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Bloomberg - Brazilian hedge funds saw a record 14.3 billion reais ($6.7 billion) in withdrawals last month after returns trailed a fixed-income benchmark even while defying a 25 percent plunge in the Bovespa stock index.
The redemptions brought total outflows this year to 48.9 billion reais, shrinking the industry by 16 percent, according to data released by the National Association of Investment Banks yesterday. The rate of withdrawals is similar to hedge funds globally, even though the worst-performing Brazil funds lost a third as much on average as their overseas rivals.
Brazilian managers avoided declines even as the Bovespa plunged 43 percent this year. Investors withdrew money because they compare performance against fixed-income indexes, said Luiz Felipe Andrade, a director at the association known as Anbid. Bond yields in Brazil are among the highest in the world.
Bloomberg - Brazilian hedge funds saw a record 14.3 billion reais ($6.7 billion) in withdrawals last month after returns trailed a fixed-income benchmark even while defying a 25 percent plunge in the Bovespa stock index.
The redemptions brought total outflows this year to 48.9 billion reais, shrinking the industry by 16 percent, according to data released by the National Association of Investment Banks yesterday. The rate of withdrawals is similar to hedge funds globally, even though the worst-performing Brazil funds lost a third as much on average as their overseas rivals.
Brazilian managers avoided declines even as the Bovespa plunged 41 percent this year. Investors withdrew money because they compare performance against fixed-income indexes, said Luiz Felipe Andrade, a director at the association known as Anbid. Bond yields in Brazil are among the highest in the world.
MSN MoneyCentral - Stock futures fell on Thursday, pointing to a weaker open on Wall Street, with the Dow Jones industrial average, the Nasdaq 100 and the S&P 500 share indexes down 1.4-2.8 percent.
Highlights:
* Walt Disney reports results and could comment on whether theme park bookings for the popular holiday period are down and whether it is scaling back costs in the face of skittish media advertisers. Revenue is expected to rise about 5 percent and net profit about 11 percent.
* Initial jobless claims for last week, due at 1330 GMT, are expected to come in just a thousand above the previous week at 480,000, setting the stage for a grim October non-farm payroll report on Friday.
Telegraph.co.uk - In the biggest-ever round of redemptions, funds around the world are braced to give back between 10pc and 50pc of their assets under management.
Hedge funds were faced with a slew of redemption notices at the start of the quarter, but investors were prepared not to withdraw their money if returns improved, according to one prime broker. He said many would now be forced to close.
None of the strategies used by hedge funds produced a positive return in September. According to the Dow Jones Hedge Fund Indexes , equity market-neutral funds, which often try to manage risk by shorting a stock in one sector and going long on one if its competitors, have fallen 1.85pc this month, while convertible arbitrage securities have dropped 7.96pc and distressed securities by 7.34pc. That compares with a 9pc decline by the FTSE 100. Hedge fund of funds, which are designed to spread risk, are expected to face the biggest redemptions.
Globe and Mail - Joe E. Lewis, the late American nightclub comic and inveterate horse player, once quipped: "I hope I break even. I need the money." That could very well become a mantra in the hedge fund world, where even the best and brightest of managers with impressive track records have been suffering through some of their worst results in years.
In the first three months of this year alone, 170 funds in the United States went out of business, and that was before things got really bad. Globally, hedge funds ended the first half with their most dismal performance in a decade. And then came the selloff in resource stocks, which brought misery to commodity funds, one of the few bright spots earlier in the year. July ended up being the worst month for futures in more than five years.
Scotia Capital’s Canadian hedge fund index, a useful measure of performance, was off 8.6 per cent on an asset-weighted basis last month, bested by both the gloom-laden TSX composite and S&P 500 indexes.
In the first three months of this year alone, 170 funds in the United States went out of business, and that was before things got really bad. Globally, hedge funds ended the first half with their most dismal performance in a decade. And then came the selloff in resource stocks, which brought misery to commodity funds, one of the few bright spots earlier in the year. July ended up being the worst month for futures in more than five years.
Scotia Capital’s Canadian hedge fund index, a useful measure of performance, was off 8.6 per cent on an asset-weighted basis last month, bested by both the gloom-laden TSX composite and S&P 500 indexes.
Hedge funds reduced their bets in the past year that U.S. stocks would gain as the Standard & Poor’s 500 Index declined and credit conditions tightened, Goldman Sachs Group Inc. said.
Such wagers accounted for 32 percent of funds’ equity investments as of June 30, compared with 45 percent a year earlier, analysts led by David Kostin said in an Aug. 21 report.
Hedge funds cut their holdings in financial, consumer and industrial companies, while investments in utilities, telecom services and materials were little changed in the period, Goldman said. Bets that financial stocks would fall accounted for 24 percent of holdings at the end of June; the previous year, 32 percent of funds’ portfolios wagered that financials would rise, the bank said.
Goldman analyzed quarterly filings of 745 hedge funds with combined equity holdings valued at $881 billion. The filings exclude trades using options and futures contracts as well as indexes that may offset funds’ equity holdings. The filings also exclude holdings of companies not based in the U.S.
Zawya - Lionhart (Middle East) Limited, part of the Lionhart group of companies, a firm specializing in global multi-strategy arbitrage, today announced that it has gained regulatory approval from the Dubai Financial Services Authority (DFSA) to open an office in the Dubai International finance Center (DIFC).
The Dubai office will be headed by Jim Quinn who has over 20 years experience in the asset management industry with 10 years experience in the Gulf region. The office opening and the establishment of a dedicated team is the culmination of many years of investing in the Middle East. The increasing sophistication of Gulf investors and the rapid development of economies mean that the region is set to play an increasingly important role in the world’s economy. With this new office opening, Lionhart is committing itself to the Gulf region for the long term.
Abdulla Al Awar, Managing Director of DIFC Authority said: "The funds industry in the Middle East has seen rapid growth in the past few years, spurred by the growth of the economy and the availability of a world-class financial services infrastructure. The increasing commitment shown by leading firms like Lionhart in the region will boost the market for funds generally, and for hedge funds specifically. We look forward to providing Lionhart with the services that will support their efforts to develop their business in the region."
Reuters - Jerome Abernathy has a proposition for the world’s biggest pension funds — better returns than hedge funds without the headaches or heavy costs.
This may sound too good to be true to institutional investors, who have poured billions of dollars into the loosely regulated $2 trillion hedge fund industry in the hope of earning better returns, even as they worry about poor performance and the possibility a fund will fail.
But Abernathy, a money manager armed with electrical engineering and computer science degrees, is quietly convincing skeptics with proof that his Alternative Beta Fund delivers exactly that by investing in indexes instead of managers.
Sometimes called a "synthetic" hedge fund product or a "hedge fund replicator" — a phrase Abernathy said he dislikes because it sounds pejorative — the $250 million fund ended its first 12 months of trading in April with a 3.18 percent return after fees. That trumps the average hedge fund’s 1.78 percent return during the same period, Hedge Fund Research data show.