Posts Tagged ‘finance’
admin | Sunday, July 5th, 2009 | No Comments »
What the Ultra Rich Invest in now
Below is a short article on what family offices and some ultra high net worth investors are investing in right now:
Simon Mellon, who’ll be heading up Bonner & Partners Family Office, our soon-to-be-launched money management and tax optimization service, is keeping in close contact with Notes HQ.
Simon is a global finance insider with a decade’s worth of experience working in capital markets. And right now he’s advising investors to remain cautious until a clearer picture emerges about the market’s direction.
When I was a child I could never sit still on a long road journey. I was always asking, “Are we there yet? Are we there yet? ARE WE THERE YET???” My father would always reply “Nearly, son… Nearly,” even though we were still miles from our destination.
This is exactly how the financial markets seem to me right now. It’s been more than two years since the credit crisis kicked off, and I’m getting itchy in my seat: I want to be back out there playing with the other financial (whizz) kids. But it feels like the end of this current rocky road is still on the distant horizon.
Wall Street wants you to believe things improving… that we are on the road to recovery… and that “green shoots” are starting to appear in the economy. Call me a cynic, but I’m just not convinced. Read more…
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admin | Thursday, December 4th, 2008 | No Comments »
Wealth Management Marketers
Demand for Family Office Sales Professionals
Below is an article on family offices and how they may be well positioned to pick up the pieces and grow their market share after this financial crisis has passed. I agree with the comment below that part of the reason that ultra high net worth individuals sometimes don’t use family offices is because they don’t know they exist or have never sat down with someone to discuss why it may make sense to work with one.
I believe this is a sign of pent up demand for expert family office marketers. If you can work within the industry for 7 years and build your marketing expertise you are worth your weight in Gold to a medium to large sized family office group which is looking to further expand their services.
Here is an excerpt from the article mentioned above:
When the dust settles from the financial crisis, multi-family offices are likely to be among the winners in Europe’s wealth industry.
These businesses, which tend to advise ultra-wealthy families, expect to benefit from the damage wrought to the reputations of investment banks.
Geneva-based Global Wealth Management manages €2bn ($2.6bn) for about 30 European and Middle Eastern families. Peter Sartogo, its managing partner, says multi-family offices have until now failed to promote themselves effectively in Europe.
“One of the reasons multi-family offices haven’t grown as rapidly as might have been expected is that clients simply don’t know they exist. At the same time, there is no winning formula for a multi-family office – everyone does it differently.”
Sartogo joined GWM three years ago after 15 years as an investment banker: “I think of it as my military service,” he laughs. source
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admin | Thursday, December 4th, 2008 | No Comments »
Hedge Fund Statistics
Video Interview on Closures & Redemptions
Here is a short video interview with a Yale professor who is an expert on hedge funds. He estimates that the industry will shrink by another 25% next year due to poor markets, volatility and low liquidity across many asset classes. He also discusses hedge fund redemption rates and how many institutions need to raise cash and many have lost some faith in hedge funds. This means that many hedge funds have had to restrict the securities which they own so they can meet redemption requests. The reporter also discusses how many hedge funds have been slashing fees to attract more investors.
If you are viewing this article via our daily hedge fund newsletter please click here to view the video now.
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admin | Saturday, September 27th, 2008 | No Comments »
Investment Marketing
Investment Marketing Hurdles for Hedge Funds
I just read an interesting article on AllAboutAlpha discussing the challenges today in marketing hedge funds to new potential investors. Within the piece AAA discusses how the US has one of the most restrictive regulatory regimes in the world when it comes to the hedge fund industry. The countries of Australia, Canada, Japan and China are all less restrictive.
Here’s a short excerpt from the article:
An article in this month’s Journal of Financial Transformation illustrates why this is. The piece, titled “Hedge fund marketing in an era of regulatory uncertainty” covers many of the issues faced by those trying to raise money in the US. It’s a great update on the ebb and flow of SEC edicts over the past year and was co-authored by hedge fund personality James Hedges. Here’s some of what Hedges suggests:
- Avoid speaking to the media about your funds – even if you’re not actively selling, but just “conditioning the market”.
- Avoid “print, radio and television advertisements or solicitations regarding funding or investment matters”.
- When giving presentations, “address the risks associated with hedge funds in general as well as the specific risks associated with the hedge fund being offered.”
- When your fund has a great year, make sure you “disclose the reasons for extraordinary performance…”
- No “mass mailings” except to “individual investors, or a discrete group of accredited investors”.
Click here to read the full article.
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Tags: Marketing for Investments, Investment Marketing, Hedge Fund Marketing tips, Investment Marketing tips, Investment Marketing Regulations, Investment Marketing Group
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admin | Wednesday, September 24th, 2008 | No Comments »
Hedge Fund Industry
Hedge Fund Industry Survival Notes
Here is a short article on the hedge fund industry business model and my comments in red.
______________________________________________________
I have thought for a while that the hedge fund business model was breaking down. In fact I turned down an offer to raise capital in a hedge fund format a few weeks ago. This summer it appears that the soft white underbelly of hedge funds is being exposed as the four legs of hedge funds are being kicked out right from under the industry:
- Leverage – hedge funds need leverage to generate excess alpha and non-correlated returns. Leverage is being removed from the system like never before for hedge funds. I’m not sure what the difference is between “excess alpha” and alpha but a fair number of hedge funds use no leverage. Both the prime brokers and use of leverage will survive these times.
- Manipulative Short Selling – short selling is a good thing. Manipulative short selling is illegal and against the interest of shareholders. That is now going to be enforced and put to an end. Next we will have the reinstatement of the up-tick rule. It worked for 70 years but failed us in the last year. Hedge funds provide liquidity and as someone else recently noted in the news – often the short sellers are the guys in white hats which come down on bad companies.
- Performance Fees – many funds are closing up because the managers won’t earn performance fees. This resulted in massive liquidations which are still continuing. There will always be liquidations and poor performance. Now that both are higher than usual it will hopefully rid the industry of the extra 30% of hedge fund managers who have a dream but not the right team and skills to produce long-term risk adjusted returns.
- Lack of Transparency – The SEC took the first step in requiring hedge funds to report short positions over certain limits. Mutual Funds have to file reports with the SEC and provide shareholders with a quarterly report which is part of the SEC filing. The wall of transparency will be brought down. I don’t believe it will, even if the US takes a radical stance on this issue many other countries are happy to go their own ways when it comes to regulating hedge funds. Many areas of the world are more than happy to cater to the business the United States creates for them through our strict tax and regulatory regime.
