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.
Bloomberg – The European Union’s plan to regulate hedge funds will cost the bloc’s pension industry about 25 billion euros ($36 billion) a year, the Alternative Investment Management Association said.
The proposed law would drive pension funds toward more traditional assets such as equities and bonds or cut the returns on their investments in hedge funds and private equity, London- based AIMA, the largest trade group representing the industry, said in a statement today.
“This is an estimated figure but it shows the potentially enormous impact that the directive could have on Europe’s pension funds and in the longer term, Europe’s pensioners,” AIMA Chief Executive Officer Andrew Baker said in the statement.
Seeking Alpha – The innovators were out with guns blasting as they introduced an ETF that acts like a hedge fund. How has it been doing since the March 25 launch?
This new ETF, established by Index IQ analyzes publicly available hedge fund performance data and then tries to replicate returns utilizing ETFs and other liquid trading vehicles. Additionally, it promises to perform as well as a hedge fund without the risk and with low correlation to traditional assets. Another benefit that this ETF could offer to investors is risk reduction because of its low correlation with the stocks and bonds that already dominate an investor’s portfolio.
Reuters – China Investment Corp, the country’s sovereign wealth fund, will start investing in Japanese equity markets by March, a Japanese newspaper reported on Sunday.
The $200 billion (111 billion pounds) fund is screening Japanese banks at which it holds accounts to settle yen transactions, Japan’s Mainichi Shimbun daily reported.
The paper also said a Chinese government-affiliated think tank had conducted research on how Japanese companies would react if the fund were to build a 20 percent stake in them.
Financial Times – China’s State Administration of Foreign Exchange has agreed to invest more than $2.5bn in the latest TPG fund, in what could be the largest commitment ever made to a private equity firm, people familiar with the matter say.
The investment by the Chinese entity, known as Safe, underscores the growing inclination of sovereign wealth funds to invest through private equity firms – rather than directly – to minimise the potential political backlash to their growing activity.
It also illustrates the growing importance of sovereign wealth funds to private equity firms at a time when pension funds and non-profit endowments are cutting back their exposure to leveraged buy-out investments.
Investments in private equity firms are usually not made public, but industry executives believe the largest previous investment in a private equity firm came from pension funds in the US states of Oregon and Washington. The two funds both invested about $1bn to $1.5bn in Kohlberg Kravis Roberts.
Safe declined comment.
In recent years, a growing percentage of the money for US private equity firms has come from overseas. In 2002, for example, 25 per cent of the money that Blackstone raised came from outside the US. In 2005, it increased to 40 per cent.
China Investment Corporation, another sovereign wealth fund, has been given authority to invest a small portion of China’s $1,600bn in reserves.
Reuters- Sovereign wealth funds, which control up to $3.7 trillion in assets and have been making headlines as they buy assets in the West, will ultimately have the biggest impact on private equity and hedge funds, analysts at JPMorgan Chase said in a report on Thursday.
State-run investment funds currently own up to 7.5 percent of so-called alternative assets, or about $340 billion, and this stake could grow to as high as 17 percent by the end of 2012, said David Fernandez and Bernhard Eschweiler, analysts at the bank. "The main beneficiaries of the increased allocation by SWFs to alternatives are set to be private equity firms and hedge funds. These managers offer skills, resources and expertise that would be difficult for most SWFs to develop on their own," they said in the report. Indeed, last year one of the highest profile deals among sovereign wealth funds was the China Investment Co Ltd’s purchase of a $3 billion stake in U.S. private equity firm The Blackstone Group.
