• TIME Europe Magazine: Should You Join The Hedge Fund Circus?
• It`s not your daddy`s Lehman Brothers
• Best Loan Trading Desk 2004: J.P. Morgan Keeps Par, Overall Crowns; CSFB Wins Distressed Title
• Mass. may cloak data to attract high profile funds
• Wells Fargo in Talks to Buy Strong Capital
• Wall Street Firms Funnel Millions to Bush
• Zweig Total Return Delays Proxy Vote Result Until June 4
• Ex-ally to testify against Grasso
• Spitzer Goes After Grasso
• There, in Grasso`s Corner, Is That Oliver North?
• Putnam Investments Drops in Industry Ranking
• Soaring Oil Prices Are Music to Investors Ears; Hedge fund managers say fundamentals drive the price
• Shell cuts oil reserves again
• Hedge funds in Dublin hit the 100 mark, set to rival Cayman Islands
• Dublin updates hedge fund rules
• UBS to service hedge funds from Ireland
• Milan Takes Stock of Hedge Fund Industry
• Euro area ageing just a business cycle away
• India`s SEBI Mulls Over New Regulations For Hedge Funds
• Asia Fund View: Multimanager Funds Shine In Volatile Mkt
• China signals easing of rules on investing

• 11th Annual Hedge Fund Forum New York City - Save up to $500
• NEW! : 2nd Annual Global Absolute Return Congress (‘Global ARC’) Boston
• Alternative Investment Roundup: three concurrent conferences on Hedge Funds, Private Equity & Real Estate
• 7th Annual Portfolio Management Conference Frankfurt/Germany
• Asset Allocation Summit London - 10% discount for subscribers
• Institutional Investor invites for second annual Hedge Fund Awards Dinner in NY on June 24, 2004
• Advertise in this newsletter
• Contact

Hedge Funds: Quantitative Insights
François-Serge Lhabitant
Hardcover
384 pages

Fresh off the press (published May 18th): “Quantitative Insights” from the bestselling author of “Hedge Funds: Myths and Limits”.

This primer on the analysis of hedge funds offers investors a more quantitative understanding of this topic, providing a complete guide to portfolio techniques, asset allocation, performance measurement and product selection in the alternative investment world.

• Hedge funds are the fastest growing sector of the financial industry, and yet the least understood, by market professionals.
• Examines and popularises the results of several quantitative studies that have so far been confirmed within academic circles.
• Written by a highly regarded and impartial financial practitioner and academic, this will provide an excellent follow-on to Hedge Funds: Myths & Limits (Wiley 2002).

To the Recommended Reading Archive

Should You Join The Hedge Fund Circus? More average investors are taking the plunge and buying into these lucrative funds. How's this for a sales pitch: we're going to take your money and invest it in an almost indescribably complex way….A Goldman Sachs–Russell Investment Group study released in 2003 forecast that the percentage of European institutions investing some part of their portfolio in hedge funds will rise from 21% in 2003 to 50% in 2005.
What's the attraction? Huge returns. In 2003, hedge funds globally returned an estimated 13%, with a projection to do the same this year. That's more than double the projected return for equities. " Source

From TheDeal.com: A lot has changed on Wall Street since Lehman Brothers Inc. went public in 1994. Big brokerages merged, Glass-Steagall fell, a market bubble inflated and burst. But through it all, Lehman, a firm with a tumultuous past, stayed pretty much the same, sticking largely to its knitting and its traditional strength of fixed-income trading. Until now.
These days, Lehman Brothers, a 152-year-old firm, is embracing change. No longer content with being a second-tier, fixed-income specialist, the firm is intent on morphing into a top-tier, full-service, one-stop shop. Says Brad Jack, 45, Lehman's co-chief operating officer: "I see the firm as diversified, in the sense of a broadly capable institutional investment bank. A good client, for us, is somebody who uses multiple products of the firm. A one-product client is an important client, but it's not the model we're aspiring to." In the past year alone, Lehman has risen to prominence in nearly every one of its businesses, Jack says….Full article: Source

From Loan Market Week/InstitutionalInvestor.com - J.P. Morgan easily defended its title as best par loan trading desk in Loan Market Week’s 2004 Best Trading Desk survey, but it was toppled from its perch as best distressed desk by Credit Suisse First Boston. Source

