27/07/2010 Author: Ben Haidari

HFMWeek Daily Snapshot - 27 July

NEWSPAPERS AND WIRES
Christophe Lee, chief executive of SHK Fund Management and chairman of the Alternative Investment Managers Association (Aima) in Hong Kong has described hedge funds as the industry's “gold medalists” over investment cycles or long-term periods, Asian Investor reports.  According to HFR figures, global hedge funds as a group have outperformed S&P 500 in the past three, five and 10 years and since 1990. "In all these periods, this outperformance was achieved with less than half the volatility of the S&P," says Lee. "So in plain English, hedge funds have performed better than equities, but with much less risk." 

Canadian retail investors may get a second chance to tap the trading expertise of New York-based hedge fund manager Paulson & Co, which made billions from the US housing crisis, reports the Dow Jones Newswire. According to people familiar with the matter, Propel Capital Corp. is working to resurrect the initial public offering of its Propel Multi-Strategy Fund. Holders of the fund's units would get indirect access to Paulson's trading strategies. Exact timing couldn't be confirmed, but the re-launch may take place later this summer or sometime in the autumn. Paulson & Co, headed by b, manages over $30bn in assets.

Aberdeen Private Equity Fund (APEF) has cut its exposure to hedge funds to 3.3% of its Nav at the end of March 2010 while increasing its exposure to private equity funds, London Sharecast reports. The fund’s sterling share Nav fell from 90.1p to 89.55p a share over the year to March 2010, a decline worsened by exposure to Bernard Madoff-related investments. At the end of March 2010, the discount to Nav was 39.7%, prompting the board to request shareholder approval to buy back 14.99% of APEF’s shares.  Guernsey-based APEF was known as Bramdean Alternatives until June. More than 53% of its Nav is currently invested in private equity and private equity funds.  

Bank of America Corp., the largest US lender by assets, is offering clients an electronic trading strategy that can automatically create shares of exchange-traded funds (ETFs) by buying and selling stocks and hedging with futures, reports Bloomberg. More than a third of its electronic clients are expected to adopt the algorithm, which seeks liquidity in ETF shares and related securities at the best price, according to Charlie Whitlock, a director in the bank’s execution services team. The ETF-aX product is aimed at mutual and hedge fund managers and broker-dealers. US ETFs had $783bn of assets in May, up from $582bn a year earlier, according to the Investment Company Institute in Washington. The number of ETFs rose to 860 from 712 over the same period, the trade group said. 

Hedge funds have outperformed many global equity markets, posting returns of 0.6% year-to-date through 30 June, as managers continued to employ a diverse range of alpha-generating investment strategies, according to new research, reports the New Statesmen. 'H1 2010 Hedge Fund Industry Review’, a new paper released by the Dow Jones Credit Suisse Hedge Fund Index team, examines the current market environment and its effect on hedge fund returns in the first half of the year. According to the report, performance among the 10 index sectors was mixed with six out of the 10 sectors in the index posting positive performance in the first half of the year. Top performers included fixed income arbitrage (5.5%), global macro (4.2%) and event driven (1.8%). 

LAUNCHES
Edinburgh-based investment management firm Martin Currie is planning a raft of new launches, fund changes and an increased focus on investment trusts following an 18-month strategic review, reports Investment Week. The firm will launch a Latin American fund for the emerging markets team it poached from Scottish Widows Investment Partnership (Swip) in May, as well as three absolute return vehicles based on hedge fund strategies previously unavailable to retail investors. The group will now focus on its flagship UK growth and income vehicle, Securities Trust of Scotland, managed by Ross Watson. “We believe because of RDR, investment trusts will move to a more level playing field,” says Andy Sowerby, managing director of sales and marketing. 

New York-based merger arbitrage shop Glazer Capital Management has recently launched a higher leverage version of its Glazer Onshore Fund, according to Opalesque. The strategy, which focuses on mergers and acquisitions in the US, Canada and Europe and has achieved annualised returns of over 10% for investors since its launch in late September 2001. The newly launched Glazer Enhanced Fund will seek to provide investors with targeted returns above the flagship fund, and will use two-time leverage to achieve this. The Glazer Enhanced Fund launched on 1 July, with $12m in assets. Glazer Capital will begin August 2010 with over $350m in capital, impressive growth during a very slow asset-raising period for many hedge fund firms. The additional August launch of an offshore version of the Glazer Enhanced Fund should also boost the firm's overseas asset raising campaign as well.

Two former heads of one of Bank of New York Mellon’s fund of hedge funds units are planning to launch their own fund, says Financial News. Derek Stewart and Scott MacDonald, who previously ran BNY Mellon’s Mellon Global Alternative Investments, have formed Carduus Capital and plan to raise money for a fund of funds later this year, according to a person familiar with the situation. The two men left the firm in May, following BNY Mellon’s move to rejig its fund of hedge funds business.