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COMPETITION AMONG providers of financing for funds of hedge funds (FoHF) is heat-ing up again, with JP Morgan the latest name to reveal a strong return to a space hit hard during the financial crisis.
Demand among the FoHF sector is also increasing, in line with the new supply, as it returns to health, with a jump in AuM, and a number of new launches look for financing.
The number of providers of bridge loans – short-term financ-
ing primarily used to bridge the liquidity gap between redemp-tions and subscriptions at FoHFs – dropped dramaticallyin 2008 as balance sheets and confidence took a knock. In the aftermath, many players reduced their activity, while some with-drew completely.
“The demand for bridge loans is not at pre-crisis levels. But there has been a clear pick-up,” said Michael Gordon, a man-aging director at JP Morgan’s Equity Derivatives division. “In 2010 we actively increased com-mitments in this space.”
In November, HFMWeek reported that HSBC had begun actively marketing its bridge facilities again after a period of inward-facing business developments.
The long and the short of it ISSUE 220 7 April 2011
As confidence returns post-crisis, a number of major players report fresh bridge financing commitments BY TONY GRIFFITHS
FoHF financing activity increases as demand grows
03
COMMENT THE REASONS BEHIND CAYMAN’S CONTINUED SUCCESS 14
RAMIUS SET TO WIND DOWN MULTI-STRATEGY FoHFOnshore version to liquidate, while offshore keeps trading CLOSURE 06
NEWS 03
TEXAS COUNTY PENSION FUND INCREASES TARGETRetirement system votes to up absolute return to 20%
INVESTOR 08
NEW MEXICO PENSION MAKES NEW CREDIT ALLOCATIONRetirement fund hires GSO Capital as part of long-term strategy
MERGER MOTIVESWHAT’S DRIVING M&A ACTIVITY IN THE HEDGE FUND ADMIN SPACE
NEWS ANALYSIS 16
BRIDGING THE CREDIT GAP
FEATURE 18
HFMWeek’s guide to the key fi rms active in the FoHF fi nancing space
001_003_HFM220.indd 1 05/04/2011 16:12
This material is not intended for use by or targeted at retail customers. It is neither an offer, nor a solicitation, advice or recommendation for the purchase or sale of any securities, financial instrumentsor investment solutions in any jurisdiction, including the United States, or to enter into any transaction. Securities or financial instruments may not be offered or sold in any jurisdiction, including theUnited States, absent registration or an exemption from registration under applicable regulations. This material is issued by Lyxor Asset Management S.A.. Lyxor Asset Management S.A. is a firmauthorised by the French Autorité des Marchés Financiers.
ONLY LYXOR’S MANAGED ACCOUNT PLATFORMCOVERS THE BROADEST RANGE OF INVESTMENTOPPORTUNITIES.
IF ONLY THEREWAS A HEDGEFUND MANAGEDACCOUNTPLATFORM THAT OFFERED A WIDER CHOICE OF INVESTMENTS
”
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To find out more visit www.lyxor.com or email [email protected]
LYXOR THE EDGE IN HEDGE FUNDS.
C35403 HFM Week 279x209 13/10/10 10:16 Page 1
The $17.6bn Texas County & District Retirement system (TCDRs) could boost its hedge fund investments by more than $650m following a change to its asset allocation targets, HFMWeek.com exclusively revealed last week.
The retirement system, which allocated 16.2% to hedge funds as of 31 December 2010, previously had an absolute return target of 15% – however, the TCDRs board decided to increase this to 20% in March.
The pension fund’s private equi-ty and emerging markets equity allocation targets also increased as a result of the amendments, from 8% to 10%, and from 5% to 6%, respectively, while allocations to developed international equity, core fixed income and Treasury Inflation Protected securities (Tips) were reduced.
With the retirement system’s
equity allocations divided into three separate asset classes – domestic equity, developed inter-national equity and emerging markets equity (which have target allocations of 16%, 15% and 6% respectively) – the change means
that, should TCDRs achieve its allocation targets, its absolute returns investments will become the largest component of its invest-ment portfolio.
TCDRs already boosted its absolute return portfolio by $50m at the end of last year, adding $15m to its existing investment in credit hedge fund MKP Credit, $10m to long/short equity fund Meditor european and $25m to multi-strategy fund Wexford spectrum. The retirement system was already allocating $75m to all three hedge funds.
TCDRs previously had a target absolute return allocation of 10%, before increasing this to 15% at the beginning of 2010.
Overall, the retirement system’s investments gained 12.7% last year, with the fund’s hedge fund portfo-lio posting positive returns of 9.7%[email protected]
Texas county pension fund ups targetCounty & District Retirement System votes to increase absolute return target to 20%
SeaRCh
news
7- 1 3 a p R 2 0 1 1 h f m w e e k . Co m 3
If you have a news story for HFMWeek, please email: [email protected]
stamford police pension allocates to Golub fund
The $140M POlICe PensIOn Fund for the City of stamford, Connecticut has upped its hedge fund spend with a new allocation.
The board of trustees approved a $5m investment in Golub Capital, a $4.5bn firm credit specialist, in February, after meeting with repre-sentatives from the fund in December. The investment, which was made on 31 March, was funded from the pen-sion’s Oppenheimer Money Market account.
The move comes amid a number of changes to the City of stamford hedge fund portfolio. back in november, the board decided to completely redeem the pension’s investments in aetos and blackstone, with the funds reallocated to Mellon Capital.
The pension also boosted its existing investment with Japan-focused fund of hedge funds Wolver hill, approving a $2m allocation to the firm’s recently launched Pan asian Fund, which pur-sues a range of strategies including commodities, foreign exchange and long/short [email protected]
alloC at ion
aberdeen asset management 6
avantium investment management 6
azentus Capital 10
Bancorp fund Services 6
Basswood Capital management 10
Berens 5
Brevan howard asset management 6
Citadel 6
Clipper partners 6
eD Capital management 10
fauchier partners 8
Gam 5/8
Golub Capital 3
Grosvenor 5
GSo Capital partners 8
ironbound Capital management 7
matrix asset management 10
Ramius 6
Reynoso asset management 6
Schroders 10
Sentosa Capital 10
SlJ macro partners 10
walbridge Capital advisors 7
FUnD MAnAGeR InDeX
eDitoR of the YeaR 2010
the impoRtanCe of CaYman
14 18
CoMMenT Colin maCkaY
FeATURe
the RetuRn of BRiDGe finanCinG
i n t h i S
I ssue
a HFMWeek survey of bridge loans (see feature, p18) suggested that activity and vendor numbers are both on the rise. Interviewees estimated that the number of active providers fell from 20-50 to 1-2 during the crisis, since rising back to around seven.
Current players include Deutsche bank, Credit suisse, hsbC, JP Morgan and Citco. “We are not at our 2007 peak, but the market is coming back,” said Gilbert Grosjean, Citco’s head of financial products.
“Pricing is becoming more homogenous, however the prac-tices among the banking groups, in this sector, have become more diverse,” added Michael Romanek, principal of Rise Partners, which, among other services, sources bridge facilities. “This is a result of new entrants to the market and smaller niche players now operat-ing on a wider geographical basis.”t [email protected]
CONTINueD FROM PAGe 1
TexAs COuNTy & DIsTRICT ReTIReMeNT sysTeMasset allocations (%)SouRCe: tCDRS
AsseT ClAss %
equities 37%
other 26%
absolute return 20%
private equirty 10%
tips 3%
private real estate partnerships 2%
Commodities 2%
001_003_HFM220.indd 3 05/04/2011 16:12
P A G E
I N S I G H T
7-1 3 A P R 2 0 1 14 H f m w e e k . co m
MAr
kEt
Mon
itor
BEn
CHM
ArkS
HiG
HS&
LoW
SINDeX PeRfoRmANce 4 mar - 4 Apr 2011 (%)
FTSE 100 NASDAQ S&P500 HFR INDEX
febRuARy 2011 ReTuRNS Source: barclayHedge
HEDGE FuNDS FoHFs
HEDGE FuNDS FoHFs
brightline capital Partners LP
11.10%
Jk Asian Invest LP
-4.80%
Gottex Port Alpha mkt Nrl erisa uSD
4.28%Theta Deep Value fund
-0.97%
HiGH
LoW
diSCountS LEvEL off in 2011PRIce VoLATILITy IN THe SecoNDARy mARkeTS cALmS IN q1, foLLowING LAST yeAR’S GyRATIoNS SouRce : H eDG eb Ay
with pricing volatility the hallmark of the secondary market in 2010, this year, despite the wild macro-economic conditions, has started on a more even footing. february’s average discount to Nav of 73.15%, a slight improvement on January, suggests that the market is more stable, while the first premium trade, at 103%, since April 2010, is a sign that some investors are now willing to pay a higher price for access to closed funds and the most desirable strategies. The fact that the fund in question is a diversified commodity fund reveals where investor sentiment currently lies.
AvER AGE HEDGE FuND PR IcE(% oF NAv)
J AN 10 -feb 1 1
HIGHEST PREmIum TR ADE IN
2011
103%
004_007_HFM220_news.indd 4 05/04/2011 15:52
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The $920m University of Kentucky endowment Fund has doubled its target allocation to hedge funds, HFMWeek has learned.
Th e en d ow m ent fund, which has been investing in hedge funds since 2009, increased its target allocation from 10% to 20% in December last year, following a recommendation made by investment consulting firm RV Kuhns & Associates in September, recently released investment committee minutes reveal.
The increase was shared between the fund’s three existing hedge fund managers: Grosvenor, Gam and Berens.
Previously, the endowment targeted a 4% allocation to Grosvenor, 4% to Gam and 2%
to Berens. however, as a result of the increase, the three funds will now receive 12%, 5% and 3%, respectively, of the 20% target, with a part of Grosvenor’s increase to be invested in its new See Blue fund, which, according to the committee minutes, is
“a separate fund of funds created for the University of Kentucky”.
The change came as a result of an asset allocation study conducted by RV Kuhns last year.
The fund’s new investment policy is designed to “reduced the projected risk of the endowment”, the September investment committee minutes stated, adding that the new asset mix is expected to reduce risk by 0.78% but also marginally reduce returns – by 0.08%[email protected]
the imPoRtAnce of cAymAn As A finAnciAl hub
Colin MaCKay comment P14
Ironbound capital management to closeI R o n B o U n D C a p i t a l management, the new Jersey-based hedge fund manager established in 2004 by former merrill Lynch manager Steve Silverman, has decided to shut down its operations.
The firm’s flagship offering, the Ironbound Partners Fund, implemented a global long/short equity strategy. Brian Sattinger, the firm’s CFo, confirmed that Ironbound was winding down, but declined to provide further details.
Before Silverman established Ironbound, he worked at merrill Lynch for 19 years. Throughout
his tenure there, he was portfolio manager for the merrill Lynch Pacific Fund and the merrill Lynch Global Value Fund. he departed in 2002.
HFMWeek previously reported
Kentucky Uni endowment doubles hedge fund target10% increase shared between Grosvenor, Gam and berens funds
Alloc At ion
closuRe
Attempts by us hedge fund elliott Advisors to install three new directors to the board of national express have been labelled “an attempt to circumvent best corporate governance procedures” by the british transport firm’s chairman. “i strongly encourage shareholders to resist this,” John Devaney said in a letter to shareholders this week. elliott owns a 16.3% stake in national express.
the week
20%univeRsity of
kentucky enDowment Absolute RetuRn
AllocAtion
that in 2007, Ironbound was gearing up to raise money for a new Asia ex-Japan fund, which was slated to launch in october of that [email protected]
hedge fund perforManCe mARch 10 - feb 11 (%) hfRX Global hedge fund index / hfRX equity hedge index / hfRX eh: multi-strategy index / hfRX macro index souRce: hfR
infloW Sregul aT ionM arKeTS
5.4/10mAR 11 wk 4
con
fId
ence
Ind
ex week 4 mARch 2011
each week , hfmweek’s online poll invites managers, service providers and investors to rate their confidence in the industry out of ten. to participate, visit www.hfmweek.com
feb 11wk 4
feb 11wk 4
feb 11wk 4
mAR 11wk 1
mAR 11wk 1
mAR 11wk 1
mAR 11wk 2
mAR 11wk 2
mAR 11wk 2
mAR 11wk 3
mAR 11wk 3
mAR 11wk 3
6.2/10mAR 11 wk 4
6.8/10mAR 11 wk 4
004_007_HFM220_news.indd 5 05/04/2011 15:52
7- 1 3 A P R 2 0 1 16 h f m w e e k . co m
Ramius, the Cowen Group’s $9bn alternative investment man-agement business, is in the process of liquidating the onshore version of its multi-strategy fund of hedge funds (FohF), HFMWeek has learned.
according to a source familiar with the plans, the Ramius multi-strategy FOF LP is winding down due to the low-rate environment after the low-volatility portfolio’s single-digit returns failed to pick up traction with investors.
however, the offshore version of the fund, which has $140m under management, is still trading.
Data provided to Barclayhedge revealed that the majority of the onshore’s underlying investments were in fixed-income, equity long/short and event-driven hedge fund managers. Launched in January 1998, it had $36m under management. Last year it returned almost 5%, and in 2009 it posted 8%.
Last year, HFMWeek reported that Ramius was liquidating its two multi-strategy hedge funds, the Ramius multi-strategy and Ramius enterprise funds, due to ongoing and future redemptions. [email protected]
mARch 2011
barclayhedgehedge fund indexeSTiMATed PeRfORMAnCe fOR MARCh (AS Of 5 APRil 2011)
indi
ces
closuRe
former goldman sachs employees Karl devine, andrew dausch and brad lord have been hired by brevan howard asset Management to work in its london office. They will trade for the $25bn Brevan howard master fund, the company’s flagship offering.
Kay haigh has left deutsche bank after 17 years, where he served as head of both emerging markets debt trading and global macro trading. Reports suggest he plans to start a new hedge fund as he has registered a new company called avantium investment Management.