The Boston Business Journal reports Massachusetts is moving quietly but swiftly to protect its access to top-tier private equity and hedge funds by severely limiting public access to data those highly secretive investors would prefer to keep confidential. The Treasury measure comes as top-shelf, prominent venture capital funds such as San Francisco-based Sequoia Capital and Waltham's Charles River Partners are rejecting public money for fear of having sensitive data about their investments revealed. A state Treasury proposal, tucked within House and Senate fiscal 2005 budget blueprints, would require much of the information related to state pension fund investments kept secret, and would exempt from the state public meeting law the pension fund board meetings in which that data is discussed. "It will allow us access to the best funds….More: Source

From Bloomberg.com: Wells Fargo & Co., the fifth-biggest U.S. bank, may buy Strong Capital Management Inc., which settled lawsuits last week over allegations of engaging in improper mutual fund trading, people familiar with the matter said. Wells Fargo probably would pay as little as $400 million, or less than half what the firm would have fetched before it was linked to improper trading…More: Source

From the Washington Post: ...The money flowing from Merrill Lynch employees is part of a $12.14 million tidal wave of cash to the Bush campaign from the finance and insurance sectors. Wall Street has stepped up to the plate in support of Bush, and Bush has sponsored legislation producing billions of dollars in revenue on Wall Street. Source

Due to heavy voter turnout in a heated proxy fight, Zweig Total Return Fund Inc. (ZTR) will extend the adjournment of its annual meeting until June 4. Zweig Total Return, a $526 million closed-end balanced fund, said in a news release late Friday that more time is needed to tabulate the proxy results, "due to the large number of votes cast by registered shareholders, which require manual counting." Dissident shareholders challenged the fund's board of directors on three contentious issues that were up for vote: whether to approve a proposal to convert the fund to an open-end structure; whether to approve a reinstatement of a fixed 10% cash distribution policy; and an election of nominees to the fund's board. Source

USATODAY.com to My Yahoo!: One of the key architects of former New York Stock Exchange chairman Richard Grasso's now infamous pay package is expected to testify against him, according to a person who has been briefed on the deal. Frank Ashen, a Grasso loyalist who retired last year as the NYSE's human resources chief and top ethics officer, has agreed to help prosecutors…Full story: Source

New York Attorney General Eliot Spitzer on Monday sued former New York Stock Exchange Chief Executive Richard Grasso, seeking the return of at least $100 million from Grasso's $188.5 million pay package. After a four-month investigation, Spitzer claims Grasso's compensation was "rigged," and "wholly inappropriate and illegal." The lawsuit also named as defendants Kenneth Langone, the NYSE compensation committee's former chairman who played a role in the approval of the pay package. Source

Richard Grasso, former chairman of the New York Stock Exchange, has enlisted the counsel of Brendan Sullivan Jr., who defended Oliver North in the Iran-contra case. Source

Putnam Investments, punished severely by investors in the mutual- fund scandals, has dropped another notch in a widely followed industry ranking. Boston-based Putnam now ranks No. 7 in the industry, falling behind Baltimore- based T. Rowe Price Group Inc., according to data released today by fund tracker Financial Research Corp. In April, Putnam agreed to pay $110 million to settle charges that it allowed portfolio managers and others to profit from rapid trading of its funds at the expense of other investors. To reassure investors, Putnam has installed new senior management, lowered fees and instituted a host of controls. Source

According to Reuters, soaring oil prices may be music to investors' ears and many on Monday said they expect to put down more money in the weeks ahead, arguing that higher demand, not some speculative play, has sparked the recent rally. "This really is based on fundamentals and it is a trend that will continue," said Christian Baha, whose $1.5 billion hedge fund Quadriga Investment Group, has seen a big payoff on its energy investments since last fall. Source

From Reuters.com: Royal Dutch/Shell has cut its oil reserves for the fourth time this year as a booking scandal that has wiped more than a fifth from the oil giant's reserves rumbles on. The world's third biggest oil firm SHEL.L said on Monday it was now slicing 4.47 billion barrels of oil equivalent from its 2002 reserves, up from a figure of 4.35 billion in April. The errors have shaken investor confidence and cost three top executives their jobs. Source

From Portfolio-international.com - Dublin may yet prove a rival to the Cayman Islands in terms of alternative funds as it notches up over 100 hedge funds choosing to domicile on the Emerald Isle. Hedge fund managers traditionally choose Caribbean jurisdictions as their domicile of choice for non-retail hedge funds, but Ireland is now beginning to win more of this business. Figures from solicitor William Fry show that between 1995 and 1999 only 14 hedge funds were domiciled in Dublin. Since then the number has swelled to 104. Source

