Posts Tagged ‘stock market’
admin | Monday, August 3rd, 2009 | No Comments »
Hedge Funds 101 Video
Below is a video on hedge funds. While parts of the video are good, generalizations are made about the industry which I do not believe are true. All hedge fund managers do not “hedge” and many are not “adventurous.” Hope this is helpful. Also, there are many more rules that hedge funds typically must follow, this video makes the process sound more simple than it really is.
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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, July 2nd, 2009 | No Comments »
Hedge Fund Infrastructure Investments
While we don’t usually publish videos put out by industry service providers, below is a very professional interview-based video created by Advent Software. Within this video they talk about hedge fund infrastructure, investing in improving operations, and the pay-off periods of doing so. Click here to view the embedded video below.
View over 100 videos on hedge funds within our Hedge Fund Video Library.
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admin | Monday, June 22nd, 2009 | No Comments »
Hedge Fund ETFs | Video Explanation
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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admin | Thursday, June 11th, 2009 | No Comments »
Hedge Funds vs. Mutual Funds
I provided a quote yesterday to Daleela Farina, an author over at BloggingStocks.com. Here is an excerpt from an article she just published on hedge funds and mutual funds:
Has your broker repeatedly sold you on the “safe” investment vehicle, the mutual fund? Investing in a wide variety of prominent companies, with solid, long-term track records, mutual funds have been an easy-to-understand and popular investment choice for decades.
Mutual funds are hugely diversified, holding large stakes in recognizable names such as Google (GOOG), Citigroup (C), Walmart (WMT), Starbucks (SBUX), General Electric (GE), Bank of America (BAC), and Fannie Mae (FNM).
A few years ago, doubting these dominant brands would have been considered foolish. This narrow-minded thinking is representative of our formerly uneducated and naive views on the market. But after last year’s performance, mutual funds’ investment model has now been proven obsolete. Like the dinosaurs. source
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admin | Sunday, May 31st, 2009 | No Comments »
Single Family Offices Losing Ground
As a follow up to a post we put out a few weeks ago, here is some more evidence that multi-family offices may still be growing as some wealth management operations and single family offices struggle:
Citing a collapsing investment market and increased demands from family members, many single-family offices are worried about keeping their doors open, saying that “sustainability” is the biggest challenge they face.
That was a key finding from the “Single-Family Office Study” released last month by Family Wealth Alliance LLC of Wheaton, Ill.
“For single-family offices, assets are down and expenses are up,” said Thomas Livergood, chief executive of Family Wealth Alliance.
“When things are hunky-dory, as they’ve been for the past few years, nothing is questioned,” he said. “When things start going wrong, everything is questioned.”
Many single-family offices “will need to change,” Mr. Livergood said. source
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admin | Sunday, May 31st, 2009 | No Comments »
Single Family Offices Losing Ground
As a follow up to a post we put out a few weeks ago, here is some more evidence that multi-family offices may still be growing as some wealth management operations and single family offices struggle:
Citing a collapsing investment market and increased demands from family members, many single-family offices are worried about keeping their doors open, saying that “sustainability” is the biggest challenge they face.
That was a key finding from the “Single-Family Office Study” released last month by Family Wealth Alliance LLC of Wheaton, Ill.
“For single-family offices, assets are down and expenses are up,” said Thomas Livergood, chief executive of Family Wealth Alliance.
“When things are hunky-dory, as they’ve been for the past few years, nothing is questioned,” he said. “When things start going wrong, everything is questioned.”
Many single-family offices “will need to change,” Mr. Livergood said. source
To learn more about family office wealth management firms please visit FamilyOfficesGroup.com.
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admin | Friday, May 22nd, 2009 | No Comments »
Hedge Fund Investments & Risks
Below is a short video on hedge fund investments, current market risks and how hedge funds have been involved within the recent crisis. This video discusses the blame placed on hedge funds, the importance of trust in the industry right now and whether fund of hedge funds are going to continue to exist within their traditional form. If you are reading this article through our daily email newsletter and would like to watch the embedded video on our website please click here.
View over 100 hedge fund videos for free within our Hedge Fund Video Library
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admin | Wednesday, May 20th, 2009 | No Comments »
Investing in Diamonds
Here is a short video on investing in diamonds as an alternative investment. To view this video through your email inbox please click here.
View over 100 hedge fund videos for free within our Hedge Fund Video Library
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admin | Tuesday, May 19th, 2009 | No Comments »
Direct Funding Preservation Alliance
A new trade group was recently formed to help improve the public and industry image of PIPE investments. This is needed, I have heard many professionals say that this is one of the 3-5 types of hedge fund strategies that they do not want to touch within their portfolio. Here is short article excerpt on this development:
Companies that make private investments in public equities, also known as PIPE investments, have formed a trade group to educate the public about what they do.
