Linkedin Hedge Fund Group (HFG) Launch

Hedge Fund Group (HFG)

Hedge Fund Group (HFG) Launch

The Hedge Fund Group (HFG) has been launched in conjunction with Linkedin.com. This group was formed in an effort to further connect hedge fund professionals to share business leads, provide consulting services, network, and share online resources related to the hedge fund industry.

Initially attracting mainly technology/IT professionals the site now boasts over 100,000 CEOs as members along with tens of thousands of investment and hedge fund professionals. Linkedin.com has over 5 million members and is growing quicker than Myspace and FaceBook. Below are some stats on the growth of Linkedin.com compared to other social networking websites that you might be familiar with:

Network	Growth rate
LinkedIn	189%
Club Penguin	157%
Facebook	125%
Windows Live Spaces	32%
MySpace	19%

Source: Nielsen Online

I have created a new group for hedge fund professionals who are on Linkedin.com. To join this network of hedge fund professionals and casual industry followers please click on the link below:

Linkedin.com Hedge Funds Group (HFG) Invitation Link

or

http://www.linkedin.com/e/gis/44059/5FC1F8699305

- Richard

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Large Accredited Investors

Large Accredited Investors Definition

There is a proposed classification of wealth individuals which could affect hedge fund legislation called Large Accredited Investors. Large accredited investors are people with at least $2.5 million in investments (excluding homes) or $400,000 in annual income ($600,000 when combined with a spouse). This is a new category of qualified buyers of financial products that is meant to protect smaller investors which the SEC see as less able to absorb some of the risks of certain investments.

Note: This is a proposed definition by the SEC, it has not been put into place yet.

Read dozens of additional articles like this within the guide to Hedge Fund Terms.

- Richard

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Hedge Fund Investments

Hedge Fund Investments Video

Here is a short video I found on hedge fund investments.

If you can't view this hedge fund investments video please follow this link: http://www.youtube.com/watch?v=n6m4_UyfLDs

Read dozens of more articles like this within my Hedge Fund Strategy Guide.

- Richard

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Using Hedge Funds in Financial Planning

Financial Planning with Hedge Funds

If you are a financial advisor and would like to begin using hedge funds within your financial planning practice the steps below might help you navigate this process. Note: While this article was written for financial advisors, others might also find some useful tips and resources here.

Speak with your broker-dealer as applicable about available hedge funds through their organization and what the process would be to invest in a hedge fund through their compliance/reporting requirements. Make sure and get a clear understanding of what licenses the broker-dealer requires you to have as well.
Become a continual learner of hedge funds, read 50-100 posts on my hedge fund blog (http://richard-wilson.blogspot.com/), subscribe to newsletters by FinTag, Fierce Finance, and the Albourne Village. This organic education (vs. being spoon fed by consultants) will pay dividends when it comes to evaluating fund managers and negotiating fees.
Evaluate your current book of business. Who is an accredited investor? Who will soon become one? What amount of assets or % of your total book is of individuals who would be considered accredited investors?
Conduct some research on hedge fund consultants and hedge fund brokers and explore the various options available to you. You might not need to work with a consultant but it could help to be connected to a few consulting firms that see hundreds of hedge funds a year and would happy to introduce you to who they have selected as “best of breed” in the industry.
Try to customize your portfolio allocation software or reports so that you can show your clients 3 typical asset allocation strategies. One might suggest a 5% allocation to hedge funds with others allocating say 11% and then 20-25% as more aggressive options. These are not hard and fast numbers but they might help start a conversation around their use of hedge fund sin the near term.
Have 3 resources on hedge funds available to provide to your client in case they ask more about what they are. One way to provide this information would be to print out 2-3 posts from within this blog that would be serve your clientele. For example it might be helpful to show them posts I have written on the Differences between “Hedge Funds & Mutual Funds,” “What is a Hedge Fund,” and “Why Invest in Hedge Funds?.”
Establish your own internal due diligence process that can help you weed out managers that are not likely to provide the type of performance or capital preservation you are seeking.

