Tag Archives: hedge funds

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I'm a sucker for a good venn diagram, so when I saw one on the New York Times Bucks blog featuring the intersection of "Rich Smart People" "Super Secret Formulas" and "Costs You a Lot of Money" I had to learn more.  What's in the intersection of Carl Richards diagram? Hedge Funds, that's what.  The post's title? "The Appeal of Investments That Cost More and Return Less"

I'm not here to dump on hedge funds - I'm sure there are plenty of folks out there who can do that - but what is this weird attraction to opacity?  Why do some people like alternative investments with mystery ingredients?  Do these people also buy food without reading the ingredients? Nobody likes mystery ingredients in food, right?

Richards thinks it's a persistent bit of "(bogus) investing folklore" that "the more complicated and secretive and exclusive it is, the better." Sure, if the secret to great returns at low risk wasn't a secret, everybody could enjoy them, and that's clearly not the case.  The folklore persists, but just because you can't do it - maybe you don't have the time to run models and keep up with markets and manage trades - that doesn't mean you don't have a right to know about how it works and what's in it.

You know Currensee is all about transparency, so here's our advice to smart rich people, and it also goes for anybody with money to invest: ask to see what's inside and how it works; if they won't tell you, be very very careful.  Investors in stocks hold the boards and executives accountable and demand annual reports and audited financials, so should people who hold alternative investments and managed funds.

The prospect of having an investment industry genius strategically (and often aggressively) managing your asset allocations in an attempt to kill risk and crank out returns can be alluring. Add to that the current upsets throughout the global economy, and despite their stigmatic volatility, hedge funds are looking pretty tempting.

Unfortunately for many retail investors, the restrictions that determine who can access a hedge fund don't leave much in terms of acceptance. In order to invest in these managed funds, one must either be an accredited investor with $1 million plus in liquid assets and a $200,000+/year paycheck, or a qualified purchaser, who owns at least $5 million in investments already. This clearly narrows the investor diversity scope down a bit.

But, the shell of the hedge fund industry looks like it’s finally starting to crack. Recent findings of financial research firm Cerfulli Associates published in an InvestmentNews article last week demonstrated that money managers expect their allocations into alternative investments to increase by at least 50% over the next three years. Investors and financial advisors also have a growing desire to increase alternative investments to negate market downturns and create a divergence from the stock and bond market.

But what does this have to do with making the elusive world of hedge funds more mainstream? It seems the ripples caused by an overall increase in demand for alternative investments have reached the mutual fund industry in the form of something known as ‘alternative mutual funds’.

Funds of this sort fall into alternative sectors such as long-short equity (one of the more popular), currencies, precious metals, and commodities. Taking it to the next level, alternative mutual funds twisted and evolved a bit further into something very similar, known as hedge-like mutual funds (the two names are often even interchanged.) These funds have the potential to hedge risk and generate stronger returns using some of the same strategies and tools that hedge fund managers use.

The most attractive characteristic of investing in a hedge-like mutual fund is that now, average-income investors can access the advantages of hedge fund investing previously available only to those qualified to invest in a hedge fund. Because the SEC regulates them, hedge-like mutual funds preserve some amount of the conservatism and transparency that is demonstrated within traditional mutual funds. Unfortunately, this can also impact these funds negatively in that it restricts their flexibility and requires a greater level of liquidity.

Though these crossbreed mutual funds aren’t anything new and earth shattering, Cerulli predicts that within the next five years, their presence will increase to the point of comprising 10 percent of mutual fund assets - a 245+ percent surge. The fueling of their growth really comes down to one thing: education. Money managers who strive to educate financial advisers on their investment products are the ones seeing positive results. This is due simply to the fact that many advisers are not yet familiar with all of their options in alternatives available to them. And we all know how easy it is to fear the unknown.

