Hedge Connection will be joining NVIDIA at the GPU Technology Conference March 18-21 in San Jose, CA. Their Emerging Companies Summit showcases promising companies sharing the latest disruptive technologies revolutionizing mobile and computer industries and will have a finance track. Below is blog posting from NVIDIA.

Hedge Connection will join several dozen other companies sharing their ideas at the Emerging Companies Summit, at the fourth annual GPU Technology Conference, to be held in San Jose, Calif., next March.

Video gamers rely on GPUs to deliver dazzling fast-twitch action. Scientists use banks of GPUs to simulate reactor cores and predict changes in global climate. That may sound like an unlikely set of skills to bring to the world of high finance — but it turns out GPUs are a perfect fit.

Bankers, hedge funds, actuaries, and other hyper-connected capitalists are increasingly relying on GPUs to help manage money. Just talk to Rob Arthurs, CEO of Hedge Connection, which helps bring together fund managers and qualified investors. “Why wouldn’t hedge fund managers want the same tools being used to build supercomputers?” Arthurs asks.

GPUs have long been used to tackle one of the toughest computing chores in modern finance: Monte Carlo simulations. Originally developed by nuclear scientists at the Los Alamos National Laboratory, Monte Carlo simulations can be used to model complex systems. Because GPUs are parallel processors – they rely on large numbers of cores working on different parts of a problem simultaneously — they can run algorithms involved in such simulations more efficiently than machines that rely on CPUs alone.

The result: GPUs are now being used by some of the finance industry’s biggest players. In 2008, market news giant Bloomberg began using GPUs to help it grind through the Monte Carlo simulations it uses to calculate prices for hard-to-price securities. Standard Live Canada uses GPUs to help it manage complex financial instruments such as derivatives.

And in 2011, JP Morgan became the first major bank to detail its use of GPUs publicly, claiming that NVIDIA Tesla GPUs helped it tackle calculations Monte Carlo and finite difference algorithms as much as 100 times faster while slashing the cost of running these calculations by 80%.

Keeping it low key

While major financial players are making headlines, hedge funds have been quietly scooping up GPUs as well. Few will detail how they use them: the most successful hedge funds don’t want to give competitors an edge, Arthurs explains. “They really don’t like talking about it,” he says.

While the banks and hedge funds using GPUs are staying quiet, the companies supplying them with the software needed to unlock the power of GPUs are proliferating. These tools range from powerful, general purpose tools widely used by mathematicians and scientists — such as Wolfram Mathematica — to far more specialized products. Synerscope (see “Synerscope: Data Analysis for the Rest of Us”) use GPUs to help financial institutions — and other customers — visualize complex data sets. Murex — whom we’ll profile in an upcoming post — uses GPUs to speed up the sophisticated analytics software used to assess the risk of a portfolio.

Coupled with powerful new tools, even a handful of GPUs can give hedge funds computing power possessed by only the most advanced supercomputers a decade ago. And a few are buying scores — even hundreds — of GPUs. “There’s one that likes to say they can turn electricity into money,” Arthurs says.

The release of Hedge Connection’s new social database gives hedge fund managers and their marketers ways to connect with investors like never before.

On the database side of the site, each fund profile now has a Follow button (much like you can Follow a company on LinkedIn) and a Followers area. When an investor clicks the Follow button it will let others know of their interest in the fund. It does not necessarily mean they are invested in the fund; it is simply a passive way of sharing their interest. If you have a hedge fund listed on Hedge Connection, either through Morningstar or directly through us, a Follow button has been added to your page and Investors can Follow your fund.

Additionally, a new Followers area has been added to your fund management area (where you update your performance numbers etc), and in this area all the investors that have Followed your fund will be listed. You will receive an email notification each time an investor Follows one your funds (a new Settings tab will let you control email notifications). At this point you can login and post an Update to the investors Following you. The update will be posted in the investor’s Activity Stream and can be anything from stating your latest performance numbers to your thoughts on the market.

Managers are also invited to register for the Boardroom side of Hedge Connection. Here they can view our entire Morningstar database of funds and connect with the investors.  Those managers running fund of funds will be interested in joining our Executives as a promotional opportunity and should contact us for more information.

Make sure you check out our informational page and our FAQs for further details. If you have forgotten your login credentials, please either use the Forgot your Password function or email info@hedgeconnection.com

We are pleased to announce the release of Hedge Connection’s latest features . We have propelled the traditional hedge fund database into the modern world. Investors can now use the familiar social tools (as found on Twitter, LinkedIn etc) to gain a deeper, more powerful insight into our Morningstar database of thousands of funds. At the center of the social activity will be the Boardroom – an area to discover new funds and participate in the conversation with other Investors. Registration is free and open to qualified investors.

Managers that have their fund posted on our database now have an extraordinary opportunity to see who is interested in their fund and interact with them.

Below are some key features in this new and exciting database.

Follow Funds

Each fund listing on the database now has a Follow button and a Followers area. Let others know of your interest in a particular fund see others that share your interest – and Follow them as well.

