West Palm Beach (HedgeCo.net) – The alternative investment sector will continue to benefit from increasing asset allocations from Single Family Offices (SFOs), according to "On the Rise," the latest research report sponsored by CPA firm Rothstein Kass.

The white paper, co-sponsored by G Capital highlights the growing relationship between the alternative investment community and SFOs, entities established to serve the needs of individual high-net-worth families. "On the Rise" was co-authored by Russ Alan Prince, a leading authority and counselor on private wealth, and Hannah Shaw Grove, a widely recognized expert on behaviors and finances of high-net-worth individuals.

The findings include that almost three-quarters of SFOs currently invest in hedge funds, with nearly 60% of this group planning additional allocations in the coming year

SFOs with hedge fund allocations hold an average of 3.2 hedge funds or fund-of-funds in the portfolio. Nearly 70% of SFOs with hedge fund allocations report that these investments have met or exceeded performance expectations over the past 12 months.

Over 70% of SFOs with hedge fund allocations report "lack of transparency" as a key concern. Other concerns sited include lock-up periods (60%), style drift (55%) and fraud (37%)

"As SFOs consider an ever-expanding range of investment options, they are increasingly turning to the alternative investment sector and its proven ability to deliver superior returns independent of underlying market conditions," said Rick Flynn, a Principal in Rothstein Kass’ Family Office Group. "Moreover, our findings suggest that performance continues to drive alternative investment allocations. Nearly 70% of those polled said that performance over the last 12 months has been ‘as expected’ or ‘better than expected.’"

The "On the Rise" survey was based on telephone interviews with 146 SFOs and was concluded in August 2008. Investable assets ranged from $312.2 million to $1.3 billion, with a median of roughly $500 million. Just under 60% of the firms polled are based in the Americas, with the balance operating in Europe (21%) and Asia (20%). Additional results were generated from only those entities with reported allocations to the alternative investment sector. For the purposes of this research, SFOs are defined as "created exclusively for or by a single exceptionally wealthy family to provide control, negotiating leverage, and a defense for family members."

"’On the Rise’ details the latest evidence of the growing interrelation between SFOs and the alternative investment community. While high-net-worth individuals generally recognize advantages of hedge fund investing, they are frequently confounded by the growing roster of products and services available. SFOs have had great success in bridging this knowledge gap," said Peter Gerhard, Chief Executive Officer of G Capital Management LLC. "Still, lingering challenges face this blossoming relationship. Both transparency (73%) and style drift (55%) rated as key concerns among respondents. It seems that although high-net-worth families are comfortable involving SFOs in the asset allocation process, they themselves retain a level of involvement. Investors need to feel confident that the funds that have been selected are not only good choices in the moment, but reflect overarching and longer-term investment objectives."

Rothstein Kass is a financial services firm, recognized nationally as a top service provider to the alternative investment industry. The Firm provides audit, tax, accounting and consulting services to hedge funds, fund of funds, private equity funds, broker-dealers and registered investment advisors. Rothstein Kass has offices in New York, New Jersey, California, Colorado, Texas and the Cayman Islands.

Alex Akesson

Editor for HedgeCo.Net
Email: alex@hedgeco.net

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West Palm Beach (HedgeCo.net) – SGAM (Société Générale Asset Management) Alternative Investments launched the SGAM ETF T-Rex (for total return exposure), on Euronext Paris.

"It is possible to build a portfolio of dynamic strategies designed to replicate overall allocations in the hedge funds industry," SGAM says, "and thus attempt to replicate performances by taking up equivalent positions in these asset classes."

The portfolio invests in the main asset classes of equities, bonds and currencies, and is managed dynamically using liquid financial instruments such as futures. The new fund has no minimum subscription, and offers real-time liquidity and total transparency. Launched in a mutual fund format in August 2007, the strategy in an ETF format offers investors a choice between the subscription/redemption channel of a traditional fund and the flexibility of a real-time stock market negotiation via the ETF.

"Based on the concept of alternative beta, involving the replication of estimated hedge fund allocations in traditional asset classes," SGAM says, "academic studies show that hedge fund investments can on the whole be broken down into long/buy positions and short/sell positions in traditional asset classes."

The allocation process of the SGAM ETF T-Rex portfolio is based on a quantitative model, created by SGAM AI’s structured asset management team. The model automatically calculates the allocation that optimises correlation to the index, composed of more than 2,000 hedge funds tracked in the HFR database. Positions are reviewed every month.

Société Générale Asset Management had EUR 309 billion ($452 billion) in assets under management at the end of June, including EUR 50 billion ($73.2 billion) in alternative investments.

SGAM Index is a wholly owned Société Générale Asset Management subsidiary that offers passive management, differentiated index management, structured ETFs and alternative beta products, and whose funds are commercialised by SGAM Alternative Investments.

Alex Akesson

Editor for HedgeCo.Net
Email: 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!

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Bloomberg – Dai-ichi Mutual Life Insurance Co., with more than 30 trillion yen ($274 billion) in assets, will invest more money with hedge funds to safeguard returns as financial markets falter.

Tokyo-based Dai-ichi Mutual, Japan’s second-largest life insurer, currently invests in more than 100 hedge funds as well as funds of hedge funds, Yuji Hirai, manager of the firm’s structured and alternative investment department, said in an interview in Tokyo yesterday. He declined to provide specific targets for hedge fund allocations.

“Our goal is to increase our allocation to hedge funds,” said Hirai, 40. “We’re in a difficult market, no doubt, but for hedge funds chasing absolute returns, this is the time to prove their outperformance.”

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