Futures and Forwards

Futures and Forward Contracts

Futures and Forward Contracts: Derivatives

Here is a short derivatives video on futures and forward contracts. In this video forwards and futures are explained in clear and simple terms. Forward contracts are traded over the counter where futures are really exchange traded forward contracts.




- Richard

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Hedge Fund Performance in May

Hedge Funds in May

Hedge Fund Performance in May

In May, HFN Hedge Fund Average Aggregate was +2.02%, and the S&P Total Returns Index was +1.30%. The energy sector continued to rise this year with the HFN Energy Sector Average at +4.38% last month. The equity markets' success seems to have led to the HFN Long/Short Equity Average outperforming the S&P Total Return Index, yielding +2.76.

In regional benchmarks, while hedge funds investing in China and India performed dismally, funds investing in Russia and Brazil boosted the Emerging Markets Average to +2.55%. Hedge funds using the long only strategy have performed poorly this year but improved thanks to the global equity markets, the Long Only Average was %3.41 in May. Investors have shown dissatisfaction with the technology sector through redemptions and liquidations. Total assets in tech sector funds fell 10.89% in Q1 of 2008, yet the Technology Sector Average was one of the best performers in May at 3.46%.

- Richard

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Prime Brokerage New York

Prime Brokerage New York

Prime Brokerage New York / Evolution

Prime Brokerage New York CityThe prime brokerage industry is constantly evolving adapting to new client demands, opportunities and regulatory environments. I was in New York yesterday discussing some of these ongoing changes with a few prime brokerage professionals and they mentioned that several times a year there are events which slightly re-shape their industry.

If you haven't read it already there was an interesting article put out by ICFA a few days ago about the changing landscape of the hedge fund prime brokerage business model. Special thanks to Fintag for finding this article.

The main point of change that this article pointed to was the widespread interest in hedge funds by traditional investment managers. This is leading prime brokerage clients to service clients who also run 130/30 and long only portfolios as well.

"According to a recent Vodia Group survey traditional asset managers have 3 per cent of their asset base - equivalent to $1.95trn - in leveraged investments, with 86 per cent of major asset managers expecting to run 130/30s by mid-2009. The firm predicts that leveraged assets will increase from $2.65trn today to $4.48trn in 2012, driving greater demand for prime brokerage services."

"But traditional asset management clients are forcing prime brokers to adapt their business model, placing greater emphasis on custody, reporting and
risk management and de-emphasising capital introduction and leverage. These factors will push margins lower and increase operational requirements in the prime brokerage business, Vodia said."

While I can see why the largest of institutional money managers are not going to be drawn by the hopes of capital introduction I still believe that those prime brokers who do offer capital introduction services will have a competitive advantage while competing for the business of hedge fund managers here in the US. Every year the field becomes more competitive, and most hedge funds need help marketing and raising capital.

- Richard

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Hedge Fund Business

Hedge Fund Business

Hedge Fund Business Overview

Hedge Fund BusinessHere is a relatively long whitepaper/Powerpoint on the business of hedge funds. It gives a good overview of the industry, where hedge funds are domiciled and discusses popular structures and strategies employed by both hedge funds and fund of hedge funds.

Please click here to view this report.

- Richard

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Get a Job at a Hedge Fund

Get a Hedge Fund Job

Get a Job at a Hedge Fund

How to get a job at a hedge fundI recently wrote a hedge fund career related article for Investopedia.com on how to get a job at a hedge fund. This is a short two page article which details from my experience what tangible steps one can take to work in the hedge fund industry. The steps I suggest include:

  1. Make sure you really want to get a hedge fund job
  2. Become a student of the hedge fund industry
  3. Use the 3 circles strategy for your career decision making progress
  4. Identify several mentors to help you secure a hedge fund job
  5. Complete multiple hedge fund internships
  6. Develop your unique value proposition
  7. Hedge fund job tips
  8. Land the unadvertised hedge fund job
  9. Consider hedge fund service provider jobs
  10. Apply to hedge fund jobs
To read the advice given under each of these 10 sections please read the full 2 page hedge fund career advice article here: http://www.investopedia.com/articles/financialcareers/08/hedge-fund-career.asp

Read dozens of additional articles related to Hedge Fund Jobs by visiting the Hedge Fund Employment Guide.