Activity Streams

At the center of the interactions is the Boardroom. This area contains the activity streams of funds and investors that you are following. It’s an area of discovery – find new funds, see what others are saying, participate in the conversation.

Investor Profiles

Each Hedge Connection member has a profile. Here you can see what funds they are Following, which Investors they are Following, their investment philosophy and biography.

Executives

Integral to the Boardroom experience are our Executives. These are professionals in the hedge fund industry, selected by Hedge Connection, to lead the conversation and activity in the Boardroom.

Fund Interaction with Investors

Now, for the first time on any industry database, a fund manager can interact directly with investors on the site. When an investor Follows a fund, the manager will receive an email notification. The manager can now log into their account and post updates on their fund, such as performance updates or views on the market. Investors receive these updates as part of their Activity Stream in the Boardroom.

Contact us for more information, check out our Frequently Asked Questions or download our  new brochure.

Guest post from the Hennessee Group.

HEDGE FUNDS ADVANCED +1.45% IN DECEMBER

Hedge Funds Finish the Year with Gains and Outperform the S&P 500 in Q4

January 9, 2012 – New York, NY – Hennessee Group LLC, an adviser to hedge fund investors, announced today that the Hennessee Hedge Fund Index advanced +1.45% in December (+6.99% YTD), while the S&P 500 increased +0.71% (+13.40% YTD), the Dow Jones Industrial Average gained +0.60% (+7.26% YTD), and the NASDAQ Composite Index advanced +0.31% (+15.92% YTD).  Bonds were down, as the Barclays Aggregate Bond Index declined -0.14% (+4.23% YTD).

“Hedge funds continued to perform well in December, adding to their gains for the year,” commented Charles Gradante, Managing Principal of Hennessee Group. “Hedge fund managers benefited from both increased exposure levels and alpha generation from security selection as high correlations continued to decline among stocks with attractive and unattractive valuations.  The fourth quarter was the best quarter of the year for hedge funds as they outperformed the S&P by more than +2.5% on an absolute basis (+1.70% versus -1.01%).”

“2012 was another year where global markets were driven by macro news.  Global stimulus outweighed renewed concerns about the European sovereign debt crisis, a global economic slowdown, and political uncertainty in the U.S.  Fears of a recession declined dramatically and risk assets rallied,” commented Charles Gradante.  “Hedge funds posted a respectable year, but underperformed broad equity markets due to conservative positioning early on.  During the first quarter, below-average exposures led to reduced up-market capture.  In May, European worries resurfaced in a dramatic sell off, resulting in a reduction of risk and leading to underperformance in the relief rally that followed.  However, the last six months have been encouraging.  Despite volatile macro events, such as political uncertainty and fiscal cliff in the U.S., managers were able to capture a good portion of upside and generated alpha, which bodes well for our outlook for hedge fund performance in 2013.”

Equity long/short managers were up in December, as the Hennessee Long/Short Equity Index advanced +0.84% (+5.82% YTD).   The looming fiscal cliff put pressure on equity markets, but all markets were able to add to their gains for the year in December.  During the month, the best performing sectors were financials (+4.59%), materials (+2.89%) and industrials (+2.26%).  There was significant dispersion as several sectors were negative, including consumer staples (-2.54%), telecom (-1.09%) and healthcare (-0.36%).  For the year, equity markets were again volatile, dominated by macro news and geopolitical events that resulted in “risk on” or “risk off” investing.  Despite some resolution of the ‘fiscal cliff’ in January, managers continue to be concerned about political uncertainty.  The debt-ceiling and spending cuts will have to be addressed in the short term.  In addition, the longer term fiscal situation, slowing corporate earnings, and global weakness should become areas of focus.  Despite these challenges, managers are cautiously optimistic on stock prices for 2013 due to positive economic growth and continued stimulus.  Hedge funds have been increasing net and gross exposures following the U.S. presidential election as there is slightly less uncertainty about the future. In addition, managers state that equities are still fairly valued at 12.6x times projected earnings and look attractive relative to other asset classes, specifically fixed-income yields.

“Investors started the year cautious and had their net exposures down at relatively low levels.  They underperformed when the markets rallied +12% in the first quarter, but they performed consistent with their net exposure,” said Lee Hennessee, Managing Principal of Hennessee Group.  “At the time, reduced exposures were warranted due to concerns about Europe.  Managers were more focused on protecting capital in a potential sell off and were willing to miss out on upside that was driven by new stimulus efforts and not company fundamentals.”

