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) – Morningstar and Barron’s today released highlights of a recent national survey examining the perception and usage of alternative investments among institutions and financial advisors.
“Our survey found that both institutions and advisors want alternative investments that are liquid, transparent, and regulated like traditional investments,” said Steve Deutsch, director of separate accounts and collective investment trusts at Morningstar. "We conducted this survey during one of the worst market downturns in history, where traditional U.S. and international investments plummeted and almost no alternative investments provided safe haven."
"One particularly interesting survey result was that against this backdrop, the majority of both advisors and institutions still reported that they expected to increase usage of alternative investments in the future, and they believed alternative investments will continue to grow in importance versus traditional investments," Deutsch added. "Recent poor performance of alternatives has not caused advisors or institutions to question their usage."
Among the survey findings are that for institutions limited partnerships, including hedge funds, direct real estate, and private equity, are the most popular alternative vehicles for institutions.
Almost half of institutions surveyed allocate more than 10 percent of their portfolios to alternative investments, and nearly 20 percent allocate more than 25 percent of their portfolios to alternatives. Institutions generally expect their portfolio allocations to alternative investments, particularly hedge funds and private equity, to increase over the next five years. Close to a quarter (23 percent) of institutions expect to invest more than 25 percent of their portfolios into alternatives.
The survey shows that advisors are predominantly investing in alternative investments through liquid, regulated, and transparent vehicles like mutual funds and exchange-traded funds (ETFs), but they’re also employing other non-traditional investments with their clients, like oil and gas limited partnerships, non-traded Real Estate Investment Trusts (REITs), church bonds, and equipment leasing.
Among advisors who work with average individual investors, almost 80 percent use alternative investments with some clients. About 40 percent of advisors had more than half of their higher-net-worth clients in some alternative investments.
Morningstar and Barron’s conducted the Internet-based survey in October 2008; 252 institutions and 1,180 financial advisors participated. The complete survey results appear in the Nov. 10 issue of Barron’s.
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!
New York (HedgeCo.Net) – TD Waterhouse has been ordered to pay a $2 million fine as a result of selling hedge funds to clients who were not accredited, according to a report by the Vancouver Sun.
The Investment Industry Regulatory Organization of Canada claimed that TD “failed to establish and maintain alternative investment review or approval procedures,” while failing to “ensure that the purchase of hedge funds were appropriate for its clients.”
The Olympus hedge funds were sold from 2001-2005 and were the subject of complaints from 31 TD Waterhouse clients. Their chief problem with the funds was that they were portrayed as a safe, low risk investment.
Hedge funds, while they may enjoy lighter regulation than most traditional investments, must adhere to strict guidelines when it comes to who may invest in them. Because hedge funds are thought to carry most risk than other investment vehicles, the investor must possess the status of being “accredited.” Since accredited investors are thought to be sophisticated and educated in the realm of investing, hedge funds can therefore enjoy the benefits of lighter regulation.
According to Alex Popovic, Vice President of Enforcement at IIROC, the fine was reduced because of TD’s willingness to cooperate and a number of things they implemented internally to help correct the problem. These include new training programs and controls, as well as the discipline of brokers who sold the funds to unqualified clients.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@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! Be sure to check out our sister sites. For more information, visit www.hedgeconetworks.com
West Palm Beach (HedgeCo.Net)- A recent Bank of America Survey of high net worth Americans indicates that US investors understand the risk and rewards of hedge fund investments. Many expressed greater satisfaction over the last 12 months with their holdings in alternatives, including hedge funds, venture capital, real estate and private equity, than their more traditional investments, including stocks and bonds.
Surveying more than 400 high net worth investors with greater than $3 million in investable assets, 267 held investments in alternatives overall, including 92 who held investments in hedge funds or hedge funds of funds. Nearly one-third (32%) of the data collected focused on the attitudes of individuals with investable assets of $10 million or more.
The findings also indicated a positive relationship between satisfaction with alternative investments and the length of time the investments were held. Investors with 10 or more years of experience in alternatives were almost twice as likely as those with fewer than 10 years of experience to be "extremely satisfied” with their total portfolio since their initial investment.
Negative stories published about hedge funds appear not to have deterred experienced hedge fund investors, according to the survey’s findings. When asked if negative publicity about hedge funds impacted their investment decisions, 44 percent of those invested in hedge fund vehicles said no and only 20 percent said yes.
"Our study demonstrates that, despite the portrayal of hedge fund investors as risk-takers investing in aggressive managers," David Bailin, president of Bank of America Alternative Investment Solutions, said, "Many high net worth investors have a realistic understanding of the risks associated with their holdings and realize that large alternatives managers are institutional in their investment approach and the quality of their investment professionals.”