From Portfolio-international.com - The Irish Financial Services Regulatory Authority (IFSRA) has published proposed amendments to its guidance notes on funds of unregulated funds schemes. The proposals come as part of a review of hedge fund regulations, and are a response to industry submissions and international developments in this area. If the proposals are implemented, minimum subscription requirements will be removed and the amount allowed in any one scheme increased. Source

From Portfolio-international.com - UBS is to open a hedge fund administration operation in Dublin to service both onshore and offshore funds. UBS Fund Services (Ireland) will provide a full range of fund administration, global custody and settlement services using superior technology such as web-based reporting. Source

From HedgeWorld.com - Italy’s stock exchange, the Borsa Italiana, SpA, hosted a one-day hedge fund conference, three years after the launch of the first fund of funds authorized by the Banca d’Italia. The growth of the hedge fund industry in Italy since that landmark authorization has been rapid. At present, 26 investment management companies in that country now manage speculative assets through a total of 87 funds, of which 79 are funds of funds, with a total of €8.5 billion (US$10.2 billion) assets under management, according to a statement from the Borsa. Source

From IPE.com: The onset of population ageing in the euro area will occur in the next business cycle, says the International Monetary Fund. The IMF said that, whatever the concerns about cyclical risks, the euro area's "real" growth problem is long term. “The onset of rapid population aging is only one business cycle away, and, other things being equal, portends both a sharp slowing in longer-term growth and financially troubled welfare systems,” the fund said in a report on the euro area. Source

Moneycontrol.com reports the Securities and Exchange Board of India, SEBI's, study group on hedge funds has recommended allowing hedge funds to operate in India, provided they follow regulations that govern the foreign institutional investors, FIIs. The study group favours providing a limited window to hedge funds to invest in Indian equity markets. Hedge fund investment will be limited to equity markets, as even FIIs are not permitted to invest in commodity and currency trading markets.
Hedge funds will not be allowed to short sell in the market, and all transactions will be delivery based. SEBI is also considering allowing hedge funds to register in India as FIIs, or investing through FII sub-accounts, which are subject to scrutiny. At the end of March, hedge funds had invested Rs 8,000 crore (Rs 80 billion) in India through participatory notes -- that is 8% of the total net equity investments of all foreign funds. Source

The current volatility in Asian markets bodes well for "multimanager" funds that offer investors stable returns through diversification, according to HSBC Asset Management. “Customers are aware of the investment risk climate, so it's a good time to launch multimanager funds that give healthy long-term returns with smaller volatility," said Andrew Leung, Asia-Pacific chief at HSBC Multimanager based in Hong Kong. The fund of funds - a unit trust which invests in a range of different trusts - is one of the most predominant types of multimanager portfolios which can shield investors from volatility. Other multimanager portfolios include funds of hedge funds. Leung said the multimanager investment concept is increasing in popularity in Asia, following its success in the U.S. and Europe, due to the appeal of "diversification without effort." Source

The Financial Times reports China has signalled a further liberalisation of its capital market's investment rules, with a loosening of restrictions on local mutual funds and the approval in principle of insurance premiums being managed overseas. Although neither change will happen quickly, both are consistent with the regulators' policy of trying to ease tight controls on investment of retail and institutional funds as their confidence in the performance of capital markets rises. China's mutual fund industry has boomed over the past two years, managing just under $25bn, and has now become the main driver of prices on the local stock market, a fact which may have persuaded regulators the rule was obsolete. Source

From the team that brought you GAIM USA, the only must-attend event of the summer on key regulatory and investment issues in the heart of New York City. **Register Today and Save up to $500**

• Special track specifically for investors looking to make an early allocation to hedge funds - plus the opportunity to meet leading institutional investors including - Verizon Investment Management, Stanford Management Company & the Ford Foundation
• Opportunity to meet face to face with several leading consultants advising on major alternative investment mandates
• A mid year update on regulatory issues - registration, inspections, cap intro conflicts of interest, AML update, short selling rules and more.
• Expert advice on how to prepare for and manage an SEC inspection - unmissable information given the additional resources the SEC will be dedicating to inspecting hedge funds.
• Outlook for alpha roundtables - face to face time with leading managers to discover their perspectives on alpha opportunities in each of the major hedge fund strategies.