So what will happen? Eventually we will see assets flow back to more traditional forms of investment – managed accounts, mutual funds and self directed investments. I disagree – the pendulum my swing back and forth but alternative investments and hedge funds are here to stay. I believe eventually there will be less reports on the death of the industry as a whole.
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Tags: alternative investments, Asset Management, finance, fund, funds, hedge fund, hedge fund industry, Hedge Funds, industry, investments, money management, Private Equity
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admin | Thursday, September 18th, 2008 | No Comments »
Financial Disclosures
Hedge Fund Disclosure Tips
There are many “how to” articles for hedge fund managers, so here is a list of 5 short tips on what not to do while writing disclosures for hedge fund performance or marketing materials.
- Objectivity is a must – writing in a strong positive slant can actually hurt your fund’s image and reputation during a due diligence process
- Always work with a compliance consultant, CCO or 3rd party auditing firm on any performance or marketing related materials. If you are not a licensed or recognized legal expert it pays in the long run not to act as one. Even if your hedge fund is a on a tight budget it would pay dividends to invest in wise legal advice for disclosure related tasks and other work.
- Never leave more questions than existed before the disclosure was read – when needed refer to a full disclosure resource which is also “compliance approved.”
- Do not print disclosures in size 5 font. Publish disclosure language in a close or same size font as the rest of the marketing materials – not only does this prevent looking like you are hiding something but many times disclosures help educate investors in positive ways
- Do not write lengthy redundant explanations while a short to point factual disclosure will do. Concise, collectively exhaustive and mutual exclusive are good rules to live by while writing disclosures. Every word and inch of space on your marketing materials is worth thousands of dollars, don’t waste it with redundant sentences or by leaving out key facts and figures.
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admin | Wednesday, September 17th, 2008 | No Comments »
Hedge Fund Loans
Corporations Seeking Capital From Hedge Funds
I’ve noticed a marked increase in the number of news stories, email inquiries and conversations over the past 4 months regarding private firms including corporations, patent portfolio companies and real estate groups seeking capital from hedge funds. This is for obvious reasons but is interesting none the less as many hedge funds may continue to pursue this “bank-like” strategy long after the dust settles. Small companies are always hungry for capital and many will agree to very aggressive terms in order to get to the next level. Here’s a short piece on this trend:
Smaller companies on the junior Alternative Investment Market (AIM) are being forced to borrow cash from hedge funds at “usury rates” in order to survive, Square Mile insiders have warned.
Some cash-rich fund managers are avoiding volatile equity and bond markets and instead lending to AIM firms, lured in by the prospect of earning giant fees.
“The kinds of costs involved in borrowing from some of these guys are huge,” said one city chief executive. “But they have no alternative in many cases because traditional bank lending has dried up. It’s like you or me being desperate enough to go and borrow from the local thug with a baseball bat.” The practice is thought to have crept in over the past few months as companies have suffered at the hands of the credit crunch during the summer. Read more…
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admin | Wednesday, September 17th, 2008 | No Comments »
San Diego Hedge Funds
San Diego Hedge Funds – Networking Events
I was recently approached by a few hedge funds in San Diego that would like to start getting together for networking events and local meetings. If you are also interested in participating please send me an email at Richard@HedgeFundGroup.org.
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admin | Wednesday, September 17th, 2008 | No Comments »
Prime Brokerage Boston
Prime Brokerage Boston – Meeting Notes
Yesterday I had a lunch meeting with two prime brokerage professionals in downtown Boston and the conversation quickly turned to the high demand for cap intro services for hedge funds.
The main problem with capital introductions being made by prime brokerage firms is that many hedge funds are not competitive enough to market. Many managers with negative or sub-par performance would still like to grow their business but the fact is most investors won’t consider hedge fund managers who are both relatively small and have mediocre or poor performance, there is nothing engaging enough that will convince investors to look past those two facts, they hear hundreds of stories and see as many teams pitching their outlook on the markets each year.
This leaves prime brokerage firms with two choices – offer capital introduction services knowing that there is almost no chance of raising assets or tell the hedge fund manager that they will not be able to market their strategy. The best prime brokers will often help with pre-marketing activities such as operational and risk assessments, marketing material scrubbing, newsletter development, etc.
This may seem straightforward but it is often an unsaid thorn in the side of prime brokerage firms offering capital introductions for hedge fund managers. They want to provide this service to everyone possible but by nature only 10-25% of all clients really qualify for the service.
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admin | Wednesday, September 17th, 2008 | No Comments »
Chartered Financial Analyst Exam
Chartered Financial Analyst Exam Explained
Below is a short run down on Chartered Financial Analyst exams including what levels must be completed and what participants are tested on. The CFA exam is much different from the Certified Hedge Fund Professional (CHP) Designation, this article helps explain how.
To earn the CFA charter, you must successfully pass through the CFA Program, a graduate-level self-study program that combines a broad curriculum with professional conduct requirements, culminating in a series of three sequential Chartered Financial Analyst (CFA) exams. Level I exams are held in June and December. Levels II and III are only held in June.Candidates generally take one exam per year over three years and are written at a postgraduate level for financial professionals. Fees for the June 2008 exams range from $600 to $930, depending on the date at which the candidate registers to take the exam.
The Level I study program emphasizes tools and inputs and includes an introduction to asset valuation and portfolio management techniques. The Level II study program emphasizes asset valuation and includes applications of the tools and inputs (including economics, financial statement analysis, and quantitative methods) in asset valuation. The Level III study program emphasizes portfolio management and includes strategies for applying the tools, inputs, and asset valuation models in managing equity, fixed income, and derivative investments for individuals and institutions.
All three exams are administered on paper on a single day; the Level I exam is administered twice a year (usually the first weekend of June and December). The Level II and III exams are administered once a year, usually the first weekend of June. Each exam consists of two three-hour sessions. Level I is multiple choice – all information required to answer the question is contained in the question. Level II is item set – a vignette followed by selected response questions. To answer each question, the candidate must refer to the vignette as there is insufficient information in the question stem. Level III consists of a session of short-answer questions and a session that is item set. On the multiple-choice/item set sections, there is no penalty for wrong answers.The curriculum for the Chartered Financial Analyst Exam is based on a Candidate Body of Knowledge established by the CFA Institute. For exams in 2008 onwards candidates automatically receive the curriculum readings from CFA Institute when they register for the exam.
