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.
Wall Street Journal Blogs – Are hedge-fund managers making a comeback with investors? The great recession hammered the hedge-fund industry in 2008. Returns tumbled, redemptions soared and investors began questioning the very underpinnings of the industry. Active managers promise to beat, rather than match, the market’s overall returns and charge fees that can be at least 10 times higher than those of index funds.
The WSJ reported in June that an increasing number of big investors are concluding that stock and bond pickers failed to add any value in the market turmoil and are shifting to index funds. A survey by Greenwich Associates at the time found that about one in five institutional investors said they recently had shifted money away from active managers and into passive index strategies. That was up from just 4% who expected to make that shift when asked from July to October 2008.
Reuters UK – Thames River Capital is hoping to launch two investment grade credit strategies later this year and is looking at how best to target the U.S. institutional market, chief executive Charlie Porter told Reuters.
The independent fund house, which manages $11.5 billion (6.9 billion pounds) in traditional long-only and hedge-fund-style products, has been adding to its investment team to support new products, and hopes to scoop up rivals weighed down by the financial crisis.
"Whenever you have periods of turmoil and tumult, interesting opportunities are thrown up," Porter said in an interview.
Earthtimes – Julius Baer, one of Switzerland’s largest wealth managers, reported Monday a net profit of 324 million Swiss francs (303 million dollars) in the first half of the year, down 37 per cent compared to the same period in 2008.
The private bank said it had 299 billion Swiss francs of assets under management at the end of June, 25 per cent less, year-on-year. Compared however, to the end of last year, when the financial markets were in turmoil, the bank said its position had improved and was experiencing inflows of new capital.
The bank dropped 2 per cent of its workforce, which now stands at 4,255 staff, and personnel expenses fell by 13 per cent to 587 million francs, reflecting a lowering of performance-related bonuses.
Guardian Unlimited – Tumbling markets and redemption waves have been murder on hedge funds, but the turmoil will free up top-tier talent for a quiet but well-heeled corner of the market: family offices.
The world’s wealthiest, not content to hand their fortunes to brokers and banks, can afford to build their own money management businesses. These offices, which would never be considered by top fund managers during the go-go years, suddenly look attractive thanks to their stable capital and long-term investment horizon.
"You follow the money. Right now that is leading people to family offices," said Greg Coules, a former hedge fund manager who is building a family office recruiting practice at New York-based Hunter Advisors.
Reuters – The nation’s second-largest pension fund, the Universities Superannuation Scheme (USS), said it was sticking by a medium-term plan to double exposure to alternative assets such as hedge funds and private equity.
The 23 billion pound pension scheme confirmed the target as it announced its first appointment to a new hedge funds team on Monday.
USS currently has 10 percent exposure to alternatives, making it already one of the more adventurous UK pension funds.
Its plan to increase that to 20 percent, coupled with specific move to boost hedge fund investment, will be comfort to an industry which struggled with poor performance and heavy outflows during a turbulent 2008.
"We believe that the current turmoil in the hedge fund industry represents a compelling investment opportunity for investors like USS who are able to take the long-term view," said USS’s head of alternative assets Michael Powell.
There have been fears that conservative long-term investors such as pension schemes could be put off future allocations to hedge funds.
Reuters UK – The nation’s second-largest pension fund, the Universities Superannuation Scheme (USS), said it was sticking by a medium-term plan to double exposure to alternative assets such as hedge funds and private equity.
The 23 billion pound pension scheme confirmed the target as it announced its first appointment to a new hedge funds team on Monday.
USS currently has 10 percent exposure to alternatives, making it already one of the more adventurous UK pension funds.
Its plan to increase that to 20 percent, coupled with specific move to boost hedge fund investment, will be comfort to an industry which struggled with poor performance and heavy outflows during a turbulent 2008.
"We believe that the current turmoil in the hedge fund industry represents a compelling investment opportunity for investors like USS who are able to take the long-term view," said USS’s head of alternative assets Michael Powell.