The Hennessee Arbitrage/Event Driven Index advanced +1.61% (+9.30% YTD) in December, and was the top performing sub-strategy for the year. Credit markets experienced their first negative month since March, as the Barclays Aggregate Bond Index fell -0.14% (+4.23% YTD).  Treasuries were negative as yields increased and the yield curve steepened.  Confidence about a resolution of the fiscal cliff led to the yield on the 10 Year increasing 16 basis points from +1.62% to +1.78%.  The Barclays High Yield Credit Bond Index increased +1.58% (+15.81% YTD).  Gains came largely from price increases rather than carry.  High yield spreads declined more than Treasuries, as the spread of the Bank of America Merrill Lynch High Yield Master Index over Treasuries tightened 34 basis points from 5.65% to 5.31%. The Hennessee Distressed Index increased +3.10% in December (+13.61% YTD).  Distressed managers experienced gains as equity markets rallied and had contributions from late-stage bankruptcies and post-reorg positions.  The Hennessee Merger Arbitrage Index increased +1.85% in December (+6.26% YTD). Merger funds generated gains amid a robust M&A environment and several special dividend investments.  Global deal volume reached $2.6 trillion in 2012, roughly in line with volume in 2011.  In December, managers benefited from several new deals, including ICE’s $8.2 billion acquisition of the New York Stock Exchange and Sprint’s $2.2 billion acquisition of Clearwire. The Hennessee Convertible Arbitrage Index advanced +0.71% (+10.46% YTD).   Convertible arbitrage managers benefited from positive equity markets and tighter credit spreads.

“Despite the pressure on gold and silver bullion prices during December, many managers believe that there are several positive factors supporting a bullish case for precious metals in 2013,” commented Gradante. “Printing of money on a global basis in an effort to keep interest rates low and debase currencies combined with economic weakness, the need for diversification by central banks, and supply constraints should lead to higher prices for precious metals in 2013. A number of macro managers are bullish on gold reaching over $2,000 an ounce in 2013.”

The Hennessee Global/Macro Index increased +2.29% (+6.21% YTD) in December.  Global equities posted gains, as the MSCI All-Country World Index ended the month up +2.14% (+13.43% YTD), led by China, Japan, and Russia.  International hedge fund managers posted gains, as the Hennessee International Index gained +1.95% (+10.95% YTD).  Emerging markets were also up, as the MSCI Emerging Markets Index added +4.78% (+15.15% YTD).  China stocks staged an unexpected December rally, increasing +15%.  Hedge fund managers were also positive, but lagged the benchmark due to conservative positioning, as the Hennessee Emerging Market Index was up +3.49% (+5.20% YTD).  Macro managers were up in December, as the Hennessee Macro Index increased +1.26% (+0.92% YTD).  December was a good month for macro managers, marking the end of a challenging year as managers struggled to identify investable trends.  In December, most managers were positioned for a rally in risk assets on the expectation of positive resolution of the U.S. fiscal cliff.  During the month, managers generated gains in fixed income as U.S. yields rose for most maturities in anticipation of the fiscal cliff resolution, while high yield credit continued to tighten.  Managers continued to benefit from the sharp rise of the U.S. dollar versus the Japanese Yen following Japanese elections and in anticipation of continued stimulus from the Bank of Japan.  The U.S. dollar fell against the Euro on positive news regarding the European banking & sovereign debt crisis.  In commodities, gold and most metals declined while oil posted gains.

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About the Hennessee Group LLC <http://www.hennesseegroup.com/>

Hennessee Group LLC is a Registered Investment Adviser that consults direct investors in hedge funds on asset allocation, manager selection, and ongoing monitoring of hedge fund managers.  Hennessee Group LLC is not a tracker of hedge funds.  The Hennessee Hedge Fund Indices <http://www.hennesseegroup.com/indices/index.html> ® are for the sole purpose of benchmarking individual hedge fund manager performance.  The Hennessee Group does not sell a hedge fund-of-funds product nor does it market individual hedge fund managers.    For additional Hennessee Group Press Releases <http://www.hennesseegroup.com/releases/index.html> , please visit the Hennessee Group’s website.  The Hennessee Group also publishes the Hennessee Hedge Fund Review <http://www.hennesseegroup.com/hhfr/index.html> monthly, which provides a comprehensive hedge fund performance review, statistics, and market analysis; all of which is value added to hedge fund managers and investors alike.

Description of Hennessee Hedge Fund <http://www.hennesseegroup.com/indices/index.html> Indices <http://www.hennesseegroup.com/indices/index.html> ®

The Hennessee Hedge Fund Indices <http://www.hennesseegroup.com/indices/index.html> ® are calculated from performance data reported to the Hennessee Group by a diversified group of hedge funds.  The Hennessee Hedge Fund Index <http://www.hennesseegroup.com/indices/index.html> is an equally weighted average of the funds in the Hennessee Hedge Fund Indices®. The funds in the Hennessee Hedge Fund Index <http://www.hennesseegroup.com/indices/index.html> are derived from the Hennessee Group’s database of hedge funds and are net of fees and unaudited.  Past performance is no guarantee of future returns.  ALL RIGHTS RESERVED. This material is for general information only and is not an offer or solicitation to buy or sell any security including any interest in a hedge fund.

On September 11th, 2012, Battle of the Quants – London 2012 awarded the Global top performing Quantitative Hedge Funds with three prestigious fund category awards: Relative Value and High Frequency, Directional and Event Driven.

Each winner was presented with a gold medal by world famous Olympic Gold Medalist Dani King, keeping in touch with the fantastic summer of British Olympic Sport held in London. In total, across all categories, 13 Fund Managers were nominated with 18 individual fund award applications.