For more information, visit: www.iirhedge.com or contact Marc Weitzman at the Institute for International Research p: 212.661.3500 ext.3092

Pension/Endowment speakers include:

• from North America: ABP Investments • Alberta Revenue • CDP Capital • City of Philadelphia Public Employees • Emory University Endowment • George Washington University Endowment • MIT Endowment & Retirement Plan • New Hampshire Retirement System • Texas Teachers Retirement System • The Atlantic Philanthropies • University of California Endowment • University of Texas Endowment • Verizon Investment Management • Virginia Retirement System • World Bank Pension Plan
• from Europe: AP7 Pension Fund • Danish Lawyers & Economist Pension Plan • KLM Airlines Pension Plan • Pension Fennia • Skandia Liv
• from Asia and Australasia: Commonwealth/Public Superannuation Scheme • Mitsubishi Corporation Pension Fund • New Zealand Superannuation Fund • Retail Employees Superannuation Trust • Victorian Funds Management Corporation

For registration go to www.global-arc.net or contact David Stewart at david@global-arc.net

The Alternative Investment Roundup is three concurrent conferences at the same location covering the most important alternative asset classes-Private Equity, Hedge Funds, & Institutional Real Estate. The programs share networking events, offering you unmatched opportunities to meet a wide array of alternative investment professionals and investors. Over 750 decision makers attended last year's event.

10% discount for Alternative Market Briefing Readers for the Alternative Investment Roundup. Register by May 17, 2004 for additional Early Bird Discount. For more information, please visit www.srinstitute.com/air or contact Chris Petersen at CPetersen@srinstitute.com

The Conference for Institutional Investors

Key speakers: Prof. Harry Kat, City University, London
Prof. Ken Froot, Harvard University, U.S.A.

Topics include:

• What are the risk and return sources of Hedge Funds?
• „Absolute Return“: What are the opportunities for insitutional investors?
• Institutional investor behavior in the equity markets
• Best execution and transaction cost analysis for European bonds
• Demographic changes and its impact on future returns of stocks and bonds

At this critical juncture for the development of the world's equity and bond markets, this conference will be examining strategic and tactical asset allocation, current strategy and alternative investing. Our conference in October 2003 attracted over 300 participants to the Inter-Continental Hotel.

"THE BIG EVENT FOR THE BIG PICTURE"

The theory and practice of asset allocation is undergoing dramatic change. The dominant position of equities in pension schemes is under question and investment consultants are putting forward new ideas regarding the structure of asset allocation benchmarks. Multi-asset mandates are coming back into fashion. Asset allocators are grappling with uncertain economic and market conditions, and the correlation between equity and bond markets has reversed. Alternative Investments are seeing record new money flows. The Asset Allocation Summit features speakers at the very heart of these key developments. For anyone involved in asset allocation, this could be the most significant investment conference of 2004.

OVER 300 DELEGATES IN 2003

ASSET ALLOCATION SUMMIT 2004 features presentations on:

• Current investment strategy
• Dynamic asset allocation strategies
• Liability driven benchmarks and risk budgeting
• Tactical asset allocation
• Using style analysis
• Investing in hedge funds
• Investing in private equity
• Gold, commodities and other alternatives
• Portable alpha strategies
• Currency overlay strategies
• Derivative overlays and structured products
• Implementation tools and strategies

This gala – held in conjunction with Institutional Investor’s Spring Hedge Fund Investment Roundtable, June 23-24, 2004 – will bring together the hedge fund industry to recognize and applaud the achievements of their peers. The awards dinner will include key industry players – hedge fund managers, funds of funds, endowments, foundations, and corporate and public pension funds.

Nominees for the awards are selected by the editorial team of Alternative Investment News. Subscribers, readers and other industry members are encouraged to visit our website to offer their input and comments on the nominations. Winners will be selected by the editorial team of Alternative Investment News. Winners will be announced at the event.

2004 Alternative Investment News’ Editorial Advisory Board:
Leroy Cody, American Express Alternative Investments
Joel Katzman, J P Morgan Alternative Asset Management
Richard Lindsey, Bear Stearns Securities Corp
Nick von Speyr, Optima Fund Management
Kent Clark, Goldman Sachs Hedge Fund Strategies
Joe Pescatore, UBS
Martin Phipps, Gartmore Investments

Award Categories: Hedge Fund Leader of the Year, Fund of Funds Leader of the Year, Institutional Manager of the Year, Emerging Manager of the Year, Institutional Investor of the Year

To find out who is nominated and to register for the event contact: Nazneen Kanga nkanga@iinews.com

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