The curriculum includes Ethics and Professional Standards, Quantitative Methods (such as the time value of money, and statistical inference), Economics, Financial Statement Analysis, Corporate Finance, Analysis of Investments (stocks, bonds, derivatives, venture capital, real estate, etc.), and Portfolio Management and Analysis (asset allocation, portfolio risk, performance measurement, etc.)
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admin | Tuesday, September 16th, 2008 | No Comments »
Pequot Capital
Pequot Capital Management
The following piece on Pequot Capital Management is being published as part of our daily effort to track hedge fund events and managers in the industry. To review other hedge fund related announcements and manager notes please see our Hedge Fund Tracker Tool.
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Resource #1 (5.26.09) Arthur Samberg, among the best-known hedge-fund managers, is closing down his firm amid an ongoing investigation into possible insider trading.
“Public disclosures about the continuing investigation have cast a cloud over the firm and have become a source of personal distraction,” Mr. Samberg wrote in a letter that was sent to investors of his Pequot Capital Management Inc source
Resource #2: (12.9.08) Documents filed in a Connecticut divorce case disclose that Pequot Capital Management C.E.O. Arthur J. Samberg or his hedge fund is making so-far-unexplained payments of $2.1 million to a former Microsoft employee who figured in a now-closed insider-trading investigation of Samberg.
The Securities and Exchange Commission closed its investigation of Samberg in 2006 without filing any charges, although the Senate Judiciary Committee a year later faulted the S.E.C. for the way it conducted the investigation and allegations that a related case had been influenced by politics.
Records obtained from Connecticut Superior Court in Stamford show that Samberg or his firm has paid the former employee, David Zilkha, $1.4 million in two equal installments since April 30, 2007, and has promised an additional $700,000 in April 2009. source
More Resources
- In 2004, Pequot expanded its upper management team. “Employee-owned, Pequot Capital offers funds that focus on technology, health care services, and small-cap firms to institutional investors and wealthy individuals.”
- Pequot Management’s venture capital arm, “Pequot Ventures” split from the company and formed “FirstMark Capital”. The move was described as “the next logical step” for both Pequot Capital and Pequot Ventures. The move does not appear to effect Pequot Capital’s Hedge Funds since Pequot Ventures was run separately from the rest of the firm.
- Pequot Capital Management’s Chief Investment Strategist shares his ideas during a Financial Round Table Discussion in January 2008. He believes the current market condition and credit crisis are more serious than most people believe. He also thinks that many investors under estimate the seriousness of the energy situation as well.
- A Congressional report came out that the SEC made a mistake in its dealings with Pequot Capital Management. Pequot was suspected of insider trading. The report says the SEC mishandled the case by making a series of mistakes to compromise the investigation. The SEC closed its investigation of Pequot without taking any action against the firm.
- Pequot Capital is the majority shareholder of Midwest Air Group Inc. (8.8%) Midwest Air considered pursuing a “$16 per share all-cash proposal from a private equity firm and its consortium.” Pequot Capital Management wrote a letter to the company claiming that this proposal is not in the best interest of the shareholders and that a cash and stock deal would be better. The article contains a copy of the letter sent to Midwest Air.
- Pequot Capital Management’s chief investment strategist Byron Wien’s August 2008 market commentary focuses on South America. He specifically mentions how Brazil has become a hot bed for growth and the country has seen a huge inflow from US investors. He also discusses why Argentina, Brazil’s neighbor, has remained relatively stagnant.
- New development at Pequot Capital Management called the “Emerging Manager Program” The idea is a pool of capital run by 13 managers using 12 different strategies. The article talks extensively about the firm and its global strategies and risk management.
- Byron Wien’s top 10 surprises of 2007. He predicts oil and gold prices will rise despite a world wide economic slowdown. He thinks Asian emerging markets will peak, and focus will shift to Latin America.
- Byron Wein’s predictions for the top surprises of 2008. He predicted a US recession, a surge in commodity prices, and rising inflation. He also thinks Obama will be elected president in the upcoming election.
- Pequot Capital recently launched a global long/short fund in April 2008, its second new Hedge Fund of the year. The “Pequot New Vision Fund” contains $18.1 million is assets. The Fund will attempt to earn “attractive returns with consistent alpha by identifying global emerging growth opportunities that are fundamentally mispriced by the market”
- Provides a brief snapshot of Pequot Capital Management. Contains descriptions of the firm’s overall strategies and tendencies. Also mentions the company directors and where the offices are located.
- From Dec 2007, the article talks about the firm’s Short Credit Fund up 18% YTD. The fund placed bets on rising mortgage defaults that paid off big with the current credit and sub prime mortgage crises.
- Dated Nov. 2007. Talks about the Global Core Fund, the “flagship fund” with $2.6 billion in assets has gained 37% YTD under the management of founder Art Samberg and Mike Corasaniti. The firm also decided to close 3 poor performing funds and move the money into other core funds.
- Talks about the plan for Pequot Ventures to break away from the firm and become an independent private equity firm known as FirstMark Capital. Pequot will still be affiliated with the newly independent firm. . One of the major reasons for this potential split is that the Hedge Fund has decreased its interest in the technology sector, while the VC branch still focuses primarily on tech.
- Pequot teams with Pangaea Capital in Singapore. The firm’s focus in Asia has become “distressed assets” instead of “publicly traded stocks” Pequot has made a strong push into Asia, as the firm traditionally invested in US equities. Pequot’s was seeking $300 million for its Pequot/Pangaea Asia Opportunities Fund.
- This pdf file is an interview with an employee at Pequot Ventures, the VC arm of Pequot Capital Management. He talks about what the firm looks for in their employees. He also discusses the investing strategy of the firm.
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admin | Monday, September 15th, 2008 | 1 Comment »
Future of Hedge Funds
Q & A: Future of Hedge Funds
Reporter Question: With both hedge funds and the large investment banks providing prime services to them both failing what do you think the future of the hedge fund industry looks like?
Answer: While times like this are painful for many investors and managers of hedge funds this type of “weeding out” is needed, at least some level for the hedge fund industry. Major databases report that there are between 7 and 10,000 hedge funds in existence. The number of hedge funds in existence is far greater than any of the databases report. There are thousands of hedge funds in Europe and America who have no need to register with a database, are seeding strategies or simply don’t have the man power or knowledge to know that they should be listed within these databases.