Interactive Investor – British fund firm Ashmore Group said it expected the fund-raising environment to remain tough in 2009 as clients continue to cash in investments, after it reported first half profits in line with forecasts.
The group, which specialises in managing emerging market funds, said on Tuesday it sees significant opportunities arising from the turmoil that has hit financial markets, though so far this year it has lost money on its investments. The group said pretax profit for the six months to end-December fell to 80.3 million pounds ($116.9 million) from 100.9 million a year before.
Assets under management fell 34 percent to $24.6 billion during the period as the group suffered net outflows of $5.8 billion and investment losses of $7.1 billion.
Reuters – British fund manager GAM on Wednesday said it had moved to restrict investor redemptions to once a quarter rather than once a month in its funds of hedge funds amid turmoil in the industry.
A spokeswoman for GAM, which is owned by Swiss bank Julius Baer, confirmed the move after an earlier report in the Financial Times.
GAM which runs long-only and hedge funds has seen assets under management decline by about a third this year.
West Palm Beach (HedgeCo.net) – Independent alternative asset and hedge fund management group, Gottex Fund Management Holdings Limited, announced the opening of an office in Dubai to capitalise on the growth opportunities in the region.
In addition, Gottex appointed Wassim Nasrallah as Managing Director responsible for sales and marketing in the Middle Eastern region. With significant business lines already in the Middle East, Gottex says the region is one of its core growth areas over the coming years. The region and office will be managed by Hashem Arouzi, Managing Director and a founding partner of Gottex. Wassim Nasrallah, who recently joined Gottex from Lehman Brothers, will work alongside Hashem Arouzi in Dubai and co-manage the region.
"We are very pleased to announce the opening of our new Dubai office which will enable us to better service and expand our Middle Eastern customer base," Joachim Gottschalk, Chairman and CEO of Gottex, said, "Similarly, we welcome Wassim to Gottex, who, with his extensive experience in the Gulf region, will be essential to our growth plans in the Middle East."
Before joining Gottex, Wassim Nasrallah worked for Lehman Brothers International, where he was Head of Generalist Sales in Dubai for Capital Markets and Investment Management products. While at Lehman he was involved in Private Investment Management in Boston, New York and Dubai.
Incorporated in Guernsey, Gottex provides investment management services to a diversified range of hedge funds and funds of hedge funds. The Gottex group also structures and manages specialised fund of hedge funds, managed accounts, real asset funds and provides related investment advisory services. As of 30 September 2008, Gottex had $13.5 billion in assets under management (AUM).
Christian Johnson Staff Writer for HedgeCo.Net
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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."
CNNMoney.com – It’s time to say goodbye to Old Lane, the hedge fund management company bought by Citigroup last July.
Citi paid a very dear $800 million to snag the fund and its founder Vikram Pandit, who now runs the entire bank, but the fund’s investors got very little out of the deal. One wonders whether Old Lane was doomed from the moment it was bought, and whether death is the fate of funds that become part of Wall Street conglomerates like Citi (C, Fortune 500), Goldman Sachs (GS, Fortune 500) and UBS (UBS) – the mega-banks that have rolled up merchant bankers, trading floors, and personal wealth management groups.
True, the hedge fund had problems independent of Citi, generating a modest 6.5% in its first year and falling about 6% amid last August’s credit turmoil. It continued to lag other multi-strategy funds thanks to bad credit bets. But problems at Old Lane are the latest in a string of blowups at banks that operate hedge funds. UBS shuttered its Dillon Read Capital Management last May due to big credit losses; and those problems gave markets a warning shot of the credit crisis to come.
The implosion of two highly leveraged credit hedge funds last June was the beginning of the end for Bear Stearns. And Goldman Sachs’ flagship Global Alpha fund began 2007 with $10 billion and ended the year with about $4 billion. Each of these debacles has had its own special flavor, but they all show how hedge funds can lose their mojo when they live within a big, bureaucratic institution.
