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Article
Publication date: 1 January 2005

Jedd Wider and Kevin Scanlan

Seeks to introduce several of the important issues that must be resolved in connection with the structuring and formation of a customized hedge fund program

Abstract

Purpose

Seeks to introduce several of the important issues that must be resolved in connection with the structuring and formation of a customized hedge fund program

Design/methodology/approach

Explains why some institutional investors have sought alternative investment structures that provide for the establishment of dedicated, captive hedge fund programs and provides an introduction to several of the important issues that must be resolved in connection with such a program, including the choice of investment vehicle, Investment Company Act considerations, ERISA considerations, tax considerations, Investment Advisers Act issues, terms of the captive fund's governing document, investment guidelines, and performance‐monitoring processes.

Findings

At a time when hedge fund assets are growing exponentially, some institutional investors have turned to dedicated, captive hedge fund programs to ensure their access to talented hedge fund managers and secure a diversified investment approach.

Originality/value

Two attorneys who work with hedge funds provide important guidance on structuring and satisfying the regulatory requirements for dedicated, captive hedge fund programs.

Details

Journal of Investment Compliance, vol. 6 no. 1
Type: Research Article
ISSN: 1528-5812

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Article
Publication date: 1 April 2014

Wejendra Reddy, David Higgins and Ron Wakefield

In Australia, the A$2.2 trillion managed funds industry including the large pension funds (known locally as superannuation funds) are the dominant institutional property…

Abstract

Purpose

In Australia, the A$2.2 trillion managed funds industry including the large pension funds (known locally as superannuation funds) are the dominant institutional property investors. While statistical information on the level of Australian managed fund investments in property assets is widely available, comprehensive practical evidence on property asset allocation decision-making process is underdeveloped. The purpose of this research is to identify Australian fund manager's property asset allocation strategies and decision-making frameworks at strategic level.

Design/methodology/approach

The research was undertaken in May-August 2011 using an in-depth semi-structured questionnaire administered by mail. The survey was targeted at 130 leading managed funds and asset consultants within Australia.

Findings

The evaluation of the 79 survey respondents indicated that Australian fund manager's property allocation decision-making process is an interactive, sequential and continuous process involving multiple decision-makers (internal and external) complete with feedback loops. It involves a combination of quantitative analysis (mainly mean-variance analysis) and qualitative overlay (mainly judgement, or “gut-feeling”, and experience). In addition, the research provided evidence that the property allocation decision-making process varies depending on the size and type of managed fund.

Practical implications

This research makes important contributions to both practical and academic fields. Information on strategic property allocation models and variables is not widely available, and there is little guiding theory related to the subject. Therefore, the conceptual frameworks developed from the research will help enhance academic theory and understanding in the area of property allocation decision making. Furthermore, the research provides small fund managers and industry practitioners with a platform from which to improve their own property allocation processes.

Originality/value

In contrast to previous property decision-making research in Australia which has mainly focused on strategies at the property fund investment level, this research investigates the institutional property allocation decision-making process from a strategic position involving all major groups in the Australian managed funds industry.

Details

Journal of Property Investment & Finance, vol. 32 no. 3
Type: Research Article
ISSN: 1463-578X

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Article
Publication date: 8 May 2018

Haruna Babatunde Jaiyeoba, Abideen Adeyemi Adewale, Razali Haron and Che Muhamad Hafiz Che Ismail

This study aims to investigate the Malaysian retail investors and fund managersinvestment decision behaviours. The study offers an important opportunity for…

Abstract

Purpose

This study aims to investigate the Malaysian retail investors and fund managersinvestment decision behaviours. The study offers an important opportunity for understanding the investors’ experiences, how they understand the Malaysian economy and their priorities for company selection. Other main aspects of this study are how investors mitigate the influence of emotions and psychological biases and challenges faced during investment decisions.