As the number of hedge funds in the industry has increased over the past 7 years institutional investors have raised the bar in terms of minimum assets, track record and risk management checks which all must be in place. Naturally it has become more challenging to raise assets as there are more fund fighting to raise capital. This competitiveness along with the current volatility in the markets has lead to a constant push to create new investment models and strategies. During a bull market these strategies seem to perform well but it is not until times like these in which these new ideas and many old are re-tested.
These markets and the recent downfall of some hedge funds will do many things to the future of the hedge fund industry:
- Weed out the hedge funds started by those with minimal trading experienced based on momentum trades made during bull markets
- Remind us all of the importance of risk management procedures at both the business and portfolio management levels
- Encourage more hedge fund seeding and track record building before any active marketing is completed
- Shift more due diligence focus from general risk management questions to potentially more pointed questions, including worst case scenarios which have been played out through Bear Stearns and now Lehman Brothers
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admin | Friday, September 12th, 2008 | No Comments »
Socially Responsible Investing
Guide to Socially Responsible Investing
Socially responsible (SR) hedge funds integrate social and environmental criteria into their investment decision making process. Within this general framework socially responsible hedge funds follow a variety of investment strategies such as equity long/short, merger arbitrage and fixed income arbitrage.
The approach of socially responsible investors (SRI) generally fall under three primary categories: screening, community investing and shareholder activism. The screening approach involves both avoiding companies that do not uphold social and environmental standards (negative screens) and investing only in companies that uphold strict social and environmental standards (positive screens). Community investing targets companies and industries that have explicit social and/or environmental objectives. Carbon trading, renewable energy credit trading, ethanol trading and emissions trading are popular strategies, as are socially motivated industries like alternative emerging, microfinance and public healthcare. On the other hand, socially responsible shareholder activists leverage their role as shareholders to motivate change in social and/or environmental impact of the company.
Over the last few years, SRI has emerging from a niche market to become a potentially important player in the investment space. According to GreenMoney Journal’s 2007 report on SRI trends in the US, total assets under management of SR funds grew 13% between 2005 and 2007, a significant chunk of which was driven by the alternative investment space. All indicators point to a continued increase. Most of this is driven by investor demand, as more and more investors align their investment portfolios with their personal values and try to motivate social and environmental change through their investment strategy. However, a small and growing movement in the SRI space has been arguing that an analysis of a company’s environmental, social and governance (ESG) performance provides an effective measure of the management’s strength and therefore the company’s long-term financial performance.
White papers and reports related to socially responsible investing
- Global Change Associates has several excellent reports on hedge fund activity and trading strategies in energy and ‘green’ sectors.
- Goldman Sachs, “Introducing GS Sustain.” June 2007.In this report Goldman Sachs describes its proprietary framework that incorporates ESG analysis into long-term analysis of industry themes and cash returns valuation to pick stock and emerging industries. This PowerPoint presentation summarizes the performance of GS Sustain.
- Lydenber, Steven D. “Envisioning Socially Responsible Investing: A Model for 2006” Domini Social Investments, USA, Autumn 2002. Written in 2002, this article lays out what major initiatives must take place in the corporate, institutional and financial communities for SRI to become an important player in social, economic and political debates.
- Nocera, Joe. “The trouble with socially responsible investing.” International Herald Tribunal, April 2007.Nocera looks at the difficulties involved in evaluating a company’s social and environmental standards. In doing so, he also questions the value of relying on independent agencies like KLD Research to decide which companies socially responsible investors should consider and avoid.
- Standard and Poor’s, “S&P ESG India Index: Index Methodology.” January 2008. In this report S&P briefly outlines the eligibility criteria, index construction and index maintenance it uses in selecting companies for its S&P ESG India Index.
- Woll, Lisa. “The 2007 Report on Socially Responsible Investing Trends in the United States.” Green Money Journal, Summer 2008. This report is published every two years, and synthesizes the major trends in the SRI industry. In the process, it also provides a very good introduction to SRI.
- Yegnasubramanian, Anu. “Environmental, Social and Governance: Moving to Mainstream Investing?” Business for Social Responsibility, June 2008. Several major financial institutions have been developing analytical frameworks that include ESG criteria as part of their fundamental financial analysis results in better investment decisions. This report looks at the challenges behind the mainstream adoption of ESG criteria into investment decisions.
Information Sources
Corporate Social Responsibility Website is a news source covering corporate social responsibility. It is a good place to start researching the social and environmental profile of a company
Green Money Journal is a tri-annual journal covering major trends and events in SRI
KLD Research & Analytics is one of the primary independent research firms that cater to SRI managers. As such, it provides up-to-date news, independent research reports and benchmark indexes for the industry.
Centre for Responsible Business, University of California Berkley, Haas School of Business runs the Markowitz Research Program which examines the foundations and trends in SRI. As part of the effort, Lloyd Kurtz, Senior Portfolio Manager of Nelson Capital Management writes a blog that provides commentary on major SRI themes and also has a collection of quantitative studies related to SRI. The centre also runs the Markowitz Prize for Socially Responsible Investing, the only award that recognizes quantitative research in the field.
Social Investment Forum is a membership association for socially responsible investors and related organizations. It hosts an annual conference for members and puts together research related to SRI that ranges from basic definitions, to industry reports.
SRI-advicor.com is a good tool for socially responsible money managers with discussions on SRI strategy and interviews with prominent market players. This website is directed primarily towards traditional institutional investors.
SRI World Group is an up-to-date news source on issues and events related to social responsible investing as well as companies’ social and environmental profile. It also has a database of major companies’ social responsibility reports.
Guest post by Sharini Kulasinghe
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admin | Friday, September 12th, 2008 | No Comments »
Hedge Fund Paralegal
Hedge Fund Paralegal Position Open
Just a quick note to alert you to a new job listing within the Compliance & Legal Hedge Fund jobs Category.
A hedge fund in Minnesota is looking to hire a paralegal this quarter. For more information please see the job listing page here: Legal & Compliance Jobs
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admin | Tuesday, September 9th, 2008 | No Comments »
Tags: alternative investments, Books, Downloads, finance, Guides, hedge fund, Hedge Funds, Hedge-Funds.Money, Invest, investing, investor, Investors, Resources, wall street
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Selling Tip
Pain Free Hedge Fund Selling Tip
Here is a short video on pain free selling. If you have read a lot of marketing and sales books many will recommend that you find your customer’s pain. I agree with Jeffrey Gitomer though that in the hedge fund world you should build marketing efforts based on relationships, positive solutions and goals. Here’s a clip on this idea:
If you are viewing this post via my daily hedge fund newsletter please click here to view the video now.
