• Hedge funds no threat to financial stability
• Mellon to Acquire FOF Evaluation Associates Capital Markets
• BayStar Asset Management Acquires Stake in FOF
• Too many hedge funds, too few opportunities?
• Wall Street Battles over the Rich, UBS targets US ultra high net worth clients
• Ex-Putnam Head Agrees To $25M Compensation Cut, but still walks away with $80m
• Accomplice in abduction of Edward Lampert gets nine years in prison
• Three Ex-Bankers in U.K. May Be Extradited for U.S. Enron Case
• JPMorgan survey reveals positive outlook of super-HNI on expanded EU
• Commerzbank Evaluates Expanded Reliance On Portfolio, Risk Management System
• Country Report: Prospects for the Banking Industry in Germany
• UBS to expand in German fund market
• China Reins in Mutual-Fund Promises

• Financial Portfolio Management System – A Modular Front/Back Office System from Computer Design
• 11th Annual Hedge Fund Forum New York City - Save up to $500
• 7th annual Hedge Funds World Asia 2004 Hong Kong - 10% Discount for subscribers!
• NEW! : 2nd Annual Global Absolute Return Congress (‘Global ARC’) Boston
• Alternative Investment Roundup: three concurrent conferences on Hedge Funds, Private Equity & Real Estate
• Asset Allocation Summit London - 10% discount for subscribers
• Institutional Investor invites for second annual Hedge Fund Awards Dinner in NY on June 24, 2004
• Advertise in this newsletter
• Contact

Practical Risk Management
An Executive Guide to Avoiding Surprises and Losses
0470849673
Hardcover
176 pages
July 2003

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Special offer to Opalesque readers. Order Practical Risk Management with us now and save 20%. Only £36.00/€54.00/ (US customers US$72.00) plus P&P. Quote promotion code CWD when prompted, or contact cs-books@wiley.co.uk for further details. Link for EU customers here. US customers, please follow this link. If you get this newsletter in the text version please click on the “View the HTML-Version” at the top of the newsletter or paste the following link into your browser to access the links to Wiley: http://www.opalesque.com/forward.php?to=op_3_2.php. Remember to quote CWD for your discount!

To the Recommended Reading Archive

From Reuters.com: Hedge funds no longer pose a threat to the world's financial system, industry experts say, and may even increase stability by taking on risk and providing liquidity at times of market turbulence. “...There is probably a bigger threat from derivatives trading between institutions (than from hedge funds)," said Cuthbert, funds analyst at Bridgewell Securities…Full article: Source

Mellon Financial Corporation announced that it has signed a definitive agreement to acquire Evaluation Associates Capital Markets (EACM), a $4.5 billion asset manager based in Norwalk, CT, that offers hedge fund-of-funds and manager-of-managers investment strategies. The transaction, terms of which were not disclosed, is scheduled to close before the end of the third quarter of 2004. EACM manages approximately $2.7 billion in the hedge fund-of-fund strategies and $1.8 billion in manager-of-managers strategies. In its hedge fund-of-funds strategies, EACM invests in a wide range of hedge funds, including relative value, event-driven and directional strategies. In its manager-of-manager strategies, EACM selects and oversees diversified teams of long-only equity and fixed income money managers.
"The hedge fund-of-funds business has been one of the fastest growing segments within alternatives over the last four years," said Ronald P. O'Hanley, Mellon vice chairman and president of its institutional asset management business. Press release: Source

BayStar Asset Management, LLC today announced that it has acquired an interest in hedge fund-of-funds manager Ascendant Capital Partners, LP from Turner Investment Partners, Inc. The transaction is the first major venture for BayStar Asset Management, an alternative investment management company that makes strategic investments in hedge funds-of-funds. The firm plans to make several additional acquisitions and investments in alternative management companies in its first year, and expects the combined assets under management of its family of funds-of-funds will reach approximately $1 billion. Source

Reuters reports on a discussion at the GAIM conference in Lausanne: Total hedge fund assets may grow from $1 trillion or so currently to $2-$4 trillion by the end of the decade, industry experts say, but some of them worry there may not be enough investment opportunities to go round. Continue: Source

UBS is in the middle of the rollout of its Private Wealth Management Group. The group, a new effort in the U.S will establish products and services required for ultra high net worth clients. In the U.S., the ultra high net worth segment (investors with a net worth exceeding $10 million), while only approximately 100,000 households, represents an estimated $2.8 trillion assets. As the firm with the most $10 million accounts worldwide, UBS is well positioned to expand in this market. Source

Morningstar reports former Putnam Investments Chief Executive Lawrence J. Lasser has agreed to a $25 million reduction in his compensation as part of a settlement worked out with his former employer, but will still walk away with nearly $80 million. Lasser, who led the mutual-fund company for 18 years, lost his job in November amid the trading scandal that engulfed the company. Source

