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Reuters - Traditional long-only mutual funds are set to dominate shareholder registers again as the hedge fund industry shrinks and retail investors continue to stay away, according to Morgan Stanley.
Meanwhile, with institutions, including hedge funds, deleveraging aggressively, emerging markets equity issuance is set to fall to 10 percent of total volume in Europe, Middle East and Africa in 2009 from one quarter this year, the bank told the Reuters Global Finance Summit.
"Traditional classic long-only funds, which used to be the main part of shareholder registrar in the 1990s, will become more important," said Emmanuel Gueroult, head of EMEA equity capital markets.
"The hedge fund industry is deleveraging…Access to credit is difficult."
Financial Times - Hedge funds charging hefty fees for sophisticated trading strategies aimed at outperforming the wider market have collectively parked $100bn in simple money market funds typically used by investors seeking safe rather than spectacular returns.
Citigroup estimates that hedge funds have now placed $600bn in cash, and that $100bn of this is held in money market funds, normally seen as some of the safest places to invest cash.
However, last week, those money funds became embroiled in the wider financial crisis to the point that the US Treasury was forced to offer a blanket guarantee on them as part of its attempts to prevent the spillover of the financial crisis into the $3,400bn sector.
The extreme measures taken by the Treasury followed mounting fears that retail investors in the sector could be starting to panic and might withdraw funds on a large scale.
Reuters UK - Fund firm BlackRock held onto the top spot for net sales of British funds to retail investors in the second quarter, according to industry data, helped by sales of its hedge fund-style UK Absolute Alpha fund.
BlackRock had 879.2 million pounds of net sales, up from 713.6 million pounds in the first quarter, according to Lipper Feri’s Fund Sales Report.
The report comes as the funds industry faces lower sales due to volatile and falling markets and investor caution. According to the Investment Management Association, net retail sales were 139.5 million pounds in June, down from 747.8 million pounds a year before.
FierceFinance- Hedge fund regulation is a hot topic right now. But we’ve heard only a little about that perennial issue: whether retail investors should be allowed more–or less–access to funds. Current proposals, driven by the credit crunch, would make it harder to qualify as an accredited investor. AllAboutAlpha suggests that current proposals would result in a drop in the pool of retail assets by about 50 percent.
Perhaps this is not a bad time to revisit the idea. The age-old thought has been that most retail investors generally lack the sophistication necessary to really invest safely in hedge funds. But AllAboutAlpha notes a recent article by Houman Shadab of George Mason University that argues retail investors are actually hurt by restrictions on investing in hedge funds. He makes a number of good points, one of which is the idea that most hedge funds are not as complex as publicly traded corporations. In some cases, understanding various financial and other companies requires a certain amount of knowledge.
Reuters UK- Friends Provident will offer a precious metals fund to retail investors looking for protection against inflation and financial market turmoil, the company said on Monday.
The fund, managed by U.S.-based Castlestone Management, only holds physical gold, silver and platinum. Half of the fund, the Aliquot Precious Metals fund, is invested in gold, 30 percent in platinum and the remaining 20 percent in silver.
"Precious metals continue to offer investors the best safeguard and insurance against the real risks of inflation and the increasing geopolitical and financial risks existing today," said Angus Murray, founder of Castlestone Management.
Financial Standard- DWS Investments could well be one of the pioneers of a new era in hedge funds when it launched a new product that offers daily liquidity and pricing to retail investors.
DWS Investments, Deutsche Bank’s global retail asset management arm, last week launched the DWS Strategic Value Fund (Enhanced Liquidity) - a product designed to give exposure to an actively managed, multi-strategy, fund-of-hedge funds.
According to Jody Fitzgerald, investment specialist at DWS Investments, the underlying DWS Strategic Value Fund will face no changes to its operations or strategy as a direct result of the heightened liquidity.
“The liquidity is being synthetically organised outside the fund. The Strategic Value Fund is the underlying product, and sitting outside the fund are investment certificates issued by Deutsche Bank. These certificates are the ones that will provide the liquidity," said Fitzgerald.
London Stock Exchange- Allianz Global Investors is mulling the launch of a listed hedge of hedge funds to be aimed at retail investors.
The launch of the multi-strategy Peletier Absolute fund would mark the first time that small investors have been permitted access to a European hedge fund manager.
Once operational the fund is targeting a return comparable to Allianz’ KGH Licorne fund and will target investments in between 40 and 50 hedge funds.