The gold medal winner for Top Performing 2012 YTD Relative Value and High Frequency Hedge Fund was awarded to Jasper Anderluh, Principal at HiQ Invest in the HiQ Invest Market Neutral Fund with a 15.1% 2012 YTD return.

HiQ Invest Market Neutral Fund is an investment fund that focuses on trading short-term and medium-term equity price anomalies. HiQ’s strategy is highly liquid and market neutral with equal long and short positions which allows to generate alpha regardless of market direction or conditions.

The fund’s objective is to provide consistent and superior risk- adjusted returns over the long-term. Based on its systematic value models, the fund will take long and short positions in equities which have deviated from their theoretical value. The fund’s models attribute a live and dynamic theoretical value for each equity in which it participates.
Since inception on 14th of August 2007, HiQ has had a net return of +95,59% and according to Bloomberg, currently number 1 in the worldwide statistical arbitrage class.

The gold medal winner for Top Performing 2012 YTD Directional Hedge Fund was awarded to Karsten Schroeder, CEO at Amplitude Capital in the Amplitude Klassik Fund with a 17.05% 2012 YTD return.

Amplitude Klassik Fund is an open-end fund incorporated in Cayman Islands. The Fund trades liquid exchange-traded futures across asset classes: equities, FX, fixed income and commodities. The strategy is based on a systematic and fully automated directional program which uses extensive quantitative analysis of real-time price data and sophisticated portfolio methodology.

The gold medal winner for Top Performing 2012 YTD Event Driven Hedge Fund was awarded to Carlos Ontaneda, CFA: Head of Multi Asset and Total Return at Pictet Asset Management in the Pictet Absolute Return Global Diversified Fund with a 2012 YTD Return of 6.13%.

Pictet uses 2 independent strategies, a dynamic beta strategy and a portable alpha strategy.

“In the beta part we build a dynamic portfolio of multiple asset classes (equities, bonds, commodities, currencies and credit) using statistical models to time our exposure to these various asset classes. In the alpha strategy, we select internal managers within Pictet and extract their value added by shorting out their respective benchmarks. We use both quantitative and qualitative selection filters to pick these managers.” (Carlos Ontaneda, August 2012).

The conditions for entering were:
• AUM > $25USD
• Fund launched before 2011
• 100% quantitative driven
• Participating manager in the Battle of the Quants – London 2012

Battle of the Quants, now continues its conference in Hong Kong on December 12th & 13th, 2012.

For additional information, please email press@battleofthequants.com

Some welcome news out of McKinsey on the growth of the alternatives industry: The Mainstreaming of Alternative Investments Fueling the Next Wave of Growth in Asset Management

-Institutional investors to have 25% of portfolios in alternatives by end of 2013

-Growth of alternatives in retail market

-Increasing shift from relative benchmarks to absolute return

-Traditional asset managers move to offering alternatives and vice versa (alternative managers offering traditional products)

-Strongest growth expected: for HFs in US, PE in Europe

-Increasing trend to bucket HF strategies with underlying asset classes

View the report.

Guest post from the Hennessee Group.

HEDGE FUNDS ADVANCED +0.97% IN AUGUST

Hedge Funds Get More Bullish; Benefit from “Risk On” Rally

September 10, 2012 – New York, NY – Hennessee Group LLC, an adviser to hedge fund investors, announced today that the Hennessee Hedge Fund Index increased +0.97% in August (+3.82% YTD), while the S&P 500 gained +1.98% (+11.85% YTD), the Dow Jones Industrial Average advanced +0.63% (+7.15% YTD), and the NASDAQ Composite Index increased +4.34% (+17.73% YTD).  Bonds were also up, as the Barclays Aggregate Bond Index increased +0.07% (+3.86% YTD) and the Barclays High Yield Credit Bond Index increased +1.17% (+10.58% YTD).

“Hedge funds benefited from the rally in risk assets, as many funds strategically increased net exposure in July,” commentedCharles Gradante, Managing Principal of Hennessee Group. “While hedge funds are mindful of risks related to the ongoing European banking and sovereign debt crisis, they have become more comfortable with the short-term outlook and have increased their risk tolerance.”

“Hedge funds continue to learn a hard lesson.  ‘Don’t fight the Fed… Regardless of Fundamentals’ should be the bumper sticker for this market.  Sitting in cash, being defensive and waiting for the other shoe to drop has been a poor strategy during the last 12 months,” commented Charles Gradante. “Hedge fund managers remain reluctant to increase risk taking before improvement of fundamentals.  They are also reluctant to change their investment philosophy in order to chase returns.  However, as the fourth quarter is rapidly approaching, we will see more managers under pressure to generate performance and we could see equity markets continue to rally.”

“The majority of hedge fund strategies were positive in August, the third positive month in a row. Long/short equity, credit and event driven managers all performed well, while short-biased and Asia-Pacific were laggards” said Lee Hennessee, Managing Principal of Hennessee Group. “Hedge funds continue to lag equity markets for the year, as many failed to participate in the strong market rally of the first quarter and third quarter.”

