Carlyle has raised $698 million for its dedicated Africa fund, nearly $200 million above its initial target.» Read More
Recent turmoil around megabond fund manager Pimco has been "like a near-death experience," firm's founder Bill Gross says.
Significant underperformance coupled with the exit of high-profile CEO Mohamed El-Erian caused Gross to re-evaluate the way he was running the firm, which manages nearly $2 trillion for clients and runs the world's largest bond fund, the Pimco Total Return, which has assets of $232 billion.
"People have different impressions of themselves, and where reality lies is somewhere in between," Gross told Bloomberg Businessweek in a profile slated to hit newsstands Friday. "And maybe I hadn't been forced to be in between. I always thought of myself as being part of a family and sharing and, yes, leading, but not forcing people to do anything.
Surprise, surprise: Low-key investment funds that diversify their portfolios across asset classes to protect them for the long term are again proving their value.
So-called "risk parity" funds—run by prominent investment firms like Bridgewater Associates, AQR Capital Management and Invesco—are up an average of 3.3 percent through March, according to data from Morningstar, easily beating returns for stocks and bonds. That also is better than a classic 60-40 percent stock-bond allocation, which gained 1.87 percent in the first quarter.
Risk parity is a strategy that holds steady investments in stocks, bonds and commodities that in theory will make money in any economic environment, including inflation or deflation, in cases of either high or low growth. Bonds in the portfolio are often modestly levered to increase their return, which can help make up for equity market losses. The basic diversification idea is a time-honored one: You can't predict the market, but you can predict what assets will do well in different environments.
Bridgewater founder Ray Dalio pioneered the idea to manage his fortune, and his firm launched its risk parity fund for external investors in 1996. Most other funds were created following the financial crisis.
The problem is that investors are getting out of the funds following average losses of 0.01 percent in 2013—and worse at several major firms. Morningstar estimates that $1.45 billion of investor capital has been pulled from risk parity funds in 2014, bringing capital in the previously fast-growing strategy to $11 billion as of March 31.
Happy Wednesday from the crew (of one) at the Morning Six-Pack, where we're always buying the dips.
So this guy walks into his doctor's office ... and finds out his doctor is making $21 million. Ouch. (The New York Times)
Investors give and investors take away, and nowhere has that been more true lately than in value stocks.
Last year's 30-percent stock market rally was powered largely by value stocks—those with low valuations that investors believe can jump higher—that looked like they had nowhere to go but up.
Almost on a dime, however, that belief has changed in recent trading days, with investors looking to put their money elsewhere as growth stocks—health care and biotech are two of the current hot hands—gain preference.
A nearly 30-year employee of the Securities and Exchange Commission used his recent retirement party to deliver a stinging criticism of his agency being too "tentative and fearful" of prosecuting senior executives on Wall Street following the financial crisis, according to a report.
James Kidney, who joined the SEC in 1986 and retired this April, said the SEC has become "an agency that polices the broken windows on the street level and rarely goes to the penthouse floors," according to the Bloomberg report.
Kidney said his superiors were "more focused on getting high-paying jobs after their government service than on bringing difficult cases," according to the report.
Bridgewater Associates, the largest hedge fund firm in the world, has posted modest, positive returns this year as others that bet on macroeconomic trends have faltered.
Bridgewater's largest hedge fund, Pure Alpha II, fell 0.41 percent in March but is up 2.36 percent over the first three months of the year, according to two sources with knowledge of the performance. Pure Alpha I, a similar strategy that is designed to be less volatile, also fell 0.24 percent in March and gained 1.59 percent in the first quarter.
Bridgewater's Pure Alpha funds bet on dozens of different global markets at once, including stocks, bonds, interest rates and currencies.
The winning percentage for all bets in March was 55 percent, according to an investor in the fund. The largest winner for the month was developed market currencies, which gained 0.40 percent. The fund also gained 0.20 percent on stocks. Losers for the month included emerging market currencies (down 0.30 percent) and commodities (down 0.20 percent), according to the investor. Most other bets were "flat," meaning they did not gain or lose much money.
Five months after a groundbreaking criminal settlement with the U.S. attorney for the Southern District of New York that turned it from a major hedge fund into a private family office, Point72 has hired a former prosecutor from that office to handle internal surveillance.
Point72's new hire, Vincent Tortorella, begins work Tuesday, according to an internal memo issued by company President Tom Conheeney on Tuesday morning.
Tortorella's hiring, the memo states, is part of a broader effort at the family office, which manages company head Steve Cohen's own money alongside that of certain employees and family members, to "heighten our emphasis on surveillance and to add someone with outstanding investigative skills, preferably honed in law enforcement, to lead this effort."
Happy Tuesday, and welcome to the final bracket-busting edition of the Morning Six-Pack.
We're marking Equal Pay Day by helping report that things aren't as bad in terms of male-female income discrepancy as you think they are. (Pew Research Center)
Private equity goes kosher, as Sankaty Advisors plans a takeover of the kosher king itself, Manischewitz. (DealBook)
Mega-rich people aren't always miserly penny-pinchers, especially to workers at one exclusive Manhattan co-op.
According to the dirt-dishing new book by Michael Gross, "House of Outrageous Fortune," service employees at 15 Central Park West pocketed an average of $22,500 during the 2011 holidays, according to a New York magazine peek into the book.
The private fund company Point72 Asset Management, the former SAC Capital, launched officially Monday with about $9 billion in funds and a year-to-date return of close to 10 percent through March, according to people familiar with the matter.
The size and rate of return remains in line with its former life as a hedge fund that traded public money.
Point72, a moniker that was drawn from the fund company's address at 72 Cummings Point Rd. in Stamford, Conn., was unveiled in March in an employee memo. But because it was still working out the technicalities of changing names and returning some remaining money to outside investors through the first quarter, the firm only started doing business with the new logo, email and letterhead on Monday.
Everyone's buzzing about HFTs having a speed advantage but this NYU professor and former HFT trader says not so fast — there's more.
Ex-Galleon trader Turney Duff offers an insider's view of how learned about Wall Street's dirty little secret: insider trading.
Fed speak may trump earnings reports and economic data, guaranteeing another volatile trading day.