Here is a short video with IndexIQ which offers a hedge fund ETF product. This video provides a pretty good high level explanation of the product. Discussions around how legitimate these products are surfaced at both of the last two hedge fund conferences I attended. If you are viewing this article via email please click here to watch the embedded video below.

View over 100 videos on hedge funds within our Hedge Fund Video Library.

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HedgeFundBlogger.com now hosts hundreds of free-to-watch videos on the hedge fund industry. Many of these are highlighted within our Hedge Fund Video Library. Here are links to 20 of the more popular videos from this library:

• What To Know About Hedge Funds
• Hugh Hendry Eclectica Asset Management Interview
• Obama Hedge Fund Regulation 2009 2010 2011
• Hedge Fund Macro Fund Performance Video
• Mark Fuchs Interview on Hedge Funds
• How to Have a Positive Attitude
• Hedge Fund Business Model Discussion Video
• Nassim Taleb Interview on the Economy Black Swan
• Private Equity Regulation in Europe and America
• Investor Questions for Hedge Funds
• Hedge Fund Losses and Closures in 2008 2009
• Barton Biggs Traxis Partners Hedge Fund Interview
• Hedge Fund Startup and Business Development
• Jim Cramer on TARP Programs & Hedge Funds
• Regulation on Hedge Funds Regulations 2008 2009
• Hedge Fund Compensation Report
• The Hedge Fund Industry – Video Update
• Building a Hedge Fund How to Start A Hedge Fund

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More Alternative Investment Awareness

I recently read a post on Hedge Lines about the alternative investment industry and how Portfolio.com has claimed that private equity firms add no value – only fees. Here are some quotes from that blog post:

“The entire spectrum of alternative asset management is under attack.”

“The problem is that no one is talking about the good apples in the alternatives arena. No one is making the case that hedge funds and private equity are valuable, even important, vehicles for institutions, like pension funds, that should reasonably expect to make money even when the market is down. This should be an easy argument to make, but no one is actively taking it on.”

The Hedge Fund Group (HFG) and HedgeFundBlogger.com are taking this on. Through this financial crisis we have been pointing out how hedge funds have outperformed the markets, how hundreds of new funds are being started right now, and we have also detailed how this diverse industry is as alive as ever.

What the industry needs is a more concerted effort to converse with the public, with government officials, with banks, and wealth management firms. There should be an easier channel for hedge fund manager communication directly with the public whether they are a potential investor or not.

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Top 20 HedgeFundBlogger.com Pages

Here is a list of 25 of the most popular articles on HedgeFundBlogger.com based on pageviews over the last month:

1. Top 100 Hedge Funds to Watch
   
2. Hedge Fund Tracker Tool (Over 1,000 Hedge Funds)
   
3. Hedge Fund Job Listings
   
4. Letters to Hedge Fund Investors
   
5. Hedge Fund Employment
6. Hedge Fund Startup Tools
7. Hedge Fund Strategy Guide
   
8. Hedge Fund Websites
   
9. Geographical Guide to Hedge Funds
   
10. Hedge Fund Performance Articles
    
11. Hedge Funds in New York
    
12. Book Summary of Good to Great
    
13. Top Banks in the US
    
14. Renaissance Technologies Hedge Fund Profile
    
15. Blue Ridge Capital Hedge Fund Profile
    
16. Beta Formula – Finance Definition
17. Hedge Fund Marketing Tools
18. Hedge Fund Transparency Act
19. Bernard Madoff Hedge Fund Fraud Case
20. Table of Contents

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Hedge Fund Industry & The Markets

I just had a comment on a past blog post related to how the current markets have changed the current hedge fund strategies being offered right now.

Here was my response:

While many strategies have struggled in 2008 and 2009 global macro and shorting strategies have done well. I’ve also heard of many managers who are shifting their strategies to more short term vol trading instead of long term holding for obvious reasons. Managers who used to do 80% long term holding and 20% short term trading have now flipped those stats on their head. Lots of new commercial financing and distressed asset funds are coming out right now as well.

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Q & A Email Exchange

Question: Richard, you have done a great job branding yourself online, I appreciate all of the advice contained within your articles. I am curious what you do besides run http://HedgeFundBlogger.com, do you consult full time?

