Progress report
An assessment of hedge fund YTD performance in the face of renewed fears for a potential eurozone crash Read More
25/05/2011
Comment: Mark Mannion
Almost six months into 2011 and there now exists sufficient empirical evidence to suggest that the hedge fund industry’s recovery is gathering momentum. Hedge fund inflows have increased, redemption requests are at a record low and many hedge funds are now reporting several consecutive months of positive returns. The report that European funds of hedge funds (FoHF) experienced significant inflows back in March is most welcome, as is anecdotal evidence that UK pension funds are about to increase allocations to the alternative asset class. I am pleased to report that most of our hedge funds are in positive territory year to date, with commodities, event driven and macro strategies to the fore.
BNY Mellon has experienced considerable activity in the alternative Ucits sphere in 2011 and expects this dynamic to continue. While many of our clients view establishing Ucits as an opportunity to expand their distribution potential, the main driver has been the need to address key investor concerns following the turbulence of recent times. On the assumption that a particular hedge fund strategy can be appropriately accommodated in a Ucits, this structure can deliver the degree of liquidity, transparency and risk monitoring that investors appear to be seeking.
If Ucits funds continue to represent a real opportunity, compliance issues continue to worry managers. A troika of regulatory developments continues to exercise our clients, with the precise impact of each still some way from final determination. Fatca will require the provision of US investor names to the IRS or expose those investors to a 30% withholding tax. This has significant implications for the transfer agency function. AIFMD continues to evolve and the roles of independent valuation agent and depositary are the main focus of attention from the service provider’s perspective. Finally, Solvency II will introduce capital implications for certain investor types should they wish to invest or continue to invest in hedge funds.
It does not appear that capital raising has become any easier for new managers in 2011. We are active participants in the extensive due diligence carried out by potential investors. This process can involve an extensive review of internal controls and procedures, system reviews and reporting analysis.
In terms of product innovation, there are those evolving from Ucits growth. With the number of alternative Ucits having reached a critical level, there is now a sufficient universe to permit the creation of funds of absolute return funds. Hedge fund replicants are coming to market, usually offering more frequent liquidity and a lower fee structure than a typical single manager fund. It is probably too early to comment on how popular this product will turn out to be.
The debate around onshore versus offshore domiciles continues to rage. Both Ireland and Luxembourg have introduced specific legislation to facilitate redomiciliation from offshore locations. The arguments in favour of onshore tend to focus on the opportunities to expand distribution potential and the onshore regulatory environment which promotes transparency and accountability. Another school of thought would suggest that, unless there is a clearly defined investor demand, a manager can offer strong internal corporate governance and the required level of transparency from an offshore domicile without incurring the costs associated with the regulated onshore products. It is too early in this debate to make a call on how the market share of onshore versus offshore will shift in the medium term.
- Share
-
Text Size
Decrease text size
Increase text size
60 seconds with... Kenneth Turchin
CAN YOU DESCRIBE YOUR CURRENT ROLE?
I have worked in public accounting and hedge funds and in the past eight years have been selling middle- and back-office services to the alternate investment industry. My role is to build relationships with clients, teach them about SS&C’s products and services, and ensure seamless transactions every time the firm launches a new fund.
IF YOU WERE DOWN TO YOUR LAST £1,000, HOW WOULD YOU INVEST IT?
I would buy THREE shares in Apple and hope for a repeat 383% return in the next five years.
WHAT WOULD YOU DO IF YOU WERE IN PRESIDENT OBAMA’S SHOES?
That’s one pair of size 12 shoes I do not want to be in!
WHO WOULD PLAY YOU IF THEY MADE A MOVIE ABOUT YOUR FIRM?
Kevin Bacon. He is a versatile actor and the centre of the entertainment universe. I am in sales. Everyone in the industry would be linked to me in six steps or less. My client list would be ridiculous.
SS&C wins Form PF mandate from $23bn Lone Pine
SS&C Technologies, the hedge fund administrator, has been mandated by $22.7bn Lone Pine Capital to provide its Form PF reporting solution, HFMWeek has learned.
Squeeze on fees continuing, according to State Street
Downward pressure on fees for hedge fund services such as administration, alongside an increased demand for more transparency on pricing, continues to be a defining industry characteristic, State Street executives said today.
OPERS hires COMAC for $120m as part of $3bn hedge fund spend
The Ohio Public Employees Retirement System (OPERS) has committed $120m to COMAC Global Macro Fund and plans to hire new funds during the second and third quarters as part of its effort to commit around $3bn in fresh capital to the space by the end of the year, HFMWeek can reveal.
Investor demand for CTAs is on the rise, says Agecroft Partners
Agecroft Partners is seeing widespread demand from institutional investors for Commodity Trading Advisors (CTAs), which is a dramatic change from the historical reluctance of many institutional investors and their consultants to allocate to this strategy.
Read More07/06/2012
UK: Impact of the AIFMD - the real story
Join us and our panel of experts for HFMWeek's Subscribers' Club June's UK breakfast briefing, 'Impact…
31/05/2012
US: Family Offices
The next US HFMWeek Subscribers' Club breakfast, will take place on Thursday May 31. Join us and…
02/02/2011
European Hedge Fund Services Awards 2012
HFMWeek's European Hedge Fund Services Awards are designed to recognise companies that have outperformed...
Be the first to comment on this article!