Equity long/short managers were up in August, as the Hennessee Long/Short Equity Index advanced +1.04% (+3.75% YTD). Equities trended steadily higher and credit spreads continued to tighten.  Comments made in July by European Central Bank President Draghi that the ECB would do “whatever it takes” continued to drive positive investor sentiment and direct intervention in European government bond markets became increasingly likely.  In addition, expectations for further policy easing in the U.S. provided support, with the potential onset of QE3 appearing more likely in the near term.  Due to seasonal factors and broker-dealer issues, trading in August was slow and displayed depressed volumes.  Several managers commented that the volume is so low that a single institutional buyer can move a stock, forcing holders of short positions to cover. Managers continued to struggle on the short side of the portfolio, experiencing losses as most risk assets rallied. The S&P 500 was up +1.98% for the month, bringing year to date performance to +11.85% YTD.  The best performing sectors were technology (+4.80%), consumer discretionary (+4.20%), and financials (+3.02%), while the worst performing sectors were utilities (-4.80%) and telecommunications (-2.41%). The technology-heavy NASDAQ continued its strong run, up +4.34% for the month and +17.72% for the year, primarily lead by Apple, which is up +65% for the year.  Volatility continued to decline, as the VIX fell to a low of 13.45 mid-month, which resulted in losses as some were long volatility as a hedge.  The best performing managers in August were either positioned with significant net long exposures or were focused on relative value as mean-reversion was effective.

“Some have concerns about risk assets as bond prices are overvalued due to interest rates that are artificially low and stocks are approaching the top of a fifteen year range.  Many are concerned about the unknown long term impact of zero percent interest rates and massive quantitative easing,” commented Charles Gradante. “Despite this, we feel it is the time to be invested in alternatives.  There are many events on the horizon that could reintroduce volatility to the markets, including the U.S. election, European financial issues and geopolitical events.  Hedge funds are well positioned to take advantage of the market opportunities that present themselves.  In addition, they are prepared to protect capital in a downturn.”

The Hennessee Arbitrage/Event Driven Index advanced +1.05% (+5.30% YTD) in August. The Barclays Aggregate Bond Index increased +0.07% (+3.86% YTD) and the Barclays High Yield Credit Bond Index increased +1.17% (+10.58%).  Treasury securities dropped in price with the yield on the ten year Treasury note increasing to 1.85%.  High yield performed well as the spread of the BofA Merrill Lynch High Yield Master Index tightened 18 basis points from 6.16% to 5.98%.  Credit managers posted a gain despite rising yields due to spread tightening, a positive carry, and effective hedging.  Many managers feel that high yield is still attractive in a slow growth, low interest rate environment. The Hennessee Distressed Index increased +1.11% in August (+5.19% YTD).  Distressed managers experienced gains as risk assets increased. The Hennessee Merger Arbitrage Index increased +0.56% in August (+3.12% YTD). Merger arbitrage experienced small gains due to a rising market and positive contributions from core positions, including Hertz/Dollar Thrifty and Glencore/Xtrada. The Hennessee Convertible Arbitrage Index advanced +0.86% (+6.91% YTD). Convertible arbitrage managers experienced gains as spread tightening offset rising yields and falling volatility.  The convertible markets were quiet but were bid up by a stronger environment for risk in equity and credit markets.  The market for new issuance remains very quiet with $1.2 billion of deals announced in August.

The Hennessee Global/Macro Index advanced +0.78% (+2.12% YTD) in August.  Global equity markets posted gains for the third consecutive month in August, with significant geographic contributions from Italy and Spain.  The MSCI All-Country World Index ended the month up +1.93% (+7.55% YTD).  International hedge fund managers posted gains, as the Hennessee International Index advanced +1.34% (+4.94% YTD).   Investors again focused on a possible hard landing in China as key economic indicators suggested that a more significant slowdown than previously anticipated.  Managers suffered losses in China growth bets as the markets declined.  Emerging markets were negative as the MSCI Emerging Markets Index fell -0.54% (+3.38% YTD), mostly due to losses in China and Latin America.  Hedge fund managers benefited from European positions and posted gains, as the Hennessee Emerging Market Index advanced +1.07% (-0.95% YTD).  Macro managers posted gains in August, as the Hennessee Macro Index advanced +0.52% (+3.37% YTD). Macro performance was mixed.  Several managers posted losses in currency as the U.S. dollar declined against the Euro and Pound, while rising against the Japanese Yen. Managers posted gains in commodities as hopes of additional quantitative easing in the US and bond buying in Europe sparked a reflation trade in many commodities, including gold and oil.  Agricultural commodities, which have been big winners in previous months, were down as there was drought relief. Long stock index positions, particularly the EuroStoxx and S&P 500, positively contributed to performance in August. One of the biggest losing trades was long volatility, as the VIX continued to fall, dropping to a low of 13.45 mid-month.

