Funds Hub
Money managers under the microscope
Where pension funds went wrong
Knut Kjaer, adviser to some of the world’s biggest asset pools, and former head of Norway’s government pension fund, told pension funds some home truths at the CFA Institute’s European Investment Conference on Tuesday.
Kjaer said the financial crisis had exposed two main pitfalls in institutional investment – the tendency to run with the herd, and the adoption of overly complex portfolios.
He was especially critical of investors who had made an allocation to hedge funds or private equity as a form of diversification without properly thinking through the implications for overall risk levels. He pointed out that some so-called diversified portfolios had performed very badly during the financial crisis.
So what is a poor pension trustee to do? Kjaer said they needed to construct portfolios that differentiated better between alpha and what is just costly beta: “Particularly in alternative assets you see a lot of beta dressed up as alpha.”
Morning Line-Up: Academics’ retirement and a new life in the country
News and views on the asset management industry from Reuters and elsewhere:
Funds try to cope with demand for farms – Reuters
Universities pension fund backs algo hedge funds - Reuters
JO Hambro to soft close UK Equity Income fund - Fund Strategy
M&G sees rise in Q3 retail flows - Fund Strategy
Got those Great Recession blues
Given the amount of money central banks have been pumping into the global economy you’d be forgiven for thinking we should be getting a pretty decent recovery right now. And whilst that seems true for emerging markets, market participants and consumers just can’t rid themselves of the feeling that there is another shoe yet to drop.
Citi’s Matt King encapsulated this general nervousness in his presentation at the CFA Institute’s European Investment Conference in Copenhagen on Tuesday. And according to King, there are some very good reasons why corporates and households just can’t bring themselves to load up on more debt.
Theirs not to reason why…
Hedge funds have had a tough time since the onset of the credit crisis, what with some poor performance in 2008, looming regulations from the U.S. and Europe, and the general vilification of bankers and financiers in recent years.
However, their plight was thrown into a whole new light yesterday at this week’s Hedge 2010 conference in London’s Canary Wharf, where Caroline Hoare, CEO of hedge fund firm GLC, drew a comparison with the charge of the light brigade.
Morning Line-up: Dog funds, Asian elites and growing hedges
News and views on the asset management industry from Reuters and elsewhere:
Hedge funds took in $3.8 billion in September - Reuters
Asian equity hedge funds outperform – Financial Times
Schroders beats forecasts, shares soar – Reuters
Worst performing funds revealed - This is Money
Bill Ackman’s Howard Hughes impersonation begins…
After years of breaking his way into corporate boardrooms, activist hedge fund investor William Ackman says he is ready for everyone to get back at him. Ackman is set to become chairman of Howard Hughes Corp, a spin-off of mall owner General Growth Properties Inc, which could emerge from bankruptcy as soon as today. Ackman, however, has spent years as an activist investor, targeting some of the world’s largest companies like Target Corp and J.C. Penney, through investments at his New York-based hedge fund Pershing Square Capital Management.
At the Directorship 100 Forum in Manhattan on Tuesday Ackman told a room full of corporate board members that he knows its his turn now:
INSIDER-GLC launches two new UCITS strategies
GLC CEO Caroline Hoare tells Reuters Insider the hedge fund plans to launch two new UCITS-compliant vehicles to draw in new investors.
Manager warns of US government bond bubble
Those investors still gobbling up US government bonds as a nice defensive investment could be in for a nasty surprise, according to James Montier, a member of GMO’s asset allocation team.
Speaking at the CFA Institute’s European Investment Conference in Copenhagen, Montier said there was currently no margin of safety for investing in bonds as yields were just too low. “Rather than being a risk-free asset this could be about to become a return-free risk,” he said. “Historically, when people have bought bonds at these levels they have received a zero return or worse.”
Merrion profits from UK housing malaise
October may have been a strong month for markets (and therefore, by implication it seems these days, for hedge funds), but that hasn’t stopped some short-sellers from profiting.
Mike Nicol, manager of the Merrion European Absolute Return hedge fund, says he did well out of new short positions in housebuilders Barratt Developments and Taylor Wimpey. Both fell around 21 percent during the month, while the FTSE 100 rose 2.2 percent.