Michael Mohamadi has been appointed vice-president of bancorp Fund services, an alternative investment service provider in the us. he will work in the group’s Alternative Investment Products division, heading up its east coast operation.
andrew Mccaffery has been appointed head of institutional hedge funds at aberdeen asset Management, working within the firm’s $4bn funds of hedge funds business. he previously worked at bluecrest, attica alternative investments and Ubs.
bill King, portfolio manager at $11bn hedge fund citadel, is leaving the company, sources say. king joined from JPMorgan chase in 2008, and the $200m mortgage fund he oversaw is reportedly being liquidised.
P eO P l em o v e s
Alloc AT Ion
COnVeRTiBle ARBiTRAge
0.17%eQuiTY lOng BiAS
-0.39%MeRgeR ARBiTRAge
1.35%
hedge fundS
0.44%fundS Of hedge fundS
-0.56%
fixed inCOMe ARBiTRAge
0.75%eQuiTY lOng/ShORT
0.14%eVenT dRiVen
1.44%
eMeRging MARkeTS
2.46%eQuiTYMkT nTRl
1.07%MulTi STRATegY
0.61%
illinois college boosts hedge fund allocationsthe investment advisory panel for the $1.13bn College illinois 529 Prepaid tuition Programme has boosted its allocation to hedge funds, HFMWeek has learned.
the panel approved a new $50m investment into fund of hedge funds (FohF) firm Clipper Partners, a multi-strategy, multi-manager endowment-style investment fund, in February; as well as allocating an additional $25m to existing hedge fund manager Reynoso asset management, specifically, the Reynoso Options arbitrage Fund, a managed futures fund.
the investment trust, which began allocating to the sector at the beginning of last year, previously allocated 13.9% of its investment portfolio to four hedge funds: Reynoso, neuberger Berman’s diversified arbitrage fund, Pinnacle asset management’s natural resources fund, and global macro firm Balestra Capital.
as of July 2010, the trust’s investment portfolio was down 1.8% since inception.
the College illinois Prepaid tuition Programme’s investments are currently managed by the illinois student assistance Commission (isaC), an illinois state [email protected]
ramius set to wind down onshore multi-strategy FohFonshore version to liquidate, while offshore keeps trading
Two new indexes tracking capital flows of many of the world’s hedge funds are to be launched by administrator Globeop, based on monthly data for actual and expected movement from the funds it administers. “There is a real lack of independently confirmed industry data against which hedge fund managers and investors can benchmark their allocations and performance,” Globeop ceo hans hufschmid said. (pictured: Globeop capital movements Index)
The week
COllege illinOiS PRePAid TuiTiOn PROgRAMMeAsset allocation as of 28 feb 2011 (%)souRce: colleGe IllInoIs
ASSeT ClASS %
Domestic equities 28.2%
International equities 8.4%
Domestic fixed income 22.3%
Alternative investments 24.6%
Real estate 15.1%
cash 1.4%
004_007_HFM220_news.indd 6 05/04/2011 15:51
7- 1 3 A P R 2 0 1 1 h f m w e e k . co m 7
Walbridge Capital opens first managed account Walbridge Capital advisors, the Connecticut-based hedge fund manager, has created an $18m separately managed account following demand from an individual allocator in New York.
the firm’s first managed account structure shadows the manager’s flagship Walbridge long-Short Strategies Fund, which implements a statistical arbitrage strategy selecting long and short positions of S&p500 large-cap companies.
“because we are a highly liquid absolute return strategy, we would be suited ideally for qualified endowments, foundations and family offices,” said Jeffrey leitz, CeO.
HFMWeek previously reported on the launch of Walbridge Capital advisors and the firm’s planned launch of a levered version of its flagship fund last year.
the Walbridge long-Short Strategies Fund is up an estimated 2.49% Ytd gross of fees through the end of March. last year, it returned 10.35% [email protected]
the $1bN eNdOWMeNt fund for the Smithsonian institution, the world’s largest museum and research complex, is still actively looking for opportunities in the global macro space, HFMWeek has learned, after conducting a series of discussions late last year.
Chief investment officer amy Chen confirmed to HFMWeek last week that the endowment is seeking opportunities in the space, but said that the fund has not initiated a man-ager search. “We typically look at a broad range of hedge fund strategies,” she added.
the move was first mooted in the September meeting of the Smithsonian’s investment committee, when members suggested that the endowment staff should “look into ... global macro mangers for a portion of the [endowment’s] allocation.”
in the meeting, the committee also suggested that staff look into relative value fixed-income managers, while the possibility of adding emerging
market debt was also raised.the meeting minutes also reveal
that the endowment is currently “overexposed” to credit hedge fund managers, which the committee believes “drove the outperformance over the [2010 fiscal] year”, while the fund’s long/short equity managers “significantly underperformed mainly due to a flat third quarter 2009”.
in October last year, HFMWeek revealed that the Smithsonian institution endowment fund had committed $25m to a long/short directional emerging markets fund and $10m to a commodity hedge fund manager as part of an effort to boost its exposure to the hedge fund space.
the hires followed the endow-ment’s decision to boost its allocation to the sector from 25% to 35% ,with a maximum allocation of 45%, the pre-vious year, with the global developed equity portfolio reduced to 25% from 40% in order to fund the [email protected]
Smithsonian endowmentlooking into global macromuseum fund seeks opportunities in macro and fixed-income
hedge funds piled into natural gas, and oil rallied, this week, off the back of speculation that the US economy is poised for a recovery. hedge funds doubled bullish bets on natural gas, boosted further by expectations that Japan’s demand will rise in the wake of its nuclear crisis, while oil climbed to a 30-month high in New York trading. The US is the world’s biggest crude consumer.
The week
l AUNch
SeARch
febRUARY 2011
AbSolute RetuRn IndICeSSource: Newedge Prime Brokerage Group
feB2011 eSt-0.28%YtD 2011 eSt0.43%
vol AT i l i T Y TR Ad iNg iNdex
SuB-iNDiceS
equitY StrateGieS
feb 11 0.94%
Y td -0. 39%
traDiNG StrateGieS
feb 11 1 . 32%
Y td 1 .07%
feB2011 eSt1.27%YtD 2011 eSt0.85%
commodiT Y TR Ad iNg iNdex quaNtitative
feb 11 0. 39%
Y td -0. 58%
DiScretioNarY
feb 11 0. 12%
Y td -0. 59%
feB 2011 eSt0.22%YtD 2011 eSt-0.58%
mAcRo TR Ad iNg iNdex
SuB-iNDiceSIn
dIC
eS
whAT’S dRiviNg m&A iN The AdmiN SPAceneWS feAtuRe P16
toP 10 Stat arB HeDGe fuNDSfeb 10 - Jan 11 (%)SoURce: bARclAYhedge
1 blau capital ltd 21.21%
2 Anaxis Sabre Style Arbitrage USd 15.8%
3 AlphaSquare Sys equity Trading USd 3.59%
4 AlphaSquare Sys equity Trading eUR 3.56%
5 double Alpha enhanced llc 0.76%
6 double Alpha Standard llc -1.4%
7 old mutual gl Stat Arb USd -1.64%
8 vaca capital Partners lP -3.39%
9 fairport international ltd -4%
10 Pentangle Partners lP -12.35%
004_007_HFM220_news.indd 7 05/04/2011 15:51
7- 1 3 A P R 2 0 1 18 h f m w e e k . co m
investor
Florida pension looks into managed futuresThe $22m General employees’ Pension for the City of Punta Gorda, Florida, is considering making its first allocation to managed futures, HFMWeek has learned.
a representative of The Bogdahn Group, the pension fund’s investment consultant, distributed a report enti-tled ‘Overview of managed futures as a potential asset class’ at the most recent meeting of the pension board, held on 17 march.
according to the minutes of the previous meeting, held in December, the board had previously discussed the possibility of allocating 5% to managed futures.
HFMWeek previously revealed in December that the $55m pen-sion fund for the Town of Cheshire, Connecticut approved a $1m allo-cation to managed futures manager abbey [email protected]
The $9.2Bn new mexico educational retirement Board (erB) has hired GSO Capital Partners as part of a new opportunistic credit alloca-tion, HFMWeek has learned.
according to the recent published minutes of the board’s February meeting, the investment committee approved a $150m allocation to the fund – specifically, a separate managed direct lending account.
The move is part of a 20% long term investment to opportunistic credit that new mexico erB is carving out. The board also approved a $150m alloca-tion to medley Capital at the same meeting. medley, which this week
announced the acquisition of credit hedge fund manager Viathon Capital, provides capital and advisory services to middle market companies in north america, and has assets of $1.4bn, including hedge funds.
Back in november, new mexico allocated $19.7m to the Bridgewater Pure alpha major markets fund. The board already invested $290.1m to the Bridgewater all weather fund as well as $186.7m to the Bridgewater Pure alpha fund as part of a global asset allocation strategy.
The board also has a 7.1% alloca-tion to absolute return strategies, compared to a target allocation of 10%
and a maximum of 20%, investing in a number of funds including austin Capital, Gottex and Gam.
new mexico erB enjoyed a net investment gain of $464.9m over the fourth quarter of 2010, while total assets increased from $8.3bn to $9.2bn over the course of the [email protected]
new Mexico pension board makes new credit allocationRetirement system hires GSo capital as part of long-term strategy
i n v e sto ri n b R i e f
Alloc At ion
sea
rch
act
ivit
y
the $7.6bn new york city Fire Department Pension Fund has announced plans to allocate $50m to Permal Group. it is the third new York pension fund to make a commitment to Permal this year. earlier this month, the $39.6bn employees’ retire-ment system committed $250m, while the $23.1bn Police Pension Fund allocated $150m.
the $72bn new Jersey state investment council has revealed an updated version of its most recent asset allocation policy, which would enable the council to commit as much as $1.6bn in new hedge fund allocations.
the $267m el Paso county retirement system has invested in hedge funds for the first time, allocating $5m to fund of hedge funds firm Gam. the move comes as the retirement system seeks to broaden its investments beyond equities and bonds.
the defined benefit pension scheme for hanson industrial has hired five new hedge funds managers in its first foray into the sector: FX concepts, Goldman sachs asset Management, Lee overlay Partners, Blackstone Group and Mesirow asset Management.
the £601m ($970m) howden Joinery pension plan has allocated £26m ($41.9m) to Fauchier Partners. the firm made a number of new hires in Q4 2010, including Blackstone Group for a hedge fund mandate.
continueS on P13
SeARch
City of Punta Gorda General emPloyees’ Pension total aum $22m Consultant bogdahn Group aCtivity considering managed futures
texas County & distriCt retirement system
total aum $17.6bn aCtivity increased hedge fund target to 20%
City of stamford PoliCe Pension Plan
total aum $140m aCtivity Allocated $5m to Golub capital
new mexiCo eduCational retirement Board
total aum $9.2bn aCtivity Allocated $150m to GSo capital Partners
Almost a third of hedge funds with $1bn or more in Aum are yet to register with the Sec, one of the uS regulator’s databases suggests. 66 of the 220 managers on AR magazine’s list of billion-dollar firms weren’t registered, with several of the industry’s biggest names – including $27.9bn Soros fund management, $13bn SAc capital Advisors and $12.3bn Viking Global investors – among them.
the week
new mexiCo erB ASSet AllocAtion AS of 31 Dec 10 (%) SouRce: new mexico eRb
asset Class %
equity 46.1%
fixed income 31%
Absolute return 7.1%
Private equity 3.8%
Real estate 4.9%
Real assets 0.8%
Global asset allocation 5.4%
cash 0.8%
008_010_HFM220_investor.indd 8 05/04/2011 15:50
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111098_02_AD_HFMWeek.indd 1 3/3/11 2:23 PM
launches &closures
7- 1 3 A P R 2 0 1 11 0 h f m w e e k . co m
eD capital to launch russia-focused ucitsED Capital Management, an international investment manage-ment firm specialising in Russia and the Commonwealth of independent States (CiS), is gearing up to launch a Ucits-compliant version of its long/short fund.
the Hudson River Russia Growth Fund will launch later in april and invest in publicly traded equity and equity-related securities of compa-nies in Russia and the CiS. the fund, which is launching with $10m, has a $500m capacity.
“Since the start of 2011, the Russian market has shown strong absolute performance, and has substantially outperformed both the emerging and developed markets, while still retain-ing attractive valuations,” said Elliot Daniloff, founder of ED Capital.
Daniloff and ilya Kravets are the fund’s portfolio managers. Before founding ED Capital in 2004, Daniloff worked at a number of brokerage firms including UBS-paineWebber and Morgan Stanley. Kravets previously worked at Rodman & Renshaw, an investment bank in New York. [email protected]
former Goldman sachs trader Morgan sze’s azentus capital was formally launched on friday. The multi-strategy fund has reportedly received commitments of over $1bn. Sze was granted an asset management licence for the new fund in february, from the hong kong regulator.
Matrix asset Management plans to launch a long/short Ucits-III fund, based on its cayman-based New europe fund. managed by David Thornton, the fund will focus on europe and Russia.
sentosa capital launched the $40m sentosa asian credit Fund on friday, which will trade Asian debt. “we see a fundamental growth story in Asia as well as the capital markets’ develop-ment,” said Brad levitt, ceo. schroders has launched the schroder GaIa cQs credit Fund, the fifth fund on its Ucits platform. The fund will follow a long/short strategy and be managed by cQs.
currency trader stephen Jen is to launch slJ Macro Part-ners after leaving BlueGold capital Management this week. The new fund will focus on currency trading, alongside commodities, fixed-income and equities.
launches In BrIeFs p o n s o r e d b y
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BaSSWooD Capital Management, a New York-based $400m US long/short equity hedge fund manager, launched its second hedge fund last week, HFMWeek has learned.
the Basswood Financial Fund invests in US financials across all mar-ket capitalisations and has 30 long positions and 40 short ones.
“Basswood has been managing money for over 20 years and we have seen the financial cycle twice, made good money the first time and antici-pate doing the same this time around,” said Jim Sheehan, director of market-ing and investor relations.
the fund debuted with $25m of
internal capital along with commit-ments from some of its existing family office investors. it has a $300m-$500m capacity.
