Money managers under the microscope
The hedge fund industry, it seems, has come out of intensive care and is doing laps around the block again.
After last year’s turmoil, funds are seeing assets flow back, performance pick up and confidence return.
Polar Capital joined the jogging party with net sales of $248 million in the three months to September, more than cancelling out of the net outflows in the previous three months and helping lift assets by 28 percent over the six months. Both the hedge funds and the long-only funds are seeing net inflows.
Meanwhile performance and currency movements have also boosted assets. Hedge fund may still try to sell themselves as a means to smooth the market’s wrinkles, but performance tends to reflect overall movements in equity and credit markets and in turn, sales tend to follow performance.
Hedge fund stories from the past 24 hours from Reuters and elsewhere:
Hedge fund compensation; New funds, new tricks – Seeking Alpha
Hedge funds gain in August – Reuters
Alpha advertising - FT Alphaville
For many money managers who bet exclusively that securities will fall, July may go down in history as their personal Waterloo — .
When performance data is announced in the next few days, the numbers will show high single-digit or even double-digit losses at so-called dedicated short-sellers, industry analysts and investors forecast.
There has been plenty of bad news surrounding Man Group in recent months.
Assets at end-June were $43.3 bln, compared with $79.5 bln a year before. Flagship managed futures strategy AHL, which not so long ago was boasting some superb-looking performance figures in spite of the credit crisis, is down 5.1 percent over the past year after a poor first half of 2009.
And Man Group’s shares have underperformed the market by 44 percent over the past year, though they have outperformed during 2009.
Puccini’s tragic opera Tosca ends with the heroine, realising she has been tricked by the evil Baron Scarpia and that her lover has been executed, hurling herself to her death from a castle parapet in despair.
However, despite last year’s tragic performance — an approximately 60 percent plunge in the flagship fund after holdings such as Redrow and Taylor Wimpey fell sharply — it would seem Martin Hughes has sidestepped such an unhappy ending at Toscafund, where redemptions have tailed off and fund performance is strong once again.
The challenges of volatile markets and client redemptions are finally driving the consolidation in the hedge fund sector that some commentators have been expecting.
Yesterday it was announced that hedge fund firm Cheyne Capital would buy fund of hedge funds firm Altedge Capital, a smaller boutique, and appoint Altedge CEO and CIO Chris Goekjian as partner and CIO.
It’s encouraging to see that, even as many hedge fund investors rush for the exit, there is still some appetite to invest, as highlighted by the National Association of Pension Funds’ optimistic publication of a beginner’s guide to the industry.
Entitled Hedge Funds made simple and starting with “What is a Hedge Fund”, the guide’s blurb tells us that ”the role of hedge funds, and investing in them, has become more prominent in the last year”.
Spanish bank BBVA’s move to close down its alternative investment arms including hedge funds shows just how much things have changed in the industry, even within the past year.
There seems to be an endless wave of bad news hitting the hedge fund industry at the moment — gates and suspensions, record poor performance, the Bernard Madoff scandal and so forth – but there are still one or two reasons to be positive.
According to a survey of institutional investors by alternative assets data group Preqin, conducted in January (and therefore after the alleged Madoff fraud came to light), only 8 percent said they were no longer confident about hedge funds and would reduce investments.