Pictet Asset Management markets funds of hedge funds
By Jame DiBiasio | 27 August 2009
The firm is better known in Asia as a traditional fund house but is targeting institutional investors and private banks with a platform for hedge funds.
advertisement
Pictet Asset Management has assembled a three-person team based out of Geneva to promote its fund of hedge funds, a marketing effort that has now been extended to Asian and Australian institutional investors.
The move is an expansion for the firm, which in Asia is known as a traditional, long-only provider.
Steve Huguenin-Virchaux, alternative product specialist at Pictet, says the timing is based on the firm's recent track record. Pictet has managed hedge funds since the 1980s and created its fund of hedge funds in 1994. Its business is mid-sized, with about $3.5 billion in funds and another $3 billion or so in segregated mandates or advisory businesses.
Last year Pictet's fund of funds maintained full liquidity, as the underlying strategies allowed this. Pictet did suffer redemptions (at its peak its total hedge-fund invested assets was around $10 billion) and losses (-15% for 2008) but these were in line or slightly better than the industry average, and there was no gating of assets.
Year-to-date for 2009 the fund of hedge funds is up about 10%.
The majority of clients for the alternative business are French and Swiss, and mostly private banks. Pictet is keen to balance the business both by targeting institutional investors as well as promoting funds of funds in Asia.
"We want to be seen as a wealth manager, not a fund manager," says Amy Cho, managing director in Hong Kong. Her business-development team will focus on clients in Australia and Hong Kong first for the alternative product side.
© Haymarket Media Limited. All rights reserved
Thursday, August 27, 2009
Hedge fund of funds' assets fall by $200bn
August 25, 2009
Hedge fund of funds' assets fall by $200bn
By Louise Armitstead, Telegraph.co.uk, August 24, 2009
Investors pulled an estimated $200bn (£122bn) from the hedge fund of funds sector from September 2008 to June this year, representing a 30pc drop in assets.
While many individual hedge funds have seen inflows recover in the first half of this year, a study of the top 50 hedge fund of funds in the world found that all except two players have seen significant falls in assets since September 2008 which had not been recovered by June.
The research, by The Hedge Fund Journal and Newedge Prime Brokerage, found that assets in the sector were $530bn at the end of June, down from a peak of $825bn. The industry magazine said the figures revealed a "transformational crisis" that had "come as a shock" to a sector that had grown at a rate of more than 20pc a year between 2000 and 2008.
While the survey found that "most funds" had lost an average of between 25pc and 30pc of their assets, some had lost far more. Many of the biggest losers were the operations within investment banks. HSBC's Alternative Investments division shrank 51.9pc, from $46.3bn to $22.3bn; UBS's Alternative and Quantitative Investments fell 32.6pc, from $46.6bn to $31.4bn; and Goldman Sachs Hedge fund strategies was down 24.7pc, from $23.9bn to $18bn.
The biggest specialist managers also suffered heavy redemptions: Permal Asset Management dropped 48.9pc, from $36.6bn to $18.7bn, and Man Investments fell 46.4pc, from $42.9bn to $23bn. All of these remain top-10 players in the world.
The only two hedge fund of funds that saw inflows were Blackstone, which grew its operations 25pc, from $20bn to $25bn, and Grovesnor Capital Management, up 1pc from $20bn to $21bn. The hedge fund sector as a whole suffered last year as a combination of the market turmoil and high levels of gearing resulted in its worst performance for a decade. In addition, a sudden aversion to risk and a need for liquidity led to a scramble by investors to withdraw money, causing some funds to collapse.
Hedge fund of funds have been hit twice by redemptions both directly and in the funds they invest in. Chicago-based Hedge Fund Research (HFR) has reported that more than 200 funds of hedge funds liquidated in 2009, nearly twice the number of those that closed in the fourth quarter of 2008. However, in recent months some have reported a steady return of inflows, particularly in funds of funds that have restructured and reduced management fees.
Hedge fund of funds' assets fall by $200bn
By Louise Armitstead, Telegraph.co.uk, August 24, 2009
Investors pulled an estimated $200bn (£122bn) from the hedge fund of funds sector from September 2008 to June this year, representing a 30pc drop in assets.
