Subject: FW: Prime Services' Monthly Hedge Fund Industry Update - April 2011
From: "Neil Callahan" <[email-masked]>
To: <[email-masked]>, "'Hunter Biden'" <[email-masked]>, "'Eric Schwerin'" <[email-masked]>, "'Devon Archer'" <[email-masked]>
Date: Thu, 21 Apr 2011 16:22:35 -0400

Indications of Increased Pension Fund Activity

􀂄 We continue to observe a significant number of institutional investors approve first time hedge

fund investments, while others with existing allocations have raised their target allocations.

While some are still using the barbell approach of allocating to both single manager funds and

multi-manager fund of funds, there is a clear trend towards single manager allocations. One

pension focused publication recently identified a 38% increase in pension fund "activity"

(searches and allocations) over the same quarter from last year.i

􀂄 While this activity has led a number of people to proclaim that institutional flows are back to their

pre-2008 levels, we believe that most pension investors remain methodical and opportunistic.

Rather than representing a "flood of capital", their allocations belie a longer-term approach that

began in the aftermath of the dislocation, when hedge funds outperformed their Long-Only

counterparts. The current inflows are the result of that ensuing asset allocation process.

􀂄 Another interesting trend that we have noted among pension fund investors is the fact that a fair

number are utilizing not only consultants, but in some cases, also a fund of funds in an advisory

capacity. In our discussions with these investors, many note that they see these two providers

as having separate, but complimentary roles. In some cases, they are seen as augmenting an

internal system of check and balances. We expect to see that trend continue as both sides

increase their specialized roles.

------------------------------------------------------------------------------------------

Neil Callahan

Rosemont Seneca

401 Greenwich Street, Suite 400 | New York NY 10013 | 212-933-9965 | 212-796-4037

1010 Wisconsin Avenue, Suite 705 | Washington DC 20007 | 202-333-1880

917-945-9516 (mobile) 

866-749-8879  (fax) 

From: Jacknow, Bret [mailto:[email-masked]] 
Sent: Thursday, April 21, 2011 4:19 PM
To: Jacknow, Bret
Subject: Prime Services' Monthly Hedge Fund Industry Update - April 2011

 

Attached please find the PDF which complements the Monthly Hedge Fund Industry Update call 

<<Credit Suisse April 2011 Call.pdf>> 

The Investor Perspective 

·         Sentiment & Flows: March inflows into the hedge fund space were strong and appear to have included a significant component of allocations from pension funds. Risk appetite continues to increase, as investors consider a broader range of managers by asset size and strategy, in order to compliment their core positions with more established managers.

·         Performance: Hedge funds’ performance in March was relatively flat across most strategies, with the Dow Jones Credit Suisse Hedge Fund Index returning 0.12% for the month. 9 out of 13 strategies posted performance in the +/- 1% range.

·         Strategy Appetite: Equity-oriented strategies, particularly with a fundamental focus and derived from "event" situations, continue to garner the attention of investors. In addition, investors also appear to be placing an emphasis on differentiated opportunities and minimal portfolio overlap as prerequisites for making new allocations.

The Risk Perspective 

·         Gross Leverage: Overall book gross leverage at March month-end was up to 2.72x from the February level of 2.66x.

·         Long/Short Equity Bias: Long/Short Bias rose sharply in March to 63% (from 55%) as managers took advantage of the dislocation and increased core positions.

·         Regional Long/Short Bias: Long/Short bias in March was flat in North America and up in all other regions.

·         Sector Long/Short Bias: As of March month-end, sectors whose bias increased relative to the previous month included Industrials and Utilities.

Call Replay Details: 
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Australia 1800 002 633 
Replay available through May 20th, 2011 
Replay ID 57411435 

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