The theme of taking an investment that was once unavailable to traditional investors and making it available to them is common across the alternative investing landscape. Hedge-like mutual funds have successfully done what Currensee is striving to accomplish by carrying out this theme. Just the way hedge fund management, tools, and strategies were only available to high net-worth investors at one time, not long ago the world currency market experienced the same inaccessibility. However, with the emergence of various types of trade replication software and autotrading, even those with no prior knowledge of currency trading can allocate a portion of their investments to this type of alternative.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 5/29/12

Summer has arrived. After last weekend’s gorgeous weather in Boston as we honored Memorial Day, we erased our cravings for hamburgers and hot dogs and replaced them with hunger for some knowledge of the currency markets.

In the U.S., economic optimism continued. The May Thomson Reuters/University of Michigan’s index on consumer sentiment rose to its highest level in four years. According to the survey, consumer sentiment increased to 79.3 from 76.4 in April. The highest jump since October 2007, the survey also showed half of all consumers felt the economy has improved during the last year. Jobless claims, which remained at 370,000, also illustrated economic stability.

While conditions in America painted an optimistic picture, images abroad weren’t cast in the same stroke. Greece remained much of the focal point as the country devised plans for a parallel currency to the euro, should it withdraw from the region. Sergey Shvestov, vice president of Russia’s Central Bank, said Greece’s departure from the eurozone was necessary, and it would be a “good example” for other countries. Facing discussions about debt issuances, German Chancellor Angela Merkel defended her opposition about why bonds won’t solve the eurozone’s problems, saying such tools wouldn’t get to the root of the problem. Ultimately, the Organization for Economic Cooperation and Development warned the 17-member region that a severe recession looms if its governments and central banks don’t act quickly to improve economic conditions.

For hedge funds, an overwhelmingly majority of them added compliance staff since 2008, according to a new survey. Hedge fund redemptions for May 2012 upped 3.31 percent, according to the GlobeOp Forward Redemption Indicator.

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 5/21/12

Even though the unofficial start of summer kicks off this Memorial Day weekend in Boston, flip flops and sunscreen were out in full force last weekend. What was the temperature of financial markets from the past week? Read on to find out.

In the U.S., the economy was picking up after an early spring slump. Data showed growth in the April-June quarter is off to a good start, thanks to falling gas prices and solid hiring gains. Manufacturing and housing continued to show signs of economic expansion as factory bookings for long-lasting goods rose 0.3 percent last month, according to a May 24 Commerce Department report. Other numbers showed purchases of existing and new houses also increased. In the business sector, about 72 percent of startup CEOs reported thoughts of economic optimism this year in a study conducted by Silicon Valley Bank.

For the eurozone, unfortunately, there haven’t been too many signs of economic confidence after fiscal turmoil continues in Greece. The country is facing a possible exit from the eurozone that could cost the region hundreds of billions of euros. Greece’s financial minister said he expects the financial disorder to last about 12-24 months, allowing time for Greece to decide if it wants to stay in the single eurozone currency. As Greece struggles with itself, European leaders have prepared crisis-fighting plans for discussion at an informal EU Summit this week. According to the European Central Bank, officials said the eurozone needs growth and austerity.

In April, hedge funds upped 0.12 percent, according to the HFRX Global Hedge Fund Index, which puts their year-to-date gain at 3.27 percent.

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 5/14/12

Rain, rain, go away. While Boston has been under rain showers for the past week, and recovering from the Celtics loss May 14, we drizzled some of the top headlines from the financial markets into this week’s roundup.

In the U.S. the economy continues to show signs of improvement. Jobless claims now stand at 367,000—1,000 less than last week, and job openings in March are the highest in almost four years, as employers advertised 3.74 million job openings. Additionally, economic confidence remains steady at -18, up slightly from the previous week and slightly better than the -20 average for the month of April.

