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Hedge Funds

New Financial Regulations to Create Unprecedented 'Sea Change' at SEC

January 25, 2010 - BOSTON -- Mutual fund companies must stay on top of their compliance programs, particularly because Congress is likely to pass new financial regulations, executives warn. "Regulation writing is about resolving tensions and balancing purposes,' said Michael Novey, associate tax legislative counsel at the Office of Tax Policy at the Department of Treasury. "Our task is to implement legislative purpose, recognizing that Congress' acts ought to be workable. There is a tremendous amount of misunderstanding about many of the proposed regulations."

BNY Mellon Aims to Curb Costs, Expand Wealth Unit

January 25, 2010 - As it waits for the fee income that will come once interest rates rise, Bank of New York Mellon will continue to try and control costs and focus on expanding its asset management and asset servicing businesses overseas, the firm said during an earnings call last Wednesday. Robert Kelly, BNY Mellon's chief executive, said the firm will cut expenses by $100 million, or 4.3%, this year. "There are a lot of opportunities to drive efficiencies in our businesses," he said. "Executives will re-engineer operations to make us more efficient."

Hedge Funds Up 25%, Best Performance in a Decade

January 18, 2010 - Hedge funds had their best year last year since 1999, according to the Hennessee Group. The Hennessee Hedge Fund Index gained 24.6% in 2009. Equity indices also gained in 2009, with the S&P 500 up 24.7%, the Dow Jones Industrial Average up 18.8%, and the Nasdaq Composite Index gaining 43.9%. In 1999, the Hennessee Hedge Fund Index was up 30.78%. "Hedge funds competed very well with the stock market, with a lot less risk. Whenever you can achieve market returns with a third less risk, that is professional money management, as opposed to the traditional money managers who are long-only and who achieve market returns with 100% net exposure," said Charles Gradante, managing principal of the Hennessee Group.

2010 Outlook Looks Hopeful, Barring Any Surprises

January 11, 2010 - NEW YORK - U.S. and international regulators are widely credited with having saved the global economy from plummeting into a second Great Depression, and the fragile, recovering economy can expect to see continued support for much of 2010, experts say. This support could help stocks rebound anywhere from 2% to 12% this year, depending upon whom you ask, but markets can always defy expectations.

IFRS Puts Focus On Fair Value

January 4, 2010 - As regulators work to converge U.S. Generally Accepted Accounting Principles (GAAP) with International Financial Reporting Standards (IFRS), several key differences remain, most notably the different measurement attributes of financial liabilities, the timing and approaches to projects and the difference between fair value and amortized costs. Under GAAP, investment companies like mutual funds, private equity holders and venture capital organizations are exempted from certain consolidation requirements and are allowed to account for separate fund holdings at fair value. No such exemptions currently exist under IFRS, though fair value concerns are being featured prominently in convergence discussions, and the U.S. has been adapting its rules on fair value to increase its international appeal.

Private Funds Face Regulatory Face-Lift

December 7, 2009 - While it may be too late for the Securities and Exchange Commission to pass any new regulations before the end of the year, financial experts anticipate major financial legislation and regulation to occur sometime in early 2010. The main issues facing money managers are Congressional proposals to require private funds to register with the SEC, a Supreme Court ruling on fund fees, a proposal to regulate money market funds and regulatory proposals or guidance on valuation.

IFRS Consolidation Rules Could Slam Mutual Funds

November 9, 2009 - NEW YORK - A little-known provision in international financial reporting standards (IFRS) could require mutual funds to consolidate and report the financials of the companies they invest in, if they own a controlling interest across all of their individual funds. Under U.S. Generally Accepted Accounting Principles (GAAP), investment companies like mutual funds, private equity holders and venture capital organizations, are exempted from consolidation requirements and allowed to account for their holdings separately in each fund at fair value.

Fidelity Enables Investors To Trade International Stocks, Currencies via Web

October 26, 2009 - Fidelity Investments has augmented its international trading platform, enabling retail investors, advisers and brokers to trade foreign stocks and currencies in real time. The platform gives retail investors access to 12 foreign markets and eight currencies, along with third-party research, news, real-time market data and quotes, and telephone access to international trading specialists 24 hours a day, seven days a week. Broker/dealers and financial advisers have access to trading equities in 25 markets and 16 currencies. The platform can convert dollars into foreign currencies instantly, in current market exchange rates.

Companies Wait for Clearer Guidance Before Adopting IFRS

October 26, 2009 - Noting the urgency and immensity of their task, global financial leaders are frantically making small and large changes to U.S. Generally Accepted Accounting Principles (GAAP) and international financial accounting standards (IFRS) to make them more similar, and the Securities and Exchange Commission has recently made a single set of standards a high priority. With more than 100 countries already using the principles-based IFRS, the world is anxiously waiting to get the U.S. on board, but merging the two standards to eliminate their differences has been and will continue to be a monumental task.

Non-Traditional ETFs Worry Regulators, Advisers

October 12, 2009 - As exchange-traded funds continue to grow in scope and popularity, investment experts warn that some products, such as leveraged and inverse ETFs, may be too dangerous for all but the most experienced hands. 'People get lazy and they think an ETF is an ETF,' said Paul Schatz, president and CEO of the Woodbridge, Conn.-based registered investment advisor Heritage Capital LLC. 'There are inherent problems with every product, and some products have way too much firepower for the average person to use.'

Politics Could Slow Risk Control Overhaul

October 5, 2009 - NEW YORK - Regulatory officials are pondering significant changes to the way the U.S. oversees financial markets in the wake of last year's credit crisis and the failure to prevent Bernard Madoff's massive Ponzi scheme, but lawmakers will have to make some hard choices before any real changes can happen. Financial industry experts blame these failures on the way regulatory agencies operate in silos and fail to share vital information.

Fund Industry Defends Dark Pools

October 5, 2009 - NEW YORK - Despite their sinister-sounding name, dark pools of liquidity can be very beneficial to average investors by offering mutual funds and large institutional investors an efficient way to make large trades without impacting the market. Unfortunately, the usefulness of dark pools has quickly exceeded the ability of authorities to monitor or regulate them. Many financial leaders are worried that the exploding popularity of these private crossing networks runs contrary to mutual funds' promise of transparency and should perhaps be scaled back a bit.

Absolute-Return Yields Via Mutual Fund Trades

September 21, 2009 - Given the number of tactical and absolute-return mutual funds hitting the market, it appears that some fund complexes are now giving their portfolio managers more leeway. The 17 individual traders who run ProfitScore Capital Management's multi-manager long/short unified hedge account accomplish this by actively trading mutual funds within their individual specialty. They primarily buy funds from Rydex, ProFunds and Direxion, including funds that permit intraday trades. Money Management Executive recently spoke with John McClure, CEO of ProfitScore, about this unusual approach.

SEC Seeks to Shore Up Advisor Custody Rule

September 7, 2009 - Regulators are looking for ways to increase accounting safeguards for investment advisors who have custody of client assets, but an investment advisor's group says some of the proposed changes are too broad and go too far. Proposed amendments to Rule 206(4)-2, requiring all investment advisors that control or have custody of client assets to hire an independent public accountant to conduct an annual 'surprise' examination of their books, would place an unnecessary burden on small advisory firms, according to the Washington-based Investment Adviser Association.

Crisis Might Have Been Averted if Hedge Funds Registered With SEC

July 20, 2009 - 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. Even after a federal appeals court in 2006 tossed out a controversial Securities and Exchange Commission rule that would have required hedge funds to register with the agency, the SEC and Congress have continued to talk about requiring hedge funds to register-to no avail.