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.
New York (HedgeCo.net) – Hedge funds are recovering rapidly in 2009, Morningstar reported in their preliminary hedge fund performance study for the third quarter of 2009.
“Paced by an exceptionally strong September, hedge funds began to regain their swagger in the third quarter,” said Nadia Papagiannis, Morningstar alternative investments strategist. “The road to recovery for hedge funds was paved by strong performance in riskier asset classes such as emerging markets, distressed, and small-cap securities.”
But hedge funds overall haven’t yet returned to their October 2007 peaks, the Morningstar 1000 Hedge Fund Index declined 25.2% through February 2009, and has only recovered 20% in the last seven months, with 11.4% to go.
Certain hedge fund strategies have set new highs, however. In September, hedge funds following global macro-economic strategies, fully recovered from 2008 losses, despite lagging the performance of other category indexes this year.
Guardian – Emerging markets have been the place to invest over the past decade. While the FTSE 100 is down more than a quarter since it peaked in December 1999, and the S&P 500 in the US by 28%, markets in Brazil, India and Russia have more than trebled in value, while China has doubled, according to figures compiled for Cash by BGC Partners.
The more recent performance of emerging markets has also been better than developed ones, undermining the traditional view that they overreact to bad news. And Bryan Coyne, head of emerging markets at BGC Partners, thinks “there’s no reason why these markets shouldn’t continue to outperform mature markets”.
Bloomberg – Harvard University, the wealthiest U.S. school, said its investments fell 27.3 percent in the past year, a $10.1 billion loss that was smaller than President Drew Faust’s forecast in December before markets started to recover.
The endowment declined to $26 billion from $36.9 billion in the year ended June 30, including the inflow of gifts from donors and $1.7 billion in distributions to the university, according to a report today by Harvard Management Co., which oversees the fund. Gains in non-U.S. fixed-income and emerging- markets securities helped trim a loss that Faust had said could reach about 30 percent.
HedgeCo.net (West Palm Beach) – Credit Suisse Tremont Index LLC released a new research piece, 1H 2009 Hedge Fund Update: Halfway There, a review of how hedge funds have repositioned themselves in the first half of 2009 to generate positive returns for five out of the first six months of the year.
The report discusses how hedge funds have generated year-to-date returns of 7.2% through June 30, outperforming, with lower volatility, both key equity and bond indices. Some key takeaways from the report include:
* The Convertible Arbitrage, Emerging Markets, and Global Macro sectors have received increased attention as investors began to regain their appetite for risk and global markets rallied.
* Performance has improved across most sectors, with the bulk of returns for many strategies moving into positive territory for the year, with 80% of all funds reporting positive returns for the second quarter.
* Overall industry assets under management have dropped approximately $18 billion since the end of the first quarter of 2009; we estimate industry assets totaled $1.3 trillion as of June 30 – down from $1.5 trillion at the end of 2008.
* As of June 30, 2009, an estimated 9.6% of funds were classified as impaired, meaning they have either suspended redemptions, imposed gate provisions or sidepocketed assets.
Credit Suisse is comprised of a number of legal entities around the world and is headquartered in Zurich. The registered shares of Credit Suisse’s parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares, in New York.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
HedgeCo.net (West Palm Beach) – Long/Short Equity managers who maintained a cautious stance through the recent market run-up appeared to be positioned to profit as markets shifted from cyclicals to defensives in June. Overall, the Credit Suisse/Tremont Hedge Fund Index (“Broad Index”) finished up 0.43% for June, bringing year to date to 7.18%.
Convertible Arbitrage funds continued to post the best performance of all the strategies in the Broad Index, with 4.05% for June and 23.95% cumulative performance YTD, Credit Suisse/Tremont Index’s monthly commentary reported. As equity markets’ recovered in the second quarter, managers began to profit again from the volatility arbitrage aspect of the strategy.
Overall, Emerging Markets finished the month relatively flat despite a rebound in economic activity in Asia, as countries across the region saw rising industrial and manufacturing output, the Index reported.
Credit-oriented hedge funds performed well as credit markets showed healthy activity, with $102 billion of investment grade bonds brought to the market in June. Many believe continued governments’ activism in the markets could provide additional opportunities for these managers.
Global Macro hedge funds posted their first negative monthly performance since October 2008 as the sell-off of short rates in US Treasuries negatively impacted the positions of a number of Global Macro hedge funds early in the month, Credit Suisse/Tremont said.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
HedgeCo.net (West Palm Beach) – One of the first no-load, open-end mutual funds designed to replicate broad-based hedge fund performance characteristics, the ‘IQ ALPHA Hedge Strategy Fund’ (IQHIX) has marked its one-year anniversary on June 30th, 2009.
For the trailing 12-month period, the fund was down -2.58 percent, compared to a loss of -26.21 percent for the S&P 500.
“The performance over the past year can be attributed to a number of factors, including the ability of the fund to hold both long and short positions, and the liquidity of the ETFs used to represent asset class exposures,” said Adam Patti, IndexIQ’s Chief Executive Officer. “As a result, we were able to continuously execute our strategy during the period, something not all hedge funds could do.”