Design/methodology/approach

The researchers have mainly adopted an interpretivist approach for the present study. Qualitative data elicited through semi-structured interviews conducted with four retail investors and four fund managers were subjected to qualitative thematic analysis.

Findings

The results reveal that the investment decision processes of fund managers are more comprehensive than those of retail investors. Although both fund managers and retail investors acknowledge the influence of psychological biases on their investment decisions, the former use different and comprehensive approaches to mitigate such influences during investment decisions compared with the latter. Other important findings are how investors understand the Malaysian economy, their priorities for company selection and challenges faced during investment decisions.

Research limitations/implications

The researchers have interviewed eight carefully selected interviewees across retail investors and fund managers divide. Adopting other grouping criteria, focus group discussion with more respondents or adopting a mixed-methods approach may increase our understanding of the investment decision behaviours of Malaysian retail investors and fund managers.

Practical implications

This study could be used as a guide by both retail investors and fund managers when making investment decisions.

Originality/value

This research has included both retail investors and fund managers; it has also increased literature on investment decision and behavioural finance, particularly in the context of Malaysian investors and managers.

Details

Qualitative Research in Financial Markets, vol. 10 no. 2
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 1 January 2005

Carolyn E. Taylor

On October 26, 2004, the Securities and Exchange Commission (the “Commission” or the “SEC”) adopted a new rule and related amendments requiring, among other things, that…

Abstract

On October 26, 2004, the Securities and Exchange Commission (the “Commission” or the “SEC”) adopted a new rule and related amendments requiring, among other things, that hedge fund managers register with the SEC under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) by February 1, 2006. In this article, we refer to the totality of the recent rulemaking as the “new rules.” The new rules and a lengthy interpretive release (the “Adopting Release”) were made available to the public on December 2, 2004.The new rules only slightly modify the text of the proposed rules published by the SEC on July 20, 2004. We will refer to the July 20, 2004 rules as the “proposed rules.” The proposed rules, which were opposed by two of the five SEC commissioners at the time they were announced, provoked a loud outcry and strong opposition. According to the Adopting Release, the SEC received 161 comment letters from investors, hedge fund managers, mutual fund managers, law firms, and others. Of these, only 36 supported the proposed rules, 83 argued against them, and the remainder presented a neutral view. The objections included “concerns about the costs of compliance under the new rule[s], questions about [SEC] effectiveness in preventing hedge fund fraud, and the potential intrusiveness of [SEC] oversight of hedge fund managers.”

Details

Journal of Investment Compliance, vol. 5 no. 4
Type: Research Article
ISSN: 1528-5812

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Article
Publication date: 10 May 2019

Carl-Christian Trönnberg and Sven Hemlin

The purpose of this study was to gain a better understanding of pension fund managers investment thinking when confronted with challenging investment decisions. The study…

Abstract

Purpose

The purpose of this study was to gain a better understanding of pension fund managers investment thinking when confronted with challenging investment decisions. The study focuses on the theoretical question of how dual thinking processes in experts’ investment decision-making emerge. This question has attracted interest in economic psychology but has not yet been answered. Here, it is explored in the context of pension funds.

Design/methodology/approach

The sample included 22 pension fund managers. The authors explored their decision-making by applying the critical incident interview technique, which entailed collecting investment decisions that fund managers retrieved from recent memory (Flanagan, 1954). Questions concerned the investment situation, the decision-making process and the challenges and uncertainties the fund managers faced.

Findings

Many of the 61 critical incidents examined concerned challenging (mostly stock) investments based on extensive analysis (e.g. reliance on external analysts for advice; analysis of massive amounts of hard company and stock market information; scrutiny of company reports and personal meetings with CEOs). However, fund managers to a high degree based their decisions on soft information judgments such as experience and qualitative judgements of teams. The authors found heuristics, intuitive thinking, biases (sunk cost effects) and social influences in investment decision-making.

Research limitations/implications

The sample is small and not randomly selected.

Practical implications

The authors suggest anti-bias training and better acquaintance with human forecasting limitations for pension fund managers.

