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 Definition

Q & A: Hedge Fund Definitions Resource?

Question: I have just been hired for a hedge fund analyst position and need to get up to speed on industry norms and definitions. Do you know how I could do so in just a few weeks time?

Answer: Yes, I have been building an online glossary for the hedge fund industry here: Hedge Fund Terms. Let me know if you need a specific definition and don’t see it there yet, we are constantly expanding this resource for individuals such as yourself. Here are some direct links to available definitions:

• Accredited Investor
• Prime Brokerage
• What is a Hedge Fund?
• Sharpe Ratio
• Video:Discussing Hedge Fund Leverage
• Sortino Ratio
• Omega Ratio
• Active Premium
• Hedge Fund Strategy Definitions
  

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Tags: Hedge Fund Definition, Hedge Fund Terms, Hedge Funds Definition, Define hedge fund, define hedge funds, Definition of hedge fund, hedge fund definition, hedge fund leverage definition, hedge fund strategy definition, activist hedge fund definition, Fund of hedge funds definition

More prime brokerage firms are adding on administration services to help attract and retain clients. I wasn’t sure how widespread of a trend this was but saw this mentioned within an article yesterday as noted below. I would be interested in discussing this further with hedge fund managers reading this article – if you have some insight – Richard@HedgeFundGroup.org.
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In recent years, the custodian banks that have acquired hedge fund administrators have sought to adjust client lists in favor of larger and more profitable hedge fund and fund of funds groups interested in a broader array of services. At the same time, prime brokers have recognized that providing administration services can help attract and retain clients and counter the shift among hedge fund managers towards multiple prime brokerage.

“It would be surprising if the hedge fund administration industry continues to support such a large number of providers, and there is now evidence that a renewed round of consolidation is in the offing,” says Dominic Hobson. “However, the appetite to sell may be offset as well as encouraged by the depressed prices available. In any event, the buyers are likely to be different from the banks which dominated the acquisition process in the early years of this century.” Read more…

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Tags: Prime Brokerage and Hedge Fund Administration Services, Prime Broker offering administration services, administration services from prime brokerage firms, which prime brokerage firms offer hedge fund administration services

More prime brokerage firms are adding on administration services to help attract and retain clients. I wasn’t sure how widespread of a trend this was but saw this mentioned within an article yesterday as noted below.
__________________

In recent years, the custodian banks that have acquired hedge fund administrators have sought to adjust client lists in favor of larger and more profitable hedge fund and fund of funds groups interested in a broader array of services. At the same time, prime brokers have recognized that providing administration services can help attract and retain clients and counter the shift among hedge fund managers towards multiple prime brokerage.

“It would be surprising if the hedge fund administration industry continues to support such a large number of providers, and there is now evidence that a renewed round of consolidation is in the offing,” says Dominic Hobson. “However, the appetite to sell may be offset as well as encouraged by the depressed prices available. In any event, the buyers are likely to be different from the banks which dominated the acquisition process in the early years of this century.” Read more…

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Tags: Prime Brokerage and Hedge Fund Administration Services, Prime Broker offering administration services, administration services from prime brokerage firms, which prime brokerage firms offer hedge fund administration services

Pharos Fund

Pharos Financial Group – Hedge Funds

The following piece on Pharos Fund 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.

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Resource #1: (11.18.08) oscow-based hedge fund Pharos Financial Group is opening an office in sunnier climes. The Russia-focused hedge fund manager has been licensed to operate in Dubai and is opening an office at the Arab Emirate’s Dubai International Financial Centre.

The US$130 million firm, which was seeded by Soros Fund Management in 1997, is the first Russia-focused hedge fund manager to win approval from the Dubai Financial Services Authority. Founder Peter Halloran pointed to a growing appetite for Russia-focused funds among Persian Gulf Coast investors as a motivation for the new office.

“Our move to DIFC was an easy strategic decision given our expectation that the need for quality asset management in the GCC will grow substantially over the next decade,” he said in a statement. “Pharos intends to fill the niche as the market leader in emerging markets fund management. Already we have seen tremendous appetite from GCC investors for our Russian-focused investment opportunities.” Source

Additional Resources

The following is a list of resources and information that is publicly available about Pharas Fund.