Matthew and Bennett lindenbaum, twin brothers who co-founded Basswood in 1994, are the portfolio managers.
the fund offers different share classes contingent upon investor liquidity. Morgan Stanley and BNp paribas are the prime brokers.
last year, the flagship Basswood opportunity Fund returned 9.87% net. Year-to-date through February, it is up 3.81%. [email protected]
Basswood capital launches long/short financials fund New York-based manager debuts second hedge fund offering
Valhalla capital Group
fund name Prop fX strateGy cTA focused on spot fX launch date Q1 2011
ed capital manaGement
fund name hudson River Russia Growth fund strateGy Russia-focused Ucits launch date Apr 2011
basswood capital manaGement
fund name basswood financial fund strateGy US long/short financials launch date Apr 2011
fX momentum
fund name fX momentum strateGy Short-term currency programme launch date Q1 2011
hfri equity indeXPerformance feb 10 - feb 11 (%) SoURce: bARclAYhedGe
Asset manager Rab capital is to launch two new Ucits-III funds focusing on the natural resources market. The Rab Global mining and Resources Ucits fund and the Rab Gold and Precious equities Ucits fund will start trading on monday, with an initial $100m invested across the two strategies. The company is looking to bounce back from pre-tax losses of £20.2m ($32.5m) recorded in the year to december.
The week
008_010_HFM220_investor.indd 10 05/04/2011 15:50
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DATA PERFORMANCE ANALYSIS
7- 1 3 A P R 2 0 1 11 2 H F M W E E K . CO M
EUROPEAN EQUITIES//ODEY EUROPEANMar 10 - Feb 11 (%)
FIXED INCOME// III FUNDMar 10 - Feb 11 (%)
CTA// MAN AHL DIVMar 10 - Feb 11 (%)
SOURCE: BarclayHedge
SOURCE: BarclayHedge
SOURCE: BarclayHedge
SOURCE: BarclayHedge
Japan Orbis Equity had a promising start to the year; unfettered by the volatility that hit the Nikkei in March, the $2.5bn fund was able to return more than 7% in February. The eventual turnaround in the performance of the Nikkei in March, regaining about half its losses, meant the fund should have been able to consolidate on an excellent fi rst quarter. However, questions remain as to how investors will react long term to the situation in Japan. The quarterly redemption deadline could have arrived a little early for investors, as they attempt to digest the real effects of the Tsunami and the ensuing chaos.
Undoubtedly it was equities that got seriously damaged in March; repercussions from the turmoil in Japan. Hedge funds heavily invested in Japan got hurt the worst , but others trading European equities took a hit too. Up to the end of February, these managers were proving the strongest of all, although clearly many were net long and not set up for a reversal. Odey European is one manager that started 2011 very well and would’ve expected a strong Q1 after February, when it was up 5.5%
Fixed income managers may be wondering what Bill Gross will do with all that cash in Pimco’s Total Return Fund. Worryingly for everyone else, Gross doesn’t feel confi dent that the US and global economy will hold up too well when there’s no QE3 to keep the market afl oat, and he appears content, at least for now, to wait for the next move. Other managers that aren’t as fortunate have kept on trad-ing. III’s fund started where it left off in 2010 and is up around 5% over the fi rst two months of the year.
CTAs have already hit a diffi cult patch in 2011, so the news by Man Group’s Peter Clarke that the world’s biggest manager will fall short of perform-ance expectations in Q1 won’t be received with much mirth by the rest of the industry. Man AHL was already down 2.35% through February and suffered worse in the gyrating markets of March. The rest of the industry was reasonably placed af-ter the hurt of January was soothed by a rewarding February, but March looks like a return to the pain, so expect a slew of red YTD numbers after Q1.
THE WEEK IN NUMBERS
Global oil market share controlled by Libya, where confl ict has virtually stopped production
US jobless rate hits two-year low in March, the fourth consecutive monthly fall
UK reforms propose raising the weekly pension from £97
Global TV audience for India’s Cricket World Cup Final win over Sri Lanka
Pay of Goldman Sachs bosses, which has been questioned by leading orders of catholic nuns
World’s most expensive hot dog is added to the menu
at a New York restaurant
BY STRATEGY & SECTOR
Pension investors open up to Ucits CTA benefitsAFTER A PERIOD OF mistrust, or just misunderstanding, pension funds have now come round to the abilities of CTAs.
While diversification remains crucial, interest will stay at a constant. But, how investors opt to access these managers is more fluid – with the funds of funds route slowly giving way to direct invest-ment, a trend that many managers are hoping to tap, via the Ucits III space.
Ucits-compliant CTAs have a short pedigree. A year ago, Aquila Capital launched the first such fund. Twelve months later and it has spawned a num-ber of similar strategies, including a Ucits version of the mighty BlueTrend, which emerged last April, hit $630m, only to be unwound over tracking errors.
Industry rumours suggest a BlueTrend Ucits may yet return, while other more concrete CTA launches are known to be in development. ML Capital’s – which operates the Montlake Ucits platform – quarterly barometer of investor demand shows that commodity strategies are still popular, while investors complain of being underserved in this area.
This scarcity is understandable. Ucits regulation doesn’t allow commodities exposure, and, even though CTAs use synthetics, they still struggle to meet requirements.
However, since the launch of Aquila, more prime brokers – Deutsche, New Edge, Bank of America – have launched products, usually designed around com-modities indices, based on the underly-ing instruments the hedge fund wants to trade, to smooth structuring.
Easier access will spell more launches. And, while equity-based Ucits have fal-tered in garnering pension sector interest, CTAs – deemed a safer option to non-Ucits brethren, but remaining equally liquid – may prosper in this space.
THE SHORTVIEWGWYN [email protected]
JAPANESE EQUITIES// JAPAN ORBIS EQUITYMar 10 - Feb 11 (%)
2% £155 1bn$69.5m $698.8%
012_013_HFM220_analysis searches.indd 12 05/04/2011 14:18
7- 1 3 A P R 2 0 1 1 h f m w e e k . co m 13
search acTIVITY APRil
a weekly compendium of recent hedge fund searches and investment mandatescompiled by hfmweek
s e a r c h a c t i v i t y
smithsonian institution endowmentToTAl Aum $1bnAcTiviTy Seeking global macro opportunities
university of kentucky endowment ToTAl Aum $920m conSulTAnT Rv kuhns & AssociatesAcTiviTy Doubled hedge fund allocation
college illinois 529 prepaid tuition program ToTAl Aum $1.13mAcTiviTy Allocated $50m to clipper Partners
university of michigan endowmentToTAl Aum $7.3bnAcTiviTy Recommended $25m allocation to the Protégé Tactical fund
university of washington endowmentToTAl Aum $2.08bnAcTiviTy Allocated additional $15m to valinor capital Partners
clwyd pension fundToTAl Aum $1.6bnAcTiviTy Allocated additional 8% to hedge fund strategies
suffolk pension fundToTAl Aum $2.3bnconSulTAnT hymans Robertson AcTiviTy considering 10% absolute return allocation
city of manchester employees' contributory retirement system ToTAl Aum $153mAcTiviTy Reviewing Attalus capital allocation
arizona public safety personnel retirement system ToTAl Aum $6.1bnconSulTAnT Albourne AmericaAcTiviTy considering allocating $40m to eJf capital
london borough of bexleyToTAl Aum $792.3mAcTiviTy Terminating allocation to man investments
colorado fire and police pension associationToTAl Aum $3.1bn AcTiviTy Appoved $130m allocation to Aetos capital management
orange county retirement systemToTAl Aum $8.7bnAcTiviTy made additional $10m allocation to BlackRock
avon pension fundToTAl Aum $3.6bn conSulTAnT JlTAcTiviTy Redistributed allocation to hedge fund portfolio following review
new Jersey state investment councilToTAl Aum $71.6bnAcTiviTy Boosting hedge fund allocations
university of british columbiaToTAl Aum $841.5mconSulTAnT PBi AcTiviTy moving out of hedge fund space
dorset pension fundToTAl Aum $2.43bnAcTiviTy Allocated additional £15m ($24.3m) to existing fohfs
alaska permanent fund corporationToTAl Aum $39.5bn conSulTAnT callan Associates AcTiviTy considering further investments in absolute return vehicles
san antonio fire & police pension fundToTAl Aum $1.9bn conSulTAnT Albourne PartnersAcTiviTy increased existing investment with hBk capital management by $5m
workplace safety and insurance board (canada)ToTAl Aum $13bnAcTiviTy To double allocation to total return funds, inc. hedge funds, by 2012
texas teachers retirement system ToTAl Aum $100.3bn conSulTAnT Albourne AmericaAcTiviTy considering directional hedge funds
alchemy venturesfocuS managed account platformAcTiviTy Accelerating allocations to long/short , market neutral and global macro
texas tech university system ToTAl Aum $700m AcTiviTy hired Argonaut capital management and Discovery capital management in December
topping capitalfocuS long-biasedAcTiviTy looking to allocate to event-driven m&A-focused strategies
uni of california retirement plan and gepToTAl Aum $40.1bnconSulTAnT mercerAcTiviTy increasing long-term absolute return targets
orange county retirement systemToTAl Aum $8.7bn AcTiviTy Searching for two new hedge fund managers
west virginia investment management boardToTAl Aum $12.2bnconSulTAnT Albourne AmericaAcTiviTy Allocated $60m to flagship carlson capital fund
university of houston systemToTAl Aum $533mconSulTAnT cambridge AssociatesAcTiviTy Redeeming from two hedge funds
arizona public safety personnel retirement system ToTAl Aum $6.1bnconSulTAnT Albourne AmericaAcTiviTy hired the Red kite explorer fund
university of michigan ToTAl Aum $6.6bnAcTiviTy invested $25m in Golub capital
north carolina retirement systemToTAl Aum $72.4bnAcTiviTy Planning to allocate to credit hedge funds
ohio school employees retirement system ToTAl Aum $9bnconSulTAnT AksiaAcTiviTy Reviewing contract with hedge fund consultant
white peaks asset managementAcTiviTy Allocated to Beaconcrest capital through managed account platform
apr 2011
mar 2011
012_013_HFM220_analysis searches.indd 13 05/04/2011 14:18
COMMENT&ANALYSIS
“SMALLER GUYS CAN’T WIN BIG CLIENTS BECAUSE WHEN THE BIGGER GUYS DO THEIR DUE DILIGENCE THEY COME UP SHORT”
“GIVEN CAPITAL REQUIREMENTS AND FUNDING COSTS AT BANKS, I DON’T THINK WE’LL SEE PRE-CRISIS LEVEL PRICING IN THE NEAR FUTURE”
“WHEN A COMPANY IS IN THE HANDS OF WELL-REGARDED INDIVIDUALS IT IS ALL THE MORE SURPRISING THAT THIS RUMPUS STARTS”
THE LONGVIEW
A NATIONAL EXPRESS SHAREHOLDER IS LESS THAN IMPRESSED BY ATTEMPTS BY HEDGE FUND ELLIOT ADVISORS TO ADD THREE NEW SHAREHOLDERS TO THE TRANSPORT GROUP’S BOARD
AN INDUSTRY SOURCE TELLS HFMWEEK WHY, WITH OPERATIONAL ACUMEN A PRIORITY POST-MADOFF, SIZE MATTERS IN THE HEDGE FUND ADMINISTRATION SPACE
THE IMPACT OF THE FINANCIAL CRISIS ON BRIDGE FINANCING PRICES IS LIKELY TO BE A LASTING ONE, SAYS MICHAEL GORDON, A MANAGING DIRECTOR AT JP MORGAN
THE WEEK IN QUOTES
I t is not surprising that Cayman, as the preferred domicile for an estimated 80% of the world’s hedge funds, is experi-encing the same industry trends being
reported elsewhere in the alternative invest-ment management community. After the difficulties domestically and internationally which followed the 2008 financial crisis, the Cayman industry has witnessed a period of consolidation, reorganisation and retool-ing which is now manifesting itself in a sus-tained period of recovery.
According to statistics published by the Cayman Islands Monetary Authority (Cima), funds registered with Cima, which include those registered, licensed or admin-istered in Cayman, have demonstrated sustained growth since the end of the first quarter of 2010 and are heading back to the record highs of 2008. With month-on-month growth trends, it is expected that the total number of funds registered with Cima will break through the 10,000-barrier for the first time during 2011.
Aima Cayman, the local representa-tive of Aima’s global network, serves as the voice of the Cayman alterna-tive investment management indus-try. Established in 2006, Aima Cayman works closely with Cima, the Cayman Islands government and local legislators to ensure the adoption of sound practic-es within the industry, as well as to help shape and direct local and internationalregulation and legislation.
Furthermore, Aima Cayman is a leading member of Cayman Finance, the broader financial services representative body in Cayman, and has established a structured educational programme aimed, principal-ly, at new professional staff entering the industry which will run throughout the year. This programme is complemented by external speakers and presentations aimed at encouraging debate on local and inter-national issues that impact the industry.
Over the past year, Aima has engaged in detail with Cima on various initiatives
aimed at improving the means and pro-cesses by which it executes its regulatory functions. These include Cima’s move-ments towards online filings and data collection which will guarantee the speed of response which is a trademark of the Cayman industry at large.
Additionally, Aima has participated in the industry consultation around the EU Alternative Investment Fund Managers (AIFM) Directive, which allowed Cima to provide detailed responses to the regula-tory consultation undertaken in late 2010. As a result, the final text retained many of the concessions sought by the industry at large, including the retention of the private placement provisions during the transi-tion phase and the passporting initiatives thereafter. The detail of the regulations and implementation will be important and Aima and Cayman Finance will continue to educate and inform commentators and parliamentarians to ensure that all aspects of the operation of the industry are taken into account in determining the detail of the implementation provisions.
