Hedge Fund Industry Performance

[quote="batman"]December effect Bodes well for Hedge funds...I like this piece. Solid research...I also enjoy the 2010 outlook for funds...


Hedge fund advisory firm the Hennessee Group believes the equity
markets are likely to continue their momentum and lead to additional
gains for investors during the month of December. “We believe the December Effect,
whereby investors choose to defer paying taxes on equity market gains
until the following year, will provide additional support to the equity
markets as we close out the year,” said Charles Gradante, co-founder of
the Hennessee Group. “And historical data seems to support this thesis
as the equity markets have experienced gains during the final month of
the year 70% of the time when positive through the month of November.”
Additionally, says Gradante, hedge funds have experienced gains in
December 100% of the time during the same calendar year periods. The December Effect: Equity Markets And Hedge Funds The
Hennessee Group recently conducted a brief study examining the
historical performance of the equity markets and hedge funds when
entering the final month of the year with positive year-to-date gains.
The study focused on the calendar year periods dating back to 1995;
using the S&P 500 Index and the Hennessee Hedge Fund Index as
proxies. As illustrated in the chart below, dating back to 1995, the
S&P 500 Index has generated positive returns through November in 10
calendar year periods and experienced additional gains in December 70%
of the time. In comparison, hedge funds managed to generate gains in
nine of the calendar year periods the S&P 500 Index was positive
through November and experienced gains in December 100% of the time.

YTD-Nov.		Dec. Only
Year	S&P500	Hennessee Hedge Fund Index	S&P500	Hennessee Hedge Fund Index
1995	31.82%	15.79%	1.74%	1.65%
1996	22.91%	17.67%	-2.15%	1.20%
1997	28.98%	16.84%	1.57%	1.16%
1998	19.91%	-0.28%	5.64%	1.70%
1999	12.97%	22.57%	5.78%	6.70%
2003	20.28%	16.75%	5.08%	1.76%
2004	5.57%	6.31%	3.25%	1.82%
2005	3.12%	6.10%	-0.10%	1.66%
2006	12.23%	9.99%	1.26%	1.28%
2007	4.44%	10.85%	-0.86%	0.33%
Positive	10	9	7	10

Note: Hedge funds experienced a challenging period in 1998 due in large part to the failure of Long-Term Capital Management. "The data supports the December Effect Theory and
bodes well for investors as we close out 2009. Hennessee Research
indicates that when the equity markets were positive through November,
they gained on average +2.1% in December while hedge funds gained
+1.9%,” said Gradante. Optimistic Hedge Fund Outlook For 2010 While
the Hennessee Group is optimistic for both the equity markets and hedge
funds heading into the final month of the year due to the December Effect,
the firm is more optimistic that hedge funds are well positioned for a
good year on a relative basis in 2010. According to Gradante,
fundamentals will matter again in the coming year which should lead to
an increase in dispersion between sectors and individual stocks,
particularly as the rally gets long in the tooth. In addition,
he says, the equity markets are likely to trade in a range as opposed
to trend in one particular direction in 2010. Gradante says such an
environment should favor hedge funds relative to their traditional
counterparts as they will have the opportunity to generate alpha on
both the long and short side of their portfolios while not having to
rely on market direction or beta for returns. [quote]

The OCT HFN Daily report is out ill tell sauros to post it in the crypt

Despite the small sample size I think the results are generally telling. And this is definitely good news for AC. Lots of HF investors more more risk appetite looking a smaller funds to invest in with a track record less than a year!

--------------
HFN Survey of Emerging Manager-focused FoFs




Dear managers,



We quickly put together a short survey of some of the

emerging manager focused fund of funds, 11 to be

exact, and found some interesting tidbits of

information. All of the managers were bullish on

emerging/early stage managers because of the upside

they offer, and as one investor put it, they "often

outperform their older and larger competitors in part

because their size enabled them to react more

quickly."






The full table is published below, but here are the

quick points:

• 54% of the respondents would consider products
  
  with less than 1 year track record
  
• 100% of the respondents would look at products
  
  with less than 50 mm
  
• 100% of respondents are looking for funds recently
  
  formed by veteran management teams as well as "up and
  coming" manager talent
  

Once again we would like to thank the participants for

their assitance in this survey, and hope to see more

participation in the future.


HFN Survey of Emerging Manager


Focused Fund of Funds










As always, if you have any questions or comments then
please let me know.


Best regards,
Napoleon T. Butic

Director, Manager Services
HedgeFund.net
Email:Managerinfo@he


dgefund.net

Napoleon T. Butic is the
Director of HedgeFund.net’s Manager Services
Group, which manages HedgeFund.net’s HedgePlus
platform, a service providing managers with premium
visibility to over 30,000 registered users. Since
2000, he has helped hundreds of managers with their
marketing efforts through the site. For questions
about marketing, HedgeFund.net, or the industry in
general feel free to contact Managerinfo@he


dgefund.net.

Bond HF (esp: fixed income arb) out paced equities finally after lagging past two months. And again EM are outperforming developed markets.


----------------
HFN Release: HF Assets Again Pass $2 Trillion Mark
HFN released early estimates for November performance and asset flows. A full
report will be available later in the month.

Highlights:
Hedge fund assets passed the $2 trillion mark in November driven both by
performance and new allocations.

-Total assets increased 3.39% to $2.037 trillion. Assets were last above $2
trillion in November 2008.
-Investors allocated $26.3 billion to hedge funds in November, performance
increased assets an additional $40.5 billion
-Investor flows were positive in November for the 7th consecutive month.
-During the 7 months of consecutive investor inflows, $119.91 billion has been
allocated to hedge funds.
-The Core Growth Rate (% increase in assets due solely to investor flows)
increased to 1.33% November. The rate of growth has risen two consecutive
months.
-Hedge fund assets are still $900 billion below the peak set in Q2 2008.

Hedge fund performance was positive in November, driven by commodity focused
strategies and emerging markets. Equity long/short strategies appeared
conservatively positioned, underperforming the S&P by more than 450 basis
points.

-The HFN Hedge Fund Aggregate Index was +2.03% in November and +18.66% YTD.

Details from November:

Assets:
-Fixed income investments outpaced equities in November, after lagging the two
prior months.
-Investments in commodity strategies were in line with overall industry growth.

-Flows to corporate bond related strategies turned slightly negative in
November.
-Fixed income arbitrage strategies had the fastest rate of inflow in November.
-Allocations into emerging markets slowed for the second straight month, but
were in line with overall industry growth.

Performance:

Regional/Country Specific Exposure:
With the exception of funds investing in the MENA region, emerging markets
again outpaced developed market exposure in November. Latin America focused
funds were the best performing, led by funds investing in Brazil. India
exposure produced large returns as well and Russia and China focused funds were
more aligned with the overall industry.

HFN Latin America Index: +4.26% in November, +45.74% YTD
HFN Brazil Index: +5.90% in November, +52.85% YTD
HFN India Index: +4.81% in November, +47.54% YTD
HFN China Index: +1.80% in November, +36.80% YTD
HFN Russia Index: +2.19% in November, +60.82% YTD
HFN Middle East/North Africa Index: -0.89% in November, +23.00% YTD
HFN Emerging Markets Index: +2.12% in November, +40.86% YTD

Fixed Income (FI) Strategies
The average performance from fixed income focused strategies was +0.82% in
November. Performance was led by distressed debt related strategies while
arbitrage strategies lagged for the first month in several.

HFN Distressed Index: +2.34% in November, +26.54% YTD
HFN Fixed Income Arbitrage Index: +0.08% in November, +17.81% YTD
HFN Mortgages Index: +1.00% in November, +50.62% YTD

Equity (EQ) Strategies
The average performance from equity focused strategies was +1.23% in November.
Funds investing in U.S. markets returned an average of +1.98% during the month.
Overall underperformance of broad equity markets was an indication of a more
defensive positioning of LS Eq portfolios. Energy and healthcare focused funds
outperformed.

HFN Long/Short Equity Index: +1.43% in November, +19.84% YTD
HFN Market Neutral EQ Index: +0.07% in November, +4.48% YTD
HFN Short Bias Index: -1.80% in November, -16.65% YTD
HFN Energy Sector Index: +2.93% in November, +36.25% YTD
HFN Healthcare Sector Index: +3.71% in November, +26.03% YTD

Commodity and Foreign Exchange (FX) Related Strategies
CTAs and commodity focused managers mostly outperformed the industry in
November. Energy and metals exposure produced the highest gains. Funds focusing
on financial futures (EQ indices) posted returns above equity long/short
managers, but still lagged major equity benchmarks by a wide margin.

HFN CTA/Managed Futures Index: +4.41% in November, +4.87% YTD
Foreign Exchange focused funds: +0.94% in November, +1.93% YTD
Financial Futures focused funds: +2.41% in November, +3.11% YTD Click Here To Read Comments on This Story or Submit Your Own Hedge Fund Routed in Sunshine State
Swindle A hedge fund got soaked in an alleged billion dollar Ponzi
scheme a Florida lawyer set up in 2005.

Banyon Investments, itself targeted in an investor lawsuit, said Scott
Rothstein fleeced $775 million, according to a bankruptcy court filing.

Rothstein pleaded guilty to running a Ponzi scheme that sold settlement money
in fictitious legal action. In November, an investor lawsuit called the hedge
fund and its leader George Levin as conspiring with Rothstein.

The fund claimed its profit from investing with Rothstein was audited, the suit
against Banyon said. Banyon and Levin denied the charge. Banyon employee Frank
Preve, its chief operating officer, pleaded guilty to embezzlement in 1985.

Levin made a fortune with his Philadelphia retail businesses, enabling him to
retire to Florida at 32. Levin, now 69, is also a real estate speculator.

Rothstein ran a 70-lawyer firm that collapsed following the unraveling of his
scheme.

Report: Women Hedge Fund Managers Are Top Performers
Women may only account for a fraction of hedge fund managers, but their
returns performance surpassed their male counterparts, according to a
new report.

Women-led funds on average returned 9% annually since 2003, compared to
hedge funds as a group, at an annual average of almost 6%, according to
the report, "Women in Fund Management," published by the National
Council for Research on Women (NCRW).

During the financial debacle that was 2008, women performed even
better, the report said, with female-managed funds down only 5.41%
compared with -19.03% overall.

One problem with the study is that the sample is, of necessity, small,
as women accounted for only 3% of those in charge of more than 9,000
hedge funds, the report said.

Researchers have found that men and women have different investment
styles, with women tending to be more consistent and processing a
greater level of informational detail, including contradictory data, in
making decisions. Men, on the other hand, tend to manage more actively,
trading often and basing decisions on overall schema, the report said.

Although women face a number of challenges in entering the closed, and
mostly masculine, world of hedge funds, firms are increasingly viewing
them as an untapped resource pool, according to the NCRW.

From HFN

Hedge Fund Assets Top $2T in November Hedge fund assets were back at more than $2 trillion in November for the first time in a year, according to HedgeFund.net, driven both by performance and new allocations.

Performance overall for the asset class in November was positive. The
HFN Aggregate Index was up 2.03% last month and +18.66% year-to-date.

