averse, the Fidelity Wealth Builder Fund is a fund with no entry load. Whether investors invest through their advisers or directly, they will not be charged an entry load. Moreover, the Fund also offers investors free switch-in and switch-out facility between the Plans, if, over time, investors’ outlook for debt and equity changes.”
The Fund will offer Growth and Dividend options. A dividend is proposed to be declared, subject to availability of distributable surplus, on a Quarterly basis under Plan A and Plan B. Under Plan C, the dividend may be declared by the Trustee, at its discretion, from time to time subject to the availability of distributable surplus.
The minimum initial investment is Rs.5000.($100K )Investors can invest in the Fidelity Wealth Builder Fund even through the SIP route with a minimum amount of Rs. 500 per installment with the total of all installments not being less than Rs.5000. In addition, the systematic transfer and systematic withdrawal plans are also available.
FIL Fund Management Private Limited is the Indian arm of Fidelity International, one of the world’s leading global investment management companies with operations in 23 countries and more than $197.9 billion in assets under management.
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Bloomberg – The biggest-ever decline in commodities turned Pierre Andurand and Chris Levett into this year’s heroes for investors.
Andurand’s $1.1 billion BlueGold Capital Management LLP hedge fund in London almost tripled between its February debut and November by betting on higher oil prices in the first half of 2008 and then reversing the strategy, the 31-year-old manager said. Levett’s $3 billion London-based Clive Capital LLP returned 44 percent in the first 11 months of the year.
The first bear market in commodities since 2001, as measured by the UBS Bloomberg CMCI Index, cut investments in raw materials to $144 billion from a peak of $270 billion in the second quarter, Barclays Capital estimates. While the CMCI rose almost fivefold from 2001 to 2008, beating stocks and bonds, commodities measured by the Reuters/Jefferies CRB Index fell 53 percent since June and are heading for the worst year in five decades.
