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.
Bloomberg – Bennelong Funds Management, an Australian fund manager with A$400 million ($271 million), will start a second hedge fund to ride through the financial crisis as it seeks to more than double funds under management.
Melbourne-based Bennelong wants to boost the assets it oversees to A$1 billion in the next three years, Jarrod Brown, chief executive officer, said yesterday in an interview in Sydney. Bennelong teamed up with Security Global Investors LLC to offer a long-short global equities fund in coming weeks to follow a long-only global fund the two began this month, he said.
SGI will manage the global funds under the Bennelong SGI name to gain access to Australia’s A$1.2 trillion dollar pool of managed funds after the $1.36 trillion hedge fund-industry shrank by more than 20 percent last year, and averaged losses of about 19 percent, the worst year on record.
New York – Trident Trust is expanding its fund administration service to the U.S. to cater to domestic hedge and private equity funds.
The new U.S. office offers clients access to Trident Trust’s three decades of experience providing independent corporate, trust and fund services to the financial services sector worldwide. Trident Trust currently provides services to more than 320 offshore funds with combined assets under management of more than $25 billion.
The new office is headed by Brian Visel, whose auditing and fund administration experience includes working for a leading international accounting firm and heading a global funds administration team servicing clients from start-up to large, diversified hedge funds.
Employing Geneva® and Advent Partner® as its core fund accounting platform Trident Fund Services, Inc offers U.S. funds a comprehensive, independent, administration service which includes complete fund accounting, net asset valuation, investor reporting and anti-money laundering compliance.
With the increased regulatory and investor demand for independently administered funds, Trident Trust’s new office is well-placed to provide both existing and new domestic funds an effective administration solution to their needs based on Trident Trust’s unique pricing model.
For more information contact:
Eileen Casey Trident Trust Fund Services NYC Representative Office 545 Fifth Avenue, Suite 402 New York, NY 10017 Tel +1-212-840-8280 Fax +1-212-944-5923 ecasey@tridenttrust.com
The funds of hedge funds industry shrank by nearly 30% in 2008. Volatile markets, zero liquidity, and year-end average returns of -16.63% led to the asset outflows for the global funds of funds industry, according to the latest survey of the InvestHedge Billion Dollar Club.
The largest funds of funds – those with more than $1 billion in assets under management – now control a combined amount of $744 billion in assets, according to the 2008 asset flow survey carried out by InvestHedge, the leading publication about investors in hedge funds.
“The industry has taken a serious beating but it is not an industry that is on the brink of extinction. The multi-manager approach and professional selection of hedge funds is still very much essential for the creation of a healthy hedge fund portfolio,” says Niki Natarajan, editor of InvestHedge. “What has happened is that the barriers to entry have finally gone up and only those that are serious representatives of the funds of funds industry will win the institutional money.”
“This clear-out was necessary as there were too many sloppy practices in the industry. Everyone, large or small, good or bad, will be going back to the drawing board to make sure that their business can stand the highest level of scrutiny.”
There are now 137 funds of hedge fund management companies in the InvestHedge Billion Dollar Club and if the assets of the smaller 420 or so funds of funds management companies are also included, this universe still manages roughly half the assets of the hedge fund industry (which currently measures about $1.8 trillion in all according to the latest HedgeFund Intelligence data). Some 27 groups fell out of the rankings after shutting their businesses or the assets falling below the $1 billion level.
UBS Global Asset Management A&Q with total assets of $34 billion regained the top slot in the rankings having lost in the mid-year survey to Union Bancaire Privée, which now has $33 billion in total assets. If the assets of UBS Wealth Management USA are added in, UBS has a total of $36.8 billion, making the largest hedge fund of fund management group in the world.
Man Group, which includes RMF Investment Management, Glenwood Capital Investments and Man Global Strategies, now has a total of $26.6 billion, taking its global position as a group to 4th in the rankings after HSBC, which has $31.9 billion.
Top 10 largest Funds of Funds
31 December 2008
Assets $bn
UBS Global Asset Management A&Q 34.00
Union Bancaire Privée 33.00
HSBC Alternative Investments 31.88
Permal Investment Management 24.40
Blackstone Alternative Asset Management 23.65
Goldman Sachs Asset Management 23.50
Credit Suisse 21.90
Grosvenor Capital Management 20.50
RMF 19.30
GAM Multi-Manager 18.40
Total
250.53
Source: InvestHedge
About HedgeFund Intelligence and InvestHedge
HedgeFund Intelligence is the biggest provider of hedge fund news and data in the world, with the largest and most knowledgeable editorial and research teams of any hedge fund information provider. We supply data on more than 11,000 funds and comprehensive news and insight from across the globe. Through four regional brands – Absolute Return, EuroHedge, AsiaHedge, AfricaHedge – and InvestHedge, which focuses on investors in hedge funds – we provide news and data to the global hedge fund industry.