However, other equity indices outperformed the asset class in November.
The S&P 500 was up 5.34% last month and +20.84% YTD, while the Dow
Jones Industrial Average was up 6.51% and +17.87% YTD and the NASDAQ
Composite Index was up 4.86% and +35.99% YTD.


On the fixed-income side, the Barclays Aggregate Bond Index was up 1.29% and +7.61% YTD.

Emerging markets had a good month, up 2.12% according to HFN and
+40.86% YTD. Top performers among country-specific emerging market
funds in November were Brazil, up 5.90% and +52.85% YTD; India, up
4.81% and +47.54% YTD; and Russia, up 2.19% and +60.82% YTD.

Harvey Sawikin, a cofounder at Firebird Management, which invests in
Eastern Europe, as well as a few frontier markets, says not only
November, but the past nine months, were strong.

"Our region is still recovering from the crisis of last year, so we
feel that there's more room to go higher, as the effects of the crisis
wear off," Sawikin says.

In his region, Sawikin says, resources stocks have done well because
they have strong balance sheets and banks are starting to recover.

"There are lots of other sectors we think will eventually recover that
are slower to come back, such as real estate and telecom," Sawikin
says.

China has also come back big in the recovery, with funds focused on the
world's third largest economy up 1.80% in November and +36.80% YTD.

Shah Capital's founder, Himanshu Shah, says his firm has been partial
to China since late last year, particularly Chinese industrials and
that has served them well.

"We still think there's a lot of growth and potential [in China], but
we are looking at other sectors, not just industrials," Shah says.

Although Shah Capital is a long-short fund with a long bias, Shah says
his expectations about upcoming market conditions mean they are looking
into more short opportunities than long.

"Overall, we see more volatility as the markets worry about how long
the government support is going to last, in terms of easy money and
injection of money," he says. "So it has been a heck of a ride over the
last eight months, but we are entering some challenging waters."

For equities strategies in general, November was a good month. The HFN
Long-Short Equity Index was up 1.43% last month and +19.84% YTD.


Short bias, however, was down 1.80% in November and 16.65% YTD.


The CTA/Managed Futures Index was up 4.41% in November and +4.87% YTD.

Long-short manager Bill Martin, founder of Raging Capital Management,
says his firm has the greatest number of shorts on that they've had all
year.

"We are particularly focused on commercial warehouse REITS, which have
interest rate sensitivity, but are under tremendous pricing and
occupancy pressure," Martin says.


As the firm takes a deflationary view of the world, it is also short a number of commodity food producers, Martin says.

"There's a big debate on Wall Street deflation vs. inflation," he says.
"We get the inflation argument, but we don't see it in the real world
and the fundamental indicators we see are deflationary in nature."

Snapman wrote:

Report: Women Hedge Fund Managers Are Top Performers
Women may only account for a fraction of hedge fund managers, but their
returns performance surpassed their male counterparts, according to a
new report.

Women-led funds on average returned 9% annually since 2003, compared to
hedge funds as a group, at an annual average of almost 6%, according to
the report, "Women in Fund Management," published by the National
Council for Research on Women (NCRW).

During the financial debacle that was 2008, women performed even
better, the report said, with female-managed funds down only 5.41%
compared with -19.03% overall.

One problem with the study is that the sample is, of necessity, small,
as women accounted for only 3% of those in charge of more than 9,000
hedge funds, the report said.

Researchers have found that men and women have different investment
styles, with women tending to be more consistent and processing a
greater level of informational detail, including contradictory data, in
making decisions. Men, on the other hand, tend to manage more actively,
trading often and basing decisions on overall schema, the report said.

Although women face a number of challenges in entering the closed, and
mostly masculine, world of hedge funds, firms are increasingly viewing
them as an untapped resource pool, according to the NCRW.

From HFN

Women are known to be more analytical then men, always relishing every single detail before making a decision. When I went to see Joe Mazzella and Guy Adami speak, they touched on the same point. Both agreed that there are not enough women on the street and there is a vast potential for expansion. Maybe we should look to get some females on board Snapman.

Snapman wrote:

Hedge Fund Assets Top $2T in November Hedge fund assets were back at more than $2 trillion in November for the first time in a year, according to HedgeFund.net, driven both by performance and new allocations.

Performance overall for the asset class in November was positive. The
HFN Aggregate Index was up 2.03% last month and +18.66% year-to-date.

However, other equity indices outperformed the asset class in November.
The S&P 500 was up 5.34% last month and +20.84% YTD, while the Dow
Jones Industrial Average was up 6.51% and +17.87% YTD and the NASDAQ
Composite Index was up 4.86% and +35.99% YTD.


On the fixed-income side, the Barclays Aggregate Bond Index was up 1.29% and +7.61% YTD.

Emerging markets had a good month, up 2.12% according to HFN and
+40.86% YTD. Top performers among country-specific emerging market
funds in November were Brazil, up 5.90% and +52.85% YTD; India, up
4.81% and +47.54% YTD; and Russia, up 2.19% and +60.82% YTD.

Harvey Sawikin, a cofounder at Firebird Management, which invests in
Eastern Europe, as well as a few frontier markets, says not only
November, but the past nine months, were strong.

"Our region is still recovering from the crisis of last year, so we
feel that there's more room to go higher, as the effects of the crisis
wear off," Sawikin says.

In his region, Sawikin says, resources stocks have done well because
they have strong balance sheets and banks are starting to recover.

"There are lots of other sectors we think will eventually recover that
are slower to come back, such as real estate and telecom," Sawikin
says.

China has also come back big in the recovery, with funds focused on the
world's third largest economy up 1.80% in November and +36.80% YTD.

Shah Capital's founder, Himanshu Shah, says his firm has been partial
to China since late last year, particularly Chinese industrials and
that has served them well.

"We still think there's a lot of growth and potential [in China], but
we are looking at other sectors, not just industrials," Shah says.

Although Shah Capital is a long-short fund with a long bias, Shah says
his expectations about upcoming market conditions mean they are looking
into more short opportunities than long.

"Overall, we see more volatility as the markets worry about how long
the government support is going to last, in terms of easy money and
injection of money," he says. "So it has been a heck of a ride over the
last eight months, but we are entering some challenging waters."

For equities strategies in general, November was a good month. The HFN
Long-Short Equity Index was up 1.43% last month and +19.84% YTD.


Short bias, however, was down 1.80% in November and 16.65% YTD.


The CTA/Managed Futures Index was up 4.41% in November and +4.87% YTD.

Long-short manager Bill Martin, founder of Raging Capital Management,
says his firm has the greatest number of shorts on that they've had all
year.

"We are particularly focused on commercial warehouse REITS, which have
interest rate sensitivity, but are under tremendous pricing and
occupancy pressure," Martin says.


As the firm takes a deflationary view of the world, it is also short a number of commodity food producers, Martin says.

"There's a big debate on Wall Street deflation vs. inflation," he says.
"We get the inflation argument, but we don't see it in the real world
and the fundamental indicators we see are deflationary in nature."

I really like to here the piece on emerging markets. Those who got in during March and April are surely sitting on a nice chunk of change. However, I'd like to read HF managers' thoughts on default risk in some of these countries particularly eastern europe. I will be sure to take a journal with me when I go back to Hungary this time, and try to find investing opportunities. If we find the right platform, I'd love to start trading Euro and USD/Forint exchange rates.

I also wonder how much these funds are Hedged in cases of political corruption? For example, last year the Czech Republic's government collapsed when they held the rotating EU presidency. When finals are done I will definately do some of this type of research before jumping the pond. Snapman, if you know of any places I can find information about this please let me know.

Always good news to see positive HF performance
Hedge funds rebounded in
November, putting them on track to post their best annual performance
since inception of the Credit Suisse/Tremont Hedge Fund Index in
January 1994.

The index finished up 2.11 per cent for the month, bringing year to date performance to 17.53 per cent through 30 November 2009.
Managed futures experienced its best month since October 2008,
rising 4.94 per cent, as managers capitalized on clear trends in
equities, short-term interest rates and commodities.
Global macro was the second best performing sector, up 3.52 per
cent, as models captured gains in equities, credit and precious metal
markets.
Managers across strategies profited from upward momentum in precious
metals, specifically gold, which hit record nominal highs during the
month.
All sectors were positive for the month, with the exception of
dedicated short bias, which fell 2.99 per cent amidst rising global
equity markets.

Record setting Year for many Fund Groups Enters Home Stretch
Global equity markets moved
sideways in mid-December as investors began to close the book on 2009
and think about the prospects 2010, according to research by EPFR
Global.
The book on 2009 makes for generally good reading, with many fund
groups posting good to excellent performance numbers and on course for
record setting years in terms of attracting fresh money.
But 2010 promises to be another testing year as fiscal and monetary
stimulus in many of the world’s major economies begins to wane, says
EPFR Global.

Much of the week ending 16 December saw choppy fund flows, but
towards the end of the week, Abu Dhabi’s support of Dubai helped
investors regain some of their risk appetite.

Investors pulled another USD37.5bn out of money market funds between
14 and 16 December, pushing year-to-date outflows well over the
USD500bn mark, and channelled some of that money into the major bond
fund groups, diversified equity funds and several major sector fund
groups.
All equity funds took in USD3.38bn for the week while all bond funds collectively absorbed USD5.31bn.

With two weeks of 2009 to go, combined monthly and weekly data
points to record setting inflows for global emerging markets, Asia
ex-Japan and Latin America equity, commodity sector and US, global and
high yield bond funds, the first yearly inflow for Europe equity funds
in over seven years and record outflows for US equity and money market
funds.

Flows into the combined emerging market equity funds surpassed the
USD75bn mark in mid-December, well beyond the previous record of
USD54bn set in 2007. But flows slowed appreciably to USD571.4m in the
week ending 16 December as investors waited for clues about the US
Federal Reserve’s policy in early 2010 and for Dubai World’s debt
problems to play out.


GEM and Asia ex-Japan equity funds did absorb USD404m and USD301m
respectively, but Latin America equity funds posted outflows for only
the second time in the past three months and net redemptions from EMEA
equity funds hit a six week high. Year-to-date GEM and Asia ex-Japan
Funds are already comfortably ahead of the totals for their previous
best years, with the former having now absorbed over USD39bn and the
latter USD24.7bn versus the USD23.9bn and USD20.3bn they took in during
2007.

Latin America funds are within striking distance of the USD10.83bn
they absorbed in 2007, but lost ground this week as concerns generated
by Mexico’s credit rating downgrade swamped the region’s commodity
story.

Brazil equity funds did post inflows for the 13th time in 14 weeks,
taking YTD inflows deeper into record setting territory, as did funds
dedicated to the other three BRICs markets. India equity funds absorbed
USD64m for the week, nudging them ahead YTD of the USD3.4bn they
tallied in 2005, and the USD59m taken in by Russia equity funds was
sufficient to move them YTD ahead of the USD1.6bn they took in last
year. China and dedicated BRIC equity funds also look set to establish
new inflow records this year.

