Observations / Statistics / Commentary

3rd Annual Managed Futures Pinnacle Awards, June 17th, Chicago
The Managed Futures Pinnacle Awards recognizes excellence exclusively in the managed futures space. Presented by CME Group and BarclayHedge, the Awards honor the top managers in the industry today, while providing networking opportunities for managers and investors. The awards are based on a set of quantitative data from BarclayHedge.
***DA: The nominees for each category have been announced and, a couple weeks ago, we learned that Frank Caliendo, arguably the best comic impressionist of our time, will be the featured entertainment. If you will be in Chicago for the MFA conference, or you will be in Chicago because you live/work here, check out the event.

Lead Stories

Winton: ‘People are frightened of us’
Chris Newlands – FT
It is difficult not to like David Harding, the Cambridge-educated physicist who in 1997 founded Winton Capital, now one of the world’s largest hedge fund companies.
**JK – David Harding appears to be one of the least frightening people I’ve seen.

Coquest, Inc. Completes Purchase of Mega Capital LLC
Energy broker Coquest Inc has finalized its purchase of Mega Capital, LLC, an introducing broker specializing in managed futures. The purchase allows Coquest, one of the largest independent US introducing brokers, specializing in energy markets, to diversify its operations and leverage its expertise throughout its brokerage and managed futures businesses.
**JK – A Mega deal.

Emil van Essen Launches a Multi-Strategy Program
Herald Online
Chicago-based investment manager Emil van Essen, LLC (EvE) has launched a new program called the EvE Multi-Strategy Program (EvE MS). EvE MS is a 50-50 combination of the firm’s flagship EvE Spread Trading Program (EvE STP) and the EvE Long-Short Commodity Program (EvE LSCP).

Ziffs Shut Down Hedge Fund, Shift Way Wealth Is Managed
Juliet Chung – WSJ
The billionaire Ziff brothers are shutting down the last multibillion-dollar hedge fund that invests their family fortune, one of the biggest such pots of money in the U.S.
**JK – David Fear is an interesting name for a fund manager.

Hedge Fund Cover Without the Hedge Fund Fees
Most people think hedge funds aim to shoot the lights out and return a zillion percent. The funds are mocked for not beating the S&P 500 Index, which is up 136 percent over five years. Not to defend hedge funds, but, as the name suggests, many of them are actually just looking to hedge stock and bond exposure. They’re designed to get positive returns regardless of market conditions, and to not move in lockstep with the broad markets.

Complacency Everywhere
Attain Capital, via ValueWalk
Now, we’ve all seen the headlines recently about stocks being at all time highs and volatility getting lower and lower and lower. But here’s the thing that’s driving those who do more than just stocks (read: global macro, fixed income traders, currency traders, managed futures, etc.) – CRAZY. You see, it isn’t just the stock market that’s seeing record low volatility. Complacency is everywhere.

Managed Futures / Managed Funds

Fund Within a Fund Creates a Conflict
WILLIAM D. COHAN – Dealbook – NY Times
It is taken for granted that hedge fund investors expect superior returns. What other justification could there be for paying routine fees of 2 percent of assets and 20 percent of any profits, or sometimes even more? But what if those returns pale in comparison to the returns that the partners of a hedge fund earn in a separate, secretive fund that is set up specifically for their benefit and not available to the outside investors?

Brokers, Liquid Alts and the Fund That Never Goes Up
Joshua M Brown – The Reformed Broker
Today we’re going to talk about the boom in hedge fund-like mutual funds and the difference between brokers and advisors.

Exclusive hedge funds crack open door to Main Street
As a $14.8 billion hedge fund with a reputation for savvy mortgage trades and a record of double-digit returns, Pine River Capital Management has long signed up multi-billion-dollar pension and sovereign wealth funds as investors.

For Sale: 20% Stake in Hedge Fund. Terms: Complicated
It should be an easy sell. One of the prime assets that the estate of the bankrupt Lehman Brothers still has to sell is a 20 percent stake in the $22 billion hedge fund D. E. Shaw. But so far, Lehman has found no takers.