None of the above should be taken as financial advice or recommendations and a qualified compliance professional or lawyer should review your procedures before making investments in hedge funds or advising others on placing your money with hedge funds. If you need to speak with a lawyer please let me know I have a few friends who have worked with dozens if not hundreds of hedge funds in the past. My email address is Richard@RichardCWilson.com.

- Richard

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Hedge Funds The Root of All Financial Evil?

This is what could sometimes be construed by reading through various news publications reporting the fraudulent acts and losses that are well documented among the almost 10,000 hedge funds in existence today. Recently though hedge fund professionals and those outside the industry have been trying to correct this image.

The head of the Financial Services Authority (FSA) said that, "hedge funds were not the catalysts or drivers of this summer’s events.” Additionally the deputy governor of the Bank of England stated that “hedge funds have not been blown away by the first signs of real market stress, as some commentators thought they would be.”

This is important to note because it is the equivalent of Alan Greenspan and speaking up to clear the air on stop the continuous finger pointing at hedge funds whenever there is volatility in the marketplace. Many hedge funds provide liquidity when there otherwise would be none, they create a more "perfect" market to trade in.

- Richard

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Multi Strategy Hedge Fund

Multi Strategy Hedge Funds

Multi strategy hedge funds use several strategies within the same pool of assets. They might seek returns from running money focused on shorting equities, investing in global real estate projects, and seeking momentum focused event driven strategies. The diversification benefits help to smooth returns, reduce volatility and decrease asset-class and single-strategy risks. These funds may allocate funds in to a certain strategy in response to market trends allowing them to more easily capitalize on favorable market conditions. Due to the unpredictable nature of this type of hedge fund, the volatility is variable. A downside to this form of investing is that they will rarely be the highest performing hedge fund over a short time period. This is because the diversification dilutes the returns of any highly profitable strategy. The long term consistency, however, generally outweighs this risk.

I haven't seen this type of fund very often as only the largest funds will have the resources to effectively employ the strategy. Many people wanting hedge fund exposure to this type of strategy diversification will buy a fund of hedge fund product.

Here is a Comparison Between Hedge Fund of Funds and Multi-Strategy Hedge Funds.

Read dozens of more articles like this within my Hedge Fund Strategy Guide.

- Richard

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Event Driven Hedge Funds

Event Driven Hedge Fund Strategy

Event Driven Hedge Fund Strategies

Event-driven hedge fund managers invest their assets on a opportunistic basis where they see best fit. Sometimes they will be restricted to a set of certain events and their fund mandate allows them to use a wide range of assets or investment strategies to take advantage of those environments. Events can include some things that global macro funds might respond to but they can also include IPOs, mergers, write down announcements, or backdating scandal announcements. They try to ride the short term momentum either up or down created by events that are priced into the marketplace.

Want something more meaty? Here is a Roadmap to hedge funds

Read dozens of more articles like this within my Hedge Fund Strategy Guide.

- Richard

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Family Office Wealth Management

Multi-Family Office Wealth Management

I just found a great article on multi-family office wealth management that i wanted to share. It is not new but it is a good discussion of multifamily office wealth management services, which often includes the use of alternative investments such as fund of hedge funds or traditional hedge funds.

Family Office Wealth Managment Article

- Richard

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Picture Source: Finnav

Multi-Family Offices & Hedge Funds

Multi-Family Office Hedge Fund

Multi-Family Offices & Hedge Funds

Many multi-family offices use hedge funds because their clients consist of high net worth or ultra high net worth investors. There are over 800 family offices in the US and over 3,000 family offices globally. With such a high number of offices the types of hedge funds that family offices use varies from place to place. Some best practices on the types of funds family offices typically worth with though include using hedge fund managers that have:

3+ years of a track record
Deeply experienced portfolio management team of at least 4 professionals
A competitively defendable and repeatable investment process
Transparent operations
Long-term relationships with the family office
Top quartile or decile performance
Returns that are not highly correlated with stock market movements
Assets of over $30M with preference of at least $100M-$300M