EMEA equity funds, the one emerging markets fund group not expected
to have a record setting year, suffered during the latest week from its
exposure to the Middle East and from another bout of jitters about the
willingness and ability of banks based in the big developed European
countries to keep lending to emerging European businesses and consumers.

Flows into EPFR Global-tracked Europe, Japan and US equity funds
remained subdued during the second week of December ahead of the US
Federal Reserve’s meeting, with safe haven flows into these fund groups
tempered by concerns about the state of public finances Japan, the US
and Eurozone.
Flows into Japan Equity Funds did, however, hit a YTD high of
USD248m despite the buffeting business confidence in that country has
taken from the strength of the yen and the uncertainty about the new
government’s policymaking. While this fund group is on track to end the
year with net outflows of around USD7.5bn, that will be less than a
third of the record outflows they posted in 2007.

Europe equity funds, which have posted seven straight years of
outflows since 2002, are creeping towards the year’s end with about
USD2bn of net inflows. But headwinds are building again as German
manufacturing stumbled in November, the credit rating agencies pull out
the knives and a major Austrian bank was nationalized.

US equity funds, meanwhile, snapped a three week losing run as they
absorbed USD1.69bn for the week. Those inflows, some of which may be
tied to investors seeking arbitrage opportunities from the quarterly
rebalancing of major exchange-traded funds, will do little to prevent
2009 going in the books as the worst in flow terms for this fund group.
YTD outflows now stand at USD84.7bn compared to the USD74bn in net
redemptions recorded last year.

Global equity funds, one of the two major diversified fund groups
that invest primarily to developed markets, continued their strong
finish to the year as they absorbed another USD902m that took YTD
inflows over the USD17m mark. That is still well short of the USD87bn
this fund group took in during 2007. Pacific equity funds posted
inflows of USD21m for the week but look set to fall just shy of the
USD1.56bn inflow record they set in 2006.
Flows into EPFR Global-tracked commodity sector funds rebounded
during the second week of December, with these funds taking in another
USD683m as YTD inflows climbed towards the USD17bn mark, and utilities
sector funds had their best week of the year as they took in USD525m.

Regulatory and legislative trends continue to shape year-end flows,
with utilities and energy sector funds benefiting from the perception
that the Copenhagen Climate Summit will not result in the immediate
application of more stringent regulations, while financial sector funds
posted outflows for the fifth time in seven weeks as European finance
ministers took aim at bonus payments. Elsewhere, technology sector
funds enjoyed their best week since late July, taking in a net USD226m,
and real estate sector funds snapped their three week outflow streak as
investors committed USD210m.
EPFR Global-tracked bond fund groups sustained the momentum they
have built up since the second quarter going into the final two weeks
of the year. During the week ending 16 December global bond funds took
in USD1.85bn, their 36th consecutive week of inflows and the 14th
straight week they have absorbed over USD1bn.

US bond funds took in USD2.48bn as YTD inflows moved over the
USD140bn mark. Flows were strong again into the municipal bond funds,
the year to date fund flow leader with record inflows of USD31.2bn. But
investors also displayed their risk aversion by funnelling money into
short term bond funds, with nearly USD18bn of YTD inflows, short term
government bond funds and inflation protected funds. The latter fund
group is sitting on inflows of nearly USD12bn this year. The
intermediate term bond funds, which invest in a mixture of corporate
and government securities, and intermediate term government bond funds
were the only US bond fund subgroups seeing net outflows this week.
These two groups have also fared the worst in fund flow terms among US
bond funds this year, with intermediate term government funds posting
year to date outflows of USD2.6bn.

Also setting a record are the high yield bond funds which now look
set to end the year having absorbed some USD30bn in fresh money. The
one bond fund group that probably will not set a record in 2009,
emerging markets bond funds, remains on track for its second best year
after 2005 with the latest week seeing another USD522m flowing into
them. Funds focuses on local currency debt again accounted for the bulk
of the week’s inflows. Balanced funds, which invest in both bonds and
equities, continued their strong run as investors committed another
USD344m.

Batman wrote:

Record setting Year for many Fund Groups Enters Home Stretch
Global equity markets moved
sideways in mid-December as investors began to close the book on 2009
and think about the prospects 2010, according to research by EPFR
Global.
The book on 2009 makes for generally good reading, with many fund
groups posting good to excellent performance numbers and on course for
record setting years in terms of attracting fresh money.
But 2010 promises to be another testing year as fiscal and monetary
stimulus in many of the world’s major economies begins to wane, says
EPFR Global.

Much of the week ending 16 December saw choppy fund flows, but
towards the end of the week, Abu Dhabi’s support of Dubai helped
investors regain some of their risk appetite.

Investors pulled another USD37.5bn out of money market funds between
14 and 16 December, pushing year-to-date outflows well over the
USD500bn mark, and channelled some of that money into the major bond
fund groups, diversified equity funds and several major sector fund
groups.
All equity funds took in USD3.38bn for the week while all bond funds collectively absorbed USD5.31bn.

With two weeks of 2009 to go, combined monthly and weekly data
points to record setting inflows for global emerging markets, Asia
ex-Japan and Latin America equity, commodity sector and US, global and
high yield bond funds, the first yearly inflow for Europe equity funds
in over seven years and record outflows for US equity and money market
funds.

Flows into the combined emerging market equity funds surpassed the
USD75bn mark in mid-December, well beyond the previous record of
USD54bn set in 2007. But flows slowed appreciably to USD571.4m in the
week ending 16 December as investors waited for clues about the US
Federal Reserve’s policy in early 2010 and for Dubai World’s debt
problems to play out.


GEM and Asia ex-Japan equity funds did absorb USD404m and USD301m
respectively, but Latin America equity funds posted outflows for only
the second time in the past three months and net redemptions from EMEA
equity funds hit a six week high. Year-to-date GEM and Asia ex-Japan
Funds are already comfortably ahead of the totals for their previous
best years, with the former having now absorbed over USD39bn and the
latter USD24.7bn versus the USD23.9bn and USD20.3bn they took in during
2007.

Latin America funds are within striking distance of the USD10.83bn
they absorbed in 2007, but lost ground this week as concerns generated
by Mexico’s credit rating downgrade swamped the region’s commodity
story.

Brazil equity funds did post inflows for the 13th time in 14 weeks,
taking YTD inflows deeper into record setting territory, as did funds
dedicated to the other three BRICs markets. India equity funds absorbed
USD64m for the week, nudging them ahead YTD of the USD3.4bn they
tallied in 2005, and the USD59m taken in by Russia equity funds was
sufficient to move them YTD ahead of the USD1.6bn they took in last
year. China and dedicated BRIC equity funds also look set to establish
new inflow records this year.

EMEA equity funds, the one emerging markets fund group not expected
to have a record setting year, suffered during the latest week from its
exposure to the Middle East and from another bout of jitters about the
willingness and ability of banks based in the big developed European
countries to keep lending to emerging European businesses and consumers.

Flows into EPFR Global-tracked Europe, Japan and US equity funds
remained subdued during the second week of December ahead of the US
Federal Reserve’s meeting, with safe haven flows into these fund groups
tempered by concerns about the state of public finances Japan, the US
and Eurozone.
Flows into Japan Equity Funds did, however, hit a YTD high of
USD248m despite the buffeting business confidence in that country has
taken from the strength of the yen and the uncertainty about the new
government’s policymaking. While this fund group is on track to end the
year with net outflows of around USD7.5bn, that will be less than a
third of the record outflows they posted in 2007.

Europe equity funds, which have posted seven straight years of
outflows since 2002, are creeping towards the year’s end with about
USD2bn of net inflows. But headwinds are building again as German
manufacturing stumbled in November, the credit rating agencies pull out
the knives and a major Austrian bank was nationalized.

US equity funds, meanwhile, snapped a three week losing run as they
absorbed USD1.69bn for the week. Those inflows, some of which may be
tied to investors seeking arbitrage opportunities from the quarterly
rebalancing of major exchange-traded funds, will do little to prevent
2009 going in the books as the worst in flow terms for this fund group.
YTD outflows now stand at USD84.7bn compared to the USD74bn in net
redemptions recorded last year.

Global equity funds, one of the two major diversified fund groups
that invest primarily to developed markets, continued their strong
finish to the year as they absorbed another USD902m that took YTD
inflows over the USD17m mark. That is still well short of the USD87bn
this fund group took in during 2007. Pacific equity funds posted
inflows of USD21m for the week but look set to fall just shy of the
USD1.56bn inflow record they set in 2006.
Flows into EPFR Global-tracked commodity sector funds rebounded
during the second week of December, with these funds taking in another
USD683m as YTD inflows climbed towards the USD17bn mark, and utilities
sector funds had their best week of the year as they took in USD525m.

Regulatory and legislative trends continue to shape year-end flows,
with utilities and energy sector funds benefiting from the perception
that the Copenhagen Climate Summit will not result in the immediate
application of more stringent regulations, while financial sector funds
posted outflows for the fifth time in seven weeks as European finance
ministers took aim at bonus payments. Elsewhere, technology sector
funds enjoyed their best week since late July, taking in a net USD226m,
and real estate sector funds snapped their three week outflow streak as
investors committed USD210m.
EPFR Global-tracked bond fund groups sustained the momentum they
have built up since the second quarter going into the final two weeks
of the year. During the week ending 16 December global bond funds took
in USD1.85bn, their 36th consecutive week of inflows and the 14th
straight week they have absorbed over USD1bn.

US bond funds took in USD2.48bn as YTD inflows moved over the
USD140bn mark. Flows were strong again into the municipal bond funds,
the year to date fund flow leader with record inflows of USD31.2bn. But
investors also displayed their risk aversion by funnelling money into
short term bond funds, with nearly USD18bn of YTD inflows, short term
government bond funds and inflation protected funds. The latter fund
group is sitting on inflows of nearly USD12bn this year. The
intermediate term bond funds, which invest in a mixture of corporate
and government securities, and intermediate term government bond funds
were the only US bond fund subgroups seeing net outflows this week.
These two groups have also fared the worst in fund flow terms among US
bond funds this year, with intermediate term government funds posting
year to date outflows of USD2.6bn.

Also setting a record are the high yield bond funds which now look
set to end the year having absorbed some USD30bn in fresh money. The
one bond fund group that probably will not set a record in 2009,
emerging markets bond funds, remains on track for its second best year
after 2005 with the latest week seeing another USD522m flowing into
them. Funds focuses on local currency debt again accounted for the bulk
of the week’s inflows. Balanced funds, which invest in both bonds and
equities, continued their strong run as investors committed another
USD344m.

Sorry Batman but can you give me a source for these? I'm just curious what website these are from. Thanks!

-Snapman

Gloom, But no Doom in '09
There was gloom, but not quite doom, for the hedge fund industry in
2009. Optimism, however, would have come at a premium-which is too bad,
really. All in all, the asset class made a good showing in 2009.

Check out The HFN Hedge Fund Aggregate Index. It gained 20.15%. Now the stock market did
fare better: the Nasdaq Composite Index is up 35% through November
while the S&P 500 Index gained 20%. But doubt about the fundamental
strength of the market has lingered, sentiment and government
intervention aside.


