.Praise for Hedge Fund of Funds Investing: An Investor’s Guide
by Joseph G. Nicholas
“Hedge funds of funds are at the leading edge of the broad move into hedge investing by the mainstream of private wealth management.
In one way or another, business activity must be financed. Without finance to support
their fixed assets and working capital requirements, businesses could not exist. There are
three primary sources of finance for companies:
● a cash surplus from operating activities
● new equity funding
● borrowing from bank and non-bank sources. Non-bank sources are mainly investors in
the capital markets who subscribe for bonds and other securities issued by companies.
The high data frequency not only helps to validate our results, but
also allows us to advance some analysis. For example, in Chapter 5, the fund weekly data are
used to calculate the risk-adjusted abnormal return for each year from 2000-2007. Then, it
turns into a panel data allowing us to perform a multidimensional (panel) regression on fund
Furthermore, this is the first empirical study of an emerging market which includes
flexible funds in the sample. In theory, a flexible fund is in some ways similar to equity funds
since its main assets are also stocks.
Evaluating mutual fund performance is a topic of long-standing interest in the academic
literature, but few if any studies have addressed the selection of an optimal portfolio of funds.
Instead of using the historical data to estimate performance measures or produce fund rank-
ings, this study uses the data to explore the mutual-fund investment decision.
Remaining Funds, which account for €147 billion of shares/units in issue, consist primarily
of mixed funds, but also include real estate and other unclassified funds. This category has
performed positively in Q1 2012, second only to equity funds in terms of revaluations, with
asset growth of €8.9 billion or 6.4 per cent. Remaining funds were the strongest performing
category in Q4 2011, and despite a continued resilient performance, the category attracted
negligible net new investment of €0.1 billion.
Bond Funds, which account for €320.7 billion of shares/units in issue, and are therefore the
largest fund category, experienced minor positive revaluations of €1.7 billion, but mostly
benefitted from increased confidence in bonds by recording significant new investment of
€12 billion, the highest relative inflow of any category.
Hedge Funds, which account for €73.2 billion of shares/units in issue, also benefitted from
positive revaluations and net inflows. Revaluations at €3 billion, or 4.
Progress Microfinance has been implemented through two actions, both of which are managed by
EIF. They are: 1) a guarantee instrument to providers of micro-credit (funded entirely by the
European Commission); and 2) a structured investment vehicle set up under Luxembourg law, the
European Progress Microfinance Fund, funded by the European Commission and the EIB.
The smart money hypothesis states that investor money is “smart” enough
to f low to funds that will outperform in the future, that is, that investors have
genuine fund selection ability.
1 Research into smart money in the mutual fund
context was initiated by Gruber (1996). His aim is to understand the continued
expansion of the actively managed mutual fund sector despite the widespread
evidence that on average active fundmanagers do not add value.
This study is distinct from pervious studies in two folds. Firstly, this study fills the gap of
limited research on emerging mutual funds. Secondly, this study explores determinants of mutual fund
growth at the asset management corporation level. Research on emerging market mutual funds are
performed at mutual fund level. Nazir et.al (2010) assessed determinants of mutual fund growth
focusing on equity funds in Pakistan. Analysis of Thai mutual fund industry and competitive situation
are elaborated in section 2. Data, model, and methodology are discussed in section 3.
Four major types of mutual funds offered by Thai AMCs are fixed income, equity, mixed, and
property funds. Table 3 exhibits size (in million Baht) and proportion of each fund type offered by
asset management corporations in Thailand. Two types of fund dominate asset management industry in
Thailand namely, fixed income and equity funds. Fixed income funds outweigh other types of funds by
having the largest amount of asset under management (AUM) with drastic growth from 640 billion
Baht in 2006 to 1.23 trillion Baht in 20103
AUM of the equity funds increased nearly three folds from approximately 99 billion Baht in
2006 to 261 billion Baht in 2010. Unlike developed capital markets, proportion of equity funds to total
asset under management of the industry in Thailand is stable around 11% and 15% in 2006 and 2010.
