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 – Former Prime Minister Tony Blair is to give a series of talks to bosses at Lansdowne Partners, said a source close to the secretive hedge fund that made millions from the credit crisis.
Blair, whose “light-touch” model of regulation of the financial industry was later criticised for helping cause the credit crunch, will give a small number of talks on geopolitics to executives of the firm, the source said.
New York (HedgeCo.net) – A newly released survey of 176 leading investment managers, private banks and hedge funds by McLagan, a compensation consulting, productivity and performance benchmarking firm, showed that broker performance has risen in many areas this year, particularly in US and Asian markets and for OTC Derivatives.
When asked to rank the leading brokers on their 2009 Operational Performance and Client Service offerings across Equities, Fixed Income and OTC Derivatives, the managers rated as follows:
In the US:
Liquidnet – Best 2009 Broker for Equities Operations
Morgan Stanley – Best 2009 Broker for Fixed Income Operations
Deutsche Bank – Most Improved Broker
In Europe:
UBS – Best 2009 Broker for Equities Operations
UBS – Best 2009 Broker for Fixed Income Operations
Deutsche Bank – Most Improved Broker
In Asia:
UBS – Best 2009 Broker for Equities Operations
UBS – Best 2009 Broker for Fixed Income Operations
Morgan Stanley – Most Improved Broker
For Global OTC Derivatives:
Goldman Sachs – Best 2009 Broker for Core Processing
Deutsche Bank – Best 2009 Broker for Client Management
Morgan Stanley – Most Improved Broker
“The goal of UBS Operations is to be the leading client-focused global service provider.” Simon Haggerty, Global Client Service Head at UBS said, “With 176 clients rating 15 brokers across a range of products & measures, the report provides a comprehensive and credible viewpoint on our performance. One of the most accurate and independent methods by which we can measure our progress is for us to sponsor, support and analyse the feedback obtained from this annual survey.”
“In particular, UBS has leveraged this feedback to help develop our 2010 client objectives – that of delivering post trade service excellence. The feedback and rankings are taken seriously both within Operations, and also by our trading & sales partners.”
“Providing superior services and support for our Members is why we’ve been voted number one for overall performance in US Equities Operations for the second year in a row, and we very much appreciate this recognition,” said Seth Merrin, Founder and CEO of Liquidnet. “We continuously strive to deliver the best value and experience for our Members throughout the entire trading process.”
A key factor of the survey results this year was the increase in usage of technology by the buy-side, particularly implementation of OMGEO CTM for both Equities and Fixed Income. This has contributed to the rise in Straight Through Processing (STP) particularly in Electronic Trade Matching which in turn has reduced fails and re-work in the back-office.
Carsten Eckhardt, Managing Director, Global Business Services at Deutsche Bank added, “Deutsche Bank has made a commitment to improving its operational processes in order to provide exceptional service to its clients. The McLagan Z/Yen survey is key in enabling us to assess the extent to which we have achieved these goals and in highlighting areas of focus for further improvement.”
Registered Rep – Like hard-pressed retailers, investment managers have lately taken to lowering prices. Mutual funds and ETFs have cut expense ratios. Even exclusive hedge funds have reduced the fees they charge clients. Some of the fee cuts may be temporary measures aimed at attracting sales during the recession. But the trend toward lower expenses seems likely to continue. At a time when the Internet is making it easier to compare prices, investors are searching for bargains whenever they shop.
Of course, not all fund managers are cutting costs, which is widening the gap between what is low-cost and what is expensive. And that makes it increasingly important to shop hard for the cheapest funds.
Business Week – BlackRock Inc., the world’s biggest money manager, said fourth-quarter net income rose almost five- fold as the purchase of Barclays Global Investors lifted fee revenue and investors poured money into stock and bond funds.
Earnings rose to $256 million, or $1.62 a share, from $52 million, or 39 cents a share, a year earlier, the New York-based company said today in a statement. The purchase of BGI added $94 million to fourth-quarter net income, which was offset by $108 million in after-tax costs from the acquisition.
Telegraph – Bill Browder knows exactly the “darkest day” of his life. It was Tuesday November 17, the day he found out that his colleague Sergei Magnitsky, a Russian lawyer, had died in a squalid Moscow prison awaiting trial. Although the two had only met on a handful of occasions, Browder says the news “was like a knife through the heart”.
Since his death, Magnitsky has become a martyr for anti-corruption crusaders in Russia. It’s a cause long-championed by Browder, founder of hedge fund Hermitage Capital Management and once the largest foreign portfolio investor in the country.
