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.
Guardian.co.uk – Sweden is trying to water down moves to toughen regulation of hedge funds and private equity firms before its EU presidency expires at the end of the year.
In new proposals the Swedes have suggested withdrawing a cap on the amount that hedge funds can borrow to make investments, an official from the country said.
“We would leave it up to the competent authorities to decide whether to impose the caps in each case,” said the official, who did not wish to be named.
Economic Times – US hedge fund Wexford Capital LP is looking to buy equity stakes in Indian hydroelectric power generation companies and has chalked out a plan to invest Rs 500 crore ($108+ million) in the country. The fund house will make investments through its wholly-owned subsidiary, Indus Renewable Energy India. At present, Indus Renewable Energy does not have any operations or any downstream investment.
A person familiar with Wexford’s expansion plans in India said Indus Renewable Energy has already sought approval from foreign investment promotion board(FIPB) to make investment.
Boston – The state pension fund climbed 2.6 percent in September to finish the month with a $41.5 billion balance, according to a preliminary staff assessment.
“I feel a lot better this year than I did a year ago. Last year, Lehman had gone bankrupt, we were on the eve of the worst thing I’ve seen in my life as far as investments go,” said Stan Mavromates, chief financial officer of the Pension Reserves Investment Trust, which funds benefits for state retirees, at a Tuesday meeting. “All arrows are pointing up. We didn’t emotionally react to anything.”
Bloomberg – Soros, the founder of hedge fund Soros Fund Management LLC, announced the investment in Copenhagen on Oct. 10 at a meeting on climate change sponsored by Project Syndicate. The group is an international association made up of 430 newspapers from 150 countries.
“I want to apply rather stringent criteria to the investments,” said Soros in an e-mailed message. “They should be profitable but should also actually make a contribution to solving the problem.”
Bloomberg – Asian hedge funds will attract a “wave” of new money that could more than double the industry’s assets from its peak of $250 billion as the region leads the world’s emergence from the deepest recession since World War II, according to GFIA Pte.
The industry in Asia will grow to two-to-three times its peak within the next five years as investors outside the region with little or no investments in Asian alternative strategies allocate to the funds, said Peter Douglas, principal of GFIA, a Singapore-based hedge-fund consulting firm. The industry has shrunk by about 30 percent from the peak reached in the first half of 2008 following client withdrawals, he said.
Tuscaloosa News – A committee of University of Alabama trustees voted to pull some investments from stocks, instead buying more stable U.S. and international bonds in an effort to avoid potential drops in the stock market.
International bonds will be bought as well as domestic to hedge against the deflating dollar, said Thomas Gale, investment officer for the system.
“In light of the fact that the stock market is no longer cheap, we are reducing our stock exposure slightly, thus reducing the volatility of the endowment fund,” Gale said after the meeting.
Bloomberg – Lloyd’s of London insurers pulled as much as half a billion pounds ($825 million) from hedge funds and private equity after investment returns at the world’s oldest insurance market fell by more than half.
Catlin Group Ltd.,Brit Insurance Holdings Plc, Chaucer Holdings Plc and Beazley Plc withdrew or have redemption requests on as much as 434 million pounds of investments including in hedge funds, according to regulatory filings.
“The premise we and the rest of the world looked at in terms of hedge funds was that they would provide an uncorrelated return to things like the equity markets,” Catlin’s Chief Operating Officer Paul Jardine said in a telephone interview. “That didn’t happen.”
Bloomberg – Harvard University, the wealthiest U.S. school, said its investments fell 27.3 percent in the past year, a $10.1 billion loss that was smaller than President Drew Faust’s forecast in December before markets started to recover.
The endowment declined to $26 billion from $36.9 billion in the year ended June 30, including the inflow of gifts from donors and $1.7 billion in distributions to the university, according to a report today by Harvard Management Co., which oversees the fund. Gains in non-U.S. fixed-income and emerging- markets securities helped trim a loss that Faust had said could reach about 30 percent.
Bankrate.com – Alternative assets are a good diversification tool because they’re generally not correlated to the stock market. This means when the market goes down, alternative assets may go up or stay the same and vice versa.
Large investors such as pension and endowment funds have been attracted to hedge funds because of their reputation for producing high returns. But it’s difficult to tell how successful hedge funds are because the historical data leaves much to be desired.
“They are self-reported. Indexes of hedge fund performance are biased by the fact that those that do poorly go out of business and those that do well stay in business,” says Walt Woerheide, Ph.D., CFP, vice president of academic affairs and professor of investments at The American College in Bryn Mawr, Penn. “And so when you look at the index over time, it’s really an index of those that have done well.”
Bloomberg – Akito Fund, a Japan-focused hedge fund set up by former UBS AG bankers, returned 14 percent since its July start, beating benchmarks on investments in smaller companies including Geo Corp. and Yellow Hat Ltd.
Koichiro Yamaguchi and Tetsuya Hamano, who formerly worked at UBS Securities Japan Ltd. and various hedge funds, in March set up Akito Capital Co., which advises the Cayman Island-based fund. The fund started on July 24 with initial capital of 1.4 billion yen ($15 million) and has maximum capacity of about 30 billion yen, according to Yamaguchi.
The Modesto Bee – The tantalizing climb in the stock market has made hedge fund and mutual fund managers increasingly courageous, but millions of investors with 401(k) accounts remain reluctant to trust what burned them.
That could hurt them, and the market as a whole.
Some individual investors clutched the money they had left after the market plunged more than 50 percent from October 2007 until March and stopped adding to stock funds. A recent study found about 6 percent stopped contributing to 401(k) plans altogether as they blamed workplace retirement savings plans, rather than the investments within the 401(k) plans, for losses.
Forbes – Hedge fund managers Lloyd Khaner, Stephen Roseman and Ken Shubin Stein discuss changes in the industry post-Bernie Madoff.
The next video will include a discussion between three hedge fund managers and Intelligent Investing assistant editor David Serchuk. In the wake of the Bernie Madoff scandal, hedge funds remain a charged topic among investors. Often considered secretive investments for the super wealthy, there is no doubt hedge funds wield enormous influence on our financial markets. Currently there are some $1.8 trillion in assets under management at hedge funds, as more and more investors scramble back in. But why should anyone invest in them? What value do they offer?
