Hedge funds

After a rough 2008 in which almost 1,500 portfolios closed, hedge funds and bank trading desks are hiring again, and the top managers are being snatched up quickly, Reuters reports.

Hedge funds may have to change tactics, notably by cutting their leverage, and adapt to regulations that likely will restrict their investment strategies, according to a recent report about the $2 trillion alternative asset management industry published by Standard & Poor’s.

Investor confidence among affluent investors increased in July, according to monthly data released by Spectrem Group.

Mutual, pension and hedge fund managers have been investing large quantities of cash in the market in recent weeks, and while the pace of their buying has been slowing, it appears to indicate their faith in a continued rally, Reuters reports.

Of the 132 mutual funds on the market that employ hedging strategies, nearly half have been launched in the past three years, and in light of the 39% average decline in stock funds last year, more are likely on the way, The Wall Street Journal reports.

The U.S. should adopt a Systemic Risk Council made up of top financial regulators, according to Investment Company Institute President and CEO Paul Schott Stevens, during testimony July 23 before the U.S. Senate Banking Committee.

BlackRock reported second quarter earnings of $218 million, a 20% decrease from the $274 million it earned a year ago. Revenue also fell, by 26%, to $1.03 billion.

Of course, it cannot be proved that hedge funds contributed to the financial crisis, as the Department of the Treasury said last week. However, it's more than likely that the top-performing hedge fund managers, those earning a staggering $1 billion a year in 2006, 2007 and 2008, were invested in the mortgage-backed and leveraged instruments that brought the economy to its knees.

hedge funds regulation crisis sec securities and exchange commission

The Department of the Treasury is proposing legislation that would require all hedge funds and private capital pools with $30 million or more of assets under management to register with the Securities and Exchange Commission.

While mergers and acquisitions among asset management companies were down significantly during the first half of 2009, many M&A experts predict this decline will flatten out or reverse by the end of the year, driven by renewed faith in the profitability of asset firms and banks' continued need to raise capital.

Alternative investment manager Hattaras Funds has entered into a definitive agreement to acquire a controlling interest in Alternative Investment Partners, which offers a line of open-end hedge funds-of-funds called AIP Mutual Funds.

The Treasury Department tapped nine fund managers, including five mutual fund companies as well as private equity and hedge funds, to help implement its Public-Private Investment Program, established to address legacy real estate assets.

Lori Richards is stepping down as head of the office of compliance inspections and examinations at the Securities and Exchange Commission, a role she held since its creation in 1995. She joined the SEC in 1985. Upon her departure on Aug. 7, Associate Director and Chief Counsel John Walsh will take her place.

It could take as long as five years for asset managers around the world to recoup the $10 trillion they lost in 2008, according to a report by Cerulli, which calls the global meltdown “of near-biblical proportions.”

In a roundtable with The Wall Street Journal four of the most preeminent asset managers discussed their outlook for the economy, and while they expect rough times to continue for some time to come, they do see pockets of opportunity.

Registered investment advisors reported a rise in new clients, according to a survey released Monday by TD Ameritrade Institutional, a unit of TD Ameritrade Holding Corp.

Hedge funds appear to be on track to deliver returns of 6% or better in the second quarter, their best quarterly performance since 2000, Merrill Lynch analysts project.

Financial advisers were able to save their millionaire clients big money last year, helping to fortify the need and demand for good advice among the wealthy, Fidelity Investments found.

More than 25% of high-net-worth individuals either withdrew assets or closed their accounts with their wealth managers in 2008, according to the World Wealth Report, a survey of the 15 largest firms issued by Merrill Lynch Global Wealth Management and Capgemini. Instead, 30% of wealthy investors said they are likely to move their money to local and regional banks.The 15 asset managers surveyed lost an average of nearly 25% of their assets in 2008 after a 17% growth in 2007.“The good news is that it’s still a profitable business—just less profitable than before,” commented Bertrand Lavayssierre, managing director of global financial services at Capgemini.Wealthy clients moved 50% of their assets into cash or cash-equivalent assets, up from 44% in 2007 and 35% in 2006.