Hedge funds

Sophia Grene

Apparently more than a thousand amendments have been tabled for the Alternative Investment Fund Management directive, Brussels’ attempt to bring private equity and hedge funds under its loving control.

This unprecedented level of rewriting during the legislative process is a testament to the inexorable sway of the alternative asset management industry. The original, draconian, draft of the AIFM was seen as a shy at the ever popular Aunt Sally of hedge funds, or ‘locusts’ as they are known in Germany. The usually painstaking and thoughtful asset management unit of the European Commission’s internal markets division had apparently come under political pressure to bring out a hardhitting draft directive in a hurry.

At leisure, however, even the European Parliament found regulating a European hedge fund industry too harshly might not be that good an idea. Its own impact study found implementation of the proposed directive as it stood could result in a 0.2 per cent contraction in the combined GDP of the European Union.

Possibly, however, the initial announcement and pained squawks for the industry were enough to satisfy the hedge fund haters, and now the tedious work of actually piecing together something actually workable can be done out of the glare of the media spotlight.

Certainly the number of journalists prepared to dig through all 1000+ amendments is likely to be as slim as the number of readers prepared to read about them.

London’s status in doubt as BlueCrest decides to relocate 50 staff to Geneva

Resolution prepares to make further deals

UK’s oldest private equity group, 3i, edges into postive returns

Ceiops to give annuities reprieve in UK, opening the door to exceptions for existing annuity books

Move to curb EU fund managers’ pay

TPG, the private equity firm, could invest in JAL

Microfinance group in CDO scheme

Former Optimal chief faces Madoff charges

Two former Bear Stearns fund chiefs cleared of fraud

Schroders celebrates two consecutive quarters of institutional net fund inflows

Brussels warns IASB saying rules shake-up could cause instability

Paulson & Co, the New York hedge fund, has disclosed a 2.08 per cent stake in Cadbury

Galleon probe expands to take in tech analysts

Pauline Skypala

The arrival of really expensive funds in the Ucits space, notably those being launched by hedge fund managers, makes the funds run by traditional long-only managers look quite reasonable.

Pauline Skypala

Where is financial innovation coming from in these days of (slightly) chastened banks? Look no further than index providers. The profit to be made from joining the index game has tempted Thomson Reuters to throw its hat into the ring, as we reported in FTfm yesterday.

Now S&P has announced an intriguing new securities lending index series, designed to measure the average cost of borrowing US equities. What does it portend when an activity like securities lending gets its own index? S&P says it is bringing transparency to opaque over-the-counter transactions, and providing both lenders and borrowers with a means of hedging (against rate increases that would decrease revenue streams or against costs, respectively). The indices can also be used to speculate on the direction of markets, S&P points out.

The ingenuity of index providers knows no bounds. What next? An index of bank bonuses or CEO pay perhaps? Tracking those might be worthwhile!

Ruth Sullivan

Just about everyone would like to make some amendments to the proposed EU regulations for the alternative investment industry, from hedge funds to governments, industry consultants and pension schemes.

The latest laments come from Mercer, the pension consultants, and their pension fund clients who agree the industry needs improvement and better supervision but call for Brussels to take a broader look outside the EU to see what is happening to the industry on a global regulation front.

Ruth Sullivan

Protectionist stance

Protectionist stance

The European Union’s draft rules on alternative investments have drawn a storm of protest from hedge funds, equity funds and even investment trusts. Today, the global hedge fund industry association took the battle a step further.

Such a ruling will make it so difficult and expensive for non-EU funds and managers to access the EU market that it would have huge consequences, particularly in North America and Asia Pacific, the Alternative Investment Management Association warns.

Sophia Grene

just like a hedgie

just like a hedgie

Why is running a hedge fund like competitive surfing? Apparently, it’s a mixture of the length of your wave and how aggressive your moves are.

That is the opinion of Pedro de Noronha, one of the few who have done both for a living. Mr de Noronha, who left surfing for the world of financial services because he wanted more intellectual stimulation, says the kind of strategic thinking that stood him in good stead while on a board helps in managing Noster Capital, his hedge fund.

Sophia Grene

Was it all a dream?

Was it all a dream?

I had to pinch myself to make sure I was awake. I was having lunch with the head of equities from a German fund manager at a Conran restaurant near Tower Bridge. I had asked what trends he saw and the answer flowed as smoothly as the sparkling Perrier.

“I predict a convergence between traditional and alternative fund managers, as long-only managers start to incorporate the new techniques available under Ucits into their toolkit. There is also a blurring between institutional and retail – all these boundaries are blurring,” he said.

This visionary also thought it was possible some investors would ask for more account to be taken of sustainability principles in investing, while he had heard of ETFs, but didn’t think they were likely to take off.

It was as if the whole of the last 18 months had been a dream.

Steve Johnson

If the high-powered hedge fund world is anything to go by, the worst appears to be over for the beleaguered investment industry.

Despite the fact that hedge funds were not to blame for the spectacular implosion of the global financial system, the sector copped more than its share of the fallout, with poor performance, widespread redemptions, gating, suspensions and Madoff combining to make a veritable toxic cocktail.

About the blog

FTfm is no longer updated but it remains open as an archive.

FTfm's specialist writing team offer their insights into the global fund management industry.

About the authors

Pauline Skypala has been editor of FTfm for four years having previously been deputy personal finance editor. She joined the FT in 1999 and has been writing on savings and investment issues throughout her career.

Steve Johnson, FTfm deputy editor, has been a journalist for 17 years, 10 of which have been with the FT.


Sophia Grene, reporter on FTfm, has been a financial journalist in print and online for 12 years.

Ruth Sullivan has worked as a financial/business journalist and foreign correspondent and for the past 10 years has been at the FT.

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