(Sidebar: That 20.15% gain? The highest annual gain for The
HFN Hedge Fund Aggregate Index since 2003, when it topped 23%. In 1999,
it returned more than 32%).

Exhibit B: Inflow. A ton of capital parked itself on the sideline after
2008, when The HFN Hedge Fund Aggregate Index lost 15.75%. But a
turnaround is afoot. Peter Laurelli, vice president of HedgeFund.net
owner Channel Capital, estimated $100 billion has come back to the
asset class, with inflow ticking up each month. The most common
estimate has $2 trillion invested in the industry. Not bad at all.

But behind the statistical data is that special "it" factor. The hedge
fund industry, as George Lucaci, senior managing director, Channel
Capital, has admonished, is not an "industry" at all. It is a talent
pool. Remember that mutual fund boom from the prior decade? The
portfolio manager-as-rock star phenomenon? Is there anybody left
willing to still buy into that shtick? All those people did was ride
the beta of a market bubble (the dot-com boom), until it crashed. Would
John Paulson do that? What about George Soros? What about anyone
targeting an alpha, rather than a beta-driven return?

In 2004, the hedge fund industry was a niche market. Going into 2010, it is the market. The place to invest. The
place to work. If the asset class started the decade in obscurity, it
will end it in the spotlight. Everyone is at least vaguely familiar
with the term hedge fund. "Financialization" of the economy, and
society itself, is here-and the asset class is its biggest, most talked
about signpost. Whether that talk is good or bad is a separate issue.

Scandal. That word has become synonymous with the hedge fund industry.
Bernard Madoff bilked $65 billion with his Ponzi scheme, a good bulk of
it came from within the hedge fund industry. Ralph Cioffi and Matthew
Tannin were pulled from the hedge fund program at defunct Bear Stearns
and dropped into a New York courtroom. Galleon Group is the biggest
insider trading scandal ever on Wall Street. "Naked shorting?" No
explanation needed. And all that was just 2009.

Still, the asset class is swimming the mainstream and hitting Main
Street. Citadel Investment Group is going into the investment banking
business. Barack Obama ran his White House campaign with a war chest
crammed with hedge fund money. Former first daughter Chelsea Clinton
got a job in the hedge fund industry. Heck, even David Letterman made
fun of his hedge fund manager on "The Late Show."

Jim Cramer was wrong (was he ever right about anything?). The "Mad
Money" host went on record claiming "hundreds" of hedge funds would go
bust in the third quarter of 2009. Did that happen? A new decade is on
the way. While the fate of the economy is unknowable, the primacy of
hedge fund investing is all but assured. In 1999, who would have
guessed it?

---

From HFN

Art Fund Closing Doors The first ever fine art hedge fund reportedly is closing, a victim of the global economic recession.


A meeting of U.K.-based Artistic Investment Advisors (AIA) is set for Jan. 12, 2010, according to The Financial Times.


The reason why you take Art History At Fordham is so you can evaluate art hedge fudns!



------------

AIA was the manager for The Art Trading Fund, a Guernsey-headquartered
fund, which was founded in 2007 with $10.2 million in assets under
management by Chris Carlson and Justin Williams. Art world magnate
Charles Saatchi was brought onboard as an advisor to the fund.

The fund invested in contemporary, impressionist and modernist art
genres. Its hedging strategy was to short companies that were
art-related.

But while art may have seemed like a safe bet in the global markets
run-up, 2008's great recession could not have been less unkind.

Carlson was at Deutsche Bank and UBS O'Connor before cofounding the
fund, while Williams had launched a number of businesses, including Fabric, a property magazine.

More news form the Asia HF world...


-Alex

Taken from HFN daily



----

Morgan Stanley Hires Lehman Asian Fundraiser Morgan Stanley reportedly has hired a former Lehman executive to raise money in Asia for hedge fund clients.

Jenkin Leung, who was with Lehman Brothers' institutional sales group,
has come on board with Morgan Stanley, according to Reuters. HedgeFund.net could not reach the bank's Asian offices for further comment.


Leung also headed up Hong Kong hedge fund firm Hindsight, Reuters said.

The group Leung is joining is headed up by David Barrett and has staff
in global financial centers of New York, London, Hong Kong and Dubai.
The unit is seeking to raise money for hedge fund clients from large
institutional investors including pension plans and sovereign wealth
funds.







AND






GLG Hong Kong Site A Done Deal
GLG Partners went ahead with its planned Asia office Thursday in order
to establish itself in a region the hedge fund industry has judged to
be a wide open market.

The London company, known as a premier hedge fund operation in Europe,
said it opened an office in Hong Kong, a global city with an economy
separate from mainland China.


GLG also said it expected to open a so-called representative office in Beijing.


Anuj Mutereja, a portfolio manager, is relocating to Hong Kong, the company noted.


A week ago, Soros Fund Management, run buy outspoken hedge fund
legend George Soros, opened a site in Hong Kong. The company,
headquartered in New York, is considering putting James Chang and Dai
Jixin in charge of the operation.

A business fascinated with global expansion, the hedge fund industry,
righting itself from its worst ever annual performance in 2008, is
talking up China, as well as Asia, as a massive untapped customer base.


But the asset class has experienced lukewarm success at
breaking into the region. Citadel Investment Group, Deephaven Capital
Management, Och Ziff Capital Management and Ramius have been forced to
decrease their presence or close up shop altogether in Hong Kong.

Avenue Capital Management, Man Group and SAC Capital also have business in the city.


GLG, a publicly traded company, has expanded from its stalwart hedge fund business into traditional investment management.

It will take time for the Asian market to mature. However, By the time we have the funds to expand their, it should be ready. I talked to my business Policy professor about this exact thing.

Early note with December highlights, comments on 2009 hedge fund asset flows and performance and detailed early
estimates for December. A full report will be available later in the month.
Please feel free to contact the HFN Research Division regarding asset flows, industry/regional/strategy peak analysis
(high water marks) or general performance and industry trend related trends at +1.212.230.2216
December Highlights:
• The HFN Hedge Fund Aggregate Index was +1.33% in December and +19.42% YTD.
o The HFN industry benchmark is only 0.43% below its peak set in
October 2007
Hedge fund assets rose slightly in December supported by performance; investor flows slightly negative.
• Total estimated assets increased 0.15% to $2.034 trillion.
• Investors redeemed an estimated net $4.07 billion from hedge funds in December, performance
added $7.21 billion.
• Investor flows were negative for the first time in 8 months.
• The Core Growth Rate (% change in assets due solely to investor flows) was -0.20% in December.
Hedge fund performance was again positive in December driven by distressed and emerging market focused
strategies. Equity long/short strategies outperformed positive major equity indices for the first time since May 2008.
Investor flows in December were near flat and the slight outflow is more likely due to seasonal/year end related
redemptions and not meaningful reversal of the trend of inflows which began in May 2009.
Overview of 2009:
• Hedge fund performance in 2009 was best since 2003 (+21.19%) and second best in ten years
(+30.20% in 1999)
• Hedge fund assets ended 2009 +5.29%, an increase of $101.36 billion from the end of 2008.
o Performance increased assets an estimated $302.00 billion.
o Investor redemptions outpaced allocations by an estimated $200.64 billion.
o Redemptions early in 2009 were large; an estimated $315.29 billion was net redeemed in
the first four months of the year.
o Investor outflows turned positive in May 2009 and remained positive until December. During
this span, investors added an estimated $114.65 billion to hedge funds.
• Smaller funds outperformed larger funds during the year. The trend was magnified for equity focused
strategies.
o Median performance from funds with less than $20mm in AUM beginning 2009 was 13% vs.
10% for funds with greater than $500mm in AUM to begin the year.
o Median performance from EQ focused strategies with less than $20mm in AUM beginning
2009 was +16% vs. 5% for EQ focused funds with greater than $500mm in AUM to begin
the year.
• Outperforming Benchmarks in 2009 (2008 performance in parentheses):
o HFN Mortgages Index: +57.88% (+20.41%)
o HFN Convertible Arbitrage Index: +45.01% (-24.40%)
o HFN Emerging Markets Index: +44.85% (-39.51%)
o HFN Small/Micro Cap Index: +38.42% (-30.37%)
o HFN Energy Sector Index: +37.61% (-38.92%)
o HFN Event Driven Index: +32.35% (-20.48%)
o HFN Distressed Index: +32.08% (-27.10%)
• Underperforming Benchmarks in 2009:
o HFN Short Bias Index: -19.13% (+30.60%)
o HFN CTA/Managed Futures Index: +1.08% (+10.98%)
o HFN Market Neutral Equity Index: +5.19% (-3.40%)
o HFN Asset Based Lending Index: +6.95% (+5.28%)
o HFN Merger/Risk Arbitrage Index: +9.31% (-2.89%)
o HFN Macro Index: +10.40% (-1.71%)
Details from December:
Assets:
• Equity and Commodity focused fund allocations remained positive in December while broad Fixed
Income strategies experienced a net outflow.
• Flows to Corporate Bond focused strategies were positive.
• Distressed, Global Macro and Merger Arbitrage strategies all had notably strong inflows in December.
• Flows for emerging market focused funds turned negative following two straight months of
decreasing growth.
Performance:
Regional/Country Specific Exposure:
Funds investing in Russia and India produced the best average performance in December. Funds investing in Japan
surged to end the year and Latin America focused strategies slightly lagged those investing in developed markets.
HFN Russia Index: +4.88% in December, +65.83% in 2009
HFN India Index: +4.38% in December, +53.69% in 2009
HFN Japan Index: +2.79% in December, +6.37% in 2009
HFN U.S. Index: +2.29% in December, +20.90% in 2009
HFN Europe Index: +2.13% in December, +16.80% in 2009
HFN Latin America Index: +2.10% in December +46.77% in 2009
HFN Brazil Index: +2.05% in December, +51.86% in 2009
HFN Australia Index: +2.04% in December, +30.81% in 2009
HFN Emerging Markets Index: +3.58% in December, +44.85% in 2009
Fixed Income (FI) Strategies
The average performance from fixed income focused strategies was +2.65% in December. Performance was led by
distressed debt related strategies.
HFN Distressed Index: +4.81% in December, +32.08% in 2009
HFN Fixed Income Arbitrage Index: +0.74% in December, +19.67% in 2009
Equity (EQ) Strategies
The average performance from equity focused strategies was +2.35% in December. Energy and Healthcare focused
strategies outperformed while Finance sector funds lagged.
HFN Long/Short Equity Index: +2.59% in December, +22.62% in 2009
HFN Market Neutral EQ Index: +0.97% in December, +5.19% in 2009
HFN Short Bias Index: -2.64% in December, -19.13% in 2009
HFN Small/Micro Cap Index: +3.55% in December, +38.42% in 2009
HFN Healthcare Index: +3.51% in December, +29.14% in 2009
Commodity and Foreign Exchange (FX) Related Strategies
CTA/Managed Futures performance was volatile in December with large positive and negative returns being reported.
The result was broadly lower performance. Pockets of positive returns came from managers focusing on Metals and
Energy markets while FX and even Financial Futures funds reported negative results.
HFN CTA/Managed Futures Index: -2.26% in December, +1.08% in 2009
Commodity - Metals: +1.39% in December, +51.15% in 2009
Commodity – FX: -2.01% in December, +1.35% in 2009
Commodity – Financial Futures: -0.43% in December, +4.60% in 2009

Learning whose who... and a little fund history

---

Lasry Thinking Big For New Avenue Fund
Marc Lasry is a think big kind of guy, or maybe just a little nostalgic.