From AP/ ABC.CA: Shemone Gordon, 24, was granted a more lenient sentence because he helped prosecutors find and arrest others involved in the kidnapping of Edward Lampert, one of the richest men in America. Lampert, chairman of the hedge fund ESL Investments Inc., was released unharmed in Greenwich the next day. The alleged ringleader of the group, Renaldo Rose, was sentenced last month to 15 years in prison. Source

Bloomberg reports three ex-bankers at National Westminster Bank may face extradition from the U.K. to the U.S. for cheating their employer out of $7.1 million in an Enron Corp.- related fraud, the U.S. Department of Justice said. Source

Seventy per cent of JPMorgan Private Bank’s global client base believe that the expansion of the European Union will make Europe a stronger and more competitive market, according to a recent survey. The article cites Maria Elena Lagomasino, chairman and ceo of JPMorgan Private Bank saying many of the world’s wealthiest individuals play quiet but vital roles in local and global economies and that the newly expanded EU is likely to have a real and lasting effect on these individuals’ investment choices. The economies of the 10 new countries would be collectively growing three times faster than those of the original member countries. Full article: Source

InstitutionalInvestor.com reports Commerzbank Securities is weighing deploying the newly selected portfolio and risk management system across its global operations. More: Source

From RiskCenter.com: Manfred Weber, Chief Executive Officer of the Association of German Banks, yesterday presented the Association's 2004 Banking Survey in Berlin . The survey focuses on the need for political reform and on the structural changes in the banking industry.
Germany is on the brink of far-reaching structural change. Radical reforms are needed to get the country in shape for the 21st century. The German government’s “Agenda 2010” is a step in the right direction. But we still lack an overarching strategy which will boost economic growth and stabilise public finances and the social security system. This would also promote broader acceptance of the reform process.
There has been a growing impression of late that the appetite for reform is diminishing. This must not be allowed to happen. Given the high unemployment and mounting pressure of demographic trends on the social security system, policymakers must now make it their top priority to put in place measures that will allow Germany to regain its former strength. Full article: Source

John Fraser who heads the worldwide asset management of UBS says the bank targets the German fund market also with Alternatives. Currently UBS recommends a 10-15% allocation to Alternatives. In German: Source

From AP / TheState.com: China's financial regulators are barring mutual fund companies from promising investment returns, moving the fast-expanding sector closer to international standards. The China Securities Regulatory Commission issued a notice in the state-run China Securities Journal on Friday, formalizing guidelines for the industry. Source

In line with changing industry trends Computer Design’s modular Financial Portfolio Management System (FPM) has evolved over the course of time from a multi-currency-multi-instrument portfolio management system, to an institutional fund management system, managed futures system, hedge funds system. Here are some examples of the uses of the FPM system.

• Order Management: Creation of an electronic dealing pad to record the decision process and issue pre-trade breach warnings. Dealers are able to see open positions and P&L on-line. Back office can process the deals without re-keying.
• Managed Futures Accounts: One of the most time consuming tasks for the back office is to compute performance fees in accordance with client mandates. Normally fees accrue at periodic intervals and become payable depending on certain thresholds. In our solution accrual and payment records are accounted through FPM Cash Book/General Ledger and the fee notes printed automatically.
• Client Report Book: Each month client account managers send statements to clients with differing reporting requirements. FPM Client Report Book automates the procedure and provides straight integration with Microsoft Office.
• Financial Reports: Fund managers have complex financial reporting requirement for gross/net P&L, Income Forecast, Statement of Total Return, Balance Sheet. FPM General Ledger meets these requirements through a flexible combination of the accounting database and Excel.
• Performance Attribution: FPM Performance Attribution Module allows asset managers to maintain model portfolios and composite benchmarks and to determine asset class relative performance and contribution based on industry standard methods and integrated graphics output.
• Integrated System: Computer Design creates integrated systems with straight through processing between all departments with a flexible general ledger back-bone, data feed interface for prices and corporate actions, financial reporting and an interface to the custodian for settlement instructions. All of our clients have evaluated a number of systems but only FPM could provide the required functionality for the price.

From the team that brought you GAIM USA, the only must-attend event of the summer on key regulatory and investment issues in the heart of New York City. **Register and Save up to $500**

• Special track specifically for investors looking to make an early allocation to hedge funds - plus the opportunity to meet leading institutional investors including - Verizon Investment Management, Stanford Management Company & the Ford Foundation
• Opportunity to meet face to face with several leading consultants advising on major alternative investment mandates
• A mid year update on regulatory issues - registration, inspections, cap intro conflicts of interest, AML update, short selling rules and more.
• Expert advice on how to prepare for and manage an SEC inspection - unmissable information given the additional resources the SEC will be dedicating to inspecting hedge funds.
• Outlook for alpha roundtables - face to face time with leading managers to discover their perspectives on alpha opportunities in each of the major hedge fund strategies.

