Funds Hub
Money managers under the microscope
Yen? Too late.
European investors have missed the boat if they wanted to adjust their portfolio to take advantage of a rising yen as the currency has peaked, says BNP Paribas Asset Management’s Hubert Goye.
You can watch his interview with Reuters Insider here: http://link.reuters.com/ket58n
Noster stays cautious
Equities continue to steam ahead but at least one hedge fund manager is wary.
Noster Capital’s Pedro de Noronha is currently short the S&P 500, believing valuations are too high.
In addition, he sees a longer-term threat in the form of demographics: ‘baby boomers’ are now hitting retirement and will be selling equities to fund their annuity purchases, he argues.
His long position? Well, he’s defying Alan Miller’s warning and is long gold (in September he said it could go as high as $1,600).
Quantitative easing and buying by emerging market central banks should support it, he thinks.
(See also Gold – “the most dangerous asset”)
from Global Investing:
Falling on deaf ears
The European private equity industry today published its response to the proposed Alternative Investment Fund Managers directive that seeks to place controls on the industry.
In what it must hope will be seen as a carefully considered and constructed response to the European Commission's hastily drafted and ill-thought-out proposed directive, the European Private Equity and Venture Capital Association -- the voice for private equity in Europe -- calls for the threshold for reporting on its companies' activities to be lifted to 1 billion euros assets under management from 500 million.
It argues that private equity firms smaller than that specialise in managing small and medium-sized companies and should be subject to national legislation.
EVCA also wants a grandfathering clause introduced so firms existing funds that use no leverage and have no redemption rights (the vast majority of all unlisted private equity funds) would be exempt from the directive. It argues that failing to do this could result in termination of these funds "with disastrous consequences for the industry and its portfolio companies".
The big question is who in Europe is listening?
Having already gained a surprise concession in the published draft, which lifted the reporting threshold to 500 million euros from an expected level of 250 million euros, private equity may be seen as pushing its luck by asking for further leeway.
While the Socialists lost ground to the Conservative right in the recent European Parliament elections, it would be a mistake to think that the left wing coalition leader Poul Nyrup Rasmussen will be any less strident in his call for stringent legislation on private equity and hedge funds alike. The right wing Governments in France and Germany have been just as loud in their demands for legislating of the industries.
Back to the Futures
At the turn of the year managed futures funds/CTAs were the talk of the town after a stonking 2008 in which they gained 18.33 percent while the average fund lost 19.07 percent.
Six months on and they have become one of 2009′s laggards, losing 5.23 percent while the average fund is up 6.72 percent.
The problem has been a lack of clear trends in futures markets, which CTAs follow to make their money.
The worst case scenario, which has happened in some markets this year, is an apparently long-term trend suddenly reverting, catching out those who’d been betting on something a bit longer-lasting.
To make matters worse, some CTAs had increased their leverage, according to Finaltis CEO Denis Beaudoin.
However, Beaudoin reckons this could be the time to buy back into managed futures again as trends are likely to re-emerge at some point, according to the laws of probability.
“If CTAs experience a drawdown it’s not time to get out, it’s the time to get in,” he says.
Payday at Man Group
Reports of potential shareholder unrest at Man Group.
A Times article reports on fund manager anger over an “arms race” in executive pay and juxtaposes this against Man CEO Peter Clarke’s $14.4 mln pay.
It says several institutional investors it contacted “said that they had not yet decided whether to protest over remuneration at Man”.
Man Group’s annual report reveals Clarke received $920,000 in salary, about half that again in pension and benefits, plus a cash bonus of $6 mln in the year to March. In addition, he received $7.4 mln in deferred shares and options, subject to performance.
In the 12 months to March 2008 he received a total package of $27.5 mln, meaning remuneration fell 46 percent on the year.
Man Group’s shares fell 61 percent over the year to March, while the FTSE 100 dropped 31 percent. However, financials have obviously been punished across the board by the market during the credit crisis, rightly or wrongly. Man’s assets under management over the year fell by more than a third, while profits fell roughly 40 percent.
Whether or not shareholder unrest actually emerges, determining how much the executives who make the tough decisions at the helm of Britain’s biggest companies remains a tricky, and inevitably controversial, business. Investors will have to pick their battles carefully.
Listen to LV’s Tom Caddick
Tom Caddick, fund of funds manager at LV= Asset Management, talks about his funds’ allocation to equities and his positive outlook on corporate bonds.
USS’s enterprise
The 23 billion-pound Universities Superannuation Scheme (USS) is boldly going where few investors are prepared to go at the moment and upping its allocation to hedge funds.
Despite last year’s record poor performance from the hedge fund industry, Britain’s second-biggest pension fund is sticking with a mission to double its allocations to hedge funds and private equity to 20 percent.
Pension funds were faced with a major problem after 2008 – do you buy or sell hedge funds?
If your equities are down 40 percent and your hedge funds down 20 percent, do you invest more in hedge funds because they performed better?
Or do you pull money out because they didn’t make money and because they’re now actually a bigger part of your portfolio than you’d originally bargained for, so you have to rebalance?
USS’s move backs up what some hedge fund firms have been telling me recently - that some institutions are very gradually putting money in.
Plenty of investors are pulling money out as fast as they can, either because their hedge fund investments disappointed their expectations of positive returns in all markets, or simply because some hedge funds offer a quicker means of accessing cash than some of their other investments.
Madoff and the lawyers’ bonanza
Oh what a tangled web we weave when first we practise to deceive, wrote Scottish novelist Sir Walter Scott, and anyone looking into the alleged Madoff fraud may well understand what he means.
Funds, advisors, auditors, fund administrators and custodians are looking around nervously and trying to understand whether they are likely to face lawsuits. Some are pre-empting that by taking out lawsuits themselves.
A pretty pair
The shrinkage of the UK-listed banking sector is providing an interesting trade for Legal & General Investment Management’s $46 million Global Macro fund.
After some dramatic share price falls, banks now account for only around 10 percent of the FTSE 100. According to LGIM’s head of asset allocation David North, this means any potential damage of further bank problems to the index is likely to be a lot less from here onwards.
In contrast, banks account for around 32 percent of Spain’s Ibex index. North points out that this includes Santander, owner of mortage lender Abbey and parts of Bradford & Bingley, both offering plenty of exposure to the UK property market.
Hey presto, a pairs trade.
“UK equities we believe are fundamentally cheap. It’s a dollar earnings base and a sterling cost base. Spain’s exposure to the property market (is huge),” says North.
“Why would you not be long the UK and short Spain?”
