Expected Rotation Out of Bonds Rattles Hedge Funds (CNBC)
A mass investor rotation out of bonds, expected earlier this year, has finally materialized—to the dismay of some hedge funds that say they now need bigger cash stashes and an increased appetite for risk in order to trade successfully. During the month of June, fixed income allocations fell to a four-year low, according to the American Association of Individual Investors, as major bond fund managers like Pimco experienced record withdrawals for the second quarter. That pullback sent places like emerging markets and high-yield bonds reeling—just as the Federal Reserve signaled plans to taper its easy-money policies within the coming years. Benchmark bond yields ticked up on that news, and in an unexpected twist, the stock market nosedived as well.
SEC to Vote July 10 to Lift U.S. Ban on Hedge-Fund Advertising (BusinessWeek)
U.S. securities regulators are set to vote next week to lift an 80-year-old rule that prohibits companies and private funds from advertising to raise capital outside of a public offering. The Securities and Exchange Commission is required to remove the advertising ban under a 2012 law that sought to ease regulations on financing for startups and small businesses. In a nod to complaints from critics who say the change will open the door to more fraud, the SEC will also propose a separate rule during the July 10 meeting to add some investor protections and make it easier for the agency to monitor the change.
Media Spotlight: Crisis Economics by Nouriel Roubini (MortgageStrategy)
Only the other week Desert Island Discs host Kirsty Young joined the Queen in directly asking the now former governor of the Bank of England Sir Mervyn King why no one had seen the beginning of the current crisis coming. King responded that while there had been warnings, primarily there had been a misreading of the market and that all the things that had been seen as dispersing risk, the endless dicing up of debt to markets and so-called sophisticated financial markets, had actually just amplified and spread that risk on a global scale. So when US housing market tanked it dragged down everything else with it.
Caxton, Citadel Among Few to Make Money in June (InstitutionalInvestorsAlpha)
June may have been a bust all over, with most market averages — and many hedge fund managers — finishing the month in the red. However, several big-name hedge funds posted strong results or continue to enjoy very good years. One of this year’s top performers is Caxton Global Investment, the fund founded by Bruce Kovner and taken over by Andrew Law in January 2012 and run out of New York-based Caxton Associates. The macro fund was up 2.25 percent in June alone and is now up 15.9 percent at the year’s halfway mark. It is not clear which markets Law made money from or exploited.
Whitebox Advisors searching for new president (PIOnline)
Jonathan Wood, president and chief operating officer of hedge fund manager Whitebox Advisors, will leave the firm within the next three to six months. Whitebox, which has $2.2 billion under management, has begun a search for a new president, confirmed Amara Kaiyalethe, a company spokeswoman in an e-mail. Mr. Wood will leave to launch a non-profit, Charity Aware, in Woodbury, Minn., to encourage teen volunteerism, he said during an interview. Mr. Wood’s dual roles are being split, said Andrew Redleaf, CEO, in a client letter obtained by Pensions & Investments.