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.
Reuters – Canadian hedge funds will emerge stronger from the global economic crisis, driven by domestic expertise in key industries like resources and energy, and as the asset class recovers internationally, a chief industry source told Reuters on Thursday.
Gary Ostoich, who took over as Canadian chairman of the Alternative Investment Management Association this week, said the crisis pummeled many hedge funds at home and abroad, bankrupting many managers but setting the foundations for a stronger industry.
European Voice – Europe may be laying the foundations for the next financial bubble, through its monetary, industrial and regulatory policies.
In the midst of the worst crisis in half a century, it is easy to forget that the real problem is not the bust but what preceded it: a boom filled with bad investments.
The boom was a natural consequence of too much easy money for too long. That policy was itself a response to the bursting of the dotcom bubble, to which Alan Greenspan and the Federal Reserve responded by cutting interest rates from 6.5% to 1% – and keeping them that low for a whole year. The result was a market drowned in cheap money.
Financial Standard – Pension funds around the world are expected to pump up their $547 billion hedge fund allocation by more than $60 billion before December as they look to balance assets and liabilities, new research shows.
Hedge fund managers are expected to heap an extra $63 billion into their coffers from pension funds and family offices.
But insurance companies, private banks, endowments and foundations are all likely to decrease their allocations to the sector, according to Barclays Capital.
The report, which surveyed 300 investors and 100 hedge fund managers representing $873 million of hedge fund assets, noted investors were ready to aggressively allocate their cash balances but will demand liquidity in the process.
Hedge Funds Review – A majority of all assets under management (AUM) by hedge funds and funds of hedge funds globally are from institutional investors, according to the Alternative Investment Management Association (AIMA).
One third of the AUM comes from institutional investors now come from pension funds.
The AIMA research defines institutional investors as pension funds, university endowments, foundations and governmental authorities. The figures were produced by AIMA’s research department and are based on extensive consultation with the association’s members.
Boston Globe – At a time when most foundations are cutting back or maintaining last year’s spending, a few are doing what hedge fund manager Ken Nickerson of the Eos Foundation calls "counter-cyclical giving." They’re increasing their grants.
Nickerson heard a story last October that helped him decide how to steer his family foundation through this severe recession: A gentleman visiting a local food pantry offered $5 for his groceries. Even after a pantry worker assured him they were free, the man insisted on paying. "There are people out there who need this $5 more than me," he said. The worker then laid his own $5 on the counter. Others did the same, and within moments the food pantry had collected $50.
MSNBC – Nonprofits that are struggling because their donors lost money with Bernard Madoff are getting a bailout — but not from the government. Richer foundations are stepping in to help.
Human Rights Watch, The Center for Constitutional Rights and others are already slated to receive more than $1 million in help from philanthropies and donors who share their interests.
Grand Forks Herald – From worrying about banks and a financial meltdown, investors are now wondering if they can trust the person investing their money.
In this year of shocks, investors were dealt another a little over a week ago. Someone considered one of the nation’s elite money managers, Bernard Madoff, reportedly confessed that he misled investors for years about the money they were making.
The $50 billion firm collapsed, allegedly wiping out funds of supposedly savvy investors – multimillionaires, colleges, foundations, brokerage firms and hedge funds. The clients, many of whom had done social gymnastics to get into his fund, may have nothing.
The situation serves as a reminder that investors need: Don’t take on a broker, adviser, money manager or hedge fund without thorough checking.
West Palm Beach (HedgeCo.net) – AA platform for asset managers and advisers to create SICAV SIF funds in Luxembourg has been launched by KMG SICAV SIF. The platform caters to all asset classes, including hedge funds. There are no restrictions on leverage.
Thee process allows managers to focus on investment management, the process allows managers to focus on investment management. . The platform takes care of incorporation, custody, transfers and administration. In addition it can also offer a Luxembourg address and office for the fund, organise annual general meetings of shareholders and supply investors with statements, day-to-day management and general organization as well as order placing and execution, investment performance reports, promotion and distribution and corporate branding.
The open-architecture platform provides a faster route to market with funds established and open for capital within a few weeks rather than months, which it usually takes for a traditional fund. The platform can also provide all back office support, administration and other services for funds.
The KMG SICAV SIF platform is an off the shelf solution, licensed and regulated in Luxembourg. Entities establishing a fund through the platform do not have to apply for additional licences.
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Times Online – The esteem of John Waples for the hedge funds (“Get used to volatility: the hedgies are in control”, last week) was not very sound financial journalism.
Who else but these grossly leveraged entities would have the capital or the appetite for the short-selling that we have seen during the course of this economic turmoil?
Waples should turn his investigative attention to our so-called regulators who, with every conceivable avenue of inspection available to them, have failed to track down the City insider traders who have made millions from this financial system.
San Francisco Chronicle- The giant housing rescue plan President Bush signed Wednesday might help stanch the bleeding in the housing market, but experts on both sides of the political divide worry that it is, at best, only an emergency step.
In addition to $300 billion in government guarantees to aid homeowners threatened by foreclosure, the administration got extraordinary new powers to backstop mortgage giants Fannie Mae and Freddie Mac after their stocks plunged earlier this month. The legislation gives both companies an open line of credit at the U.S. Treasury and allows the government to buy the companies’ stock through 2009. In return, the companies get a tough new regulator.
But both firms remain weird hybrid entities whose profits are private but whose losses are public, a recipe for excessive risk-taking. The new law makes the government guarantee explicit, exposing taxpayers to losses that could dwarf the savings & loan bailouts of the 1980s that cost taxpayers $300 billion in today’s dollars.