His Avenue Capital Group has set a lofty fundraising goal: $3 billion for a hedge fund still in the pipeline. A report said the upcoming fund is a distressed strategy; and its multibillion dollar target is right out of the heyday of the hedge fund gold rush-a time when Convexity Capital and Eton Park Capital Management had amassed a war chest of equity by the time they opened.

In 2005, Goldman Sachs Group wunderkind Eric Mindich started Eton Park with $3.5 billion. That same year, Jack Meyer, endowment fund head at Harvard University, started Convexity Capital with $4.8 billion. Dinakar Singh and Vikram Pandit also made a big splash in '05: Singh opened TPG-Axon at $2.8 billion while future Citi boss Pandit hauled in $2 billion in launching Old Lane.

We all know what happened next. The hedge fund industry became a multi-trillion-dollar free-for-all, outperformance tapered off, and the subprime mortgage collapse spurred a global credit crisis that incinerated Wall Street. But by then, the hedge fund gravy train had left the station anyway.

But Lasry is a cagey hedge fund operator and pioneering distressed player. After graduating from New York Law School, Lasry got his distressed know how as a Big Apple bankruptcy lawyer. He caught the attention of Bass family majordomo Robert Bass, who persuaded Lasry to manage some of his fortune. In 1995, Lasry opened Avenue Capital, and would sell a piece of his company to Morgan Stanley for $275 million.

Though Avenue Capital dropped from $20 billion in managed capital to $17 billion in 2009, Lasry and Co. hung tough. Its flagship vehicle gained 60% last year, according to Bloomberg. The New York hedge fund now has $18.5 billion under management. Furthermore, distressed, an unpopular strategy of late, might be coming back in vogue.

"Distressed is due," said George Lucaci, senior managing director at HedgeFund.net owner Channel Capital Group. "Performance has been spotty for so long, but the current market volatility is making it an ideal strategy. They will have to watch the government closely to be successful."

The HFN Distressed Index gained 1.42% in January. In 2008, when the asset class, measured on the HFN Hedge Fund Aggregate Index, had its worst ever annual performance with a 15.75% loss, distressed bottomed out, dropping 27%.

Pulling off a multibillion dollar fund launch would cement Lasry as a top hedge fund manager. According to data culled from HedgeFund.net coverage, $100 million in equity is a big launch. The halcyon era of hedge fund fundraising is over, but for Lasry, living in the past is a good business decision.

Todd Fogarty, representing Avenue Capital, declined comment.

When Legends fall,

even the best have good days and bad days...

The days of the cubs is becoming a page in the history books! Theres a whole new breed out there stemming from the 08 crises...

Lets see what 2010 brings!


-----

Tiger Cub Ott
Done at Viking Global After Poor Q1
A mediocre first quarter preceded a shakeup at Viking Global Investors
as Chief Investment Officer David Ott relinquished his management role.


A letter from Chief Executive Officer Andreas Halvorsen,
cofounder with Ott of Viking Global, said Ott resigned so he could
spend more time with his family.


His portfolio, Halvorsen wrote, has been divvied up, with limited liquidation.


A "negative long-short spread" hurt Viking Global, Halvorsen
explained, adding his fund posted a 0.1% Q1 loss and tanked on
Mastercard, where it had a big position. The fund liquidated its entire
Mastercard stake in March, he wrote.

Halvorsen and Ott worked together at Tiger Management, headed by hedge
fund legend Julian Robertson. In 1999, Halvorsen and Ott, along with
Brian Olsen, started Viking Global, now a $12 billion hedge fund, in
Greenwich, Conn.


Halvorsen praised Ott for his "perceptive interpretation" and
"awesome processing power," and characterized Ott as his "trusted
friend."


Olsen left in 2005, later suing Viking Global for wrongful
termination. He lost his case in 2009. Ott, meanwhile, will remain at
Viking Global as an advisor.

Harbinger NYT Selloff an Ongoing Saga
Harbinger Capital Partners in April continued its New York Times Co. selloff, further trimming ownership of its most prestigious, but most troublesome, holding down to 9.4%.

The selloff marked a second reduction in its Times Co. position in a month; the hedge fund cleaved its stake to 11.7% in March.

Being a Times Co. stakeholder made Harbinger, a $10 billion New York hedge fund, visible to the general public in a manner it could have never achieved prior.

Harbinger, dubbed a "Midas of Misery" in a BusinessWeek article for its reputation as a crusading activist shareholder, was outspoken in its insistence Times Co. revamp its outmoded business model to leverage online media. A hard charging campaign against management gained Harbinger board presence.

Harbinger founder Philip Falcone, meanwhile, watched his star rise. As Harbinger spent $500 million building out a 20% stake in Times Co., Falcone, a savvy trader, made a smart bet against subprime mortgage, then appeared on Capitol Hill to go to bat for the asset class.

By mid 2008, Harbinger had amassed $25 billion in capital, and hired third-party marketer Park to help it get bigger. But a reversal of fortune-due in no small part to its stake in Times Co.-was afoot.

The newspaper business began a rapid downturn in 2008 amid a worsening economic recession. Storied newspaper publisher Times Co., owner of The Boston Globe as well as its namesake paper The New York Times, lost advertising revenue to Internet-based competition, and seemed unable to keep pace with the evolution of online media.

Meanwhile, Harbinger lost investment capital and respect in a drawn out proxy fight against Times Co. management. Media punditry likened its investment in the publisher as a ruse to gain attention. Harbinger held firm, demanding Times Co. spin off, while refusing an offer from record label boss David Geffen as well as interest from Internet search engine Google.

But by 2009, it was clear the Times Co. investment had backfired on Harbinger. The fund had reportedly paid $20 a share for a stock which, as of Monday, April 26, was trading at $11.50 apiece on the New York Stock Exchange (it had a 52-week low of $4.60). Smack dab in the worldwide financial crisis, Harbinger watched its asset base drop to $9 billion. The fund is going to relinquish its last seat on the board.

The Times has meanwhile struggled to hold on to its rank as No. 1 newspaper. Rupert Murdoch, News Corp. mogul, on Monday unveiled a "Greater New York" sector of The Wall Street Journal in hope of elevating WSJ to the top slot. The paper was handed out for free around New York Monday.

The Journal has also managed to out earn The Times in ad revenue, according to Reuters, with a Journal official claiming ad revenue is down 12% for Times Co. in the latest quarter, while revenue at WSJ is up 25%. Analyst sentiment on Wall Street has noted News Corp., a diversified media company, can afford to offer cut rate advertising, giving it an advantage over Times Co.

A source within Harbinger told HedgeFund.net reducing its NYT exposure is part of "standard portfolio management" and that the fund is committed to the publisher. A Harbinger spokesman had no comment. Abbe Serphos, a media contact for Times Co., declined comment.

==============================================================================

To quote my man Jay-Z. "Everyday a star is born." I remember in late 08 when Falcone was a superstar. Its crazy how fast things canchange in this industry. Not that 9 Billion is anything to sneeze at.

On April 21, 2010 with 3,434 hedge fund products reporting performance, the HFN Hedge Fund Aggregate Index was +2.87% in March 2010 and +2.89% year-to-date (YTD). The S&P 500 Total Return Index (S&P) was +6.03% in March and +5.38% YTD.

Hedge Fund Industry Highlights:
• Total industry assets increased an estimated 3.59% to $2.267 trillion in March. Net investor flows were positive, but the rate of growth was lower than February.
• The HFN Hedge Fund Aggregate Index reached a new historical peak level during the month. The prior peak was set in October 2007.
• Equity strategies again outperformed fixed income funds in March led by funds with emerging markets exposure.
• Investor allocations to merger arbitrage, global macro and fixed income arbitrage strategies continued to be above average. CTA/managed futures products had their first aggregate monthly inflow in the last four.

Hedge fund performance in Q1 2010 was the best first quarter since 2006 when funds went on to return an average of nearly 12%. Performance was driven primarily by rising equity markets, led by emerging markets and strong returns from funds investing in distressed assets.

The best performing primary strategy benchmark for the quarter was the HFN Small/Micro Cap Index, +7.39%, followed by the HFN Distressed Index, +6.21%. Funds of funds also produced positive returns during the quarter, but trailed hedge funds by more than 100 basis points.

Aggregate industry returns over the last twelve months are among the best stretches for the hedge fund industry in recent time. In almost 10 years, only one other 12-month period has produced better results than the current +22.69%; during the 12-month period ending March 2004 the industry was +23.99%.

Snapman wrote:

Batman wrote:

John Paulson: Housing Due to go up

John Paulson said he is expecting housing to rise 3% to 5% in 2010 and 8% to 12% in 2011, CNBC reported Monday. The business news channel said Paulson made his prediction during an investor conference call.

Paulson added $20 billion to his Paulson & Co. when he bet against housing. Paulson felt real estate was overvalued, and shorted subprime mortgage. His New York hedge fund went from $10 billion to $30 billion in 2008 because of his call. Paulson himself made $3.5 billion from his trade. In 2010, he has been bullish on gold, using it as a hedge against inflation.

In addition, Paulson selected the assets of a few CDOs

Details from April:
Regional/Country Specific Exposure:
Emerging market fund returns were above the industry's average in April for the 12th month in the last 14. Funds investing in India and Russia led EM returns. Funds investing in Brazil and across broad Latin American markets have underperformed on average in 2010. There have been some funds producing outstanding returns investing in LatAm markets, but as a whole the group has lagged other regional performance.

Emerging Market Benchmarks:
HFN Brazil Index: +0.20% in April, -0.06% in 2010
HFN China Index: +1.27% in April, -0.05% in 2010
HFN India Index: +4.40% in April, +7.36% in 2010
HFN Russia Index: +2.06% in April, +12.36% in 2010
HFN Latin America Index: +0.27% in April, +0.55% in 2010
HFN MENA Index: -0.33% in April, +8.90% in 2010
HFN Emerging Markets Index: +1.67% in April, 7.00% in 2010

Broad and Developed Market Benchmarks:
HFN Asia Index: +2.48% in April, +5.10% in 2010
HFN Europe Index: +0.84% in April, +4.03% in 2010
HFN North America Index: +2.23% in April, +5.74% in 2010
HFN Australia Index: +0.26% in April, +0.20% in 2010
HFN Japan Index: +3.14% in April, +9.57% in 2010
HFN U.S. Index: +2.22% in April, +5.55% in 2010

Fixed Income (FI) Strategies
The average performance from fixed income focused strategies was +1.24% in April. Corporate bond strategies again outperformed both mortgage and government bond related strategies, though all were higher on average for the month.

