'Barclays may sue to recover losses at Bear Stearns' -- MarketWatch

Barclay's was an investor at the now-worthless Bear Stearns' High-Grade Structured Credit Strategies Enhanced Leverage Fund? Well, for Pete's sake. They were also a lender to the fund. A conflict of interest? And they are suing to get their investment back? As a lender, would you expect then to have had more or less information about the status of the fund than the retail investors? This will be interesting to watch.

Also, per a WSJ subscription-only article, Barclays Spars Over Its Losses at Bear Stearns it now seems that some of the investors were not happy with what turned out to be pretty radical levels of leverage employed at the fund, but were trying to juice the returns by borrowing part, perhaps half, of their investment in the fund from a bank. In essence, investing in a hedge fund on margin. I personally just have a hard time working up much sympathy for anyone who would treat their own money with such contempt. How could anybody do that?


Barclays considers options for recovering losses at Bear Stearns - MarketWatch

FT - "ETFs: winning concept's meteoric rise"

A nice review of current status and how ETFs are changing, though I'd be wary of speculative approaches like those listed at the end of the article. You just don't need to speculate, and leveraged ploys are not winners for most of those who use them.



FT.com / Wealth - ETFs: winning concept’s meteoric rise

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Fascinating Bloomberg Article on Barclay's Global Investors

I'll offer a few comments below the link. The best take-away from the whole article, for my money: "The rush into hedge funds may end badly, says Zvi Bodie, a finance professor at Boston University who has studied pension issues for more than 25 years. If hedge fund trades go wrong, the use of short sales could leave pension funds in a hole, he says." Further, he also says, "There is very little evidence that anyone can consistently beat the market,'' Bodie says. ``The pensions don't want to suck it up, so they're grasping at anything that might provide an answer."

The sane man in the room!


Bloomberg.com: Exclusive

First thought on the article's extended discussion of how BGI's hedge fund operation has grown larger than its' iShares exchange traded funds business, is that indeed, pension funds have rushed to put a lot of money into hedge fund-type investments, and if, as the article notes, the hedge funds do not successfully execute their strategies and make the kind of returns they have indicated they can, there will be more pension funds in a world of underfunded hurt.

Also, given the size of the funds coming into these institutional investor-oriented hedge funds, they simply cannot all beat the market. As has been said about the largest actively-managed mutual funds, in a sense, they are the market. The market cannot beat the market.

And, finally, if (hopefully not when,) BGI's hedge fund has a serious problem, I just hope and pray that it does not screw up the financial markets for more traditionally-minded investors. Like the Unknown Advisor and so many others. Ah well, if it does, think "buying opportunity".