When dealing with hedge funds and hedge fund of funds multi-family offices usually avoid hedge funds that have:

Track records of less than 2 years
Small management teams
Give off the impression of being a fly by night operation
Capitalization Problems
Poor marketing materials that are unprofessional
Hard selling overbearing sales people that don't understand how family offices are ran

- Richard

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Global Macro

Global Macro Hedge Fund Strategy

Global Macro is a relatively volatile hedge fund strategy that attempts to profit from shifts in the market due to economic, political, or government related events. Many times these hedge funds use leverage and produce returns that are not highly correlated with the public equity markets. Hedge fund managers use indexes, equities, etfs, bonds, and other asset types while using this strategy.

Managers of global macro hedge funds try to anticipate changes in global macroeconomic trends and make bets to profit from them. They are able to allocate capital across asset classes, sectors and regions. It is perhaps the widest mandate of all hedge fund strategies as managers can take a position in any market and instrument. It is therefore no surprise that managers of global macro hedge funds have very different approaches and trading styles. Some managers will design trades based on their subjective opinion of market conditions (called discretionary approach), while others will use quantitative or pre-defined rules to do so (called systematic approach). And others will use a combination of both methods. However, all global macro managers are linked by the international scope of their strategies, the use of leverage and a primary focus on structural macroeconomic imbalances and trends.

Global macro trading strategies primarily fall under two categories: directional and relative value. In a directional trade, a manager will bet on discrete price movements, such as long US dollar, short gold or long Indian government bonds. On the other hand, relative value trades are structured by pairing a long and short position in similar assets to take advantage of a relative mis-pricing. For example, a manager can go long Indonesian government bonds and short Philippine government bonds

One of the most famous global macro trades is a relative value trade designed by George Soros, who bet that the UK would be forced out of the European Exchange Rate Mechanism (ERM) in 1992. So, he borrowed the sterling pound and converted it into a mixture of Deutschmarks and French francs. On September 16th 1992, known as Black Wednesday, Soros’ bet paid off when the pound fell below its minimum level in the ERM. It is this trade that earned Soros the title of ‘the man who broke the Bank of England.’

Soros and several other star global macro managers such as Julian Robertson, Lewis Bacon and Bruce Kover have generated outsized returns. In fact, on average, the performance of global macro funds has been relatively strong, as they have produced high absolute returns, outperforming traditional asset classes.

Books Related to Global Macro Hedge Funds

Drobny, Steven. Inside the House of Money: Top Hedge Fund Traders on Profiting in the Global Markets. New Jersey: John Wiley & Sons, Ltd., 2006. Sample first chapter to be found here.Drobny really does take his readers inside global macro hedge funds, through 13 in-depth interviews with global macro hedge fund managers that provide rare insight into a variety of trading strategies as well as a behind-the-scenes perspective. The book also includes a chapter on the history of global macro hedge funds that gives a good sense of how the driving forces and consequent trades put on by global macro managers have changed over the years.
Lhabitant, Francoise-Serge. Handbook of Hedge Funds. West Sussex: John Wiley & Sons, Ltd., 2006.This is an excellent guide to the industry, with concise and informative descriptions on all of the major hedge fund strategies and primary methods to measure their risk and performance. Lhabitant also includes an overview of the legal environment of hedge funds and their organizational structure, while ending with a short guide to investing in them.

