Alternative Intelligence Quotient

Alternative Intelligence Quotient is a journal specially created for the global hedge fund industry and is published six times a year. The cost of an annual subscription is US$399.

ISI Publications is proud to announce the re-branding of its flagship journal, Alternative Intelligence Quotient (AIQ). AIQ highlights strategies and developments in the hedge fund world, from the nuts and bolts of regulation and taxation (and analysing the implications of those changes) to commentary on subjects such as fund manager styles, risk management, and marketing and distribution. In short, AIQ continues to provide readers with incisive commentary on the framework in which the alternative investment world operates.

AIQ’s new look also has taken into account feedback from its valuable subscribers, and now will run two new sections in each issue. Firstly, AIQ will feature a selection of careers currently available in the hedge fund industry and, secondly, AIQ will highlight a variety of upcoming alternative investment events that are of interest to our readers.

All current and new subscribers will receive a complimentary copy of the Comparative Jurisdiction Guide - where to set up and, perhaps, manage a hedge fund.

Articles in the latest issue include:

The Oil Markets: Let the Data Speak for Itself (Part 2)
"The reader may grant all of the various fundamental explanations regarding the oil-price spike in 2008, but still say, ‘Yes, but what about the speculators?’ In reviewing historical studies since 1941, one realises that this topic may always be an area of controversy. When one reads the landmark US Department of Agriculture (USDA) (1941) study by Hoffman and Duvel on the impact of futures trading on grain prices, one is struck by how the terms of the debate on futures trading have not changed in seven decades."
Hilary Till, Premia Capital Management LLC, Chicago and Research Associate, EDHEC-Risk Institute, Nice, France.

Mini Prime Brokerage
"Post-credit crisis, the landscape for hedge funds and prime brokerage has undergone a dramatic transformation. With ambiguity still looming overhead in terms of the Alternative Investment Fund Managers (AIFM) Directive, it has been a year for re-vamping, re-capitalisation and re-structuring for hedge funds and prime brokers globally. Having been part of the redundancy culls in 2009, I have kept in touch with a couple of ex-clients, one of whom liquidated during the crisis. Another was facing a large minimum fee from their prime broker and needed to find another firm who could clear the fund’s business, while keeping costs to a minimum in light of their fairly new track record."
Alexandra R. Barbier, JP Morgan, London.

Hedge Funds: A Risk Manager's Viewpoint
"One of the priorities of regulators is to prevent a repeat of the catastrophic losses that caused so much damage in 2007 and 2008. But, is this aim realistic? It is worth remembering that, while the sources of the meltdown are still being debated, few believe that it originated with hedge funds. Two possible culprits, banks — responding to very low interest rates — and the mortgage market, were already well-regulated and supervised. Large banks ran daily stress tests and scenario analyses that failed, at the time, to tell them how vulnerable they actually were."
Frances Cowell, R-Squared Risk Managament.

The Hedge Fund of Tomorrow: Building an Enduring Firm
"During the past decade, hedge funds represented one of the fastest growing segments in asset management, with industry assets under management expanding at more than 20% per year between 2000 and mid-2008. These years of rapid expansion were marked by a shift in both hedge funds’ investor base and in several core investment attributes, while some of the industry’s more controversial traits, including its obsession with secrecy and an antagonistic attitude towards any regulation, calcified into business as usual."
BNY Mellon and Casey Quirk & Associates.

Articles that appeared in Issue #33 included:

Challenges of a New Supervisory Architecture in Europe
"The final report presented by the De Larosière Group on 25 February 2009, set out a balanced and pragmatic vision for a new system of European financial supervision. At the core of this vision are proposals to strengthen co-operation and co-ordination between national super visors, including the creation of new European Supervisory Authorities and, for the first time, a European-level body in charge of overseeing risk in the financial system as a whole."
Jaksa Kristo, University of Zagreb, Faculty of Economics and Business, Croatia.

The Performance of the SFA Score vs Traditional Risk-adjusted Performance Measures
"In this article, we examine the performance of a new risk-adjusted performance measure called the Single Fund Analysis (SFA) score, developed by Infiniti Capital. This measure is a weighted average of a number of underlying statistics that has also been standardised to a reference data set making it both a relative and conditional measure. The SFA score can further be decomposed into risk, return and persistence sub-scores."
Peter Urbani, Infiniti Capital, Hong Kong.

