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The evolution of due diligence Part 5 – PAMCO: last year’s events have merely provided further validation for heavy resource commitment to DD

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Benedicte Gravrand, Opalesque London:

Some funds of hedge funds (FoHFs) and due diligence (DD) providers have had to review their methodology since the beginning of the credit crunch and the subsequent uncovering of frauds such as Madoff’s. Opalesque spoke to several industry players about their approach. Our conversations are presented in a Q&A format – as are DD forms.

Most of the FoHFs interviewed for this series said they had not re-organised their DD resources – they had been doing it right all along – although one said that “meaningful evolutions were implemented in the second half of 2008.” Although no new risk areas have been introduced since last year, all managers t………………….


For full article :  http://www.opalesque.com/56048/The_evolution_of_due_diligence_Part_5048.html


Review of hedge fund launches, closures, trends, regulatory, and legal events – week 35

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Allianz SE
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By Benedicte Gravrand, Opalesque London: A roundup of last week’s hedge fund launches, closures, index performance, trends, regulatory, legal and financial events pertaining to the alternative investments world.

Last week, we heard of fund launches or possible launches from Desert Shores (momentum trading); Allianz (European Ucits III); 613 Capital (global L/S); Aviva (UK Absolute Return); Noctua (global macro); and Spruce Point Capital (L/S value).

 The HFN Hedge Fund Aggregate Average Index was up 2.56% in July, +12.03%YTD; and HFR reported that emerging markets hedge funds had gained 19% for the quarter, and that assets were up by $10bln, to $77bn.

It is not the smoothest time for funds of hedge funds; it was found that investors had pulled $200bn from Europe’s largest FoHFs since Sept-08; UBP confirmed it would reduce its staff by 10%; and Gottex cut fees for investors in its listed products.

 Some ranking lists from Alpha had Sparx, Value Partners, Artradis, ADM on top of the Asia list and Brevan Howard, Man, BGI, BlueBay on top of the Europe list.

 Some of the fund managers who hit the headlines last week were: Einhorn, who said that Greenlight had “no net long exposure to equities;” short-seller Jim Chanos, who was said to be looking at pharmaceuticals, accused the UK prime minister of ignoring the credit crunch alarm bell; and John Paulson, who is pushing into gold, bought a stake in Citigroup.

 TCI’s Chris Hohn is to let investors withdraw cash from its fund and introduce a more liquid share class; clients of Cerberus Capital Management‘s core hedge funds opted to withdraw the majority of money from the funds; and Goldman Sachs Asset Management became the latest manager to announce a levy on investors coming and going from its funds.

For full article go here: http://www.opalesque.com/54462/Review_of_hedge_fund_launches_closures_trends462.html

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August 31, 2009 at 12:08 PM

Single hedge fund manager AUA still at $2.079 trillion (down $730.647 billion), according to industry’s most comprehensive survey

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carbon 360Carbon360° Research (link: CARBON360), an Opalesque Group company, will soon be releasing its 2009 Hedge Fund Administration Fact Book, where it meticulously features and compares all 130 hedge fund administrators side by side. The analysis of the material offers surprising insights. Please also note the list below with the updated AUA of the top 25 hedge fund administrators (by single manager and FoF AUA).

The Carbon360° Report illustrates that previously reported hedge fund industry assets under management (“AUM“) have been grossly underestimated. However it also shows that third party hedge fund administrators have come under pressure through the asset decline.

The good news at this point is that with the Q2 of 2009, hedge funds had their best quarter in nine years as risk appetite came back strongly. All styles except for managed futures made profits. Overall, hedge funds are back on track. The liquidity situation has improved considerably and many gated or suspended funds could liquidate their holdings in an orderly fashion and, in some cases, lift redemption restrictions earlier than expected. (see our following article “Hedge funds are back on track”).

Hedge Fund Research (HFR)says redemptions slowed to $42.8 billion in Q2, compared to $103.2 billion in Q1, according to their database. Many funds are seeing net subscriptions for the first time since Q3 2008. Overall, industry assets under management rose by $98.9 billion, or 7.4%.

In addition to inflows into existing funds, hedge fund administrators tell Opalesque that new funds are being set up and the “conversion” trend of formerly self-administered hedge funds to opt for third-party administration is still ongoing.


Hedge Fund Administration Industry’s Most Comprehensive Survey Registers Record Asset Declines

Total Alternative Assets under Administration plummet an eye popping $1.347 trillion, Fund of Funds down 32% 

Single Hedge Fund Manager AUA down $730.647 billion but still at $2.079 trillion

Mergers, concentration, cost cutting and closures among Administrators?

For full story :http://www.opalesque.com/53895/Single_hedge_fund_manager_AUA_still_at895.html

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August 7, 2009 at 5:37 AM

Review of hedge fund launches, closures, trends, regulatory and legal events – week 31

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Goldman Sachs Tower at dusk, with the Moon han...
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By Benedicte Gravrand, Opalesque London: A roundup of last week’s hedge fund launches, closures, index performance, trends, regulatory, legal and financial events pertaining to the alternative investments world.

Last week, we heard of fund launches from Goldman Sachs (UCITS L/S US equities); Natural Capital (green); RWC Partners (US L/S funds); Bookbinder Capital (green); Magister Ludi Capital (global macro); TrueBeta (rules-driven); ADM; ACG (Japan market neutral); and probably SRM Global. Polygon closed its Global Opportunities fund and is raising money for two new hedge funds.

