Hedge Fund Street

Hedge Funds and the Indian Markets

Samir Arora, former chief investment officer of Alliance Mutual Fund, will reportedly launch a hedge fund in April.   The charges that were brought forth on Arora by the Securities and Exchange Board of India last year were dropped when no substantial evidence could be found.  It is believed that Arora is currently marketing the fund to oversea investors.

Recently, other Indian fund managers have been attracted to hedge funds because of their potential big pay day.  Still, experts in India warn that the cons outweigh the alluring pros.  The Indian Markets are currently in a bull phase, and arguably chaos will ensue, where hedge funds are concerned, when that changes.   Rediff.com reports:

"Things at hedge funds are not as rosy as they look from the outside. The Indian markets are in a structural bull phase. So it is easy to make money.  The challenge will come when the markets are declining. We will have to protect the assets of investors and also give them decent returns."

Read more: Samir Arora to launch hedge fund

Pop Goes the Hedge Fund

Hedge Funds have garnered much attention recently, but the question posed by many is whether or not it is a permanent fixture among investors, or a fleeting trend. In the past, hedge funds were directed to the super wealthy. Today, the funds are directed to the wealthy, as well as the not-so-wealthy. The change in direction can be seen in the staggering numbers- 15 years ago hedge funds managed less than $40 billion, and today the number is close to $1 trillion.

Since hedge funds have tremendously risen in popularity, the markets have been impacted correspondingly. Hedge funds now account for up to half of all activity in major markets, according to Credit Suisse First Boston. With all this new found success many industry insiders weigh in on whether or not hedge funds have solidified their place in the investment world. The New York Times reports:

"Hedge funds are an innovation of compensation," one fund-of-funds executive said. "It's a compensation system, not an asset class."

Read more: Will the next pop you hear be the bursting of hedge fund bubble?

Los Angeles Fire and Police Pension System Moves to Hedge Funds

Later this year, the Los Angeles Fire and Police Pension System is preparing to invest in hedge funds. The $12.5 billion system will begin to look for a manger to oversee $150 million in REITs this month. The size of the hedge fund has yet to be determined, but it is thought that the initial investment will be less than 1%. The idea is to yield 10% to real estate and an additional 10% to alternatives. The board began entertaining the thought of hedge funds due to the fact that numerous funds have moved into the asset class. For the past couple of years, the board has sought out much information about hedge funds and now they are utilizing their knowledge to finally institute their plan.

The plan will hire a fund-of-funds manager to gain access to a diversified portfolio and delegate the hedge fund selection decisions.

Read more: L.A. Fund To Invest In Hedge Funds, REITs

Hedge and Seek

The distinction between hedge funds and private equity funds has become obscurred since investment and management has intertwined the two. Following the Second World War, hedge funds and private equity were introduced as an instrument that would allow wealthy individuals and family offices the possibilty of higher returns for a fraction of their portfolio. Today, things are not quite so simple with the largest hedge and private equity funds having $5bn or more to invest. Buyout executives believe that investors in privte equity funds prefer to invest in various funds "under the same roof." The poignant, yet hard to answer question that RB Whitestone of the Financial Times poses is, "Are private equity firms the best means of investing in hedge funds?" FT.COM reports:

The convergence theme is very real. Individuals are looking at capital allocations as somewhat fungible – hedge or private equity, both are in their ‘alternatives’ bucket, and they like that some firms have both capabilities,” says Erik Hirsch, chief investment officer at Hamilton Lane in Bala Cynwyd, Pennsylvania.

Read more: Hedging bets in an uncertain age

Did a West Palm Beach Fund Manager Skip to Korea?

A hedge fund manager from West Palm Beach who was recently sued by the SEC over accusations that he and his partners defrauded investors may have fled to South Korea. According To Bloomberg:

Won Sok Lee, 34, is one of three owners of KL Group LLC, which was sued by the SEC on March 2. Lee used frequent-flier miles to buy a one-way ticket to Seoul on Feb. 23, said Gary Klein, a Boca Raton lawyer who's representing KL employees and more than 30 investors.

"One of my clients saw the paperwork for the ticket and the itinerary" on Lee's desk, Klein said.

Read more: West Palm Beach Hedge Fund Manager May Have Fled U.S. for Korea