Last Updated Sep 10, 2010 3:11 PM EDT Market neutral funds first started capturing investors' attention a few years ago, in the midst of the great hedge fund love affair. Eager to cash in on the popularity of hedge funds and their apparent ability to manufacture stellar returns out of whole cloth, a slew of hedge fund-like mutual funds -- including market neutral funds -- were brought out. Indeed, nearly half of the 99 funds classified by Morningstar as long-short equity funds (the general classification that such funds fall into) were introduced between 2008 and 2010. As the name implies, market neutral funds are designed to produce returns that are uncorrelated to the direction of the overall market -- a trait that's been a particularly easy sell over the past few years. In attempting to achieve this performance, the manager typically holds a group of stocks he believes will outperform the market, and sells short another group of stocks that he believes will underperform. Doing so, … [Read more...] about Do You Need a Market Neutral Fund?
Barclay hedge fund index
Last Updated Jul 12, 2011 10:39 AM EDT In what truly must be a story of the triumph of hype and hope over wisdom and experience, hedge funds continue to see inflows despite lousy performance. Hedge funds took in a whopping $8.1 billion in May, and they've experienced inflows each month this year. However, this seems to defy logic, as BarclayHedge founder Sol Waksman told Dow Jones Newswires: "The industry hauled in $75.0 billion in the first five months of 2011, which marks the heaviest such inflow since 2007. Performance, however, has hardly been stellar. The Barclay Hedge Fund Index shows a year-to-date return of just 2.1 percent through May, and many managers are in the red for the year." Our second quarter hedge fund update provides further evidence on the failure of hedge funds by comparing them to widely used benchmarks. The table below presents the returns of the HFRX Global Hedge Fund Index and compares it to the performance of various equity and fixed income indices, both for … [Read more...] about Hedge Fund Update for Second Quarter 2011
Last Updated Jul 26, 2011 1:58 PM EDT One of our BAM Advisor Services clients requested we look at the Payden/Kravitz Cash Balance Plan Fund (PKCBX). I asked Kevin Grogan, my Right Financial Plan co-author, to provide his thoughts. The fund is designed to be used by cash balance plans -- a defined benefit retirement plan that maintains hypothetical individual employee accounts like a defined contribution plan. The employees' accounts earn a fixed rate of return that can change from year to year. PKCBX's objective is to outperform the 30-year US Treasury Yield (a common interest crediting rate for cash balance plans). The firm's Web site states the fund targets consistent return and seeks to minimize risk and avoid financial surprises. Let's take a quick look at some of the fund's characteristics and see if this is an accurate picture. The fund isn't invested 100 percent in fixed income. In fact, it's roughly 10 percent equities and 90 percent fixed income. The fund has 35 percent … [Read more...] about Is the Payden/Kravitz Cash Balance Plan Fund a Good Investment Vehicle?
Vanguard recently announced plans to introduce its first international bond funds and makes a good case for global bond investing. I've been asked several times what I think of the new offerings, and here is my take on what I've learned so far. One important caveat is that Vanguard must by law be in a "quiet period" before the launch of the funds, so I wasn't able to get any specific information beyond the press release. The funds are expected to launch in early 2012. The Vanguard Total International Bond Index Fund will seek to track the Barclays Global Aggregate ex-USD Float Adjusted Index (Hedged). This benchmark includes more than 7,000 global government, agency, and corporate investment grade securities in 57 countries. While I haven't yet confirmed, this seems like the international counterpart of the Total Bond Fund, which follows the Barclays aggregate bond index of US government and investment grade taxable bonds. The annual expense ratio of the ETF and the Admiral share class … [Read more...] about Vanguard’s new international bond index funds
Every time interest rates are low, investors begin to make mistakes, engaging in activities (such as stretching for yield by taking on credit risk) that they wouldn't do if rates were at more "normal" levels like 4 or 5 percent. Wall Street takes full advantage of this bad behavior by rolling out new products to exploit investors, and floating-rate note funds are just another example. The seemingly insatiable demand for yield has fueled the demand for these funds (also known as bank loans, syndicated loans, leveraged loans and loan-participation funds) that invest in the variable interest-rate corporate loans originated by banks. The rates reset at regular intervals (such as monthly or quarterly) at a fixed spread over a benchmark like the London Interbank Offered Rate. Over the 12 months ended March 31, 2011, open-end floating-rate funds, which constitute 13 percent of the total floating-rate loan market, saw their assets increase by more than 50 percent, fueled by investor cash … [Read more...] about Floating-rate note funds should be avoided