In the eurozone, the German economy grew by 0.5 percent in Q1 2012 after it contracted 0.2 percent in Q4 2011. Economists predicted a growth rate of 0.1 percent, and some experts speculated Germany—the economic backbone of Europe—could help save the eurozone from recession. Macroscopically for the eurozone, economists predicted an economic growth of 1 percent for 2013, with the European Commissioner for Economic and Monetary Affairs Olli Rehn saying “a recovery is in sight” for the area. After Greece entered its second week without a government, the European Commission hoped the country would remain part of the eurozone, not withdrawing from the region and returning to its drachma form of currency.

For hedge funds, they saw an inflows increase of 1.24 percent so far in May, according to the GlobeOp Capital Movement Index.

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 4/23/12

We enjoyed some warm weather in Boston this past weekend before rain pounded the city, but the inclement forecast didn’t dampen our perspectives about the currency markets.

In the U.S., unemployment aid requests remained near a four-month high as weekly jobless claims totaled 386,000. While economists said the March figures were weaker than previous numbers, they downplayed them, saying that the warmer winter may have led to some early hiring in January and February.

In the eurozone, the European Commission said Greece should now have enough money to stick to its economic reform program as the country seeks to improve its financial instabilities. British retail sales increased 1.8 percent, surprising economists because the volume of sales dropped by 0.8 percent last month and were only expected to increase 0.4 percent this time.

For hedge funds, assets rose to new levels as they surged to $2.13 trillion at the end of the first quarter, beating the previous high of $2.04 trillion, set in the middle of last year, according to Hedge Fund Research Inc. The Dow Jones Credit Suisse Hedge Fund Index finished up 0.05 percent in March.

In the foreign exchange space, FXCM reported steady March FX volumes, with retail down 2 percent from February and institutional up 27 percent from February. Retail volume accounted $340 billion, and institutional volume totaled $161 billion.

 

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 4/16/12

The Boston Marathon has finished, the scorching weather has departed and another week has past. While cheering on the runners battling the heat—and Heartbreak Hill—during the 116th Boston Marathon, the financial markets also made a dash for themselves.

In the U.S., consumer confidence held to a four-year high as more Americans said their finances were in better shape. The Bloomberg Consumer Comfort Index posted minus 32.8 in the period ending April 8, second only to the prior week’s minus 31.4 as the highest since March 2008. Strong U.S. retail sales fueled economic growth in the first quarter, and analysts are optimistic that the economy grew at an annual pace of at least 2.5 percent during January-March. Also, the U.S. Federal Reserve said the country’s economy continued to grow at a steady pace since February. According to its latest national economic performance survey, the central bank said five districts, including Boston, reported moderate growth.

In the alternatives, hedge funds are rebounding in 2012 as investors have put more cash into hedge funds during the past month, according to GlobeOp. Now four months into 2012, hedge funds are off to their strongest start since 2006, with the average fund gaining nearly 5 percent in the first quarter of 2012. In 2011, more than 1,100 hedge funds launched, according to Hedge Fund Research.

In the eurozone, industrial production has risen for the first time since August 2011, showing signs of revived economic life for the region.

Strong retail sales ease growth worries, Reuters, April 17, 2012
Hedge funds attracting cash in 2012 rebound, Reuters, April 13, 2012
Consumer Comfort in U.S. Held Last Week Near Four-Year High, Bloomberg, April 12, 2012
US economy grows at steady pace: Federal Reserve, The Economic Times, April 12, 2012
New Sign of Economic Life in the Euro Zone, Institutional Investor, April 12, 2012
Hedge Funds Off to Best Start in Six Years, Wall Street Journal, April 11, 2012
HFR: Over 1,000 Hedge Funds Launch In 2011, FINalternatives, April 10, 2012

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

It has been quite an exciting day here at Currensee as we’ve been receiving generous coverage on a press release published this morning by the Wall Street Journal’s Market Watch. The premise of the piece highlighted how Currensee’s Trade Leader Investment Program has grown to include over 100 institutional partners who are currently offering the program to their investors and clients.

