Author: Gwyn Roberts

Editor's view: 29 July 2010

Like Paris in the spring, the lure of the Ucits space is proving a heady experience for many managers. First Europe fell for the charms of these onshore products, now the Americans are joining in a communal swoon.  

As HFMWeek exclusively revealed last week, John Paulson and Barton Biggs are at the vanguard of a group of US managers hoping to benefit from launching Ucits funds. With approximately 500 of these products, holding $80bn, in circulation – that’s an average of $6.25m per fund – it’s abundantly clear that not all of these vehicles will magnetise cash.  

However, as any manager will tell you, success is as much about preserving existing assets, as winning new mandates. And for some – although the potent Biggs and Paulson brands can probably be discounted – launching a Ucits can defend existing European holdings, as well as ‘break’ a brand into new territories.

US managers launching a European product aren’t necessarily coveting the interest of French and German pension funds, or the loyalty of British retail investors. In many cases, it’s about preserving the integrity of a fund’s existing capital, and giving non-US investors what…

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Author: Amy Hirsch

Comment: Amy B Hirsch

The hedge fund world has always had third-party marketers. At first, it was simply one investor recommending a fund to another investor. Then groups such as Far Hills appeared; independent and knowledgeable about the strategies their managers employed, such firms serve a valuable role in the investor world. They provide the manager with valuable advice on how to structure products, they create marketing material, and they teach the manager how to present his or her firm. They provide access to investors the manager would have never met, and often facilitate the RFP and due diligence response process for the manager. So what is the issue?

Sometime after 1999, third-party marketers, with a sleeve filled with the latest hedge fund managers du jour, started appearing at every hedge fund conference. It seemed like there was no method to the mix of managers, except that no two typically traded the same strategy. A third-party marketer might represent a long/short equity manager, a distressed manager and a commodity trading advisor, with a 50/50 chance that they would know anything about the underlying strategy or portfolio. Their real job was to get the manager in the door, so they could explain…

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Author: Zaki Abushal

Investors sit tight on impaired assets

Playing the ‘what if’ game can be fun but, depending on the number of variables in question, it can get a little out of control. Apply this conceit to the hedge fund sector's performance during the financial crisis and the possible permutations become legion.

last week, the game was further complicated with new figures published by Credit Suisse. The bank claims the amount of impaired assets outstanding in the industry has plateaued since Q1 2010, and was already slowing at Q4 2009, holding steady around $56bn. The numbers are unlikely to come down very soon, with hedge funds, and investors, prepared to sit it out until such time as the assets regain their true value.

Secondary markets have been of very little significance during this period, moving around 5% of the original $175bn impaired. In fact, the patience on display reveals a hedge fund investor base that sits at odds with the fleeing hoards of late 2008.

Yet just how much would impaired assets have contributed to outflows had they not been gated or suspended? It’s a ‘what if’ scenario with at least two answers. While a white paper back in February suggested…

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Author: Gwyn Roberts

Editor's view: 22 July 2010

Journalism’s palette extends to mostly black, with a smidgen of white. Hardly a spectrum of colours, but effective enough if you want to paint an unsettling picture. Hedge funds frequently fall victim to this particular school of art; a series of unsubtle brush strokes rendering the industry as the unacceptable face of capitalism.

The latest story to add to this distorted portrait is Armajaro’s purchase of a substantial amount of the world’s raw cocoa supply. Largely reacting to the conventional forces of supply and demand, the fund manager has still become the poster-boy for the ‘unacceptable face of speculation’; stories that last did the rounds in 2008, when oil was nosing up to $150 a barrel.

There is a big snag here. Firstly, these stories completely negate the legitimacy of the futures markets, a series of legal and perfectly viable financial contracts. Secondly, there is nothing synthetic about Armajaro’s purchase. A physical transaction, with an exchange of cash for assets, this deal was completed the old-fashioned way, with the firm storing its 250,000 tonnes of cocoa in warehouses in Liverpool and Rotterdam.

Nor is Armajaro stockpiling the produce, as it waits for prices…

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