The Direct Funding Preservation Alliance will attempt to squelch misconceptions of PIPE investors, who have been criticized as predatory investors who take advantage of companies desperate for money. Membership will include PIPE investors and industry vendors, organizers say.
Even within the publicly maligned hedge-fund industry, PIPE funds have been looked at by some as a seedy back-alley … source
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admin | Monday, May 18th, 2009 | No Comments »
April 2009 Hedge Fund Performance
Here a recent video on hedge fund performance in April 2009. If you are viewing this through our email newsletter please click here to see the embedded video below.
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admin | Friday, April 17th, 2009 | No Comments »
Hedge Fund Video Series
Here are a series of videos on hedge funds which came out this week. The first video below discusses the state of the hedge fund industry, pending hedge fund related regulations, and possible adjustments to the taxes hedge fund managers must pay on their performance gains.
This next video below is on hedge fund performance and on how hedge funds now once again turning a profit. The video also discusses which strategies are doing well this year. The best strategies in March were the Equity Hedge Strategies and Relative Value Strategies, the worst performance was seen by Macro strategies.
The next video discusses how there are some positive signs for the hedge fund industry, in March aggregate hedge funds returns turned positive and redemptions have started to slow.
Related to Hedge Fund Video Series | Quick Summary Update
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admin | Thursday, April 16th, 2009 | No Comments »
Hedge Fund Video Series
Here are a series of videos on hedge funds which came out this week. The first video below discusses the state of the hedge fund industry, pending hedge fund related regulations, and possible adjustments to the taxes hedge fund managers must pay on their performance gains. If you are viewing this article via our daily Hedge Fund Newsletter you will need to click here to view these embedded videos below.
This next video below is on hedge fund performance and on how hedge funds now once again turning a profit. The video also discusses which strategies are doing well this year. The best strategies in March were the Equity Hedge Strategies and Relative Value Strategies, the worst performance was seen by Macro strategies.
The next video discusses how there are some positive signs for the hedge fund industry, in March aggregate hedge funds returns turned positive and redemptions have started to slow.
View over 100 additional free videos within our Hedge Fund Video Library
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admin | Wednesday, April 8th, 2009 | No Comments »
Free Videos on the Hedge Fund Industry
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:
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admin | Wednesday, April 1st, 2009 | No Comments »
Hedge Fund Strategies During the Recession
Just came across an article which on top of the normal industry regulation and redemption talk discussed what strategies might actually do well over the next year or two. In addition to the ideas quoted below I believe that more simple, easy to understand strategies which survived both the 2001-2002 and current periods will go far with new investors.
Here is a few quotes from the article:
“Macro funds will be a big winner,” predicts Sassan Ghahramani, former chief executive Medley Global Advisers, a research firm for hedge funds and other money managers. “There is so much policy involvement that is affecting the movements of markets. And in the next two to five years, central banks will unwind their interest rate cuts, but at different speeds in different countries.” That will create trading opportunities for the macro managers.
The environment also is ripe for hedge funds that invest in distressed assets, such as real estate and securities backed by credit card and auto loans. “There is a lot of interest out there for this,” Ghahramani says. “People are trying to put together war chests.”
“Probably the best hedge-fund trade in the next year is to partner with the government in buying the securities it wants to get sold from banks,” says David Gilmore, a partner at Foreign Exchange Analytics, which advises hedge funds and others about market trends. “You get the most leverage at the lowest rates and insurance on your downside risk.” source
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admin | Tuesday, February 24th, 2009 | No Comments »
Plenty of Good Apples
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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admin | Sunday, February 15th, 2009 | No Comments »
Hedge Fund Trend
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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admin | Monday, February 9th, 2009 | No Comments »
Hedge Fund Performance
Hedge Fund Performance Figures
Here is a video interview with the head of Hedge Fund Research. The interview discusses how hedge funds had the worst year last ever in terms of redemptions and performance. 2008 followed a year of record inflows in 2007 when almost $200B came into the industry. Macro funds had the best performance for 2008, due to their strength during volatile times. If you are viewing this article via email you will need to click here to view this embedded video below:
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admin | Monday, February 9th, 2009 | No Comments »
2008 Fund Performance
Hedge Fund Macro Fund Performance
Here is a video interview with the head of Hedge Fund Research. The interview discusses how hedge funds had the worst year last ever in terms of redemptions and performance. 2008 followed a year of record inflows in 2007 when almost $200B came into the industry. Macro funds had the best performance for 2008, due to their strength during volatile times. If you are viewing this article via email you will need to click here to view this embedded video below:
View over 100 hedge fund videos within our Hedge Fund Video Library.