The fund works by optimizing the relative index weights among six hedge fund strategies, Equity Long/Short; Global Macro; Emerging Markets; Fixed Income Arbitrage; Equity Market Neutral; and Event Driven.
The funds do not invest in hedge funds, but use ETFs and a variety of other highly liquid financial instruments to provide exposure to the components of the index in approximately the same weighting. It employs leverage totaling 25 percent of the portfolio to magnify returns.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
HedgeCo.net (West Palm Beach) – Paul Myners, the UK Financial Services Secretary to the Treasury, speaking at an Alternative Investment Management Association (AIMA) event this morning in London, said, “the UK is not in the business of blocking more stringent regulation, contrary to what some in Europe may say.”
Lord Myners said the UK government’s aim was “a framework which allows efficient, well run and well regulated fund managers to compete for business without restriction across the EU and to make the EU a base from which to compete in global markets.” But he said that the draft directive, “needs major surgery before this can be delivered”.
He also expressed concern about the protectionist impact of the directive and argued that, “to deny institutional investors a global choice of fund manager would come at a direct cost to pension savers and others who rely on the returns from institutional investment funds”. He said of the custody elements of the directive that “imposing strict liability for delegated custodians would impose large capital costs, make investing in some emerging markets impractical and increase costs to investors”. And on the leverage caps within the directive, he argued that “systemic risks posed by the leverage of any one fund can only be assessed in the context of wider market conditions so capping leverage on a fund-by-fund basis cannot be an effective protection”, adding that it could even be counter-productive.
Lord Myners said that the UK government was, “reaching out bilaterally to leverage natural alliances and win over others” in Europe. But he pointed out that managers threatening to quit the UK “will make my job harder” and would not be well received in Europe. And he called on institutional investors to make their voices heard on the directive. He said, “if institutional investors can make clear which regulatory safeguards they want to see applied to their fund managers and which they find to be costly and unnecessary, this will send a powerful message to policymakers”.
The UK Financial Services Secretary to the Treasury concluded by arguing that, “an open single market in fund management must be a major opportunity for Europe and we must all do our bit to ensure we deliver the best possible result for EU investors and for the future of the EU funds industry”.
West Palm Beach (HedgeCo.net) – “Hedge funds finished up 4.06% in May, capturing the largest monthly gains since February 2000." Oliver Schupp, President of Credit Suisse Index, said, Emerging Markets funds were the strongest performers, finishing up 6.96%. The Emerging Markets sector has experienced a significant turnaround over the last three months as risk appetite seems to be returning to markets, and investors are encouraged by positive signs of global growth and rising commodities prices.” Schupp added, “Convertible Arbitrage managers also performed well during May as funds capitalized on the overall appreciation in convertible bonds globally. The Convertible Arbitrage sector has been up every month this year, and redemption pressure seems to have eased substantially as a result.”
The Credit Suisse/Tremont Hedge Fund Index (“Broad Index”) is the industry’s premier asset-weighted hedge fund index. Unlike equal-weighted indices, the Broad Index does not underweight top performers and overweight decliners to provide the most accurate representation of the hedge fund universe.
Alex Akesson
Edtior for HedgeCo.Net Email: alex@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Seeking Alpha – The second hedge fund replication ETF from IndexIQ began trading on Tuesday (6/09/09). According to the press release, the IQ Hedge Macro Tracker ETF (MCRO) seeks to deliver risk-adjusted return characteristics similar to macro and emerging-market style hedge funds.
IndexIQ maintains indexes representing seven separate hedge fund strategies. Their first ETF, the IQ Hedge Multi-Strategy Tracker ETF (QAI), was launched on March 25 and is a composite of all seven underlying strategies.
The new MCRO ETF is designed to track two of the underlying strategies: the IQ Hedge Global Macro Beta Index and the IQ Hedge Emerging Markets Beta Index. The allocation to each strategy will change over time using a rules-based methodology.
Reuters – Money managers are flooding the market with exchange-traded funds (ETF) and mutual funds designed to give even the smallest of investors access to hedge fund returns without all the usual restrictions or hefty fees.
IndexIQ Advisors, a start-up firm that seeks to replicate hedge fund performance, on Tuesday launched the index-based IQ Hedge Macro Strategy Tracker ETF, about 75 percent focused on emerging markets and 25 percent on global trends. The offering joins the IQ Hedge Multi-Strategy Tracker ETF, which began trading in March and is up 17 percent.
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.
West Palm Beach (HedgeCo.net) – UK-domiciled funds had a strong week to Friday May 8, led by global emerging markets products, according to data from Thomson Reuters research firm Lipper.
Asia Pacific funds also performed well, as did funds investing in European smaller companies. Global bonds, UK gilts and UK index-linked gilts were the only sectors to post negative returns in the week.
Lipper, a Thomson Reuters company, is a leading fund research and analysis organisation, providing independent insight on global collective investment including mutual funds, retirement funds, hedge funds, fund fees and fund expenses to the asset management and media communities.
