Institutional Investor's Alpha Magazine - April 2008 - (Page 6)

Sally Dewar is leading an FSA crackdown in London. and institutional markets for the Financial Services Authority, the U.K.’s markets regulator, rebuked the gossipmongers and publicly reminded traders not to take advantage of volatile markets “by spreading false rumors and dealing on the back of them.” The FSA has launched an investigation to determine where the rumors started and who disseminated them. So serious was the threat to HBOS that its share price plunged by 17.1 percent that Wednesday morning and only began to recover in the afternoon, when the Bank of England — in an entirely separate move from the FSA’s — announced that no British bank had sought its help. Finding the agents behind the selling frenzy won’t be easy: The FSA, which receives an electronic notice of every equity transaction that occurs in the U.K., will have to comb through thousands of records. It is also asking hard questions of London hedge fund managers and prime brokers. “We’re now contacting everybody who held a short position in various ﬁnancial stocks over that period of time and asking them to talk us through why they were holding that position and what happened with it,” says Teresa La Thangue, an FSA spokeswoman. The FSA may need an informant to come forward. Howard Davies, a former FSA chairman and deputy governor of the Bank of England who is now director of the London School of Economics and Political Science, believes such help is of the essence. “There is a lot of slightly dishonest posturing by people in the markets who claim to be respectable,” Davies says. “While they will happily decry all those bad people who spread rumors, when you say, ‘Well, can you come in and tell us who those rumormongers are?’ they suddenly clam up.” But he’s hopeful that the FSA’s long-sought proposal for broader plea-bargaining powers — which might encourage those in the know to talk — will ﬁnally gain traction. It won’t help the HBOS inquiry much, however, because change will take time and probably won’t be retroactive. InvestorForum Institutional investors are still on the fence about portable alpha. Despite rising interest since we last polled investors on the strategy, many have yet to add it to their portfolios. But among those investors that have, hedge funds are the most popular way of generating alpha for the strategy. Nearly two thirds of respondents to our latest InvestorForum survey who have or are considering portable-alpha programs say they use hedge funds to create the alpha.* What type of institution do you represent? Corporate pension fund Public pension fund Taft-Hartley pension fund Endowment Foundation Other What is the size of your fund? More than $5 billion $2.5 billion to $5 billion $1 billion to $2.49 billion $500 million to $999 million $100 million to $499 million Less than $100 million If you answered “no” to the previous question, are you considering investing in hedge funds or funds of hedge funds in the future? Yes 30.0% No 70.0 If you do invest in hedge funds, how big is your hedge fund allocation? 26 to 50 percent 10.6% 16 to 25 percent 27.7 11 to 15 percent 17.0 6 to 10 percent 23.4 Less than 6 percent 21.3 If you answered “no” to the previous question, are you considering portable alpha? Yes 26.0% No 56.0 Don’t know 18.0 If you use or are considering using a portable-alpha portfolio, where does or would you expect the alpha to come from? (Check all that apply.) Hedge funds 63.6% Long-only U.S. equities 30.3 Long-only non-U.S. equities 24.2 Real estate 18.2 Private equity 24.2 Fixed income 24.2 Other 27.3 Where does portable alpha best ﬁt into an asset allocation? (Check all that apply.) Alternatives 59.5% Equities 46.0 Fixed income 35.1 Other 10.8 Who is best able to build and manage a portable-alpha portfolio? Consulting ﬁrm 17.1% Fund-of-hedge-funds manager 14.3 Hedge fund manager 28.6 Traditional money manager 14.3 Other 25.7 Do portable-alpha strategies add value? Always 1.5% Frequently 35.8 Occasionally 22.4 Never 1.5 Don’t know 38.8 18.8% 17.5 0.0 51.3 3.8 8.8 10.0% 5.0 25.0 13.8 25.0 21.3 Is any of your hedge fund allocation part of a portable-alpha portfolio? 24.1% Do you currently invest in hedge funds Yes No 75.9 or funds of hedge funds? Yes 62.0% Do you have any portable-alpha No 38.0 strategies in your investment portfolio? Yes 34.9% No 65.2 * Responses may not total 100 percent because of rounding. 6 • INSTITUTIONAL INVESTOR’S ALPHA • APRIL 2008

Table of Contents Feed for the Digital Edition of Institutional Investor's Alpha Magazine - April 2008

Institutional Investor's Alpha Magazine - April 2008 Contents Letter from the Editor Longs & Shorts Pension Corner: Here to Eternity The Good Guys: Voice of Hope Cover Story: The Kings of Cash Where the Money Is Into the Light Interview: Proceeding with Caution Strategies: A Convenient Truth Alpha Bytes: Village Voice Unhedged: Commentary: No Time for Complacency

Institutional Investor's Alpha Magazine - April 2008

For optimal viewing of this digital publication, please enable JavaScript and then refresh the page. If you would like to try to load the digital publication without using Flash Player detection, please click here.