NZARA now on LinkedIn...

Hi - we now have a group for NZARA on LinkedIn. Feel free to look it up. This is a useful way to stay in touch with the New Zealand alternative investment industry and NZARA members in particular. We are looking for two-way communication and discussion of those topics that members think are important. If you are a manager or an investor, please feel free to make contact through the group on LinkedIn. Go to www.linkedin.com . Search for "New Zealand Absolute Return Association Inc".

NZARA update...October 2011

Hi. Welcome back to the NZARA Blog. The core NZARA group continues to operate in what is a very challenging environment for investment managers - both from a market environmental perspective, and also from a regulatory perspective. New Zealand managers are coping well in context, albeit with year-to-date performance that is slightly negative (see chart above -3.57% YTD). With global equities down almost 14% YTD at the end of September, it appears that there remains significant diversification benefits from being exposed to New Zealand managers in a portfolio. The HFRX Global Hedge index is down over 8% YTD which shows that not only are New Zealand managers an appropriate diversifier for a standard portfolio - but also for an hedge fund portfolio. The index is still annualizing at above 12% over its 4 year history - through one of the worst episodes in financial market history. The association continues to experience steady membership growth with several innovative investment strategies making their way onto the NZARA roster over the last 12 months. As usual, the NZARA members will meet in December in Auckland for an end-of-year function - this year on Auckland's beautiful harbour. This will be a time to catch up with each other as well as to introduce the managers to a range of important local investors. Please feel free to make contact if you wish to have more information on the NZ alternatives industry and/or its constituent managers.

NZARA appoints the executive team for 2010...

Hi. At a meeting today (March 11 2010) a quorum elected the following to executive roles within the New Zealand Absolute Return Association Inc. The executive is:

Anthony Limbrick - Chairman (reappointed)
Mark Sleeman - Deputy Chairman (new)
Monique Le Roux - Secretary (new)

Contact details are available on the website at www.nzara.org

More than a one trick pony...NZ funds up in May 09

Hi there. The Ernst & Young New Zealand Absolute Return Index had a strong year in 2008. The index was +20.4% with most of the gains attributable to directional, trend-following, volatility and commodity strategies. This led some to comment that the index was really only a CTA index as its correlation with CTA's was high. 2009 is proving that our index is indeed more than a "one trick pony". May 2009 saw a strong move higher for the index, correlating highly with the global HF industry and equities - at a time that we would think it would be appropriate. The index was +6% for the month, putting it +7.5% for the 2009 year so far. The index is now annualizing on a compound basis at 19.95% with the largest peak to valley draw-down so far being -6.5%. New Zealand managers continue to demonstrate competence in investment management.

New Zealand index holding its own...

Hi. Well...after running high correlation co-efficients with managed futures strategies last year, the Ernst & Young New Zealand Absolute Return Index has proved its mettle to the end of April, +1.877%YTD to the end of April, a year on year return of 12.7%. The index is annualizing at just under 17%. Managed futures strategies are currently down on a YTD basis so it is good to demonstrate that New Zealand managers as a group are not a "one-trick pony". It is also great to see the equities strategies kicking in, with one of the managers, Pie Funds, posting a 14% return in April. Diversification sometimes works!

Amber Partners on Madoff

Hi

Amber Partners, a London-based hedge fund certification business recently put out an interesting Amber Alert (comment) on Madoff.

Key points made were:

1. Investors who invested directly with Madoff did not buy shares in an offshore company or partnership interests in an onshore limited partnership.
2. It was extremely unusual for a firm of Madoff's size and supposed reputation to utilize an audit firm which was quite clearly not one of the "top 4" firms nor a specialist in auditing broker-dealers.
3. Amber Partners has never known a broker that refuses to send trade tickets to clients, other than in hard copy form via the postal system.
4. Madoff was infamous for not letting investors visit their offices to performan any on-site due diligence.
5. Many who invested with Madoff recognized the risks involved. A logical counter argument to all of the above "red flags" was that there would have to be substantial collusion within Madoff for such a fraud to go undetected for such a long period, and there was also the fact of his continued regulation by SEC and FINRA.

If you want a copy of the release, please register at the NZARA website (www.nzara.org). Once website access has been granted you may find the document in the Library on the site. You could also register on the Amber Partners website at www.amberpartners.com for future alerts and announcements.

Regards

Anthony Limbrick

From the FT - "Ten reasons to..."

Hi

The Financial Times (http://www.ft.com/) has some excellent columnists and their Alphaville blog (http://ftalphaville.ft.com) is a great way to get a real time view on market developments.