While external pressures have required significant focus in recent years, the strength and depth of the Cayman indus-try remains of critical importance to Aima and its membership. Maintaining Cayman’s market-leading position relies not only on co-operative engagement with Cima and the Cayman government, it also requires the local industry to maintain the technical expertise, efficiency and cost-effectiveness which attracted the major-ity of the world’s managers to its shores. Despite the economic pressures of the last two years, Cayman appears in rude health, with new service providers setting up on a regular basis and existing businesses recruiting and planning for growth, indi-cating broad confidence in the longevity of the industry, and of the Cayman Islands. ■
COLIN MACKAY is head of Aima Cayman’s education and research committee
7- 1 3 A P R 2 0 1 11 4 H F M W E E K . CO M
WHILE EXTERNAL PRESSURES HAVE REQUIRED SIGNIFICANT FOCUS IN RECENT YEARS, THE STRENGTH AND DEPTH OF THE CAYMAN INDUSTRY REMAINS OF CRITICAL IMPORTANCE TO AIMA AND ITS MEMBERSHIP”
COLIN MACKAYon Aima’s role in Cayman, and how the fi nancial hub has continued to thrive in the face of economic and regulatory pressures
014_015_HFM220_comment.indd 14 05/04/2011 14:16
INDEPENDENT PUBLISHER AWARDS EDITOR OF THE YEAR 2010
EDITOR’SVIEW
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HFMWEEK
g.roberts@hfmweek .com
‘We are all in the business of transparency’, has become an industry mantra. A facetious, investor may well respond,
‘yes, but what happened to the business of performance?’ However, for investors, man-agers and service providers, performance and transparency are crucially linked.
Hedge fund indices – and there are some very good ones in existence – are generally believed to be flawed, as managers decide not to report in bad times or back report when the sun shines.
By throwing its hat into the index ring, with a series of indices that will not be self-selecting, GlobeOp may well end up setting an important precedent. Its current brace – capital flows and forward redemptions – should enable funds to benchmark their own liquidity, against an index of their peers.
They will also eerily tell the future, showing just how unsettled investors are. Performance, despite the month’s macro shocks, looks to have held up in March, but any movement in forward redemptions will show the impact of other risk management concerns – a key to the psyche of investors.
GlobeOp’s own client portfolio may not be totally representative – it has less equity funds than other administrators – but the new indices are definitely useful. It is also a marketing coup. Investors care about perfor-mance, but they are genuinely fascinated by the business of transparency, good news for an admin currently promoting its own index.
GWYN ROBERTS, EDITOR
FREQUENTLY ENIGMATIC, occasionally unfathomable, it’s rare to come across a fund whose name communicates exactly what it does. Ceres Agriculture is one of this rare breed. A London-based fund, named after Ceres, the Roman Goddess of agriculture, it invests primarily in exchange-traded agricultural commodity contracts and derivatives.
Owned by FourWinds Capital Management, the fund looked to make hay in the commodities boom and raised $150m from investors when it was floated in 2007 – but that was before the crisis. As with funds globally, 2008 provided a series of massive challenges, but Ceres managed to navigate them better than most and returns have picked up significantly since then.
Ceres the goddess would probably have sympathised with the fund’s tough year – she was responsible not just for agri-culture but for grain crops, fertility and motherly relationships, a heavy workload for any deity, or indeed hedge fund manager. Her ability to battle on all fronts may have been an additional reason the business assumed her name.
The seven-day April festival of Cerealia, held in her honour, brought relief to the masses of Ancient Rome every year. Inves-tors in Ceres Agriculture will be hoping April will bring comfort for them too, after the global turmoil of the first quarter. ■
7- 1 3 A P R 2 0 1 1 H F M W E E K . CO M 15
#82CERES AGRICULTURE
CAN YOU DESCRIBE YOUR ROLE? I’m a matchmaker. I connect top-calibre CFOs with alternative asset managers. My role is to ensure that we consistently create the perfect marriage for both parties, with the final goal being to help fund managers hire world-class CFOs efficiently so they can focus on investing.
WHO DO YOU ADMIRE MOST IN THE INDUSTRY?Julian Robertson, who has become a legend for turning less than $10m in start-up capital into a multi-billion dollar hedge fund. Since then, he has given back by seeding young, emerging fund managers. He has played a tremendous role in supporting the industry’s next generation.
WHAT WOULD YOU DO IF YOU WERE IN PRESIDENT OBAMA’S SHOES?I would support the American entrepreneur. Small businesses are the economic backbone of this country. Investing in the entrepreneur is one of the surest ways to make the American dream a reality for more people.
WHICH MOVIE CHARACTER DO YOU MOST IDENTIFY WITH?Danny Noonan in Caddyshack – I have the clubs that help you hit a hole-in-one. ■
J PATRICK GORMANco-founder, iFind Group
60 S ECONDS
WITH...
WHAT’S IN A NAME?THE STORY BEHIND HEDGE FUND MONIKERS
014_015_HFM220_comment.indd 15 05/04/2011 14:16
7- 1 3 A P R 2 0 1 1
NEWS ANALYSIS HEDGE FUND ADMINISTRATION
1 6 H F M W E E K . CO M
Few industry observers were surprised to read reports of Northern Trust’s agreement to pur-chase Omnium, Citadel’s fund administration arm, last month. It could be, a� er all, the latest in a line of consolidations to have occurred re-cently within the crowded admin space, a sec-
tor currently rife with speculation as to who will make the next move. But what is driving this activity and what does it mean in terms of the service o� ered to hedge funds?
David Aldrich, managing director at BNY Mellon, whose fund admin unit was the third largest in HFMWeek’s No-vember survey, with $261.80bn AuA, says M&A in the sec-tor has three main drivers. Asset gathering and capability expansion by admins looking to rise up the league tables are central, as is interest from asset-hungry private equity � rms, looking to build economies of scale in a still-fragmented service provider group.
According to Aldrich, the trend towards bigger � rms is a good thing. “Managers need to utilise multiple domiciles and the fund administrator needs to be both domicile neu-tral and multi-jurisdictional,” he says. GlobeOp’s president and CEO, Vernon Barback, agrees. “We have developed powerful technology to provide our clients with tailored and high-touch, high-service solutions which are based on standardised processes and controls.” Ranked sixth in HFMWeek‘s November league, the share price of GlobeOp – still rare among admins in being stock market-listed –
currently stands at nearly twice its September 2010 level. Andrew Kennedy, COO at hedge fund manager Sam
Capital, echoes these thoughts. “� e ability to meet your needs as a fund, together with competitiveness on cost, is the key criteria for admins,” he says. “And the economies of scale custodians are able to generate through these merger activities should allow them to get be� er and be� er at that kind of service.”
However, though the M&A trend points to a smaller number of bigger � rms in the future, smaller admins, of-fering what they consider to be a more tailored service than their larger rivals, keep springing up. Centaur Fund Services, launched by Ronan Daly in 2009, is a prime ex-ample. “� e service given to hedge funds now is, by and large, a very commoditised service,” says Daly, who ran Hemisphere, an admin that rapidly grew and evolved, un-til being acquired by Citibank in 2007. With experience of both, he believes in the bene� ts of smaller-scale � rms, likening most hedge fund administration now to the kind of generic service o� ered to mutual funds.
He disagrees with Barback’s assertion that be� er tech-nology puts bigger � rms at an advantage – quite the op-posite. “� is process of consolidation is reducing the level of specialist, high-touch service, so there appears to be a gap in the market. � e idea of launching a smaller � rm was to go back to basics.”
Daly sees the rise of larger admins as an opportunity, and believes the two models can work side-by-side. “� e big-guy model does work for some of the very big, institu-tional-type investment managers. But we � nd there are a huge number of independent or boutique asset-managers who de� nitely do not want that model.” If that is the case, the market can expect smaller admins to continue appear-ing to replace the larger boutiques that have consolidated.
OTHERS SAY THE MOVE TO consolidation has been driven by investors more desperate than ever for account-ability throughout the investment process, including from admin providers. Speaking on condition of anonymity, one source told HFMWeek: “Smaller guys can’t win big clients because when the bigger guys do their due dili-gence they came up short. Brand name is important be-cause a fund employing an administrator no one’s heard of raises questions for investors.”
Opinion is also split on what the changing admin land-scape means to hedge funds in terms of cost. While Daly thinks the dominance of the bigger companies will impose slight downward pressure, Aldrich believes client experi-ence, and not price, is the de� ning factor. If admins pro-vide an inadequate service, they won’t be used – however cheap they are.
And maybe that is the bo� om line. Whatever form they take, admins have to provide a service funds are happy with, and the market will evolve to suit these needs. Cur-rently, the increasing demands of investors and institu-tions have produced a climate of bigger � rms who have more middle-o¤ ce, day-to-day involvement than ever. � e increased regulatory and reporting demands placed upon hedge funds provide further opportunities.
Whichever way the market moves, one thing is clear. With fund admins looking to build economies and exper-tise, and private equity and prime brokerage buying to � nd a way into the admin market, the appetite for more deals is there. Judging by the sheer number of rumours HFMWeek heard while exploring the space, the M&A trend looks set to continue.
Consolidation within the hedge fund administration space is on the rise, with conventional wisdom suggesting larger firms are best placed to respond to the increasing operational standards expected of post-crisis funds. But many still see smaller admin firms as having an important role in the evolving service provider spaceBY WILL WAINEWRIGHT
MOTIVESMERGER
THE LATEST DEALS IN THE HEDGE FUND ADMIN SPACE SOURCE: HFMWEEK AUA SURVEY, NOVEMBER 2010 (SINGLE MANAGER TOTALS)
Northern Trust believed to have agreed in March to acquire Omnium (combined AuA: $88.23bn).
Helvetic Fund Administration acquired Capita Financial Administrators in March, adding $86m AuA.
Credit Suisse is in the process of buying Prime Fund Solutions, potentially adding $75.47bn AuA.
Private equity fi rm BV Investment Partners announced plans to buy Butterfi eld Fulcrum ($25bn AuA) in February, having previously bought administrator FORS in 2009.
AlphaMetrix acquired Spectrum Global Fund Administration in December, adding $6bn AuA.
Equinoxe Alternative Investment Services have $5.3bn AuA after merging with MadisonGray Holdings last year.
MOVERS AND SHAKERS
016_HFM220_news feature.indd 16 05/04/2011 14:50
T h u r s d a y 2 6 M a y 2 0 1 1T h e h u r l i n g h a m c l u b , l o n d o n
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7- 1 3 a p r 2 0 1 11 8 h f m w e e k . co m
When credit lines dried up in the after-math of the financial crisis, funds of hedge funds (FoHF) felt the pinch more than most. Seeking not only lev-erage like their single manager breth-ren, the majority of FoHF managers
had, and have, several short-term concerns for which ad-ditional relationships are required. These short-term con-cerns are soothed by what the industry calls bridge loans, or bridge liquidity. And in late 2008, FoHFs would find that the providers and terms of bridge loans were to change dramatically.
Unlike single managers, whose liquidity issues are dealt with by their primes, FoHFs have no automatic calling point for short-term financing. Bridging the liquidity gap between redemption and subscription requests, FX hedging for rele-vant share classes, as well as additional leverage, all require a steady flow of capital. Short of implementing an inefficient, not to mention inconvenient, cash buffer, FoHFs will source said capital in the form of a bridge loan; a committed or un-committed line of credit provided, at a cost, by a third party.
Prior to the financial crisis, providers of bridge loans were in plentiful supply. A significant proportion of investment and custody banks offered such facilities, as did a number of administrators. Estimates for the size of the pool vary, but, during interviews conducted by HFMWeek, suggestions of anything from 20 to 50 have been forthcoming.
“The landscape has changed dramatically,” says Cameron Hedger, managing director at Credit Suisse. “Primarily, the number of participants in the space as lenders has decreased significantly. Pre-crisis the number exceeded 15. During the crisis there were literally one or two banks still extending credit to FoHFs. In 2009 it grew to three or four, now there are probably about five players who are truly active.”
While no-one argues with a dramatic drop in lender num-bers, the true current total also divides opinion. The half-dozen figure received a lot of backing from those HFMWeek interviewed, although Michael Romanek, principal of Rise Partners, an independent consultancy which sources and arranges credit and bridge facilities, notes that he now pri-marily works with about 12 entities.
Trickier still is ascertaining who exactly it is that’s active. Everyone agreed that the large European investment banks,
feature bridge financing
creditwhereduecredit’sThe drying up of bridge financing during the crisis hit funds of hedge funds hard. post-crisis, as capital starts flowing again, hfmweek investigates who is active in a changed financing landscapeBy tony griffiths
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his list of 12 includes many entities that operate without noise. “And I would like it to stay that way,” he adds.
There are two main variants of bridge facility providers, one being the custody banks and the second being distinct fund-linked financing desks, often through derivatives. “The former can generally compete best purely on price, but comes with many limitations which may not be suitable for a given manager,” Romanek explains. “The latter can provide more flexibility, better service and include the added ben-efit of providing this via a tri-party pledge agreement with a funds present custodian. At present, pricing is becoming more homogenous however the practices among the bank-ing groups, in this sector, have become more diverse.”
A key differentiAl currently appears to be the extent to which the service is a part of a firm’s fund administration package. The likes of Credit Suisse will offer bridge financing as a core service (via a fund-linked prod-ucts desk situated within the equities division of the invest-ment bank) while HSBC, among others, bundles it in with admin, offering it only as part of a full package.
Asset custody also makes a difference: Citco, who, as an administrator, doesn’t have the balance sheet of an invest-ment bank, syndicates its loans to the financial community; JP Morgan seeks to obtain a security interest in the fund’s assets, typically holding them in a custody account; and HSBC requires full custody as a minimum.
Citco’s offering is perhaps the most distinct, offering bridge liquidity via its Amathea platform. An integrated of-fering linked to both custody and administration, Amathea maintained its AA1 credit rating through the entire crisis, Gilbert Grosjean, Citco’s head of financial products, reveals.
predominantly Credit Suisse and Deutsche Bank, were the big players. Administrators were also touted as a growing sect, with Citco and Northern Trust names that gained trac-tion. HSBC and JP Morgan topped the list of those making an increasing amount of noise – since verified by HFMWeek. Historical player Prime Fund Solutions (PFS) – the fund admin arm of Fortis – continues to offer a visible service, but is expected to be restructured when the firm is finally purchased by Credit Suisse.
