Money managers under the microscope
UBP — which had exposure of about 1 billion Swiss francs to Madoff’s firm — on Wednesday said hedge fund assets had slumped by 20 billion Swiss francs in the first half and are now more than half the level achieved at the peak in June 2008. To be fair, the private bank isn’t giving up easily and has hired in new managers to liven up its offering.
In the UK, the Bramdean investment firm managed by Nicola Horlick is still battling to resolve a row over its future strategy sparked by a 10 percent exposure to Madoff.
But their woes contrast sharply with the experience at other players, particular U.S. firms reporting the same day.
It may look like an unlikely scenario on paper, but Europe’s elderly masses could be about to provide the killer blow to draft EU rules to regulate the alternative investment industry.
Hedge fund associations, private equity lobbyists, the British government and even the United States Treasury have waded into the debate over the proposed legislation, seeking to soften an approach which has been labelled an exercise in post-financial crisis political grandstanding, rather than a measured look at how to better regulate the sector.
Insight director of UK equities Andy Cawker, manager of a long-short Ucits III fund, tells me he has been changing the way his fund hedges its market exposure as market conditions change.
His Absolute Insight UK Equity Market Neutral fund, which uses pairs trades to produce a largely market neutral portfolio, has shifted from hedging mostly against the index two years ago to now hedging predominantly against individual stocks.
Bill Maldonado, head of alternative investments at HSBC’s Halbis unit, talks to Hedge Hub about how market neutral hedge funds have fared in 2008 and 2009.
As Barclays auctioned off its Barclays Global Investors unit this year, Goldman was widely seen as a likely acquirer. That is until Blackrock In under Larry Fink emerged as the buyer with a $13.5 billion deal.
There has been no shortage of people lining up to lambast the EU’s draft directive on hedge funds and private equity.
But today the UK’s Financial Services Secretary Lord Myners stepped up the attack, criticizing the draft rules on leverage caps and where funds can be sold and promising a blitzkrieg of lobbying.
As you’ve probably noticed, there’s no shortage of regulation in the wake of the biggest financial crisis in 80 years.
IOSCO has been fleshing out pledges made by G20 leaders while the European Commission has put forward its highly-controversial draft law on hedge funds and private equity. Meanwhile the EU is formally reviewing MiFID next year.
Rating agency Moody’s has updated its hedge fund ratings process in the wake of the Madoff fraud and the collapse of Lehman Brothers.
Hedge funds and other investors are shorting stocks laden with the biggest debts, according to stock lending research group DataExplorers, betting they may struggle to refinance themselves.
After draft laws from the European Commission, which have been attacked by almost the entire UK hedge fund industry, IOSCO‘s proposals — including registration of managers, disclosure of systemically-important information to regulators, registration and supervision of prime brokers — must seem like a walk in the park.