Unstructured Finance

UF’s Weekend Reads

Here is Sam Forgione’s suggested weekend reads. Happy St. Patrick’s Day everyone. The calendar says March but it feels like mid-May in NYC.


From Dealbook:

Recent graduates are becoming disenchanted with Wall Street careers. Kevin Roose interviews a college grad, a recruiter, professor, and former Goldman employee support to make his point.

From Fortune:

Mina Kimes takes a look at James J. Wang, the head of the small and wildly successful OceanStone Fund, who she describes as being spectrally mysterious.

From The New Yorker:

Romney’s data-crunching background as a management consultant may explain his allergy to the instinctual side of politics

From Bloomberg BusinessWeek:

Bill Cohan wonders whether Goldman Sachs “invented” its sleek reputation, as he explores the firm’s questionable role in the merger of El Paso and Kinder Morgan

Gross miscalculation?

By Jennifer Ablan and Matthew Goldstein

It appears that Bill Gross’s PIMCO Total Return Fund is losing ground with investors — just not as fast as we originally thought.

Morningstar, the mutual-fund tracker, initially told us that PIMCO’s flagship fund had suffered $17 billion in net outflows over the last 12 months. It turns out Morningstar discovered this morning that it miscalculated and the figure actually is $10.3 billion.

That’s slightly better news for Gross but the trend still holds that the fund is seeing  a steady stream of outflows. Morningstar estimates that in October and November of this year, PIMCO Total Return fund has seen $1.69 billion in customer redemptions.

Hedge funds vs mutual funds

By Dunny P. Moonesawmy, Head of Fund Research for Lipper in western Europe, Middle East and Africa. The views expressed are his own.

Hedge funds took some heat from the credit crisis as liquidity and transparency became critical factors in investment decision-making. It’s fair to say hedge funds continued to deliver decent returns to investors, but how do they compare to mutual funds if we focus on performance and risk alone?

In 2008, the average return for mutual funds stood at a negative 22.91 percent. At the same time, hedge funds posted average returns of minus 8.37 percent. We might have expected a stronger rebound for mutual funds in 2009 and 2010 than for hedge funds, yet the data shows better average returns for hedge funds in both years. Positive returns in the sector stood at 22.36 percent and 18.08 percent respectively against 21.16 percent and 10.23 percent for mutual funds.

Are you happy with the direct tax code?

The much-awaited direct tax code bill, aimed at simplifying the country’s archaic direct tax laws, was passed by the cabinet on Thursday, with new income tax slabs being proposed for individuals.

Though these slabs will put some extra money in taxpayers’ pockets as compared to existing slabs, the original slabs proposed in the first draft of the direct tax code have been diluted.

The original code proposed that income up to 10,00,000 rupees would be taxed at the rate of 10 percent, but the tax slabs announced on Thursday propose a tax of 20 percent for income between 500,000 – 10,00,000 rupees and a tax of 10 percent on income between 200,000 – 500,000 rupees.

Mutual fund investors rewarded for patience

A man speaks on a phone as he looks at a large screen displaying India's benchmark share index on the facade of the Bombay Stock Exchange (BSE) building in Mumbai May 18, 2009. REUTERS/Punit ParanjpeEquity fund investors had a lot to cheer about in the last seven months.

Stock market enthusiasts had almost given up hope after losing an average 52 percent in 2008, when the benchmark Sensex recorded its first annual fall after six years of gains. But a rally since the start of March has bought the smiles back.

By September 30, as many as 10 equity funds more than doubled their net asset values as fund managers bought into the global panic, data from global fund tracker Lipper, a Thomson Reuters company, showed. During the same period 145 Indian equity funds outperformed the 30-share Sensex, which returned 73 percent.

Domestic tax saving funds, which manage nearly 200 billion rupees ($4.3 billion dollars), also rose with the tide. The nation’s largest such fund, SBI Magnum Tax Gain, surged 83 percent.

Reuters Fund Summit: Will hedge fund regulation open the door to retail investors?


By Huw Jones


Hedge funds are nothing if not optimistic – they have to be in the current climate.



rtxcvygWhile holed up in an English country resort last weekend, finance ministers and central bankers from the G20 group of countries agreed that the $1.4 trillion hedge funds sector should be made to register, be directly supervised and provide information about their holdings to regulators who track risk in markets.


And the European Commission, which drafts financial rules applied across the European Union, said later it will come forward with a draft law on April 21 for the sector.

Mutual funds gaining ground on hedge funds?

rtr9urwHedge funds have gained a increasing share of the investment pie in recent years but the trend could could be reversing, judging by separate comments made by UBS and Deutsche Bank on Tuesday.

Timothy Bell, global head of hedge funds advisory at UBS Wealth Management, said hedge fund assets could fall further to $1.2 trillion this quarter from $1.4 trillion at the end of 2008 and $1.93 trillion at their peak in mid-2008.

At the same time, Deutsche Bank’s DWS unit said it saw inflows into its Asian mutual funds in the first six weeks of 2009.

Funds industry criticized for lack of diversity

wall-st.jpgThe U.S. mutual fund industry is doing little to increase diversity and hire more minority workers, a senior executive at boutique investment firm Ariel Investments said this week.

“The fund industry has to make a real commitment, not lip service, to diversity. And really go out of our way to find people of color to work in our organizations,” Ariel president Mellody Hobson told Reuters in an interview on Thursday.

Ariel has long championed the cause of spreading financial literacy in the African-American community. Founder John Rogers is helping raise support and funds for Barack Obama.