The Top Ten Rules Hedge Fund Managers Should Follow to Attract and Keep Great Investors
"An important point hedge fund managers should keep in mind is that the best investors don’t want to micromanage their managers. Integrating the following points into the framework of a hedge fund will greatly improve a fund’s appeal to institutional and high-net-worth investors. These points are often given equal or greater consideration to performance, as these guidelines will help to prevent problems in the future."
Jeff Banfield, JMO Research, Toronto.

Financial Services Regulation in Australia
"Chapter 7 of the Corporations Act provides for a uniform licensing and disclosure regime for financial services businesses operating in Australia, together with general compliance obligations, reporting and record-keeping obligations and prohibitions on certain types of conduct including unconscionable, dishonest and misleading and deceptive conduct. The aim is to ensure that minimum standards of competence, capital holdings, reporting and disclosure are met by participants in this industry on an ongoing basis, in order to protect the interests of consumers. It is, at its heart, a consumer protection law."
Scott Charaneka, Norton Rose, Australia and Michelle Asimus, Pinsent Masons LLP, London.

The Oil Markets: Let the Data Speak for Itself
"In the first section of this article, we will explain how futures traders view the role of price, followed by an examination of data and public statements from the International Energy Agency (IEA) on the state of the oil markets during the summer of 2008. We will then discuss how useful petroleum-complex futures markets are in their price-discovery function: even when fundamental data on the oil markets are sparse or opaque, large-scale supply-and-demand shifts leave footprints in futures-price relationships, from which one can potentially infer the oil market’s fundamentals. In the presence of active futures markets, an observer need not be a member of a cartel or a large corporation to gain insights into the oil market."
Hilary Till, Premia Capital Management LLC, Chicago and Research Associate, EDHEC-Risk Institute, Nice, France.

Articles that appeared in Issue #32 included:

Hedge Fund Clones: A Much safer way to Play
"The motivation for seeking hedge fund exposure through hedge fund clones is two-fold. On one hand, investing in individual funds is generally associated with high costs, moderate to low liquidity, lack of transparency, and barriers to entry...On the other hand, evidence is increasing that the 'alpha' of the avergae hedge fund or fund of funds is very poor and not persistent..."
Martin Cassani, Cass Business School, London and Daniel Giamouradis, Athens University of Economics and Business, Athens.

The Value of Liquidity and Option Timing From a Simple Game
"Locking up investments represents a loss of liquidity to the investors and, despite its growing importance, very little quantitative work has been done to understand it in the context of hedge funds."
Niall Whelan, ScotiaBank, Toronto and Ranjan Bhaduri, AlphaMetrix Alternative Investment Advisors, Chicago.

Does Independent Credit Research Add Value?
"If sell-side research provided by investment banks does provide investors with timely information and serve their 'valuation' function, 'non-certified' rating agencies and other providers of independent debt research ought to provide investors with a superior level of service; their research is objective and solely at the service of the investors."
Julien Rerolle and Cedric Rimaud, Spread Research, France,

So, You're Thinking of Switching Back-Office Service Providers...
"The process of converting to a new provider often seems daunting. There is a lot involved, and a lot at stake. The good news is that any firm worth converting to is likely extremely good at managing the process; their survival dependes on it."
Dennis E. MacPherson, Felcom Data Services Inc., Toronto.

Cayman Islands Funds: A New Gateway to Capital Markets
"To access the Indian markets, an investment fund must register as a oreign Institutional Investor (FII) with the Securities and Exchange Board of India (SEBI). In the past, since the Cayman Islands Monetary Authority (CIMA) was not a member of the International Organization of Securities Commissions (IOSCO), SEBI often engaged in extensive due diligence and enquiries before allowing registrastion..."
Dennis Ryan and Sonia Xavier, Conyers Dill & Pearman, Dubai.

Articles that appeared in Issue #31 included:

Investing in Hedge Funds in Emerging Markets: The Prudent Approach
"In addition to providing a better risk-adjusted return relative to the broader emerging market indices, the hedge fund universe offers a diverse choice of investment strategies that have a varied pattern of returns and risks and, therefore, modest or low cross-correlations."
Sundar Arumugam
(Revised and updated by Peter Douglas, CAIA and Chin Yingwen, CAIA, GFIA, Singapore).

