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.
Times Online – People who run hedge funds hate the way the press describe them as “secretive”. A quick Google of “hedge funds” shows what a cliche it has become. Hedge funds are “notoriously secretive” and “super-secretive”; they live in a “secretive world”.
But sadly, for an increasing number of them, the secret is finally out.
The promise behind this $2 trillion universe was that its managers would make money whether markets went up or down. But the turmoil in the financial world is proving too much for many of them. All of a sudden the Masters of the Universe are failing fast.
The average hedge fund has lost more than 4% this year, according to Hedge Fund Research, putting the industry on course for its worst year on record. New investments in hedge funds for the first six months of 2008 fell below $30 billion, compared to $118 billion for the same period last year.
The hedge fund manager has become the Gatsby figure of our era. But his fall will be felt by more than Manhattan estate agents, art galleries and Porsche dealers. Over the past decade, the hedge fund industry has grown fivefold, pumped up with billions from corporate and public pension funds and university endowments looking for market-beating returns.
HedgeFund.Net – Swiss funds-of-funds firm Gottex Fund Management is launching a fund that will emulate the investment principles of U.S. “super endowments.”
The new fund will emulate the investment principles of successful U.S. university endowment funds, such as Harvard and Princeton. It will allocate about 65% to alternative investments. The alternative part of the portfolio will cut across all asset classes: hedge funds, private equity, commodities, long-only equity, fixed income, real estate and other real assets.
Harvard Management, long the model for university endowment funds currently with about $35 billion in assets, increased more than 20% year over year in 2007.
William Landes is helming the new fund. Landes joined Gottex from Boston-based 2100 Capital, his hedge fund specialty firm that Old Mutual Asset Management bought in 2005. Before that Landes was a money manager at Putnam Investments, which helped incubate 2100 Capital.
Wall Street Journal – Not long ago, hedge funds were reserved for a few wealthy investors and even fewer pioneering managers. Now 7,500 funds have nearly $2 trillion under management globally, according to Hedge Fund Research — increasingly from endowments and pension … Read Complete Article
Boston Globe – Massachusetts again has some of the best money managers in the world. But unless you’re a public employee or the parent of a Harvard student, you won’t benefit much from this tremendous talent.
Harvard University’s endowment, already the nation’s largest university endowment, earned 7 to 8 percent over the past year, a period when stock markets tanked and many investment professionals lost substantial sums. Harvard’s performance, first reported yesterday by The Wall Street Journal and confirmed by a financial industry source briefed on the school’s returns, puts it at the top of an elite group of institutional investors.
Financial firm Northern Trust col lects returns on 87 endowments and foundations but not Harvard. Nevertheless, the Cambridge university’s performance would put it "at the top of the class," said Northern Trust spokesman John O’Connell.
FT Alphaville- New figures from Singapore’s central bank bear out the (abundant) anecdotal evidence of the quickening exodus of Asia-focused hedge funds out of Japan and elsewhere and into Singapore.
Reuters reports that assets managed by fund managers in Singapore grew 32 per cent to S$1,173bn ($862bn) last year, driven by a doubling in assets held by hedge funds.
Assets managed by hedge fund managers in Singapore doubled to close to S$80bn in the year, while the number of hedge fund firms in Singapore increased by more than 50 per cent to almost 300, according to the island state’s Monetary Authority. Meanwhile institutional investors such as pension funds, endowments, foundations, companies and financial institutions accounted for 43 per cent of the funds.
Reuters UK- Roughly three dozen U.S. hedge funds have opened for business so far this year, 50 percent less than the same period last year, according to data released on Tuesday that underscored how tough it is to launch one of these portfolios now.
But the data also shows investors, like pension funds, endowments and wealthy individuals, are still flocking to these loosely regulated funds in search of better returns as the credit crisis and slower economic growth dents performance.
According to numbers compiled by trade magazine Absolute Return, the 35 new funds began trading with a total of $19.5 billion (9.9 billion pounds) in the first six months of 2008. That compares with 72 funds launched with $14 billion in the first half of 2007.
Reuters- Meeting long-term funding obligations can be the stuff of nightmares but that’s what hedge fund industry veteran Philip Duff says his new firm can do to help pension funds, endowments and insurers tackle.
For years, Duff has warned these organizations could soon run out of money and has urged them to find a fresh approach.
Now he is offering help through Duff Capital Advisors, his four-month-old company that offers not only hedge funds but products that could set actuaries’ hearts racing. For example, its risk analysis models can help insurers calculate ways to hedge mortality risk and help clients select appropriate types of investments.
Financial Times – China’s State Administration of Foreign Exchange has agreed to invest more than $2.5bn in the latest TPG fund, in what could be the largest commitment ever made to a private equity firm, people familiar with the matter say.
The investment by the Chinese entity, known as Safe, underscores the growing inclination of sovereign wealth funds to invest through private equity firms – rather than directly – to minimise the potential political backlash to their growing activity.
It also illustrates the growing importance of sovereign wealth funds to private equity firms at a time when pension funds and non-profit endowments are cutting back their exposure to leveraged buy-out investments.
Investments in private equity firms are usually not made public, but industry executives believe the largest previous investment in a private equity firm came from pension funds in the US states of Oregon and Washington. The two funds both invested about $1bn to $1.5bn in Kohlberg Kravis Roberts.
Safe declined comment.
In recent years, a growing percentage of the money for US private equity firms has come from overseas. In 2002, for example, 25 per cent of the money that Blackstone raised came from outside the US. In 2005, it increased to 40 per cent.
China Investment Corporation, another sovereign wealth fund, has been given authority to invest a small portion of China’s $1,600bn in reserves.
Altassets – Cleantech-focused venture capital firm RockPort Capital Partners has closed its third fund, RockPort Capital Partners III, on over $450m, the hard cap of the fund. It had an initial target of $400m and held a first closing just three weeks ago, on $400m.
The new fund will continue the focus of RockPort’s previous funds, investing in the development of technology and products in emerging cleantech companies.
The investor base consists of US university endowments, family offices, foundations and institutional investors from both the US and Europe.
Wilber James, managing general partner, RockPort, said, ‘The cleantech sector provides enormous opportunities to identify and foster initiatives that offer solutions to global energy and natural resource needs, while providing superior investment returns. We have already seen how the teams we invest in can create enormous value. Our collaborative approach together with a business-building mentality and keen domain expertise has proven invaluable to growing companies.’
Houston Chronicle – Billionaire investor George Soros told a Senate panel Tuesday that the run-up in oil prices has "some of the earmarks" of a bubble and that institutional investors stampeding into commodities are helping raise prices.
Appearing before the Senate Commerce, Science and Technology Committee, the famous hedge fund manager and supporter of liberal causes described the pension funds, university endowments and other large institutional investors pouring billions of dollars into commodity index funds as reminiscent of a craze to add insurance to portfolios that he said led to the stock market crash of 1987.
"In both cases," Soros said, "the institutions are piling in on one side of the market, and they have sufficient weight to unbalance it.
"If the trend were reversed and the institutions as a group headed for the exit as they did in 1987, there would be a crash."
