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.
Citywire.co.uk - The polished doors of the poshest hedge fund offices in St. James’s Park have been closed to humble private client managers in recent years.
As the good times rolled the retail market place was of little interest to hedge funds. But now hedge fund managers have been reduced to crowd control stewards – gradually shepherding assets out of their funds – they are discovering the benefits of diversifying into the private client market.
Times Online - One of the most senior fund managers at Prudential has attacked hedge funds as selfish and devious and blasted derivatives as “the scourge of the modern age”.
Tom Dobell, who manages the £3 billion Recovery Fund for M&G, the insurer’s asset management unit, made the remarks in letters sent this month to the fund’s 100,000 investors.
The salvo came amid evidence that hedge funds are poised to deliver their best first-half returns in a decade, bouncing back from a disastrous spell last autumn.
MSN India - Fund managers are aggressively selling the India theme to overseas investors. After Singapore-based Helios Capital’s fund manager Samir Arora’s India-focused Slumdog Millionaire Equity Fund, domestic brokerage firm India Infoline, run by Nirmal Jain, and Atlantis Investment Advisor headed by Vinay Gairola have launched India-focused off-shore funds.
While Gairola is trying to sell his India Alfa Fund to investors in West Asia, Singapore-based fund managers of India Infoline—Deepesh Pandey, the erstwhile deputy CIO of Mirae Asset, and Manish Srivastava, ex-fund manager of Halbis (HSBC Global Asset Management) — have conducted roadshows for the ‘Mumbai’ Fund in Hong Kong and US markets. Both are long-short equity funds and are likely to raise nearly $100 million.
Reuters - Fund managers need to stress-test worst-case scenarios more rigorously before investing in hedge funds, industry participants at a hedge fund conference said on Thursday.
Many existing stress tests, used to gauge how funds will perform in extreme market conditions, failed to identify potential problems during the financial crisis, leaving investors exposed to steep losses.
"Many allocators used models that failed to take into consideration certain risk factors, simply because they had never been seen as risks before," Mark Schindler, portfolio manager of alternative assets at Clariden Leu, told Reuters on the sidelines of the GAIM annual industry conference.
Alibaba News Channel - We’re not quite there yet, but hedge fund managers may soon need to start giving away toasters — or perhaps plasma TVs — to woo new investors. Forcing the funds to eat a little humble pie now would benefit hedge fund investors in the long run.
Most hedge funds are off to a decent start this year — the average return to date is 9.43 percent, says Hedge Fund Research. Yet it’s a particularly tough time for launching a new fund. In the first five months of 2009, just 40 new funds have begun reporting performance figures, BarclayHedge reports.
Seeking Alpha - Grail Advisors, LLC, the investment advisor that launched the Grail American Beacon Large Cap Value Fund (GVT) last month, has filed with the SEC to launch four additional ETFs. Grail notes that these four funds will be the first actively-managed ETFs to use a single-manager approach.
Unlike traditional ETFs, managers of these funds will have discretion on a daily basis to choose securities consistent with the ETF’s objective. With the launch of these funds, Grail will establish itself as the leader in the actively-managed ETF arena.
"Our goal from the outset was to bring traditional, active fund managers to the ETF marketplace," said William Thomas, chief executive of Grail Advisors. With these funds, that day has come "a lot sooner than even the most enthusiastic proponent of the ETF structure could have imagined."
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.
Wall Street Journal - Quantitative fund managers, who use computer models rather than human judgment to pick securities, have seen their world turned upside down by the credit crisis.
The first generation of managers and their models have moved on: Their inheritors are having to accommodate a changed landscape full of skeptical investors. In reaction, quant managers have spent 2008 making adjustments to their models, finding new sources of data and tightening secrecy.
Asset managers, in general, are facing tough times, but stock-picking is at least a familiar and well-worn concept for investors. They may not always be happy with their human asset managers, but they are continuing to talk to them. The so-called black boxes that carry out the complex strategies of quantitative funds, on the other hand, are increasingly out of favor with investors and investment consultants.
hedged.biz - In 2006 if someone suggested that it was a good idea to be seeding and incubating hedge funds, I would have been highly skeptical. Managers who were any good were raising large amounts of capital on their own on day one, mediocre managers were able to start with credible amounts of day one capital and even managers who while talented had no idea how to run an investment management business could get into business. The hedge fund seeder faced insurmountable adverse selection problems.
Hedge fund managers willing to give away either a share in their management company or a share of their fees tended to be of lower quality. You didn’t want to be seeding them.
Hedge fund managers of good quality but who understood the business development support role of a seeder and were happy to work with one were labeled as poorer quality and found it difficult to raise capital, so also were from a business perspective, less attractive to a seeder.
Guardian Unlimited - Tumbling markets and redemption waves have been murder on hedge funds, but the turmoil will free up top-tier talent for a quiet but well-heeled corner of the market: family offices.
The world’s wealthiest, not content to hand their fortunes to brokers and banks, can afford to build their own money management businesses. These offices, which would never be considered by top fund managers during the go-go years, suddenly look attractive thanks to their stable capital and long-term investment horizon.
"You follow the money. Right now that is leading people to family offices," said Greg Coules, a former hedge fund manager who is building a family office recruiting practice at New York-based Hunter Advisors.
GrowthBusiness.co.uk - Its proposals would, if enacted, put an additional burden on both funds and the companies in which they invest. They have been greeted with dismay in the City, but what would they mean for the industry?
The central notion is that fund managers should be subject to ‘harmonised’ governance standards across the EU, with robust systems put in place to manage risk, liquidity and conflicts of interest. The rules would apply to private equity funds with more than €100 million (£90 million) invested, though this threshold would be increased to €500 million for funds which do not use leverage and lock in their investors for a minimum of five years.
Reuters - Hedge fund manager Steven Persky plans to start betting on companies’ bad fortunes again.
Persky, who runs $1 billion hedge fund firm Dalton Investments, said on Wednesday he will re-launch his distressed debt strategy three years after liquidating two similar portfolios when the strong economy made such investing difficult.
Now that times have changed dramatically, Persky is among a handful of fund managers who expect to make money for their wealthy clients in the distressed area.
