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 – From the edge of the abyss, most investment banks and hedge funds have roared back this year thanks to equity markets that have surged 60 percent from their March lows and healthier credit markets, said Novogratz, who manages $4.6 billion through Fortress’ Drawbridge global macro hedge funds.
But the post-crisis surge cannot last, he said. A still-shaky economy and volatile stock markets with no clear direction will suck the wind from the sails of investment banks, trading houses and the hedge funds, he said.
“Mark my words: Next year will be far harder for Wall Street to make money,” Novogratz said. “The easy meat is off the bone.”
Bloomberg – Hedge fund assets increased by $10.6 billion in July, rising for a third straight month, as managers trading shares benefited from global stock market gains, according to Eurekahedge Pte.
Net inflows into the industry totaled $2.1 billion, while gains through performance were $8.5 billion, bringing total assets under management to $1.35 trillion, the Singapore-based research firm said in a report posted on its Web site.
Hedge fund managers are making a comeback after suffering their worst year on record in 2008, as stock markets recover amid optimism that stimulus measures will help put an end to the worst of the global economic recession. The MSCI World Index jumped 8.4 percent in July, bringing its year-to-date advance to 14 percent.
Business24-7 – Six months after their worst drawdown on record, regional stock markets are outperforming the Middle East and North Africa (Mena)-focused hedge funds, suggesting markets are once again warming up to equity participation.
According to Emirates Business research, Mena markets have posted gains of 9.73 per cent on average, beating the 10 region-focused hedge funds, which have posted returns of 4.4 per cent since the beginning of this year.
Even the GCC markets, battered by their exposure to relatively lower oil prices and global economic environment, have turned in a marginally better performance, at 4.42 per cent, suggesting that risk appetite among investors in the regional markets is on the upswing.
Reuters UK – Most strategies employed by hedge fund managers globally failed to generate positive returns in June as stock markets moved sideways and commodity prices slid during the month, according to estimates from Lipper on Tuesday.
The best-performing hedge fund strategy was "convertible arbitrage" which returned 0.28 percent, while the worst-performing strategy was "managed futures" which lost 1.59 percent. Long/short equity hedge funds declined 0.23 percent.
Overall, nine of the 13 strategies tracked by Lipper lost money last month.
The Guardian – The BIS said the retreat from riskier investments such as stocks in favour of safer bonds could pressure stock markets, delaying their recovery. "Similarly, the decline in the pension wealth of households participating in defined contribution plans and of employers sponsoring defined benefit plans has implications for aggregate spending," the BIS said.
Hedge funds did not play a central role in shaping the crisis but they will feel its impact, the BIS said.
After many wealthy individual investors withdrew, the funds are targeting institutions.
"Such a shift engenders demands for greater transparency about the investment strategy and greater scrutiny of risk management processes," the BIS said.
Reuters – The current rebound in stock markets is a bear rally and could turn by September, according to hedge fund manager Hugh Hendry, who has recently cut exposure to agricultural stocks.
Hendry, who is partner and chief investment officer at Eclectica Asset Management, said that while stock markets have rallied in recent months on hopes for an economic upturn, developed economies are still heading for a 1930s-style depression.
"To date we are maintaining the profile of the economic contraction that we witnessed in the 1930s. Nothing as yet has changed that profile. It’s still a profile of concern to me," he told Reuters on the sidelines of the GAIM 2009 conference in Monaco.
CNBC – Hedge funds posted their best monthly performance in a decade in May, taking advantage of rallying stock markets and distressed opportunities across the board, according to the latest numbers from the Absolute Return Composite of hedge fund indices.The industry has been increasingly under the microscope by Washington and investors alike since the second half of last year. On top of registering their worst performance ever in 2008, with the average fund down 19 percent for the year, the $50 billion Madoff fraud delivered a severe blow to the already suffering industry and gave rise to a huge wave of redemptions.
But this year has been different. On average, hedge funds gained 3.1 percent over May, bumping up year-to-date gains across the $1.33 trillion industry to about 6.1 percent.
Forbes – The current rally in stock markets may be the start of a new bull market, said hedge fund manager Crispin Odey, founding partner at Odey Asset Management and one of the hedge fund industry’s highest profile figures.
‘Opinion is divided over whether this is a bear market rally or the beginning of a new bull market. I think it has the chance to be a new bull market,’ Odey said in a note to clients.
‘In little over a month much has changed’, following a sharp rally in stocks led by banks and base materials stocks, he said.
guardian.co.uk – The shadow business secretary, Kenneth Clarke, has become the latest victim of the credit crunch after losing his job on the board of a hedge fund, the Guardian has learned.
Clarke, who was parachuted back on to the Tory frontbench to beef up the party’s handling of the financial crisis, has been axed from the board of Centaurus Capital as the sector faces its worst crisis in decades.
The hedge fund, which like other investment companies faces huge withdrawals of cash from clients anxious about plunging stock markets, has scrapped its advisory board, which also included José María Aznar, the former Spanish prime minister.
Wall Street & Technology – Global investors boosted their equity holdings for the second month running in December and cut bonds, thanks to signs of stabilising stock markets and tumbling government bond yields, Reuters polls showed on Monday.
Surveys of 44 leading investment houses in the United States, Japan, continental Europe and Britain showed an average mixed-asset portfolio holding 56.0 percent in stocks, up from 54.8 percent in November. However, it still remained below the long-term average holding of almost 60 percent.
Bond holdings fell to 33.0 percent in December from 34.3 percent the previous month, above the long-term average of around 32 percent.
Cash rose to 5.4 percent from 5.3 percent.
A rise in the respondents’ equity holdings comes as world stocks, measured by MSCI, rose nearly 20 percent after hitting a 5-1/2 year low on November 21.
A round of central bank interest rate cuts worldwide and the introduction of fiscal stimulus packages in major developed and emerging economies have helped convince many investors that stock markets might bottom before long.
Reuters – Ramius Capital, an activist hedge fund, is informing its investors that it will close four funds with a combined $550 million in assets, the Wall Street Journal said, citing people familiar with the fund.
The assets of the four funds are focused in convertible bonds, distressed credit and securities of merging companies, the paper said.
Ramius’ biggest fund, the $2.1 billion multistrategy Ramius Fund, could shrink by about $500 million or more if investors stick with plans to pull out money, the paper said citing people familiar with the fund.
"Going forward, these strategies will continue to be important allocations in our multistrategy funds and will continue to be managed by the same portfolio teams," a spokesman for Ramius told the paper.
New York (HedgeCo.Net) – New York City-based Ramius Capital will close four of its hedge funds that manage about $550 million in capital, the Wall Street Journal reports citing people familiar with the matter.
The closing hedge funds are concentrated in convertible bonds, distressed credit and securities of merging companies.
Some of the money in these funds could be transferred to Ramius’ largest, $2.1 billion multi strategy fund. However, as the company deals with a wave of redemption requests, the multi strategy fund could be in danger of losing about $500 million of its value.
“Going forward, these strategies will continue to be important allocations in our multi-strategy fund and will continue to be managed by the same portfolio teams,” Ramius told the Wall Street Journal.
Ramius currently manages about $10 billion in capital. It recently offered its main hedge fund clients lower management fees to keep their loyalty with the firm.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
