Products July 29, 2008

All Cap Product Reduces Style, Market Cap Limits

Paradigm Asset Management Co. LLC, announced the development of an All Cap Core Opportunistic Strategy created to offer unconstrained exposure to a broad range of investment opportunities by removing style and market cap limitations.
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According to Greg Pai, managing director of Paradigm—a manager of quant-active equity strategies for institutional investors—the All Cap product is designed to leverage Paradigm’s entire research platform in a totally unconstrained fashion. “There are no style screens, filters or valuation metrics used that serve to limit the initial opportunity set,” said Pai in a press release. “Instead we apply our proprietary AlphaMax ranking research process to our entire universe that seeks to indentify direction of the overall market’s character and direction as defined by industries, risk factors, and securities.’

The investment objective for the All Cap Core product is to produce 500 to 700 basis points of annualized excess return with 500 to 600 basis points of tracking error relative to the Russell 3000 Index, the release said.

More information is available at www.paradigmasset.com.

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The Markets July 29, 2008

HNW Investors Report Hedge Fun

Wealthy Americans expressed more satisfaction with their alternative investments than traditional investments over the last 12 months, according to a Bank of America survey.
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Alternatives across the board—hedge funds, venture capital, real estate, and private equity—beat out the more traditional investments, including stocks and bonds, according to a release of the survey results.

Thirty percent of the high-net-worth survey respondents holding alternative investments expressed satisfaction with the more traditional investment categories in their portfolios. However, many noted greater satisfaction with their investments among the four major categories of alternative investments: 51% reported satisfaction with their hedge funds, 44% with venture capital, 41% with real estate, and 35% with private equity.

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Headlines Don’t Deter

The bad rap hedge funds might have been getting in the press has affected some but not all of seasoned hedge fund investors, according to the release. When asked if negative publicity about hedge funds impacted their investment decisions, 44% of those invested in hedge fund vehicles said no and only 20% said yes, according to the release.

“Our study demonstrates that, despite the portrayal of hedge fund investors as risk-takers investing in aggressive managers, many high-net-worth investors have a realistic understanding of the risks associated with their holdings and realize that large alternatives managers are institutional in their investment approach and the quality of their investment professionals,” said David Bailin, president, Bank of America Alternative Investment Solutions, in the release.

More than half (57%) of high-net-worth (HNW) individuals surveyed who invest in hedge funds expressed satisfaction with these vehicles since their initial investment (with only 5% expressing dissatisfaction).

Close to half of hedge fund investors said they are more likely to invest in a hedge fund registered with the U.S. Securities and Exchange Commission (SEC) than a non-registered fund. Overall, nearly six out of 10 wealthy individuals surveyed (59%) said they are more likely to invest in a registered hedge fund. Roughly half of the 400 overall respondents (48%) and about the same percentage of those invested in hedge funds (51%) said they were more likely to invest in a hedge fund that has been carefully screened.

“The number of alternative investment vehicles has grown exponentially, yet there are few easy ways for investors to assess fund performance or manager talent,” said Bailin. “This is why the industry must commit to educating investors, strengthening performance reporting, and providing standardized information to enable investors and their advisers to make better investment decisions.”

The Bank of America Survey of Attitudes Toward Alternative Investments studied more than 400 HNW investors with greater than $3 million in investable assets. Of the survey respondents, 267 held investments in alternatives overall, including 92 who held investments in hedge funds or hedge funds of funds.

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