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About the Hennessee Group LLC <http://www.hennesseegroup.com/>

Hennessee Group LLC is a Registered Investment Adviser that consults direct investors in hedge funds on asset allocation, manager selection, and ongoing monitoring of hedge fund managers.  Hennessee Group LLC is not a tracker of hedge funds.  The Hennessee Hedge Fund Indices <http://www.hennesseegroup.com/indices/index.html> ® are for the sole purpose of benchmarking individual hedge fund manager performance.  The Hennessee Group does not sell a hedge fund-of-funds product nor does it market individual hedge fund managers. For additional Hennessee Group Press Releases <http://www.hennesseegroup.com/releases/index.html> , please visit the Hennessee Group’s website.  The Hennessee Group also publishes the Hennessee Hedge Fund Review <http://www.hennesseegroup.com/hhfr/index.html> monthly, which provides a comprehensive hedge fund performance review, statistics, and market analysis; all of which is value added to hedge fund managers and investors alike.

Description of Hennessee Hedge Fund <http://www.hennesseegroup.com/indices/index.html> Indices <http://www.hennesseegroup.com/indices/index.html>®
The Hennessee Hedge Fund Indices <http://www.hennesseegroup.com/indices/index.html> ® are calculated from performance data reported to the Hennessee Group by a diversified group of hedge funds.  The Hennessee Hedge Fund Index <http://www.hennesseegroup.com/indices/index.html> is an equally weighted average of the funds in the Hennessee Hedge Fund Indices®. The funds in the Hennessee Hedge Fund Index <http://www.hennesseegroup.com/indices/index.html> are derived from the Hennessee Group’s database of over 3,500 hedge funds and are net of fees and unaudited.  Past performance is no guarantee of future returns.  ALL RIGHTS RESERVED. This material is for general information only and is not an offer or solicitation to buy or sell any security including any interest in a hedge fund.

This article has been provided by our friends at iGlobal Forum with whom Hedge Connection has entered into a media partnership for the upcoming ETF Investing Summit.  For more information on the event, please contact info@iglobalforum.com or visit http://www.iglobalforum.com/etf3.

Total ETF assets now stand at close to $1.4 Trillion with over $115 billion assets under management in the U.S.  Actively traded funds listed for trading in US markets total more than 1400 in mid-2012. Many investors are looking to exchange-traded funds these days as an alternative to owning individual stocks and mutual funds as the asset class continues to expand.

According to Ashmead Pringle, President, GreenHaven LLC, “ETFs can be cost-effective, tax-efficient, liquid, and transparent and it is no wonder ETFs have enjoyed such rapid growth, growth that is likely to continue as more investors, large and small, discover their benefits.”

On September 12^th, panelists will debate ETF investing and forecast the international growth for 2012-13 as well as discuss their benefits over mutual funds and how different ETF products are being structured.

Please, visit www.iglobalforum.com/etf3 for complete information on the program.  Selected RIAs are welcome to register for the event complimentary.   Please, apply by emailing us at info@iglobalforum.com.

The following post comes from our friends at TradeTech. Dodd Frank and all the current and upcoming regulatory reforms will be under the spotlight at TradeTech FX, 25-57 September 2012, London. For more downloads, reports, interviews, Q&As and to find out more about the conference visit tradetechfx.co.uk

Regulation has a significant impact on how businesses operate across the world, and no industry is more tightly regulated than the financial sector. In the wake of the financial crisis of 2008 regulators responded with a raft of new proposals intended to prevent a future economic collapse. By far the most broad reaching of these is the Dodd Frank Act.

Originally proposed in 2009, the provisions in the Dodd Frank Act are by far the most sweeping reforms in financial markets to happen in living memory, mandating changes in market structure that US President Barak Obama has noted will revolutionise the way most financial institutions do business.

Among the most significant reforms are a consolidation of regulatory agencies, new consumer protection laws and changes designed to enforce more transparency across markets. It is hoped that such transparency will help to eliminate loopholes which enable risky and abusive practices to occur unnoticed, and a new independent watchdog will be created and housed at the Federal Reserve in the US to act where such practices are seen to occur.

The impact of Dodd Frank on US Capital market structure has been much discussed, and most of the significant reforms are now well understood. What is less clear is how these reforms will impact other areas of the global financial sector. In particular, there is a real lack of clarity around how businesses dealing in FX trading may be impacted, although some industry observers have speculated that they may find themselves affected far more than they might hope for.

Legal services provider Wilson Sonsini Goodrich & Rosati (WSGR) has commented on how the Dodd Frank will affect the treatment of derivatives, which are regarded as “swaps” under section 721 of the reforms, and highlighted that currently it is not known if FX linked products will be exempt from these rules.

Dodd Frank provides the registration and regulation of swaps dealers and major swap participants, as well as the implementation of clearing and trade execution requirements for swaps. Under the term swaps are a varied selection of foreign exchange derivatives, including FX swaps, FX forwards, currency swaps, currency options and non-deliverable forward contracts.

Many industry participants argue that an exemption should be made for FX products, for a number of reasons.

Firstly, such products are often used by non-financial corporations such as FMCG multi-nationals to hedge against genuine currency and commodity risk. In this context, the products are not used to speculate, but to protect the business against shocks in price and liquidity in a global supply chain. Should a business

using FX products in this way on a regular basis be subject to the same regulatory regime as a hedge fund using complex derivatives to bet on movements in markets?