Higher value of asset under management of equity funds can be decomposed into two factors, which
are valuation and new flow factors. As Thai stock market index (SET) had increased from the vicinity
of 700 points in 2006 to the level of 1,000 points in 2010, higher value in equity...
Investment funds worldwide experienced an increase in net flows in the first quarter of 2012 to register
net inflows of €193 billion, up from €83 billion in the previous quarter. Long-term funds recorded net
inflows of €248 billion, a considerable increase compared to the net inflows of €11 billion recorded in
the previous quarter.
Flows out of equity funds worldwide were €6 billion in the first quarter, after experiencing €52 billion
of net outflows in the fourth quarter of 2011.
In addition, the Volcker Rule does not apply to Banking Entity’s investing in or sponsoring hedge funds
or private equity funds that occur solely outside the United States as long as (i) no ownership interest
in such funds is offered to U.S. residents, and (ii) the Banking Entity is not directly or indirectly
controlled by another Banking Entity that is organized under the laws of the United States or a U.S.
Under the Act, the Federal banking agencies, the SEC, the CFTC and the Board of Governors of the
Federal Reserve System (the “Fed”) will coordinate to...
Zheng (1999) further develops the analyses of Gruber (1996), expanding the
data set to cover the universe of all equity funds between 1970 and 1993. She
finds that funds that enjoy positive net f lows subsequently perform better on
a risk-adjusted basis than funds that experience negative net f lows. She also
examines whether a trading strategy could be devised based on the predictive
ability of net f lows and finds evidence that information on net f lows into smal
funds could be used to make risk-adjusted profits....
One of the most fundamental Dodd-Frank changes
affecting private funds is the elimination of the “private
advisers” exemption from registration with the SEC as an
investment adviser (also known as the “15-client” exemp-
tion). In its place, Dodd-Frank created several new, but
less comprehensive, exemptions, with the result that most
Equity and fixed income funds play an important role for the impressive Thai mutual fund
growth. With an in depth analysis, we found two major facts. Firstly, Thai mutual fund industry is
concentrated in fixed income mutual funds especially short-term money market funds. Secondly,
approximately 50% of the AUM invested in Thai equity mutual funds are from LTF and RMF or
growth in equity mutual funds is affected by tax incentive.
As reported in the financial statements of each AMC, fund expenses can be divided into
management fees and administrative fees. Expense ratio is the ratio between total fund expenses to
fund’s assets. Administrative or operating expense excluded management fees of AMCs managing
large number of funds are considered to be constant. Thus, when management fee is excluded, fund
expense ratio is lower. Fund expenses excluded management fees indicate fund operation efficiency.
Management fees measures security selection skills of fund manager.
The Reserve Fund was only the second MMMF to break the buck since the SEC adopted rules governing
these funds in 1983, with the first being the Community Bankers US Government Fund in 1994.
funds had losses significant enough to cause them to break the buck and sponsors that were unable to
provide non-contractual support to prevent the losses from being passed on to shareholders. However, it
was the lack of sponsor support for these two funds that was more unusual than the underlying losses
suffered, as credit events have impacted many more than two funds in the...
A further barrier to pension funds‟ investment in green projects is their lack of knowledge and
experience not only with „green‟ projects, but with infrastructure investments in general (which green
projects are often a subsector of) and the financing vehicles involved (such as private equity funds or
Our sample contains a total of 1301 open-end, no-load U.S. domestic equity mutual
funds, which include actively managed funds, index funds, sector funds, and ETFs
(exchange traded funds). Monthly net returns, as well as annual turnover and expense
ratios for the funds, are obtained from the Center for Research in Security Prices (CRSP)
mutual fund database over the sample period January 1975–December 2002. Additional
data on fund investment objectives are obtained from the Thomson/CDA Spectrum ﬁles.