(MoneyWatch) Investors would love to be able to achieve positive returns in both bull and bear markets. That's the "promise," or at least the idea behind, absolute return funds. The devastating bear market of 2008 increased the demand for these funds. Wall Street is happy to meet that demand with its usual array of high cost vehicles. Morningstar recently reported that since the 2008 crisis, 28 absolute return funds were launched, bringing the total to 41 with an astounding $11.1 billion of assets. Unfortunately, there's a reason that the old saying "if sounds too good to be true, it almost certainly is" is a cliché. Absolute return funds try to accomplish their objective using a wide various strategies. While some invest primarily in stocks and bonds, others use commodities, short selling, futures, options and other derivatives, arbitrage strategies, currencies, credit risk, leverage, and almost anything else you can dream up. That's one of the many problems with these funds … [Read more...] about Absolute return funds fail to deliver
(MoneyWatch) Vanguard recently announced plans to launch a new International Bond Index Fund by June 30. The firm filed an amended registration statement with the SEC that replaced earlier plans to launch two bond index funds Vanguard had announced in late 2011, but never launched. According to Vanguard, the new bond fund will track the Barclays Global Aggregate ex-USD Float Adjusted RIC Capped Index (USD Hedged). The index comprises approximately 7,000 high-quality corporate and government bonds (average credit quality AA2/AA3) from 52 countries. The index caps its exposure to any single bond issuer, including a government, at 20% to meet regulated investment company (RIC) tax diversification requirements. The top country holdings as of December 31, 2012, were Japan (23%), France (12%), Germany (11%), and the United Kingdom (9%). The bond fund will be hedged to the US dollar, meaning that it attempts to eliminate foreign currency risk. Vanguard to launch two international bond … [Read more...] about New international bond fund shows promise
(MoneyWatch) Exchange-traded products (ETPs) that are linked to futures contracts on the CBOE S&P 500 Volatility Index (VIX) have grown dramatically in volume and assets since their inception in 2009. They're now among the most heavily traded ETPs. For example, the Barclays iPath S&P 500 VIX Short-Term Futures ETN (VXX), the largest volatility-based ETP, has assets of about $1 billion and daily trading volume of about 40 million shares. The reason for the growth of volatility-based ETPs is the perception that they offer a hedge against stock market losses. It's important to understand that the VIX is a forward (not historical) measure of volatility. It represents investors' expectations of future market volatility. If investors become fearful, their demand for portfolio insurance will increase, driving up the price of the VIX. As such, the media often refers to it as the "fear gauge." And there's a negative correlation between the changes in the VIX and changes in the S&P … [Read more...] about Do VIX futures hedge stock market risk?
provided by Published 8:07 am, Wednesday, February 21, 2018 Dominique Mielle. Dominique Mielle was one of the hedge-fund industry's most senior women, working at $20 billion Canyon Capital for 20 years. She was the firm's only investment partner, and is one of the few senior female investors in hedge funds. Hedge funds are facing a performance problem – one that could be improved if hedge funds included more diversity in their top ranks, Mielle argues in an op-ed. Recommended Video: Now Playing: Jamie Zimmerman is one of the few, and first, female investors to run a hedge fund. She started Litespeed Partners in 2000. The fund has had a tough run of late, and now manages less than half of what it did two years ago. Litespeed Partners now manages about $725 million, less than half of the 1.9 million it managed in October 2015. Litespeed, which makes bets on distressed companies and company events such as mergers and acquisitions, is not alone. Last year, … [Read more...] about One of the most senior women in the hedge fund business identified the problem almost every fund has
Jacob Sonenshine, provided by Published 10:25 am, Wednesday, January 31, 2018 Paramount Pictures The median money manager was paid $350,000 in 2017, according to a survey by SumZero, an online community for investors. That's up from $300,000 in 2016, and marks the largest pay increase since 2012. The median annual compensation for money managers in 2017 was just under $350,000, up from just under $300,000 in 2016, according to research done by SumZero, an online community for investors. SumZero surveyed roughly 5,500 people at 1,400 hundred different firms. Roughly half of the $350,000 in median annual compensation is base salary, with the other half being mostly cash bonuses on realized gains. Local Channel Now Playing: Now Playing Pickup truck T-bones sedan on rural S.A.-area road, killing woman San Antonio Express-News Galveston PD releases image of 'Little Jacob' Galveston Police Department Man found covered in blood after … [Read more...] about Hedge fund managers are celebrating big pay increases — here’s how much you can expect to earn working at one