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.
Reuters UK – Hedge fund firm RAB Capital said on Wednesday that clients had started putting money back into some of its funds helped by a recent upturn in performance, adding to signs the industry may be recovering.
The firm, some of whose funds have been hit by poor performance and illiquid markets during the credit crisis, posted a 32 percent drop in overall assets. However, it said it saw positive net flows into its single strategy funds in the second quarter and into July, excluding the effects of recent disposals.
This is Money – Institutional investors are still running scared from hedge funds after last year’s bloodbath, figures from sector giant Man Group show.
They pulled a net £2bn from Man Group in the first quarter of its financial year. Confidence in hedge funds has been rocked by their poor performance of late.
Keith Baird, analyst at Oriel Securities, said 2008 destroyed the entire theory of hedge funds ability to produce positive returns in any market. He said: ‘The illusion was shattered.’
MONACO, June 17 (Reuters) – Investor flows out of the hedge fund industry have stabilised and the health of the industry has improved, GLG senior managing director Pierre Lagrange told Reuters on Wednesday.
‘Industry-wide they (flows) have stabilised,’ Lagrange said in an interview on the sidelines of the GAIM 2009 conference in Monaco. ‘You can see from performance that things are better.’
The hedge fund industry has suffered redemptions of around $250 billion between October and March as investors fretted over record poor performance last year.
Reuters – Hedge fund managers, administrators and investors have gathered in Monaco for the annual GAIM industry conference following a tough year marked by poor performance and client outflows.
Below are selected quotes from the first day of the conference:
JONATHAN FEENEY, INVESTCORP INVESTMENT ADVISORS:
"In the last five years or so … everything was flying and no one cared about risk management. It’s only when problems arise that it suddenly becomes a focus, and then it’s too late.
"With a new manager, it’s horrible to say this, but it’s got to the stage now where you want to check the office exists. It’s the paranoia now post-Madoff."
Reuters – The nation’s second-largest pension fund, the Universities Superannuation Scheme (USS), said it was sticking by a medium-term plan to double exposure to alternative assets such as hedge funds and private equity.
The 23 billion pound pension scheme confirmed the target as it announced its first appointment to a new hedge funds team on Monday.
USS currently has 10 percent exposure to alternatives, making it already one of the more adventurous UK pension funds.
Its plan to increase that to 20 percent, coupled with specific move to boost hedge fund investment, will be comfort to an industry which struggled with poor performance and heavy outflows during a turbulent 2008.
"We believe that the current turmoil in the hedge fund industry represents a compelling investment opportunity for investors like USS who are able to take the long-term view," said USS’s head of alternative assets Michael Powell.
There have been fears that conservative long-term investors such as pension schemes could be put off future allocations to hedge funds.
Reuters UK – The nation’s second-largest pension fund, the Universities Superannuation Scheme (USS), said it was sticking by a medium-term plan to double exposure to alternative assets such as hedge funds and private equity.
The 23 billion pound pension scheme confirmed the target as it announced its first appointment to a new hedge funds team on Monday.
USS currently has 10 percent exposure to alternatives, making it already one of the more adventurous UK pension funds.
Its plan to increase that to 20 percent, coupled with specific move to boost hedge fund investment, will be comfort to an industry which struggled with poor performance and heavy outflows during a turbulent 2008.
"We believe that the current turmoil in the hedge fund industry represents a compelling investment opportunity for investors like USS who are able to take the long-term view," said USS’s head of alternative assets Michael Powell.
Boston Globe – The Massachusetts state pension fund fired two money managers yesterday for poor performance, including one that had lost $12 million investing with accused swindler Bernard L. Madoff.
Austin Capital Management, which had managed $170 million in state retirement funds, was fired after it lost $40 million, including the money invested with Madoff and $28 million from market declines. The state withdrew its remaining $130 million from Austin, which runs a "fund of funds," a middleman that takes investors’ capital and spreads it among other money managers, including hedge funds.
West Palm Beach (HedgeCo.net) – Renaissance Institutional Futures, a $3 billion futures fund run by hedge fund management company, Renaissance Technologies, has waived all it’s management fees for 2009, even if the fund delivers good results in 2009, according to the Wall Street Journal.
Renaissance told investors in a end-of-year letter that the futures fund was waiving it’s 1% fixed management fee following poor performance in 2008. The discount is estimated by the Journal to save investors $30 million.
Renaissance Technologies was started in 1982 by James Simons, Renaissance currently has approximately $20 billion in assets under management. The company operates in East Setauket, Long Island, New York, near Stony Brook University. Administrative functions are handled out of offices in Manhattan.
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The Australian – After suffering one of the worst years on record, Australia’s $62 billion hedge fund industry is bracing for even tougher times in 2009 as a confluence of factors works against them, including poor performance, more regulation, further short-selling bans, and a flood of redemption requests in late 2008 that are due to be repaid right about now.
The result is that an unprecedented level of cash is being pulled out of hedge funds and funds-of-hedge-funds by investors this quarter, just as they face millions of dollars of losses from the ban on short selling.
It is no surprise, then, that a lot of lobbying is going on behind the scenes to ensure that corporate watchdog ASIC lifts the ban on short selling financial stocks on January 27.
But speculation is running hot that the ban will be rolled over and some believe it could remain until the credit crisis subsides — a move hedge funds can ill afford.
In Britain, the ban is due to be lifted on January 17, but Andrew Baker, deputy chief executive of the Alternative Investment Management Association, recently said the ban could last for the entire length of the financial crisis.
The Associated Press – College endowments and state pension funds plowed billions of dollars into hedge funds and private-equity investments as a way to balance their stock holdings, and for a time they got supercharged returns.
Those days are over. From Harvard University to the state pension fund of California, officials are watching the value of their alternative investments shrink.
So far, the losses are mostly on paper, but analysts say they could eventually lead to reduced payouts to retirees, higher taxes so state governments can fulfill their promises, or less cash available for colleges to give out financial aid.
Denver Post – College endowments and state pension funds that once plowed billions of dollars into hedge funds and private-equity investments as a way to balance their stock holdings officials are watching the value of their alternative investments shrink.
So far, the losses are mostly on paper, but analysts say they could eventually lead to reduced payouts to retirees, higher taxes so state governments can fulfill their promises, or less cash available for colleges to give out as financial aid.
In recent years, endowments and pensions heaped cash into hedge funds — private investment funds that often use unconventional and risky trading strategies. They also bought into private-equity funds, which make direct investments into private companies or buy them out.
New York Times – Some of the nation’s universities are trying to sell chunks of their portfolios privately as their endowments swoon with the markets.
Among institutional investors, school endowments aggressively embraced private equity, real estate partnerships, venture capital, commodities, hedge funds and other so-called alternative investments over the last few years. Endowments with more than $1 billion in assets reported 35 percent of their holdings in these types of investments on average last year, a much greater portion than big public pension funds, for example.