Global Macro White Papers & Articles

Ahl, Peter. “Global Macro Funds – what lies ahead.” AIMA Newsletter, April 2001.This paper provides a short description on the strategy and describes the three primary approaches used by global macro managers to find opportunities. However, since it was written in 2001, its predictions and suggestions are slightly outdated.
Coen, Madilean and Sherwin, Richard. “Global Macro Hedge Funds.” The Hedge Fund Journal, May 2008. This article discusses the historical performance of the global macro strategy, with emphasis on its relatively good performance in 2008, even given the stress in the financial markets. It also points out how there has been a wider dispersion of returns among managers who use a discretionary approach than among those who use a systematic approach.
Davis, Nigel. Funds of Hedge Funds Look to Global Macro for Gains. July 22nd, 2008, Reuters.In this Reuters article, Nigel Davis examines why global macro hedge funds are popular during times of crisis.
Global Derivatives. Overview of Hedge Fund Strategies, November 2003.Quick and dirty description of all major hedge fund strategies.
MacDonald, Alistair and Patrick, Margot. Macro Gangs Hang Tough. March 12th, 2007, Wall Street JournalThis WSJ article looks at what the possibilities were for global macro hedge funds in the beginning of 2007. In the process, it gives a good background on global macro funds. We are providing the link through RiskVentures, who originally drew our attention to the article.
Säfvenblad, Patrik. February 2004, Global Macro Trading This power point presentation outlines the structure of the alternative asset space and the comparative position and performance of global macro hedge funds. It also details some popular trading strategies of these hedge funds while highlighting the risks and issues that confront them.

Blogs Related to Global Macro Hedge Funds

Boom Bust Blog Written by Reggie Middleton, who apparently trades from home and works primarily off his own research, this blog contains short, interesting and sometimes cynical posts that would interest global macro traders.
The Global Guru This blog provides a weekly overview of the major issues in the financial markets, in the context of global macro hedge funds.
Investment Capitalist Investment capitalist blogs on issues that are likely to interest global macro investors. The blog is well organized and the posts often contain sharp insights buried beneath a lot of words. It also has a list of reading materials that cover technical and fundamental analysis as well as investment philosophies.

Information Sources

Eurasia Group Eurasia Group is a political risk advisory and consulting firm. They generate political research specific to various regions as well as general macro trends. Access is for subscribers only.
RGE Monitor Founded by the prominent economist, Nouriel Roubini, the RGE Monitor contains a wealth of information and analysis on global economic, political and financial events. Staff economists write daily commentary on select global macro issues which are available without subscription. However, access to region and sector specific information is by subscription only.

Tracking

Barclay’s Global Macro Index Barclay’s calculates the average performance of 130+ global macro funds.Credit Suisse Tremont Hedge Fund Index CS/Tremont tracks provides registered users with historical data on the performance of variety of hedge fund strategies.

Want some more meat on global macro hedge fund strategies? Here's a white paper on Global Macro Hedge Funds

Read more articles like this within my Hedge Fund Strategy Guide list of articles.

Last updated by Sharini Kulasinghe

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Distressed Securities Hedge Fund Strategy Explanation

Distressed Securities Hedge Fund

Distressed Securities Hedge Fund Strategy Explanation

Hedge funds that invest in distressed securities buy debt or equity positions into firms filing for reorganization or bankruptancy. Many of these types of funds due extensive fundamental research analyzing the book value, balance sheet, strategic partners, suppliers, and creditors of a company before investing their money. These types of hedge funds usually have relatively low volatility but without exception require someone with deep bench strength and fundamental research experience.

- Richard

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Alternative Investments Outperform

Alternative Investments

Alternative Investments Outperform

‘‘Over the past decade, the four primary alternative asset classes – real estate, infrastructure, hedge funds and private equity – delivered higher returns than the traditional offerings of stocks and bonds,” said chief economist and strategist for RREEF, Asieh Mansour.

Mansour points to the swelling size of the alternative asset industry as direct result of steady returns during uncertain times in the public markets. His report states that more investments in areas that are not highly correlated with stocks and bonds will be made, especially by pensions and endowments. This bodes well for hedge fund managers.

I think that these types of reports are great to see in mainstream media because so often we hear of hedge funds blowing up or someone committing fraud while institutions are pouring money into these alternative investments. Why? Out sized and un-correlated returns. Many are trying to catch up on pension obligations or add in some extra alpha on top of their US equity money manager allocations which might just be trying to beat a benchmark by a few points.

