Money Management Executive Latest News

Wilmington Trust is acquiring Bingham Legg Advisors, a wealth advisory firm based in Boston that specializes in tax-sensitive investment strategies.

After eager investors rushed in to Brazil, Russia, India, China funds (BRIC), many pulled back, particularly disappointed by performance in China and Russia.

A nursing shortage in the U.S. is causing many nurses to double up on shifts and make more money, and in return they are saving more for retirement than other working employees, research from Fidelity Investments found.

Goldman Sachs is expanding its presence in the South Korean retail fund business with the recent agreement to acquire a South Korean asset management firm from majority owned Australia-based Macquarie Bank, according to Reuters.

Investors showed continued interest in bond and large-cap funds in the first quarter, while interest mid-cap and growth funds shrank, according to The Wall Street Journal.

Zurich Capital has settled with the Securities and Exchange Commission for having provided financing to four of its hedge fund clients for the purpose of market timing mutual funds. The firm is paying a $16.8 million fine, consisting of $12.8 million in disgorgement and a $4 million penalty, all of which will be distributed to the mutual funds that were harmed as a result of the market timing.

Whether it's protection of their own investments or a sense of responsibility to the world, there is an intriguing, if not unexpected, movement developing among mutual fund investors.

Some mutual funds, looking to boost returns or hedge their market exposure, have been turning to derivatives, particularly bond and commodity mutual funds, The Wall Street Journal reports. And this has been causing problems for the people wearing the green shades in the back office.

Typically delivering high double-digit returns, hedge funds have had no trouble charging investors, typically, 2-and-20: 2% of assets and 20% of gains. But with performance disappointing of late, some investors are pressuring hedge funds to lower their fees, BusinessWeek reports. And wealthy investors’ interest in hedge funds is on the decline; 27% of households worth more than $25 million own hedge funds, down from 38% two years ago, according to Spectrem Group. Last year, the average hedge fund returned 12.9%, whereas the S&P 500 rose 15.1%. “We have no problem paying high performance fees for a manager’s selection, but we find taking on average market risk inherently unsatisfying,” said Russell Read, chief investment officer of CalPERS. Robert Discolo, head of hedge fund securities at AIG Global Investment Group, agreed: “In most cases, [managers] don’t deliver enough to justify their fees. Most funds are doing things that can be replicated much cheaper.” As a result, institutional investors with large stakes in hedge funds are pressuring the managers to lower fees. At the same time, some hedge funds are voluntarily rewarding investors who agree to lock up their money for three years, rather than the standard one year, with a 1.5-and-15 rate, that is, 1.5% of assets and 15% of profits. The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.

A wave of executives leaving Wall Street to work for hedge funds has been occurring the past few years, but now some of those employees might be coming back, according to the Financial Times. The hunt for long-term capital, wanting to build more than a short-term moneymaking machine, and the need for resources are fueling the desire to come back to the Street. Also, investment banks and other financial institutions are starting to invest directly in hedge funds or hire executives from them, further fueling the trend. “If Wall Street wants to attract these people in a way that is acceptable to shareholders and boards, they are not going to do it by paying hedge fund-like salaries, so they are resorting to acquisitions,” said one New York-based hedge fund banker. The large players offer employees the backing of a large organization and, in some instances, senior roles at group level to make sure they don’t leave. This is the case for Gil Caffray, vice-chairman of FrontPoint Partners, a hedge fund conglomerate, who is now also the vice-chairman of Morgan Stanley’s fund management unit after the investment bank bought his company late last year. Caffray said that Morgan Stanley convinced FrontPoint’s management of its commitment to building a world-class alternative investment franchise, with Front-Point as a cornerstone of that effort. “It does give us the ability to attract and to retain very high quality investment teams,” Caffray said. FrontPoint’s investment expertise and distinct set of strategies provide Morgan Stanley’s existing clients with a broader range of alternative investments than they had access to before, said Stu Bohart, head of alternative investments at Morgan Stanley Investment Management. Besides Caffray, other employees of FrontPoint’s management team have also assumed leadership roles with Morgan Stanley. The move of hedge fund executives back to the Street also comes at a time when hedge funds and investment banks are converging on common territory. More and more hedge funds are being viewed by bankers as partners in the capital markets, especially in buy-out deals. Investment banks are starting to become similar to hedge funds in certain areas. “You are certainly seeing more convergence between hedge funds and Wall Street, be that through acquisitions of hedge funds by Wall Street firms, staff moving from one to the other, or the two working in concert on restructuring and turnarounds,” said one fund of hedge fund managers. The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.