30/06/2010
The $3.44bn Avon Pension Fund is to assess the potential impact of the draft Alternative Investment Fund Managers (AIFM) Directive as part of a major review of its hedge fund portfolio.
The fund’s current investment portfolio, which has been allocating to the space since 2007, currently allocates 10% of its overall portfolio to five funds of hedge funds (FoHFs): Stenham Universal, Lyster Watson, Signet Global, Gottex and Man Group.
“We are due to review our FoHF investments and so naturally we wanted to incorporate any regulatory change into that review,” Matt Betts, assistant investments manager told HFMWeek.
A number of high-profile pension funds have expressed fears that the increased compliance costs brought about by the Directive are likely to be passed onto investors.
The move also follows concerns raised at a previous meeting about whether the Avon fund should, in fact, be investing in hedge funds at all.
According to the meeting minutes, one member of the pension fund panel argued that hedge funds “bore a major share of the responsibility for the financial crisis” and have “in effect, gambled with borrowed money.”
It was subsequently decided that the fund’s investment into the hedge fund space would be reassessed as part of the upcoming strategic investment review, which is due to be completed early next year
Increase text sizeIt’s interesting how one deal can often summarise the tenor of the times. Last week’s rubber stamping of the Man-GLG tie-up by the former’s shareholders may have been a formality, but in the wider context of the hedge fund sector, the tenets underpinning the move are far more interesting.
Collateral management is undoubtedly a big deal for the post-Lehman investor, but, as Danny Caplan, Deutsche Bank’s head of global prime finance sales, Europe, put it this week, “not all asset segregation is the same”.
"Firms must be careful not to take their eye off the ball, as enforcement action for reporting failures is increasing in frequency and severity"
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.
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