November 2006
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November 22, 2006
US University Endowments Pile Into Hedge Funds
The U.S.'s 53 largest university endowments have put $40 billion into hedge-fund investments, according to a report by data provider and publisher InvestHedge.
Harvard University is the largest investor of its type in hedge funds, with roughly $5 billion - or 17% of its $29.2 billion endowment.
The University of Virginia has the highest allocation, with $1.7 billion of its $3.4 billion fund - 51.7% - in hedge funds. At least five more endowments have more than 30% of their total assets in hedge funds.
In all, the 53 endowments, which all have at least $1 billion in assets, control about 3% of the world's estimated $1.3 trillion in hedge fund assets.
University endowments have been piling into hedge funds to boost their returns and diversify their holdings from the typical mix of stocks, equities and real estate.
Their models of success are the endowment funds run by Harvard University and Yale University, which were early investors in hedge funds and have consistently posted double-digit returns from their holdings.
The average annualized return for the 53 endowments across all assets is 15.3% , InvestHedge said.
In addition to Harvard and Yale, at least eight more endowments have at least $1 billion invested in hedge funds.
-Dow Jones-
Posted by su at 11:44 AM | Comments (0)
November 14, 2006
Korea offshore funds top $10 billion
Korean investors have put more than $10 billion into mutual funds domiciled offshore, investing in international asset classes, according to statistics from the Association Management Association of Korea (Amak).
That marks a nearly 50% rise over the course of this year. Offshore funds accounted for approximately $7 billion at the end of 2005, and $4 billion at the end of 2004.
This is in addition to another $10 billion that has gone into locally domiciled funds that invest in international assets and hedge back to won, according to Jeon Kil-soo, CEO at Schroder Investment Management’s Korea business in Seoul. Korean investors have therefore put $20 billion into international securities.
This rapid increase will continue, predicts Kim Jae-keun, researcher at Zeroin, a local funds rating agency. “Investors in Korea have increased interest in global markets...for hedging the geopolitical risk by North Korea,” he says. He also notes that with an aging society and the expansion of wealth, individuals are more focused on better returns for their retirement. “But the returns onshore are worse than in other global markets, such as Bric's [big emerging markets],” he notes.
The November edition of AsianInvestor magazine features a detailed look at Koreans’ international investing habits.
The Amak statistics show the demand is overwhelmingly for equity funds, particularly those focused on single countries such as Japan, China and India, or global emerging-market concepts such as Bric (Brazil, Russia, India, China).
Kim worries that this means investors haven’t diversified their portfolios as much as they may think. He would like to see investors consider a broader array of sectors and regions. “Some also need to hedge their currency risk,” he says.
Fidelity Investments and Merrill Lynch Investment Managers (now acquired by BlackRock) are the big winners. Fidelity has seen its offshore assets from Korea explode from $987 million in early 2005 to $5.3 billion, a rise of more than 500%, accounting for more than half of the total offshore universe. MLIM has also seen its offshore component quadruple from $572 million in early 2005 to nearly $2 billion.
Other global houses, however, have not capitalised on this trend. According to Amak, Franklin Templeton’s offshore AUM in Korea rose from $492 million in early 2005 to only $591 million now. And others have actually lost ground: HSBC, Prudential Financial and Schroders’ local businesses have seen offshore AUM declines over the past two years.
The other big gainers are the banks, which through their wealth-management divisions are churning out offshore equity funds – although this is not so much a change as a deepening trend. According to Amak, banks such as Kookmin and Woori now account for $7.7 billion’s worth of offshore fund sales. Two years ago, banks accounted for about 65% of offshore sales.
Securities companies have failed to capitalise on this trend. First, banks sell almost entirely equity funds. Of the $2.3 billion of offshore fund sales by brokers, nearly a quarter are in bond products, which offer lower fees. Their participation in offshore fund sales has declined from 35% of the market to 23% in under two years.
David Mitchell, head of marketing for Fidelity in Korea, attributes the firm’s success to the time and resources it has made to training distributors, which include the leading commercial banks. He expects the focus on hot markets will continue, but says the firm is now promoting a global real-estate fund. “We’re educating our distributors about the opportunities in global property investments,” he says.
-FinanaceAsia-
Posted by su at 11:11 AM | Comments (0)