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The Guardian – Value of assets held by the world’s sovereign wealth funds fell to $3 trillion this year from $3.6 trillion at end-2007 as the credit crisis nearly halved their equity portfolio, according to Deutsche Bank.
The German bank’s report on state-owned investment funds also highlighted their positive long-term prospects, with their total assets under management likely to more than double to $7 trillion in the next 10 years.
Sovereign wealth funds (SWFs), which have replaced hedge funds and private equity as major movers of corporate mergers and acquisitions, have taken a dent in their wealth after pouring $80 billion into major banks just before the credit crisis escalated into major market turmoil.
New York Times – Two weeks from now, a seven-year-old hedge fund called Alson Capital Partners will return around $800 million to its investors, and shut its doors for good.
The fund was founded and managed by Neil Barsky, 51, a former Wall Street Journal reporter-turned-Morgan Stanley analyst, who started his first hedge fund in 1998, just as the “hedge fund decade” was gaining steam. He was an old-fashioned stock picker who ran Alson Capital as a classic “long-short” stock fund, meaning that he bought companies he thought had good long-term prospects, while shorting companies he thought were likely to fall off the cliff. At its peak, Alson Capital had $3.5 billion under management, charged a 1.5 percent management fee, took 20 percent of the profits, and, when you include Mr. Barsky’s predecessor fund, produced compounded annualized returns of 12.11 percent a year. It’s fair to say he’s made a pretty penny.
West Palm Beach (HedgeCo.net) – Deutsche Bank’s foreign exchange (FX) trading platform, dbFX.com, reported a surge in customer numbers in 2008 as FX grew as an asset class of choice for investors amid the financial crisis.
The trading platform saw customer numbers increase by over 250%, as investors looked to FX as an alternative, and uncorrelated, asset class to equities and bonds. Volumes also notably increased from 2007, as investors took advantage of significant volatility in the market.
From a currency perspective, the EUR/USD was the most popular currency pair on the platform accounting for 41% of all trades, versus 20% of volume the previous year.
"Retail FX’s popularity as an asset class truly soared in 2008 from a customer and trading perspective," Betsy Waters, Global Director of dbFX.com, commented, "Looking ahead, we’re very bullish about the long term prospects for retail FX. As active traders become disenchanted with the equity markets they will turn to the FX markets for trading opportunities. In many countries, retail traders can only buy and hold equities, while FX markets offer the ability to buy and sell currencies based on your market views."
"Ultimately, FX is proven to be uncorrelated to bond and equity markets so it’s no surprise that retail investors are looking to FX, which is a proven asset class with institutional investors as a means of generating returns.” Waters concluded.
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