Top Hedge Fund News Wrap: 10/15-10/19
Records are Meant to be Broken. Data released by Hedge Fund Research on Thursday showed that hedge funds have reached a record size, overseeing $2.2 trillion in assets, in the midst of record outflows and more cautious investors. Reuters reports that funds utilizing relative value arbitrage strategies are delivering the year’s best returns and attracting the largest amount of new investments. Overall hedge fund performance is +4.76% through the end of September.
End of the Yellow Brick Road. Moore Capital’s “Wizard of Oz” Greg Coffey is retiring from hedge funds altogether at the age of 41. Although Mr. Coffey is worth nearly $700 million, he seems to have lost his edge as his GC fund is only a $100 million shell of its former $1.6 billion self. With Moore Capital’s downsizing fresh in all our memory, this was the right time to walk away.
Man-Oh Man. The world’s largest publicly traded hedge fund manager Man Group Plc has seen better days. There are multiple reports stating that Man reported outflows increasing to 57% in the third quarter. Investors have pulled a net $2.2 billion from the firm. In the words of their CEO Peter Clarke, “Investor sentiment, and consequently the outlook for flows, continues to be subdued.”
Playing it SAIF in China. Reuters reports that SAIF Partners plans on becoming the first major Chinese private equity firm to branch out into the hedge fund sector. The firm, which has about $4 billion under management, will use the long/short strategy for its Greater China Fund.
Fund-raising. Bloomberg reports that SkyBridge Capital LLC and managing partner Anthony Scaramucci are looking to allocate nearly 30% of their total capital to Asia-based managers within the next decade. “We’re here to establish bigger, broader relationships”, said Scaramucci prior to the SkyBridge Alternatives Conference (SALT). This move comes at a time when Asian hedge funds are struggling to fundraise due to the European debt crisis and economic slowdown in China but have the potential for alpha opportunities.
News in Brief
SEC sues Yorkville Advisors and two of their top executives for alleged securities fraud leading to an extra $10 million in fees collected.
Och-Ziff Capital Management Group LLC exits housing market and foreclosed homes investments.
ETFs Outperform Broader Hedge Index. If hedge funds were finding it harder to justify hefty performance fees, ETFs aren’t making their lives easier. ETFs have outperformed the broader market and hedge funds as well, with lower fees and added liquidity. TrimTabs ETF has gained 35.14% in just over a year beating both the Russell 3000 Index and S&P 500 while BlackRock reported that profits rose 8% in the third quarter with help from its iShares funds. BlackRock also plans to cut fees for these ETFs to attract addition investors and foil the competition.