Corporate bond strategies: +2.13% in April, +4.80% in 2010
Government bond strategies: -0.77% in April, +2.33% in 2010
HFN Distressed Index: +1.37% in April, +7.72% in 2010
HFN Mortgages Index: +1.61% in April, +6.63% in 2010
HFN Fixed Income Arbitrage Index: +0.78% in April, +5.20% in 2010

Equity (EQ) Strategies
The average performance from equity focused strategies was +1.76% in April. Technology sector funds performed best followed by finance and healthcare sector focused funds while energy sector funds lagged the industry's average.

HFN Long/Short Equity Index: +1.69% in April, +4.74% in 2010
HFN Market Neutral EQ Index: +0.58% in April, +1.95% in 2010
HFN Short Bias Index: -1.64% in April, -7.12% in 2010
HFN Energy Sector Index: +1.44% in April, +5.20% in 2010
HFN Healthcare Sector Index: +1.55% in April, +5.59% in 2010
HFN Technology Sector Index: +3.96% in April, +6.85% in 2010

Commodity and Foreign Exchange (FX) Related Strategies
CTA/managed futures strategies continued to lag the rest of the hedge fund industry, on average, in April, but posted positive returns for the third straight month.

Agriculture sector focused funds: +1.85% in April, -0.82% in 2010
Foreign Exchange focused funds: +1.21% in April, +2.56% in 2010
Oil/energy related commodities: +2.08% in April, +2.75% in 2010
Financial Futures focused funds: +1.27% in April, -1.23% in 2010
Broad/Multi Sector CTA products: +0.33% in April, -0.54% in 2010
HFN CTA/Managed Futures Index: +1.18% in April, +0.65% in 2010

Please feel free to contact the HFN Research Division directly with any requests for additional information at: hfnresearch@hedgefund.net
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Russia and Japan look good so far in 2010. India had a strong month. I will be interested to see where all the em capital flows now that Chinese equities are in a cyclical Bear market

By Saijel Kishan

May 17 (Bloomberg) -- John Paulson, the hedge-fund manager who amassed a fortune by betting against U.S. mortgage markets, raised his stake in Bank of America Corp. to 1.7 percent during the first quarter.

His firm, Paulson & Co., bought 16.8 million shares of the Charlotte, North Carolina-based bank, bringing its holding to 167.8 million shares, according to a filing today with the U.S. Securities and Exchange Commission.

The value of Paulson’s holdings in financial companies rose 6.5 percent during the quarter, accounting for 45 percent of the holdings listed in the filing. Bank of America remains Paulson’s second-biggest position, with a market value of $2.99 billion. Paulson told clients in November that the bank’s shares may rise to $29.81 by December 2011. The stock closed at $16.35 today.

Paulson’s stake in Citigroup Inc. was unchanged at 506.7 million shares, according to the filing. The New York-based bank is the hedge-fund firm’s third-largest reported holding.

Paulson’s biggest position remained SPDR Gold Trust, which was also unchanged in the quarter. The hedge fund owned 8.5 percent of the exchange-traded fund, which buys bullion, according to the filing. Paulson increased his stake in Johannesburg-based AngloGold Ashanti Ltd. by 900,000 depositary receipts, holding 43.8 million at the end of the quarter.

Armel Leslie, a spokesman for New York-based Paulson, declined to comment. The firm manages about $35 billion in assets. The filing showed $21.2 billion in holdings.

Casino Stocks

Money managers who oversee more than $100 million in equities must file a Form 13F within 45 days of each quarter’s end to list their U.S.-traded stocks, options and convertible bonds. The filings don’t show non-U.S. securities or how much cash the firms hold.

Paulson acquired 40 million shares of MGM Mirage and 4 million of Boyd Gaming Corp. in the quarter, making the firm one of the biggest owners of the two Las Vegas-based casino companies. The firm is now MGM Mirage’s second-biggest shareholder, after founder Kirk Kerkorian, and Boyd Gaming’s fourth-largest owner, according to data compiled by Bloomberg.

MGM Mirage is the biggest casino owner on the Las Vegas Strip, with 10 resorts. Boyd operates casinos in Nevada, New Jersey, Mississippi, Louisiana, Indiana and Illinois.

Paulson sold its stake in Philip Morris International Inc., the world’s largest publicly traded tobacco maker.

Via HFN Daily

Ackman A Citi Believer?
William Ackman revealed he has bought stock in Big Four bank Citigroup Inc.

He told a conference in New York Wednesday his Pershing Square Capital Management held a 150 million share stake in Citi, Reuters reported.

But Ackman, giving a speech, told an audience he did not "have time to talk about it," Reuters said.

In owning Citi, Ackman is a marked contrast to George Soros.

Soros, a hedge fund icon, sold Citi in the first quarter. He had bought up Citi in late 2009, and is expected to have netted a profit. Citi had been the fifth largest holding for his Soros Fund Management, which owned a 97 million share piece of Citi worth $313 million.

Soros purchased Citi at $2 a share and might have sold around $4, according a Reuters report.

But Ackman as a Citi shareholder is in good hedge fund company.

John Paulson, who bet on a banking turnaround, is a 500 million share Citi stakeholder. Citi, which hit a peak 52 week range of $5.43, is trading at $4.02 (NYSE: C).

Paulson & Co. is the biggest shareholder in Citi as well as Bank of America. Still, Paulson can be bearish on banking; he unloaded his Fifth Third Bancorp stock.

Ackman is a noted activist shareholder who has pressured fast food empire McDonalds Corp. and retailer Target Corp. Soros made his claim to hedge fund fame with a bet against the pound which netted him $1 billion. Paulson made his hedge fund a $20 billion profit in his bet against subprime mortgage.

ASIAN HF INDUSTRY GROWNING:

Prana Move East A Growth Driver
For Prana Capital, an old real estate mantra-location, location, location-is a cutting edge hedge fund movement.

Prana is expecting to double its asset base with its relocation from London to Singapore. Its $125 million macro hedge fund should increase to $250 million in 2011, founder Peregrine Cust told Bloomberg.

The company had begun contemplating moving its investment team in January.

Growth in Asia prompted Cust to re-up in Singapore. A Barclays review claimed hedge fund inflow in Asia could reach $8 billion in 2010.

D.E. Shaw & Co., GLG Partners, Soros Fund Management and York Capital are each planning to build out their Asia profile, with Fortress Investment Group considering giving its Asia business a second go, as is Milwaukee-headquartered Stark Investments, which lost its Asia team with spinout Orchard Capital. Personnel from Citadel Investment Group and Polygon Investment have also set up shop in Asia.

Investor demand in the region is spurring its hedge fund growth. A Credit Suisse Group investor report noted 61% plan to invest in Asia.

Joining Cust in Singapore is research boss Jason Roberts, analyst Srina Patel and trader Mihail Nedev.

Cust began his hedge fund career as a analyst at Odey Asset Management. He began managing his own capital in 2000 and opened Prana Capital in 2005.

The Merry Month of May Overall Down



---
News Headlines
May is Worst For Hedge Funds So Far in 2010
It may be the merry month of May for some, but not for the hedge fund industry.

In fact, it was the worst month for the asset class so far in 2010.

The HFN Hedge Fund Aggregate Index was down 2.74% in May, although it was up 1.03% year-to-date.

The only other down month this year so far was January: -0.65%.

That didn't mean that other investment indices fared much better in May, when fears of a European debt crisis and a surprise "flash crash" at the beginning of the month made for extremely volatile markets.

The Dow Jones Industrial Average was down 7.92% in May (-2.79% YTD), while the S&P 500 was down 8.20% (-2.30% YTD) and the NASDAQ Composite Index was down 8.29% (-0.53% YTD).

Bonds, however, performed well as U.S. Treasuries increased on the back of the fall in equities. The Barclays Aggregate Bond Index was up +0.84% in May and +3.74% YTD.

Short bias was one of the few strategies that made out in May, up 4.86% and -4.17% YTD.

Grange Johnson, founder of LaGrange Capital Management, says the fact that his firm came in heavily short in May helped them to survive the rocky markets.

Going into May, Johnson says, the market had recovered substantially "but it still had feet of clay."

Other strategies fared less well in May. Long-short was down 3.91% (+0.03% YTD). Distressed was down 2.08% (+6.08% YTD). Macro was down 0.41% (+1.56% YTD).

Emerging markets didn't escape the debacle in the world's equities markets. The HFN Emerging Market Index was down 5.57% (+1.02% YTD).

HSBC Private Bank said in a statement Monday, that, although it reduced its exposure to global equities on April 21, it still believed hedge funds were well positioned to profit from current market conditions and higher volatility.

The private bank particularly likes macro and distressed.

"Hedge funds are traditionally well placed to look at relative value between assets and to exploit pricing anomalies," said Fredrik Nerbrand, HSBC Private Bank head of global strategy. "They also tend to be good at taking advantage of higher volatility in the markets, which we are currently observing."

Johnson says that recent market volatility may reflect the trauma of the financial crisis of 2008 and 2009.

"I think it's one of these markets where it gyrates widely around no news," he says.

Also weighing on the hedge fund industry is the threat of more onerous regulation. The U.S. Congress is expected to pass a bill requiring hedge funds with more than $100 million in assets under management to register, as well as exact more stringent reporting requirements.

Over in Europe, anti-private investment countries like Germany and France are trying to argue the rest of the E.U. into making it hard for non-E.U. hedge funds to attract European investors. Although the U.K. (where most European hedge funds are headquartered) and the U.S. have entered their protests against the protectionist stance, the likelihood is that some version will be in the final legislation.

Despite threatened legislation and jittery markets, Johnson says he believes the macro numbers are fairly good.

"I'd argue that, at this point, we've seen a pretty robust and substantial market correction," LaGrange says. "I don't think macro conditions are nearly as bad as they were."
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GLG Macro Fund up in May
As one of the few success stories in an otherwise down May, GLG Partners' new macro fund was reportedly up in May.

The fund, which was launched a year ago, was up 8% last month, according to a Financial News report.

That contrasts with what happened to most of the asset class in May as a European national debt crisis on and the so-called "flash crash" adversely impacted most strategies.

The HFN Hedge Fund Aggregate Index was down 2.74% in May (+1.03% year-to-date). The HFN Macro Index was down 0.41% in May (+1.56% YTD).

Driss Ben-Brahim, formerly of Goldman Sachs, and Jamil Baz from PIMCO co-manage the GLG macro fund.

GLG, which has about $24 billion in assets under management, was acquired last month by hedge fund behemoth Man Group in a deal valued at about $1.6 billion.