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admin | Tuesday, February 3rd, 2009 | No Comments »
Q & A Email
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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admin | Thursday, January 15th, 2009 | 12 Comments »
Hedge Fund Course
Hedge Fund Course CHP Designation
Below is a short interview just conducted with popular private equity writer Theo O’Brien.
Theo: What is the Certified Hedge Fund Professional (CHP) program?
The CHP Designation program is an online hedge fund certification program sponsored by the Hedge Fund Group (HFG) starting in 2008.
The CHP Designation is a two part program. Level 1 helps participants gain a comprehensive base level of knowledge about the hedge fund industry. Level 2 allows participants to specialize within a niche area of the industry such as marketing and sales, due diligence or analytics.
Theo: What do graduates from the CHP program receive, as in what are the benefits from taking the program?
For a list of the benefits from completing the program please see this page: http://chadesignation.org/CHA-Designation-Benefits.html.
Our program also benefits hedge fund startups and sub $100M hedge fund managers. Here is how: http://chadesignation.org/How-To-Start-A-Hedge-Fund-Startup-Benefits.html
Theo: How is this program connected to the Hedge Fund Group (HFG) and who decides what goes on the exam?
The Hedge Fund Group (HFG) sponsors the CHP Designation and created it in 2008. There is a team of 5 professionals who have developed and maintain the designation and they are aided by an advisory board of approximately 55 professionals who work at hedge funds, fund of hedge funds and prime brokerage/auditing firms.
Theo: Where are classes held? New York? How much do they cost.
The CHP Designation is offered 100% online and tuition is $599 or $499 if you register within the first 24 hours of registration opening. The program and exam may be taken from anywhere in the world as long as the individual has a reliable internet connection. Last year we had participants from Hong Kong, UK, US, Canada, India and China.
Theo: So the CHP Designation program is really international and not based within the Manhattan or any one location for that matter.
Yes that is correct.
Theo: How well known is the program? Have mainstream media outlets interviewed your team?
To some extent we have been covered. We have not graced the cover of the WSJ or any large American newspaper but we have been picked up by the Financial Times, Alpha Magazine, Institutional Investor and Job Search Digest. Most of these stories were ran in interview form. The Financial Times was the most thorough, we spent over 4 hours speaking with them and that doesn’t count their inquiries to actual participants within the program as well.
Theo: Is there anything else you want to mention here before we end this interview?
We have much more information on our website: http://chadesignation.org/.
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admin | Monday, January 12th, 2009 | 1 Comment »
Hedge Fund Performance
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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admin | Thursday, January 8th, 2009 | No Comments »
Prime Brokerage Business
Prime Brokerage Business | Wikipedia
Quick Link: Hedge Fund Prime Brokers
Prime brokerage is the generic name for a bundled package of services offered by investment banks and securities firms to hedge funds and other professional investors needing the ability to borrow securities and cash to be able to invest on a leveraged basis and achieve an absolute return. The business advantage to a hedge fund of using a Prime Broker is that the Prime Broker provides a centralized securities clearing facility for the hedge fund, and the hedge fund’s collateral requirements are netted across all deals handled by the Prime Broker. The Prime Broker benefits by earning fees (“spreads”) on financing the client’s long and short cash and security positions, and by charging, in some cases, fees for clearing and/or other services. It also earns money by hypothecating the portfolios of the hedge funds it services and charging a fee to those borrowing securities and other investments.
The following services are typically bundled into the Prime Brokerage package:
- global custody (including clearing, custody, and asset servicing)
- Securities lending
- Financing (to facilitate leverage of client assets)
- Customized Technology (provide hedge fund managers with portfolio reporting needed to effectively manage money)
- Operational Support (prime brokers act as a hedge fund’s primary operations contact with all other broker dealers)
In addition, certain prime brokers provide additional “value-added” services, which may include some or all of the following:
- Capital Introduction – A process whereby the prime broker attempts to introduce its hedge fund clients to qualified hedge fund investors who have an interest in exploring new opportunities to make hedge fund investments.
- Office Space Leasing and Servicing – Certain prime brokers lease commercial real estate, and then sublease blocks of space to hedge fund tenants. These prime brokers typically provide a suite of on-site services for clients who utilize their space.