Amber Capital Investment Management got back its assets from Lehman Brothers’ prime-brokerage unit and plans to return about $600m, or 60% of its hedge funds’s NAV to investors; UK hedge fund Lansdowne Partners stopped accepting investments in its flagship fund; RAB Capital reported H1 loss of $4.5m with AUM down $600m and said clients are returning to some hedge funds; Martin Currie Investment attained conformity with the Hedge Fund Standards Board’s (HFSB) best practices for hedge fund managers; and Nicola Horlick is rumoured to be seeking to regain influence at Bramdean Alternatives.

The following trends were noted: Hedged mutual funds (HMFs) may be a dominant trend in the next hedge fund industry cycle; 20 out of 22 hedge fund managers interviewed by Moonraker Fund Management in the U.S. are buying gold to protect their personal wealth against excessive inflation; and “position calibration” is becoming a source of alpha.

For full story: http://www.opalesque.com/53839/Review_of_hedge_fund_launches_closures_trends839.html

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Review of hedge fund launches, closures, trends, regulatory and legal events – week 30

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By Benedicte Gravrand, Opalesque London: A roundup of last week’s hedge fund launches, closures, index performance, trends, regulatory, legal and financial events pertaining to the alternative investments world.

Last week, we heard of fund launches from Centaurus (event-driven); Tribridge (special sits); Instinct Capital (Japan); DS Credit Strategies (ABS); TKNG Capital (global macro); Golden Hedge Umbrella (multi-strats); GLG (long-only FoHFs); Silkstone Capital (E.M.); and AGS Capital (PIPE, fixed income, reserve equity).

The Lyxor investable index was flat in June (+2.2% YTD); the Eurekahedge Hedge funds Index was up 0.2% (9.54% YTD); the Parker FX Index was down 0.25% (0.19 YTD); and the Morningstar 1000 Hedge Fund Index posted its largest quarterly increase (9.25%), -0.20% in June, 8.93% YTD, with estimated asset flows of -$1,350.6m in May; HFR found that the hedge fund industry assets had surged as performance was leading to an industry recovery, assets invested in the hedge fund industry had increased by $100bn in Q2-2009, which ended at $1.43tln.

Revere Capital Advisors, an investment group focused on emerging hedge funds managers, announced the re-launch of San Francisco global macro manager Bayswater A.M.; Union Bancaire Privee (UBP) may turn 70% of its underlying hedge fund investments into highly liquid managed accounts.

Swiss hedge fund Jabre Capital eased its redemptions terms; Abbey restructured its Global Macro Fund to offer investors weekly liquidity; Dutch FoHFs manager Attica is letting investors subscribe and redeem again from its flagship fund; Howard Marks, the chairman of Oaktree Capital Management, joined the rallying cry against sky-high fees paid to managers of hedge funds in a recent letter to clients; London hedge fund Polar Capital Partners imposed an innovative fee on investors withdrawing from one of its funds to help cover any losses to the portfolio; NYC Weiss Multi-Strategy Advisers removed the provisions of gates and side-pockets from its flagship fund.

Full story: http://www.opalesque.com/AMW/50/Review_of_hedge_fund_launches_closures_trends50.html

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July 30, 2009 at 9:08 AM

Hedge fund managers staying with underwater funds, taking long-term views of their business

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WASHINGTON - NOVEMBER 13:  Hedge fund manager ...
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For many funds, high watermarks were set in October 2007, and the 21 months since have been a long, hard climb to try and get back to levels where performance fees kick back in. Hedge Fund Research reported on Tuesday that according to its HFRI Fund Weighted Composite Index funds had an average climb of 14.7% to reach that point.

As the industry’s performance disappointed throughout 2008 the number of hedge funds contracted significantly, leaving approximately 8,900 funds (down from a high of 10,000+ funds in 2007). However, the worries that numerous managers would fold funds that had descended below high watermarks in order to start new funds that would be eligible for performance fees has not panned out.

Kaufman Rossin Fund Services, LLC (KRFS), a US-based administrator for a wide variety of single strategy funds and fund of hedge funds funds (onshore and offshore), says that when it comes to funds that have been under high-water marks, it has seen managers “sticking it out”, taking a long-term view of their funds and the industry in general.

The bounce back in hedge fund performance, happening rather quickly in the first half of 2009 (HFRI Fund Weighted Composite Index is up +9.46% YTD), may have made the decision to stick with their funds a little easier for many managers. “We feel that among many managers, there is a sentiment that 2008 will be an outlier over the long haul,” says Christine Egan – Business Development Manager at KRFS.

For full story: http://www.opalesque.com/53670/Hedge_fund_managers_staying_with_underwater670.html

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Castle Asia Alternative: Opportunity in Asia Pacific hedge funds larger than ever

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UN geoscheme subregions of Asia:         Easte...
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The Asian hedge fund universe has grown significantly in recent years, with around 1200 Asia focused hedge funds managing over USD 160 billion, compared to just USD 14 billion at the end of 2001*. Diversity has increased and there are now talented, credible managers in most strategies, making it possible to build a truly multi-strategy Asian fund of funds portfolio.

Sentiment in Asia remains positive, underpinned by low interest rates, record loan growth (especially in China) and policy action aimed at maintaining strong liquidity conditions and stimulating domestic demand. Asia has not seen the same level of contraction in consumption as personal and corporate financial leverage was not on a par with Western economies. Asian economies continue to grow, backed by healthy financial systems and efficient internal growth engines in Asia’s largest markets of China and India.

Whilst Japan appears susceptible to a difficult global environment given its lacklustre domestic story, opportunities exist as corporates respond to difficult operating conditions via cost-restructurings and as the market plays catch up to the rest of Asia. We decided to increase our allocation to three Japanese long/short managers in May.

Full story: http://www.opalesque.com/53595/Castle_Asia_Alternative_Opportunity_in_Asia_Pacific595.html

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July 21, 2009 at 9:36 AM