While many individual hedge funds have seen inflows recover in the first half of this year, a study of the top 50 hedge fund of funds in the world found that all except two players have seen significant falls in assets since September 2008 which had not been recovered by June.
The research, by The Hedge Fund Journal and Newedge Prime Brokerage, found that assets in the sector were $530bn at the end of June, down from a peak of $825bn. The industry magazine said the figures revealed a "transformational crisis" that had "come as a shock" to a sector that had grown at a rate of more than 20pc a year between 2000 and 2008.
While the survey found that "most funds" had lost an average of between 25pc and 30pc of their assets, some had lost far more. Many of the biggest losers were the operations within investment banks. HSBC's Alternative Investments division shrank 51.9pc, from $46.3bn to $22.3bn; UBS's Alternative and Quantitative Investments fell 32.6pc, from $46.6bn to $31.4bn; and Goldman Sachs Hedge fund strategies was down 24.7pc, from $23.9bn to $18bn.
The biggest specialist managers also suffered heavy redemptions: Permal Asset Management dropped 48.9pc, from $36.6bn to $18.7bn, and Man Investments fell 46.4pc, from $42.9bn to $23bn. All of these remain top-10 players in the world.
The only two hedge fund of funds that saw inflows were Blackstone, which grew its operations 25pc, from $20bn to $25bn, and Grovesnor Capital Management, up 1pc from $20bn to $21bn. The hedge fund sector as a whole suffered last year as a combination of the market turmoil and high levels of gearing resulted in its worst performance for a decade. In addition, a sudden aversion to risk and a need for liquidity led to a scramble by investors to withdraw money, causing some funds to collapse.
Hedge fund of funds have been hit twice by redemptions both directly and in the funds they invest in. Chicago-based Hedge Fund Research (HFR) has reported that more than 200 funds of hedge funds liquidated in 2009, nearly twice the number of those that closed in the fourth quarter of 2008. However, in recent months some have reported a steady return of inflows, particularly in funds of funds that have restructured and reduced management fees.
Monday, August 17, 2009
Viability Challenges to Funds of Hedge Funds, Cogency
Viability Challenges to Funds of Hedge Funds
Jeffrey Axelrod, CEO, Cogency
Aug 2009
In the wake of portfolio pressures coming from hedge funds with questionable prime brokers (Lehman, Bear), credit facilities and liquidity, combined with investor pressures arising from the Madoff scandal and the quest for quick cash, funds of hedge funds found themselves at the beginning of 2009 with portfolios spotted with quicksand and landmines, and a capital drain threatening with the force to swallow them.
The sandbags
As a first line of defense, all that a FOHF could do was to mimic what their HF investments were doing to them: dropping gates and suspending redemptions. But if they were going to regain investor trust and stand a chance of getting new money into the fund, they would need to be more creative.
The better dam
What many FOHFs did was to create a protected bucket within the fund, fill it with illiquid and questionable investments and with an equal proportion of investor capital. Within this bucket they could control investor redemptions, charge different fees (often none or reduced), change the high-water mark, and handle forced-redemptions when any money came in from the underlying investments. This allowed the remainder of the fund to continue business as usual – allowing redemptions, reporting good returns as the market improved, and even pulling in new money as the flow of liquid capital changed direction.
Engineering the solution
Words like special purpose vehicle, redemption in kind, side-pocket, and liquidating-trust all began to take on life outside the offering documents. The legal and accounting form of this solution for each firm took on a shape determined by the wording of the fund’s offering documents and the capabilities of their fund administrator’s accounting system.
There were many new transactions and concepts that needed to be tracked and reported on. The rebalancing transactions that create the new entity can take many forms and be quite complex, transferring liquidity terms, fees, high-water marks, and effective dates. There must be ongoing accounting of the illiquid entity. Portfolio redemptions into the illiquid bucket must be monitored, and distributed to investors according to the terms of the new legal structure. And the investor reporting requirements on the balance in their main and illiquid holdings (sometimes separate, sometimes merged) can be complex.
In cases where the fund administrators could not accommodate the structures and reporting that the fund required, they either provided workaround solutions in Excel spreadsheets, or worked with the fund to restructure the solution to fit the available tools.
