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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.
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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Reuters Tokyo – The yen dipped against higher-yielding currencies on Monday while the Australian dollar surged as leaders from Europe to the United States rushed out plans to shore up banks and stem the panic gripping investors.
After many stock markets suffered their worst weekly losses ever last week, leaders from Group of Seven industrialised nations set out a plan of action.
European officials offered to guarantee some bank debt and inject public funds into individual banks if necessary.
The United States said it would take stakes in banks in a first such move since the Great Depression, Australia guaranteed bank deposits and Britain was set to pump more than 40 billion pounds into its four biggest banks.
The flurry of initiatives to contain the worst financial crisis since the 1930s increased investor appetite for risk, though analysts were uncertain whether the improving mood would last very long.
Bloomberg – Hedge funds that profit from turbulence in the financial markets are beating stock, bond and commodity investments for the first time in five years.
Volatility hedge funds climbed 7.3 percent this year through August, according to the Newedge Volatility Trading Index. The average equity fund fell 8.38 percent, corporate fixed-income funds declined 4 percent, and energy and basic- materials stock funds dropped 6.36 percent in the same period, data compiled by Chicago-based Hedge Fund Research Inc. show.
“Nobody knows the direction of the markets or economy at the moment, and we’re profiting from that uncertainty,” said Trevor Taylor, 35, co-chief investment officer at Miami-based Innovative Options Management LLC. The firm’s $90 million hedge fund rose 12.3 percent this year through August, after returning 25 percent in 2007.
Price swings that helped Taylor started with the collapse of subprime mortgages that have left the world’s biggest banks with $506 billion of writedowns and credit losses in the past year, according to data compiled by Bloomberg. The Standard & Poor’s 500 Index fell 19 percent since October as credit dried up and the U.S. economy edged to the brink of recession.
Bloomberg- Asia’s expanding hedge fund industry will probably create tens of thousands of jobs in the next five years, even as investment bank recruitment dries up after the U.S. subprime mortgage market collapse, said Sheridan Mather, a managing director of recruitment firm Pinnacle International Ltd.
“We’re seeing some streamlining at the moment. We’re seeing some of the not so well-performing funds closing down,” London- based Mather said in an interview with Bloomberg TV today. “But we’re seeing massive growth of the established guys.”
The world’s biggest banks and securities firms cut 83,000 jobs in the 10 months to May as U.S. subprime mortgage delinquencies seized up the global credit market, according to data compiled by Bloomberg.
Times Online- The Financial Services Authority took the unprecedented step of pressuring Britain’s five biggest banks into supporting the revised rescue capital-raising at Bradford & Bingley last week, The Times has learnt. HSBC, Royal Bank of Scotland, Barclays, Lloyds TSB and HBOS are understood to have each agreed to sub-underwrite £20 million-worth of the reworked £258 million rights issue.
The banks agreed to step in when Citigroup and UBS, the lead underwriters, could find no one to whom they could lay off some of the risk. Underwriters typically pass on some of the risk to institutions known as sub-underwriters. The FSA, worried that too much Bradford & Bingley stock would be left with UBS and Citigroup, which are already under pressure, decided in the middle of last week to ask the big five to take some of the risk.
