Funds Hub
Money managers under the microscope
Morning Line-Up: ‘Cruz missile’, Marshall Wace, USS
News and views on the asset management industry from Reuters and elsewhere:
‘Cruz Missile’ takes off with new fund – WSJ
Marshall Wace investors poised to wind up listed fund – FT
Cautious on equity hedge funds – WSJ
USS pension fund expands its internal investment team – Financial News
80 pct of FoHF managers considering Ucits wrapper, says KDK – Hedgeweek
JPMorgan launches Ucits fund of absolute return hedge funds – Hedgeweek
Marshall not so gaga for Osborne
Lord Myners played a cheeky game of bull and bear with Paul Marshall, the co-founder of hedge fund company Marshall Wace, at the close of his Q&A session at the Fund Forum in Monaco this morning.
After a playful grilling by Lord Myners, which ran the gamut from the problems of gating amongst hedge funds to Marshall Wace’s interest in being a Red Knight for Manchester United football club, Lord Myners fired various concepts at Marshall in a quickfire round, inviting him to choose whether he was a bull or a bear.
Although Marshall was bullish on the dollar and long-dated bonds, practically everything else made him feel bearish, from the euro zone to Spanish banks to Lady Gaga, Goldman Sachs, Paris Hilton and BP’s hapless CEO Tony Hayward.
When Lord Myners pointed this out, Marshall declared he was bullish on life after death, but could not quite give himself over to being a bull for UK Chancellor of the Exchequor George Osborne, and passed. The somewhat longer in the tooth Vince Cable was given his fulsome support however.
Worth noting Marshall has donated money to the Liberals in the past.
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:
Former BOE Deputy Governor John Grieve joins GLG - Times
Marshall Wace returns 26 pct with Japan fund- Bloomberg
Rajaratnam investigated a decade ago – WSJ
Co-founder Blochet exits Brevan Howard – Reuters
Wace wades into HFT debate
High frequency trading strategies have been in the news for all sorts of reasons recently, attracting controversy over their effect on markets, whether some other investors may be disadvantaged, or for the level of fees piled up as the trades tick through in their thousands.
However, Ian Wace, co-founder of Marshall Wace — one of Europe’s biggest hedge fund firms with assets estimated by EuroHedge at $6.5 billion at the end of last year — has leaped to the industry’s defence, citing performance from the firm’s own Eureka fund.
“We manage an active trading fund and I do accept there are frictional charges,” he said at yesterday’s Hermes Fund Managers and City of London responsible asset management conference. “If we have turnover of 15 to 20 times per annum and it costs 30 basis points to turn the assets that implies a 6 per cent charge per annum.
“People could say “how can you justify that?”. I reply that if you provide 14.59 per cent of absolute return after fees and the 6 per cent charge, then it could be justified.
“I go to huge lengths to find where the alpha is, and I don’t pay a penny more than I want to pay for transactions.”
And while hedge funds will always have their critics, Wace drew a contrast with broad stock market returns.
“When I look at returns, over the last 12 years equities are unchanged while we have provided 400 per cent compound returns because of the turnover in our funds. So who’s wrong?”
Blowin’ in the wind
The timing of the Alternative Investment Management Association’s hedge fund disclosure initiative indicates just how strong the winds of change are blowing in hedge fund land.
Coming just a day after ECB President Jean-Claude Trichet called the credit crisis “a loud and clear call” for extending hedge fund regulation, the move shows the hedge fund industry feels it must be more active in deciding the future shape of regulation.
The move, which will include regular — probably quarterly – disclosure of systemically significant holdings and risk exposure to national regulators, goes further than that suggested at last month’s Treasury Select Committee by Marshall Wace chairman and Hedge Fund Standards Board trustee Paul Marshall, who had proposed aggregating data through prime brokers.
“The international agenda is starting to gallop away… We can see which way the wind is blowing and we want to exercise leadership,” said AIMA CEO Andrew Baker, adding the proposals had been in the pipeline since early in the new year.
But AIMA’s drive to do this also serves to highlight the low number of funds that have signed up to the HFSB’s voluntary code – a fact seized upon by last month’s Treasury Select Committee.
AIMA is proposing unifying all the industry standards — AIMA, the HFSB, IOSCO, PWG and MFA — into one code. Their fear is that regulators may do this for them.
Hedge fund diversification
Tuesday’s Treasury Select Committee grilling of the hedge fund industry proved a lively affair (if somewhat hot in a crammed Westminster room), but you have to wonder how well diversified their choice of witnesses is.
As well as Chris Hohn, co-founder of TCI, the Committee picked BlackRock’s head of alternatives Douglas Shaw — a previous employee of TCI.
Another witness was Marshall Wace’s Paul Marshall. Paul was former chief investment officer for continental European equities at Mercury Asset Management – now part of BlackRock.
But then again, this isn’t the biggest of industries to choose from.
