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.
Forbes – Long-only hedge fund strategies posted the best returns of the asset class in July as global stock markets continued their upward trend, according to data in a report published by Lipper Global on Tuesday.
As the industry looks to repair itself following last year’s heavy losses and record redemptions, these new figures will give more ammunition to market watchers who claim that the industry is on the road to recovery.
New York Times – In mid-March, with the global stock markets plunging, Philippe Jabre, a hedge fund manager based in Geneva, started buying bombed out financial stocks in the United States, Europe and Asia.
A procession of sleepless nights followed as he wondered whether his bets would pan out, or send his nascent $2.5 billion fund outfit reeling.
Now, with his main fund up 30 percent this year, rest comes a little more easily.
Bloomberg – Daniel Och had about 35 percent of his $20 billion of hedge-fund assets in cash during the first quarter because he suspects global stock markets will start falling again.
“The world will not just bounce back to where it was,” Och, the 48-year-old chief executive officer of New York-based Och-Ziff Capital Management Group LLC, wrote last month in a letter to investors, referring to the gain of almost 35 percent in the Standard & Poor’s 500 Index since March 9. “We continue to believe that economic recovery will be a long process.”
OZ Master, Och-Ziff’s biggest hedge fund, rose 6.3 percent this year through April after losing 15.5 percent last year. The S&P 500 fell 3.4 percent in the first four months of 2009 after dropping 38 percent in 2008.
Bloomberg – Tozai Investment Advisory Ltd., a Tokyo-based hedge fund adviser, is closing its business after market losses and investor redemptions cut its funds’ assets to zero from a peak of $70 million, a senior partner said.
The Cayman Island-based Trident Pacific Japan Absolute Return Fund, which Tozai advises, was closed last month, Angus McKinnon, senior partner at Tozai said in an interview in Tokyo yesterday. The fund, launched in December 2004, invested in Japanese equities using a so-called long-short strategy that bets on rising and falling stock prices, McKinnon said.
Global hedge funds are bracing for the worst year on record as more than 80 firms liquidated hedge funds, segregated assets or limited withdrawals following the MSCI World Index’s 44 percent drop this year and tightening credit conditions. Citadel Investment Group LLC, the hedge-fund manager founded by Kenneth Griffin, said yesterday it will close its Tokyo office, eliminating 12 jobs.
Bloomberg – Citadel Investment Group LLC, the hedge fund manager founded by Kenneth Griffin, will close down its Tokyo office and Asian principal investments operations, cutting more than half of jobs in the region.
Citadel will run its remaining Asian operations from Hong Kong in the future after shutting the regional principal team that invests in companies undergoing or about to go through mergers and acquisitions, spinoffs, asset sales or legal challenges. Katie Spring, a spokeswoman in Citadel’s Chicago head office, confirmed the decision today.
Hedge funds globally are cutting jobs, limiting withdrawals and liquidating funds as a credit crunch and a 46 percent drop in the MSCI World Index in 2008 put them on course for the worst year on record. Hedge funds have lost 18 percent this year, according to Chicago-based Hedge Fund Research Inc.
Bloomberg – The global hedge fund industry lost $100 billion of assets in October, according to an estimate from Eurekahedge Pte, as firms including Sparx Group Co. and Man Group Plc were hammered by investor redemptions.
Funds fell an average 3.3 percent, based on preliminary figures from the Singapore-based data provider, as measured by the Eurekahedge Hedge Fund Index, which tracks the performance of more than 2,000 funds that invest globally. That compares with a 19 percent slide in the MSCI World Index last month.
The biggest market losses since the Great Depression and investor withdrawals hurt the $1.7 trillion hedge funds industry that manages largely unregulated pools of capital. The index of global funds has lost 11 percent this year, set for the worst performance since 2000 when Eurekahedge began tracking the data.
