Investing August 19, 2003

Tremont: Hedge Funds Net Record Inflow For Q2

August 19, 2003 (PLANSPONSOR.com) - Continuing the asset gaining behavior of the first quarter, investors poured a record $13.83 billion in net assets into hedge funds during the second quarter of 2003.
Reported by

With the second quarter’s record pick up, hedge funds have now added $16.28 billion in net new assets so far in 2003.    This came after netting $6.98 billion during the first quarter (See Fixed Income Arbitrage Leads Q1 2003 Hedge Fund Returns ), according to Tremont’s TASS Research.

Leading the surge during the second quarter was Convertible Arbitrage, which attracted $2.68 billion in new assets.   This was followed up by two of last quarter’s leaders, Global Macro and Managed Futures, which gained $2.48 billion and $2.28 billion, respectively.

Get more!  Sign up for PLANSPONSOR newsletters.

Only one strategy was on the outside looking in for the quarter:   Dedicated Short Bias.   The shorts were done in by a wave of good sentiment throughout the markets, recording an outflow of $64.4 million.

The TASS Research quarterly analysis of hedge fund flows is based on an analysis of approximately $350 billion in hedge fund assets.  The TASS Asset Flows Report for the first quarter is available through  www.hedgeworld.com .

Compliance August 18, 2003

DoL Gives Thumbs Up to NWA Stock Pension Contribution

August 18, 2003 (PLANSPONSOR.com) - Struggling air carrier Northwest Airlines got the green light Monday from federal officials to contribute stock to its three defined benefit pension plans in lieu of cash.
Reported by

>The US Department of Labor’s Employee Benefits Security Administration (EBSA) announced that it had decided that the transactions would be in the interest of and protective of the pension plans’ workers and retirees based on the input of interested parties and the adoption of additional protections. The exemption allows Northwest to make in-kind contributions to its plans of stock of Pinnacle Airlines Corporation, a regional Northwest affiliate (See  NW Airlines Seeks OK for Stock Contribution to Pensions ).

>According to the DoL news release, the proposed exemption would permit in addition to the in-kind contribution:

Never miss a story — sign up for PLANSPONSOR newsletters to keep up on the latest retirement plan benefits news.

  • holding of the stock by the plans
  • the sale of the stock by the plans to Northwest
  • the acquisition and exercise by the plans of a put option granted by Northwest
  • the guaranty to the plans by Northwest Airlines Corporation of Northwest’s obligation to honor the put option.

>An independent fiduciary has been retained by the pension plans to establish the fair market value of the Pinnacle stock and to determine that the stock is a prudent investment for the plans, the DoL announcement said.   The plans will receive financial protections and governance rights as negotiated by the independent fiduciary on their behalf.

>ERISA generally prohibits in-kind contributions except under certain statutory exceptions or if the DoL grants an exemption that protects the interests of workers and retirees covered by the plan. The Northwest Airlines exemption will be published in the August 19, 2003 Federal Register.  Northwest, headquartered in Eagan, Minnesota, sponsors the three plans for 72,854 employees nationwide.  

«