Perspective of the Investment Industry towards FX-based Investment Products

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I have just read R’s blog entry with a link to a paper about alternative investment and I’ve scan-read the paper. In exhibit #1, it was mapped, the universe of traditional and alternative investment asset class.

But I couldn’t find there, any investment products in forex/futures market especially those are based on algorithmic trading. I thought it was under the hedge fund class, but it wasn’t.

I’ve been wondering what is the perspective of the investment industry towards FX-based investment products? Does it really not belong to any of those asset classes, does it really not considered as a proper opportunity of investment by institutional investors? I’ve never took any courses in investing so i’d like to know how the investment in fx market (especially the ones based on systematical trading systems) are viewed by the investment industry.

I know some professional and well known FX managers, like the Dynex Corp, and several Managed Account products are also offered by regulated FX businesses, but where do all these belong to in the investment asset class map? Could anyone shed some light on this? Thanks in advance.

(*)

And the Lady Joins Dumping the Dollars too

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She prefer to get her payments in Euro rather than the Dollars. Smart move, baby.
You definitely are my type. lol.

Supermodel Bundchen Joins Hedge Funds Dumping Dollars

Gisele Bundchen wants to remain the world’s richest model and is insisting that she be paid in almost any currency but the U.S. dollar.
Like billionaire investors Warren Buffett and Bill Gross, the Brazilian supermodel, who Forbes magazine says earns more than anyone in her industry, is at the top of a growing list of rich people who have concluded that the currency can only depreciate because Americans led by President George W. Bush are living beyond their means.
Bundchen, 27, signed a contract in August to represent Pantene hair products for Cincinnati-based Procter & Gamble Co., she demanded payment in euros, according to Veja, Brazil’s biggest weekly magazine. She’ll also get euros for the deal she reached last October with Dolce & Gabbana SpA in Milan to promote the Italian designer’s new fragrance, The One, Veja reported. Bundchen earned $33 million in the year through June, Forbes reported in July.

(*)

Money managers are just human :p

A quite nasty but funny e-mail exchange between Daniel Loeb, a hedge fund manager who manage a $ 4+ billion fund with Alan Lewis, a British money manager. This happened after Alan sent his CV to Daniel.
Enjoy.

—–Original Message—–
From: Alan Lewis
Sent: Tuesday, March 22, 2005 11:34 AM
To: Daniel Loeb
Subject: CV

Daniel,

Thanks for calling earlier today. Enclosed is my cv for your review. I look forward to following up with you when you have more time.

Best regards,

Alan

Alan D. Lewis
Managing Director
Sthenos Capital Ltd.

—–Original Message—–
From: Daniel Loeb
Sent: 27 March 2005 23:08
To: Alan Lewis
Subject: RE: CV

what are your 3 best current european ideas?

Daniel Loeb
Managing Member
Third Point LLC

—–Original Message—–
From: Alan Lewis
Sent: Monday, March 28, 2005 1:03 AM
To: Daniel Loeb
Subject: RE: CV

Daniel,

I am sorry but it does not interest me to move forward in this way. If you wish to have a proper discussion about what you are looking to accomplish in Europe, and see how I might fit in, fine.

Lesson one of dealing in Europe, business is not conducted in the same informal manner as in the U.S.

Best regards,

Alan

—–Original Message—–
From: Daniel Loeb
Sent: 28 March 2005 09:50
To: Alan Lewis
Subject: RE: CV

One idea would suffice.

We are an aggressive performance oriented fund looking for blood thirsty competitive individuals who show initiative and drive to make outstanding investments. This is why I have built third point into a $3.0 billion fund with average net returns of 30% net over 10 years.

We find most brits are bit set in their ways and prefer to knock back a pint at the pub and go shooting on weekend rather than work hard. Lifestyle choices and important and knowing one’s limitations with respect to dealing in a competitive environment is too. That is Lesson 1 at my shop.

It is good that we learned about this incompatibility early in the process and I wish you all the best in your career in traditional fund management.

Daniel

—–Original Message—–
From: Alan Lewis
Sent: Monday, March 28, 2005 4:08 AM
To: Daniel Loeb
Subject: RE: CV

Daniel,

I guess your reputation is proven correct. I have not been in traditional fund management for more than eleven years. I did not achieve the success I have by knocking back a pint, as you say. I am aggressive, and I do love this business. I am Half American and half French, and having spent more than half my life on this side of the pond I think I know a little something about how one conducts business in the UK and Europe.

There are many opportunities in the UK and Europe, shareholder regard is only beginning to be accepted and understood. However, if you come here and handle it in the same brash way you have in the U.S. I guarantee you will fail. Things are done differently here, yes place in
society still matters, where one went to school etc. It will take tact, and patience (traits you obviously do not have) to succeed in this arena.

Good luck!

Alan

—–Original Message—–
From: Daniel Loeb
Sent: 28 March 2005 10:23
To: Alan Lewis
Subject: RE: CV

Well, you will have plenty of time to discuss your “place in society” with the other fellows at the club.

I love the idea of a French/english unemployed guy whose fund just blew up telling me that I am going to fail.

At Third Point, like the financial markets in general,”one’s place in society” does not matter at all. We are a bunch of scrappy guys from diverse backgrounds (Jewish Muslim, Hindu etc) who enjoy outwitting pompous asses like yourself in financial markets globally.

Your “inexplicable insouciance” and disrespect is fascinating; It must be a French/English aristocratic thing. I will be following your “career” with great interest.

I have copied Patrick so that he can introduce you to people who might be a better fit-there must be an insurance company or mutual fund out there for you.

Dan Loeb

Money managerrr jugaaa manusiaaaaaa.. punyaa rasaaaa punya hatiii… kekekeke

Quality is paid well (?)

Competition, as any freshman economics student will tell you, brings down prices. It works for computers and for phone calls and for cars. Why not for hedge funds? Investors have been paying the same fees since practically the dawn of the hedge fund: a 2 percent management fee plus 20 percent of profits. Now that there are thousands of funds competing for capital, why hasn’t “2 & 20” become “1 & 10” or even “0 & 5”? . Read more…

Big Dogs: Quantitative investors

One of them :
James Simons
Renaissance Technologies
Size: $24 billion
Style: Quantitative investor
Location: East Setauket, N.Y.
Former math professor is king of the “black box” investors—funds that use top-secret algorithms and invest largely by computer. Shocked peers when he set a target of $100 billion for his latest fund. Charges 5 & 44, a fee structure without peer in the hedge-fund world—but nobody’s complaining. Net worth estimated at $4 billion.
More reading.

Inside Goldman Sachs

Start with the physical surroundings of the firm. There’s nothing that shouts either “Goldman Sachs” or “money.” The drab brown headquarters at 85 Broad Street famously bears no sign. Inside, you’re struck not by elegance, and certainly not by opulence, but rather by the shabby state of affairs–the faded, torn carpets, the grungy cubicles, the utterly ordinary offices. Treasurer Elizabeth Beshel, who was a junior analyst back in 1990, points out that a giant ink stain she left on her old cubicle is still there. (The firm is building a new headquarters in downtown Manhattan.) Nor will you spot a lot of flashy investment bankers. Jon Winkelried, who is the co-head of Goldman’s massive fixed-income, currency, and commodities division, sports a shirt with a torn sleeve and missing buttons.

for a complete article go here.