Funds Hub

Money managers under the microscope

A timely withdrawal?

February 27, 2009

Spanish bank BBVA’s move to close down its alternative investment arms including hedge funds shows just how much things have changed in the industry, even within the past year.

rtr22m3jBBVA said it had “decided to anticipate the possible effects of the current situation of markets and of the alternative investment industry”.

And judging by forecasts, the possible effects could be fairly bad for many hedge fund firms.

Research from Morgan Stanley shows 2009 may not be any better than 2008 for the once-booming industry, and could actually be worse.

The bank expects industry redemptions of between 15 percent and 30 percent this year, after 20 percent withdrawals in the second half of last year, taking the industry below $1 trillion in size.

It now seems an age since money was gushing into hedge funds and assets were rising above $2 trillion on some measures.

Even last year the industry saw net inflows during the first half, according to Hedge Fund Research.

Man Group’s Swiss-based fund of hedge fund unit RMF, which was caught out by the Bernard Madoff scandal, looks like another one to suffer, according to Morgan Stanley.

It now believes RMF will see RMF’s assets will fall by around 75 percent from peak to trough, adding Madoff is “a key aspect”.

Some in the hedge fund world have optimistically predicted a levelling off in hedge fund assets and maybe a pick-up as performance improves.

But it looks as if a lot more funds in London and the U.S. will have to close before the industry’s downturn is over.

Comments

Alot of these so called savvy investors need to read a copy of Thomas Paines “COMMON SENSE”, when it comes to putting their entire fortunes in these fly by night financial scams. Forensic analysis is a must, so that all of the derivative products these investors put their money in can be substantiated to the nth degree. A saying I learned on Wall Street said ” NO PLACE BURIES ITS DEAD SO GRANDLY AND FORGETS THEM SO QUICKLY, WHICH IS UNDERSTANDABLE WHEN LIFE IS PERCEIVED AS A SERIES OF DISCRETE TRANSACTIONS”!!!!…..Another Wall Street saying goes: “THERE ARE 2 THINGS YOU SHOULD NEVER SEE IN YOUR LIFETIME, HOW THE MEAT INDUSTRY MAKES ITS SAUSAGE AND HOW THE INVESTMENT BANKER MAKES HIS DAILY BREAD!!!”…….To Citibank, Bank of America, Chase and Wells Fargo and The Royal Bank of Scotland, Bernie Madoff & Allen Stanford….GOOD RIDDANCE TO THE NTH. DEGREE!!!!

Posted by LOUIS WOOLF | Report as abusive
 

Transparency is one of the big issues raised by the credit crisis and the Madoff and Stanford scandals. Investors and regulators alike are pushing for more information on exactly what managers are doing with investors’ money, but at the same time hedge funds will be wary of giving up their trade secrets.

Posted by Laurence Fletcher | Report as abusive
 

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