LONDON - An estimated $5 billion was redeemed from hedge funds and managed futures funds in the first half of 1995, according to TASS Management Ltd.
"The strong showing by the U.S. stock market during the first half (of this year) clearly caught many hedge fund managers off guard and probably contributed to the redemptions experienced by the industry," Nicola Meaden, chief executive of TASS, said in a prepared statement. As a result, TASS estimates the total size of the two industries was $75 billion as of June 30.
Redemptions were in part caused by the lackluster performance registered by hedge fund and managed futures funds in a period when general stock market indexes were up about 20%.
Understandably, short sellers were down in the period, reporting returns from -13% to 1.4%.
But macro-style managers, who trade in a variety of markets using a top-down approach, also had a tough first half, on average reporting essentially flat returns: 1.4% for WPG-Hennessee Hedge Fund Advisory, -11.4% for Van Hedge Fund Advisors Inc., and median returns of -0.49% at MAR/Hedge. TASS' index of commodity trading advisers showed a loss of about 1% in the first half. Results vary because of differences in the content of respective databases.
ROCHESTER, N.Y. - Eastman Kodak Co.'s move to reduce its use of derivatives strategies was made after consulting with Ibbotson Associates Inc., Chicago, industry sources say.
Kodak officials could not be reached to comment but in general do not discuss pension fund activities.
Scott Lummer, managing director at Ibbotson confirmed that Ibbotson did an overall review of the pension fund.
He declined to comment on specifics.
SAN FRANCISCO - Most companies didn't change their hedging practices following the serious risk management failures reported in 1994, according to a new survey by Bank of America.
The "events caused over 50% to review their hedging policies and practices, nearly 40% presented their review findings to senior management, and one in four submitted those findings to boards of directors; but in the majority of responding companies, no significant changes were implemented," said Arnold Miyamoto, vice president and manager-foreign exchange risk analysis.
Some 50% of the companies do not have a risk management performance benchmark, although 90% review their positions at least monthly and 30% review them daily.
TORONTO - The investment advisory committee for the Pension Commission of Ontario put together an article offering basic perspectives and advice for pension plan sponsors on derivatives usage.
Published in a PCO Bulletin, the article suggests sponsors look at seven areas: strategy, instruments, sources and magnitude of risks, leverage, pricing, monitoring, and expertise.
Bruce Macnaughton, director of policy and research for the PCO, said the guidelines might be especially useful for smaller plan sponsors. Smaller sponsors are more likely to be seeking derivatives guidance following the well-publicized losses taken at various institutions worldwide, he said.
LONDON - The London International Financial Futures and Options Exchange will automate individual equity options trading sometime next year.
The intention is to have a "fully integrated order-driven market in which users are able to trade both cash and equity derivatives through a single (computer) screen," said Jack Wigglesworth, LIFFE chairman, in a prepared statement.
LIFFE executives hope this move, coupled with changes in the cash market for equities to increase trade transparency, will spur greater use of the U.K. individual options markets.
NEW YORK - Global Advanced Technologies and Kroll Associates formed a joint venture to assist public and private institutions to evaluate business and investment controls and risk.
The linkup came as a result of both working to assist an investigation of the treasurer's office in Orange County, Calif., according to a statement. The venture, called The Risk Group, will offer its services to both large and small institutions.
GAT is a fixed-income analytics and consulting firm, while Kroll Associates is a private investigation consultant.
CHICAGO - The futures industry is falling behind in terms of technology, and because of that it risks becoming obsolete, said Laurence E. Mollner, chairman of the Futures Industry Association, and executive vice president of Dean Witter Reynolds.
If the futures industry "doesn't get serious about technology," it won't be around in 10 years, Mr. Mollner said, speaking at an FIA luncheon.
Even if futures industry participants tackle issues related to technology, the eventual form of the futures industry is likely to change dramatically, he said.
CHICAGO - In a joint effort, the Chicago Mercantile Exchange and the Chicago Board Options Exchange have created an index of 30 publicly traded Mexican stocks, with the two exchanges planning to offer a number of related futures, options and futures options.
The CME's board voted to file for regulatory approval to trade both a futures contract on the index and options on the index, called the Mexico 30 Index. The CBOE already has filed for regulatory approval to trade cash-settled options on the index.
The capitalization-weighted index will be maintained by the CME and the CBOE. As of the end of July, class L shares of Telefonos de Mexico S.A. represented 24% of the index, and class A1 shares of Grupo Carso S.A. de C.V. represented 14%.
CHICAGO - The Chicago Stock Exchange hired Andrew Kolinsky as senior vice president, sales and marketing, replacing James A. Gary, who took a job with The Chicago Corp.
Mr. Kolinsky was a first vice president, equity product marketing for the Philadelphia Stock Exchange.
James Farmer will replace Mr. Kolinsky at the Philadelphia exchange.
Before the appointment, he was senior research analyst in the exchange's new product development department.
Mr. Gary is an executive vice president and director in charge of Chicago Corp.'s futures and foreign exchange activity.
Mr. Gary replaces William A. Walser, who retired.