In terms of absentees, a few obvious examples include Bear Sterns, Lehman Brothers and AIG. Confirming wheth-er some desks, such as Swiss Re, are closed or merely inac-tive proved more difficult. “Right after the crisis it wasn’t that the majority absolutely closed their desks,” Romanek says. “They went into a dormant mode and some of them are still in it.”
Other names received a more mixed response. Royal Bank of Scotland (RBS), State Street, Bank of New York Mellon and Citigroup were name-checked by some inter-viewees. KBC, SocGen, BNP Paribas and BarCap were giv-en as examples of bridge lenders that made more noise pre-crisis. “Goldman Sachs and Morgan Stanley always did a bit of it,” says one source. “They could be still, but we wouldn’t see them either way.”
Herein lies the problem. “The bridge loan space was never like prime brokerage – ‘here’s our website, this is what we do’,” explains Romanek. “It was always a little murky, opaque world.” Even now, much of the activity remains below the radar and the identities of the serious players are disputed. As HFMWeek found, in certain cases a name could evoke extreme reactions, depending on who you spoke to. As a re-sult, while most agreed that there were about six with sizable offerings, each person’s list varied to some degree. Romanek, whose business thrives on matching funds with lenders, says
Credit SuiSSeModel fund-linked desk within equities / CuStody optional
widely-acknowledged as a stalwart of the bridge loans game, credit Suisse offers financing via its fund-linked products desk , which is sat within the equities division of the investment bank . run as a global business, financing services are concentrated primarily on the US and europe, although the firm also has a number of clients in asia. It was announced last year the credit Suisse was to purchase prime fund Solutions (pfS), including the pfS bridge liquidity service. The bank has also experienced year-on-year growth in its financing book for a number of years.
JP MorganModel fund-linked desk / CuStody typically required (via third party)
Jp morgan provides bridge financing via a bi-lateral agreement and seeks to obtain a security interest in the fund’s assets, typically holding them with a third-party custodian. according to michael Gordon, a managing director for the firm’s equity derivatives division, the covenants and guidelines associated with bridge financing activity are essentially unchanged. activity has, however, been ramped up over the past 12 months. “In 2010 we actively increased commitments in this space and executed several large new transactions in addition to renewing existing trades in our book,” he says.
northern truStModel credit desk as part of full admin and custody service / CuStody mandatory
while offering a full service model to fohf managers, Northern Trust only offers bridge loans in selected circumstances and at modest levels. available via the firm’s Guernsey-based credit team, bridge liquidity is not lent for leverage purposes. Northern Trust also looks to work jointly with investment banks where the credit risk is above its appetite. while selectivity and terms remain relatively unchanged post-crisis, “there has been an increase in the number of committed credit lines we now offer,” a Northern Trust source said.
having spent much of the immediate post-crisis period inwardly focused, hSBc was perhaps among the less-visible former participants until recently. however, since the middle of 2010, the bank has begun to actively market its bridge liquidity offering to strategic new clients. run out of hSBc Securities Services (hSS), facilities are offered as part of a bundled service, meaning custody of assets is required as a minimum. hSBc is now in the market to provide “meaningful bridge finance facilities,” a source at the bank said.
hSbCModel credit desk within hSS / CuStody mandatory
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If the terms of the offerIngs vary, the source, through the fund-linked desk, is more standardised for the investment bank model. A bridge loan can be offered as a simple bank revolver, appearing on the bank’s balance sheet not unlike a credit card limit. More often though, the loan would be granted as a structured product and appear on a bank’s trading book – a far more favourable option. Typi-cal trade variants include: a VFN (Variable Funded Note); a financing swap (created as swap transaction); and an ASCO (Accreting strike call option).
While the size of the requested loans remains similar – typically 10% to 25% of a fund’s Nav – the price has, un-surprisingly, skyrocketed. “Bridge facilities were extended at lower spreads pre-crisis than they are today,” says Credit Suisse’s Hedger. “The banks have increased costs of funds post-crisis, and it has caused them to reassess the risks as-sociated with all lending activities.”
Fees typically have two components: a commitment fee, to ensure that a service is paid for even if the loan is un-touched; and the borrow rate, for once the loan is used. The two are usually combined.
In broad terms, the pre-crisis spread over Libor for a com-bined fee would be below 100bps, depending on the par-ticular portfolio that’s being lent against and the nature of the FoHF. “During the crisis, spreads blew out to north of 250bps,” an un-named source says, “if facilities were being extended at all. We’re now somewhere in between that now, probably closer to the 200bps-mark again, depending on the nature and the quality of the assets.”
According to Romanek, commitment fees didn’t really come into play pre-crisis. “Though prior commitment fees ranged from 3bps to 25bps, mangers could nearly always ne-gotiate them to zero,” he says. “However, now 25bps would be the starting point and would be regarded as an extremely low commitment fee, with the norm being around 80bps and possibly as high as 50% of the drawdown rate.”
“Pricing spiked post-crisis and recently has been coming down, but given capital requirements and funding costs at banks I don’t think we’ll see pre-crisis level pricing in the near future,” Michael Gordon, a managing director for JP Morgan’s equity derivatives division, says.
“Before 2008, we saw a lot of uncommitted lines,” says John Sergides, Head of EMEA business development, global transaction banking at Deutsche Bank. “People were happy to agree to uncommitted lines to reduce performance drag, as their use was concentrated around month-ends with an implicit guarantee the line would be there.” An un-committed line works much like an overdraft – there is no guarantee it will be there.
“Recently, the demand has been for committed lines ver-sus uncommitted lines from the funds,” Sergides adds. “The higher cost reflects that commitment, but it is a secure facil-ity which gives investors comfort when they want to know about their liquidity position. A committed loan equates to security for investors.”
The demand for bridge loans is not at pre-crisis levels. But, as Gordon says, echoing the wider sentiment, “there has been a clear pick-up in demand that started in 2010.”
In many ways, appetite is not the issue. As long as there are FoHFs there will be a need for bridge financing. The battle taking place is as a result of a gradual re-emergence of competition. HSBC and JP Morgan are the latest provid-ers of bridge loans to increase their visibility in the past 12 months. With balance sheets growing stronger by the day and the supposed demise of the FoHF sector now con-signed to post-crisis hysteria, expect more to follow suit.
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feature bridge financing
two types of foHf financingThere are Two Types of financing lines used with fohfs: bridge facilities, which are used for bridging redemptions, settling and managing fX exposures and other purposes; and leverage facilities, where fohfs give their investors leveraged exposure to their underlying funds.
These two services – distinguished by purpose – are sometimes bundled, but, when separate, have distinctly different proportional ranges. as a short-term loan, bridge is typically lower, at 10% to 25% of a fohf’s assets (a percentage of either net asset Value (nav) or Loan to Value (LTV), depending on the quality of the assets the lender wishes to rate against).
a leverage facility is much higher, of course, more in the range of 40-50% nav/LTV, with pre-crisis levels even higher, up to 75% nav/LTV and, in some cases, beyond.
citcoModel separate platform / custody optional (via third party)
Unique among the current players, citco syndicates its bridge loans to a panel of financial institutions through its amathea platform. it also offers an integrated solution linked to the firm’s custody and admin businesses. Loans are available instantly via a pre-trade verification system. sources at citco say that although demand has not reached its peak of 2007, it is seeing the market coming back . it can accommodate multiple credit lines (small and large) for a client and is seeing an increasing amount of business, not only from fohfs, but also from pension and endowment funds.
deutscHe BankModel fund-linked desk / custody typically required
deutsche bank has been in the space of bridge lending to fohfs for a number of years, but, since the firm’s acquisition of hedge works in January 2008, has built out its offering significantly. The bank’s offering comes as a combination of its custody and lending facility and, as a result , custody of assets is typically required. deutsche has witnessed assets under custody from fohfs rise to $27bn in the last 18 months and extends bridge loans to the majority. main focus is on larger fohfs.
priMe fund solutionsModel fund-linked desk / custody typically required
The hedge fund administration arm of dutch-belgian bank fortis, prime fund solutions (pfs) offers bridge loans as part of package of services, including admin, custody and financing. sells bridge liquidity separately where needed, but prefers to be a fohf’s one-stop provider. a big player before, during and since the crisis pfs has commitments running into the billions of dollars. pfs, which services both large and small clients, is due to be sold to credit suisse – completion of which is expected in the next couple of months.
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HFMWEEk (HFM): WHAT, iN yOUR OPiNiON, ARE THE MAiN ADvANTAgES OF SETTiNg UP A HEDgE FUND iN gibRAlTAR?
JOEy gARciA (Jc): Managers and investors need to consider Gibraltar in a wider context as a
jurisdiction providing a platform for financial services. It is not widely reported, but there is a huge insurance sector (around 10% of UK car insurance is booked through Gibraltar insurance companies). Additionally, being home to leading online gaming players brings with it an IT infrastructure and pool of employment which is highly relevant. The jurisdiction is also one of the largest bunkering ports in the Mediterranean. This is before considering the finance centre itself, which has gone from strength to strength – in particular, the funds sector.
HFM: WHAT ROlE DOES THE gibRAlTAR gOvERNMENT PlAy iN ATTRAcTiNg FUND MANAgERS TO THE REgiON?
Jc: To put the strengths of the jurisdiction in context, we need only consider the recent budget
delivered by the UK Chancellor George Osborne. Much has been made of the attraction in a reduction in UK corporate tax to 26% with a further reduction to 23% by 2014. A full 13% lower than the US corporate tax rate currently in force. However, this would still be a full 13% higher than the Gibraltar corporate tax rate of 10% implemented following the introduction of new Gibraltar Income Tax Act (1 January 2011). This is also 2.5% lower than the Irish corporate tax rate, currently under pressure from Germany and France for obvious reasons.
The position of an investment manager in Gibraltar is therefore increasingly attractive, given access to full passporting rights of his investment management licence throughout the EU. However, the Gibraltar manager will be subject to a 10% corporate tax rate, and managers, traders or potentially high-level employees should be able to apply (subject to certain conditions being met) for specific, and tax-efficient residency status as Higher Executives, generally capping income tax at £32,550 ($52,540).
HFM: HOW EASy iS iT TO REDOMicilE A FUND TO gibRAlTAR, cOMPARED WiTH REDOMiciliATiON TO OTHER JURiSDicTiONS?
Jc: Gibraltar doesn’t pretend to be a Ucits domicile to the same extent as Luxembourg, but there are
instances where Luxembourg is not the best choice. The drive in Gibraltar is now towards Ucits IV and the industry has been working hard to ensure a smooth implementation of the directive. Arguably, Ucits IV is even more prescriptive than Ucits III and as such Gibraltar should benefit from a level playing field in terms of the product itself. The buzz -words that we hear are ‘regulatory backlog’, which we think will make managers consider EU domiciles outside of the ‘big two.’
HFM: TO WHAT ExTENT HAS THE iNTRODUcTiON OF EUROPEAN iNvESTMENT FUNDS (EiF) cONTRibUTED TO gibRAlTAR’S APPEAl?
Jc: In terms of the product offering from Gibraltar, there is less and less ‘regulatory arbitrage’ between
jurisdictions and my own view is that the direction is more one of EU versus non-EU. Gibraltar is in the EU and is well regulated. The Gibraltar EIF has been critical to the island’s growth, but the constantly growing expertise in the sector, high quality of counterparties available from within the jurisdiction, cost and time to market are also critical factors in Gibraltar’s success.
HFM: HOW cAN gibRAlTAR cOMPETE WiTH JURiSDicTiONS likE MAlTA, lUxEMbOURg AND DUbliN iN TERMS OF cAPiTAliSiNg ON THE gROWiNg POPUlARiTy OF UciTS-cOMPliANT HEDgE FUNDS?
Jc: Ucits-compliant hedge fund strategies are an important driver for the Ucits market, but not
the only driver. The advantage should be in being able to offer a range of products to suit the needs of managers and investors. Danske Invest recently announced plans to launch the first Ucits-compliant hedge fund from Denmark, which serves as a reminder of the importance of being a player in an EU single market.
HFM: HOW DO yOU ExPEcT gibRAlTAR TO EvOlvE AS A HEDgE FUND cENTRE?
Jc: With the introduction of the management company passport, managers will look for the best
jurisdiction for a particular project and a particular market, with the role and timescale of the appropriate regulator becoming increasingly important. My own feeling is that there are some real opportunities for us in this space. n
Joey Garcia is a senior associate at ISoLAS, and has built up a strong funds practice at the firm, advising on varied structures and solutions to an international client base, which includes investment managers and banks as well as family offices and larger private clients
focuS on
Growing regulatory requirements have put increased pressure on established eu fund centres, such as malta, Dublin and Luxembourg, creating opportunities for other jurisdictions. Joey Garcia of ISoLAS tells hfmweek what makes Gibraltar an attractive alternative fund location within the eu, particularly in terms of ucits-compliant hedge funds
gibraltar ucItS StRAteGIeS ARe ImPoRtAnt, but ARe not the onLy DRIveR. the ADvAntAGe ShouLD be In beInG AbLe to offeR A RAnGe of PRoDuctS to SuIt mAnAGeRS’ AnD InveStoRS’ neeDS
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HFM FOCUS RECRUITMENT
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HFMWEEK (HFM): CAN YOU DESCRIBE THE CURRENT ATTRACTION OF ETFS FOR HEDGE FUNDS?
JAMES ORME-SMITH (JOS): To summarise the a� raction in three words, I would say: choice,
liquidity and transparency. For the vast majority of portfolio allocation decisions, there is an exchange-traded fund (ETF) that can express an idea, or be used as part of its implementation. ETFs are also seen as an optimum pool of liquidity; we o en see volumes spike during periods of market distress, such as the week following the earthquake in Japan. Finally, risk managers are still highly sensitive to counterparty exposure, and ETFs, which are physically backed, or operate on multi-swap provider platforms, can mitigate this concern.
NIZAM HAMID (NH): ETFs provide hedge funds with an e� cient and liquid tool to trade di� cult-
to-access assets. � eir use has increased as liquidity has improved, and they have become easier to borrow and short and trade e� ciently. � ey have less risk than pure OTC products, and more transparent pricing. We have seen a growth in use in a range of asset classes, from European sectors to emerging market exposures. � ere is a signi� cant drive by broker dealers to improve liquidity in ETF products across all the main European exchanges, with many clients trading directly with the fund in the primary market.