- Richard
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Articles related to Selling Tip:
1. Hedge Fund Marketing
2. Hedge Fund Public Relations
3. Raising Capital
4. Hedge Fund Jobs
5. Hedge Fund Managers
6. Financial Public Relations
7. Third Party Marketing
8. CTA Database
9. Capital Introduction
10. Gitomer Conference
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admin | Monday, September 8th, 2008 | No Comments »
Private Equity Funds
Private Equity Funds vs. Hedge Funds
I just found an interesting PowerPoint presentation describing the different types of private equity funds and hedge funds available today. This is pretty high level but within one presentation it covers much of both industries relatively well.
Here is a direct link to the PowerPoint.
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Tags: Private Equity Funds, private equity fund of funds, private equity hedge funds, Funds in Private Equity, private equity hedge funds India, Private Equity Funds Resource
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admin | Monday, September 8th, 2008 | No Comments »
Establish a Hedge Fund
Q & A: Establishing a Hedge Fund
Question: What does it take to launch a hedge fund? If I am hard working and determined I believe I can start one. As long as I never give up I will succeed right? How can you help me?
Answer: I get this question fairly often. There are many misconceptions about the hedge fund industry, two which are that all hedge fund managers are filthy rich and that most hedge funds are large entities manging billions of dollars. The truth is that hedge fund managers are paid well but most do not earn tens of millions of dollars each year – and only a small percentage of the total firms manage over a billion dollars of capital. To start a hedge fund you need:
- A deeply experienced team
- A repeatable investment process
- A business plan
- A competitive advantage
- Business risk management measures
- Portfolio risk management tools and techniques
- Capital to run the business on the first 2-3 years
- A compliance consultant or legal advisor, etc.
Launching a hedge fund is not much different than flying in some ways in that will power alone will not lift you off the ground. You must seek the appropriate resources, ensure you have enough capital to run on and you almost always have to operate as a team.
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admin | Monday, September 8th, 2008 | No Comments »
Prime Broker Survey
Prime Broker Survey Results
A new survey shows that more than one-third of hedge fund and CTA managers are dissatisfied with their prime brokers. The most notable dissatisfaction is with the prime brokers’ personal service. In 2007 80% of funds rated the personal service of their prime brokers as either “good” or “excellent”, this year only 63% gave their prime brokers high marks. This may be a result of the liquidity crisis, which 16% of the managers said negatively effected the relationship with their prime broker.
The survey also shows that many funds are happy with the cost of their prime brokers, with only 7% responding “poor”. However, a considerable 38% of managers rating their prime brokers as “poor” performers of capital introduction. Funds who consider themselves technologically advanced are the most satisfied with their prime brokers.
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admin | Friday, September 5th, 2008 | No Comments »
Germany Hedge Funds
Germany Hedge Fund Guide
Here is a short collection of articles on the hedge fund industry in Germany. I am always looking for more valuable online tools and resources to add to these geographical hedge fund guides to the hedge fund industry. If you have a white paper or PowerPoint that I can include here please send me an email and I will post it for everyone’s benefit.
German Hedge Fund Resources:
- Germany to Step Up Hedge Fund Scrutiny. As a plan for German governemnt to place a greater scrutiny on country’s hedge fund investment, Barbara Hendricks, the deputy finance minister, said that Germany would force the funds to declare stakes in companies when they rise to three percent, comparing to the current threshold of 5% as in most European Union states.
- G8 HostGermany Fails to Convince on Hedge Fund Issue (8/06/2007). Germany had put hedge funds on top of the agenda of its year-long G8 presidency given its concerns that rapid growth in the increasingly powerful sector could destabilize the entire global financial system. But the world’s richest nations — Britain, Canada, France, Germany, Italy, Japan, the United States and Russia — have so far spectacularly failed to find a common line on the issue.
- Hedge Fund Opportunities in Germany: Practical Guidance Q&A. With the new German Investment Act and Investment Tax Act in force since January 1, 2004, new opportunities to access the German hedge fund market from abroad have opened up. The objective of this paper is to give practical, hands-on guidance to foreign hedge fund managers who are interested in targeting the growing German market.
- This advisory article briefly explains the taxation issues in Germany’s hedge fund industry for both fund managers and investors. The topics include the various tax structure, requirement and regulations.
- This special report (Aug. 2006) features several articles provide some recent development and oveview of German hedge industry and some decription of it legislatory structure and law regulations. :
German Market Growth Benefits from Master KAG Structure
An interview with Christian Benigni, one of the top three European hedge fund managers with approxiamtely USD 14 billion dollars under management, shared with readers his views on the propects and the potential future development of the German Hedge Fund industry.
Delivering Tax Transparency
When the new legislation governing alternative investment funds came into force in Germany in 2004. HSBC’s Alternative Fund Services (AFS) took a two-fold approach to capitalise on the development of the market. On one hand, in partnership with its software provider, Advent Geneva, and with advice from PricewaterhouseCoopers, AFS launched a project to deliver tax transparency to their clients to enable them to distribute their funds in Germany.
The Evolution of Prime Brokerage in Germany
Since the introduction of the 2004 German Investment Act, there has been debate on the potential growth of the local hedge fund market, and on possible ‘local’ prime brokerage solutions. However, as well as domestic hedge funds, the legislation deals also with another important area: the regulation and distribution of ‘foreign’ (non-German) hedge funds. Furthermore, the related Investment Tax Act enables local investors to obtain favorable tax treatment on investments in foreign funds, including hedge funds.
New ETFs Improve index Tracking and Reducing Trading Costs
Exchange-traded funds allow investors to track the performance of specific market segments more efficiently and reduce costs, helping institutions to create more efficient portfolios for use in core-satellite strategies. A new category of innovative ETFs recently introduced by Indexchange takes advantage of the European Union’s Ucits III directive to mirror the underlying index even more accurately while reducing trading costs.
Institutional Market Pised for Take-off
The change of the law in 2004 allowed hedge funds and funds of hedge funds to be launched under German regulations for the first time. Under the German rules, a Master KAG – service company for hedge funds – can take charge not only of the administration of a fund but its launch, registration and ongoing reporting, leaving the fund manager to focus on the investment management, marketing and the distribution.
