Funds Hub

Money managers under the microscope

Gabbert spots side letters loophole

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Earlier this month we reported that the Hedge Fund Standards Board had voiced its concerns over the increased use of so-called “side letters” — preferential deals offered to some clients that could disadvantage others.

These ad-hoc deals are covered by best practice guidelines, although not formal rules, that were issued by AIMA in conjunction with the FSA. These say that managers should disclose terms that give some investors better access to their cash, although it seems that these guidelines may not always be followed to the letter by managers.

However, eagle-eyed lawyer Dale Gabbert of Reed Smith has spotted a potential loophole, which is particularly relevant now that many big hedge fund firms are opening offices in Switzerland or elsewhere and shifting the location of some functions such as fund management to cut their personal or corporate tax bills.

He explains: “One of the unintended side effects of firms moving their asset management function from London to reduce their tax burden will be that the AIMA guidance on Side Letters will no longer apply to them.

Greece to welcome hedge funds?

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Interesting report in the Telegraph that debt-laden Greece may have to turn to hedge funds for support in its next dollar bond issue.

Having effectively tried to exclude them from recent issues, a u-turn looks likely if it wants to raise anything like what it hopes, the paper says.

from Global Investing:

Revisiting March lows

No, not in the way you think. Tuesday marked the one-year anniversary of world stocks hitting what appears to be their post-financial crisis low. The index was the MSCI all-country world index. The low was hit on March 9, 2009.

At the time, many investors reckoned their world was collapsing. Stocks had fallen close to 60 percent in a little more than 16 months. But the low proved to be the start of a remarkable rally that brought the index back up 80 percent until January this year.

Hedge funds found not guilty

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Interesting research from the FSA out today, giving us the reassuring conclusion that hedge funds don’t seem to pose a systemic risk to the global financial system.

The two surveys, from October, show that funds were running a “relatively low level” of leverage relative to the assets investors have put into the funds and that risks were largely contained.

Reuters Hedge Fund and Private Equity Summit 2010

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Next Monday sees the start of our 3-day Reuters Hedge Fund & Private Equity Summit, in London, New York and Hong Kong.

We have a great range of high-profile speakers this year, who will address issues such as the industry’s recovery, the investment outlook in 2010 after a year of rising markets, and impending regulation.

HedgeWorld-Dykema distressed investing outlook webinar Feb 23

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Distressed investing was one of the best performing hedge fund strategies in 2009, up nearly 43% according to the Hennessee Group – and many experts see continued opportunities in 2010. The recession may have been declared over, but companies and governments are still facing major problems.

Join HedgeWorld and a panel of distressed investing experts including Dykema law firm partner Richard Bendix and Jon
Anderson, GlobeOp’s global head of valuations and OTC derivatives as we discuss the outlook for distressed in 2010.

Morning line-up: Terminator, takeovers, Ucits

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News and views on the hedge fund sector from Reuters and elsewhere:

RTR1SGF8 U.S. judge OKs ‘Terminator’ sale to hedge fund – Reuters Should hedge funds be disenfranchised? – BBC Blog Ucits-compliant hedge funds growing – Hedge Funds Review How to invest $100 mln in 2010 – Seeking Alpha

All very British

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The debate over the EU hedge fund directive at this week’s Edhec-Risk conference in London was in danger of becoming all a bit too friendly before one delegate’s intervention.

“Isn’t it the case that you’re all being terribly polite?” she asked, drawing widespread applause from the hedge fund industry audience with the suggestion that most of the panel secretly believed the controversial regulation may be driven a rather sinister rivalry between EU member countries.

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