Answer: Greg, thanks for the note. My background is in capital raising for hedge fund managers but in 2008 I quit that position to focus full time on run this website, work with hedge funds on their prime brokerage and capital raising needs in more of a consulting role and help launch and grow the CHA Designation. Most of my day-to-day work with hedge funds now consists of evaluating prime brokerage options, multi-prime brokerage models, capital raising methods and capital introduction opportunities.
The websites that I run or help run include:

http://CHADesignation.org
http://HedgeFundBlogger.com
http://FamilyOfficesGroup.com
http://PrivateEquityBlogger.com
http://HedgeFundsCareer.com
http://PrimeBrokerageGuide.com
http://HedgeFundGroup.org

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Hedge Fund Losses in 2008 2009

Here is a video below on hedge fund asset losses and closures. While there is a small set of institutional investors investing in a number of opportunistic hedge funds most are still loosing assets each quarter. Many firms were profitable just 2-3 years ago and now have less assets to manage and little if any performance fees to collect. If you are reading this article over email through our daily hedge fund newsletter please click here to watch the embedded video below.

View over 100 additional hedge fund videos within our Hedge Fund Video Library

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Truth About Hedge Fund Performance

(HedgeFundBlogger.com) Hedge funds have been hurt by their overall negative returns in 2008. The truth about hedge fund performance is that it still far outperforms the broader markets. With all of the recent bad press hedge funds have been receiving you would think they had lost twice as much as the S & P 500, the truth is they lost less than 20% while the S & P was down over 38% for 2008.

Counterparty risks, fraud and redemption notices are obviously the hot topics which are hurting the hedge fund industry just as much if not more than performance. Many in the industry hope and believe that many groups are sitting on cash, waiting to allocate and completing much more due diligence before investing back into the markets or hedge funds. Hopefully these issues mentioned above cease to break the front pages of the WSJ and fade away with the weak economy in 2009.

Here is a short snippet from a recent news story on hedge fund performance:

Although hedge funds finished up 2008 with some of the worst numbers to date, they showed some signs of promise in December. According to the latest research by the Hennessee Group LLC, a New York-based advisor to hedge fund investors, hedge funds advanced .51 percent in December.

Hedge funds finished up the year down 19.15 percent according to the research. Although it was a dismal year for funds as a whole, they still outperformed the S & P, which was down 38.5 percent on the year, the Dow Jones, who dropped almost 34 percent, and the NASDAQ Composite Index, which posted a 40 percent drop on the year. source

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Counterparty Risk Management | Counter Party Risks

It goes without saying that counterparty risk management has become more important to look at for just about everyone in the industry. What needs more discussion is exactly how to conduct and assess counterparty risks. Here is an article on this topic:
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Risk and Reward: Hedge Funds Changing Views on Counterparty Relationships, focuses on the heightened importance of effectively managing counterparty risk and the integral role it plays in partnering with a prime broker. It also highlights best practices that have been implemented by other hedge funds to help address and mitigate counterparty risk. Key findings from the study include:

• Hedge Funds Increase Scrutiny On Managing Counterparty Risk — Counterparty risk monitoring has become a significant part of overall business operations. One of the major drivers for heightened attention to managing counterparty risk are hedge funds’ concerns about the negative impact it could ultimately have on their firms’ operations should one of their key counterparties default on their obligations. More than 50% of respondents reported monitoring counterparty risk on a daily basis and nearly 85% consider it an extremely important or very important business issue. An overwhelming 96% of respondents also cited managing counterparty risk as the number one factor in selecting their prime broker relationships. Concerns about managing counterparty risk two years ago were not a primary issue for most hedge funds, as 26% of the respondents considered counterparty risk important and 22% viewed it as moderately important;

• Counterparty Risk Management Must be Tackled Directly and Systematically — Effectively monitoring counterparty risk will continue to be a critical component of a hedge fund’s business operations. The development of a standardized, well-documented approach to analyzing counterparty risk remains one of the top priorities for the hedge fund community. Best practices for proactively managing counterparty risk include:

* Leveraging innovative services from prime brokers, such as a tri-party account approach
* Conducting consistent internal portfolio and risk assessments
* Formalizing business processes by outsourcing and installing in-house technology solutions such as portfolio management systems
* Implementing third-party independent valuation technology solutions and service providers supplemented with in-house valuation tools; and

• Adoption of Technology — There is no silver bullet for hedge funds when attempting to actively monitor the balance sheets of important counterparties despite the growing concerns over counterparty risk management. Read the full article

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