Reuters UK – Recent sharp moves in global currencies are the start of longer trends set to produce strong money-making opportunities for trend-following hedge strategies, according to Insch Capital Chief Executive Chris Cruden.
Cruden, whose Insch Interbank Currency Program is up 7.96 percent over the year to end-September before fees compared with a 27.6 percent fall in the MSCI World index, points to the rise of the Australian dollar versus the U.S. dollar between 2001 and 2008 as an example of previous long-term currency moves.
"I imagine the nature of the shakeout will produce sustained moves lasting many months if not years," said Cruden, a former director of Adam, Harding and Lueck Asset Management AHL.L, now the flagship hedge strategy of Man Group.
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.”
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.
Bloomberg – Eurasia Capital Management plans to increase the world’s first Mongolia-focused fund fivefold to $100 million to tap economic growth fueled by the nation’s mining industry.
Eurasia’s hedge funds, which have about $200 million of investments across Central Asia, also expect to sell shares on London’s Alternative Investment Market or Deutsche Boerse AG by next June, said Alisher Djumanov, managing partner of the Singapore-based firm. Proceeds would be used to start private- equity and property funds, and expand in Central Asia, he said.
Mining in Mongolia, which has reserves of coal, copper, gold and uranium, will spur "double-digit” economic growth rates over the next 10 years as commodity prices remain high, Djumanov said in an interview. Mining accounted for about two- thirds of Mongolia’s exports last year, and foreign direct investment in the country rose more than 33 percent.
"The spillover effect from the mining sector will be significant,” Djumanov, 35, said. "We’re investing in companies that are expected to grow significantly on the back of this strong economic growth.”
Eurasia’s Mongolia Discovery Fund rose 12 percent this year, compared with the 16 percent drop in the MSCI World Index. The fund invests in coal mines, water utility as well as oil and gas companies, Djumanov said.
Hedge Funds Review Magazine – Hedge funds generally are more correlated in bull market runs and more de-correlation at market downturns. A comparison of the Credit Suisse/Tremont Broad Benchmark Index (HEDG), an asset-weighted broad benchmark of the hedge fund industry, to the MSCI World Index, a broad equity index, shows that the 12-month rolling correlation between the two has dropped from its peak of 0.97 in June 2006 to 0.61 in June 2008. The findings are given in a research report* by Credit Suisse Index. The report showed that during times of market stress sharp declines from HEDG’s previous peak levels of positive correlation with MSCI World demonstrated the ability to de-correlate from broad equity market indices.
Between July 2007 and June 2008, HEDG increased by 4.09% compared with a fall of 12.5% in the MSCI World Index and a decrease of 13% in the S&P 500.
The ability of hedge funds to maintain exposure to a range of asset classes allows them to preserve capital in down markets and, if successful, offer a more balanced investment option compared to traditional equity indices. In addition, the ability of hedge funds to monetise negative views through short selling is clearly effective during market downturns.
West Palm Beach (HedgeCo.net) - Hedge funds generally are more correlated in bull market runs and more de-correlation at market downturns.
A comparison of the Credit Suisse/Tremont Broad Benchmark Index (HEDG), an asset-weighted broad benchmark of the hedge fund industry, to the MSCI World Index, a broad equity index, shows that the 12-month rolling correlation between the two has dropped from its peak of 0.97 in June 2006 to 0.61 in June 2008. The findings are given in a research report by Credit Suisse Index.
The report showed that during times of market stress sharp declines from HEDG’s previous peak levels of positive correlation with MSCI World demonstrated the ability to de-correlate from broad equity market indices.
Between July 2007 and June 2008, HEDG increased by 4.09% compared with a fall of 12.5% in the MSCI World Index and a decrease of 13% in the S&P 500.
The ability of hedge funds to maintain exposure to a range of asset classes allows them to preserve capital in down markets and, if successful, offer a more balanced investment option compared to traditional equity indices. In addition, the ability of hedge funds to monetise negative views through short selling is clearly effective during market downturns.
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