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Reuters - In spite of suffering more than most markets in the global downturn, hedge funds are likely to bounce back faster than other markets.
That is the view of Barclay’s Capital director Frank Gerhard whose company is a major player in the regional hedge fund market and is in the process of launching a Sharia-compliant hedge fund platform along with Sharia Capital.
"We have been running a roadshow around the region and there is still a lot of institutional and high net worth individual interest in the sector.
"What we are likely to see is hedge funds bouncing back in the first quarter of next year even if equity markets remain depressed.
"Each time there is a major market downturn, like the Asia crisis of 1998 or the slump after the dotcom bubble burst, we have seen alternative investments like hedge funds bounce back far quicker than other investments.
CNNMoney.com - Hedge funds were leaving the prime brokerage business of Lehman Bros. (LEH) long before Lehman filed for Chapter 11 bankruptcy Sunday, and now, business there has all but stopped, according to sources.
But in certain areas, like the statistical arbitrage and repurchase, or repo markets, Lehman was and still is a top player. What happens to the prime brokerage is a complicated question, because most of that business is located in the U.K. While Lehman included its prime brokerage as part of its bankruptcy, it is not thought to be subject to the laws of Chapter 11 since the business is in the U.K.
Lehman’s prime brokerage, which like others lends money and securities to hedge funds as well as provides administrative services from back-office help to processing trades, was a key revenue-earner for the bank as recently as earlier this year. In its first-quarter earnings report in March, Lehman had reported a 38% year-over-year revenue increase in its securities service unit, which includes prime brokerage. At that time, it said it had $194 billion in hedge fund balances.
But as the investment bank started stumbling more and more the past few months - along with the rest of the financial services industry - Lehman started losing all or part of the business of hedge fund customers afraid of the counterparty risk attached with dealing with Lehman.
InvestmentNews - Emerging-market strategies gained some momentum during the quarter ended June 30, but are still struggling, according to Hedge Fund Research Group LLC of Chicago.
HFR reported today that emerging-market hedge funds took in $995 million during the second quarter, reflecting a 66% increase over the $597 million worth of inflows into the strategy during the first quarter of the year.
But the inflows into the category paled in comparison to the year-ago quarter, when emerging market hedge funds took in $3.7 billion.
If the current pace of asset flows continues through the end of the year, the emerging-markets strategy could experience its worst year for investment flows since 2000, when the category had net outflows.
Reuters UK - Fund firm BlackRock held onto the top spot for net sales of British funds to retail investors in the second quarter, according to industry data, helped by sales of its hedge fund-style UK Absolute Alpha fund.
BlackRock had 879.2 million pounds of net sales, up from 713.6 million pounds in the first quarter, according to Lipper Feri’s Fund Sales Report.
The report comes as the funds industry faces lower sales due to volatile and falling markets and investor caution. According to the Investment Management Association, net retail sales were 139.5 million pounds in June, down from 747.8 million pounds a year before.
Reuters Singapore - Investors almost halved the money they put into Asia-focused hedge funds in the second quarter compared to the first three months of the year as a selloff in stocks hurt appetite for risky assets, data showed.
Asia-focused hedge funds received a net $530 million (268 million pounds) from investors in the April-June quarter, down from $1 billion in the first quarter, Chicago-based Hedge Fund Research said in a statement released late on Thursday.
Asian hedge funds grew by approximately $200 million to $100.48 billion, up just 0.25 percent from the first quarter, as inflows were mostly offset by a decline of nearly $320 million due to poor performance.
Reuters - Investors almost halved the money they put into Asia-focused hedge funds in the second quarter compared to the first three months of the year as a selloff in stocks hurt appetite for risky assets, data showed.
Asia-focused hedge funds received a net $530 million from investors in the April-June quarter, down from $1 billion in the first quarter, Chicago-based Hedge Fund Research said in a statement released late on Thursday.
Asian hedge funds grew by approximately $200 million to $100.48 billion, up just 0.25 percent from the first quarter, as inflows were mostly offset by a decline of nearly $320 million due to poor performance.