• Pharos fund portfolio.
• Whitepaper on Pharos Fund. The White paper explains how the pharos fund manager makes decisions.
• Every letter to all investors for 2008, from the Pharos Fund and Gas Fund.
• Excel spreadsheet of every Pharos funds performance. So far, 2008 has a negative return on every fund.
• Excel spreadsheet breakdown of Sector allocations for the pharos fund.
• Excel spreadsheet breakdown of Sector allocations for the Gas fund. Pretty self-explanatory, the fund invests in options and futures in oil and natural gas.
• Article about how there will be an increasing demand for natural gas.
• Excel spreadsheet of Pharos small cap fund. The small cap fund uses Russia’s building economy and uses illiquid shares to make a profit.
• Daily market comment and performance of all three funds. The Political Environment is fragile, which will create volatility in the market overall, which is good for each hedge fund.
• Article about how all Pharos funds are down. The MSCI Russia Index is down 32.4% due to “a reversal of fortune from the market’s earlier outperformance.”
• The Georgia conflict severely hurt the Russian economy because investors pulled out more than $7 billion. Russian may not be allowed to host the next Olympics and the U.S. is restricting Visas for Russians.
• Pharos said that the Russian economy is stable, but foreign investors insecurity will create short term-volatility.
• Name of this article pretty much sums it up- “Pharos, TPG to acquire American Beacon Advisors for $480m.”
• Interview with Peter Halloran. Eastern European (Russian affiliated) countries are rapidly growing faster than other developing nations.
• Article about the government planning to increase domestic gas prices by 25-40 per cent, over the next three years.
• A blog post that has a about positive outlook for every Pharos fund, for the month of June.
• Article about how hurricane Gustav may increase gas to $5 a gallon. This may effect pharos gas fund.

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Tags: Pharos Fund, Pharos Hedge Fund, Pharos Gas Fund, Pharos Hedge Funds, Pharos Hedge Fund Russia, Russian Hedge Funds by Pharos, Hedge Fund managers Pharos Financial Group Funds

Denmark Hedge Funds

Guide to Hedge Funds in Denmark

Here is a short collection of articles on the hedge fund industry in Denmark. 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 Denmark:

• Denmark and Norway hedge towards the future with announcement of new regulatory regime. Aiming at attracting more oversea investors, Denmark and Norway have both announced the introduction of a more lenient regulatory framework for the hedge funds, with includes a more transparent tax regimes and less regulation for managing the funds.
• This Article discusses the taxation issues regarding establishing a hedge fund in Denmark and to its potential investors.
• Warning lights in Denmark. Investment in private equity is becoming increasingly popular in Denmark, with some investors allocating as much as ten percent of total assets. In this article, I&PE’s analyst Paula Garrido examines how Denmark’s pension funds are structuring their portfolios to include these alternative investments.
• This news archive contains most recent regulatory updates and developments in Nordic hedge fund industry.
• Hedge Funds in Denmark and Internationally. This comprehensive article introduces the recent development and future prospect of hedge fund industry in Denmark. In addition, it also covers various hedge fund strategies and their risks in relation to prime brokerage and to investors.
• Review of Danish Capital Market. Composed by International Monetary Fund, this report gives a broad overview of Danish capital market, with detailed descriptions of the legal framework and regulation of both of its bond and equity market. The report also provides a future guidance on its rapid growing mutual fund sector and introduces the Danish Hedge Association.
• Scandinavians Arrange Emergency Funds to keep Hedge Fund Pirates from Destroying Iceland. Norway, Sweden and Denmark of 1.5 billion Euros to support the Icelandic Krona from an attack by hedge funds. These hedge funds are wielding what Warren Buffet calls ‘Weapons of Mass Financial Destruction’ (a.k.a. derivatives), who have targeted the country with short-selling ‘bear raids’ to try and drive the 300,000 people living in Iceland and their economy into bankruptcy for a quick buck.
• The Investment Fund Industry in Denmark. Taken from the Federation of Danish Association website, this article provides a overview of the Danish Investment Fund Industry, its organizational structure, pricing and cost structure and related legislations.
• One of Denmark’s largest banks, FIH is a corporate and investment bank specializing in financial services to Danish corporate, had selected SuperDerivatives (the benchmark for derivatives pricing and the leading provider of multi-asset front office systems, risk management, revaluation and online options trading solution) in order to strengthen and expand its capacity to trade interest rate derivatives.
• On the Hedge Fund Frontier. This year Scandium Fund Ltd. ranked among the xis best performing fund of hedge funds worldwide by MARHedge. In this article, the fund’s Co-founder and portfolio manager, Mr. Casper Hallas, shared with us the secret of Scandium’s success, his investing philosophy, and his opinion of the present state and future prospects of the Danish hedge fund industry.
• Danish Pension Provider Opts for Direct Hedge Fund Investment. PFA Pension, one of Denmark’s largest institutional pension providers with responsibility for $41.6 bn of pension assets, is set to distinguish itself from the majority of European pension scheme by investing directly in hedge fund. PFA plans to increases its allocation to equities and alternatives at the expense of bonds in the hope of higher returns.
• Denmark – Fund Market 2005 – 2006. This article introduces the economic and financial background of Denmark and its key trends in asset management service, and recent regulatory development (including tax) in fund governance.
• The regulation, taxation and distribution of hedge funds in Europe: Changes and Challenges. This report summarized the most recent legal development and regulatory changes occurred in the European region (up to 2006), and what are some effects that would have on the European hedge fund industry.
• Hedge Funds and the Financial System. The increasing prevalence of hedge funds has been a key trend in the international financial markets in recent years. This report created by the Denmark’s National Bank let us look inside the brief history of the Danish hedge fund industry, its present development and its future growth potential. The paper also examines the governance and regulatory structure for these hedge funds.
• Denmark‘s biggest pension funds will have to report on corporate social responsibility (CSR) as part of new legislation currently under development by the Ministry of Economic and Business Affairs.Under existing law, pension funds only need to state the kind of CSR guidelines they are following if they have an impact on their financial activities. Under the changes proposed, pension funds would no longer have a choice.
• Newly-formed Danish alternative investment firm Global Evolution is looking to make a name for itself in the emerging markets. The Kolding, Denmark-based manager is prepping its Emerging Markets Multi Strategy Fund for launch sometime in January with between US$50 million and US$100 million.
• Government-sponsored pensions savings scheme allowing foreign managers to gain visibility in the Nordic region. Fund manufacturers are exploiting new distribution models in Europe, where savings are migrating from banks and insurance companies to government-sanctioned fund selection platforms. The new Danish government-sponsored pensions savings scheme, the SP Valg-Folkebörsen, is allowing foreign fund managers to gain visibility in the region.
• Copenhagen, Denmark-based Danfonds is readying its first hedge fund, Frontier Market Fund, for launch later this year with more than €25 million (US$39 million). The firm will cap the fund at €200 million (US$315 million) and is in talks with potential seed investors. The Frontier fund, which will debut after September, will look for long positions in the frontier markets of sub-Saharan Africa, central Asia and the Caucasus, the Balkans, the Baltics and the Middle East.
• At the end of 2004, the Danish government presented a bill to create a legal and supervisory basis for establishing “hedge associations” in Denmark. According to the bill, hedge associations will be the Danish equivalent of hedge funds. Like hedge funds abroad, hedge associations will have full freedom to determine their risk profile and investment strategy.
• Denmark Country Report: In 2005, Denmark achieved the highest economic growth for a number of years and the GDP grew by 3.4 %. The growth is continuing in 2006 and especially domestic demand is making a substantial contribution. Private consumption is driven by higher disposable incomes, low interest rates, new loan products and accelerating house prices.
• Hedge Nordic reports that Danish fund of hedge funds Scandium Fund Ltd. was the sixth best performer in terms of sharpe ratio among all funds of hedge funds worldwide during the past year. This is according to figures published by hedge fund database MarHedge, which receives performance reports from 547 funds of hedge funds.
• The Danish venture capital industry is very much in its infancy but recent developments are ensuring that it becomes increasingly attractive to investors. Kim Forum Jacobsen of the Danish Growth Fund charts the country’s rise and discusses its potential for future growth. With a highly educated population, state-of-the-art research in areas such as biotech, wireless technologies and photonics, Denmark has all the hallmarks of an attractive market for investors.