West Palm Beach (HedgeCo.net) Former Merrill Lynch banker Jun Mihara, 45, has announced plans to launch a fund to invest in Asian distressed debt. Mihara was hired by Zais Group LLC of Red Bank, NJ last month to serve as its chief investment officer to raise capital for the new venture.
Under his new role, he will oversee the raising of 50 to 100 yen ($1.1 billion) to purchase discounted Japanese real estate, distressed assets, and securities backed by commercial mortgages. In particular, the fund will look to accumulate AAA-rated debt backed by real estate, purchasing it primarily from Japanese Banks as they try to avoid refinancing risk stemming from falling property values.
Mihara, who left Merrill in July, was best known at his former firm for organizing asset-backed debt sales on behalf of several Japanese gaming outfits.
New York (HedgeCo.net) – “Hedge funds performed as advertised in October—they hedged,” said Nadia Papagiannis, Morningstar alternative investment strategist. “Though the economy may be recovering, hedge fund managers appear positioned for a reversal.”
However, hedge funds in the Morningstar Europe Equity hedge fund category had inflows of $847 million.
Hedge funds following arbitrage strategies and buying distressed securities have enjoyed a tremendous year, as they continue to profit from assets acquired at fire-sale prices in late 2008. Profits are starting to narrow, however, as the discounts on assets are diminishing.
Certain emerging market countries, such as China and Russia, posted significant gains, the performance of emerging market hedge funds depended on country allocation. In developed markets, European and Asian equity markets declined less than the U.S. equity market, but this did not carry over to hedge funds.
Hedge funds that make make macro-economic bets in equities, fixed-income, currencies, and commodities benefited from the appreciation of gold, which reached record highs in October, moves in the Australian dollar versus the U.S. dollar, and price trends in global government bonds. Price-trend-following funds were hit by a reversal in the trends in equity and currency markets in late October, though, resulting in overall losses.
Meanwhile, Eurekahedge reported global hedge fund inflows totaling $10.2 billion for October, while performance-based losses were $2.4 billion. Total hedge fund assets under management (AUM) have increased by $7.8 billion in October, bringing hedge fund AUM to a total of $1.45 trillion.
MarketWatch – Phibro LLC, which became embroiled in controversy over star trader Andrew Hall’s compensation, is reaching out to hedge fund investors as Citigroup Inc. relinquishes its grip on the profitable energy-trading firm, two people familiar with the situation said Wednesday.
Phibro began offering its commodities-trading fund to hedge fund investors this month through Park Hill Group, the people said on condition of anonymity. The fund is run by a team led by Hall, they added.
WSJ – Hedge-fund titan Kenneth Griffin lost $8 billion of his clients’ money last year. Now, he is trying to persuade investors to trust him with more.
“We showed a level of human fallibility,” he told his staff at a late-September lunch in Manhattan.
The price of fallibility: a 55% loss in the big hedge funds at his firm, Citadel Investment Group. His funds’ declines far outstripped the 19%, on average, that hedge funds lost as a whole, according to Hedge Fund Research Inc. For the past year, Citadel prevented investors from withdrawing money they wanted to take out from his two main funds, Kensington and Wellington.
Bloomberg – Nomos Capital Partners Ltd. founder Mark Lowe said he didn’t take escorts on business trips and didn’t hire a hit-man to kill a former employee who is suing him for sexual discrimination.
Lowe testified yesterday that he “took exception” to the claims by Jordan Wimmer, who is suing the hedge-fund boss for 4 million pounds ($6.7 million). Lowe told a London employment tribunal that he took girlfriends on trips, not escorts. He admitted to calling Wimmer a “dumb blonde” in front of colleagues, and said he stopped after she complained. Lowe later sent a joke to his staff about a blonde woman who couldn’t tell the difference between corn flakes and a jigsaw puzzle.
New York (HedgeCo.net) – The fund which the U.S. House Financial Services Committee is setting up to dismantle large insolvent financial institutions will be limited to $200 billion, MarketWatch reported earlier today.
“The cap we have is $200 billion,” House Financial Services Committee Chairman Barney Frank said, referring to legislation which would collect funds from large financial institutions and hedge funds with $10 billion in capital or more.
The Chairman’s regulatory-overhaul package, in opposition to the Obama administration, which wants to collect fees after a company fails, is up for vote by the House this month. The fund would be used to make payments to creditors and counterparties of a large failing financial institution so that its collapse does not unsettle the financial markets.
The New York Times – The hedge fund industry has incurred a backlash by lobbying aggressively against proposed European Union rules and now faces possible pay curbs that were not envisaged in the original legislation.
Attacks by some London-based hedge funds and British politicians have had the effect of softening European Commission proposals to regulate alternative investment companies. But the lobbyists have misjudged the tide of public opinion. Read Complete Article
