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BluMont Man Alternative Yield Fund Announces Income Distribution March 21st, 2007 | |||||
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BluMont Capital Inc. Announces Completion of Amalgamation March 2nd, 2007 | |||||
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BluMont Capital Inc. Announces Shareholder Approval of Amalgamation February 28th, 2007 | |||||
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BluMont Quarterly Results February 23rd, 2007 | |||||
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Alternative Yield Fund Announces Distribution February 23rd, 2007 | |||||
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Proposed National Instrument 31-103: Impact on the Hedge Fund Industry Ronald Kosonic Mondaq Business Briefing March 2007 Canadian hedge fund managers are already under the regulatory umbrella of the Canadian securities regulators because they must register as advisors (investment counsel/portfolio managers) if they provide portfolio management services to their funds. However, the Proposed NI 31-103 will clarify any concerns about registration requirements for hedge fund participants, including general partners of hedge funds organized as limited partnerships along with other regulatory requirements on industry participants. The proposed NI 31-103 expands and clarifies existing regulation of hedge fund managers, advisors and distributors by: - Introducing a new category of registration for “Investment fund managers” - Introducing a registration category of “exempt market dealer” across Canada - Introducing a new “business trigger” test for determining when registration is required - Increasing capital and insurance requirements across all categories of registration - Increasing financial reporting requirements - Governing referral arrangements - Enhancing compliance and supervisory expectations Click here for more information on the proposed National Instrument 31-103. | |||||
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Interest-rate swap: An agreement between two parties that wish to switch floating-rate loan payments for fixed-rate loan payments in the same or different currencies. The rationale behind interest rate swaps is that one party may have access to better fixed-rates and the other may have access to better floating rates. Interest rate swaps are normally 'fixed against floating’ rates, but can also be 'floating against floating' rates. | |||||
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Issue 32 - April 4, 2007
We hope you enjoyed reading BluMont eNews. You can expect our next issue in May. BluMont eNews is a monthly email publication. We want to hear from you. Send us your comments or questions and let us know what you want to see in BluMont eNews. Email feedback@blumontcapital.com | |||||
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AIMA Canada recently sponsored a lunch presentation by Mr. Alexander Ineichen, of UBS Global Asset Management. Mr. Ineichen has written numerous articles, and two prominent books about the hedge fund industry. He is considered an authority in the industry, and as such, managed to draw the largest crowd AIMA Canada has ever had for one of its events.
Mr. Ineichen was speaking about his latest book, “Asymmetric Returns: The Future of Active Asset Management.” Mr. Ineichen’s first book “Absolute Returns: The Risk and Opportunities of Hedge Fund Investing” was a top seller and is considered to be a classic text on the hedge fund industry. His latest book promises to be no less groundbreaking and influential. The main thrust of Mr. Ineichen’s most recent book is to look critically at the concepts of ‘alpha’ and ‘beta.’ The term alpha generally refers to the portion of a manager’s return that can be attributable to pure skill, as opposed to passive exposure to an asset class, known as ‘beta.’ Mr. Ineichen’s argument is that the terms ‘alpha’ and ‘beta’ do not fully capture what alternative investments can offer to investors. ‘Alpha’ and ‘beta’ are concepts that were developed in the 1960’s within the linear capital asset pricing model (CAPM). The CAPM model was an important breakthrough in financial management theory, but it has shown to have limited relevance to financial markets in practice. Mr. Ineichen is not trying to rewrite financial textbooks, but he believes that financial thought can move beyond ideas that were developed several decades ago. One of the central tenets of orthodox financial thought is that markets are efficient and random. Mr. Ineichen argues (as do many others) that inefficiencies are pervasive in financial markets. Market efficiency implies that active managers cannot add very much value to a portfolio, with upside return potential and downside risk balanced in a symmetric risk/return profile. ‘Alpha’ and ‘beta’ apply in a relative return world, where money managers are tied closely to a market portfolio, and there is limited opportunity to reduce downside risk. However, active risk management in alternative investment products can significantly reduce downside risk in a portfolio, creating an asymmetric risk/return profile. Mr. Ineichen believes that active risk management is the future of asset management, and the concepts of ‘alpha’ and ‘beta’ cannot capture the benefits of active risk management. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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One of the most recent and best books on hedge funds that is available to the general reader is Hedge Hogging by Barton Biggs. Mr. Biggs is the former chief global strategist for Morgan Stanley – he was with the firm for more than 30 years – and more recently, was the founder of Traxis Partners, a $1.5 billion hedge fund based in Greenwich, Connecticut.
The book is presented as a series of vignettes and set pieces relating to Mr. Biggs’s 40+ years in the investment business and contains a mixture of facile “lifestyle” portraits and hard-hitting investment insights by Mr. Biggs during his time as a top-level investment manager. Some of the more memorable vignettes include Mr. Biggs’s account of the “Triangle Investment Club”, an informal private gathering of hedge fund managers, and his descriptions of it’s membership (the names have been changed to protect the identity of the members). his time as a top-level investment manager. Another particular gripping section - sure to strike a chord amongst anyone who has ever attempted it – recounts Mr. Biggs and his partners’ (ultimately successful) attempt to start-up their own hedge fund. Mr. Biggs also describes the grueling and pedestrian grind that many new managers must undergo in attempts to raise money from investors, traveling across the country, reciting the same pitch over and over again and with more often than not, little to show for it at the end of the day despite the great deal of effort exerted. Other chapters of this intriguing, yet somewhat discursive work relate to such subjects as Mr. Bigg’s experiences being an investment manager through some of the worst bear markets in recent history, the difficulty of short selling, Fibonacci numbers, anecdotal stories about Mr. Biggs’ trading activities through recent oil price shocks and internet bubbles, and a somewhat tangential digression on the life of John Maynard Keynes. The entire work is interspersed with Mr. Biggs’s own observations and insights regarding market behaviour and investor psychology. Mr. Biggs, an English and Creative Writing major (he studied under Robert Penn Warren) and former English teacher, has a knack for a good turn of phrase and his book makes for both an entertaining and informative read for both industry participant and lay person alike. John Wiley & Sons Inc., 2006 320 pages | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