- Richard

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Prime Brokerage Survey

Prime Brokerage Survey

Prime Brokerage Survey Resource

Prime Brokerage SurveyFinAlternatives just released a prime brokerage survey, it contains some interesting details on how satisfied hedge funds are with their prime brokerage service providers. The survey digs into the quality of capital introduction, execution and personal service received from their prime broker. What is interesting was that 38% of hedge fund Manager respondents noted that their prime broker's capital introduction capabilities were non-existent or very weak. Another interesting point was that poor personal service was the #1 reason that a hedge fund manager would switch prime brokers.

Here is the full report and prime brokerage survey.

If you are looking to change prime brokers I know a few Hedge Fund Group (HFG) members who offer both prime brokerage and capital introduction services to hedge funds. Let me know if I can be of assistance - Richard@RichardCWilson.com.

- Richard

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High Net Worth Clients

High Net Worth Clients

Hedge Funds + High Net Worth Clients

High Net Worth ClientsHere is in article published by Advisor Perspectives which tells the story of two Boston-based wealth management firms which emphasize the importance of due diligence. The two firms, RINET and Colony, use a strategy for placing its high net worth clients in riskier investments based on their level of wealth. The policy addresses the investors personally, by requiring its investors to have at least $5 million in investable assets to qualify for investing in hedge funds. Those HNW clients who do not qualify for hedge funds are placed in sometimes less risky, more traditional investments, such as separate managed accounts or mutual funds. This simple strategy reduces risk for those clients not financially ready to invest in less liquid or secure investments.

Another lesson in reducing risk is that RINET favors placing its high net worth investors in fund of funds over single hedge funds. This diversifies the investor's portfolio and the investor is less vulnerable. When considering hedge funds, the firms look at the historic performance and the fund's level of risk. They measure this by examining standard deviation, comparing the fund with the S&P 500, and looking at the hedge fund manager's Alpha. Also, the firms go beyond the hedge fund's strategy and process to back office operation concerns and factors that have effected historical performance. Finally, RINET and Colony see hedge fund due diligence as an ongoing process that doesn't stop at the investment. The firms practice due diligence throughout to secure steady returns to its investors and protect against fraud and other hedge funds hazards.

- Richard

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Structured Securities

Structured Securities

Structured Securities Video

Structured Securities and Collateralized Mortgage Obligations CMOsHere is a short video on structured securities and collateralized mortgage obligations (CMOs). Within this video Mike gives an example of how collateralized mortgage obligations are created and sold. If you cannot view the video below please click here to watch it now.



Tired of reading articles? Watch more videos like this one above within the Hedge Fund Videos Directory.

- Richard

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SEC Hedge Fund Regulation

SEC Hedge Fund Regulation

SEC Hedge Fund Regulation Resource

Here is another SEC hedge fund regulation resource that I'm adding go the hedge fund due diligence guide. The Securities and Exchange Commission offers a caution before investing in hedge funds. The key message is: be aware of the risks. First, the SEC recommends reading the fund's prospectus to understand the fund and whether it suits you. Also, it advises to be aware of the fees the hedge fund charges which cut into the investors' returns.

This resource emphasizes the research aspect of due diligence and offers tips on what to investigate before investing in a hedge fund.

Click here to view the article published by the SEC.

Read more articles like this within the Hedge Fund Due Diligence Guide.

- Richard

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Benefits of Hedge Funds

Benefits of Hedge Funds

Benefits of Hedge Funds - Industry Report

I just found this report from 2006 on the benefits of hedge funds. If you are looking for an overview on hedge funds and an introduction to a few current trends in the industry it is worth c quick skim. It will still be useful for several years to come as it contains hard data, graphs, charts and touches on the following subjects:
Click here to view the report.

- Richard

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Bear Stearns Hedge Fund

Bear Stearns Hedge Fund

Bear Stearns Hedge Fund Case

Bear Stearns Hedge FundTwo former Bear Stearn hedge fund managers are now facing criminal charges, accused of misleading investors when their hedge fund started to break down. I am very interested to see how this case unfolds because as quotes from these two hedge fund managers emerge, each could be seen as part of relatively normal day to day evaluations of how the market or portfolios are performing during volatile markets. Here are a few short news clips on this story.