The Hedge Fund Redemption
"However, the ruling potentially has wider implications, both legal and commercial. It may be of relevance to hedge funds incorporated not only in Bermuda, but also in other offshore jurisdictions such as the Cayman Islands and the British Virgin Islands..."
Alex Potts, Conyers Dill & Pearman, Bermuda.

How Regulation and Tax are Creating the Perfect Storm for European Hedge Fund Managers
"From 1 December 2009, this regime will undergo significant change and it will become possible for some managers to secure qualifying status perhaps for the first time."
Nathan Hall and Paul Valente, KPMG LLP, UK.

The Financial Services Authority’s Overhaul of Liquidity Regulation
"The regulators and supervisors must shoulder their share of the blame for the crisis alongside the banking sector."
William Yonge, Proskauer Rose LLP, London.

Articles that appeared in Issue #30 included:

Do BRICs (and Germans) Eat Pigs?
Niels C. Jensen, Absolute Return Partners LLP, London.

An Investment Decision for the New Economic Reality: Hedge Funds or Discretionary Managed Accounts?
Victor L. Zimmermann, Joshua Geller and Bradley H. Doline, Curtis Mallet-Prevost, Colt & Mosle LLP, New York.

Alternative Investments: The Coming Wave of US Regulation
Keith T. Robinson and Derek B. Newman, Dechert LLP, Hong Kong.

Hedge Fund Cost Survey: A UK Perspective
KMPG, London, UK.

Articles that appeared in Issue #29 included:

A year of crisis from July 2007 to June 2008: have hedge funds kept their absolute return promises?
Philippe Malaise, EDHEC Business School.

A statement in sheep's clothing: why should Canada care about FAS Statement 157?
James Loewen and Laura Macdonald, KPMG, Toronto.

The birth of the life market
David Blake, Andrew Cairns, Kevin Dowd,The Pensions Institute, London.

A sunny outlook for clean-tech
Richard Goodman, Sandfire Securities Inc., Toronto.

2008 return differences between small and large hedge funds
Laurent Favre, AlternativeSoft, London.

Articles that appeared in Issue #28 included:

Second Quarter: 'Calm Before the Storm'
HedgeWorld Staff, Chicago.

SEC and FSA Clamp Down on Short Selling of Financial Firms
Elliot R. Curzon, Jennifer Epstein, David A. Vaughan, Richard L. Heffner, Alan Rosenblat, Patrick, W. Dennis and Darina F. O’Connor, Dechert LLP.

Positioning Investors for Opportunities in the Credit Cycle
John E. Dunn, III, Oak Point Investments, Geneva and Craig Brownell, Muirfield Capital Managment, New York.

Monday 22 September: The Day the Contrails Faded
Chris Holt, www.AllAboutAlpha.com.

Airlines: A Play on Oil or a Real Investment Opportunity?
Dr. Fred Lazar, Schulich School of Business, York University, Toronto.

KPMG's Latin American Capital Flows Survey
Jose Aldrich, KPMG’s Iberoamerica Tax Services, Miami.

An Open Letter to the Financial Times
Simon Ruddick, Albourne Partners, London.

Canadian Hedge Fund Industry Celebrated the Best-of-the-Best
The Hedge Funds Awards, The Boiler House, Toronto.

Articles that appeared in Issue #27 included:

President’s Working Group Recommends Best Practices for US Hedge Fund Industry
Keith T. Robinson and Derek B. Newman, Dechert LLP, Hong Kong

Liquidity Buckets, Liquidity Indices, Liquidity Duration and their Applications to Hedge Funds
Ranjan Bhaduri and Christopher Art, AlphaMetrix Alternative Investment Advisors, LLC, Chicago

Hedge Fund Legal Structures and their Impact on Performance
Bhaswar Gupta and Edward Szado, CISDM, Isenberg School of Management, University of Massachusetts

Shari’ah-Compliant Hedge Funds: Commencing with First Principles
Michael J.T. McMillen, Fulbright & Jaworski LLP, New York

Book Review of the Handbook of Hedge Funds
John E. Dunn, III, Oak Point Investments, Geneva

The annual subscription price of only $399.00 includes courier shipment for all 6 issues.

For more information about this Journal, please contact:

Editorial - Sarah Barham. Tel:1 416-849-1926 sarahb@isipublications.com
Subscriptions - Eleanor Bramah. Tel: 1 416-849-1926 ellieb@isipublications.com
Advertising - John Barham. Tel: 44-1892-548881 johnb@isipublications.com