As the financial crisis cuts a swathe through the ranks of large financial institutions, independent wealth management boutiques are sensing an opportunity. With big brands battered by scandal or investment losses, investors have questioned whether it is sensible to remain with familiar names that no longer possess the sheen of stability. Research by Prince & Associates in the US suggested 80% of wealthy investors would change their advisers as a result of the crisis. Smaller operations offering straightforward investment products with personal service and equitable fees should benefit.
The following on : http://www.wealth-bulletin.com/home/content/2452237475/
Oct 21, 2008
Oct 14, 2008
Funds of Hedge Funds
By Simeon Stoitzev, Harcourt Investment Consulting
It is not the knowing that is difficult, but the doing.- Chinese Proverb
Once in a while commentators turn on the funds of hedge funds industry by criticising performance and fees. And lately, the industry has also been competing with replication strategies offered by investment banks and market indices. Warren Buffet has bet US$1 million that the S&P 500 will outperform a given fund of funds over a decade. The winner will donate the stake to a charitable organisation. Buffet has attributed a 60% probability to his winning the bet. It is a wise but also a brave bet, given that the bet is placed in times of above average price/earnings ratios (even more so if adjusted for cyclicality of earnings). However, a decade is a fairly long time and a probability not too far from 50% is a reasonable bet.
The following is on : http://www.thehedgefundjournal.com/managerwrites/index.php?articleid=85331322
It is not the knowing that is difficult, but the doing.- Chinese Proverb
Once in a while commentators turn on the funds of hedge funds industry by criticising performance and fees. And lately, the industry has also been competing with replication strategies offered by investment banks and market indices. Warren Buffet has bet US$1 million that the S&P 500 will outperform a given fund of funds over a decade. The winner will donate the stake to a charitable organisation. Buffet has attributed a 60% probability to his winning the bet. It is a wise but also a brave bet, given that the bet is placed in times of above average price/earnings ratios (even more so if adjusted for cyclicality of earnings). However, a decade is a fairly long time and a probability not too far from 50% is a reasonable bet.
The following is on : http://www.thehedgefundjournal.com/managerwrites/index.php?articleid=85331322
Hedge Fund Returns - a Challenge for Reporting
In contrast to mutual funds, hedge funds employ dynamic investment strategies and enjoy a high degree of freedom with regard to the instruments that they can hold in their portfolio. To that can be added the possibility of engaging in short selling of securities and using leverage. Consequently, alternative strategies are infinitely more complex than those of traditional funds.
The sophisticated investment strategies of hedge funds have considerable consequences for their return structure. In essence, hedge fund returns differ from those of mutual funds in three respects. First, hedge funds returns are – as opposed to mutual fund returns – not normally distributed. Second, they are non-linear with respect to the standard market factors, such as those of equity and bond markets. Finally, hedge funds often modify their investment style so that their exposure to risk factors is highly dynamic over time.
All these differences are very important when it comes to the detailed analysis of hedge fund returns, as required by adequate and comprehensive hedge fund reporting. Most important, many studies have highlighted the weaknesses of traditional mutual fund risk and performance indicators for evaluating hedge funds. Hence, it is essential for any good hedge fund reporting to employ performance and risk indicators that are appropriate and thus reliable.
The following is on : http://www.edhec-risk.com/edito/RISKArticleEdito.2008-09-03.2013
The sophisticated investment strategies of hedge funds have considerable consequences for their return structure. In essence, hedge fund returns differ from those of mutual funds in three respects. First, hedge funds returns are – as opposed to mutual fund returns – not normally distributed. Second, they are non-linear with respect to the standard market factors, such as those of equity and bond markets. Finally, hedge funds often modify their investment style so that their exposure to risk factors is highly dynamic over time.
All these differences are very important when it comes to the detailed analysis of hedge fund returns, as required by adequate and comprehensive hedge fund reporting. Most important, many studies have highlighted the weaknesses of traditional mutual fund risk and performance indicators for evaluating hedge funds. Hence, it is essential for any good hedge fund reporting to employ performance and risk indicators that are appropriate and thus reliable.
The following is on : http://www.edhec-risk.com/edito/RISKArticleEdito.2008-09-03.2013
Oct 7, 2008
Luxembourg continues to dominate onshore hedge fund industry in Europe
With an eye on the competition, Luxembourg has enacted flexible and attractive legislation aimed at tempting more hedge funds to domicile in the tiny European state.
http://www.ey.com/Global/assets.nsf/Luxembourg_E/HedgeFundsReviewMFESept08/$file/Hedge%20Funds%20Review%20Sept%2008.pdf
http://www.ey.com/Global/assets.nsf/Luxembourg_E/HedgeFundsReviewMFESept08/$file/Hedge%20Funds%20Review%20Sept%2008.pdf
Oct 6, 2008
Hedge fund reinvention is on the cards
From his office overlooking Geneva’s Jardin Anglais, Guy de Picciotto has a unique insight into the state of the hedge fund industry.
Earlier this year Union Bancaire Privée, the Swiss private bank of which he is chief executive, surpassed troubled compatriot UBS to become the largest allocator to the global hedge fund industry, according to a survey by InvestHedge, with $56.9bn (£32.2bn, €41.2bn) of assets under management. “In the first semester of this year there was still growth for hedge funds. Probably the next survey will be very different,” says Mr de Picciotto, the scion of UBP’s founder and chairman Edgar de Picciotto, hinting at waning desire among UBP’s own clients.
The younger Mr de Picciotto is a deep believer in the absolute return philosophy embedded at the heart of the hedge fund concept. Yet even he foresees a need for rapid re-invention across the $2,000bn industry, which is on course for its worst year on record. The typical fund has lost 9.6 per cent so far this year, according to the HFRX index of Chicago-based Hedge Fund Research, with the industry almost certain to underperform cash for the first calendar year since 2002.
“We have already changed 40 per cent of our list. In order to deliver performance you need another set of managers,” says Mr Picciotto, citing distressed assets, global macro and arbitrage as strategies that UBP believes can deliver in the next stage of the economic cycle.
The article is on FT.com :
http://www.ft.com/cms/s/0/fb4c7b9c-917a-11dd-b5cd-0000779fd18c.html?nclick_check=1
Earlier this year Union Bancaire Privée, the Swiss private bank of which he is chief executive, surpassed troubled compatriot UBS to become the largest allocator to the global hedge fund industry, according to a survey by InvestHedge, with $56.9bn (£32.2bn, €41.2bn) of assets under management. “In the first semester of this year there was still growth for hedge funds. Probably the next survey will be very different,” says Mr de Picciotto, the scion of UBP’s founder and chairman Edgar de Picciotto, hinting at waning desire among UBP’s own clients.
The younger Mr de Picciotto is a deep believer in the absolute return philosophy embedded at the heart of the hedge fund concept. Yet even he foresees a need for rapid re-invention across the $2,000bn industry, which is on course for its worst year on record. The typical fund has lost 9.6 per cent so far this year, according to the HFRX index of Chicago-based Hedge Fund Research, with the industry almost certain to underperform cash for the first calendar year since 2002.
“We have already changed 40 per cent of our list. In order to deliver performance you need another set of managers,” says Mr Picciotto, citing distressed assets, global macro and arbitrage as strategies that UBP believes can deliver in the next stage of the economic cycle.
The article is on FT.com :
http://www.ft.com/cms/s/0/fb4c7b9c-917a-11dd-b5cd-0000779fd18c.html?nclick_check=1
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