Fortress Finds Investors Want Managed Accounts
Fortress Investment Group, a large private equity and hedge fund company that is exchange listed, is responding to a demand for managed accounts, which give investors liquidity and transparency.
During an earnings conference call last week, executives of the firm said that there is a focus on setting up separate accounts for investors and this requires significant administrative work. Fortress has managed accounts already for some of its investment strategies, such as Drawbridge Special Opportunities.
In November of 2008 Fortress suspended redemptions in its Drawbridge Global Macro fund. At the time many hedge fund managers froze withdrawals, which forced investors in need of cash to sell off other, more liquid, assets. This is one issue that is fueling demand for managed accounts, where the investor owns the account and faces no gates to liquidating the assets.
When Fortress reopened Drawbridge Global Macro at the end of January, there were $3.3 billion in redemptions. The fund paid out $2.1 billion cash, expects to pay another $0.3 billion this month and distributed $0.9 billion of shares in newly created special purpose vehicles that hold illiquid assets.Fortress also received $1.5 billion of redemption requests for its hybrid hedge funds. The money is to be paid out over time as the underlying investments are liquidated.
Many commodity trading advisors offer managed accounts, but hedge funds have tended to set up such vehicles only for big investments.
CME Gets Green Light for Credit Swaps
The US Securities and Exchange Commission gave the go ahead to CME Group, the world's largest derivatives exchange, to clear and trade credit default swaps. The competing IntercontinentalExchange has already started to process credit default swap indexes, becoming the first company to clear trades in the $28 trillion CDS market.
ICE said it guaranteed 91 swaps transactions with a face value of $7.1 billion after launching in the second week of March. CME has formed a joint venture with hedge fund firm Citadel for CDS clearing, but when the operation will start is not clear.
The use of CDS, a form of insurance against the default of debt, grew immensely during the credit boom and is blamed for large losses at financial companies, notably AIG, the insurance giant that has been bailed out repeatedly by the US government in recent months. Regulators have called for central clearing of CDS.
CME executive chairman Terry Duffy says he is confident CME's financial safeguards package and the proven counterparty risk management framework can bring stability to the CDS market.
SASA Adds CTA/CPO Compliance GuidelinesSpecific requirements for commodity trading advisors and pool operators will become part of an online system for regulatory compliance and best practice implementation offered by Strategic Alternative Solutions Alliance.
Many of the requirements for CTAs are similar to the US Securities and Exchange Commission's rules for registered investment advisors but there are also specific requirements from the National Futures Association, said Kate Dressel, who developed the system together with Carol Kaufman. SASA incorporates best practice guidelines from the Managed Funds Association and other organizations.
Superfund Opens Sydney Center
Managed futures company Superfund has followed up its 2008 entry into the Australian market by setting up an investment centre in Sydney, according to the Australian Trade Commission. Superfund started to offer Super Alpha Fund 1 to Australian retail investors in November 2008. Superfund's affiliated companies have offices in around 20 countries, including the US.