The combined firms will have about $63 billion in AUM.
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Swiss fund assets down as investors flee equities
Mon, Jun 14 2010
* Equities assets slump after dismal May
* Inflation fears boost precious metals funds
ZURICH, June 14 (Reuters) - Swiss mutual fund assets fell for the first time in half a year in May as the euro zone debt crisis impelled investors to pull money from equities and seek safety in gold and bonds, Lipper data show.
Outflows came to over 5.1 billion Swiss francs ($4.43 billion) for the month, with 4.9 billion francs gushing from equities alone.
"Investors' behaviour showed strong correlation to equity markets development in May," said Otto Kober, head of methodology at Lipper, a Thomson Reuters company.
"As a result Swiss equity funds suffered from extended outflows, which combined with a decline in equity markets and a depreciating euro to produce the first fall in assets under management in six months," Kober said.
Total bond assets leapfrogged equities for the first time in a year as risk aversion soared on the back of May's dismal equities markets performance. Swiss funds now hold about 196 billion francs in bonds, with 184 billion francs in equities.
Money market assets also came under pressure, with investors pulling almost 1.9 billion francs, while the biggest inflows went into "other" assets, mainly comprising hedge funds and commodities, and bond funds.
"Investors switched from low-interest money market funds, where management fees destroy the tiny performance, into higher-yielding bond funds," Kober said.
"Commodities, especially physical precious metals funds, attracted net new money totaling 1.3 billion Swiss francs, certainly driven by rising inflation fears," he said.
The three largest mutual fund asset managers -- UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz)(UBS.N: Quote, Profile, Research, Stock Buzz), Credit Suisse (CSGN.VX: Quote, Profile, Research, Stock Buzz) and privately held partnership Pictet -- all had declines in total assets managed. ($1=1.152 Swiss Franc) (Reporting by Martin de Sa'Pinto; editing by Michael Shields)
Thomson Reuters 2010. All rights reserved. Users may download and print extracts of content from this website for their own personal and non-commercial use only. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters and its logo are registered trademarks or trademarks of the Thomson Reuters group of companies around the world.
Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
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Wow look at that everyone wants to be a hedgie these days... looks like we geting the new generation in with a lot of bankers (esp Goldy Heads) fleeing the seen. The alternative space is getting very crowded these days... its gonna be real hard to innovate. Once we get some academic heads to spew their spew and write their books on blah blah, we will see HF's as a real asset class...



-----


Former Goldman Risk Head Starting New Fund
A former head of risk management at Goldman Sachs is reportedly starting up his own hedge fund firm.

Gregg Weinstein, who was the global head of risk management at Goldman is hoping to launch event-driven RocWood Capital by the third quarter, according to a Bloomberg report.

Weinstein left Goldman in December.

RocWood will invest across the capital markets, according to someone familiar with its strategy. Although there is no target for fundraising, the strategy and infrastructure is such that the firm expects to be able to support significant growth, that person said.

A spokeswoman for RocWood said the firm could not comment on the report.

As proposed regulations loom that could restrict proprietary desks at the big Wall Street banks, many of Wall Street's traders have left to set up their own shops and Goldman has not been immune to that trend.

Gravelle Pierre, a former commodities trader for Goldman, told HedgeFund.net he was getting ready to open a $5 million macro hedge fund this month.

New Jersey-based G Capital, founded in 2009 by ex-Goldman trader Peter Gerhard and staffed with fellow Goldman-ites, recently got an investment from NewAlpha Asset Management, a Paris-based firm that invests in early-stage managers.

Via Reuters Via HFN DAILY

----


News Headlines
Hedge Fund Assets Could Be $3T by 2013
Hedge fund assets may well hit the $3 trillion mark as high net-worth individuals and institutional investors continue to turn to the asset class to help portfolio returns, an analyst reportedly told an industry conference Tuesday.

Speaking at the GAIM alternative investment conference in Monaco, Yariv Itah, a partner with advisory firm Casey Quick said he expects hedge funds to hit the $3 trillion mark as early as 2013, according to a Reuters report.

Although hedge funds, like most investment products, were hit hard by the 2008 recession, they have come back strongly. Pension funds in particular, have become more comfortable with hedge funds as important parts of an active portfolio, which, in turn, will help industry growth, Itah said.

Total industry assets were about $2.3 trillion by mid-April, according to HedgeFund.net.

Go to Reuters story.

The Hennessee Hedge Fund Index declined 1.35 per cent in June, bringing its year-to-date performance to +0.20 per cent.

The S&P 500 decreased 5.39 per cent in June (-7.57 per cent YTD), the Dow Jones Industrial Average declined 3.58 per cent (-6.27 per cent YTD), and the Nasdaq Composite Index fell 6.55 per cent (-7.05 per cent YTD).

Bonds advanced, as the Barclays Aggregate Bond Index increased 1.57 per cent (+5.33 per cent YTD), due to increases in treasuries, investment grade and high yield bonds.

“The rebound from the worst recession since the 1930’s faces added risks from Europe’s debt crisis causing managers to remain intently focused on Europe,” says Charles Gradante, co-founder of Hennessee Group. “Increased bank funding stress and declining liquidity have been the main catalyst for the recent correction in global risk assets. Managers question the ability of some EU governments to bail out their banks when they are having difficulty funding sovereign debt, as credit default swaps for sovereign debt have widened at the same pace as credit default swaps for bank debt.”

The Hennessee Long/Short Equity Index declined 1.70 per cent in June (-0.14 per cent YTD). The US equity markets plunged further in June as investors continued to flee risk assets due to growing doubts regarding the ongoing European sovereign debt crisis, the strength of the global economic recovery and high unemployment domestically.

Small cap stocks were hit particularly hard in June with the Russell 2000 Index down 7.9 per cent (-2.5 per cent YTD).

While all ten S&P 500 sectors finished the month in the red, recently released economic data, particularly non-farm payrolls, suggested the economic recovery could be losing steam and weighed heavily on the more cyclical sectors; the consumer discretionary and materials sectors were the largest decliners during the month, down 9.8 per cent and 7.1 per cent, respectively.

As was the case in May, hedge funds struggled to generate positive returns for investors due to the highly correlated, broad based sell off of risk assets during the month. That said, they still outperformed the broader indices on a relative basis. While valuations are beginning to look attractive, hedge fund managers have reduced risk and continue to emphasise capital protection due to ongoing macro issues and heightened volatility in the financial markets.

“I think managers are somewhat perplexed by the current investment environment. Many view stocks to be attractively priced with low price-to-earnings ratios. However, these PE multiples are lower than what one would expect given current interest rate. Recent earnings reports have been relatively good, and companies have provided somewhat optimistic guidance for the remainder of the year,” says Gradante. “However, on the other hand, managers are questioning what the true values of stocks are in an environment where most developed countries have insurmountable debt with a sovereign default being a real possibility and not just speculation.”

The Hennessee Arbitrage/Event Driven Index declined 0.67 per cent in June (+3.21 per cent YTD). Arbitrage and event driven managers experienced losses, as a flight to quality caused a re-pricing of risk assets. While funds have experienced losses in the last two months, several arbitrage strategies remain positive year-to-date.

Credit markets were positive, led by a rally in Treasuries. Investment grade and high yield bonds posted positive performance on a total return basis due to a positive carry even as spreads widened. During the month, the spread on the Merrill Lynch High Yield Index widened from 598 basis points to 713 basis points during the month, the highest level since December 2009. The spread of investment-grade corporate yields increased 50 basis points, from 150 basis points to 200 basis points.

The Hennessee Distressed Index fell 2.30 per cent in June (+3.87 per cent YTD). Distressed funds suffered in June as long portfolios experienced broad based declines. Managers have consolidated core risk positions and added protection during the sell off, but remain long biased, as is typical for the strategy. While the pace of U.S. corporate defaults has slowed dramatically in 2010, managers are optimistic on the opportunity set for new distressed opportunities over the next five years. Managers report that many companies that have refinanced debt maturities have only delayed their balance sheet problems. With a daunting maturity schedule for high yield debt and leveraged loans over the next five years, managers expect both long and short opportunities to emerge.

The Hennessee Merger Arbitrage Index advanced 0.49 per cent in June (+2.10 per cent YTD). Despite the equity market decline and volatility, managers experienced gains as they were highly hedged and several deals approached closure. Managers are finding some attractive arbitrage opportunities in strategic acquisitions by well financed acquirers. While managers have been optimistic, we have yet to see the significant pick up of M&A activity that many expected.

The Hennessee Convertible Arbitrage Index advanced 0.42 per cent (+1.80 per cent YTD) in June. During the month, it seemed that the selling pressure from May eased, but there was little new buying. Secondary cheapening in convertibles and a widening of credit spreads resulted in losses. Losses were offset by declining interest rates, positive cash flows, and higher volatility. The convertible space remained largely apathetic as sovereign, economic and regulatory concerns continued to weigh on investors.

The Hennessee Global/Macro Index fell 1.10 per cent in June (-1.93 per cent YTD). International equities declined as the MSCI EAFE Index fell 1.16 per cent (-14.72 per cent YTD) during the month. As was the case in the US equity markets, concerns about a global economic slowdown and sovereign debt in Europe remained the main focus for international markets. European and emerging markets held up relatively well in June, compared to the US markets; however, they are down significantly more on a year-to-date basis. Hedge funds benefited from conservative portfolios, as the Hennessee International Index fell 0.80 per cent (-0.02 per cent YTD).

The Hennessee Macro Index fell 1.60 per cent for the month (-0.40 per cent YTD). In recent months, macro managers have lowered risk and simplified portfolios. Many macro managers are positioned for the US to enter a deflationary period, which would lead to lower stock prices. Managers suffered losses in a crowded short position in long term treasuries, as prices rallied in a flight to quality. The ten-year treasury yield tumbled from 3.31 per cent to 2.95 per cent, falling below three per cent for the first time since April of 2009. Risk-averse investors continued to shift into precious metals, benefiting hedge funds, as a key macro theme has been long gold, which hit a record high in June.

Published on Hedgeweek (http://www.hedgeweek.com)
Home > Hedge funds down narrowly in first half of 2010
Hedge funds down narrowly in first half of 2010

By mkitchen
Created 12/07/2010 - 06:00

Hedge funds concluded the surprisingly volatile first half of 2010 with a decline of 0.81% for the HFRI Fund Weighted Composite Index, bringing first-half performance to a narrow decline of 0.18%.

After a quiet Q1, volatility increased significantly in Q2 with concerns about sovereign credit risk, currency policy adjustment, economic and energy market impact of the environmental disaster and concerns about slowing growth in both developed and emerging economies contributing to declines in global equity markets, a powerful late-quarter rally in US Treasury bonds and volatile directional moves in currency & commodity markets.

Equity Hedge was the weakest area of industry performance with the HFRI Equity Hedge (Total) Index declining 1.50% (YTD: -1.60%). Across EH sub-strategies, funds focused on Fundamental Value and Energy/Basic Materials were the weakest area of performance, with these declining by 2.05% and 1.95%, respectively. Equity Market Neutral and Sector: Technology/Healthcare posted more modest declines of 0.40% and 0.90% for June, respectively. Short selling funds were the lone positive contributor in EH, gaining 3.73%.

Relative Value Arbitrage was the strongest area of industry performance, with the HFRI Relative Value (Total) Index gaining 0.40% for June (YTD: +3.66%). Fixed Income exposure across sovereign, convertible, corporate and asset backed all posted gains in June, which were complemented by gains in Volatility and MLP-focused strategies; gains were driven by falling yields, increasing volatility and a sharp increase in Natural Gas.

