30/06/2010
May was a nightmare, but the terror-in-chief for funds still remains counterparty risk. Not since the collapse of Lehman has this fear been so keenly felt, with investors – stirred by a period of negative performance – now making multiple-prime and custodial relationships a priority once again, according to attendees at last week’s HFM breakfast briefing.
The importance of protecting long assets was also made very clear this week by the announcement of a partnership between BNY Mellon and Goldman’s prime brokerage unit. Montague Place Custody Services (MPCS), the custody-centred special purpose vehicle set up by Goldman, will no longer provide an internal service for clients, instead moving assets to BNY.
After Lehman, prime brokers faced a stark choice: either segregate hedge fund assets within the bank or rely on the service of a third party. Goldman has wisely moved from the former to the latter, emulating in broad-brush detail – although not the specifics – Deutsche Bank’s similarly successful relationship with BNY.
The original iteration of MPCS was hailed by lawyers, but seems to have fallen foul of the nervousness of some funds. Perception is, of course, everything, with one hedge fund COO telling HFMWeek that the custody special purpose vehicles set up by some PBs are less attractive than using a third party. “There is a new nervousness,” stalking the industry, he said.
This nervousness has been inflamed by recent concerns about those banks exposed to European sovereign debt. Existing numbers at PBs haven’t shifted, but hedge funds are monitoring the situation and the balance sheets of banks are once again being inspected for structural weaknesses.
It’s never really gone away, but safety of assets has become a talking point again. With many banks, particularly European institutions, still ‘highly leveraged’ and on ‘life support’, according to the Bank for International Settlements, the relationship between BNY and Goldman only serves as a reminder of the importance of segregating assets across multiple banks.
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Summer in the Hamptons is as much of a tradition for most New York managers as charging 2/20 and complaining about cap intro. However, all things must pass, and, whether it be down to the vagaries of fashion or a fresh outlook, post-financial crisis, the Hamptons is no longer the only game in town for managers seeking a New York retreat.
One of better-known benefactors of those seeking a break from the norm, has been Adirondacks-based The Point Resort. Dragging in managers for client entertainment or board meetings, The Point has garnered a reputation as a place to do business the old fashioned, face-to-face way – with its log cabin ethos and lack of city distractions.
One of the few places left in America where mobile phones don’t work, The Point’s guests are free to talk about the business matter in hand, without distraction from buzzing BlackBerries. Managers can entertain clients overlooking the lake or by the fireplace, or in the main dining room, or, if they are feeling more sporty, engage in various activities including water skiing, swimming and tennis, just to name a few.
For more information on the options available,…
ML Capital, the Malta-based financial management firm, has launched its new Ucits-compliant hedge fund platform, after having lobbied Ireland’s Financial Regulator for a change to sub-fund branding rules, HFMWeek can exclusively reveal.
Today: Smaller hedge funds suffer inflow drought as investors flock to larger firms; flagship Paulson fund suffers losses in August; top 50 European managers benefit from rise in demand for regulated funds; and finally, top Gartmore investment trust looks to sever ties with the company follows fund manager departure...
Passive marketing would be legalised as part of the EU’s Alternative Investment Fund Managers (AIFM) Directive under a new proposal by the Belgian presidency, although private placement rules would be scrapped as part of the same plan
As HFMWeek prepares to launch its new fresh look, this week’s Page 4 rolls out our industry confidence survey. Polling readers on their faith in the global economy, investor inflows and the impact of regulation we hope, on a weekly basis, to build a broad picture of the psychology of the hedge fund sector.
Read MoreHave your say on the hedge fund industry by taking part in two new HFMWeek surveys
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22/09/2010
The next HFMWeek Subscribers' Club breakfast will take place on Wednesday 22 September. Join us and…
30/09/2010
The next US HFMWeek Subscribers' Club breakfast will take place on Thursday 30 September. Join…
26/08/10
The exclusive free event consists of two days of in-depth panel discussion and plenty...
Volatile markets, demanding investors and the frustrating inability to shake the label of financial industry ‘bad guy’; it’s fair to say that hedge fund managers don’t have the most relaxing of jobs. Even those rare moments of downtime are flecked with work-related blackberry messages, compliance calls and the need to brainstorm with peers. 
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