HFM: HOW CAN ETFS HELP EFFICIENT PORTFOLIO MANAGEMENT AND DIVERSIFICATION?
JOS: ETFs are able to o� er exposure across multiple asset classes on a global, regional and sectoral basis,
meaning investors are not restricted in their ability to take advantage of the relative mispricing of risk across assets. For example, at Bank of America Merrill Lynch (BofAML) our top-ranked equity derivatives team has shown that the inclusion of volatility as an asset class is an integral part to any portfolio. A meagre 5% allocation to a 95% SX5E portfolio was shown to halve losses in 2008, and this is in part why we recently launched a European volatility ETF.
NH: ETFs o� er signi� cant portfolio management tools, as they are available on a broad range of
asset classes with quite speci� c niche exposures that can be di� cult to trade. � ey provide for an e� cient trading wrapper for hedge funds and for short-term trading. � e
increased availability of � xed income products allows for an e� cient management of risk budgeting within client portfolios. Clients can easily build broadly diversi� ed portfolios with generally low-cost exposures and easy to estimate trading costs.
HFM: WHAT SORT OF MARKETS AND SECTORS ARE HEDGE FUNDS HOPING TO USE ETFS TO ACCESS?
JOS: Any product that has historically required heavy operational infrastructure for se� ling trades
and managing risk can bene� t from ETFs. We now have currency hedged equity ETFs, ETFs that track the performance of the Eurozone government bond market and ETCs that provide exposure to a broad range of commodities on di� erent parts of the curve. In terms of new products, we have seen speci� c interest in a wider range of emerging market � xed income ETFs and enquiries about UK speci� c sector indices.
NH: From a liquidity perspective, the main markets and sectors are those where there are no equivalent
liquid futures contracts, and this is mainly with European sectors. Additionally, ETFs o� er a low-cost European trading facility for markets that would otherwise be di� cult to manage, they get round custody and currency se� lement issues and deliver diverse exposures such as to the core BRIC countries.
HFM: HOW CAN ETFS HELP WITH SHORTING?
JOS: ETFs bene� t from liquidity via both the primary and secondary market, and this holds
true for going both long and short. If you can borrow and short shares, you can borrow and short ETFs. In addition, the net cost is the same as shorting the equivalent shares, sectors or indices (physical or via swap). � e one catch is that the secondary ETF borrow market is structurally
Nizam Hamidis head of ETF strategy and deputy head of ETFs at Lyxor. He previously spent two years at iShares in London, in charge of sales strategy for Europe/Asia. Prior to this, he worked at Deutsche Bank for ten years as the global head of portfolio trading, futures and ETF research
James Orme-Smithjoined Bank of America Merrill Lynch in October 2010 from Deutsche Bank, where he worked in European Prime Finance Sales leading their synthetic and Ucits sales effort. James now runs sales and marketing for synthetic equity and delta one products. Prior to this, James worked in prime brokerage at Morgan Stanley.
FOCUS ON
Viewed as offering liquidity benefi ts and portfolio diversifi cation, ETFs are becoming increasingly popular with hedge fund managers, many of whom are looking to wrap funds within these sophisticated vehicles. HFMWeek spoke to James Orme-Smith of Bank of America Merrill Lynch, and Nizam Hamid of Lyxor, about the use of these vehicles to access a growing range of asset classes
EXCHANGE TRADED FUNDS
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about the correct index exposure to meet clients’ needs is a key element of the value added within the ETF sales process.
HFM: ARE yOU SEEiNg MORE FUNDS cREATE ETFS wiTH THEiR OwN STRATEgy AS THE UNDERlyiNg ExPOSURE? HOw cAN yOU HElP wiTH THiS?
JOS: Of course. ETFs are a convenient way to package your alpha strategies into a Ucits III format
and make them accessible to retail investors, family offices and smaller institutions. BofAML has strong relationships with numerous European ETF issuers experienced in the construction and listing of exchange-traded products, and we regularly sit down with clients to discuss their options in this regard.
NH: Certainly we have seen a handful of high-profile hedge fund managers create ETFs relating
to their own strategies, although the asset gathering in these funds has been relatively limited. We expect the regulatory environment for such strategies to evolve, and at the moment there is a risk that they may be considered too complex for certain parts of the market. As client understanding evolves we believe that there will be scope for such products, especially relating to the use of liquid assets to replicate hedge fund indices. n
underdeveloped and therefore expensive. However, the primary market is very active, and BofAML can often facilitate borrowing by creating the ETF via the issuer which we then lend out to the client for shorting purposes.
NH: It is part of the ETF market that has been very successful in the US and which is starting to grow
in Europe. The key aspect of shorting is that it aids on exchange liquidity and the arbitrage process. For many clients, shorting is an important facility as ETFs exist on many asset classes where there are no equivalent futures to short.
HFM: ARE THERE ANy DiSADvANTAgES TO USiNg ETFS, SUcH AS FEE OR liqUiDiTy cONcERNS FOR ExAMPlE? HOw cAN yOU AllEviATE THE cONcERNS OF MANAgERS?
JOS: It is commendable that ETFs are now celebrating their tenth anniversary and continue
to grow assets exponentially in Europe’s fragmented investment landscape. For instance, it is not mandatory under current legislation to report ETF trades to the exchange. As a result, only a small proportion of trades that are taking place are seen on-screen, which discourages investors with market turnover, AuM and concentration limits. New developments within MiFiD and AIFM are a positive step towards a more unified and transparent European marketplace but unfortunately implementation remains some way off at this stage.
NH: Certainly due to current MiFiD regulations the on-screen liquidity is not as obvious to some
investors, as the OTC market makes up the bulk to the current trading volumes. One aspect that is important to explain to clients is how to manage their trading strategies and how to best implement execution and analysis of relevant exposures. As the European market has grown we are now in a position where there are more products listed in Europe compared to the US and this means that clients need to be able to differentiate between them. Education
NizAm hAmid, lyxoR
eTfs offeR sigNificANT PoRTfolio mANAgemeNT Tools, As They ARe AvAilAble oN A bRoAd RANge of AsseT clAsses wiTh quiTe sPecific Niche exPosuRes ThAT cAN be difficulT To TRAde
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022_023_HFM220_ETF RT.indd 23 05/04/2011 14:11
hfm focus recruitment
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HFM: How iMportant is recruiting tHe rigHt people to tHe success oF a Fund, and How can coMpanies operating witHin tHe alternative space ensure tHat tHey eMploy tHe rigHt staFF?
MusH ali (Ma): Vital. We focus on non-investment hiring within hedge funds and the
industry has shifted in terms of the demand for quality. The reason for this is that a good performance strategy needs to be backed up by an operational infrastructure which is first class and investors are now looking very closely at the quality of the COO/CFO and what is behind that. We are now seeing start-ups and established funds consulting with their seed investor/investor base when hiring staff, which puts additional pressure on the quality of the hire required.
In terms of employing the right talent, this will always be a challenge as it is the unique combination of both fit with the culture of the hedge fund and technical skill. Unfortunately, despite improvements in technology and better access to information, the traditional, time-consuming method of meeting potential hires/taking references is the only way any employer can get comfort before hiring someone in their business. The key difference now, as opposed to five to ten years ago, is the candidate pool in the alternative space has matured, which means finding ‘non investment’ talent with industry knowledge is a lot more likely.
Justin gault (ga): Attracting the right talent is key to the success of any business. Hedge
funds are no different – they need traders who are capable of making the right decisions at the right time and infrastructure staff able to both run the business effectively and facilitate growth. The best people are typically attracted by a fund’s performance and brand, but firms can take certain actions themselves to ensure they recruit the right staff. Having adequate due diligence checks in place, in terms of referrals and background checks, can determine the quality of a potential employee. At the same time, however, these checks – along with the rest of the recruitment process – must be carried out quickly and efficiently as the best people tend to be in demand and may have a number of options to choose from. At interview, selling the potential of the business and the role can also make a big difference.
HFM: wHere are you seeing tHe biggest recruitMent need and wHy?
Ma: On both counts; operational staff and marketing/business development needs have
increased dramatically in the last 12 months.In the last six months there have been a number of
start-ups, so the demand for COO/CFOs, ideally with a legal or accounting background, has increased. It is usually the case that the fund manager hires someone they know but we have seen an increased demand for third-party recruiters because of the importance of getting the key skills that their seed investor is demanding.
Ja: In 2010, the majority of money invested with hedge fund managers went to large established
funds ($1bn AuM and above) and this led to increased hiring activity among these firms throughout last year and at the beginning of 2011. We are starting to see small to mid-sized funds benefit from increased capital flows as many of the larger funds are closed or near capacity. Most demand was for accounting, operations and compliance professionals due to broader regulatory and structural changes. However, front-office hiring at an analyst level (particularly within the credit and event-driven space) also rose. Additionally, across the alternative investment market, increasing capital inflows into the sector have resulted in external investors (fund of funds, wealth managers and pension funds) hiring within the investment and operational due diligence space.
HFM: are you seeing a surge in recruitMent in any particular geograpHic area? wHy is tHis Happening and How are you Meeting deMand?
Ma: We have always focused on hiring across London and Europe so cannot comment on the
other geographic locations. Malta has been an area where
Justin Gaultis the manager of the investment management finance and front office at robert walters. he has eight years’ recruitment experience and has worked on a variety of finance, as well as front-office, mandates, including m&A, leverage finance, equity analysis and restructuring, in both London and chicago.
focus on
As quality demands on hedge fund staff, in both front- and back-office positions, increase in line with investor expectations and growing operational challenges, hiring the right people is crucial. mush Ali of one ten Associates and Justin Gault of robert walters advise on the importance of accessing the right talent, and the characteristics of a good hedge fund professional
recruitment
Mush Aliis director of a specialist hedge fund recruitment firm, one ten Associates. he qualified as a chartered accountant before starting his career in recruitment nearly ten years ago. A specialist in the hedge fund sector, his expertise lies in finding ‘non-investment’ talent for both start-ups and established hedge funds.
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is crucial to putting this infrastructure in place and embedding it in the culture of the organisation.
HFM: LOOkiNg TO 2011, wHAT DO yOU bELiEvE wiLL bE THE EMERgiNg MAjOR TRENDS wiTHiN HEDgE FUND REcRUiTMENT?
MA: The common theme now is the need for both the front- and back-office to be filled with credible
talent. The front-office has always been this way but the major change now is to ensure the non-investment side has the credibility to be able to stand the test of scrutiny from the key stakeholders of the sector – the investors.
jA: Hedge fund recruitment is typically fluid and hiring trends within the sector are always a
reflection of market conditions or the type of underlying strategy that investors are allocating capital to. We believe global macro and event-driven hedge funds will be the largest recruiters in 2011; we have already seen an increase in demand for staff within finance, the front -office and operations in this area in early 2011, and we expect this to continue throughout the rest of the year.
HFM: wHAT DO yOU bELiEvE HAvE bEEN THE MAiN DRivERS OF cHANgE AND iN wHicH AREAS ARE HEDgE FUNDS REcRUiTiNg?
MA: The main driver of change has fundamentally been the investor community demanding that
all hires at the senior decision-making level are credible and operate as one business, as there is now a need for decisions about the running of the business not just being reliant on one or two individuals.
The reason for this is ultimately down to the evolution of the industry and all parties learning from the mistakes of the past. As a result, it is apparent that both start-ups and established hedge funds are now clearly assessing the talent they require to deal with this evolution.
jA: The main driver to change has been increased regulatory pressure. This has caused firms to bolster
their risk, compliance, finance and operations teams. More generally, investor strategy and general market conditions are always key to defining recruitment trends across the industry. As always in the front office, funds consistently look for good investors with demonstrable track records or those with strong future potential. They often hire opportunistically when excellent professionals become available. n
there has been an increased demand at the junior-mid level, but at the senior end, demand continues to be more London-centric.
jA: The growth of Singapore and Hong Kong as hedge fund centres is driven by continued
financial growth, tax advantages and reduced regulatory requirements in these locations. We continue to witness the movement (albeit at a slower rate) of senior management and traders to Switzerland. Rather than completely relocating, firms are providing this platform as a retention tool for senior staff, often opting to keep the bulk of their operations in London. Recently, we have also witnessed the first onshore hedge fund launch in Switzerland, which may pave the way for more single-managers in this region. Despite all this, we continue to see the emergence of new hedge funds registered with the FSA proving that London remains a strong and competitive market for talent.
HFM: iN yOUR viEw, wHAT kiNDS OF cHARAcTERiSTicS MUST A HEDgE FUND PROFESSiONAL POSSESS iN ORDER TO ENSURE SUccESS?
MA: A hedge fund professional ultimately needs to be the ‘best-in-class’ at what they do, be it front-
office or back-office, because in a smaller environment any gaps become exposed quickly, both internally within the business and externally to investors. Because the environment does not have a hierarchy, it requires the individual to have a natural drive and initiative in everything they do.
jA: In all areas, a strong performance track record throughout their career is vital, as is credibility
within the market. However, specific characteristics depends on the area the professional works in; in investor relations, for example, strong general product and strategy knowledge is required, as well as excellent interpersonal and networking skills. For infrastructure professionals, on the other hand, both attention to detail and controls experience is essential.