Read more articles like this within the Hedge Fund Performance Category of this hedge fund blog.

- Richard

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Source: Financial Standard

Hedge Fund Industry Basics

Hedge Fund Industry

Hedge Fund Industry Basics

Here are a few trends, facts, notes about hedge funds that I have picked up and some people might not know. Eventually I will combine several posts similar to this to create a 1 page hedge fund industry snapshot for professionals in the field, specifically for family offices and financial advisors who need to get up to speed on the latest developments.

Not all hedge funds are risky relative to mutual fund, SMA, or ETF product alternatives
There are around 10,000 hedge funds in existence with 30 new ones created each quarter
Around 80% of all hedge funds have under $100M in total assets under management (AUM)
According to Magnum Funds hedge fund returns have outperformed standard equity and bond indexes with less volatility and less risk of loss than equities
Most hedge fund assets are being gained by the industry giants with over $2B/AUM
Institutional investors make up a huge portion of the hedge fund investor base, their risk controls sometimes only allow them to invest in larger funds. They also have a great need for highly researched uncorrelated returns to safegaurd their assets. In fact the more research-heavy a large institution is the higher the chance will be that they invest in alternative assets such as hedge funds. This is ironic given the risky profiles they are given by the mass media
Most hedge fund managers are highly professional and ethical
Most hedge fund managers or portfolio management teams have backgrounds or unique information/experience advantages in the market.
Many of the most talented traders and money managers start hedge funds because the payouts are higher for great performance. Yes, the investor pays more but they are also getting premium products. Would you try to find the cheapest surgean or least expensive childcare provider possible? Probably not. When results matter so does expertise and performance.
Hedge Fund typically charge fees of 2% on base assets and 20% of any performance profits they bring in. Some hedge funds are only charging 1 or 1.25% base fees while they are still considered emerging managers.
Minimum investments in hedge funds range from $100k to $50M depending on the clout and size of the fund at hand.
In 2005 Absolute Return Magazine found that 196 hedge funds had over $1B in total assets under management (AUM)

- Richard

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Book Review: Rainmaker

I wrote this book, Rainmaker during my MBA program four years ago. It is a short text focussed on best practices of sales, business development and negotiation that I picked up while working, reading the Harvard Business Review, and speaking with experts in sales and business development. It contains over 100 lessons, models and best practices that can help you grow your hedge fund or business.

As of this morning I have made this book available for free to those people reading my blog. I did this for two reasons. One, I have learned a lot about sales and business development since writing this book. Eventually I will write a book on hedge fund sales but I haven't yet so I would like you to read this more general book on sales and negotiation with the promise that my more focussed text on hedge funds will be many times more valauble. Second, I have found through writing in this blog that the relationships gained from giving away knowledge is far more valuable than a small margin of profit from individual book sales or advertising profits.

To download this book for free please visit

http://www.lulu.com/content/230431

Enjoy this book review? Read a few more by visiting our Investment Book Reviews Directory.

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Related Terms: hedge fund sales, hedge fund marketing, hedge fund third party marketing, business development, negotiation, fees, growth, assets under management, aum

Online Hedge Fund Community

I'm experimenting with an online community just for hedge fund professionals. It is a mix of what you find on Linkedin.com, the Albourne Village, and Facebook. Sub groups within the hedge fund community would talk about hedge fund marketing, legal issues, hedge fund due diligence and general hedge fund research, and job openings. The goal is to create a collaborative environment where professionals can share business leads, work on projects that require multi-disciplinary teams, and keep connected in a more meaningful way than a an email or two a year.

I've setup this online hedge fund social group through ning so it could handle 40-50,000 members eventually if people like the idea. Let me know what you think.

http://HedgeFunds.Ning.com

- Richard

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Hedge Fund Search Engine

I've put together a search engine just for hedge funds. It works and acts just like Google but I control the scope of the content so you don't get college essays, websites pitching products, or information about things like trimming hedges in your backyard.