- Richard

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Financial Wealth Management

Financial Wealth Management Interview – Steinhardt

Here is a short 10 minute interview with Michael Steinhardt from Wisdom Tree Investments. Within this interview he talks about how the stock market from a technical point of view looks poised for a rally yet at the same time shows many signs of a bear market. He believes that financial wealth management professionals face a challenge now within this unique bear market and that a large drop in the price of oil is all that would help now. He also believes that for the next year or two the write offs in the banking sector will continue. He would like to see the fed raise the rates and he believes that this time things are really going to be different this time. If he is right that could mean a prolonged period of low or even negative hedge fund industry returns. I’ll be publishing a hedge fund performance article next week with an update on how different sectors are performing.

- Richard

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Mitsui & Co.

Mitsui & Co. Will Close U.S. Hedge Fund

The following piece on Mitsui & Co. 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.
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Mitsui & Co., Japan’s second-largest trading company, will close its New York hedge fund business as it shifts to investments including property and utilities.
Mitsui, with businesses ranging from import-export to financial services, decided to shut Mitsui & Co. Alternative Investment Corp. because it failed to meet the company’s targets amid the turmoil of the global credit squeeze, Masaji Matsuoka, who is in charge of formulating funds at the firm’s asset management division, said in an interview in Tokyo yesterday.

The unit was established in 2005 to mainly target institutional investors in Japan who sought to diversify their investments through hedge funds, Matsuoka said. Tokyo-based Mitsui aims to focus on investing where it has more expertise, Matsuoka said. In June, it announced plans to raise as much as $1.2 billion for a fund to invest in infrastructure assets such as power generators, electricity and gas transmission companies, and railways.

“We’re in the midst of shifting our focus to investments that match the business model of a trading company,” Matsuoka said. “We don’t have any plans in the near future to pursue hedge fund investments.”

The company has raised about 20 billion yen ($188 million) for the Emerging Market Infrastructure Fund, Matsuoka said. Mitsui may also create funds to invest in agricultural businesses, emission credits and metal, he said. More……

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