More from Managed Accounts USA in New York
Mar 15th, 2007 | Filed under: Hedge Fund Industry TrendsAlpha Male hangs out with managed account types in Lower Manhattan again today at Managed Accounts USA.
Jack Schwager, best-selling author and executive with Fortune Group, a fund of funds manager, just redeemed all his underlying hedge funds. But business is better than ever, he says.
Instead of investing in hedge funds by buying units directly in the LPs, he has directed all of his managers to establish accounts on a managed accounts platform. Now he essentially owns the same funds, but with the transparency, liquidity and valuation of which most funds of funds can only dream.
A lack of transparency is the root cause for all blow-ups and frauds in the hedge fund industry, he says.
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I think Jack is on crack. I am going to post on this topic over at Information Arbitrage this week (www.informationarbitrage.com). If Jack is talking about commodities funds, ok (as this segment industry pretty much grew up on managed accounts), but I’d like to see hot non-commodities funds fall into line pursuant to his platform objectives. Supply and demand would argue that he is wrong in the current environment, where demand for top managers far exceeds supply, ergo, they can tell those who demand managed accounts to take a long walk off a short pier. Should the supply/demand imbalance flip, then I’d agree that investors have the power to demand such things that are viewed as undesirable by managers. But until that happens, he is setting himself up for a massive game of adverse selection, IMHO.
I believe Jack is very correct , and this transparency will stop alot of the expensive nonsenense, and games going on wihin Funds. It ma even reduce the Trading so reduce internal costs , as there is much Trading for thre sake of generating. As for not being suitable for stocks, well soem managers maybe worreid since it will expose them to what research they are truly listening to- and what Chinese wall does not exist?