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.
Charity Times – Putting it into perspective, at January 1 2008 there was $9.7trn of hedge funds assets invested, at the end of 2008 it was $3trn, a massive loss in capital.
This year, hedge funds gained 2.41 per cent in March, according to the Barclay Hedge Fund Index compiled by BarclayHedge. The index is now up 0.82 per cent in 2009. ”After an eight per cent sell-off in early March, the S&P 500 Index bounced back to gain 17 per cent from 9 March to 31 March, its largest three-week rally since 1987” says Sol Waksman, founder and president of BarclayHedge. Overall, 15 of Barclay’s 18 hedge fund indices gained ground in March. Hedge funds took modest advantage of March’s upswings in the global equity and credit markets, according to Morningstar’s hedge fund performance summary for the first quarter of 2009.
Highbridge Capital Management, once the world’s biggest hedge fund, was a big winner, with $1bn of net inflows this year, including $225m from majority owner JPMorgan. It ended the quarter with $20bn under management.
Stamford Advocate – With a new regulatory regime hanging over the industry’s head and a field of shellshocked investors looking for safety, it may seem that hedge fund managers are poised to make a rush into the mutual fund arena.
But there’s a disagreement over how many hedge fund managers will follow AQR Capital Management LLC of Greenwich and others into mutual funds.
Ben Alpert, a hedge fund analyst at Morningstar Inc., said he expects the move will be significant. But David Kabiller, founding principal and head of client strategies for AQR Capital Management, said he wouldn’t bet it will be very big.
Greenwich Time – With a new regulatory regime hanging over the industry’s head and a field of shellshocked investors looking for safety, it may seem that hedge fund managers are poised to make a rush into the mutual fund arena.
But there’s a disagreement over how many hedge fund managers will follow AQR Capital Management LLC of Greenwich and others into mutual funds.
Ben Alpert, a hedge fund analyst at Morningstar Inc., said he expects the move will be significant. But David Kabiller, founding principal and head of client strategies for AQR Capital Management, said he wouldn’t bet it will be very big.
HedgeCo.net (West Palm Beach) – Alternative investment management company, Bandon Capital Management, LLC, has hired J. Michael Miller as Managing Director responsible for the development and management of the financial intermediary market.
Miller has over 25 years of experience in building, leading and managing intermediary distribution organizations and has held senior level positions with multiple national firms including Federated Investors Inc., Weiss, Peck & Greer, LLC, mPower/Morningstar and most recently was Managing Director for Concord Wealth Management.
Bandon is focused on delivering the attractive investment characteristics of alternative investing – absolute returns with low correlations – to a wider audience while minimizing or eliminating many of the structural negatives including high minimums, high fees, long lock ups and lack of liquidity and transparency.
Bill Woodruff, Founder and Managing Principal, said “We are delighted to have someone with Mike’s experience and track record joining the firm. We look forward to further expanding our relationships with the financial intermediary community and providing access to non-correlated, absolute return oriented strategies to a market starving for quality solutions”.
Bandon’s flagship strategy DIRS – Directional Interest Rate Strategy – is quickly approaching its 5 year anniversary with historical average net ROR of +7.23% per year, annualized standard deviation of 6.56%, and very low correlation with the major equity indices, as evidenced by a correlation of -.08 to the S&P 500 and -.05 to the Barclays Aggregate from August of 2004 through June 30th of 2009.
Bandon’s strategies are offered in multiple structures with DIRS, the flagship strategy, currently offered as a separately managed account that can be held at most major custodians. A separately managed account is an increasingly attractive structure in light of the recent hedge fund abuses associated with private pooled vehicles.
Alex Akesson
Editor for HedgeCo.net alex@hedgeco.net
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Morningstar – A new breed of clone funds seeks to capture "alternative beta." It wasn’t long ago that hedge funds were on the very cutting edge of finance. Their pitch was simple: they could deliver pure alpha , rather than the heavy doses of beta being dished up by long-only mutual funds. The rub was that you’d have to pay dearly for that elusive component, and to get it, managers would often have to operate in inefficient markets where liquidity and capacity were scarce. Now that some of the mystique has left the asset class, a new concept has made its way to the investing frontier: hedge fund replication.
Opalesque – Last week, we heard of fund launches from Galena (energy); Verulam (commodity); Twin Tree; Paulson & Co (distressed property); Abax (Asia macro); Odey (Ucits III); Pictet (agriculture); and Liontrust (European).
The Canadian Hedge Watch Hedge Fund Composite Index was up 2.26% in April (+4.66% YTD); RBC Hedge 250 Index 2.37%, 2.6% YTD; Morningstar 1000 Hedge Fund Index 3.4% (est.), 3.11% YTD; Lyxor’s investable Global Hedge Fund index -0.45%, 0.93% YTD; Greenwich Global Hedge Fund Index 3.49%, 3.91% YTD; Scotia Capital Canadian Hedge Fund Index -0.61%, 4.98% YTD; And the Eurekahedge April report showed hedge funds were up 3.9% YTD, and that the industry assets were now at $1.30tn.
West Palm Beach (HedgeCo.net) – Hedge funds took modest advantage of March’s upswings in the global equity and credit markets, according to Morningstar’s hedge fund performance summary for the first quarter of 2009.
Equity markets around the world significantly rebounded in March as appetite for risk returned, especially in emerging markets, according to the report. Positive lending and manufacturing news in China coupled with higher commodity prices, which helped stocks in other emerging economies such as Russia, drove the Morningstar MSCI Emerging Markets and Morningstar Emerging Markets Hedge Fund Indexes to increase 4.2% and 6.2%, respectively.