Secondly, most FX trading institutions have been quick to point out the very nature of the Foreign Exchange market should warrant it receiving less regulatory attention. FX markets exhibit a liquidity that exceeds any other by several orders of magnitude. They trade round the clock, are largely traded off-exchange, and have been self-regulating successfully for decades. Throughout the financial crisis and throughout the aftermath, although FX trading platforms saw similar spikes in volatility as equity and fixed income, there were not the same slumps in volume or value as seen elsewhere.

These characteristics, regulators argue, are making FX an attractive target for speculators who are no longer making their returns in high frequency trading on the world’s stock-markets. A pre-emptive regulatory strike, they say, is necessary to preserve the character and integrity of these markets for the future.

Exemptions have been proposed and are being considered, however.

It is likely that “end-user exemption” from Dodd Frank’s clearing and trading rules is available to firms in particular circumstances. In its alert, WSGR explained: “The End-User Exception will be available only to counterparties that are not financial entities. Most corporations that use FX derivatives to hedge their FX exposures should meet this requirement.”

The organisation also underlined though the recordkeeping and reporting requirements of the Dodd Frank laws, which stipulate that FX companies are required to keep and maintain records of the information needed to identify and value FX derivatives, prices of FX derivatives and whether it was subject to clearing. Who exactly will be bound by these rules is pending clarification.

Of greatest concern to many is the idea of ‘extraterritoriality’ that is bound up in Dodd Frank – the idea that non-US companies which have a base in the US, or trade with US counterparties, could find themselves subject to these US regulations. Some European companies may attempt to escape Dodd Frank’s reach by altering their legal structure, but this may not be enough.

CNN Money reported that German firm Deutsche Bank changed its operations so that it is no longer regarded as a “bank-holding company”, meaning that it can still qualify for US bailouts.

Michael Barr, a former Treasury Department official who helped write the Dodd Frank legislation, told the news provider that the US needs to “fully understand” the risks that may arise in America due to such actions from foreign banks.

While lawyers and compliance officers wrestle to adjust their businesses through this period of uncertainty they face an even greater challenge – the Dodd Frank act, whilst complicated and unclear, is just one piece of the regulatory jigsaw. At the same time these institutions are trying to adapt to Basel III, MiFID II, EMIR and several other new sets of rules. Identifying how these intersect and interact, and preparing for full compliance is going to be a difficult, demanding and expensive task.

For many, the solution will lie in a significant upgrade of the systems they use. Vendors have already come to market with new or upgraded FX trading platforms that promise to meet the demands of regulators in pre and post trade transparency, accounting, clearing and record keeping, but investing in new technology is a difficult task for a sector still recovering from a crisis that bought it to its knees.

Guest post from the Hennessee Group.

HEDGE FUNDS ADVANCE +1.72% IN FEBRUARY

Hedge Funds Off to Best Start in Over a Decade

March 8, 2012 – New York, NY – Hennessee Group LLC, an adviser to hedge fund investors, announced today that the Hennessee Hedge Fund Index advanced +1.72% in February (+4.07% YTD), while the S&P 500 advanced +4.06% (+8.60% YTD), the Dow Jones Industrial Average increased +2.53% (+6.02% YTD), and the NASDAQ Composite Index climbed +5.44% (+13.89%).  Bonds also advanced, as the Barclays Aggregate Bond Index declined -0.02% (+0.86% YTD) and the Barclays High Yield Credit Bond Index advanced +2.37% (+5.48%).

“Hedge funds are off to the best start since 2000,” commented Charles Gradante, Co-Founder of Hennessee Group. “During the first two months of the year, hedge funds have benefitted from a better investment environment relative to 2011, with improved investor sentiment, greater risk taking, lower correlations and lower volatility.  Markets are responding to fundamentals, which is benefiting stock pickers.  While many risks remain, there is optimism around a better economic outlook for the U.S. and stability in the Euro zone.”

“Hedge funds performed well in February generating gains despite conservative exposures.  As the investment environment has improved over the last two months, we have seen managers increase exposure levels,” said Lee Hennessee, Managing Principal of Hennessee Group. “Hedge fund exposures are approaching historical norms, though managers remain somewhat cautious.  Hedge funds are prepared to quickly adjust exposure should conditions dictate, as many feel volatility may rise from currently subdued levels.”

Equity long/short posted gains in February, as the Hennessee Long/Short Equity Index advanced +1.45% (+3.67% YTD).  Financial market gains continued as investor sentiment around with the European debt crisis and U.S. economic recovery continued to improve.  During the month, the Dow Jones Industrial Average and the S&P 500 reached levels not seen since 2008.  Market performance was driven by reports of strong corporate earnings, encouraging economic data and accommodative measures of central banks globally.  U.S. PMIs and employment data supported the domestic recovery that is continuing to build steam.  Market volatility continues to decline sharply, with the VIX down -20% in the first two months of 2012.  Gains were broad based and across sectors.  Financials, technology and consumer discretionary were the best performing sectors.  Stock-specific correlation has come down, benefiting stock-selection and allowing managers to generate alpha.

