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Bloomberg – Blackstone Group LP, the world’s biggest buyout company, canceled a plan to start a hedge fund that initially aimed to invest as much as $1 billion in Asian companies affected by events such as mergers and reorganizations.
Blackstone decided not to proceed with the Asian event- driven fund “after a review of the market environment and our strategic priorities globally,” New York-based Blackstone spokesman Peter Rose said in an e-mail. The fund was to be managed by Blackstone A.M.N. Advisors.
Most of about 17 A.M.N. team members, including Chief Investment Officer Aaron Nieman, left after the March decision, said four people familiar with the matter, declining to be identified because the information isn’t public. The rest have been transferred to other Blackstone departments, they said. Rose declined to comment on specific personnel.
West Palm Beach (HedgeCo.net) – Hedge fund assets under administration (AuA) have grown to $91 billion as of 31 March 2009 from $88 billion at 31 December 2008, according to hedge fund tech. and analytics procider GlobeOp Financial Services S.A.
"I am encouraged by the level of fund inflows during the first quarter of 2009." Hans Hufschmid, chief executive officer, said, "New clients with AuA of nearly $12 billion, along with new funds from existing clients of $5 billion and subscription inflows of $3 billion, offset first quarter redemptions and terminations, which we knew would be substantial, as referenced in our 2008 preliminary results announcement."
"In addition," Hufschmid continued, "client fund performance generated over $1 billion, a positive sign that hedge fund managers may have begun adapting to the changing market environment."
GlobeOp noted a sustained investor demand for greater transparency, independent portfolio verification and control of capital. Fund managers are looking for operational solutions to meet these requirements and to improve their own operational cost structures that are challenged by redemptions and lower fees.
"Funds will remain under pressure from redemptions by investors and raising new capital will continue to be challenging. Thus, while GlobeOp’s current pipeline for new business is promising, we remain focused on prudent cost management and productivity improvements."
With headquarters are in London, New York, Dublin, Ireland; George Town, Cayman Islands; Harrison and Yorktown Heights, NY and Hartford, CT, U.S.A.; and Mumbai (Bombay), India, GlobeOp serves more than 180 clients worldwide, representing $91 billion in assets under administration (AuA).
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West Palm Beach (HedgeCo.net) – Credit Suisse announced the launch of a new Global Macro Replication Index which aims to capture the risk/return characteristics of the Credit Suisse/Tremont Global Macro Hedge Fund Index.
The new index enables investors to gain liquid, transparent insight into the global macro hedge fund sector.
"Due to a frequent lack of transparency, hedge fund investors found themselves exposed to numerous unforeseen risks in 2008, and problems were only exacerbated when liquidity dried up just as investors needed it most. Yet despite the drawbacks, hedge fund returns remain positive relative to equities and hedge funds continue to serve as an effective portfolio diversifier. Many investors have been left seeking liquid, transparent and cost effective solutions for gaining access to the asset class," Credit Suisse delcared.
Dr. Jordan Drachman, Head of Research for Credit Suisse Alternative Beta Strategies, said, “In the wake of current investor sentiment, replication strategies are gaining in popularity for their ability to provide similar risk/return characteristics to a well diversified portfolio of hedge funds, while avoiding certain drawbacks of hedge fund investing such as illiquidity, lack of transparency and headline risk.” Drachman added, “We are currently seeing increased interest in the Global Macro sector, as the strategy has a history of producing positive performance during market downturns and has been the top performing hedge fund sector since the inception of the Credit Suisse/Tremont Hedge Fund Index in 1994.”
The Global Macro Replication Index joins the existing Long/Short Equity Replication Index to become the second in a suite of Alternative Index Replication (AIR) products. Together, the indices offer insight to two of the largest and most popular hedge fund sectors in the current market environment.
Professor Bill Fung, a key research advisor to Credit Suisse’s alternative beta efforts, stated “In developing a replication index, it is imperative that researchers understand the in-depth intricacies of hedge fund sectors and individual manager performance.” Fung went on to say, “The team has access to superior data through the Credit Suisse/Tremont Hedge Fund Index. Together with regular contact with hedge fund managers, this combination provides practical insight into the behavior of hedge fund strategies and adds a level of fundamental analysis to the quantitative construction of the Index. This is particularly important in the Global Macro space which is dominated by managers that engage in dynamic strategies in an ever changing market environment; and these managers have done so successfully during very challenging times historically as well as more recently.”
Index values are finalized daily and quoted on Bloomberg under the symbol AIRI. Performance, descriptions, statistics and downloadable price history can be found on the newly launched Credit Suisse Alternative Beta website,www.credit-suisse.com/alternativebeta.
Credit Suisse has helped pioneer the measurement of alternative beta for more than a decade. By bringing together indexing expertise, an academic partnership with key research advisors and extensive global resources, Credit Suisse continues to lead the industry in developing alternative index replication products.
Reuters – In a period when volatile markets battered most hedge funds, global macro funds are proving their worth, Graham Capital Chairman Kenneth Tropin told Reuters.
During one of the hedge fund industry’s worst years, Graham delivered gains of up to 41 percent in 2008 by making good bets on currencies, stocks, interest rates and commodities. And because the firm invests in highly liquid futures, clients had monthly access to cash even as many funds blocked withdrawals.
The combination of liquidity and returns that are independent of the broader market could revive interest in global macro funds, Tropin said.
"For a long time there was a perception that the biggest returns, the best risk-adjusted returns, were in other strategies. Then we had a market environment last year where most hedge fund styles ended up being correlated to each other and to the equity markets as well," he said.
Graham manages $4.9 billion in assets in human-directed funds and computer-driven quantitative funds. Funds in both categories invest across fixed income, currency, commodity and equity futures.
"Our style of investing offers some benefits, including liquidity and diversification, that may have not been appreciated as much as they should be," he said.
Graham’s quant funds gained from 20 percent to 41 percent last year, while human-directed funds rose by 6 to 27 percent. By comparison, the average hedge fund lost 28 percent.
Forbes – Bank of East Asia, Hong Kong’s fifth-largest lender, posted a bigger-than-expected second-half loss and slashed its dividend, after selling a debt portfolio at a steep loss.
The bank (BEA), which reported its first half-year loss since the 1960s, warned of a tough market environment this year but said on Tuesday it had no strong need to raise capital in the near term.
‘BEA may not need to raise capital immediately but the market will remain bearish on the stock as loan growth drops and mortgage demand slows down,’ said Castor Pang, a strategist with Sun Hung Kai Financial.
