Man Global Strategies (MGS) launched a seeding and incubation platform for U.S-based hedge fund managers this summer that could provide start-up managers with a boost as they develop their programs.
According to MGS, the Founders Program will combine a traditional seeding platform with a multi-strategy investment platform to offer portfolio managers capital and infrastructure support so they can concentrate exclusively on managing money.
Joining MGS in the venture is Plinthos Capital LLC, which will provide infrastructure support including: office space and IT support, trading execution technology, settlement and reconciliation infrastructure, risk management analytics, legal and compliance support and human resources capabilities. A spokesperson for MGS says, “For a manager to start a hedge fund from scratch is difficult. You have to have the proper infrastructure; it is no longer the days when you could just start trading.”
The spokesperson notes that Man has a long history incubating managers. MGS has $19 billion of client assets under management, some of which is allocated to managers who started out with a proprietary allocation from Man.
MGS notes in the release, “A successful portfolio manager will have the opportunity to manage significant capital on behalf of Man Investments, as well as the possibility to form an independent hedge fund business.”
Another bad month
August was another rough month for commodity trading advisors (CTA) as the preliminary Barclay flash report of programs managing at least $50 million showed a drop of 1.1% in the Barclay CTA Index, bringing the year to date total to 0.13%. The Barclay BTOP50 Index, an investable index that seeks to replicate the overall composition of the managed futures industry, performed worse, returning -2.99%.
Only three times in the 28-year history of the Barclay CTA Index has it produced a negative yearly return. Poor performance is often correlated with shrinking equity volatility. Usually equity volatility is a positive indicator for managed futures, but that has not been the case this year, particularly this summer as futures programs have suffered with the volatility spikes in July and August.
Florida smack down
The Commodity Futures Trading Commission (CFTC) announced progress in its ongoing battle against forex fraud, particularly with boiler rooms operating in South Florida. In September the CFTC announced the final disposition of two cases in U.S. District Court for the District of Southern Florida; CFTC vs. Madison Forex LLC, et al. and CFTC vs. World Market Advisors Inc., et al.; resulted in a series of orders requiring restitution to customers totaling $65 million, civil penalties of more than $25 million and disgorgement of more than $12.5 million.
