Foreign exchange funds’ worst enemy: stability (TheGlobeAndMail)
Foreign exchange specialists face challenging times. FX Concepts, once billed as the world’s largest currency hedge fund, is winding down its investment management operations. It isn’t the only one struggling, and the troubles aren’t over yet. Currency hedge funds have returned only 1.8 per cent between January and August, according to Eurekahedge data. That’s half as much as those with a wider asset focus, and puts them on track for a second year of underperformance. Such FX funds typically latch on to clear trends, pick up on deviations from what is considered fair value, or enter carry trades which involve borrowing low-yielding currencies to invest in higher-yielding ones.
SEC Charges Hedge Fund With Violations of Market Access Rule (HedgeCo)
In the SEC’s first enforcement action under the market access rule, which was adopted in 2010 as Rule 15c3-5. The SEC has alleged that hedge fund trader Knight Capital Americas LLC has agreed to pay $12 million to settle charges that it violated the agency’s market access rule in connection with the firm’s Aug. 1, 2012 trading incident that disrupted the markets. An SEC investigation found that Knight Capital did not have adequate safeguards in place to limit the risks posed by its access to the markets, and failed as a result to prevent the entry of millions of erroneous orders. Knight Capital also failed to conduct adequate reviews of the effectiveness of its controls.
For Hedge Funds, Debt Crisis Largely Business as Usual (WealthManagement)
By Svea Herbst-Bayliss and Katya Wachtel Hanging tough seems to have been the right strategy for a good number of money managers now that it appears a stop-gap deal to avoid a federal debt default and reopen the U.S. government is on the verge of passing. Hedge fund manager David Tawil said that, after living through the collapse of Lehman Brothers, many on Wall Street are now well-versed in telling a real financial crisis from one that is more of the smoke and mirrors variety and much more easily fixed.
Nobel Foundation Seeks Charity as Hedge Funds Aren’t Enough (Bloomberg)
The Nobel Foundation, which said last year it was using hedge funds to help boost capital, is now considering charitable donations after previous strategies failed to bring in enough money. The Stockholm-based institution, which earlier this month rounded off its 2013 awards, cut the prize money by 20 percent last year in an effort to preserve capital. Since then, laureates have had to make do with 8 million kronor ($1.23 million) in each category. Lars Heikensten, executive director of the Nobel Foundation, says he wants to raise the amount again to restore the award’s status.
Barton Biggs-Founded Traxis Partners is Shutting its Doors (InstitutionalInvestorsAlpha)
Traxis Partners apparently could not survive the death of its founder, Barton Biggs. The Greenwich, Connecticut–based hedge fund firm disclosed Wednesday that it has liquidated all of its funds for which it was the investment adviser and is winding down its operations. Traxis’ closure is another reminder that it is difficult for a hedge fund firm to outlive the founder when his name is on the door and its investment strategy is identified with that individual.
Goldman Sachs Adds New Funds to Hedge Fund Platform (InstitutionalInvestorsAlpha)
Goldman Sachs Group, Inc. (NYSE:GS) has added three funds to its Hedge Fund Select platform, which allows its clients to invest in well-regarded and in some cases brand-name hedge funds with much lower minimums than the underlying fund would charge. The investment bank disclosed in separate filings Tuesday that it has launched Hedge Fund Select: Halcyon Partners Offshore, Hedge Fund Select: Dymon Asia Macro Fund and Hedge Fund Select: Corsair Capital Investors Flagship Fund. This brings to 16 the number of funds it has introduced under this format since last September.
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