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What the Ultra High Net Worth Invest in now

admin — Mon, 06 Jul 2009 05:48:00 +0000

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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Tags: Ultra Rich Investing, investments, family office, family offices, wealth management, financial planning, financial, finance, business, investments, stock market, stocks

Wealth Management Marketing & Family Office Growth

admin — Fri, 05 Dec 2008 03:55:00 +0000

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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Tags: Wealth Management, Financial, Finance, Family Offices, Wealth Managers, Wealth Management Marketing, RIA Marketing, Marketing and Sales for Wealth Management Firms

Hedge Fund Statistics | Video Interview on Closures & Redemptions

admin — Thu, 04 Dec 2008 19:57:00 +0000

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.

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Investment Marketing

admin — Sat, 27 Sep 2008 16:03:00 +0000

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

Hedge Fund Industry | Leverage? Shorting? Transparency? Survival?

admin — Wed, 24 Sep 2008 13:03:00 +0000

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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Financial Disclosures – 5 Tips on What Not to Do

admin — Fri, 19 Sep 2008 00:35:00 +0000

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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Tags: Financial Disclosures, Hedge Funds Disclosure, Hedge Fund Disclosures, Investment Disclosures, Security Disclosures, Performance and Marketing Disclosures, SEC, FINRA

Hedge Fund Loans to Private Corporations

admin — Thu, 18 Sep 2008 01:05:00 +0000

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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San Diego Hedge Funds – Events & Networking Opportunities

admin — Wed, 17 Sep 2008 22:32:00 +0000

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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Prime Brokerage Boston – Meeting Notes

admin — Wed, 17 Sep 2008 17:11:00 +0000

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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Chartered Financial Analyst Exam

admin — Wed, 17 Sep 2008 17:00:00 +0000

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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