The Aegon Global Opportunities Fund and the Aethra Global Strategies Fund were included in the Holland Capital Management hedge fund index of Finles on June 1st.
The Aegon fund is managed by Olaf van den Heuvel and Aethra fund is led by Daan Potjer and Marc Vernooij. The latter recently received a fund listed on Euronext Amsterdam.
Both funds are now ways for each 1.09 percent in the index. The largest stocks in the index IDB Real Estate Equity Fund, Japan Fund Pelargos, Saemor Europe Alpha Fund, the Fund and the Kempen Pelargos Asia Absolute Return Credit Fund.
Finles the performance of the index in April announced. It had been a decrease of 0.08 percent. As of May 1 is the level of the index 112.40.
The global index rose in April HFRX 0.80 percent and the DBX hedge fund index achieved a yield of 0.60 percent.
The best performing funds in Holland were All Markets Index Fund, Japan Fund Pelargos, QTR Fund, Equity Fund and QAM Tradewind Fund.
May-months bad months
Finles has no figures for the month of May, for hedge funds badly. But according Finles were funds with a global macro strategy is best positioned for the month of May.
Finles Capital Management, a hedge fund index tracker on Holland in the market. This Holland hedge fund tracker may possibly also a listing on the Amsterdam stock exchange.
The funds included in this index are selected on the basis of size, liquidity, cost and correlation with the stock.
The latest hedge fund news shows that Lumix Capital AG is planning to launch an agricultural hedge fund during this quarter. Since June of 2008 the Lumix AgroDirect Fund has been incubated. They invest in the production of soft commodities in four countries – Uruguay, Argentina, Brazil and Paraguay.
As Lumix’s managing partner, Gonzalo Fernandez Castro explained to FINalternatives, “Farming is very volatile when you talk about one plot of land. If you have 1,000 plots of land in different areas, the volatility is very much reduced.”
So far, the firm has raised $20 million US dollars of capital from both partners and seed investors. It targets to raise $100 million for its first offering.
In an attempt to draw investment back to Southeast Asia, the six major Association of Southeast Asian Nations (ASEAN), including Thailand, Indonesia, Malaysia, Singapore, the Philippines and Brunei, have recently agreed to eliminate import duties on goods of all sorts. Such goods include cars, consumer electronics and more. This agreement comes three years earlier than was previous planned, and also includes a cut to 5% or less on tariffs for items remaining outside of the agreement. Certainly, this is good news for business leaders in Malaysia and other Southeast Asia markets such as Taek Jho Low, Harun Johar, Dr Sulaiman Mahbob and others.
Recent economic realities and difficulties have led to this drastic measure with the aim of building a larger market for these ASEAN countries. Both India and China have shown dramatic growth in foreign direct investments, while investments with Southeast Asia have been slowing. In addition, the countries of the Association of Southest Asian nations have been weakening as a result of the Multi Fibre Agreement that is scheduled to expire at the end of the year. Granting Southeast Asian countries quotas on textile and clothing exports to the U.S. and Europe, this agreement provided guaranteed jobs that will now be lost to lower paying and more efficient workers in China and similar locations.
Fearing job losses to China, the Southeast Asian leaders like Lee Kam, Taek Jho Low, and others are attempting to speed up integration and to maintain their hold on exports. As Philippine President, Gloria Macapagal Arroyo aptly noted at the meeting “We only see one way out; that is not by looking west but by looking inward.”
According to Frank Packard, the representative for Triple-A Partners Ltd, which is a provider of start-up capital for hedge funds,
“Hedge funds that are surviving and prospering will see an increase in their assets under management going forward. Hedge fund investors tend to be more long-term than month-to- month and we may be seeing some people taking money out of the equities market to invest in hedge funds.”
Eurekahedge, the Singapore-based research firm declared that the global hedge fund benchmark is up 16% so far this year, and if this trend continues then hedge funds will experience their best yearly performance since 2003. This is a great positive trend, especially considering 2008 was the worst year in history for hedge funds, due to the world-wide financial crisis.
There was a net loss of number of hedge funds, with 150 new funds begun and 150 old funds closing shop, according to Eurekahedge.
According to the research firm Eurekahedge Pte, hedge fund assets increased in the month of October by $7.8 billion, making it the sixth consecutive month in which assets did so. The gain was led by European managers in response to their regions emergence from the global recession, according to the Singapore based research firm.
Dollars flowed into hedge funds to the tune of $10.2 billion, while losses totaled $2.4 billion in October. Taken together the funds represent over 1.45 trillion dollars of assets under management.
Despite the fact that hedge funds performance was not spectacular due to the international stock market drops, the funds were still deemed attractive in investors. The Eurekahedge Hedge Fund Index actually lost 0.3% last month, putting the brakes on a seven-month long rise in value. Another index, the MSCI World Index, also fell, by 1.9% in October, putting an end to a three-month gain of 17%. Investors concerned that stocks have already outpaced the prospects for continued economic upturns drove the market downwards.
The past couple of years have been challenging for investors, to say the least. But proving once again that the saying, “What goes down must come up” is true , hedge funds are about to recoup all the losses they sustained in the most recent critical credit crunch of the past year and a half. Many funds are now placed in positions to earn performance fees, and the average fund only needs a mere 2% gain to reach the value it had as of June 30, 2007, which was the summit of the last boom.
