In this issue, first quarter results are still trickling in but it looks to have been a lackluster quarter for managed funds. A hedge fund law firm sees Obamacare as ground zero in a war on carried interest. And, investors are either getting out of commodities, or piling into them, depending one’s point of view. Finally, our friends at Horizon Cash Management published the results of a survey it conducted on the impact of the MF Global and Peregrine failures on CTAs and CPOs. Spoiler alert: they left a mark.


Observations – Statistics – Commentary

CTA Expo New York, April 25, 2013
CTA Expo
The group’s twelfth conference is fast approaching and is nearly sold out. Attendees include over 150 capital sources and dozens of traders. 40 percent of the attendees are new to the conference. Also, the final brochure is available via the link below.

Survey Results Show 73% of CTA/CPO Respondents Were Impacted by One or More FCM Failure
Horizon Cash Management
Horizon Cash Management said today that 73% of the commodity trading advisors (CTAs) and commodity pool operators (CPOs) that responded to its survey were impacted by one or more of the futures commission merchant (FCM) failures mentioned in the study. The results are documented in an executive summary, The Aftermath of MF Global and Peregrine Financial Group Meltdowns: A Crisis of Trust.
**DA: 73 percent? I would say that 100 percent were impacted, but 27 percent don’t know it yet.

Jack Schwager: Chronicling trading excellence
Q&A with Daniel P. Collins, Futures Magazine
His early “Market Wizards” not only told the compelling stories of successful traders, but also served as inspiration to a generation of new traders, many of whom have taken their place in the roster of market wizards inspired by the stories in the original books. His newest book, “Market Sense and Nonsense,” attempts to debunk many of the misconceptions in the investment world. We talk to Schwager about what he has learned interviewing traders over the years.
**DA: Brings back memories of the “glory days.” Which book had the most profound effect on you: “Market Wizards,” “Liar’s Poker,” or “Merchants of Grain?”

MFA’s Forum 2013, June 19-20, Chicago
Managed Funds Association
Forum 2013 is MFA’s 19th annual managed futures and global macro strategies conference designed to bring managers and investors together for networking, education and business development. Forum 2013 will be held June 19-20 at the Four Seasons, Chicago.


Lead Stories

Study: The Impact Of The Obamacare Tax On Hedge Funds
Hedge fund law firm Hirschler Fleischer has issued a new whitepaper on the impact of the Obamacare tax on the incentive allocation/carried interest of private fund managers: ‘New Obamacare Tax: Can a Private Fund Manager’s Carried Interest Escape Its Reach?’
**DA: Trouncing Mitt Romney in the election was not enough. Now he is going to get hit in the pocketbook.

Investors Check Out of Commodities
Wall Street Journal
If you slept through the first quarter in commodity markets, you didn’t miss much. The Dow Jones-UBS Commodity Index fell 1.1% in the first quarter, and the lackluster performance could add further fuel to detractors’ argument that the commodity supercycle is over for now. The index fell 1.1% in 2012 after declining 13% in 2011.

Bullish Bets Rebound at Fastest Pace in Four Years: Commodities
Investors are boosting wagers on higher commodity prices at the fastest pace in almost four years, rebounding from the least bullish position since 2009, on signs that the U.S. is accelerating and Europe’s debt crisis is easing.
Hedge funds and other large speculators increased net-long positions across 18 U.S. futures and options by 10 percent to 679,191 contracts in the week ended March 26, data from the Commodity Futures Trading Commission show. The bets surged 67 percent in three weeks, the biggest advance since May 2009. Wagers on higher oil prices climbed the most this year, while those for cattle are at a six-week high.
**DA: Just in time for a multi-day selloff in the grain market.

Former Commodities Corporation Alums Launch Witherspoon Asset Management
Three veteran investment professionals have teamed up to form Witherspoon Asset Management LLC (“Witherspoon”), a Princeton-based investment adviser. Witherspoon’s principals are Lee Gladden as CEO, Thomas Kuntz, CFA as Chief Operating Officer, and Tyler Vernon as Managing Director. Both Gladden and Kuntz share a background from Commodities Corporation. Witherspoon’s first offering is the Witherspoon Managed Futures Strategy Fund. The fund is designed for investors seeking non-correlated investments that also provide transparency and daily liquidity.


Managed Futures/Managed Funds

Winton Capital Management – Best Managed Futures/CTA
In 1997, David Harding and two employees established Winton with approximately USD2million. Today, that figure stands at an incredible USD25.75billion. Before Winton, Harding was the H in AHL. Once AHL had been assumed into Man Group by 1994, Harding started Man Research before leaving in 1996. Winton Capital is now Europe’s largest CTA manager and the world’s fifth largest hedge fund firm

Niche commodity funds beat markets as Jamison doubles assets
Commodity and macro markets trader Stephen Jamison has closed his macro commodity fund to new investors after nearly doubling its capital to $1.5 billion last year, making it one of the biggest players in that niche market. Jamison Capital Partners took the action for its Koppenberg Macro Commodity Fund just four years after its launch with $125 million under management, a source familiar with the New York-based company said.

