Portfolio

Hedge funds must reshape themselves to regain investors’ trust and continue to grow, speakers at the Managed Funds Association Forum this week said.

Due to a greater ease of getting in and out of markets, smaller hedge funds are handily outperforming large counterparts, according to Eurekahedge.Hedge funds with $100 million of assets under management or less are up 9.7% year-to-date through the end of May, compared with average returns of 5.2% for hedge funds with $500 million or more under management. Those with between $100 million and $500 million are up 9.4%.Bill Maldonado, head of Halbis, a division of HSBC Global Asset Management, told The Wall Street Journal that markets have been moving very swiftly this year, making it difficult for large funds to switch course. “There was an inference that they would be able to turn exposure around very quickly and go short, but, in fact, that didn’t happen,” he said.According to PerTrac Financial Solutions, smaller hedge funds have been beating larger hedge funds since 1996. The firm’s database of performance between 1996 and 2008 shows funds with less than $100 million delivering 13% a year, compared with 10% for funds with $500 million or more.

The number of millionaires in the world plunged 14.9% last year as the markets faced extreme losses and volatility, according to the Merrill Lynch/Capgemini 2009 World Wealth Report. This means there are fewer millionaires in the world today than in 2005. The number of ultra-high-net-worth individuals (those worth net assets of at least $30 million, not including their primary residence) also dropped 24.6%.

In today’s unpredictable market, even the “safest” investments such as stable-value funds carry considerable risks that plan sponsors and participants might not be aware of, cautions Watson Wyatt. Thus, the consultant urges plan sponsors and investors to review their holdings.

The Securities and Exchange Commission met Wednesday to discuss various changes to money market funds to safeguard them from another “run on the bank” like what happened last September with the Primary Fund.

As the asset management industry will inevitably face more regulations, costs will increase and competition will intensify, giving the largest companies an advantage that will increase their market share. Those were some of the views of 225 asset managers from 30 countries that Create Research surveyed. The study was commissioned by Citi’s global transaction services group and Principal Global Investors.

The board of trustees for the Fidelity Charitable Gift Fund has voted to lower the minimum asset requirement for its Charitable Investment Advisor Program (CIAP) to $250,000 from $1 million.

With births declining and medical advances extending life spans, the population of people age 65 and older in the U.S. will rise from 13% today to 20% by 2030 and 26% by 2050, the Census Bureau announced Tuesday.

Van Eck Global has launched the Van Eck Multi-Manager Alternatives Fund, a mutual fund designed to give investors exposure to a variety of investment strategies, including absolute-return and hedge style strategies.

The Financial Industry Regulatory Authority is asking brokers and registered investment advisers to provide it with information on the sale of leveraged and inverse exchange-traded funds between Oct. 1, 2008 and March 30 to investors who held them for 10 business days or longer. The authority is looking for all sales and marketing materials, customer communications and complaints, arbitration claims and written supervisory procedures regarding the sale of such funds.