If things continue as they have been going recently, by the time the end of next month rolls around, the hedge fund industry will reach above the highest level of two years ago. This comeback is due to average returns of 18.3% this year as of October 21st, almost completely counterbalancing the crushing 19% downturn which made 2008 so difficult for investors.
Optimism has taken hold of hedge fund managers lately as the major indexes, such as the Eurekahedge Fund Index and MSCI World Index show gains in the month of July. This month’s gain continues a 5 month upward trend for hedge fund managers.
According to the Eurekhedge Index, July posted a 2.1 percent gain, while the MSCI showed a remarkable 8.4% rise. The year to date improvement comes to 12 percent for the Eurekahedge and 14 percent for MSCI.
Hedge fund managers are feeling relief to finally be leaving the difficult times of the 2008 financial markets. They are hopeful that the rest of 2009 will leave the recession behind in the dust bowl of history. Many analysts view 2008 as the worst economic downturn since the Great Depression of late 1929 and the 30’s.
Peter Bernstein, president of Peter L. Bernstein Inc., a consulting firm to corporations and institutional investors, died last Friday, June 5, 2009. Bernstein was the author of several books, including “Capital Ideas: The Improbable Origins of Modern Wall Street” and “Against the Gods: The Remarkable Story of Risk.” He was also the author of many articles and other books about investment management, risk, and the markets.
He was an economic consultant who strove to bring the ideas of modern investment down from the ivory tower of academia and into the hands of the practitioner.
Harry M. Markowitz, the 1990 Nobel laureate in economics and adjunct professor of finance in the Rady School of Management at the University of San Diego mourned Bernstein’s passing. “I’m slightly in a state of shock. Peter was a good friend. He had this fantastic way to explain mathematical concepts to non-mathematicians. I was surprised to learn he was a non-mathematician.”
Peter L. Bernstein graduated from Harvard University magna cum laude with a degree in economics.
Bruce I. Jacobs, principal of Jacobs Levy Equity Management said about Bernstein, “Whether it was Harry Markowitz’s theories of portfolio optimization, or Bill Sharpe’s capital asset pricing model, or the option-pricing theory of Fischer Black, Myron Scholes and Robert Merton, Peter seemed able to translate the most abstract, arcane ideas into language that was accessible to those of us not necessarily trained in physics and higher mathematics. And he was able to do so in a lively, informal style while keeping all the main points intact.”
As our financial crisis continues to become more complex and difficult to fathom, many different types of funds are being discussed in the news. One type of fund that is frequently discussed is the Taft-Hartley Pension Fund. These funds came into existence as a result of an act of congress in 1947 as part of an amendment to the famous Wagner act of 1935, the comprehensive and history making legislation giving workers many rights, especially to form unions and other benefits, also known as the National Labor Relations Act.
Today over 6% of all pension fund assets are of the Taft-Hartley variety, representing 420 billion dollars worth of investment capital. Since this is certainly a significant amount of money, it is worthwhile to learn a bit about what these funds are.
Taft-Hartley pension funds are the way companies provide benefits to their employees at retirement. The funds are composed of contributions which the employer makes on behalf of their employees, contractually negotiated by the union that the worker is a member of; and the gains or losses that the fund is subject to while it is invested by the fund’s trustees.
Trustees are appointed in equal number by both the union and the employer, and are responsible for overseeing the investment and deciding what benefits the plan can afford upon retirement.
Usually investment firms are given the responsibility of overseeing the fund’s investment strategy as the trustee. There are many firms which oversee Taft-Hartley pension funds, including EnTrust Capital Inc.; McMorgan & Company, John F. Santaguida managing director, and consulting firms, such as Milliman, which advise trustees on how to focus on targeting the investment returns assumed by the plan.
For the curious among us, here is a brief history of hedge funds.
A man named Alfred W. Jones is credited with creating the first hedge fund in the year 1949. He was not only a financial journalist but an author and sociologist as well. Jones’ understanding of price fluctuations of individual assets considered two separate components, the performance of the asset itself and the movement of the market as a whole.
Keeping these two separate components in mind he structured his fund in such way as to neutralize the effect of the overall market movement on his assets. He created a balanced, conservative portfolio by purchasing assets whose price he expected to perform better than the market ‘selling short’ assets which he expected to be weaker than the overall market performance. In this way Jones was able to reduce the risk of his fund’s loss in value due to market fluctuations since if the market goes down, his shorted assets’ value will increase even though his assets purchased long would go down; And if the market goes up, the gain in the ‘long’ assets would be cancelled by the loss of the ‘short’ assets value.
This type of fund became known as a ‘hedge’ fund, because by covering the risk of the market going either up or down you have ‘hedged’ your bets, so to speak- protected them on both sides.
Aside from a few notable exceptions Jones’ hedge fund approach to investing was not widely known until an article appeared in 1966 by Carol Loomis in Fortune magazine. Loomis praised Jones’ fund, coining the term ‘hedge fund’ and noting that his fund had outperformed the best mutual fund’s performance by 44% over the past five years and by 87% over the past 10 years.
Over the following three years over 130 hedge funds were begun.