Hedge fund exit requests rise to five month high in May
Demand to pull out money from hedge funds rose to five month high in May as investors looked to adjust their portfolios ahead of the mid-year point.

Outcomes making fund management a hard-knock life
Investment News
If there were a word cloud generated from the on-stage panels at the Investment Company Institute’s annual meeting last week, the word “outcome” would stand in stark relief. Money managers employed the term to refer to the idea that investors are looking for fund managers to deliver more than just great performance.

Pensions & Institutions

Pimco may be turning corner on money outflows – CEO
The world’s biggest bond fund, Pimco, may be about to end a net outflow of client funds that reached 22 billion euros ($30 billion) in the first quarter, its Chief Executive Douglas Hodge told a German newspaper.

Investment Chief Named for New York City Pensions
Scott Evans, a former head of asset management for TIAA-CREF, will be the next chief investment officer of New York City’s $150 billion pension system, according to the city comptroller, Scott M. Stringer.

Man Group confirms Numeric Investor acquisition talks
Daniel Thomas in London – Financial Times
Man Group, the British hedge fund manager, has confirmed talks about an acquisition of Numeric Investors, a rival Boston-based fund management group. In a deal expected to be valued at more than $200m, Numeric would bring in long-only investment funds to sit alongside Man Group’s hedge fund products.

Pimco’s Bill Benz eyes UK pensions push
Andy Pearce – Financial News
Bill Benz, the new man in charge of Pimco’s London office, has insisted the “big picture” at the world’s largest bond manager is healthy a
s he prepares for an aggressive tilt at the UK pensions market.

CalPERS Releases Chief Investment Officer Recruitment Brochure
CalPERS today released a brochure and other materials related to its search for a new Chief Investment Officer (CIO) to lead and manage its 400-plus person Investment Office.


Judge Blocks Subpoenas to Protect Informant in Market-Manipulation Case
Christian Berthelsen – WSJ
A federal judge has blocked subpoenas for evidence that could reveal a confidential informant’s identity in an enforcement case alleging manipulation of oil markets. The ruling by Judge William H. Pauley III of U.S. District Court in New York also criticized the U.S. Commodity Futures Trading Commission for its handling of evidence in the case, and allowed some subpoenas to move forward. The judge said that the CFTC’s failure to adequately review materials nullified claims to confidentiality.

NFA Board of Directors approves reduction in assessment fees
On May 15, 2014, NFA’s Board of Directors approved a reduction in NFA’s assessment fees from $.02 per side (futures & options contracts) to $.01 per side. Assuming the proposal is approved by the CFTC, the reduction will become effective on October 1, 2014.

FIA Issues Updated Guide To Customer Fund Protections
[[FIA]] today issued an updated guide to the rules and regulations relating to customer fund protections in the U.S. The guide, which was first issued in February 2012, provides futures commission merchants and customers with easy-to-use information about the relevant provisions of the Commodity Exchange Act and the rules of the Commodity Futures Trading Commission.

BlackRock calls for international fund redemption rules
Stephen Foley in New York – FT.com
BlackRock, the world’s largest asset manager, is calling for international rules that could impose redemption fees for some kinds of funds, to cut the chances of damaging runs during times of market panic.

BoE and Citadel clash over Sifi status for funds
Kris Devasabai – Risk.net
Asset managers face growing liquidity risks – the result of reforms that have made banks less able to play their traditional market-making role – and the financial system is not well equipped to manage them, according to Sarah Breeden, head of the markets, sectors and inter-linkages division in the financial stability unit of the Bank of England (BoE).

NFA Notice to Members: Late Disclosure Filing Fee
NFA staff spends a considerable amount of time and effort to obtain disclosure of matters that applicants or registrants fail to disclose but that NFA discovers on its own. NFA recently adopted rule changes that provide for payment of a $1,000 fee when a firm or individual fails to disclose a disciplinary matter on a registration application or fails to promptly update an existing registration record to disclose a new disciplinary matter. This fee is intended to offset, in part, the cost associated with NFA’s efforts in reviewing non-disclosed matters.

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