Originality/value

Pension fund managersinvestment thinking has not previously been investigated. The authors show the types of investment situations in which analytical and intuitive thinking and biases occur.

Details

Qualitative Research in Financial Markets, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1755-4179

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Article
Publication date: 14 June 2011

Thomas M. Schiera

The aim of this paper is to provide hedge fund and other private fund managers with a brief recap of regulatory changes in 2010 and a reminder of certain “best practices”…

Abstract

Purpose

The aim of this paper is to provide hedge fund and other private fund managers with a brief recap of regulatory changes in 2010 and a reminder of certain “best practices” they should consider as they prepare for 2011.

Design/methodology/approach

The paper provides 2010 regulatory highlights, including relevant provisions of the Dodd‐Frank Wall Street Reform and Consumer Protection Act, the Pay‐to‐Play Rule, and amendments to Form ADV. It outlines issues for consideration in 2011, including preparation for SEC registration (if applicable), review of compliance policies and procedures, updating Form ADV, Form D and Blue Sky Filings, “custody rule” (Rule 206(4)‐2 under the Advisers Act) compliance, other regulatory filings that may be required (including Form 13F, Schedule 13D/13G, and Forms 3, 4, and 5), CFTC regulatory requirements for investment managers who trade or advise others on trading commodity futures contracts, certain tax considerations (including foreign bank, brokerage and other financial account (FBAR) reporting requirements), the Foreign Tax Compliance Act of 2009 (FACTA)), ERISA and Department of Labor considerations, fee deferral arrangements, and offering document updates.

Findings

This summary is not intended to provide a complete list of an investment manager's obligations relating to its compliance with applicable rules and regulations or to serve as legal advice. It does not address any non‐US or state law requirements and has not been tailored to the specific needs of a particular investment manager's business.

Originality/value

This paper provides useful summary practical guidance from experienced financial institutions lawyers.

Details

Journal of Investment Compliance, vol. 12 no. 2
Type: Research Article
ISSN: 1528-5812

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Article
Publication date: 1 March 1996

Keith Richardson

Public and private sector managers make investment decisions under uncertainty. Economic efficiency requires that managers who wish to maximize expected utility use NPV. A…

Abstract

Public and private sector managers make investment decisions under uncertainty. Economic efficiency requires that managers who wish to maximize expected utility use NPV. A field test reports that a lower proportion of public managers (20%) utilize NPV than private managers (46%). This difference is significant at p = .01 in both logistic regression and chi-square tests for three competing, but not mutually exclusive, reasons. First, taxpayers are a primary source of capital. Taxation decisions are primarily political events and inefficiency is less likely to be disciplined by capital withdrawal. Second, it is more difficult to estimate expected benefits and costs. Third, investment decisions are often the result of political, not economic, processes. The objective may not be maximization of NPV.

Details

Journal of Public Budgeting, Accounting & Financial Management, vol. 10 no. 1
Type: Research Article
ISSN: 1096-3367

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Article
Publication date: 6 February 2017

Harald Biong and Ragnhild Silkoset

Employees often expect an emphasis on financial aspects to be predominant when their employers choose a fund management company for the investment of employees’ pension…

Abstract

Purpose

Employees often expect an emphasis on financial aspects to be predominant when their employers choose a fund management company for the investment of employees’ pension fund deposits. By contrast, in an attempt to appear as socially responsible company managers may emphasize social responsibility (SR) in pension fund choices. The purpose of this paper is to examine to what extent managers for small- and medium-sized companies emphasize SR vs expected returns when choosing investment managers for their employees’ pension funds.

Design/methodology/approach

A conjoint experiment among 276 Norwegian SMEs’ decision makers examines their trade-offs between social and financial goals in their choice of employees’ pension management. Furthermore, the study examines how the companies’ decision makers’ characteristics influence their pension fund management choices.

