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- Beleaguered Swiss bank UBS is considering the sale of Paine Webber, the heart of its U.S. wealth management business, according to sources with direct knowledge of the matter.
UBS is under pressure from the Swiss financial watchdog and from one of its top shareholders, Olivant, to overhaul its business after more than $37 billion (18 billion pounds) in writedowns during the credit turmoil.
The bank’s management, led by Chief Executive Marcel Rohner, is also grappling with the U.S. trial of a former employee for helping a billionaire client hide $200 million.
Guardian.co.uk- Foreign sovereign wealth investors are targeting London’s hedge fund industry as they seek to boost returns on their vast savings, much of it generated from trade with the west in oil and other commodities.
The hedge funds have seen billions of pounds pour into their investment plans at a time when the industry desperately needs cash to replace debt funding that collapsed during the credit crunch.
According to a survey by the magazine Hedge Fund Manager Week, the rapidly expanding group known as fund of hedge funds are the main beneficiary of investments from sovereign wealth funds. Assets in fund of hedge funds, which spread their investments across a range of individual projects, have grown 10% in the last six months to £700bn.
Fortis Prime Fund Solutions topped the table of funds, with assets under administration of £107bn. Total industry assets have reached £2.2tn, according to the magazine’s annual Hedge Fund Assets Under Administration survey.
Hedge Funds Review Magazine- In early 2007 HNWIs bet heavily on riskier asset classes. However further into the year, financial market turmoil and economic uncertainty intensified and HNWIs began to shift their investments to safer, less volatile asset classes.
Exposure to property and hedge funds was reduced in favour of safer investments, according to the “World Wealth Report” from Merrill Lynch and CapGemini.
An increasing proportion of hedge fund assets are coming from institutional investors instead of wealthy clients. This is shifting the main drivers of the industry’s growth.
“This year’s report found that the number of high net worth individuals, and the amount of wealth they control, continued to increase in 2007, with the greatest wealth being created in the emerging markets of India, China, and Brazil,” said Nick Tucker, market leader for the UK and Ireland, global wealth management arm at Merrill Lynch.
Hartford Courant- An investor has sued a Greenwich hedge fund management firm, accusing its operators of siphoning off money and enriching themselves at the expense of investors.
Westerly Capital sued Windmill Management LLC, manager of SageCrest hedge fund, and operators Alan and Philip Milton and Richard Weyand in Stamford Superior Court earlier this month.
It is demanding an accounting of money that has been lost and accuses the operators of Windmill of overvaluing fund assets "in furtherance of a scheme and/or course of conduct designed to personally enrich themselves even if this proved detrimental to the fund and its investors."
Financial Times – Hedge funds have more than $2,900bn under management, according to a survey of valuers of their assets, sharply up on last year in spite of the credit crunch and a series of high-profile problems in the industry.
The survey of assets under administration by Hedge Fund Manager Week, a trade magazine, showed the total had jumped 20 per cent in the past year and continued to climb over the past six months even as the credit squeeze intensified.
The scale of the growth – up by $230bn in the six months to April – suggests concerns about hedge fund losses and a slowdown in flows of new money into the industry may be overstated.
However, the rate of growth is slowing, with the 9 per cent rise in the most recent six months well below the 17 per cent growth in the magazine’s last survey.
Hedge fund administrators act as independent valuers of hedge fund assets, giving investors updates and providing regulatory, legal and accounting services.
They are used by almost all European hedge funds and an increasing number of US funds, who are under pressure from investors to provide independent valuations.
Valuation practices are being closely scrutinised by regulators, with hedge funds in the UK and US setting up codes of best practice this year, with a focus on how to deal with hard-to-value assets such as private equity or structured credit.
West Palm Beach (HedgeCo.Net)- Hedge Fund Investor AIG and Advisor Larch Lane have announced the formation of a joint venture to make seed investments in hedge funds. The joint venture seeks to capitalize on synergies between AIG Investments’ global alternative investment and hedge fund capabilities and Larch Lane’s specialization in hedge fund seeding.
Targets may include hedge fund start-ups, teams leaving established hedge funds, and established hedge funds in need of restructuring. They anticipate investing $50-200 million per deal across a wide range of hedge fund strategies and geographies.
"Talented investors are leaving large hedge funds to start their own businesses, but many of them have not been able to reach their capital targets." Mark Jurish, Larch Lane’s CEO said, "The current supply/demand imbalance for start-up hedge fund capital represents the best seeding opportunity I’ve ever seen"
AIG Investments manages over $10 billion of hedge fund assets and has been investing in hedge funds for 26 years. AIG is currently invested in more than 130 hedge funds, including emerging managers. Larch Lane, the alternative investment affiliate of Old Mutual Asset Management, is among the pioneers in the hedge fund seeding business and has made a total of 22 seed investments over the course of the last seven years.
Reuters – American International Group Inc’s asset management division has reached a joint venture agreement with Larch Lane to make seed funding investments in hedge funds.
The AIG Investments and Larch Lane venture expects to invest between $50 million and $200 million in each deal, according to a joint statement on Wednesday.
Larch Lane is an affiliate of Old Mutual Asset Management, the U.S. asset management group of Old Mutual Plc.
AIG Investments currently manages about $10 billion in hedge fund assets, spread among 130 hedge funds. Larch Lane has invested in 22 hedge fund start-ups over the last seven years, according to the statement.
"This venture gives us the opportunity to not only invest with up-and-coming managers, but to also participate more directly in the profit growth of a rapidly growing industry," said Robert Discolo, AIG Investments’ head of hedge fund strategies.