- Risk Management Advisory Services – The provision of risk analytic technology, sometimes supplemented by consulting by senior risk professionals.
- Consulting Services – A range of consulting / advisory services, typically provided to “start-up” hedge funds, and focused on issues associated with regulatory establishment requirements in the jurisdiction where the hedge fund manager will be resident, as well as in the jurisdiction(s) where the fund itself will be domiciled.
History
The basic services offered by a prime broker give a money manager the ability to trade with multiple brokerage houses while maintaining, in a centralized master account at their prime broker, all of the hedge fund’s cash and securities. Additionally, the prime broker offers stock loan services, portfolio reporting, consolidated cash management and other services. Fundamentally, the advent of the Prime Broker freed the money manager from the more time consuming and expensive aspects of running a fund. These services worked because they also allowed the money manager to maintain relationships with multiple brokerage houses for IPO allocations, research, best execution, conference access and other products.
The concept and term “prime brokerage” is generally attributed to the U.S. broker-dealer Furman Selz in the late 1970s. However, the first hedge fund operation is attributed to Alfred Winslow Jones in 1949. In the pre-prime brokerage marketplace, portfolio management was a significant challenge; money managers had to keep track of all of their own trades, consolidate their positions and calculate their performance regardless of which brokerage firms executed those trades or maintained those positions. The concept was immediately seen to be successful, and was quickly copied by the dominant bulge bracket brokerage firms such as Morgan Stanley, Bear Stearns, Merrill Lynch, Lehman Brothers, and Goldman Sachs. At this nascent stage, hedge funds were much smaller than they are today and were mostly U.S. domestic long-short equities funds. The first non-U.S. prime brokerage business was created by Merrill Lynch’s London office in the late 1980s.
Through the 1980s and 1990s, prime brokerage was largely an equities-based product, although various prime brokers did supplement their core equities capabilities with basic bond clearing and custody. In addition, prime brokers supplemented their operational function by providing portfolio reporting; initially by messenger, then by fax and today over the web. Over the years, prime brokers have expanded their product and service offerings to include some or all of the full range of fixed income and derivative products, as well as foreign exchange and futures products.
As hedge funds have proliferated globally through the 1990s and the current decade, prime brokerage has become an increasingly competitive field and an important contributor to the overall profitability of the investment banking business. As of 2006, the most successful investment banks each report over two billion dollars in annual revenue directly attributed to their prime brokerage operations (source: 2006 annual reports of Morgan Stanley and Goldman Sachs).
Fees
Prime brokers do not charge a fee for the bundled package of services they provide to hedge funds. Rather, revenues are typically derived from three sources: spreads on financing (including stock loan), trading commissions and fees for the settlement of transactions done away from the prime broker. The financing and lending spreads, which are charged in basis points on the value of client loans (debit balances), client deposits (credit balances), client short sales (short balances), and synthetic financing products such as swaps and CFDs (Contract for difference), make up the vast majority of prime brokerage revenue. Therefore, clients who undertake substantial short-selling or leverage represent more lucrative opportunity than clients who do relatively less short selling and/or utilize minimal leverage. Clients whose market activities are principally fixed income oriented will generally produce less prime brokerage revenue, but may still present significant economic opportunity in the repo, foreign exchange (fx), futures, and flow business areas of the investment bank.
Risks
Prime Brokers facilitate hedge fund leverage, primarily through loans secured by the long positions of their clients. In this regard, the Prime Broker is exposed to the risk of loss in the event that the value of collateral held as security declines below the loan value, and the client is unable to repay the deficit. In practice, such conditions arise only in the case of extraordinary volatility or unexpected correlation reversions and are exceedingly rare. Other forms of risk inherent in Prime Brokerage include operational risk and reputational risk.
Large prime brokerage firms today typically monitor the risk within client portfolios by either Value at Risk (VaR) or “Rules Based” stress testing. Stress testing entails running a series of what-if scenarios that identify the potential gains or losses for each position due to adverse market events.
Examples of stress test scenarios include:
* Flight to Quality
* 1% up or down parallel movement in 10 year treasury yield curve
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Prime Brokerage News
Prime Brokerage News | Large Banks Win Business
(PrimeBrokerageGuide.com) Recently hedge funds have been moving some assets away from investment banks which specialize in providing a relatively narrow number of products to broader diversified banks which are more secure in earn money in hundreds of different ways. These larger banks often make money by catering to both institutional and retail clients and are less likely to fail. Some of these firms to recently benefit have been BNP Paribas, Fidelity, Credit Suisse, and Deutsche Bank (view our list of prime brokers on the right hand side of PrimeBrokerageGuide.com).