Bloomberg – Och-Ziff Capital Management Group LLC, the New York-based hedge-fund manager that went public last year, eliminated at least 10 jobs in Asia, including partner Raaj Shah, said two people familiar with the matter.
The cuts made last week, out of a global workforce of about 460, included employees in the firm’s credit and distressed- investment units, said the people, who asked not to be identified because the information wasn’t publicly announced.
“We have made some minor reductions in Asia, and we remain committed to the region,” the company said today in an e-mailed statement. Hong Kong-based Shah referred calls to the company.
Citadel Investment Group LLC, the Chicago-based firm run by Kenneth Griffin, and New York-based Ramius LLC have also laid off staff in Asia as hedge funds suffer their biggest annual loss and highest investor withdrawals since at least 1990. The HFRX Global Hedge Fund Index declined 23 percent this year through Dec. 5 amid a global credit squeeze and a more than 40 percent decline in the MSCI World Index.
West Palm Beach (HedgeCo.net) – The Central Bank of Bahrain will be participating in the Hedge Funds Review, Middle East Summit in Bahrain on November 11-12, 2008.
"As the funds industry continues to gather pace in the global arena, the CBB is determined to maintain its regulatory precedence in setting up the necessary initiatives to enable this development," said Abdul Rahman Al Baker, executive director, Financial Institutions Supervision, at the CBB who will be presenting an overview of the Hedge Funds Market and regulation in Bahrain on the first day of the event.
The two-day summit organised by Incisive Media will be addressed by Shaikh Ahmed bin Mohammed Al Khalifa, Minister of Finance and Tarek Sakka, CEO of Ajeej Capital.
This will be the second time the event will be held in Bahrain. More than 250 major investors from across the region are likely to attend the summit, along side leading fund managers from Mena, Europe and the US discussing innovative alternative investment strategies.
The sessions will highlight opinions from expert investment managers, and views from academics on the global credit crisis.
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Metro Canada – A company that will play a key role in the Vancouver 2010 Olympic Games ended rampant speculation about its financial well-being Thursday by completing a deal to refinance a $1.7-billion loan – just hours before deadline.
Intrawest ULC owns and operates major tourism venues across the country but is best known for its Whistler-Blackcomb ski resort, one of the main venues for the Winter Games.
The destination-resort company received unanimous support from its existing lender group Thursday to refinance.
Intrawest CEO Bill Jensen said he’s pleased to have reached an agreement with Fortress Investment Group LLC (NYSE:FIG), "particularly given the challenges of the global credit markets."
"The support Fortress and our lenders have shown underscores their confidence in Intrawest and will enable us to continue to execute our long-term strategic plans," Jensen said in a statement.
Los Angeles Times – Traders and investment bankers might have more to worry about than dwindling bonus pools this year as mass firings on Wall Street are set to hit a record.
The fallout from this year’s global credit crisis has claimed jobs throughout Wall Street, from hedge fund managers to floor traders and beyond. More than 110,000 people have lost their jobs so far this year, and some industry experts forecast it could come close to 200,000 before the year is over.
Even the financial industry’s biggest name isn’t immune. Goldman Sachs Group Inc., the world’s biggest investment bank, made plans Thursday to cut 3,200 positions from its staff of 32,000. Barclays Capital is in the midst of purging 3,000 jobs as part of its takeover of Lehman Bros., and Bank of America Corp.’s acquisition of Merrill Lynch & Co. is sure to add thousands more.
Bloomberg – Nippon Life Insurance Co., Japan’s biggest life insurer, said it will boost hedge fund investments and may target distressed assets to take advantage of volatility caused by the collapse of the U.S. subprime mortgage market.
Nippon Life, with about 100 billion yen ($920 million) in hedge funds, increased its allocation to this asset class by about 30 billion yen during the past two years in a trend it intends to continue, Hideya Sadanaga, deputy general manager of the firm’s Credit & Alternative Investment Department, said in an interview in Tokyo.
The global credit crisis that’s caused more than $500 billion of losses and writedowns at financial firms has increased volatility in debt markets and led to a 20 percent decline in the value of the 1,737 companies on the MSCI World Index this year.