It is interesting to look back over the timeline beginning at the programs initial inception back in October of 2010, when it was available only to retail investors. It wasn't until roughly a year later that we started providing institutional investors the option of offering the program to their clients, which include asset managers, hedge funds, family offices, introducing brokers, and other financial institutions.

The press release also illustrated how the relatively new realm of online trading platforms are reshaping the way trading happens by allowing investors some degree more control. Javier Paz, senior analyst of Aite Group, explains some components that have contributed to the monumental shifts in forex trading.

"The abundant liquidity of the Forex markets has given rise to a new breed of professional-level traders. This development, along with the popularization of trade-replication technology and prudent copy-trading rules, are the biggest developments in institutional investing since the creation of hedge funds."

The press release definitely brings into perspective just how much this facet of trading is adapting to available technology as a means of improving the way forex investors navigate the world currency markets. Thank you so much to MarketWatch, Elite Group, and the many others who found this information worthy of posting on their blogs and sites - we really appreciate it! Find the full press release here.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 4/3/12

Fenway Park is revving for its centennial and the Boston Marathon is preparing for its annual run—two signs of April in Boston. In the currency markets, financial optimism, eurozone developments and alternative investment returns continue to show positive signs.

In the U.S., the economy is once again illustrating that it’s emerging as the main generator for global growth as markets improve, stock prices rise and personal-consumption expenditures increase. The country’s consumer confidence, which posted 70.2 in March, closed to the highest level in a year last month as a growing number of Americans said they planned to buy cars, homes and appliances.

In the eurozone, there are also hopeful indicators for an improving U.K. economy as its unemployment rate is 8.4 percent, less than the eurozone’s unemployment rate at 10.8 percent. While Greece may still face a long path for economic stability, German Chancellor Angela Merkel said Greece’s exit in the euro would be a “catastrophic” mistake to the area’s economic and political arenas. Greece’s eurozone sisters and the International Monetary Fund approved in March the country’s 130-billion euro rescue package to aid the nation until 2014.

Finally, hedge funds upped nearly 2.4 percent as of March 28, according to Bank of America Merrill Lynch Hedge Fund Monitor. In the first couple months of 2012, hedge funds returned 5 percent—the best start to a calendar year since 2000, according to Hedge Fund Research.

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Our Two Cents – Week of 3/5/12

As winter finally greeted Massachusetts last week, I was able to jet down to Florida this past weekend for some warmth, but that didn’t stop me from keeping up on the latest financial headlines.

In the U.S., some more good news about jobs as claims for jobless benefits dropped to a four-year low, reaching 351,000. While claims decreased, the economy increased, growing at a 3-percent annual rate in the October-December 2011 period—the fastest pace since spring 2010. Economists say factors such as busier factories, higher retail sales, more jobs and growth in home sales will continue to help fuel more economic growth. People’s perceptions of the economy keep increasing as 40 percent of Americans believe the U.S. economy is growing—up 27 percent from April 2011 and 3 percent in 2008.

In Europe, the eurozone crisis will not be a big deal for the markets within the next few months, according to an official from Barclays Capital. Larry Kantor, managing director and head of research, said the European Central Bank has helped enough to lessen the financial crisis. Greece awaited a verdict about its bailout after completing 38 mandatory measures for amendments to its economy. On March 1, the country’s parliament passed changes to its health sector, allowing longer opening hours for pharmacies and limitations on drug spending. For Europe’s overall economy, confidence rose for a second consecutive month in February. The European Commission’s economic sentiment indicator increased by a point in the eurozone to 94.4. The rise piggybacked on January’s hike, which was the first improvement in sentiment since March 2011.

In alternative investments, hedge funds are expected to rise 12 percent to a record $2.26 trillion this year, according to Deutsche Bank’s latest Alternative Investment Survey. Hedge funds finished January up 2.34 percent, according to the Dow Jones Credit Suisse Hedge Fund Index, with nine of 10 strategies in positive territory.

 

 

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.