"Asian hedge fund investors reacted to continuing market volatility by adjusting allocations opportunistically to those regional markets that had posted sharp year-to-date losses," said Kenneth Heinz, president of Hedge Fund Research.
Bloomberg - Aozora Bank Ltd., the Japanese lender controlled by U.S. buyout fund Cerberus Capital Management LP, said first-quarter profit fell 75 percent as fees declined and returns on investments in hedge funds withered.
Net income dropped to 9.33 billion yen ($86.6 million) in the three months ended June 30 from 37 billion yen a year earlier, Aozora said in a statement today. The Tokyo-based bank left unchanged its full-year profit forecast of 44 billion yen.
Aozora’s stock slumped 18 percent during the quarter, the biggest decline of any Japanese bank, after a parent operating loss of 25 billion yen in the year ended March 31. Chief Executive Officer Federico Sacasa and other executives took pay cuts after annual profit plunged 93 percent, the bank said last month.
Reuters Shanghai- Ten new China-focused private equity funds raised $12 billion (six billion pounds) in the second quarter, but poor market conditions have forced foreign funds to delay exits of their investments through IPOs and secondary offerings, consultant firm Zero2IPO said on Thursday.
The second-quarter figure is up 107.6 percent from the same period of 2007 but down nearly 40 percent from the first quarter of this year, according to the firm’s quarterly report.
Some 8.1 percent of capital raised by the 10 funds in the second quarter, or $972 million, target investments in Chinese property markets despite China’s tight monetary policy, which may hurt its real estate industry.
Reuters - Man Group Plc, the world’s biggest listed hedge fund company, said demand for its fund products had remained strong in the first quarter and it was confident about its prospects for the full year.
Sales in the three months to June 30 were $5.0 billion (2.5 billion pounds) while funds under management increased to $79.5 billion from the $74.6 billion seen at the end of March.
"Demand for our fund products has remained strong, both from private investors and institutions," Chairman Jon Aisbitt said in a statement prepared for the annual shareholder meeting on Thursday.
"This success in asset raising reflects the group’s broad geographic presence and the continued attraction of conservatively structured alternative investment products," he added.
Daily Herald- The computer screen on Scott Topping’s desk at Southwest Airlines flickered with row after row of dates and numbers, but they had nothing to do with arrivals and departures. They tracked the price of oil futures for the next several months, and they told a grim tale: No letup in sight from record prices for jet fuel.
"We’re on a one-way street right now," Topping said as he hunched over the screen, shaking his head. It’s Topping’s job to oversee Southwest’s battle to control surging fuel costs. It is the most successful program of its kind in the airline industry.
In the first quarter of this year, Southwest paid $1.98 per gallon for fuel. American Airlines paid $2.73, and United paid $2.83 per gallon in the same period.
New York (HedgeCo.Net) - New York-based Avenue Capital, the hedge fund that manages roughly $20 billion, is back after a lagging first quarter. The company informed investors that the fund experienced gains in May for the second straight month.
The firm’s $1.5 billion Avenue International Ltd Fund was up over 1.5% in May, while the $1 billion Avenue Europe International Ltd Fund and the $574 million Avenue Investments LP Fund followed suit and also posted gains.
Hedge funds are optimistic after experiencing losses stemming from last years credit crunch and subprime fallout. Improved performance in credit markets as of late are making the future look bright for hedge funds.
The Avenue Capital Group was founded in 1995 and is headed by famed manager Marc Lasry. The funds specialize in a long/short strategy while focuses on distressed and undervalued debt and equity opportunities. The company recently raised $6.1 billion for “special situations” trading strategies.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Times Online- Hedge funds are continuing to feel the full force of the credit crunch, with 170 funds forced into liquidation during the first quarter, a Chicago research firm reported yesterday.
The bleak figures published by Hedge Fund Research (HFR) also showed that fewer funds were launched over the three-month period than at any time since 2000.
Publication of the report came as speculation was mounting that several London hedge funds are sitting on heavy losses after being caught on the wrong side of a sharp change in sentiment about future interest rates in the past fortnight.