Bear Stearns Hedge Fund Video #1




Bear Stearns Hedge Fund Video #2


Tired of reading articles? Watch more videos like this one above within the Hedge Fund Videos Directory.

- Richard

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Hedge Fund Margin Calls

Hedge Fund Margin Calls

Hedge Fund Video - Margin Calls & CDOs

A well researched video on hedge funds, margin calls and CDOs. http://www.youtube.com/watch?v=LtcnXLDnXvs


Tired of reading articles? Watch more videos like this one above within the Hedge Fund Videos Directory.

- Richard

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Brazil Hedge Funds | A 1 Page Guide to Funds in Brazil

Brazil Hedge Funds

Guide to Hedge Funds in Brazil

Brazil Hedge FundsHere is a short guide or introduction to the hedge fund industry in Brazil. Brazil's economy has been growing at a healthy pace over the past couple of years and in my opinion is the most underestimated out of the all of the BRIC countries. The hedge fund industry itself in Brazil is currently small but growing as the region as a whole becomes more wealthy.

On a side note I go to Brazil every 9-10 months for business, please let me know if you are in the hedge fund industry and live in Brazil and would like to attend a networking event or meet for lunch. Richard@hedgefundgroup.org.

Guide to Hedge Funds in Brazil
Hedge Fund Events in Brazil
- Richard

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American Diabetes Association

American Diabetes Association

Charity Golf Event - American Diabetes Association

American Diabetes AssociationAs many of you read in a previous post back in March, I had a breakfast meeting with the women of Penta Dynamic Solutions (www.pentaevents.com), a boutique event management firm based in downtown Manhattan. While Penta is focused on providing association management and event planning services to hedge funds and financial firms, they also do a lot of work with the non-profits.

Penta Cares, a philanthropic division of the company, will host their Second Annual Charity Golf Outing with proceeds benefiting the American Diabetes Association on October 6th at the Lido Golf Club in Lido Beach, NY. The 11am shotgun start will be followed by a cocktail hour, silent auction, raffle drawing, 50/50 raffle, dinner, awards reception, and entertainment. They are also planning to add electronic real-time scoring to this years outing through eGolfScore.

The success of the golf outing depends heavily on the support of individuals and organizations throughout the New York and tri-state area; therefore let’s come together and help raise money for this worthy cause. There are many sponsorship opportunities available ranging from $2,500-$10,000. Last year, Owl Creek Asset Management helped to make the event a success through a generous donation and this year, Penta is looking to get more investment firms and hedge fund managers involved through sponsorship, attendance, and donations.

You can view more information about the event as well as register to play or sponsor online at: http://www.golfdigestplanner.com/1380-PENTACares/.

This event comes exactly one month before the Annual American Diabetes “Live the Good Life” Gala which will be held in The Starlight Room of The Waldorf-Astoria. Christina Weber, Penta’s Director of Business Development, is the 2008 event chair and Michele Verdino, Penta’s President, is assisting as a member of the planning committee.”

- Richard

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Global Macro Hedge Funds

Global Macro Funds

Global Macro Hedge Funds Overview

Global Marco Hedge FundsThe global macro approach to investing is one of the most popular hedge fund strategies seen today. Global macro fund managers try to make leveraged bets on aspects of the global macro economy. For example, fund managers could place these leveraged bets on currencies, commodities, interest rates, or even equities. As most investors global macro managers would like to minimize downside risk while still offering exceptional returns. Global macro hedge fund managers often have the liberty of having the choice of using any investment instrument in almost any market to produce their returns.

Global macro trades could either be directional or of relative value. In directional trades managers make bets on isolated price movements. For instance, the manager could short the Dollar, long on the Euro, or short on Brazilian Bonds. On the other hand, relative value trades are used to take advantage of assets which were not properly priced. Managers will usually couple assets on both the long and short side to expose these mis- pricings. A usual bet could be a long on US equities versus a short on emerging chinese equities.

The global macro strategy could be executed in any number of markets and because of this fund managers are not as constrained as other fund managers who could have most of their assets invested in one market. Because of this, global macro funds have been able to sometimes avoid the bear markets in one country and take advantage of bull markets in another.

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

- Richard

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