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.
HedgeCo.net (West Palm Beach) – Man Investments’ seeding fund, RMF Global Emerging Managers, has completed its second incubation deal of the last two months, providing a cornerstone investment of $50 million for Hong Kong’s Minerva Macro Fund.
In July RMF GEM invested $50 million in the flagship product of 5:15 Capital Management, an unrelated fixed income arbitrage manager based in Connecticut.
Minerva is managed by Stanley Ku, who founded the Hong Kong office of hedge fund Fortress Investment Group and most recently managed $750 million for Fortress’ Drawbridge Global Macro Fund. Dorothy Lau, Minerva’s risk and business manager, formerly worked for JP Morgan and Goldman Sachs.
“Stanley Ku’s work at Fortress and Goldman Sachs has made him a very well respected money manager in Asia,” said Hans Hurschler, head of Man Investments’ hedge fund Ventures. “We believe that Minerva has the potential to generate solid, stable returns and that it may attract substantial assets.”
Minerva is a discretionary global macro fund, focused on Asia. It trades only highly liquid instruments such as interest rate or bond futures, foreign exchange forwards and equity index futures or sector ETFs. The entire portfolio is designed to be liquidated in 48 hours.
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Reuters – A portfolio run by Man Group, the world’s biggest listed hedge fund firm, has invested $50 million (30 million pounds) in a new start-up fund run by three former Brevan Howard traders.
Man’s RMF Global Emerging Managers strategy has put money with 5:15 Capital Management, a Greenwich, Connecticut-based fixed income arbitrage firm set up this month and named after a song from The Who’s 1973 album Quadrophenia.
Man will take a share of revenue from the firm, whose founders also worked together at Greenwich Capital Markets.
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.
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HedgeCo.net (West Palm Beach) – Hedge fund performance specialist Alternative-Index Ltd., fully owned by hedge fund manager, Salus Alpha Group AG, reported that the Relative Value Index (RVX) is the top performing Alternative Investment Indices (AI-Index) in June 2009 with a month-to-date performance of +0.52% listed on the Vienna Stock Exchange.
The RVX outperformed the German equity index for the month to date by +1.49%.
The Relative Value Index is an investable benchmark of the performance of the Alternative Investment Sub-Strategies Fixed Income Arbitrage, Long/Short Credit and Convertible Bond Arbitrage.
The Alternative Investment Indices target to offer investors an unbiased reference of the performance of alternative asset classes. Daily index prices are calculated by the Vienna Stock Exchange, and are also available via Reuters, Bloomberg and other data terminals.
Salus Alpha Group AG is a Swiss Alternative Investment expert and manages capital for institutional clients and High Net Worth Individuals since 2002. The Group was the first Asset Manager worldwide to introduce a synthetic fund of hedge funds as a UCITS fund in 2003.
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West Palm Beach (HedgeCo.net) – Hedge fund managers posted positive returns across all major strategies in May except for Managed Futures. Returns were driven by favorable investment conditions across equity, credit and commodities markets. India led the positive trend in Emerging Markets, with the Sensex index surging 17.3% within less than a minute of the announcement on May 18 that the Congress Party garnered a comfortable majority coalition in the general elections.
Industrial production numbers were up in many parts of Asia, with factories in Japan raising output by the largest monthly margin in nearly 60 years, and the Purchasing Manager’s Index (PMI) in China expanding for a third month to a seasonally adjusted 53.1 (a reading above 50 indicates an expansion). Some managers remained cautious, however, with the view that a switch from a government-led recovery to a consumer-led recovery may face hurdles such as the continuing rise of unemployment in many parts of the world, rising savings rates (particularly in the US), overhangs in vacant housing, as well as assorted weak macro data in Europe.
With spreads tightening and returns strong across the credit spectrum, relative value players such as Convertible Arbitrage and Fixed Income Arbitrage were among the best performers. With fixed income markets apparently unfazed by the General Motors bankruptcy, investment grade financials had the strongest performance, but investment grade industrials, utilities and high yield also had a solid month, as did leveraged loans.
Global Macro has continued to have the longest positive streak of all the strategies in the index for the 7th consecutive month, starting in November 2008. Managers found opportunities in currency trades, fixed income, commodities, as well as tactically trading equities. Managed Futures performance improved over April, but posted a fifth consecutive month of negative returns. Long/Short Equity Managers continued to have wide dispersions of returns, with some managers adding to their long exposures and tactically harvesting returns from the rallies, while others maintained their defensive positioning, citing an absence of fundamental drivers for a strong v-shaped recovery.
Editing by Alex Akesson
May performance will be published June 15th on Bloomberg
Financial Times – It is becoming clear that the hedge fund universe is set to shrink. The most obvious casualties will be highly levered funds, in particular the strategies that cannot justify their fees without that level of leverage, such as a number of arbitrage strategies.
In addition, depending on what further regulation is put in place, some of the more specialist funds could find themselves at risk (for example sector funds, or short only funds). Diversification could prove to be the key to providing protection from legislative changes, and in this regard, multi-strategy funds could become a more interesting prospect as they have the ability to allocate capital away from strategies that could be adversely affected by regulatory change.
guardian.co.uk – Bolder hedge funds are looking to snap up convertible bonds at bargain prices, returning to an asset class that became a no-go area for them only a short while ago.
The convertible bond market has tumbled 44.5 percent since September, as hedge funds facing a wave of client redemptions paid back bank debt. Many said convertible arbitrage strategies were a thing of the past.
But yields are now reaching all-time highs and are starting to attract the first daring hedge funds back to the investment arena they traditionally dominated.
"You can buy a convertible right now on a 25 percent discount to the same bond issued by the same company," Emmanuel Roman of GLG Partners, one of Europe’s biggest hedge funds, told a recent conference.
"You get a 25 percent discount plus a call option. That doesn’t make any sense," he said.