If anyone wants to help me develop it further I could use some more suggested websites or blogs with lots of rich timely content.

Hedge Fund Search Engine

Thanks in advance.

- Richard

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Man Investments Group | Hedge Fund Tracker Notes | 1 Page Guide

Man Investments Profile

Man Investment Group | Hedge Fund Notes

The following piece on Man Investments is being published as part of our daily effort to track hedge fund events in the industry. To review other hedge fund research please see our Hedge Fund Tracker Tool.

Resource #1: Man Group warned profits would fall for its half year that ends today as the largest listed hedge fund nanagera saw lower performance at its biggest fund. Shares in Man hit their lowest in three years falling 68¼p, more than 18 per cent, to 305½p, as funds under management tumbled $4.3bn in six months to $70.3bn (£38.1bn). Man said earnings per share excluding exceptional items were likely to be 5 per cent down on the 34.1 cents achieved in the same period last year, hit by the weak performance of AHL, its biggest hedge fund. Net performance fees would fall about 40 per cent, Man said, from $283m a year before.

However, Peter Clarke, chief executive, said sales had remained strong and the rate of client withdrawals was not up significantly. "To have sold as much product in the second quarter as the first quarter in the teeth of these financial markets is testament to the strength of our distribution," he said. AHL, which tries to catch trends in commodity and other futures prices, has given back almost all of its gains for the year after commodity prices crashed over the summer then unexpectedly spiked again. For the year to September 24, AHL was up 0.9 per cent.

Man's main funds of hedge funds have all fallen, with Chicago-based Glenwood down 5.8 per cent, Man Global Strategies off 10.8 per cent and RMF down 2.5 per cent, amid a general rout in the hedge fund sector. Analysts cut profit forecasts further after downgrades last week. Numis Securities, which lopped 11 per cent off its prediction of next year's earnings, said it expected Man to benefit long term as the hedge fund sector became less competitive.

Mr Clarke said hedge funds would face more regulation as market watchdogs increased oversight of the financial world after bank collapses. But he said Man - already highly regulated - was likely to cope better than most with that, as well as having enough cash to be able to buy stakes in other funds. Last night Man spent about £9.4m buying back 3m of its shares at 312.2p. Source

Resource #2:

Man Investments has announced the development of an online hedge fund trading platform called MI Trade. This allows advisers to manage hedge fund investments as if they were bonds or stocks with the ability to rebalance portfolios at a days notice instead of waiting for weekly or monthly or quarterly redemption dates. Only Man Group products are being offered on this platform and it is being offered for free.

The CEO of Man Investments John Morrison called it "a major leap forward for hedge funds that gives Man Investments a strong competitive advantage. Investors can now, at no extra cost, actively and easily trade hedge funds as part of an overall portfolio of stocks, property and bonds."

Sometimes companies release PR that is mostly fluff, this is not one of those times. This is a major step forward towards more transparency and flexibility and the ability to trade hedge funds on a daily basis will be valued highly by the family office and wealth management community.

There are other hedge funds scrambling to put something together to compete against this. What starts as proprietary in the investment world eventually becomes open source, it is only a matter of time before there is a platform that hosts unaffiliated hedge fund products and allows them to be traded at any time in the day.

- Richard

Permanent Link: Man Group Announces First Ever Hedge Fund Trading Platform

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Related Terms: hedge fund platform, hedge fund trading platform, hedge fund day trading, hedge fund redemption, hedge fund holding period, hedge fund trading program Man Group, Peter Clarke, AHL, Glenwood, Man Global Strategies, RMF, Numis Securities

Source: HedgeWeek

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No warranty or guarantee of any kind, expressed or implied, is given regarding the accuracy, reliability, veracity, or completeness of the information provided here or by following links from this or any other page within this site, and under no circumstances will the author or service provider be held responsible, or liable for errors, or omissions resulting in any loss or damage caused or alleged to be caused by information contained in the material presented on the site, including but not limited to direct, indirect, incidental, special or consequential damages caused by using the information.