Hedge funds

Persistent withdrawals brought Man Group’s revenues for fiscal year ended March 31 down by 22.8% to $2.49 billion and net profits down 85% to $503 million from $3.47 billion a year earlier.

Hedge funds with $100 million or less in assets underperformed hedge fund giants for the first time since 1996, PerTrac Financial Solutions found.

Citing in-house investment expertise, New York’s pension plan appears to be trailblazing the way for other pensions to feel confident investing directly in hedge funds, not through funds-of-funds, Dow Jones reports. A year ago, New York’s state pension fund had $5 billion invested in hedge funds-of-funds. Today, at $500 million, that’s a mere shadow of its former self.

The Connecticut state Senate passed a bill to require more disclosure and transparency of hedge funds, private equity firms and venture capitalists. It would also require the investment firms to disclose conflicts of interest to investors.

BlackRock is beefing up its sales team and website to reach independent advisers serving retail investors, particularly those at LPL, Raymond James, ING and AIG.“We’re trying to expand our coverage of independent advisers because we recognize that is one of the fastest-growing areas of U.S. retail, and we’d like to have better coverage,” Frank Porcelli, managing director and head of U.S. retail sales at BlackRock, told Fund Action.The sales team currently numbers 85; Porcelli would like to expand that to 100 by the end of the third quarter.In addition, the firm is heavily marketing its 529 college savings program, offered through the Ohio Tuition Trust Authority, and its separately managed Multi-Asset Portfolio Strategies platform.

The head of prime brokerage at Morgan Stanley, Stuart Hendel, has resigned to “pursue outside interests,” according to an internal memo cited in The Wall Street Journal. Hendel is being replaced by Alex Ehrlich, according to the report, who has led prime brokerage services at UBS for the past six years.

After losing an average of 19% last year and charging investors management fees of 2% plus incentive fees of 20% or more, investors are beginning to protest, The Wall Street Journal reports. And with assets languishing, it’s more than likely that hedge funds will cut fees to attract assets and keep investors at least moderately happy.

With assets so vastly depleted, many hedge funds are likely to merge, an asset management executive told a recent gathering of hedge fund executives at the SkyBridge Alternatives Conference.

Hedge funds rose 4.3% in April, according to HedgeFund.net. And year-to-date, they are up 4.5%, compared with a 2.5% decline in the S&P 500 Total Return Index.In the month, performance gains added $40 billion to hedge funds’ total assets. With redemptions totaling $35.1 billion, total assets under management ended at $1.697 trillion. Outflows certainly have steadied. In January, investors took $166.4 billion with them to the exits. In February, they redeemed $37.5 billion, and in March, $51.7 billion.Since the third quarter of 2008, redemptions have totaled $815.3 billion, and in that period, performance brought down assets by another $425 billion.The strongest hedge fund sector in April was global equity, and the only sector to turn negative was commodities.

The current regulation that allows hedge funds and other advisers with fewer than 15 clients not to register with the Securities and Exchange Commission is a “gap [that] doesn’t make sense,” said Andrew Donohue, director of the division of investment management, speaking before the Mutual Fund Directors Forum.

With so many Wall Street investment banking powerhouses and hedge funds closing, and regulators pressuring them to rein in risk, many of these executives are returning to the game, setting up, you guessed it, hedge funds, Reuters reports.

Fidelity Investments has added the IQ Alpha Hedge Strategy Fund to its mutual fund platform, making it available to registered investment advisors and retail investors.

The Securities and Exchange Commission is currently investigating 50 cases of credit-default swaps and 150 hedge funds, Chairman Mary Schapiro told the Society of American Business Editors and Writers. The investigations are in line with objectives of the Obama Administration to overhaul financial regulations.

The Morningstar 1000 Hedge Fund Index fell 0.1% in the first quarter, and the Morningstar MSCI Asset-Weighted Hedge Fund Composite Index rose 0.5%.

UBS is reportedly considering selling its hedge fund unit to management, according to a Swiss newspaper, Neue Zuercher Zeitung, and analysts believe the unit, which has $39 billion in assets under management, could fetch $1 billion.

Hedge fund investors redeemed $103 billion in the first quarter, with $85 billion of that coming out of hedge funds-of-funds, according to Hedge Fund Research, leaving remaining assets of about $1.3 trillion.

Recognizing the need for asset management executives to receive timely insights from financial intermediaries on changing investor tastes, kasina and Hoursesmouth have launched Advisor Vision. Through surveys conducted among Horsesmouth’s 70,000 members, the service provides insight into advisers’ behaviors, preferences for working with asset managers and opinions on specific firms and investment choices.

Whether driven by the demands of potential or existing investors, regulators or a new strategic direction, hedge fund and private equity firms are moving beyond their historically entrepreneurial outlooks to enhance their operational risk management, financial controls (SOX and SAS 70) and internal audit.

Hedge funds will reorganize following sharp declines last year and into 2009 to emerge stronger and top $2.6 trillion in assets by 2013, predicts The Bank of New York Mellon and Casey Quirk.

Although assets are still way down from their peaks, there were two encouraging signs last month that the tide may be turning for hedge funds.