For more information, visit: www.iirhedge.com or contact Marc Weitzman at the Institute for International Research p: 212.661.3500 ext.3092

With over 90 expert speakers form over 15 countries; the 7th annual Hedge Funds World Asia is the regions leading alternative investment event and Hong Kong's only hedge funds event with a proven track record. For more information please contact Rani at Tel: +65 63222 721 or mail to rani.kuppusamy@terrapinn.com

Pension/Endowment speakers include:

• from North America: ABP Investments • Alberta Revenue • CDP Capital • City of Philadelphia Public Employees • Emory University Endowment • George Washington University Endowment • MIT Endowment & Retirement Plan • New Hampshire Retirement System • Texas Teachers Retirement System • The Atlantic Philanthropies • University of California Endowment • University of Texas Endowment • Verizon Investment Management • Virginia Retirement System • World Bank Pension Plan
• from Europe: AP7 Pension Fund • Danish Lawyers & Economist Pension Plan • KLM Airlines Pension Plan • Pension Fennia • Skandia Liv
• from Asia and Australasia: Commonwealth/Public Superannuation Scheme • Mitsubishi Corporation Pension Fund • New Zealand Superannuation Fund • Retail Employees Superannuation Trust • Victorian Funds Management Corporation

For registration go to www.global-arc.net or contact David Stewart at david@global-arc.net

The Alternative Investment Roundup is three concurrent conferences at the same location covering the most important alternative asset classes-Private Equity, Hedge Funds, & Institutional Real Estate. The programs share networking events, offering you unmatched opportunities to meet a wide array of alternative investment professionals and investors. Over 750 decision makers attended last year's event.

10% discount for Alternative Market Briefing Readers for the Alternative Investment Roundup. Register by May 17, 2004 for additional Early Bird Discount. For more information, please visit www.srinstitute.com/air or contact Chris Petersen at CPetersen@srinstitute.com

At this critical juncture for the development of the world's equity and bond markets, this conference will be examining strategic and tactical asset allocation, current strategy and alternative investing. Our conference in October 2003 attracted over 300 participants to the Inter-Continental Hotel.

"THE BIG EVENT FOR THE BIG PICTURE"

The theory and practice of asset allocation is undergoing dramatic change. The dominant position of equities in pension schemes is under question and investment consultants are putting forward new ideas regarding the structure of asset allocation benchmarks. Multi-asset mandates are coming back into fashion. Asset allocators are grappling with uncertain economic and market conditions, and the correlation between equity and bond markets has reversed. Alternative Investments are seeing record new money flows. The Asset Allocation Summit features speakers at the very heart of these key developments. For anyone involved in asset allocation, this could be the most significant investment conference of 2004.

OVER 300 DELEGATES IN 2003

ASSET ALLOCATION SUMMIT 2004 features presentations on:

• Current investment strategy
• Dynamic asset allocation strategies
• Liability driven benchmarks and risk budgeting
• Tactical asset allocation
• Using style analysis
• Investing in hedge funds
• Investing in private equity
• Gold, commodities and other alternatives
• Portable alpha strategies
• Currency overlay strategies
• Derivative overlays and structured products
• Implementation tools and strategies

This gala – held in conjunction with Institutional Investor’s Spring Hedge Fund Investment Roundtable, June 23-24, 2004 – will bring together the hedge fund industry to recognize and applaud the achievements of their peers. The awards dinner will include key industry players – hedge fund managers, funds of funds, endowments, foundations, and corporate and public pension funds.

Nominees for the awards are selected by the editorial team of Alternative Investment News. Subscribers, readers and other industry members are encouraged to visit our website to offer their input and comments on the nominations. Winners will be selected by the editorial team of Alternative Investment News. Winners will be announced at the event.

2004 Alternative Investment News’ Editorial Advisory Board:
Leroy Cody, American Express Alternative Investments
Joel Katzman, J P Morgan Alternative Asset Management
Richard Lindsey, Bear Stearns Securities Corp
Nick von Speyr, Optima Fund Management
Kent Clark, Goldman Sachs Hedge Fund Strategies
Joe Pescatore, UBS
Martin Phipps, Gartmore Investments

Award Categories: Hedge Fund Leader of the Year, Fund of Funds Leader of the Year, Institutional Manager of the Year, Emerging Manager of the Year, Institutional Investor of the Year

To find out who is nominated and to register for the event contact: Nazneen Kanga nkanga@iinews.com

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