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.
Arizona Star – Centuries ago, historians came up with a classic theory to explain the rise and decline of nations. The theory was that great nations start out tough-minded and energetic. Toughness and energy lead to wealth and power. Wealth and power lead to affluence and luxury. Affluence and luxury lead to decadence, corruption and decline.
“Human nature, in no form of it, could ever bear prosperity,” John Adams wrote in a letter to Thomas Jefferson, warning against the coming corruption of his country.
Philadelphia Inquirer – The University of Pennsylvania’s endowment fund lost a lot less than other big Ivy League schools during the grim financial year ended June 30.
That’s a switch for the better at the West Philadelphia campus of the city’s biggest private employer, which trailed its peers during the financial-asset inflation of the mid-2000s.
Penn had ranked last among the 25 largest university endowments in the year ended June 30, 2008, with a 6 percent decline, according to the yearly performance numbers posted by the National Association of College and University Business Administrators.
Commodity Online – Gold prices had an excellent run last week, led by the extensive fall in the US dollar and strong rally in the equity markets. The rise in crude oil prices also resulted in lifting bullion.
The US currency showcased the biggest decline in a month against euro last week as US data showed that the world’s largest economy contracted lesser than forecasts, which hinted that the recession is fading and gave rise to investor demand in riskier counters such as commodities and equities.
The outlook is bright – the most active benchmark contract at the Comex has pulled off a strong recovery, ending at $953.70 near the resistance at $960, a break and close of which will take prices towards new highs of $966.70/oz and $970.40/oz, state traders.
MENAFN - U.K. hedge fund manager Man Group reported a further decline in its assets under management Thursday, but said institutional customers have significantly slowed their withdrawals and private investor sales have been strong.
The group said funds under management at the end of its fiscal first quarter were $43.3 billion, down 7.5% from $46.8 billion at the end of March.
The Guardian – The BIS said the retreat from riskier investments such as stocks in favour of safer bonds could pressure stock markets, delaying their recovery. "Similarly, the decline in the pension wealth of households participating in defined contribution plans and of employers sponsoring defined benefit plans has implications for aggregate spending," the BIS said.
Hedge funds did not play a central role in shaping the crisis but they will feel its impact, the BIS said.
After many wealthy individual investors withdrew, the funds are targeting institutions.
"Such a shift engenders demands for greater transparency about the investment strategy and greater scrutiny of risk management processes," the BIS said.
Guardian.co.uk – Big gains on derivative bets linked to Volkswagen shares offset a decline in nine-month earnings at Porsche SE’s core sports car business, the heavily indebted holding company said on Friday.
Porsche, scrambling to shore up its tattered balance sheet, blamed lower volumes and revenue as well as investments on its upcoming fourth model line and hybrid powertrain technology but insisted that its returns remained relatively healthy.
"A high earnings margin was still achieved," the company said in a statement, while a company spokesman added that it was "nearly in the double-digits".
That is still a drop from Porsche’s traditional margins of near 20 percent when markets were strong.
Nationalpost.com – The broad equity market rally helped hedge funds to their best performance in almost a decade in May, according to Chicago-based Hedge Fund Research. The firm’s Fund Weighted Composite Index rose more than 5.2% during the month, marking the largest single-month gain since February 2000.
Year-to-date, the HFRI Index is up more than 9%. This follows a decline of more than 19% in 2008. Strategies focused on energy and emerging markets posted the strongest gains in May.
Reuters Tokyo – Hedge funds are dipping their toes back into the dollar/yen options market after months of absence, betting that eventual interest rate tightening by the U.S. Federal Reserve will help the greenback gain against the yen.
Dollar/yen’s implied volatility, a gauge of how much a currency pair is expected to move over a given period, has come down to levels not seen since before Lehman Brothers collapsed in mid-September, sending global markets into a tailspin.
The decline suggests market stress has eased substantially and investor confidence has risen after the battering dealt by the global financial crisis, but it also implies lessening demand for options to hedge against a further surge in the yen.
Bloomberg – Indea Capital Pte, an India-focused hedge fund that manages about $300 million, plans to buy shares even if India’s election results disappoint investors, said Chief Investment Officer Raj Mishra.
The ruling Congress party-led coalition and the main opposition-led group may have each failed to secure enough votes to form a government, based on exit polls after a five- week election that ended May 13.
“The bias is to buy when there’s a post-election decline rather than to panic,” said Singapore-based Mishra, whose six- year-old Absolute Return Fund has returned an average 14.75 percent annually since it was set up. “Once the election is complete and we have better clarity about the strength of the government, then probably potential long-term investors will feel more comfortable.”
The Australian – Australian managed equity-based hedge funds posted their strongest performance in March since the global financial crisis began in late 2007, but underperformed the market overall.
Data from Australian Fund Monitors showed that while the Australian equity market as a whole rebounded by 7 per cent during March, equity-based hedge funds returned 3.18 per cent over the month.
However, the funds have significantly outperformed the rest of the market over a 12-month period, declining by 13.20 per cent, compared to a 33.11 per cent negative return from the benchmark S&P/ASX 200 Index and a 39.68 per cent decline on the US-based S&P 500 Index.
Zawya.com – The worst may be over for hedge funds with redemptions recording a decline for the third consecutive month in March and industry players expecting stability to return soon.
Net investor redemptions and liquidations in March were an estimated $23.97 billion (Dh87.7bn) compared to investor outflows of $41.14bn in February and $165.25bn in January this year, Hedgefunds.net said in its latest report.
Estimates show hedge fund assets fell an additional 1.01 per cent in March 2009 to $1.724 trillion compared to reductions of 2.51 per cent in February and 7.56 per cent in January 2009.
Bloomberg – Gold, little changed in London, may drop on lower demand for an inflation hedge after U.S. consumer prices posted their first annual decline since 1955.
The consumer price index fell 0.4 percent in March from a year earlier, the Labor Department said yesterday. That helped to ease concern that Federal Reserve actions to stimulate the economy will cause inflation to soar. Investors often buy gold as a hedge against accelerating prices. Rhodium climbed to the highest in more than four months on improved car sales.