Findings

The findings show that the employers placed the greatest weight to suppliers providing funds adhering to socially responsible investment (SRI) practices, followed by the suppliers’ corporate brand credibility, the funds’ expected return, and the suppliers’ management fees. Second, employers with investment expertise emphasized expected returns and downplayed SR in their choice, whereas employers with stated CSR-strategies downplayed expected return and emphasized SR.

Originality/value

Choice of supplier to manage employees’ pension funds relates to a general discussion on whether companies should do well – maximizing value, or do good, – maximizing corporate SR. In this study, doing well means maximizing expected returns and minimizing costs of the pension investments, whereas doing good means emphasizing SRI in this choice. Unfortunately, the employees might pay a price for their companies’ ethicality as moral considerations may conflict with maximizing the employees’ pension fund value.

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Article
Publication date: 1 February 2016

Gert Abraham Lowies, John Henry Hall and Christiaan Ernst Cloete

The purpose of this paper is to determine whether anchoring and adjustment as heuristic-driven bias and herding behaviour influences listed property fund managers in South…

Abstract

Purpose

The purpose of this paper is to determine whether anchoring and adjustment as heuristic-driven bias and herding behaviour influences listed property fund managers in South Africa’s property investment decisions. The study contributes to the understanding of the influence of heuristic-driven bias and herding behaviour on property investment decisions made in a highly volatile environment.

Design/methodology/approach

This study is focused on the subject field of behavioural finance and follows a survey-based design. A questionnaire was finalised after completion of the pilot study and was sent via e-mail to fund managers of all South African-based property funds listed on the Johannesburg Securities Exchange. Non-parametric statistical measures were used.

Findings

Consistency with other studies suggests that anchoring and adjustment may exist in the decisions made by listed property fund managers. However, fund managers tend to not adjust to new information due to the current socio-political environment in South Africa rather than a lack of understanding of the new information.

Practical implications

It is recommended that investors form developed and emerging economies take notice of the highly volatile circumstances in which property fund managers in an emerging economy such as South Africa have to make investment decisions. The probability of missed gains as a result of conservative investment strategies may have an impact on future returns.

Originality/value

This study enhanced the understanding of the role that heuristic-driven bias plays in the South African property industry and more importantly, it went some way towards enhancing understanding of behavioural aspects and their influence on property investment decision making in an emerging market.

Details

Journal of Property Investment & Finance, vol. 34 no. 1
Type: Research Article
ISSN: 1463-578X

Keywords

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Article
Publication date: 10 November 2014

Sujit Kalidas, Andrew Kelly and Alastair Marsden

This paper aims to explore the challenges the Venture Capital (VC) funds industry in New Zealand (NZ) faces when sourcing new capital. In NZ, there is a significant gap…

Abstract

Purpose

This paper aims to explore the challenges the Venture Capital (VC) funds industry in New Zealand (NZ) faces when sourcing new capital. In NZ, there is a significant gap currently for companies seeking VC funding of between $2 and $10 million to commercialise new products and ideas. Also, the estimated financing needs of the next generation of early stage NZ enterprises are around $2 billion of investment over the next 10 years (NZVIF, 2011).

Design/methodology/approach

A qualitative research design is applied, given the exploratory nature of this research. In this study, 15 face-to-face semi-structured interviews with VC fund managers, investors and intermediaries were undertaken.

Findings

The findings suggest that the lack of observable proven historical returns from NZ domiciled VC funds is a significant impediment to raising new equity capital. Fund managers and intermediaries also note that there is a lack of domestic entities in NZ that have the capacity and current appetite to invest in VC. In part, this may indicate that VC investors are unwilling to invest further capital in NZ VC funds until the current funds realise their existing investments.

Originality/value

Overall our findings support recent initiatives by the NZ VC funds industry to track and monitor the performance of NZ VC funds.

Details

Pacific Accounting Review, vol. 26 no. 3
Type: Research Article
ISSN: 0114-0582

Keywords

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