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.
West Palm Beach (HedgeCo.net) – Bull Path Capital Management recently announced the conversion of one of its long-short hedge funds into a long-short equity mutual fund the ‘Bull Path Long Short Fund’ (BPFCX).
The newly launched mutual fund ranks #1 of 811 funds on total annualized returns in the Lipper Mid-Cap Universe for the 5 years ending March 31, 2009, may be a “perfect consideration as a core investment for many investors.” He believes the long-short category will increasingly capture investors’ attention because of its typically lower risk levels than long-only funds. BPFCX has also received a top Lipper Leader rating of 5 for capital preservation against all equity mutual funds (9,360 funds).
“Investors have been traumatized by the events of the past 18 months, including the sobering performance of many long-only, ‘buy and hold’ strategies, and wondering how and when they can reenter the market,” said Rob Kaimowitz, portfolio manager of the Fund and founder of Bull Path Capital Management. “We believe investors will be attracted to the performance characteristics of long-short funds which aim to capture the market’s upside while mitigating risk in a market sell-off.”
“Until recently, there have been few mutual funds focused on long-short, and we are one of the few tested strategies in the market today,” noted Kaimowitz. “We believe this strategy makes sense for both individual and institutional investors with a medium- to long-term view of the market.”
In addition, Kaimowitz says investors who may have previously considered long-short hedge funds should consider investing in this strategy through a mutual fund structure owing to such benefits as lower minimum investments, lower fees, full transparency and the assets being held in a trust bank.
“There has been increasing pressure on hedge funds to provide lower fees, greater liquidity and increased portfolio transparency,” noted Kaimowitz. “A mutual fund structure addresses these issues quite well.”
The Bull Path Long Short Fund adopts a strategy developed and run by Bull Path Capital Management since 2002. “One of the hallmarks of our strategy is our ability to reinvest our knowledge through our rigorous, concentrated fundamental analysis in establishing both long and short positions,” said Kaimowitz. “This ability serves us well as we seek to provide investors with consistent returns and high levels of alpha.”
The Bull Path Long Short Fund is available in A and C Class shares with a $1,000 minimum investment or a $500 minimum with participation in the automatic investment plan. The I share requires a minimum of $100,000 or a $50,000 minimum with participation in the automatic investment plan.
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West Palm Beach (HedgeCo.net) – On June 12, three IRS personnel participated in a teleconference designed to address open questions regarding the Report of Foreign Bank and Financial Accounts (FBARs) for calendar year 2008 that must be filed by June 30. It was their position that an offshore hedge fund is a “foreign financial account” for FBAR purposes and that, therefore, every U.S. investor in an offshore hedge fund should file an FBAR, whether or not the fund has any offshore bank or securities accounts.
The FBAR needs to be filed by U.S. persons that have a financial interest in, or signature or other authority over, a foreign financial account or accounts if the aggregate value of the account(s) exceeds $10,000 at any time during the year. The instructions to the FBAR provide that foreign financial accounts include “any accounts in which the assets are held in a commingled fund, and the account owner holds an equity interest in the fund (including mutual funds).” In the teleconference, the IRS personnel took the position that offshore hedge funds are foreign financial accounts for FBAR purposes.
Based on the instructions to the FBAR and this insight from IRS personnel, until further guidance is issued by the IRS, we recommend that an FBAR should be filed by the following persons or entities with respect to offshore funds:
• Every U.S. investor, including U.S. tax-exempt entities, in an offshore hedge fund (this includes both stand-alone offshore hedge funds and the offshore feeder in master/feeder hedge fund structure)
• U.S. feeder funds that invest in offshore master funds, and any U.S. investor that owns more than 50% of the U.S. feeder
• Any direct U.S. investor in an offshore master fund
• Investment managers that have a financial interest (for example, through their carry) in any offshore hedge funds (whether stand-alone, feeder or master)
This requirement is in addition to FBAR requirements applicable to U.S. persons or entities that have a direct or indirect interest in an offshore bank, securities or securities derivatives account. Therefore, any U.S. person or entity (for example, a U.S. hedge fund) that has a financial interest in such foreign financial account or owns more than 50% of the equity of an entity that has a foreign financial account needs to file the FBAR. Similarly, anyone with signature or other similar authority over such foreign financial accounts needs to file the FBAR.
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!
Detroit News – President Barack Obama is ready to roll out an overhaul of the intricate rules and systems that govern America’s troubled financial institutions, proposing the most ambitious revision since the Great Depression.
The goal is to prevent a recurrence of the economic crisis that erupted in the United States and exploded last fall with devastating consequences still reverberating around the world.
