By Mark Melin
Altegris Acquired by Services Private Equity Firms That Specialize in Financial Services
Aquiline Capital Partners and Genstar Capital Management announced the purchase of Genworth's wealth management division for $412 million. The deal includes the sale of alternative investment brokerage firm and managed futures mutual fund provider Altegris, which was sold to Genworth in October of 2010 for $35 million plus performance incentives.
"We look forward to a new phase in Altegris' evolution with our top executive team remaining deeply committed to our clients and continuing to deliver the best investment solutions focused on leading managers in the alternatives space," said Jon Sundt, President and CEO of Altegris. "We appreciate that our new strategic partners recognize the strength of the firm's operations and our pursuit of opportunities to enhance product development, expand distribution capabilities and launch new alternative investment products."
Since Altegris launched one of the first actively managed, managed futures mutual funds in 2010, the firm has attracted more than $1.6 billion into a family of six liquid alternative mutual funds, including managed futures, global macro, equity long short, fixed income long short and multi-alternative strategies. In that same time period more than 6,500 intermediary representatives have adopted the Altegris family of mutual funds by opening approximately 145,000 investor accounts. Altegris has over 110 investment professionals on staff and, as of June 30, 2013, had over $3 billion in client assets, and provided clearing services to $752 million in institutional client assets.
Pimco Launches Managed Futures Mutual Fund
On August 16 Pimco filed a preliminary prospectus with the Securities and Exchange Commission, the first step towards launching a managed futures mutual fund. The fund is expected to follow a trend following strategy, going long and short a variety of commodity and financial futures markets. Pimco's alternative asset mutual funds have been steadily growing, from $28 billion in 2008 to reported assets under management just in excess of $100 billion in September of 2013. The managed futures offering is expected to provide investors a hedge against rising rates and is likely to deploy Pimco's skill at managing bond exposure to the benefit of the fund by investing the margin deposit.
Rothschild Notes Managed Futures as Cheap InsuranceDespite difficult performance recently, Rothschild Wealth Management Head of Investments Dirk Wiedmann noted that "managed futures provides cheap portfolio insurance." Writing in the firm's publication Market Perspective. "Managed futures funds (CTAs) suffered from falling asset prices in late May with long positions in long term government bonds hurting the most," the publication noted. "Yet recent events do not change our view that CTAs offer attractive and cheap portfolio insurance. The outlook for sources of potential return over the next six months has improved. In rising markets, long-short equity and event driven managers with a long bias are likely to perform well. Increased corporate activity should also help event driven funds. Exposure to diversifying strategies, such as global macro, remains key."
As this issue was going into production, the specter of Russ Wassendorf Sr. being questioned by his son, Russ Wassendorf Jr., was being floated in a Wall Street Journal article Wall Street Journal article on the topic by Jacob Bunge. "Senior," as he was widely known around the firm, is currently in Federal prison for fraud involving missing customer segregated funds at PFG, the brokerage firm he founded. As was pointed out in the last issue of Opalesque Futures Intelligence, the case is likely to come down to the depository agreement between the bank and FCM. Here is where it likely get's sticky. US Bank is likely to claim no such agreement existed. If this is the case, how did customer funds find their way into a bank that didn't have a depository agreement? This issue could go past Senior and may involve others at PFG. Watch what happens, it will get more interesting...
(I can attest from firsthand knowledge the CFTC can be harsh with industry participants at times. Once while unregistered I was handed a $10,000 fine because I had offered a guarantee to subscribers to my trading newsletter regarding its advice. There was no fraud and no customer complained. If the guarantee terms were not met, subscribers received that month free. In retrospect I agree with the CFTC, who said offering a guarantee was a diminishment of risk. But as an unregistered publisher I had first amendment rights. Regardless, I was given a choice of accepting a $10,000 fine and a mark on my record or potentially spending $100,000 and fighting in court. Thus, I've seen firsthand how the CFTC can treat people harshly. And here is the point: harsh treatment is deterrence; it keeps the industry in line and protects investors, and this is applauded - even if one learns a lesson the hard way.)