“There will be investment opportunities in the credit and distressed asset class eventually, given this market environment,” said Hiroshi Aikawa, head of alternative investment at office at Nippon Life’s Nissay Asset Management Corp., in the same interview on Sept. 5. “Investments that profit from trading volatility also look attractive.”
West Palm Beach (HedgeCo.net) – Conservatively positioned given the high level of stress that existed on the global financial system, the 3 Pharos Russia Funds’ current strategy uses alpha generation which comes from a combination of stock selection and active use of hedging tools available in the marketplace.
The three funds are showing the most resilience among funds in the Russia & CIS universe year-to-date. However, during the month of August, the Pharos Russia Fund was down 7.8%, the Pharos Small Cap Fund was down 8.8% and the Pharos Gas Investment Fund was down 2.3%. Meanwhile the MSCI Russia Index was down 14.7% over the same period.
August saw a continuation in the decline in markets globally, with Russian markets succumbing to the sell-off in global credit markets, continued pressure on commodities and dollar strength.
The Russian authorities have shown a willingness to intervene to protect against domestic dislocations caused by distressed selling. The Russian state has announced a liquidity package of more than $150bn.
It has increased its deposits held at the largest banks and offered them repo lending that references inflated asset valuations. The state-owned Vneshekenom Bank will also provide up to $50bn to Russian companies and banks to help redeem the $65bn of external debt coming due through 1Q’09. Meanwhile the interbank lending market is being supported by a government guarantee against defaults.
"Given the relative size of the economy," Pharos says, "Russia is better positioned than most to withstand a downturn in credit markets with its $581bn of reserves and over $200bn Stabilization Fund."
"Valuations are compelling and we expect to take advantage of these opportunities. We look for catalysts to the market to guide our entry points, such as stability in the industrial commodities markets, a reversal in measures of global risk aversion and global monetary easing."
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West Palm Beach (HedgeCo.net) – Lehman Brothers, Wall Street’s fourth biggest investment bank has filed for bankruptcy, making it the largest and highest-profile casualty of the global credit crisis, with approximately $639 billion in assets.
The bank said the Chapter 11 filing will not include its broker-dealer operations and other units, including Neuberger Berman. Lehman is looking at selling its broker-dealer operations, and is still in advanced discussions with a number of potential buyers of its investment management division.
Investors in recent weeks had grown increasingly jittery about Lehman’s $46 billion of mortgages and asset-backed securities, as well as its credit rating and its ability to raise capital.
Bankruptcy also represents a bad end to Chief Executive Dick Fuld’s four-decade career at Lehman. Fuld, who piloted the investment bank through prior crises with aplomb, was widely seen as too slow to recognize Lehman’s need to raise capital and shed bad assets.
Lehman listed its biggest unsecured creditors as Citigroup Inc, Bank of New York Mellon Corp, Aozora Bank, and Mizuho Financial Group Inc. Citi and Bank of New York Mellon are trustees for Lehman bonds.
The firm said that as of May 31, it owed about $110.5 billion on account of senior unsecured notes, about $12.6 billion on account of subordinated unsecured notes and about $5 billion on account of junior subordinated notes.
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Bloomberg.com: Asia – Nippon Life Insurance Co., Japan’s biggest life insurer, said it will boost hedge fund investments and may target distressed assets to take advantage of volatility caused by the collapse of the U.S. subprime mortgage market.
Nippon Life, with about 100 billion yen ($920 million) in hedge funds, increased its allocation to this asset class by about 30 billion yen during the past two years in a trend it intends to continue, Hideya Sadanaga, deputy general manager of the firm’s Credit & Alternative Investment Department, said in an interview in Tokyo.
The global credit crisis that’s caused more than $500 billion of losses and writedowns at financial firms has increased volatility in debt markets and led to a 20 percent decline in the value of the 1,737 companies on the MSCI World Index this year.
HedgeFund.Net – According to Joseph Biden, the hedge fund industry and private equity deserve the blame for the global credit crisis.
The Delaware senator and running mate of Democratic presidential nominee Barack Obama made that assertion in a primary debate last year when he was himself running for president. Obama, a senator from Illinois, is running for president against Arizona Sen. John McCain.
During that debate Biden, named vice president on the Obama ticket over the weekend, characterized the hedge fund industry and private equity as “no transparency, no accountability.”
The alternative space was “causing this thing to go under,” he said in the debate.
