• Pension funds plan `huge` hedge fund move – study
• Middle East investors explore alternative investment options
• Penn. State ERS Plows Billions into Four Hedge Funds (JP)
• Former Bank of England monetary policy committee member`s $1bn hedge fund delivers impressive results
• EU Hedge fund passport gets green light
• Olympia mixes traditional and alternative funds
• Sun Life unit finds $100 mln loss due to late trading-report
• SEC looking at specialists in trading probe
• Hidden Costs Make Funds More Expensive Than Most Believe
• Regulators Say Fund Investors Will See Big Changes
• European ageing to boost insurers

• Book Review and Special Offer: "Currency Overlay"
• Hedge Funds World Middle East 2004 – 10% discount for subscribers
• Alternative Investment Summit 2004 - 10% early bird discount
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Currency Overlay, by Neil Record
20% discount for Opalesque readers ordering from Wiley

ISBN: 0-470-85027-2
Hardcover
September 2003
316 pages

“Currencies are an integral part of international investing, and this long-overdue book, written by an experienced currency practitioner, is very welcome. Neil Record provides a thorough description of both practical and theoretical issues, and I expect this book to have wide appeal in the investment community.” – Peter Gilbert, Chief Investment Officer, Pennsylvania State Employees Retirement System

Special offer to Opalesque readers. Order Currency Overlay now and save 20%. Pay only £48.00/EUR72.00/ (US customers US$76.00) plus P&P. Quote promotion code CWD when prompted, or contact cs-books@wiley.co.uk for further details. Link for EU and other customers here. US customers, please follow this link. Don't forget to quote CWD for your discount.

Currency overlay has grown in parallel with the international diversification of institutional investment portfolios. Currency overlay mandates now cover around $100bn in assets, and 18 years since the first overlay mandate, currency overlay has now come of age.

Currency Overlay looks at all the components that make up an overlay mandate and the decisions and analysis leading up to it. It is written in an accessible style, designed for the interested asset manager, pension fund manager, investment consultant, trustee or student.

Many of the author's analyses start from first principles. Concepts important to the case are fully explained before utilising them, allowing the reader with no prior knowledge of the subject to exercise independent judgement. The author makes wide use of self-contained 'boxes' to illustrate and explain particular elements or concepts.

Currency Overlay covers, amongst other topics:

• The theoretical case for eliminating currency risk in international portfolios
• The interplay between asset returns and currency returns, and the effect of this on hedging decisions
• Benchmarks - their construction and strategic role
• Least-cost passive overlay
• The structure of the currency market, and its 'inefficiencies'
• Active overlay styles
• Active overlay both restricted and unrestricted (currency alpha)

“Neil Record can rightly claim to be one of the pioneers of currency overlay management, and has drawn on his decades of experience in this field to write this comprehensive and authoritative book covering virtually everything worth knowing about the subject, in a very readable style. I strongly recommend this book to all institutional investors and investment consultants dealing with international investments.” – Bill Muysken, Global Head of Research, Mercer Investment Consulting

“The management of currency risk is critical to efficient portfolio management. Neil Record is an acknowledged expert in this area. This book is comprehensive, timely and much needed.” – Paul Myners – author of the 2001 HM Treasury Review of Institutional Investment in the UK

“This book is unique in that it covers so many different aspects of currency overlay, from benchmarks to management styles to implementation. Neil Record makes this often complex area easy to understand with a good blend of theory and practical examples. The book should appeal to a broad range of investment industry professionals.” – James Mitchell, Senior Research Analyst, Frank Russell Company

Greenwich Associates says pension funds plan to put “huge amounts” into hedge funds – though transparency will become more of an issue. “Pension funds, with their enormous resources, have started to allocate significant amounts of money into hedge funds, and they are planning to put in huge amounts,” said Greenwich Associates consultant Frank Feenstra. The Connecticut-based consulting firm termed investments by pension funds as a “windfall” for hedge funds. “Greenwich research suggests that hedge funds will experience rapid and continued growth as pension funds increase their allocations to the asset class,” added Greenwich consultant Woody Canaday. Source

A growing number of investors in the Middle East are exploring alternative investment options, which has prompted the world's leading portfolio managers and financial experts to turn their attention towards the region's cash-rich investors. This was evident at a recent Alternative Investment Conference in the region, held at the Royal Mirage Hotel, Dubai. Evolvence Capital, a leading Investment Advisory firm in the Middle East, hosted the conference attended by over two hundred financial professionals from across the globe. Source