"In March we saw a recovery in equity and some credit markets, which helped hedge funds post small gains. But many hedge fund managers, believing that the economy is not yet out of hot water, continued to remain cautious, and were not strongly positioned to participate in the market rally," said Nadia Papagiannis, Morningstar hedge fund analyst. The Morningstar MSCI Developed Markets Hedge Fund Index rose only 1.1% in March compared to the MSCI World Index, which climbed 7.2%.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Bloomberg – Gather round, children, to hear about the investments you’ve been waiting for. They suggest that you might get positive returns in any economic climate, regardless of whether stocks are going up or down.
Wait — don’t run! It’s not Bernard Madoff or even R. Allen Stanford, the mini-Madoff, who allegedly bilked savers out of $8 billion in supposedly high-rate certificates of deposit. It’s sanctified by hedge funds and brought to you by America’s finest financial engineers. What could be more inspirational than that?
I’m talking about the mutual funds whose investment strategies aim to be “market neutral” or to deliver “absolute returns.” Morningstar in Chicago, which publishes fund data, currently has 28 of them on its list, up from a handful five years ago.
West Palm Beach (HedgeCo.net) – Morningstar reported a summary of hedge fund performance for January 2009 as well as asset flows for 2008. As stocks and government bonds got clobbered in January, hedge funds held up relatively well, the report said.
The Morningstar 1000 Hedge Fund Index declined only 1.2% and the currency-hedged Morningstar with MSCI Hedge Fund Composite Asset-Weighted Index rose 1.2%, against the MSCI World Index’s 8.9% drop and the BarCap Global Aggregate Index’s 3.3% decline.
"Some liquidity returned to the credit markets in January, helping certain hedge fund strategies, but even hedge funds trading equities persevered through January’s tough markets," said Morningstar Hedge Fund Analyst Nadia Papagiannis. "Overall, hedge funds held their own in January."
The rise in the U.S. dollar created profits for some price-trend-following and global-macro non-trend funds in January, but volatility across equity, government bond, and commodity markets throughout the month led to trading losses. The Morningstar Global Non-Trend Hedge Fund Index rose 0.1% while the Morningstar Global Trend Hedge Fund Index declined 1.6%.
Investors continued to pull out of hedge funds, withdrawing $26 billion in December and $70 billion for the year. Europe- and U.S.-equity hedge funds saw the largest redemptions, losing $14.8 and $18.3 billion respectively in 2008.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
Lexington Herald-Leader – When does "absolute" imply something that in reality is far less than certain?
When it comes to "absolute return funds." That’s the label mutual fund companies have put on hedge fund-style products that they’ve been rolling out the past three years. The funds seek to smooth out the bumpy, downward ride the markets have taken lately.
But you can still lose money, even if you manage to fare better than most investors in a downturn. Absolute return funds lost an average 11.7 percent over the 12-month period ended Wednesday, according to Morningstar Inc.
West Palm Beach (HedgeCo.net) – Mike Griffin of Spectrum Global Fund Administration has launched the a hedge fund website that he believes will improve hedge fund transparancy, HedgeACT.com.
“As a former hedge fund executive, I know first-hand how important transparency is during the capital allocation process,” said Michael Griffin, founder and CEO of HedgeACT and Chief Operating Officer of Fenchurch Capital Management from 1985 to 1998. “This is a difficult time for many hedge fund investors, and we think that giving them better information will make the entire analysis and allocation process much better for everyone involved.”
The “ACT” in HedgeACT.com refers to the site’s three key benefits for the hedge fund community, including Analytics, Capital Introduction and Transparency.
Providing investors with free access to hundreds of data points and analytics for over 7,500 hedge funds, HedgeAct’s data is licensed from Morningstar.
Additionally, hedge funds and hedge fund administrators will have the ability to augment this data with their own timely, vetted information on fund performance, track record and other important investor criteria.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
West Palm Beach (HedgeCo.net) – In their summary of hedge fund performance for the fourth quarter and full year of 2008, Morningstar reported that 2008′s low returns wiped out the last two years gains.
Investors lost their appetite for hedge funds in 2008, Morningstar says, as the vehicles intended to deliver absolute returns were forced to resort to relative claims of success.
"In 2008, hedge fund managers generally failed to deliver," said Morningstar Hedge Fund Analyst Nadia Papagiannis. "The average hedge fund may have lost less than the stock market, thanks in part to large cash allocations, but this level of performance was not why investors agreed to pay 2% management fees and 20% performance fees."
Hedge fund inflows peaked in June 2007 and bottomed in October 2008, when more than $21 billion left the industry. In November 2008, another $19.4 billion flowed out of hedge funds, setting the year-to-date outflows at more than $44 billion.
The number of funds dropping out of Morningstar`s database increased more than 150% in 2008 from 2007—1,158 single-manager funds and 490 funds of funds were removed in 2008 compared to 434 single-manager funds and 208 funds of funds in 2007. (Funds are removed from Morningstar’s database if the fund liquidates, if the manager wishes to stop reporting returns, or if funds fail to report returns for six months.)
Emerging market equities proved to be the worst strategy in 2008, along with convertible arbitrage funds, which took a big hit in 2008.
The best-performing strategy this year was global trend following, a systematic strategy that tracks price trends in liquid derivatives such as futures, options, and currency forwards.
Morningstar has approximately 8,400 hedge funds and funds of hedge funds in its database.
HedgeCo.Net is a premier hedge fund database and community for qualified and accredited investors only. Membership on www.hedgeco.net is FREE and EASY. We also offer FREE LISTINGS for Hedge Funds!