As counterparty risk management and multi-prime bokerage both grow in popularity this trend will only increase. The list of top prime brokers by the end of 2009 could look very different than it did just this last year. Here is a recent article on this topic:
Broker-dealers such as Morgan Stanley and Goldman Sachs are losing out in the battle for hedge funds’ dwindling pool of assets, as funds seek out banks with diverse sources of funding in a major shake-up of prime broking.
The collapse of investment bank Lehman Brothers (LEHMQ.PK) in September shocked hedge funds, as those with accounts at Lehman when it sought bankruptcy protection had those assets frozen and risked being unable to close trades.
“The Lehman bankruptcy … led many hedge funds to flee the two largest prime brokers, Morgan Stanley and Goldman, for the perceived safety of the universal banks,” said BersteinResearch analyst Brad Hintz in a note.
Prime brokers make money by charging hedge funds fees for providing financing for trading and settlement of trades.
Credit Suisse (CSGN.VX), whose operations include a large wealth management unit as well as prime broking, saw balances in its prime brokerage unit grow 50-60 percent last year compared with 2007, a source familiar with the business said.
Roy Martins, the bank’s head of international prime services, said: “There was a peak in terms of business in September and October. All the clients we took on had existing relationships and dialogues with us as they were clients we had been targeting anyway.”
Deutsche Bank (DBKGn.DE), backed up by its big retail bank, has also benefited from an influx of business in its prime brokerage in the last six months, a source close to the bank said. source
Related to Prime Brokerage News | Large Banks Win Business
Tags: Prime Brokerage News, News on Prime Brokers, Prime Brokerage, Prime Broker, Investments, Stock Market, Hedge Fund, hedge funds, Prime Brokerage Banks, trading, marketing
Tags: Business, hedge fund, Hedge Funds, investments, marketing, News on Prime Brokers, Prime Broker, Prime Brokerage, Prime Brokerage Banks, Prime Brokerage News, stock market, trading
Posted in Business
admin | Thursday, January 8th, 2009 | No Comments »
Prime Brokerage News
Prime Brokerage News | Large Banks Win Business
(HedgeFundBlogger.com) Recently hedge funds have been moving some assets away from investment banks which specialize in providing a relatively narrow number of products to placing their assets with broader diversified banks which are more secure in earn money in hundreds of different ways. These larger banks often make money by catering to both institutional and retail clients and have generally have lower percentage chances of failing.
Some of these firms to recently benefit have been BNP Paribas, Fidelity, Credit Suisse, and Deutsche Bank (view our list of prime brokers by clicking here).
As counterparty risk management and multi-prime bokerage both grow in popularity this trend will only increase. The list of top prime brokers by the end of 2009 could look very different than it did just this last year. Here is a recent article on this topic:
Broker-dealers such as Morgan Stanley and Goldman Sachs are losing out in the battle for hedge funds’ dwindling pool of assets, as funds seek out banks with diverse sources of funding in a major shake-up of prime broking.
The collapse of investment bank Lehman Brothers (LEHMQ.PK) in September shocked hedge funds, as those with accounts at Lehman when it sought bankruptcy protection had those assets frozen and risked being unable to close trades.
“The Lehman bankruptcy … led many hedge funds to flee the two largest prime brokers, Morgan Stanley and Goldman, for the perceived safety of the universal banks,” said BersteinResearch analyst Brad Hintz in a note.
Prime brokers make money by charging hedge funds fees for providing financing for trading and settlement of trades.
Credit Suisse (CSGN.VX), whose operations include a large wealth management unit as well as prime broking, saw balances in its prime brokerage unit grow 50-60 percent last year compared with 2007, a source familiar with the business said.
Roy Martins, the bank’s head of international prime services, said: “There was a peak in terms of business in September and October. All the clients we took on had existing relationships and dialogues with us as they were clients we had been targeting anyway.”
Deutsche Bank (DBKGn.DE), backed up by its big retail bank, has also benefited from an influx of business in its prime brokerage in the last six months, a source close to the bank said. source
Related to Prime Brokerage News | Large Banks Win Business
Tags: Prime Brokerage News, News on Prime Brokers, Prime Brokerage, Prime Broker, Investments, Stock Market, Hedge Fund, hedge funds, Prime Brokerage Banks, trading, marketing
Tags: hedge fund, Hedge Funds, investments, marketing, News on Prime Brokers, Prime Broker, Prime Brokerage, Prime Brokerage Banks, Prime Brokerage News, stock market, trading
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