HFM: DO yOU SEE iNcREASED REgULATiON AS A THREAT OR AN OPPORTUNiTy FOR cOMPANiES iN THE ALTERNATivES SPAcE? TO wHAT ExTENT cAN THE SELEcTiON OF THE RigHT HEDgE FUND PROFESSiONAL HELP TO ADDRESS THiS bALANcE? MA: The onset of regulation is simply the evolution of the industry. In early 2000, hedge fund managers
were ahead of time and now that regulation is becoming tighter, the evolving industry will need to demonstrate innovation. Ultimately, I do not see it as a threat as it forces the market to operate in a more professional manner and think carefully about how a business is run. This is a good thing for investors and people who work in the sector, as regulation is creating a more sustainable industry for the future.
jA: Potentially, it could be an opportunity. Funds with strong infrastructure that comply with more
stringent regulations will be able to attract greater levels of investment through the application of good operational due diligence procedures. Clearly, hiring the right people
mush Ali, one ten AssociAtes
A hedge fund PRofessionAl ultimAtely needs to be the ‘best-in-clAss’ At whAt they do, becAuse in A smAlleR enviRonment Any gAPs become exPosed quickly, both within the business And exteRnAlly to investoRs
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performance data febRuARy
One-mOnth returns frOm 1/2/11 tO 28/2/11 – ranked alphabeticallyconVertIBLe arBItraGe feb last 12 mo. car feb aum start fund name return return last 3 years ($m) date advent cOnvertible arb 1.66 12.31 7.41 747.00 3/01Am mAsteR fund I 0.53 18.94 -4.13 71.00 11/01
One-mOnth returns frOm 1/2/11 tO 28/2/11 – ranked alphabeticallydIStreSSed SecUrItIeS feb last 12 mo. car feb aum start fund name return return last 3 years ($m) date scOtt’s cOve special credits Offsh 1.25 9.43 7.00 60.00 7/98VARde fund LP 1.81 5.47 -3.17 219.40 1/99
One-mOnth returns frOm 1/2/11 tO 28/2/11 – ranked alphabeticallyemerGInG marketS feb last 12 mo. car feb aum start fund name return return last 3 years ($m) date ajia lighthOrse china grOwth fund 3.22 22.23 17.25 290.00 1/06consILIum em mkt Abs Ret LLc -0.62 10.37 2.19 63.60 7/04cOrOnatiOn glObal em mrkts fund 1.77 22.29 n.a 445.20 5/08dynAmIc LIghthoRse chInA fund 3.59 18.77 n.A 65.00 8/08east capital bering balkan fund 1.76 7.71 -15.91 107.40 8/06eAst cAPItAL beRIng centRAL AsIA fund 0.91 18.90 -18.45 81.90 3/07east capital bering russia fund -1.18 19.94 -17.96 169.40 7/04eAst cAPItAL sPecIAL oPP fund -1.05 27.45 n.A 103.00 5/09fpp glObal emerging markets fund -1.98 22.43 n.a 63.10 9/09hendeRson hoRIzon chInA fund -1.00 10.14 9.33 353.50 2/08hsbc india alpha ltd (usd) -2.53 11.87 2.91 153.10 4/07Jk AsIAn InVest LP -4.80 14.03 7.36 60.40 2/94peru special investments fund 0.00 70.69 21.71 134.80 9/06PInPoInt chInA fund -0.76 7.53 3.60 303.00 6/05pinpOint multi-strategy fund -2.56 18.45 n.a 99.00 4/08PInPoInt oPPoRtunItIes fund -0.02 7.25 6.62 91.00 8/07pma harvester fund (fX & rates) -1.35 -5.43 8.35 149.00 3/07tRIogem L/s gem fund Ltd -0.39 7.51 n.A 162.60 1/09
One-mOnth returns frOm 1/2/11 tO 28/2/11 – ranked alphabeticallyeqUIty LonG BIaS feb last 12 mo. car feb aum start fund name return return last 3 years ($m) date acru china+ absOlute return ltd -0.60 18.72 7.69 157.00 11/04Ascend PARtneRs fund II LP 0.73 4.12 5.12 593.90 2/04ascend partners fund ii ltd 0.79 4.23 5.55 1277.90 2/04bRIghtLIne cAPL PtnRs LP 11.10 105.99 39.33 92.80 7/05gutzwiller One 1.20 13.37 0.70 95.90 7/01hendeRson hoRIzon PAn euRoPeAn ALPhA 0.81 9.12 n.A 218.50 7/08iridian OppOrtunity fund lp -0.53 4.15 7.55 97.00 1/05IRIdIAn oPPoRtunIty offshoRe fund -0.55 4.02 7.51 349.20 1/05midsOuth investOr fund lp 2.60 10.25 -2.15 103.30 12/93PILotRock InVestment PARtneRs LP 1.84 2.09 -6.53 71.00 2/02
feb last 12 mo. car feb aum start fund name return return last 3 years ($m) daterOyce privet lp 2.42 16.18 3.34 127.90 7/00shAh cAPItAL oPPoRtunIty fund LP -2.95 4.73 16.37 203.00 7/06t2 accredited fund 4.10 6.29 7.93 89.50 1/99
One-mOnth returns frOm 1/2/11 tO 28/2/11 – ranked alphabeticallyeqUIty LonG/Short feb last 12 mo. car feb aum start fund name return return last 3 years ($m) dateblackrOck aletsch fund -0.50 3.94 10.48 94.80 1/08bLAckRock euRoPeAn oPP Ltd 0.00 1.48 3.97 122.00 1/06blackrOck uk emerging cO ltd 1.11 26.16 14.77 1365.00 5/04bLAckRock uk equIty Ltd 0.04 8.00 7.72 386.00 5/05criteriOn institutiOnal partners lp 3.62 19.49 1.89 66.60 2/03db equILIbRIA JAPAn fund (usd) 0.87 6.32 6.28 660.80 5/02db tOrus japan fund ltd (usd) -1.18 0.14 1.61 76.20 6/03PeRshIng squARe InteRnAtIonAL Ltd 2.70 19.54 14.90 5363.00 1/05pershing square lp 3.10 27.88 16.95 3616.70 1/04PIoneeR L/s euRoPeAn equIty (euR) 1.19 6.36 5.18 110.00 4/02pOlar cap uk abs return (a) (usd) 2.30 5.27 n.a 184.70 6/08theoRemA euRoPe fund+ (b) 1.13 4.07 2.32 109.10 9/04theOrema eurOpe fund ltd (a1) 0.57 1.33 1.36 281.40 6/01
One-mOnth returns frOm 1/2/11 tO 28/2/11 – ranked alphabeticallyeqUIty market neUtraL feb last 12 mo. car feb aum startfund name return return last 3 years ($m) datebgi eOs limited (b) 1.89 13.82 14.81 944.00 8/07quAntsoft equIty fund 3.40 34.11 n.A 75.00 7/08
One-mOnth returns frOm 1/2/11 tO 28/2/11 – ranked alphabeticallyeVent drIVen feb last 12 mo. car feb aum startfund name return return last 3 years ($m) dateamethyst arbitrage fund (cad) -0.50 15.07 9.02 140.20 7/98AndRomedA gLobAL cRedIt fund 0.27 20.89 26.65 62.20 9/99canyOn value realizatiOn fund lp 1.14 16.62 8.64 2580.00 1/94couRAge sPecIAL sItuAtIons LP (A) 2.99 -1.11 3.16 203.90 9/98cOurage special situatiOns Offshr (a) 2.99 -1.43 2.91 93.90 1/02mmcAP fund Inc 1.92 26.53 17.52 188.00 7/02Ore hill fund ii lp 1.64 14.98 3.95 223.00 4/02oRe hILL IntL fund II Ltd 1.60 14.67 3.74 457.00 4/02
One-mOnth returns frOm 1/2/11 tO 28/2/11 – ranked alphabeticallyfIxed Income feb last 12 mo. car feb aum startfund name return return last 3 years ($m) dateemf fiXed incOme fund ltd -0.90 11.75 8.66 252.00 11/01good hILL oVeRseAs fund Ltd 1.38 27.16 11.74 60.90 1/07hOrizOn credit Opp lp 2.96 20.36 7.35 65.00 6/03obsIdIAn (offshR) fund 2.00 27.17 20.25 640.00 7/96Obsidian fund llc 2.00 26.66 20.03 129.90 7/97oysteR cRedIt oPP fund 0.78 5.11 n.A 90.80 7/09perella weinberg partners asset based 0.47 10.28 n.a 508.70 4/08PRoLogue LP (A) usd 0.30 7.13 11.34 1287.00 2/06strategOs deep value mOrtgage (1a) 0.58 32.23 n.a 81.60 2/095
One-mOnth returns frOm 1/2/11 tO 28/2/11 – ranked alphabeticallymacro feb last 12 mo. car feb aum startfund name return return last 3 years ($m) datealtO glObal fund ltd -0.82 8.86 n.a 259.00 10/09
funds with a minimum Of $60m repOrting between 23/3 and 29/3*compiled by hfmweek from data provided by barclayhedge
h e d g e f u n d s
026_027_HFM220_data.indd 26 05/04/2011 14:08
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*Based on funds reporting net of all fees and lead funds
Feb Last 12 mo. CAR Feb AUM Start FUnd nAMe return return last 3 years ($m) dateGLoBAL TRAdinG STRAT (CAyMAn) 0.06 3.66 4.27 459.00 6/05
one-MonTh ReTURnS FRoM 1/2/11 To 28/2/11 – RAnked ALphABeTiCALLymulti-strategy Feb Last 12 mo. CAR Feb AUM StartFUnd nAMe return return last 3 years ($m) dateAdvenT GLoBAL oppoRTUniTy FUnd LTd 0.92 10.91 n.A 212.60 8/08AlPhAnAtics fund (A) (euR) 0.66 0.72 3.59 635.50 8/04ATLAS GLoBAL inveSTMenTS LTd UnRST 0.72 16.61 8.07 1470.00 1/04cAi GlobAl fund -0.88 40.45 17.76 227.40 9/05CMT GLoBAL FUnd LTd 0.59 5.68 14.16 93.00 12/05mARquee fund lP -2.62 -11.91 -3.36 119.00 1/08phALAnx JApAn AUSTRALASiA MS FUnd 2.53 1.09 28.18 78.00 4/05PlAtinum PtnRs VAlue ARb (usA) lP 4.41 22.44 17.34 545.00 1/03R3 Lp FUnd 0.85 12.27 n.A 395.40 6/08R3 ltd fund 0.85 11.88 n.A 1034.00 6/08
FUndS WiTh A MiniMUM oF $153m RepoRTinG BeTWeen 23/3 And 29/3*compiled by hfmweek fromv data provided by barclayhedge
F U n d S o F
h e d G e F U n d S
one-MonTh ReTURnS FRoM 1/2/11 To 28/2/11 – RAnked ALphABeTiCALLyfunds of hedge funds Feb Last 12 mo. CAR Feb AUM StartFUnd nAMe return return last 3 years ($m) date3A MULTi ARBiTRAGe FUnd (ChF) (B) 0.68 3.43 -3.64 155.00 7/043A multi ARbitRAGe fund (euR) (b) 0.70 3.95 -2.81 158.20 8/033A MULTi ARBiTRAGe FUnd (USd) (B) 0.69 4.24 -2.29 154.00 12/023A multi stRAteGy fund (chf) (b) 1.31 6.84 -4.09 290.00 8/033A MULTi STRATeGy FUnd (eUR) (B) 1.38 7.58 -3.04 296.00 2/033A multi stRAteGy fund (GbP) (b) 1.37 7.90 n.A 296.90 9/083A MULTi STRATeGy FUnd (USd) (B) 1.38 7.95 -2.71 289.30 9/02AcPi multi stRAteGy us dollAR fund 0.13 1.11 -4.54 178.00 1/99ASiAn CApiTAL hoLdinGS FUnd -0.20 8.81 -4.48 535.80 3/93coRonAtion Gl eq Alt stRAteGy (usd) 1.62 10.25 3.07 164.10 8/96CoRonATion GLoBAL eqUiTy FoF (A) 3.33 22.01 3.43 808.00 1/08
www.onetenassociates.com
Specialist Hedge Fund Recruiter
the figures published here are for information purposes only and are not to be construed as investment advice. Publication does not constitute an offer or a solicitation to buy any fund.