Derivatives Take Larger Role with Hedge Funds
Surging flows of capital into hedge funds over the past few years have aroused fears that overcrowding in popular strategies will drive returns down and reduce the appeal of alternative investment approaches. However, the growth of sophisticated investment techniques involving the use of exchangetraded derivatives, with their high levels of liquidity and transparency, is offering managers and investors new opportunities to achieve higher returns, resulting in increased usage of futures and options worldwide.
Hedge Funds Liberalisation Starts to Bear Fruit
When Germany liberalised its rules governing hedge funds and taxation of their income at the beginning of 2004 the initiative was hailed in some quarters as a new dawn for the sector. If Germany, with its tradition of conservatism in investment choices and reputation for pernickety rule-making, could embrace hedge funds and funds of hedge funds, the argument went, the rest of Europe and other markets around the world would surely soon be following suit.
- Hedge Fund Opportunities in Germany. With a new German Investment Act and Investment Tax Act in force since January 1, 2004, new business opportunities have opened up in the German hedge fund sector for foreign providers as well as those onshore. The focus of this artice is on the distribution of foreign hedge funds in Germany and with more detailed information on the provisions of the recent passed Investment Modernization Act
- Introduction and Regulation of Hedge Funds in Germany. On January 1, 2004 the German Investment Act and the German Investment Tax Act were enacted as the major parts of the investment Modernization Act. The focus of this article is to analyze the effect of these new tax provision and also some of the regulatory concerns.
- Hedge Funds and Retail Business: Comparing German, Italian, Swedish and English Law. The aim of this work is to compare the German, Italian, Swedish and English law as to see the principal policies and regulatory cornerstones that will lead us to understand and comprehend the way in which Hedge Funds and their relationship with retail investors is developing.
- This advisory article briefly describes the regulatory structure of Germany’s hedge fund industry; topics include authorization requirement and process of setting up the fund, capital requirements, and marketing restrictions.
- German Hedge Fund Legislation: Modernized but still old-fashioned. This report analyzes the legal framework of the newly passed new German Investment Act and its impacts on the current system. This analysis is conducted from three aspects: past (comparison to old laws), present (its current state), and future (need an up-to-date regulation?).
Conferences & Seminars:
- Pension Fund Investment World Germany 2008. 9/20/2008 – 9/22/2008, Germany – Frankfurt.
- 4th Annual European Conference. A full day of plenary, breakouts and roundtables with leading speakers from venture philanthropy, private equity community, foundations and professional service firms. 9/23/2008, Germany – Frankfurt.
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admin | Friday, September 5th, 2008 | No Comments »
Asia Hedge Funds
Asia Hedge Fund Guide
Here is a short collection of articles on the hedge fund industry in Asia. I am always looking for more valuable online tools and resources to add to these geographical hedge fund guides to the hedge fund industry. If you have a white paper or PowerPoint that I can include here please send me an email and I will post it for everyone’s benefit.
Resources on the Hedge Fund Industry in Asia
- Great, in dept overview of hedge funds in Asia.
- Top 25 Hedge Fund performers of Asia
- Hedge Funds are by reputation a risky and esoteric investment category that ordinary investors had best avoid. But don’t repeat that mantra in Asia. From Tokyo to Singapore, hedge funds are as hot as Thai chili peppers.
- Another great, in dept overview of hedge funds in Asia.
- In addition to this guide on Asia please see our other guides: China Hedge Fund Guide, Japan Hedge Fund Guide, Hong Kong Hedge Fund Guide, Singapore Hedge Fund guide
- Citigroup expects to see double-digit growth in assets serviced by its recently expanded Asia-Pacific prime brokerage arm, as it seeks more business with global hedge funds setting up in the region. Even with tumbling stock markets impairing the performance of most Asia-focused hedge funds, many well-resourced overseas managers have stepped up their focus on the region.
- Another excellent overview of the Asian hedge fund industry
- The Asian hedge fund industry is coming of age, with funds having had a stellar year in 2003; the Eurekahedge Asian hedge fund index was up by 27% and assets under management rose about 75%. From inception in the late 1980s, growth was relatively pedestrian for most of the first decade. The late 1990s saw a marked change with a rapid acceleration of growth in the number of funds and assets, albeit from a low base.
- The Hedge Fund Association of Asia is a not-for-profit international association and is the Asia chapter of the Hedge Fund Association. Membership is on an invitation-basis.
- Hedge Funds World Asia 2008 Conference taking place at the Hong Kong Convention & Exhibition Center
- Asia’s hedge fund industry in numbers
- Asia-focused hedge funds have taken a beating this year and investors are shying away from managers who not too long ago were seeing double-digit returns. Funds investing in India and China produced the worst performance of any specific hedge fund classification after leading all hedge funds for much of 2007, according to HedgeFund.net.
- Asian Hedge Funds: There’s no substitute for local knowledge
- Asian hedge fund managers will very likely close down or be bought out in growing numbers this year in a painful bout of consolidation triggered by the financial market turmoil. Combined with tougher barriers for potential start-ups, the number of Asian hedge funds could actually shrink in the near term, putting a still-growing pool of investor cash in the pockets of larger, established players.
- Assets invested in hedge funds focused on Asia fell by 10 percent from USD111bn to USD100bn during the first quarter of 2008, a period in which global financial markets declined broadly and volatility increased sharply, according to Chicago-based industry data provider Hedge Fund Research.
- A decade ago, it would have been rather controversial to talk about hedge funds, given the Asian economies were hard hit by a severe financial crisis widely believed to be triggered by a group of aggressive hedge funds at that time. Today, the hedge-fund industry has become an important driving force in the global financial markets. At present, there are about 10,000 hedge funds around the world with assets under management amounting to US$2.5 trillion.
- Extensive report on hedge funds in Asia.
- Hedge Funds build up manpower in Asia
- Asia’s hedge fund industry is growing rapidly as global investors zero in on the region and more traders and fund managers choose to strike out on their own. At the same time, Asian investors are warming up to hedge funds, which offer them a chance to earn higher returns and spread their risks wider than if they just relied on traditional investments like stocks and bonds.
- Although the pace of growth of the Asian hedge funds industry has lessened compared with the past two years, in absolute terms, the growth is still substantial, with more than US$30 billion in net assets estimated to flow into Asian hedge funds in 2006.
- Asia’s booming hedge fund industry will be tested in the coming year by heightened volatility that will catch out less talented managers who have coasted along on the multi-year bull run in regional stock markets.
- Another event for networking and gaining more information about Asian hedge funds
- Investors almost halved the money they put into Asia-focused hedge funds in the second quarter compared to the first three months of the year as a selloff in stocks hurt appetite for risky assets, data showed.