Long term environmental impact
The FOHF environment is forever impacted by the events of the past 9 months. First off, FOHFs that have been successfully self-administered for years now feel the pressure from investors to have an outside fund administrator. Regardless of the actual value, the perceived value is undisputable.
Even with an administrator, FOHFs now need to show their investors solid accounting controls - tracking valuation direct from the HF managers and cross-checking the administrator numbers with internal shadow accounting systems. And even beyond direct knowledge of HF valuation, FOHFs need to show that they understand the content of the investment portfolio of their HF managers. This is leading toward greater usage of managed accounts which, besides providing transparency into the portfolio, also provide quicker liquidity, albeit at the cost of additional oversight.
Recovery prognosis
By May 2009, the FOHF year-to-date returns were some of the best in their long-term history. With time passing and lessons learned, the industry is adjusting and recovering. FOHFs are showing a stronger interest in manager due-diligence and shadow accounting, with more attention placed on showcasing internal controls to investors. On the investor front, there is cash sitting in the portfolio of pension funds, endowments, family offices, and high-net-worth individuals, soon to be looking for a better home than the mattress.
Jeffrey Axelrod, CEO, Cogency
Aug 2009
In the wake of portfolio pressures coming from hedge funds with questionable prime brokers (Lehman, Bear), credit facilities and liquidity, combined with investor pressures arising from the Madoff scandal and the quest for quick cash, funds of hedge funds found themselves at the beginning of 2009 with portfolios spotted with quicksand and landmines, and a capital drain threatening with the force to swallow them.
The sandbags
As a first line of defense, all that a FOHF could do was to mimic what their HF investments were doing to them: dropping gates and suspending redemptions. But if they were going to regain investor trust and stand a chance of getting new money into the fund, they would need to be more creative.
The better dam
What many FOHFs did was to create a protected bucket within the fund, fill it with illiquid and questionable investments and with an equal proportion of investor capital. Within this bucket they could control investor redemptions, charge different fees (often none or reduced), change the high-water mark, and handle forced-redemptions when any money came in from the underlying investments. This allowed the remainder of the fund to continue business as usual – allowing redemptions, reporting good returns as the market improved, and even pulling in new money as the flow of liquid capital changed direction.
Engineering the solution
Words like special purpose vehicle, redemption in kind, side-pocket, and liquidating-trust all began to take on life outside the offering documents. The legal and accounting form of this solution for each firm took on a shape determined by the wording of the fund’s offering documents and the capabilities of their fund administrator’s accounting system.
There were many new transactions and concepts that needed to be tracked and reported on. The rebalancing transactions that create the new entity can take many forms and be quite complex, transferring liquidity terms, fees, high-water marks, and effective dates. There must be ongoing accounting of the illiquid entity. Portfolio redemptions into the illiquid bucket must be monitored, and distributed to investors according to the terms of the new legal structure. And the investor reporting requirements on the balance in their main and illiquid holdings (sometimes separate, sometimes merged) can be complex.
In cases where the fund administrators could not accommodate the structures and reporting that the fund required, they either provided workaround solutions in Excel spreadsheets, or worked with the fund to restructure the solution to fit the available tools.
Long term environmental impact
The FOHF environment is forever impacted by the events of the past 9 months. First off, FOHFs that have been successfully self-administered for years now feel the pressure from investors to have an outside fund administrator. Regardless of the actual value, the perceived value is undisputable.
Even with an administrator, FOHFs now need to show their investors solid accounting controls - tracking valuation direct from the HF managers and cross-checking the administrator numbers with internal shadow accounting systems. And even beyond direct knowledge of HF valuation, FOHFs need to show that they understand the content of the investment portfolio of their HF managers. This is leading toward greater usage of managed accounts which, besides providing transparency into the portfolio, also provide quicker liquidity, albeit at the cost of additional oversight.
Recovery prognosis
By May 2009, the FOHF year-to-date returns were some of the best in their long-term history. With time passing and lessons learned, the industry is adjusting and recovering. FOHFs are showing a stronger interest in manager due-diligence and shadow accounting, with more attention placed on showcasing internal controls to investors. On the investor front, there is cash sitting in the portfolio of pension funds, endowments, family offices, and high-net-worth individuals, soon to be looking for a better home than the mattress.
