Funds Hub
Money managers under the microscope
Morning Line-up: CoE Vs News Corp, raided hedge funds, bonuses
News and views on the asset management industry from Reuters and elsewhere
Church of England against News Corp’s BSkyB takeover- FT
Morning Line-up: bonuses, London’s position, Chinese trusts
News and views on the asset management industry from Reuters and elsewhere
Osborne’s watered down bonus disclosure – FT
Unstable, greedy, selfish….
Not the words ringing in my ears as I leave for work every morning, but City of London Investment CEO Barry Olliff’s take on the UK financial sector.
Olliff is taking his company from AIM and onto the main market next month and the new governance guidelines which will apply to the firm as a result have sparked a frank assessment. Take it away, Barry:
“From my experience of the City, when I consider remuneration and remuneration packages, I’m taken in the direction of instability, greed and selfishness…”
“…the City is made up of many selfish people who are encouraged by management, and management’s approach to remuneration, to develop egotistical tendencies. This culture of greed, in my opinion, manifests itself often via a lack of risk awareness, poor team spirit and significant key man risk…”
“…we are not looking for freedom fighters. Rather we would say it is better to appoint decent people, who can genuinely work in a team environment, than appoint just no1′s. We often say, better to appoint a good no2 who is a decent person than a no1 who is greedy, political and does not consider the maintenance and development of the brand…”
Oof… and there’s more. Olliff is clearly not convinced by the fashion for deferred bonuses, designed in theory to protect clients from short-termist bankers and asset managers.
“Is this really the way to go? Why not pay someone on time for their work. Or, is this meant to delay their departure, a sort of enforced loyalty? Or is it that there is insecurity regarding the profits that the individual has created? If this is so then surely the focus should be on the quantum, measurement and the quality of the corporation’s earnings.”
Rasmussen gives the bankers both barrels
Poul Nyrup Rasmussen’s visits to London are always value for money, and today was no exception as the president of the party of European socialists launched into a tirade against banker bonuses.
“When I listen to you it’s like you’re living in another world,” he told an audience of financial executives and journalists at a Chatham House conference after a number of questions from the floor suggested EU plans for tighter regulation might be counter-productive.
“Have you heard about the recession? Do you know that we have lost 7 million jobs in Europe? Do you know that?
“Do you know that thanks to society you’re still sitting here. They are the ones who are bailing out the banks and you’re still insisting that you should have your bonuses on taxpayers’ money.
“Can you understand the seriousness of people’s anger? I don’t hear any indication of your understanding of that, and that’s a problem for you. Because if you don’t listen and if you don’t honestly go into a discussion on how to make real regulation but insist that you should not have regulation … that’s not a sustainable point.
“So in your own interests, can I give you good advice? Sit down at the table and start by recognizing that you have had a co-responsibility and a heavy one in the reasons behind the mess we are in right now… It is inevitable for me to say you are going to have regulation.”
Morning line-up
News and views on the hedge fund industry from Reuters and elsewhere:
Caymans woos investors with immigration incentives – Reuters
Hedge fund maths on YouTube – NPR
The slow march of new Hedgies – WSJ
Hedge funds won’t die - Institutional Investor
Morning line-up
Hedge fund stories from the past 24 hours from Reuters and elsewhere:
Will hedgies switch to Bahrain? – Seeking Alpha
Event driven revival – FT
EU assault on hedge fund pay – Reuters
Blochet quits Brevan – Telegraph
Madoff yard sale: Baseball Jackets, coolers and fishing tackle – Reuters
Boutiques are back
Starting a hedge fund from scratch has become notoriously difficult in the last couple of years.
Gone are the days, it has been said, when two traders with a terminal could rent out office space in Mayfair and attract a few hundred million dollars. Instead traders are staying put, either in banks (where they can) or in larger hedge funds.
Or perhaps not.
With pressure from French president Nicolas Sarkozy to cut back on banker bonuses, the talk is that talented traders could once again be looking to start up their own funds, where they can set their own pay.
Today the launch of Nexar Capital, a new hedge fund firm set up by former Soc Gen bankers and backed by private equity firm Aquiline Capital, was announced.
France is not the only country where banker pay is a huge political issue. With increasing signs money is returning to the hedge fund industry again, setting up your own hedge fund and (for the moment) setting your own pay could be back in vogue.
Every Cloud…
As politicians and regulators worldwide prepare a new blueprint to marshall the hedge fund industry, the organisers of the GAIM industry conference release the early agenda for their annual Monaco pow wow.
Unsurprisingly, the June 16-18 summit takes the theme: Transformation In A New World Order. And even less surprisingly, several sessions are set to ponder how to best snag a new breed of circumspect investors, and how to adapt to a new regulatory environment.
There are some introspective moments scheduled too; some 25 minutes are given over to an examination of governance and risk management lessons learned in the wake of the Madoff scandal. And after we heard last week that some investors are already convincing funds of funds to drop a layer of performance fees, another 25 minute slot will have delegates hear how they should be aligning compensation with the interests of investors.
But in an industry which prides itself on finding brass amid the muck, it is comforting to note that this year’s GAIM will kick off with a look at how to exploit upheaval very close to home.
The opening session promises to pick out the survivors and opportunities among emerging, transforming and deconstructing alternative investments firms. Or as GAIM puts it ‘New Opportunities in the Creative Destruction of an Industry.’
RAB Capital
It’s been a tough 2008 for RAB.
As the industry faces its biggest-ever crisis, RAB’s own assets have slumped to just over a quarter of what it ran a year ago, while fees have inevitably fallen too.
Meanwhile it has also taken charges after making acquisitions, only to see their assets fall, and for losses on investing in its own funds.
However, there are reasons to be positive.
The firm retains the backing of the Mittal family, a major investor in its funds, while cash on its balance sheet is high.
Furthermore, it has taken the painful action of shutting funds, reducing headcount and cutting bonuses.
In a harsh, ‘Darwinian’ industry, where those who adapt survive, it will be fascinating to follow RAB’s progress and to see how a firm that built its reputation during the commodity bull market of recent years – now almost a distant memory – changes its business model.