According to Bloomberg , The Philadelphia Inquirer reports that Pennsylvania's $24 billion State Employees' Retirement System is moving billions of dollars to four hedge funds, the Philadelphia Inquirer said. Peter Gilbert, chief investment officer for the system, said the move is to try and make money in down markets. Although the retirement system doesn't get detailed investment lists from hedge fund managers, it believes the variety of funds reduces the overall risk of investing in the unregulated instruments.. In December, the system's board approved doubling hedge fund investment to 20 percent of total assets over the next two years. According to the Inquirer the four hedge funds are Blackstone Alternative Asset Management, Mesirow Advanced Strategies Inc., Morgan Stanley Alternative Investment Partners and Pacific Alternative Asset Management Co. Source

Sushil Wadhwani, the former Bank of England monetary policy committee member, has moved into the big league in the European hedge fund world, notching up assets of $1bn (£769m) in his first 10 months of trading. The fundraising makes Mr Wadhwani's one of the most successful European fund launches of last year. Mr Wadhwani, who started trading last March, has delivered impressive returns for his investors. His Keynes Leveraged Fund, which last week won an industry award, has shown net returns of 18 per cent, while the Keynes Fund, which is more conservative in its use of leverage, was up by 8 per cent. Source

THE European Parliament has passed new proposals from Scottish MEP John Purvis, to introduce an EU-wide passport for hedge funds. Under the plans, a special EU-wide regulatory regime will be set up to accommodate sophisticated alternative investment vehicles (SAIVs) which will include hedge funds and funds investing in property, currencies and commodities. It is hoped the new regulatory regime will encourage hedge funds to reside in the EU instead of offshore tax and regulatory havens, such as Jersey. Purvis, who is vice-president of the Economic and Monetary Affairs Committee and author of the parliament’s report on hedge funds, said: "It is vital that we encourage hedge funds into the EU…. Source

Olympia Capital Management in Paris has launched Olympia Investment Strategies, a fund of funds incorporating traditional and alternative strategies. Because the fund has a long-only allocation of 40-60%, it excludes allocation to long/short equity, and focuses on directional and relative value hedge styles in order to enhance diversification. Source

Massachusetts Financial Services Co. has found that investors in its mutual funds lost about $100 million because of illegal "late trading," a report said on Friday, citing people familiar with the matter. The Wall Street Journal reported that MFS found that the trades were made through more than 10 different broker-dealers, including Security Brokerage Inc., and the clearing arms of Bank of America Corp. and Bear Stearns Cos., these people said. Source

The SEC issued a Wells notice to NYSE specialist firms LaBranche & Co., Van der Moolen Specialists and Fleet Specialist for alleged trading violations, according to the three firms. The NYSE is also considering disciplinary actions against the three firms for allegedly breaking both federal securities laws and exchange rules. LaBranche, Van der Moolen and Fleet are three of five firms being investigated by the SEC and the NYSE for alleged interpositioning, or stepping in between natural buyers and sellers to capture a profit. The other firms under investigation are Bear Wagner Specialists and Spear, Leeds & Kellogg Specialists. There are seven specialist firms on the NYSE. Source

The cost of investing in mutual funds is significantly more than people are led to believe, because some expenses are hidden from view. According to a study released Friday, such hidden costs are incurred from trading of securities in fund portfolios and account for, on average, 43% of the disclosed fund expenses among the 30 largest equity funds. Source

…Disclosure will get beefed up. The SEC recently proposed a new report for broker-sold funds to give investors information at the point of sale on fund fees and conflicts that might spur a broker to promote one fund over another. House Financial Services Committee senior counsel Linda Dallas Rich said too many fees on broker-sold funds "are sneakily hidden" from investors…Lower fees could follow. At a minimum, fund companies would have to be more forthcoming about fees. Under a proposal the SEC will float in February, fund firms would have to tell investors what the fund is costing them in dollars-and- cents, supplementing current reports showing fees as a percentage of fund assets….Quarterly reports of fund portfolio holdings also would be required, although with a 60-day lag. Additionally, the SEC wants fund managers to summarize top 50 holdings and do a better job of explaining why the fund went up or down in the quarter.…So-called 12b-1 fees, which fund investors pay for fund marketing and distribution, are getting a second look. Source

Towers Perrin’s Tillinghast arm says the European insurance industry could stand to benefit from population ageing and poor state pension systems. “Tillinghast believes the ageing population and the failure of European state pensions systems will have a positive impact on the industry and open up opportunities for growth for European insurers,” the actuarial and consulting firm said in a release. “As a result of the current low-interest environment and the pension deficit, consumers may now need to plan to save twice as much for retirement, helping to stimulate life industry sales.” Source