- Best performing hedge fund strategy last year was convertible arbitrage: find anomalies between bond price and equity; short sellers preformed the worst
- Emerging markets gained 37.9% for 2009
Platinum ETF/ETN
- ETFs: depend on arbitrage mechanisms to guarantee its price tracks with NAV; during market turbulence spreads can widen
- ETN: unsecured debt; backed only by credit of issuer. has a maturity date. pays the amount specified by the tracking index at maturity less fees; can be shorted. Tax efficient, considered as a prepaid contract (e.g. forward)
- PGM US Equity traded at premium to tracking index, as the ETF didn't have a mandate to issue more shares, investors bid up; Difficult to execute because of the high borrow cost of the ETF
News
- SP500-ex financials expected to post 8% in Q4
- Historically: stock market has delivered higher returns with lower volatility when US unemployment was high
- BRICs contributed to half of global growth between 2000-2008.
- reconfirm Bernanke
Obama Regulatory Changes
- Mr Obama called for banks to be banned from running their own trading desks and “owning, investing in or sponsoring” hedge funds and private equity groups.
- Will take 3-5 years to debate, modify legislation
- Banks can hold no more than 10% of deposits (must lend!)
- Paul Volcker (chairman of the economy recovery advisory board)(80s, former Fed reserve chairman - before Greenspan, inflation was ridiculous, put fed funds rate to 15%, unemployment soared, inflation gone)
- Tim Geithner: treasury secretary
- TALF: term asset-backed securities loan facilities (ending Mar 31st): Fed lends cheap money to investors (hedge funds) to buy asset backed securities
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