In Australia, a Hedge-Fund Rocket
Wednesday 13 June 2007
The Wall Street Journal had this article by Laura Santini about the IPO of an Australian Hedge fund. What is interesting is whether investors invest in hedge funds or the IPO of the hedge fund!
“As investors around the world clamor for a piece of the big hedge-fund and private-equity companies going public, an opportunity has surfaced in Australia, where Platinum Asset Management's newly listed shares shot up 76% on their first day of trading.” Read here for the full article
Shareholder enthusiasm for these IPO’s reflects the expectation that companies will expand the pool of fees by increasing fees or raising larger assets to manage. Clearly it makes sense to invest into a profitable business. But the profits are paid in fees from investors! Another point is made..."investors in the share capital rather than the fund are not caught through the redemption risk. In other words, the shares of the hedge fund company are more liquid than the investors!
But the hedge funds will say, its not about fees, its about performance. That's true but at what risk? If its all about performance then, surely the proof of the pudding should be in the eating...maybe not...The Credit Suisse Tremont hedge fund index gained in the US 5.4% this year, while the S&P 500 stock index increased by 8.3%. The UK FTSE 100 gained 7.3% and Australian market benchmark jumped 12.4%. Where is the so called out performance?
We have concerns about the future prosperity.
If stocks decline through a market downturn, then these hedge funds on average are likely to see major falls with the potential for investors to abandon ship. Be very careful with Hedge Funds. They are great news for the fund managers but for investors...make you own mind up.
Categories: Hedge Funds
posted by Murray Round Wealth Management @ 21:46,
The Authors
Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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