Unlike the government’s temporary ownership stake in automakers and major financial companies, the regulatory changes set to be announced Wednesday are designed to be permanent. They could result in a major realignment of power and authority among government agencies that set the rules for banking, lending and investing and touch American lives through daily transactions, from credit cards to mortgages and mutual funds.
Herald Tribune – Investors are always searching for the "Holy Grail" of investing; that is, investments with high returns, low risk and little correlation to the returns of the broad stock and bond markets.
Some investors believe that they have found it in the category of investments labeled as hedge funds.
A hedge fund is an investment partnership open only to a limited number of "qualified" (meaning wealthy and supposedly sophisticated) investors that engages in a range of non-traditional investment strategies, many of which are not permitted to mutual funds.
Reuters – Money managers are flooding the market with exchange-traded funds (ETF) and mutual funds designed to give even the smallest of investors access to hedge fund returns without all the usual restrictions or hefty fees.
IndexIQ Advisors, a start-up firm that seeks to replicate hedge fund performance, on Tuesday launched the index-based IQ Hedge Macro Strategy Tracker ETF, about 75 percent focused on emerging markets and 25 percent on global trends. The offering joins the IQ Hedge Multi-Strategy Tracker ETF, which began trading in March and is up 17 percent.
Stuff – Mauled by the carnage on Wall Street, mutual funds are copying hedge fund strategies in an effort to regain some of the shine they have lost this decade.
Many investors have been burned investing in a single asset class and withdrew $234 billion (148 billion pounds) from U.S. stock funds last year as the deep bear market sparked the first annual outflow of long-term investment in mutual funds since 1988.
But as stocks sank, hedge funds soared. The Standard & Poor’s 500 Index, a benchmark for the broad U.S. stock market, returned a negative 40 percent this decade through the end of 2008. Hedge funds, meanwhile, gained 55 percent over the same period, Hedge Fund Research’s fund-weighted composite index shows.
Reuters UK – Mauled by the carnage on Wall Street, mutual funds are copying hedge fund strategies in an effort to regain some of the shine they have lost this decade.
Many investors have been burned investing in a single asset class and withdrew $234 billion (148 billion pounds) from U.S. stock funds last year as the deep bear market sparked the first annual outflow of long-term investment in mutual funds since 1988.
But as stocks sank, hedge funds soared. The Standard & Poor’s 500 Index .SPX, a benchmark for the broad U.S. stock market, returned a negative 40 percent this decade through the end of 2008. Hedge funds, meanwhile, gained 55 percent over the same period, Hedge Fund Research’s fund-weighted composite index shows.
Wealth Bulletin – AQR Capital Management intends to launch a line-up of mutual funds next month that will use a hedge-fund strategy developed in 1989 by founder Clifford Asness as a doctoral student in finance at the University of Chicago, according to a report in The Wall Street Journal.
West Palm Beach (HedgeCo.net) – UK-domiciled funds had a strong week to Friday May 8, led by global emerging markets products, according to data from Thomson Reuters research firm Lipper.
Asia Pacific funds also performed well, as did funds investing in European smaller companies. Global bonds, UK gilts and UK index-linked gilts were the only sectors to post negative returns in the week.
Lipper, a Thomson Reuters company, is a leading fund research and analysis organisation, providing independent insight on global collective investment including mutual funds, retirement funds, hedge funds, fund fees and fund expenses to the asset management and media communities.
Bloomberg – U.S. hedge funds are buying more of the nation’s stocks than they’re selling for the first time since October, while mutual funds and most other investors remain net sellers, according to UBS AG.
In the four weeks ended March 13, net purchases of equities by hedge fund clients of UBS averaged $140 million, according to a March 18 report by David Bianco, the New York-based chief equity strategist at Switzerland’s biggest bank. The inflows into stocks followed 22 straight weeks of outflows.
“Those who are supposedly experts at assessing and managing risk are more confident putting capital to work than they were in October and November,” said Peter Kenny, managing director in institutional sales at Knight Equity Markets LP Jersey City, New Jersey. “That’s an indication that the market has made some constructive moves toward building a base.”
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.
Reuters – The Madoff scandal could be a boon for mutual funds as investors shift into regulated asset management vehicles in Luxembourg or Ireland away from hedge funds in the Caymans, a German mutual funds executive said.
"There’ll be a drive clearly toward more transparency and stricter supervision. That could be good for mutual funds," Stephan Kunze, head of Europe at Deutsche Bank’s mutual funds arm DWS, told Reuters in an interview.
"A lot of strategies that have been set up in the Caymans will migrate to Luxembourg or Ireland-domiciled replicas (with) hedge fund strategies migrating onto mutual fund platforms," he said, speaking on the sidelines of DWS’s annual news conference.
