Readings: Hedge funds dumb down, Insurance gimmicks, Global asset markets
- Wall Street Journal: Hedge Funds Feel New Heat
The most-successful fund managers enjoy celebrity-billionaire status, even as regular investors struggle to figure out what they are up to. This opacity, though, is now hurting hedge funds. Investors are pulling back, worried as they watch assorted financial institutions suffer from bad trading bets.
The recent exodus from the most sophisticated hedge-fund variants represents a flight to simplicity as investors snap up easier-to-understand assets instead. As a result, gold, silver, oil and other commodities are soaring. Even agricultural commodities, once the most boring part of the market, are on a tear. Soybeans and wheat are up more than 75% in the past year.
- Economic Times: LIC agents promise 200% return on ‘0-investment’ plan
. . . a section of agents have gone to the extent of asking policyholders to take loans on their existing policy and invest in Market Plus—a unit-linked policy. What’s more, they are claiming it to be a zero-investment plan with a return of about Rs 75,000.
These letters look typically like the ones sent by LIC, only that they do not have the LIC logo or LIC office address on the envelope .
Insurance Regulatory & Development Authority (IRDA) has made it clear time and again that agents and insurers cannot portray more than 10% return on any type of policy in the long run. In contrast agents are assuming a 200% return here, which is against the IRDA norm.
Beware - there are more snake-oil salesmen in this industry than you can count!
Transaction activity in the global asset management industry once again shattered records during 2007. Buyers spent more than $51 billion to acquire partial or full ownership of 241 fund managers, well over 2006’s chart-topping metrics. Total assets under management changing hands, however, fell to $2 trillion in 2007, 25% below the previous year’s level.
India, where mutual fund assets expanded 70% during 2007, was the second-most popular Asian destination among buyers. India’s largest fund manager, Reliance Capital Asset Management, sold a 5% stake to hedge fund manager Eton Park Capital Management for $127 million.
45-page report with tons of data. See Exhibit 3: Despite the hype, hedge funds & private equity are miniscule when compared to pension, muutal & insurance funds.