With the Madoff disaster putting the global alternative investment industry under even more pressure, I thought it was time for some educated light relief.

Please see the link below for "Ten reasons why you should hug a hedgie" from the Lombard column. Amusing - but also some good points made - points that should be considered before the proverbial "baby" is thrown out with "bath water".

http://www.ft.com/cms/s/0/0f5e33aa-cbdc-11dd-ba02-000077b07658.html

Response to the NBR article...

National Business Review today published an article with the headline "John Key annoys local hedge fund managers".

The New Zealand Absolute Return Association (NZARA) would like to clarify that the New Zealand investment managers represented by the association are not "annoyed" with the Prime Minister but have noted his comment regarding hedge funds, and take that as a continuity from recent statements implying improved disclosure may be one of the areas to get a regulatory boost. If this were to be so, NZARA would welcome this initiative. We believe transparency is healthy for all involved in the investment management industry, be they investment managers, investors or regulators.

Anthony Limbrick
Chairman
New Zealand Absolute Return Association

Link to the National Business Review article is below:

http://www.nbr.co.nz/article/private-bin-john-key-annoys-local-hedge-fund-managers-38262

A new member of the New Zealand index...

Pie Funds, an Auckland-based absolute return equity manager is to join the Ernst & Young New Zealand Absolute Return Index.

Pie Funds was founded by Mike Taylor and Richard Avery-Wright in 2007. Their flagship fund is the Pie Australasian Growth Fund which focuses on small to mid cap stocks and short term opportunistic trading.

The fund is unleveraged but has the ability to short futures and trade options for downside protection. Since inception, the fund has outperformed the ASX small cap index by around 20% p.a.

Link here: http://www.piefunds.co.nz/

New Zealand Prime Minister John Key on hedge funds...

From Reuters

"We can no longer afford to ignore the effect that the amount of risk that hedge funds are able to take through leverage that is arguably completely disproportionate to the real economy," said Key.

Link here:

http://www.reuters.com/article/bondsNews/idUSN2148103820081121

Some good media coverage of our performance...

Hi

There has been some good media coverage of the Ernst & Young New Zealand Absolute Return Index over the last few months.

See below for links:

http://www.opalesque.com/AMB2008/47677Australasia_Ernst_and_Young_New_Zealand.html

http://www.hedgemedia.com/articles/detail.jsp?content_id=277018

http://www.hedgeco.net/news/11/2008/new-zealands-absolute-return-managers-index-surge-in-october.html

http://www.scoop.co.nz/stories/BU0811/S00397.htm

http://www.nzherald.co.nz/best-of-business-analysis/news/article.cfm?c_id=1501241&objectid=10539214

Another good month for New Zealand managers...

Hi there

October 2008 was a good month for most of the New Zealand investment managers represented in the Ernst & Young New Zealand Absolute Return index. The index was +15% YTD, and +2.8% for the month.

Before I tell you who the managers are, firstly understand that they are wholesale-only - and are not available for retail investment. They may also expose one's investment to substantial risk - so make sure any offering documentation is read thoroughly so that all risks are fully understood. Past performance is not necessarily an indication of future performance. And when I talk about performance I am talking about that firms "NZARA Average".

There is a strong representation by trend followers and volatility/tail risk in the group. Trend-follower, MS Capital Management was +25% for October, targeted non-correlation manager Pure Capital (my team) was +6% and volatility and tail risk manager, 36 South was +4% for the month. One of the more interesting performances was Commodity Strategies, a commodity trader that was +4%. A great performance considering how weak commodity markets have been. This was the result of a long-short commodity product they run.

These are difficult times. It is satisfying to see New Zealand managers proving they can hold their own in challenging markets - and performing well against global peers.

For more information on the index, please go to http://www.nzara.org/

Regards

Ant Limbrick
Chairman - NZARA

NZARA launches a new performance index...

Hi there

After months of work we have finally launched our Ernst & Young New Zealand Absolute Return Index...which is compiled by Ernst & Young on a monthly basis. (Minter Ellison put together the docs). It is pretty exciting to see New Zealand managers outperform their peers offshore, a manifestation I believe of the innovation and competence of the group. For September 2008 the index was up >3% while much of the industry was down...-6% is a commonly cited number. N.B. Ernst & Young does not accept responsibility for the performance of the index, nor for the veracity of the performance information presented by the constituent managers.

More information is available at http://www.nzara.org/

Regards

Anthony Limbrick

Chairman

NZARA