- Singapore Hedge Funds Club Networking event on 9/18/2008
- The hedge-fund party may be over in Asia. After years in which the number and assets of Asia-focused hedge funds have steadily risen, prime brokers and hedge fund managers say they expect a larger number of managers to fold up the tent this year because declining equity returns mean the hedge-fund managers themselves won’t be making much money.
- Hedge funds are suddenly the rage in Asia. That’s an ironic turn of events in a region that just seven years ago blamed speculative trading for its worst financial crisis in decades. It’s no mystery why hedge funds find Asia attractive. Since markets here are less researched and less liquid than Western ones, the kind of inefficiencies on which such outfits thrive abound.
- Asia hedge fund managers improved their performance and lowered redemptions in 2007 in contrast to their US and European counterparts, according to a study.
- Great article about Asian Hedge Fund Allocations
- Another great overview of Asian Hedge Funds
- Book titled Starting a Hedge Fund-an Asian Perspective
- Three recently departed executives of Citigroup’s Global Special Situations Group have announced plans to launch a new hedge fund. Initially they are to be based in Hong Kong, with plans to expand into Singapore.
- Looking for jobs or internships with an Asian hedge fund? – Asian hedge fund Jobs
- Hong Kong continues to be a hot spot of investment for overseas firms looking to tap the Asian hedge fund market. The latest to arrive is Financial Risk Management (FRM), a global hedge fund group, with US$15 billion under management.
- The hedge fund industry in Asia is dominated by a trio of financial centers: Hong Kong, Singapore, and Sydney. In this inaugural issue of the statistical digest, we provide a broad overview of the hedge fund industry in Asia and zero in on issues relevant to investors. Our analysis will be organized along the lines of manager location.
- The first start-up independent Asian hedge fund to begin with more than $US1 billion is expected to be launched in coming weeks, sources said, signaling a watershed for the asset class in the region. The launch underscores the growing confidence and ability of indigenous talent to raise significant amounts of money to compete against global firms, which have piled into the region in recent years.
- Asia’s expanding hedge fund industry will probably create tens of thousands of jobs in the next five years, even as investment bank recruitment dries up after the U.S. subprime mortgage market collapse, said Sheridan Mather, a managing director of recruitment firm Pinnacle International Ltd.
- Investors are exploring the potential of hedge funds based in the Asia-Pacific region as successful US and European managers come up against capacity constraints. Assets managed in the region now top $60bn (€49bn), according to industry estimates, and are expected to reach $85bn by the end of the year
- Another interesting book related to Hedge Funds in Asia
- Another great detailed overview hedge fund presentation
- Great guide to the outsourcing trends and tendencies of the Asian hedge fund industry
- Singapore-based hedge fund JL Capital Pte Ltd is bullish on equity and currency markets in Asia, especially Singapore and Malaysia, founder and managing director James Loh said. The flagship Swordfish Macro fund, which has a global mandate to invest in equities, bonds and currency, saw strong investor inflows from Europe last year in search of Asian investments.
- The Monetary Authority of Singapore’s annual survey of the Singapore asset management industry
- Japanese hedge funds relocate to Singapore
- Korean broker launches Singapore hedge fund
- “Singapore goes alternative” article
- Another article about the dramatic growth in Singapore’s hedge funds:
- Hedge Fund administrator boosts Singapore team to address growing demand for hedge fund service providers in Asia.
- An article about how a top hedge fund manager sets up a Singapore office
- “Asian hedge fund industry booms” – Singapore is one of the main hubs in Asia for hedge fund activity – here is an article on this topic
- Excellent Japanese Hedge Fund resource
- Bloomberg article about Man Group Plc that tripled assets
- Business Week article about hedge funds in Japan
- Hedge Fund World event in Japan
- An interesting interview of Hedge fund life in Tokyo
- Asia Pacific Hedge Fund Database and Directory
- Article describing growing fund numbers in Japan
- Informative overview guide to hedge funds in Japan and the rest of Asia
- Article on why Japan hedge funds are set to outperform many peers
- Article describing the struggles of some Japanese Hedge funds
- Article showing the current state of Hedge funds in Japan
- Japan’s Leading Hedge Funds Conference
- Article describing the choice of some investors to pull out of the Japanese industry
- Bloomberg article about successful Hedge Fund Manager Tadashi Mukai
- Article detailing a UK hedge fund that is increasing its pressure on a Japanese utility
- Interesting article about a British hedge fund and Japan’s market
- Asia Hedge Fund Oscars
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admin | Thursday, September 4th, 2008 | No Comments »
Private Equity & Family Offices
Choosing private equity investments
High risk, limited liquidity, taxes, and lack of regulation make investing in private equity challenging. However, the payoff is very attractive making private equity an interesting asset class for family office. The article shows two different points of view (fund of funds and direct private placement) of how family office would enter in private equity.
From the standpoint of diversification and lowest assumed risk, a fund of funds may present the best entry point to private equity given that you do not have specialist who can perform extensive due diligence. Additionally, it is an affordable way to test the water than any other approaches. On the other hand, direct private placement represents the highest level of risk. You must have capability to perform in-depth due diligence, and dig into the portfolio companies of what really happen. The upside of private placement is of course that your return would out-perform anything on traditional security market. Read more on this here.
- Richard
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admin | Wednesday, September 3rd, 2008 | No Comments »
Atticus Capital
Atticus Capital Hedge Fund Notes
Record losses is not exactly what most hedge funds are seeking to be known for right now. Anyone keeping up with manager developments right now know that many managers are struggling. Some reports say 2008 is shaping up to be the hedge fund industry’s worst performance in 18 years. On some level this is needed, just as recently as last month many hedge funds are still touting their positive performance with barely mentioning their portfolio or business risk controls – over the long-term you must pay attention to more than a goal to return 16+% a year. I’m not saying Atticus is one of these firms, with their size they surely have many controls in place. In general though, I believe the industry needs a shakeout every 7-9 years.
The following piece on Atticus Capital is being published as part of our daily effort to track hedge fund events in the industry. To review other hedge fund related announcements please see our Hedge Fund Tracker Tool.