Thursday, August 6, 2009
FOFs - Record Inflow in 2Q09
From Citywire: http://www.citywire.co.uk/professional/-/news/fund-news/content.aspx?ID=352626
Fund of funds post record inflows in Q2
By Drazen Jorgic | 14:54:17 | 05 August 2009
Investors poured a net record of £1.2 billion into fund of funds in the second quarter, while ethical funds registered their first outflows since Investment Management Association (IMA) records begun.
The £1.2 billion was a £100 million more than on the corresponding period of the previous year.
Most of the net sales were of funds that invest externally. The most popular sector in Q2 2009 was cautious managed, accounting for net inflows of £347.5 million, followed by Balanced Managed with a net inflow of £337.5 million.
Ethical funds suffered outflows of £18.4 million.
Overall, funds under management in the second quarter of the year, within the fund of funds space, totalled £32.5 billion, up 15% on Q1 but down 3% on the same quarter in 2008.
Tracker funds also saw a surge in popularity with investors looking for beta exposure on the rising markets. Sales of tracker funds had substantially surged, with net inflows of £258.9 million in Q2, in stark contrast to £31.6 million in outflows the previous quarter and £1.8 million outflows in the corresponding period in 2008.
IMA said gaining market exposure through trackers continued to be most popular with the IFA sector, with intermediaries accounting for 61% of all gross retail sales.
Jane Lowe, director of markets at the IMA, said: 'In line with overall net retail sales, funds of funds saw record net retail inflows in the second quarter. Although only a small proportion of total funds under management, ethical funds by contras, saw their first net outflow since records began in 1992.'
Fund of funds post record inflows in Q2
By Drazen Jorgic | 14:54:17 | 05 August 2009
Investors poured a net record of £1.2 billion into fund of funds in the second quarter, while ethical funds registered their first outflows since Investment Management Association (IMA) records begun.
The £1.2 billion was a £100 million more than on the corresponding period of the previous year.
Most of the net sales were of funds that invest externally. The most popular sector in Q2 2009 was cautious managed, accounting for net inflows of £347.5 million, followed by Balanced Managed with a net inflow of £337.5 million.
Ethical funds suffered outflows of £18.4 million.
Overall, funds under management in the second quarter of the year, within the fund of funds space, totalled £32.5 billion, up 15% on Q1 but down 3% on the same quarter in 2008.
Tracker funds also saw a surge in popularity with investors looking for beta exposure on the rising markets. Sales of tracker funds had substantially surged, with net inflows of £258.9 million in Q2, in stark contrast to £31.6 million in outflows the previous quarter and £1.8 million outflows in the corresponding period in 2008.
IMA said gaining market exposure through trackers continued to be most popular with the IFA sector, with intermediaries accounting for 61% of all gross retail sales.
Jane Lowe, director of markets at the IMA, said: 'In line with overall net retail sales, funds of funds saw record net retail inflows in the second quarter. Although only a small proportion of total funds under management, ethical funds by contras, saw their first net outflow since records began in 1992.'
Tuesday, August 4, 2009
Merrill's New Prime Brokerage / Cap Intro Person
Merrill Asia Prime Brokerage Hires CLSA Capital Intro. Expert
July 28, 2009
In recent years, the revolving door at Merrill Lynch’s Asia prime brokerage has been ushering people out. But the firm is replacing some of that lost talent with the hire of CLSA’s Joanne Bryant-Rubio.
Bryant-Rubio has joined Merrill’s capital introduction team in Hong Kong as vice president, Asian Investor reports.
At CLSA, Bryant-Rubio handled capital introduction and fundraising for Asia hedge funds from London. Before joining CLSA, she worked at Atlas Capital, a fund of hedge funds.
July 28, 2009
In recent years, the revolving door at Merrill Lynch’s Asia prime brokerage has been ushering people out. But the firm is replacing some of that lost talent with the hire of CLSA’s Joanne Bryant-Rubio.
Bryant-Rubio has joined Merrill’s capital introduction team in Hong Kong as vice president, Asian Investor reports.
At CLSA, Bryant-Rubio handled capital introduction and fundraising for Asia hedge funds from London. Before joining CLSA, she worked at Atlas Capital, a fund of hedge funds.
Subscribe to:
Posts (Atom)