The institutional outlook
A recent survey of institutional hedge fund allocators gives insight into current and future allocations
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17/02/2010
Editor's View: 18 February 2010
There is nothing particularly mysterious about the world of managed accounts. In fact, the central purpose of these vehicles is to peel away the veil of inscrutability that sometimes hangs over the
hedge fund world. They are liquid, transparent and controlled by the investor, yet, despite all of this openness, the true scale of the sector remains difficult to quantify.
It’s an ambiguity that a number of bodies are eager to clear up. Last week, Preqin suggested that 16% of its polled investors had already made the jump into managed accounts. HFMWeek’s own estimates are significantly south of this, equating to roughly 2-3% of total hedge fund assets from only 10% of investors.
Managed account platforms are obviously confident in their own numbers. But beyond this the precise level of accounts and total assets under management are uncertain. Even the hedge funds that are willing to set-up these vehicles for clients seem unclear. Popular wisdom may hold that Brevan Howard has no truck with these structures, but dig a little deeper and larger investors say there are definitely deals to be done.
If assessing the true scale of the managed account sector remains a chore, we can also be relatively certain that interest is not about to wither on the vine. According to HFMWeek’s own estimates the figure, in total assets, is expected to grow by a further 15% within the next 12-18 months, as more investors seek added security and the economic barriers to entry come down.
Butterfield Fulcrum’s plan to launch a slimmed-down managed account platform is, in this scenario, a canny move. Lots of administration companies are holding the same thought, but by reaching the market first, the 3i-owned business will be meeting demand among middle-market hedge funds.
Existing platforms will snipe, saying that the new breed does not provide a portfolio management system or distribution, but by providing accurate valuations and risk management, they are meeting a real need. And there is nothing mysterious about that.
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What's in a name? Glasnost Hedge Fund
Phillippe Gougenheim, formerly of Man Group and Unigestion, is busy plotting his next hedge fund move, Reuters reported this week. The industry veteran plans to launch a $50m fund in June that can shield investors from movements caused by the influence of politicians on markets, with a particular focus on the eurozone. “My idea is to be everything that hedge funds are not: liquid, transparent, and with a focus on capital protection,” Gougenheim told the newswire.
Hence, in theory, the name. Glasnost, a Russian word, translates roughly as openness and was used to describe Mikhail Gorbachev’s policy of transparency and freedom of information towards the end of the Soviet Union. The strategy was designed to reduce corruption, which was rife at the time in the Soviet government and Communist party.
Gougenheim’s version of transparency will aim, instead, to generate interest among investors while making solid returns too. The fund will offer weekly liquidity with three days’ notice, and will disclose all positions to investors on a monthly basis. It is due to be launched in June and domiciled in Cayman. Parent company Gougenheim Investments is reportedly hiring a COO, portfolio manager and marketing staff.
HSBC Holdings to close New York hedge fund administration group
HSBC Holdings, the New York-based hedge fund administration division of HSBC Securities, is to close its New York office and transfer its operations to Dublin, resulting in the loss of 200 jobs, according to reports Friday.
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