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.
Bloomberg – DragonBack Capital Ltd., a Hong Kong-based manager co-founded by a former Lehman Brothers Holdings Inc. executive, reopened its flagship hedge fund to investors after redemptions cut assets in the fund.
Assets in the Asia-Pacific Equity Multistrategy Fund fell 47 percent from the end of October peak, to $310 million, Chief Executive Officer Robert Lance said in an interview yesterday.
The fund’s 3.75 percent gain in 2008 put it among less than a third of hedge funds that made money in the worst year for the global industry. Investors have reduced holdings in some profitable funds after their weightings in portfolios exceeded limits set for specific hedge fund strategies.
Bloomberg – Hedge fund managers who run the largest 15 percent of portfolios in the European Union would have to report risks, debts and trading activities to regulators under a draft proposal to tighten oversight after the financial crisis.
The EU’s executive agency in Brussels is weighing plans to regulate “alternative investment fund managers” who oversee at least 250 million euros ($333 million). The measure also covers private-equity buyout firms.
The proposal answers calls from EU lawmakers for rules on all market actors, and from the Group of 20 nations for oversight of hedge funds large enough to put financial systems at risk. While the proposal, which may still be changed, excludes 85 percent of hedge fund managers, it would leave out 24 percent of their assets in the region, according to the commission.
West Palm Beach (HedgeCo.net) – March was a challenging month for hedge funds, which entered the month with tight net exposures, according to research by hedge fund consultant Hennessee LLC.
Technology and healthcare/biotech were bright spots for hedge funds, as these sectors were relative outperformers. While the strong equity rally did cause short squeezes, most hedge fund managers expect short portfolios to generate profits in the near term.
The Hennessee Hedge Fund Index advanced +1.37% in March (+1.09% YTD), while the S&P 500 advanced +8.54% (-11.67% YTD).
“Most funds were caught with tight net exposures and were unable to participate in the rally," Charles Gradante, Co-Founder of Hennessee Group said, "Managers were also hurt as the sectors they have been heavily short, such as financials, consumer discretionary and materials, were the sectors that rallied the strongest.”
“Despite the underperformance in March relative to the equity benchmarks, hedge funds are still outperforming for the year,” said Lee Hennessee , Managing Principal of Hennessee Group. “We expect that we will continue to see volatility throughout the year.”
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Reuters – Pension funds will likely funnel more money into hedge funds and become a powerful engine of growth for the industry in the coming months, a hedge fund industry veteran said on Wednesday.
"We are finding that corporate pension funds are looking at hedge funds for allocations for their equity exposures, said Carrie McCabe, chief executive of Lasair Capital LLC, a firm that creates portfolios of hedge funds for clients.
McCabe, who cemented her reputation in the hedge fund industry while running Blackstone Alternative Asset Management and FRM Americas, described a real urgency to pension funds’ desire to beef up their returns with hedge funds in a hurry.
CNBC – Hedge funds of funds, the middlemen that pension funds and endowments often use to create alternative portfolios, lost roughly one-third of their assets last year, according to new data released Tuesday.
The industry’s largest funds of funds, managing more than $1 billion, now jointly control $744 billion in assets, according to industry publication InvestHedge.
CNNMoney.com – In what looks like a sign of the hard times in the hedge fund world, AQR Capital Management – one of the industry’s biggest names – is opening its doors to the retail market.
In January, the investment management firm launched its Diversified Arbitrage Fund, its first mutual fund. Its Class I shares are up just 0.15% through the end of February, but that doesn’t look so bad compared with the S&P 500, which dropped 12.5% during the same period.
AQR says it wants to give average investors access to strategies that were once only available to hedge fund clients. While the fund may not be designed as a main holding, David Kabiller, co-founder of AQR with Cliff Asness, John Liew and Robert Krail says it can help individual investors balance out their portfolios.
Reuters – Millionaires who long put money with hedge funds are now skittish about adding fresh cash after these loosely regulated portfolios posted record losses last year, a top industry executive said on Thursday.
"We have probably seen the worst of the (hedge fund industry redemptions), but I think it will be a slow go to build up that asset base again," Don Heberle, executive director at Bank of New York Mellon Corp’s Wealth Management unit where he oversees the Family Office and Charitable Gift Services groups, said in an interview.
The potential of hedge funds to deliver strong returns in all markets because they can sell stocks short and use borrowed money has appealed to wealthy investors for years. With the help of people like Heberle’s clients — families that are worth more than $100 million — hedge fund industry assets doubled to $2 trillion between 2005 and 2008.