The HFRI Macro (Total) Index declined by 0.23% in June, dropping YTD performance to 1.27%. Minimal gains in quantitative, trend following Systematic Diversified (+0.17%) strategies and Active Trading strategies only partially offset declines in Discretionary Thematic and Commodity Focused funds.

The HFRI Event Driven (Total) Index declined by 1.10% (YTD: +2.43%) with declines in Activist and Distressed/Restructuring (-0.94%) offsetting gains in Merger Arbitrage (+0.11%) on weaker corporate credit markets and generally wider risk arbitrage spreads.

The HFRI Emerging Markets (Total) Index posted a decline of 0.63% with gains in Latin America and Emerging Asia only partially offsetting declines in Russia and the Middle East.

Articles and Features
Copyright © 2009 Hedgemedia Ltd. All Rights Reserved
Source URL: http://www.hedgeweek.com/2010/07/12/53884/hedge-funds-down-narrowly-first-half-2010

June Not Coming Up Roses For Hedge Funds
For the second month in a row this year, hedge funds turned in a negative performance, although the asset class managed to pull it out over equity benchmarks in the first six months of 2010.

Early estimate for the HFN Hedge Fund Aggregate Index had it down 0.51% in June, but up 0.40% for the first six months.

That contrasted with the S&P 500 which was down 5.23% in June and 6.65% year-to-date.

The continued decline in the stock markets driven by uncertainty over financial reform, the European debt crisis and fundamental weaknesses in world economies hit equity and commodities strategies. Fixed income and FX strategies, however, acted as a counterbalance.

Equity strategies in general were down 1.08% in June (-0.42% YTD). The HFN Long-Short Equity Index was down 1.46% last month (-1.33% YTD).

Short bias, however did well in the down markets, up 4.11% in June and down 0.94% YTD.

Other equity benchmarks fared poorly in June. The Dow Jones Industrial Average was down 3.58% (-6.27% YTD) while the NASDAQ Composite Index fell -6.55% (-7.05% YTD).

Fixed income, on the other hand was +0.76% in June (+5.37% in 2010), with mortgage-focused funds leading the way: up 9.85% for 1H 2010 and +1.00% in June.

The Barclays Aggregate Bond Index was up 1.57% (+5.33% YTD).

The HFN CTA/Managed Futures Index was up 0.42% in June and down 2.05% in 1H 2010.

Although the HFN broad Asian index was down 1.28% in June (-1.47% YTD), China was up 1.98% (-5.46% YTD), bested only by Brazil which was +2.15% in June (-1.14% YTD.)

Himanshu Shah, president and chief investment officer of Shah Capital Management, tells HedgeFund.net that, on the fourth anniversary of his firm, they are holding up well, despite economists' concerns about a double dip recession.

"Growth is definitely decelerating from a heightened level in the first quarter, but we don't see a double dip at all," Shah says.

Shah Capital's bullishness on China hasn't let up, he says.

"We think the valuation is one of the lowest in the last five to six years, earnings growth is still very decent and so is the cash flow," Shah says. "We are still very positive on industrials and consumer discretionary because incomes are growing."

Plus, Shah adds, China's announcement in late June, ahead of the G20 meeting, that it would unpeg its currency from the U.S. dollar, allowing its currency to rise, would most likely work in the country's favor.

Hedge fund inflows in the first six months of 2010 increased 1.99% or $43.30 billion. But total industry assets fell about -0.76% in June to $2.21 trillion, the second monthly decline in a row and the first month of net investor outflows since December 2009.

Peter Laurelli, Vice President of Channel Capital Group, the parent company of HedgeFund.net, says, "Despite the net inflow from investors in the first half, the industry's growth has trended downward for several months in a row culminating in the first net outflow of 2010 in June."

Published on Hedgeweek (http://www.hedgeweek.com)
Home > Singapore’s hedge fund industry remains solid
Singapore’s hedge fund industry remains solid

By mkitchen
Created 15/07/2010 - 13:30

The Monetary Authority of Singapore’s annual survey has found that its hedge fund industry was able to weather the storm of 2009, with assets under management holding firm. The 2009 Singapore Asset Management Industry Survey found that whilst y-o-y the number of fund managers fell from 350 to 320, AUM remained at $42 billion. The survey suggests that following the 2008 financial crisis many investors turned to Asia, with Singapore remaining a key investment hub. “The profiles of hedge fund managers and the strategies employed by them in Singapore remained highly varied,” says the survey. “This diversification has helped to sustain the industry during the difficult period.”

Weekly Asia News (Friday)
Copyright © 2009 Hedgemedia Ltd. All Rights Reserved
Source URL: http://www.hedgeweek.com/2010/07/15/54635/singapore%E2%80%99s-hedge-fund-industry-remains-solid

Hedge Funds Coming Back in 2010
Hedge funds are regaining some of their fixed-income trading clout they lost during the worst of the financial crisis, according to a new report.

The past 12 months have seen a shift in hedge fund focus to more liquid credit products, according to the report from financial services consultancy firm Greenwich Associates.

The most obvious impact has been in hedge fund activity in U.S. Treasuries, with hedge fund trading volume in government bonds increasing 73% from 2009 to 2010.

The shift to liquid products reflects both changes in the firms' investment strategies as well as the liquidity from institutional investors, the report said.

The Greenwich Associates report was compiled from interviews with institutional investors active in fixed income.

In 2009, hedge funds generated only about 3% of trading volume in government bonds, the report said, while in 2010 the funds' share jumped to about 20%.

Despite the increased activity in more liquid products, hedge funds are most heavily represented in less liquid credit securities.

"Hedge funds account for approximately 90% of total trading volume in distressed debt, more than half of trading volume in leveraged loans, and more than a quarter in emerging markets," said Greenwich Associates consultant Peter D'Amario.


VIA HFN DAILY

RAB Capital Closing Asian Fund
RAB Capital reportedly is closing its last Asian focused-fund as the hedge fund firm struggles with difficult circumstances.

The Pi investment group, headquartered in Hong Kong, has already left the firm, according to Bloomberg.

Last year, RAB sold another Asian-focused fund, Northwest Asset Management, back to its principals.

RAB said in a trading update in September that it expected its 2010 full-year results to be significantly below market expectations. The firm said it had initiated measures to reduce costs.

As of August, RAB's assets under management were $1.05 billion, a far cry from its $7 billion AUM at its height in 2007.

billion dollar discretionary funds are nice to hear about

Mans AUM Better than Expected in Fourth Quarter
Man Group posted a larger than expected increase in assets under management in the fourth quarter of 2010 in the wake of its recent $1.6 billion acquisition of GLG Partners.

AUM reached $68.6 billion on Dec. 31, which was up from $40.5 billion on Sept. 30, according to a statement from Man.

In October, Man acquired GLG, a discretionary fund used to bet on stock fluctuations, to take the focus off of their flagship fund.

The flagship fund, an investment program which uses computer algorithms to identify trades in futures markets, has yet to pass the level where it pulls in performance fees.

Balancing out some of the good news, Man's stock recently took a hit after a single investor redeemed $1 billion from a GLG long only fund because of too much European stock exposure, according to Bloomberg.

Shares dropped 10 pence as a result, but are now on the mend.

Man Group is the world's largest publicly traded hedge fund firm and is headquartered in London.

Fordham Fordham Fordham!


Govt Might Not Call Key Witness in Rajaratnam Trial
Prosecutors signaled in a court filing Wednesday that they might not be calling one of the key witnesses in their alleged insider trading case against Galleon Group founder Raj Rajaratnam.

The government said that if it didn't call Roomy Khan, who is cooperating with prosecutors, they don't want Rajaratnam to be able to attack their use of her as a cooperating witness or her "obstructive conduct during the course of her cooperation," the court filing said.

Early on in the investigation, Khan, who once worked for Galleon was named as an anonymous tipper who allegedly passed insider information on to Rajaratnam and others. She pleaded guilty to insider trading in November 2009 and has been one of the government's key cooperating witnesses in its ongoing investigation.

James Cohen, a criminal defense attorney and professor at Fordham University School of Law, who is not involved in the case, said the timing of the government's motion was indicative of prosecutors' concern about one of their star witnesses.

"I can't say with certainty, but there's significant doubt as to whether she will testify otherwise they wouldn't bother to bring it up now," Cohen said.

Prosecutors might also feel that Khan would make a weak witness, he said.

"It's one thing to be identified as cooperating, it's quite another thing to get up on the stand and pointing the finger at somebody," Cohen said. "That can be difficult for some people."

A spokeswoman for the Manhattan U.S. Attorney's Office declined to comment beyond the court filing. A spokesman for Rajaratnam also declined comment on the filing.

But even if Khan doesn't appear at the trial, the government may have the testimony of others who have pleaded guilty and agreed to cooperate.

On Wednesday, Adam Smith and Michael Cardillo, two ex-Galleon Group traders, pleaded guilty to insider trading. Both men are cooperating with the government.

Rajaratnam's attorney, John Dowd, said that they were looking forward to the trial, which is due to start Feb. 28.

Man Group Moves Into New HQ
The world's largest hedge fund, Man Group, opened its new international headquarters in London on Thursday.

Man's new 10-story home is located on Swan Lane near the banks of the Thames River, with 957 employees working out of the space. The firm signed a 20-year lease.

The $403 million building was completed in May and includes two new trading floors.

Peter Clarke, Man chief executive, hailed the new corporate digs.

"This new world class facility demonstrates Man's continued commitment to London after being located in the City for more than two centuries," Clarke said.

Man is one of the oldest companies in London, in business since 1783 with its start as a barrel making company.

Man has $71 billion in assets under management. Last week, it announced "record sales" in the second quarter of $9 billion with a net inflow of $3.7 billion after $5.3 billion in redemptions.


Via HFN Daily

Blackstone Sees $703M Profit in Q2
Hedge fund and private equity giant Blackstone Group reported Thursday that its second-quarter profit increased to $703 million on $1.3 billion in revenues, up 243% or $498 million from the $205 million profit at the same time last year.

The $703.3 million Q2 profit, known as "economic net income" was also an increase of $135.2 million compared to the $568.1 million profit for the first quarter of 2011, according to the company's earnings release.

The firm saw profit go to $1.3 billion as of June 30. That's an increase of $705.7 million compared to the $565.6 million profit for the first six months of 2010.

Blackstone's hedge funds had revenues of $84.5 million for Q2 2011, compared with $63.8 million Q2 2010, a 33% increase. But compared to Q1 2011 hedge fund revenues of $105.4 million, there was a 25% decrease.

Also, Q2 2011 distributable earnings increased to $185 billion, up 25% from $148 billion in Q2 2010. Fee-earning assets under management increased 27% to $129 billion at June 30 compared to $101 billion at June 30 of last year.

Blackstone Chairman and CEO Steve Schwartzman said the financial increases were driven mainly by strong investment performance in certain sectors of the company.

"Despite the challenges presented by slowing global economic growth, overall our portfolio companies and real estate investments performed well in the second quarter," Schwartzman said.

Blackstone has total assets under management of $159 billion as of June 30, up 43% from the same period last year.