The Best Commodity Broad Basket ETF?
Spencer Bogart, Index Universe
When GreenHaven’s commodity fund wins a best-in-class award, what does ‘best’ really mean?
**DA: It appears that the best broad market commodity ETF does not represent its market segment. What gives?

Carlyle’s Vermillion CTA Loses on Commodity Bets
Last year, Carlyle Group LP added a commodity trading advisor to its growing empire. Carlyle Group LP bought a 55 percent stake in Vermillion Asset Management (AUM$2.07 billion) last year. Vermillion’s flagship Viridian Ltd (AUM $1.46 billion) is just doing as well as the commodity focused hedge funds are in the running year. The fund was down 2.5 percent in February, wiping out the near one percent gain in January.

The Simple Truth about Hedge Funds
Are hedge funds “mysterious” and “controversial?” Are they “inherently evil?” Periodically, stories bubble up in the mainstream press that paints these funds in a poor light. Unfortunately, both critics and champions of alternative funds attempt to reduce complex financial transactions into simple language. In doing so, important details are inevitably lost and the search for meaningful insights is thwarted.
**DA: Don’t knock mystery and controversy. Without them, I will be out of a job.

More wealthy Americans turn to alternative investments to reach financial goals
Affluent Americans are more likely to allocate assets to alternative investment strategies in asset classes such as private equity, real estate investment trusts and hedge funds today than they have been for several years.
**DA: If nothing else, it gives them something to talk about at cocktail parties and charity balls.

Pensions & Institutions

U.S. Eyes Pension Funds to Renew Crumbling Infrastructure
Independent European Daily Express
President Obama doubled down on a new push for infrastructure investment in a major speech Friday, highlighting roads, ports and bridges that many say have suffered from decades of insufficient upkeep. “When the American Society of [Civil] Engineers put out their 2013 report card on our national infrastructure, they gave it the best overall grade in 12 years. The bad news is we went from a D to a D+,” President Obama said, speaking at a port in Miami.
**DA: Color me skeptical, but if the bonds described in the article will receive a Federal guarantee, will this just make them sort of like an off-balance sheet Treasury bond? And how is this “fiscal restraint?”

Senate panel approves version of state pension overhaul
Tampa Bay Times
Florida lawmakers in the House and Senate may be on a long road to compromise as they advance starkly different plans on overhauling the state retirement system. The Senate Appropriations Committee on Thursday cleared a bill (SB 1392) that keeps the option for new state and county employees and teachers to have a traditional pension. It now goes to the full Senate for approval.
**DA: Florida’s pension fund is 87 percent funded, among the highest in the nation, yet it is looking at reform. Meanwhile, here in Illinois…

Big public pension funds trump hedge fund benchmarks
Big public pension funds reaped strong returns from their hedge fund portfolios in 2012, with most of them handily surpassing their own benchmarks and well-used industry indexes. The hedge fund portfolios, for the most part, achieved close to what chief investment officers wanted, despite a 1,500-basis-point difference between the best and worst performers, according to Pensions & Investments’ analysis of the returns of 19 hedge fund portfolios from 17 U.S. public retirement plans with aggregate hedge fund assets of $60.7 billion.

CalPERS remains cool on commodities
John Kemp, Reuters
The California Public Employees’ Retirement System (CalPERS) continued to cut its exposure to commodity futures at the start of the year, even as the largest public pension manager in the United States increased its total inflation hedging sharply.

Fooled by fund fees
Mark Harrison, Financial Times
In a low-return environment fund management fees have a significant impact on outcomes for investors. The writer considers why investors might be fooled by fees.
**DA: The more you pay in fees, the less you get to keep. Got it.

Hedge fund managers face tough business climate and heightened investment expectations
Hedge fund managers must rethink their business models, provide tailored solutions, and offer multi-faceted client communications, according to a study conducted by SEI in collaboration with Minard Capital.
**DA: Results of SEI’s sixth annual poll of institutional investors



Alternative Ucits shaken by regulatory changes
Esma guidelines for Ucits funds and the introduction of the AIFM directive are casting doubt over the future shape of the alternative Ucits industry as demand for the products remains strong
**DA: For more on the AIFMD, visit the dedicated page in MarketsReformWiki.

Fund managers still have AIFMD concerns, says Northern Trust survey
While 86 per cent of respondents to a Northern Trust survey say they broadly understand the implications of the Alternative Investment Fund Manager Directive, close to 70 per cent feel their investors are not engaged in AIFMD considerations.



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