“There are some similarities between the beginning of 2012 and early 2011, and several managers have expressed some concern about a potential correction,” commented Charles Gradante. “The S&P 500 has rallied +20% since October 2011.  Investor sentiment may be peaking.  Some managers feel that the markets are overbought and are due for a short-term correction.”

The Hennessee Arbitrage/Event Driven Index advanced +1.53% (+4.04% YTD) in February. Along with an equity market rally, credit markets advanced for the month.  Corporate credit markets experienced a tightening of spreads, significant investor inflows and a robust primary market. The Barclays High Yield Credit Bond Index advanced +2.37% in February and the S&P/LSTA Leveraged Loan Index rose +0.8% during the month.  The Hennessee Distressed Index increased +1.86% in February (+4.93% YTD).  Distressed strategies posted solid gains as the markets rallied, liquidity increased, and investor risk tolerance continued to improve.  The Hennessee Merger Arbitrage Index advanced +1.72% in February (+2.89% YTD).  During the month, corporate M&A spreads continued to tighten, benefiting portfolios.  Managers are becoming bullish about the potential for increased corporate activity given pressure on companies to deploy high cash balances, low levels of volatility and attractive valuations.  The Hennessee Convertible Arbitrage Index returned +1.78% (+3.79% YTD).  Convertibles rallied in February driven mostly by higher equities and tighter credit spreads.  Managers also reported that it appeared as though there was a pickup in outright buying as credit and equity markets rallied.

“Managers lost money in their long gold trade as the Fed denied any near term QE3, sending gold down -5% in a single day and ending down for the month,” commented Charles Gradante. “Despite the pullback, managers remain bullish on the gold thesis.  They feel that we are likely to see inflation, which will lead to appreciation in the precious metal.”

The Hennessee Global/Macro Index advanced +2.65% (+5.03% YTD) in February, driven by strong gains in both global and macro strategies.  During the month, the market continued to focus on the impact of the ECB’s long-term repo operations (LTRO) in reducing systemic risk in the Euro-area.  International equities advanced, as the MSCI EAFE Index increased +5.44% (+10.98% YTD).  International hedge fund managers were also positive, as the Hennessee International Index advanced +2.85% (+5.16% YTD) in February.  Emerging market hedge funds added to their gains in February, as the Hennessee Emerging Market Index increased +2.69% (+5.07% YTD).  Managers remain concerned about the debt issues in Europe and a slowing China, but have greater optimism on investment opportunities.   During the month, markets became more focused on geopolitical risks in the Middle East, which led to a sharp increase in the price of crude oil.  Macro managers posted solid gains in February, as the Hennessee Macro Index increased +2.02% (+2.51% YTD) for the month.  Managers made profits in equities, fixed income, currency and commodity exposure.  U.S. yields rose across nearly all maturities, while credit tightened for the month.  Global equities and credit markets posted strong gains.  A late month sell-off in gold impacted commodity gains, but oil and other metals registered positive performance for the month.  The U.S. dollar declined against most major currencies as volatility fell and risk tolerance improved.

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About the Hennessee Group LLC <http://www.hennesseegroup.com/>

Hennessee Group LLC is a Registered Investment Adviser that consults direct investors in hedge funds on asset allocation, manager selection, and ongoing monitoring of hedge fund managers.  Hennessee Group LLC is not a tracker of hedge funds.  The Hennessee Hedge Fund Indices <http://www.hennesseegroup.com/indices/index.html> ® are for the sole purpose of benchmarking individual hedge fund manager performance.  The Hennessee Group does not sell a hedge fund-of-funds product nor does it market individual hedge fund managers.    For additional Hennessee Group Press Releases <http://www.hennesseegroup.com/releases/index.html> , please visit the Hennessee Group’s website.  The Hennessee Group also publishes the Hennessee Hedge Fund Review <http://www.hennesseegroup.com/hhfr/index.html>  monthly, which provides a comprehensive hedge fund performance review, statistics, and market analysis; all of which is value added to hedge fund managers and investors alike.

Description of Hennessee Hedge Fund  <http://www.hennesseegroup.com/indices/index.html> Indices <http://www.hennesseegroup.com/indices/index.html> ®

The Hennessee Hedge Fund Indices <http://www.hennesseegroup.com/indices/index.html> ® are calculated from performance data reported to the Hennessee Group by a diversified group of hedge funds.  The Hennessee Hedge Fund Index <http://www.hennesseegroup.com/indices/index.html> is an equally weighted average of the funds in the Hennessee Hedge Fund Indices®. The funds in the Hennessee Hedge Fund Index <http://www.hennesseegroup.com/indices/index.html>  are derived from the Hennessee Group’s database of over 3,500 hedge funds and are net of fees and unaudited.  Past performance is no guarantee of future returns.  ALL RIGHTS RESERVED. This material is for general information only and is not an offer or solicitation to buy or sell any security including any interest in a hedge fund.