Feb Last 12 mo. CAR Feb AUM StartFUnd nAMe return return last 3 years ($m) dateCoRonATion GLoBAL opp eqUiTy (A) 2.11 17.14 n.A 418.80 5/08cRoss shoRe qP PARtneRs lP 1.12 10.84 2.76 411.40 1/04dhS Lp 0.92 5.98 -1.74 267.00 1/99eAcm Absolute RetuRn fund ltd 0.45 4.81 -0.86 172.90 1/03eURizon LoW voLATiLiTy FUnd 0.58 2.61 -3.20 289.30 1/02Gottex mARket neutRAl fund (b) (usd) 0.99 4.90 -1.08 1786.80 6/99GoTTex Mn pLUS (USd) dST 0.73 6.89 0.61 1587.50 5/07Gottex PoRt AlPhA mkt nRl eRisA (usd) 4.28 26.56 -3.27 255.40 1/07GoTTex poRT ALphA Mn FTSe 100 3.41 18.42 -3.40 290.00 4/07GReen wAy ARbitRAGe (A) 0.54 7.40 5.02 208.80 7/99GReen WAy LiMiTed (A) MonThLy 1.08 6.59 n.A 509.80 2/09hedGe inVest GlobAl fund 1.06 4.74 2.56 284.70 12/01hedGe inveST MULTi-STRATeGy 0.95 4.77 1.75 204.10 12/01hedGe inVest sectoR sPeciAlist 0.81 4.98 2.22 240.60 3/02Lo MULTiAdviSeRS GL eqUiTy L/S (USd) 1.18 8.68 2.29 183.10 1/96mellon fiRst PRinciPle fund ltd 0.41 3.34 -0.01 255.80 5/06MoMenTUM ALLWeATheR ii (USd) 0.20 4.16 -4.33 255.00 9/04momentum meteoR oPPoRtunities i (euR) 0.61 4.22 -1.57 271.00 10/03MoMenTUM MeTeoR oppoRTUniTieS i (USd) 0.59 4.44 -1.31 197.00 2/04momentum oRbit GlobAl stRAteGy i 0.78 5.48 -2.72 180.00 7/99MoSAiC CLASS hi (ChF) 0.81 4.78 -1.14 1185.10 1/07mosAic clAss hi (euR) 0.87 5.36 -0.14 1178.90 1/07MoSAiC CLASS hi (GBp) 0.88 6.00 n.A 1168.80 7/08mosAic clAss hP (chf) 0.79 4.55 -1.45 1185.10 1/07MoSAiC CLASS R (USd) 0.82 5.11 -0.47 1184.00 1/07oAkley Absolute RetuRn fund 0.46 0.62 0.41 205.00 7/05oLyMpiA STAR LUx eUR (C) 1.06 n.A n.A 274.00 4/10oPtimAl stRuctuRAl oPP (iRel usd) 1.33 6.49 -0.36 191.10 10/06pAF MoSAiC eURo hi (ChF) 0.81 4.23 -1.68 441.70 7/07PAf mosAic euRo hi (usd) 0.84 5.15 -0.19 442.00 7/07pAF MoSAiC eURo (R) (eUR) 0.84 4.21 -1.59 440.20 7/07PAmPlonA fof i ltd (b) (usd) 0.51 3.62 -2.35 519.00 5/05penGAnA GLoBAL Bond FUnd (A) 0.70 9.03 n.A 242.80 5/09PioneeR AllweAtheR diVeRsified fund 0.25 3.85 n.A 517.00 4/09pioneeR ReSTRUCTURinG FUnd i (USd) 0.78 7.90 -1.87 249.00 7/07Reichmuth mAtteRhoRn 3 (chf) 0.76 3.76 n.A 258.50 5/09SpRUCe GLoBAL eqUiTy FUnd Lp 0.74 7.16 -1.32 159.20 8/05tAG RelAtiVe VAlue fund lP 0.62 6.98 0.28 289.20 10/99TheTA deep vALUe FUnd -0.97 6.34 0.37 181.30 7/06titAn mAsteRs intl fund ltd 1.34 6.43 3.54 696.40 12/01UFG ALTeRAM MULTi ARBiTRAGeS 0.38 2.66 0.23 590.20 3/02
026_027_HFM220_data.indd 27 05/04/2011 14:08
services directory
7- 1 3 A P R 2 0 1 12 8 h f m w e e k . co m
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thalius Hecksher Global Head of Business Development // Tel: + 353 861 723233 // [email protected] Hughes Group Managing Director //Tel: + 44 778 099 7609 // [email protected]
with over $16bn of assets under administration, Apex fund Services is the world’s largest independent fund administration company. with 21 offices across the globe, the company’s growth is very much at the heart of Apex’s philosophy of providing personalised fund administration services by being based in the same location as our clients. Apex: Any size fund, fund structure, fund strategy, fund domicile
the Americas: Bill Henderson, Business Development Director, +1 212-682-9629, [email protected], Middle east & Asia: Mark Boyes, Business Development Director, +44 (0) 203 0195 0338, [email protected] fulcrum is a top five independent administrator with 20 years’ experience servicing the alternative investment industry. headquartered in Bermuda, we have offices in nine countries and service over 800 funds. we are committed to providing our clients with exceptional opera-tional risk management capabilities, through customized and transparent fund administration solutions. our service delivery is underpinned by a global operating model, which is supported by experienced people and leading edge technology.
damian McAree Business Development Director, Tel: +353 1 4005316, [email protected] // www.capitafinancial.com
with more than 35 years' industry experience, capita financial Group provides fund managers with fast and cost-effective third-party administra-tion services, enabling you to free up your day to focus on growing your funds and business. capita financial Group's focus is to provide a 'Best in class’ administration service. we work in partnership with you to innovate, increase efficiency and provide the high levels of customer service that you and your clients expect. we service a broad range of funds, including Ucits, investment companies, hedge funds, real estate, private equity and infrastructure funds. we operate internationally and offer a bespoke service to our clients, tailored to your specific requirements.
dermot Butler [email protected] // www.customhousegroup.com
custom house Global fund Services Limited offers its clients a full 'round the world' and 'round the clock' hedge fund administration service through its fully integrated network of offices in Amsterdam, chicago, Dublin, Guernsey, Luxembourg, malta and Singapore. custom house’s Dublin office, which is authorised by the Irish financial Regulator under Section 10 of the Investment Intermediaries Act 1995, achieved an exception-free SAS70 Type II and was the first hedge fund administrator to be awarded a moody’s management Quality Rating.custom house Global fund Services Limited is authorised by the malta financial Services Authority.
Martin Laidlaw, managing director // T +1 345 745-2562 (direct dial) // E [email protected] eric L Wilson senior manager, fund services // T +1 345 943 2252 // [email protected]
JP fund Administration (cayman) Ltd (JPfA) is a regulated mutual fund administration company based in the cayman Islands, home to 85% of the world’s offshore hedge funds. JPfA co-operates with top-quality, professional service providers and is part of a network providing comprehensive but independent services to the fund industry. The directors have many years' experience in the accounting and administration business and with state-of-the-art software JPfA can give fund managers the flexibility and reporting capability that manager’s demand today.
UsA: Gabriel Bousbib 780 Third Avenue, 32nd Floor, New York, NY1007 // + 1 (212) 937 6075 // [email protected] UK: Max Gottschalk +44 (0) 20 7494 5101 // [email protected] Hong Kong: James singh +(852) 3968 5000 // [email protected]
Gottex Solutions Services offers comprehensive middle-office services to institutional hedge fund investors, providing them with more flexibility, transpar-ency and control over their investments. Gottex offers: A platform of single and multi-investor hedge fund managed accounts, aimed at improving gover-nance and optimising funding costs, as well as access to third-party analytical engines; An integrated risk reporting and analysis platform, across long-only and hedge fund investments; and a specialist hedge fund work-out and advisory service, including interim management and litigation assistance.
Kevin Gilligan - Geoff trebert // Tel: +44 (0)1481 748 955 // fax: +44 (0)1481 727 249 //Suite 7 Provident house havilland St, St Peter Port, GY1 2Qe, Uk
The Louvre Group was established in 1976 and provides bespoke international fund establishment and administration and fiduciary, trust and corporate administra-tion. our fund services are run by an experienced team who know that fund managers need a top-quality, highly personalised and responsive service to meet tight deadlines and provide accurate, timely information. we work closely with the fund manager to provide a full suite of services which includes – establishment of the fund through the appropriate vehicle; listing, legal and regulatory coordination; choice of bankers, brokers and custodians; calculation of net asset values; shareholder liaison; financial statements and preparation; share registration and transfer agent; and, corporate secretarial services.
Guernsey/Jersey: stuart Mauger +44 1481 744 779 [email protected] // cayman: James clayton +1 345 914 4658 [email protected]
RBc wealth management’s corporate & Institutional (c&I) business provides fund administration, global custody, custodian trusteeship and corporate services to fund promoters, investment managers, private institutional clients, companies and institutions. operating from cayman, Guernsey, hong kong, Jersey, London and Singapore we offer our international client base access to a broad range of value-added services and tailored solutions. our people are knowledgeable in their field and well-versed in the establishment of funds and the regulatory and operational requirements for both traditional and alternative investment structures. whatever our clients’ needs are, we can help them meet their objectives.
028_029_HFM220_directory.indd 28 05/04/2011 14:07
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To promote your company, email: directory@hfmweek .com or call UK +44 (0)20 7029 4052 // US +1 (646) 278-9961
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Bob Kern +1 800 300 3863 [email protected] // 615 East Michigan St. Milwaukee, WI 53202 www.usbfs.com
Since 1969, clients have come to rely on US Bancorp Fund Services for innovative service solutions and industry expertise. US Bancorp Fund Services has built its reputation on offering the broadest range of top-quality mutual fund and alternative investment product services. The expertise of US Bancorp Fund Services extends from mutual funds to a wide variety of alternative investment product services, including hedge funds, funds of funds, limited partnerships, offshore funds, private equity funds and separately managed accounts. With specialist expertise in both single manager and fund of hedge fund administration, services can be provided for both onshore and offshore funds. Through our comprehensive range of services and products, leading edge technology platforms and superior client service, we work in partnership to offer the solutions you need.
Cayman Islands Darren Stainrod +1-345-914 1060 [email protected] // US Concetta Mastrangelo [email protected] +1-212-882 5523
Fund Services holds a leading position in the area of hedge fund administration with specialized teams around the world. We offer a complete range of services including accounting, NAV calculation, shareholder services, banking and credit facilities. With specialist expertise in both single manager and fund of hedge fund administration, services can be provided for both onshore and offshore funds. Throughour comprehensive range of services and products, leading edge technology platforms and superior client service, we work in partnershipto offer the solutions you need.
Exchequer Court, 33 St. Mary Axe, London EC3A 8AG, T: +44 (0)20 3207 6000 Richard Coello, [email protected] // Simon Holt, [email protected]
Travelers Insurance Company Ltd is a UK subsidiary of The Travelers Companies, Inc. which is a component of the Dow Jones Industrial Average, with over 30,000 employees worldwide and generated revenues of approximately $25bn in 2009. As of March 2011, Travelers Insurance Company was rated 'AA-' by S&P, underlining their strength as a counterparty. The UK Financial Institutions team provides Professional Indemnity, Directors & Offi cers Liabil-ity and Crime Insurance to many of the world’s leading hedge funds and their managers. An expert team of IMC qualifi ed underwriters is supported by a highly experienced and qualifi ed in-house claims team which provide excellent service, claims representation and risk management guidance.
Willis Limited, 51 Lime Street, London, EC3M 7DQ // James E Baird, Executive Director, FINEX National, T: +44 (0)20 7558 9312, [email protected], // Paul Richards, Executive Director, FINEX National, T: +44 (0)20 7558 9240, [email protected]
The Willis Global Hedge Fund Practice Group places the client at the centre of everything we do. We have developed bespoke insurance programmes for over 1,000 hedge funds across the world, ranging from single strategy start-ups to multi-strategy global players. Propriety and innovative products ensure our clients receive unparalleled levels of service and have their claims paid promptly. With our clients managing around $150bn AuM, industry expertise and insight is imperative; our Global Hedge Fund Practice Group enables us to provide a boutique service with global broker outcomes.
10 Bishops Square, London E1 6EG // www.newedgegroup.com // [email protected]
Newedge Prime Brokerage Group is a global, multi-disciplinary, team-oriented solution-providing organisation dedicated to delivering superior services to alternative investment industry participants including hedge funds, commodity trading advisors (CTAs), fund of hedge funds, family offi ces, and institutional investors. The group offers a global range of brokerage activities, covering a wide range of asset classes including equities, bonds, currencies, commodities, and their related listed and OTC derivative products. We also provide dedicated account management, innovative cross-margining, start up services, quantitative information on the hedge fund industry, capital introductions services, and prime Brokerage services on sharia-compliant hedge funds.
Capital Support Ltd, 3 Harbour Exchange Square, Docklands, London, E14 9GE // Nigel Brooks, Director // + 44 (0) 20 7458 1290 // [email protected]// Carrie Saunderson, Marketing Manager // + 44 (0) 20 7458 1290 // [email protected]
London based Capital Support Ltd is an industry leading company who provide IT Solutions to the Financial Services Industry; our clients vary from start-up hedge funds to multinational PE fi rms. Capital Support understands that the fi nancial industry requires fast-paced technology; we therefore provide proactive IT services designed to prevent expensive IT downtime. That’s why Capital Support has been recommended by Microsoft to support fi nancial services companies, shortlisted as IT Service Provider of the year for many consecutive years, and awarded judges’ commendation and runner up position at the CRN IT Industry Awards for IT Service Provider 2010.
ehedgefundjobs // Graham Egan, 29 Quaggy Walk, Blackheath, London, SE3 9EJwww.ehedgefundjobs.com
ehedgefundjobs provides job information to the hedge fund community, to professionals seeking positions and employers seeking professionals. Our aim is to provide jobs specifi cally of interest and to help match perfect candidates to the perfect position using our unique interface.
One Ten Associates 1 Berkeley Street, London, W1J 8DJContact: Mush Ali (ACA), Director // +44 207 016 9910 // [email protected]
One Ten Associates is a specialist recruitment fi rm that services the permanent and temporary needs of the alternative/fund management sector. Our consultants have been in this sector for over ten years and have the network to cover your strategic senior hires as well the junior to mid-senior needs.
028_029_HFM220_directory.indd 29 05/04/2011 14:07
week end
4 - 1 0 N o v 2 0 103 0 h f m w e e k . co m
what coNcerNs you most about the eveNtual impact of sec registratioN?source: HFMWeek
the key words from this week's big News stories credit: Wordle.net
reader coMMents
… we are always adding cost burdens to our asset management business.
it’s a huge cost factor for little/no investment gain …
… adv ii info should be sufficient – the fear is that eventually they'll want
detailed position reports …
… the current disclosure level is fine, but i can see it becoming extreme. at some point an overriding body will say, "if you trade, you must disclose everything"…
iN the next issue
job's WortH the current hiring needs of hedge funds and the industry's shifting pattern of remuneration
investor sentiMent after a topsy-turvy quarter, what is the current mindset of hedge fund investors?
Plus all tHe latest neWs, vieWs and data
on sale14 april 2011
reader survey
Word cloud
Quarterly reportiNg reQuiremeNts 33.3%
public disclosure of advii iNformatioN 44.4%
more burdeNsome reportiNg reQuiremeNts 66.7%
030_HFM220_backpage.indd 30 05/04/2011 14:05
keep your funds on course.Any size fund, fund structure, fund strategy, fund domicile.
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To ensure your funds stay in front, contact:Thalius HecksherGlobal Head of Business DevelopmentTel: + 353 861 [email protected]
Peter HughesGroup Managing DirectorTel: + 44 778 099 7609
apexfundservices.com
APEX Personalized Services:
apex_hfm_ad_Layout 1 25/01/11 6:18 AM Page 1
Untitled-1 1 25/01/2011 11:35
“Newedge” refers to Newedge Group and all of its worldwide branches and subsidiaries. Only Newedge USA, LLC is a member of FINRA and SIPC (SIPC only pertains to securities-related transactions and positions). Not all products or services are available from all Newedge organizations or personnel and restrictions may apply. Consult your local office for further details.
Dedicated services for hedge funds and CTAs. Multi-asset prime brokerage, cross margining tools, cutting-edge risk calculation, start-up services and in-depth market intelligence. We work with you to develop customized solutions that match your needs. To help power your performance worldwide.
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We don’t believein one-size-fits-all.
DontBelieve_HFMweek_203x273.ai 13.7.2009 15:23:57