Story #1: Atticus Closes Two Funds, Barakett Bids Farewell
Atticus Capital has shut down is reducing its operations by closing two of its funds. After receiving less than 5% of redemptions from investors, Timothy Barakett, the founder of Atticus Global, decided to shut down Atticus Global, Ltd. and Atticus Global, LP. Barakett founded Atticus with $6 million and expanding to roughly $20 billion in assets under management in 2007. He is returning $3 billion back to his investors, in a letter to his investors he explained his decision:
I have used the market’s recent strength to begin liquidating a significant amount of our holdings. We currently expect that the portfolio will be fully liquidated by September 30th and that we will be in a position to return approximately 95% of your capital in early October. The balance of investor capital will be returned after the final audit is completed, which should be later this year….
Read Story
Story #2:
Atticus Capital, the hedge fund manager co-chaired by Nathaniel Rothschild, will be reduced to bare bones after announcing plans to return $4 billion to investors.
Timothy Barakett, the 44-year-old Canadian who founded Atticus with $6 million in start-up cash in 1995, wrote to investors today to tell them that he would close two of his funds – Atticus Global, worth $3.4 billion, and $600 million Atticus Trading.
Just one fund, Atticus European, worth $1.1 billion and managed by Mr Barakett’s partner David Slager, will continue to operate.
Atticus’s downsizing is another sign that the era high-profile, aggressive hedge funds, that publicly berated companies’ management and flaunted their connections to the rich and famous, has ended.
At its height in 2007, Atticus was worth $20 billion but in the year to the end of July returned a negative 13.3 per cent, under-performing the widely-recognised Credit Suisse Tremont Hedge Fund Index, which showed a –9.3 per cent return over the same period.
Mr Barakett is best known in the UK for attempting to scupper Barclays’ $64 billion offer for ABN Amro, for which he argued Barclays’ was offering too much. Read more…
___________________________________
Story #3:
Atticus Capital, one of New York’s most powerful hedge funds, has lost more than $5bn (€3.4bn) this year, as its record as one of the world’s top performing money managers was damaged by the credit crunch.
The firm’s two flagship funds fell by a quarter and almost a third by the end of August, marking among the biggest losses in dollar terms ever recorded by a hedge fund. This was as a result of its strategy of taking large, concentrated bets and using few “short” positions betting on a fall in prices to lower risk. Atticus had $14bn under management at the end of July, according to letters to investors, down from a peak of more than $20bn last year.
The losses reflect widespread difficulties for Event Driven Hedge Funds, which aim to buy cheap stocks in the expectation of a catalyst that will boost their value. Atticus, co-chaired by Nathaniel Rothschild, son of Lord Jacob Rothschild, has been closely involved in several of the highest-profile deals of recent years, helping scuttle Deutsche Börse’s bid for the London Stock Exchange and Barclays’ bid for ABN Amro, among other activism.
The Event Driven Hedge Funds Sector – which includes activist investors – was among the most popular with hedge fund investors last year but has seen a race for the exit as investors switch to strategies seen as more likely to prosper during a bear market. Read more…
______________________
Story #4:
According to a media report, Atticus Capital, one of New York’s most powerful activist hedge fund the largest investor in Deutsche Börse, has put its entire stake in the German exchange into a special limited vehicle to block redemptions by clients and boost its negotiating strength with management.
According to the report published by the FT.com, the stake of just over 11 per cent held through shares and derivatives, made up almost a fifth of Atticus’s funds under management at the start of the year but has since halved in value.
According to the report, the losses have caused concern among some Atticus clients, who have expressed concern about such a liquid stock being put into a “side pocket.” The report says that Atticus argues that it wants to be able to represent themselves as solid investors in the German exchange, but the decision has not gone down to well with some of the hedge fund’s clients. Read more…
__________________
Story Update #4:
NEW YORK (Reuters) – Hedge fund company Atticus Capital denied market rumors it was liquidating its positions and closing down and said it had a large net capital position and was looking for investment opportunities, the Wall Street Journal reported on Thursday.
Atticus’s two main hedge funds have been hit with losses of between 25 percent and 32 percent this year through August, but investors are largely sticking with it, according to unnamed investors cited by the Journal. Read more…
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admin | Wednesday, September 3rd, 2008 | No Comments »
Single Family Office
Single Family Offices in Dubai
I just found this article about how Dubai’s DIFC is positioning itself as a center for single family offices. They seem to be very skilled at positioning themselves for new money to come in so I’m sure they will be successful in this area. The country is trying to build many legs to stand on – as they take advantage of their oil and tourism based wealth.
For those of you who do not know what family ffices are and how they relate to hedge funds please see this article: What are Multi-Family Offices?
For in detail information and insight please see Family Offices Group .com
Here is the single family office article…
_________________________________
New regulations provide platform for setting up family holding companies at DIFC
The Dubai International Financial Centre (DIFC) today announced new regulations to encourage family businesses to establish Single Family Offices (SFOs) at DIFC.
Created in consultation with the DFSA, the DIFC Single Family Office (SFO) Regulations specifically address the needs of family-run institutions and create a platform for wealthy families to set up holding companies at DIFC to manage private family wealth and family structures anywhere in the world.
HE Dr. Omar Bin Sulaiman, Governor of the DIFC said: “In recent times, family offices have become highly significant on the global economic landscape. In the Middle East, where family-run businesses make up over 75 per cent of firms and have total assets in excess of US$1 trillion, the need for a specialised legal and regulatory framework is especially acute.”
“In contrast to conventional financial institutions, Single Family Offices (SFOs) have no direct public liability as all their shareholders are bloodline descendants of a common ancestor. As such, their regulatory requirements differ significantly. By establishing the new Regulations, DIFC is once again reaffirming its commitment to family businesses and the development of DIFC into a hub for local, regional and international family offices.”
The enactment of the Regulations follows a period of consultation where companies were invited to comment on the proposed Regulations. Having received highly positive feedback, the new Regulations will come into effect on 2 September 2008.
Central to the new Regulations are changes to the DIFC Single Family Offices (SFO) platform and consequential amendments to other DIFC and DFSA regulations such as the DFSA’s General Module and Glossary Module.
The Regulations offer distinct benefits to Single Family Offices (SFOs) as they exclude them from many of the regulatory constraints placed on conventional organisations located at DIFC. Read more…
- Richard
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admin | Wednesday, September 3rd, 2008 | No Comments »
Active Management
Active Investment Management
Active management is a strategy in which an investment manager selects investments that he believes will outperform the market index. Active management implies that the investment manager uses discretion to choose investments that will perform better than the index, and thus the fund will have high returns. A passive manager, on the other hand, will make investments that follow the market index.
Read dozens of additional articles like this within the guide to Hedge Fund Definitions and Terms.
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