beware artemis strategic assets

rich_b_3

Hargreaves Lansdown are giving a lot of coverage to the Artemis Strategic Assets fund in their mailings and on their website. If you go to the Artemis website you will find that their hedge fund called Artemis Global Hedge Fund has lost more than half of its investors' money over the last four years.

sabretoothtigger

Different fund manager isnt it. There is a couple videos explaining the strategy if you are interested or concerned, alot of it is normal ftse 100 stocks

Loughton_Monkey

rich_b wrote: »

Hargreaves Lansdown are giving a lot of coverage to the Artemis Strategic Assets fund in their mailings and on their website. If you go to the Artemis website you will find that their hedge fund called Artemis Global Hedge Fund has lost more than half of its investors' money over the last four years.

There are many reasons why these two things are not necessarily a problem. I hold no brief for Artemis, but have occasionally used their funds and not found them to be 'dogs'.

I have no idea of the 'purpose' or make-up of this particular hedge fund, but to understand the markets properly, it is important to understand what a hedge fund is. Sometimes people WANT them to go down.

If I make tractors, out of steel, and have contracted to sell a few of them to Canada, then I make a profit ONLY if the Canadian $ is of the same value when they pay me next year, and ONLY if I can still get the steel from Russia at the price I think I can.

So what do I do? I buy a Hedge Fund. One that trades on the Canadian $, and another on Russian Steel. So if the Canadian $ weakens against the £, and Russian Steel prices go through the roof, then I lose money on the tractors, but make my profit on the hedge fund.

Similarly, if the $ and Steel go in the 'correct' direction (for my tractor business), then boy! Have I made a big profit on my tractors, but OK, the extra is balanced by what I lost on the hedge fund.

As a corrollary to this, I am aware (and this may or may not be the case here) that the little 'boys in the city' wrap up so-called hedge funds as 'Investments'. They are NOT. They are a hedge and must 'hedge' against something. Their objective is to strike a (number of) 'position(s)', which by definition will go one way, or the other. If used properly, you may want the position to go one way. I may want it to go another.

So in my book (and that of most rational people) a "hedge fund" is NOT an Investment. It is a gamble. A bet. Sometimes it is necessary and desirable to take on the bet, since it can be 'insurance'.

dunstonh

Hargreaves Lansdown are giving a lot of coverage to the Artemis Strategic Assets fund in their mailings and on their website.

Not unusual. Remember they are paid to do that by Artemis (or other fund houses whose funds they are promoting).

turbobob

Loughton_Monkey wrote: »

So in my book (and that of most rational people) a "hedge fund" is NOT an Investment. It is a gamble. A bet. Sometimes it is necessary and desirable to take on the bet, since it can be 'insurance'.

My understanding is that a hedge fund is an investment, just not one that can be marketed to retail investors. They can invest in riskier ways and use a lot more leverage than is open to retail funds. As far as I know, UCITS compliant funds (e.g. retail absolute return funds) can use hedge fund like strategies but in a limited way, they are limited in how much of the fund can be made up of derivatives for example.

blinko

hedge funds aim is to make money regardless of market direction, hence they short and long etc

they are more expensive and you need eg minimum £500,000 kinda thing with hedge funds like GLG etc

regardless of what any broker recommends its always ones own research that should be the deciding factor

Rollinghome

dunstonh wrote: »

Not unusual. Remember they are paid to do that by Artemis (or other fund houses whose funds they are promoting).

And never made clear to their customers. Like many funds H-L promote, Artemis Strategic Assets went straight into their Wealth 150 list of recommendations from day one with Mr Hargreaves telling us he'd be investing in it himself. (He didn't say how much.)

It's too easy for customers to mistake the relentless sales literature from Hargreaves Landown and their "Wealth 150" list to be the same as "advice" which they wouldn't be permitted to give. With a huge chunk of the market I think someone needs to look at whether they step over the line.

That's no criticism or otherwise of any particular fund, just the misleading way they're marketed.

sunil1234

Rollinghome wrote: »

And never made clear to their customers. Like many funds H-L promote, Artemis Strategic Assets went straight into their Wealth 150 list of recommendations from day one with Mr Hargreaves telling us he'd be investing in it himself. (He didn't say how much.)

It's too easy for customers to mistake the relentless sales literature from Hargreaves Landown and their "Wealth 150" list to be the same as "advice" which they wouldn't be permitted to give. With a huge chunk of the market I think someone needs to look at whether they step over the line.

That's no criticism or otherwise of any particular fund, just the misleading way they're marketed.

fidelity special situations also went back in quite quick after Mr Bolton left;)

Loughton_Monkey

blinko wrote: »

hedge funds aim is to make money regardless of market direction, hence they short and long etc

they are more expensive and you need eg minimum £500,000 kinda thing with hedge funds like GLG etc

regardless of what any broker recommends its always ones own research that should be the deciding factor

I think that over the years, the terminology has become a bit 'woolly' along with the growing extreme complexity in today's 'back rooms'.

Surely it's the "absolute" funds that aim to make money in all market directions?

I guess I'm of the 'old school' and consider the word 'hedge' (as in "To mitigate a possible loss by counterbalancing") to be literally that. You would lose a pile if oil prices rocket. So you buy oil futures at a fixed price. That's hedging. Or you have a long FTSE-type position that you can't get out of, but you think it is going to dive. So you enter a Dax, or Dow Jones 'short' position to hedge against that.

A 'Derivative' is thought of as something a bit dodgy, but often isn't. E.g. You buy a brand new Jag. Drive it for 5 years. Then sell it. I will lease one for 5 years. In your case, you actually bought and owned the thing. In my case, I never owned the damned thing, but had as much pleasure and use out of it as you. I consider my car to have been a 'derivative'. It may have cost you more than me. Or the other way round. In both cases, a 'real car' was involved in the deal. But I never actually owned it.

If, for the moment, I accept that hedge funds are an 'Investment' (and I agree that some can consider them to be). Then here's the (simplistic, but honest) way I look at 3 different types of fund:

1. A bog standard 'Managed' fund - e.g. UK Smaller Companies.

Here, the fund manager will buy shares in small UK companies. He will seek to find the better ones, and by so doing beat his competitors. Despite the fact that the market might be heavily moving down, he will still doggedly buy shares in UK smaller companies, because that's his 'brief' and purpose in life. To do otherwise would be deceiving everyone who invests in his fund.

2. An absolute fund - e.g. CF Octopus Absolute UK Equity

Here, you are expecting a manager who's only brief is to make money from his 'sphere' in the market (e.g. UK Equities). Therefore, you expect him to take a view on market direction, and maybe go short at the right time, or perhaps leverage it when things are going good, etc. Because this manager 'tries' (and fails a lot of the time!) not to make a loss, he might use a small degree of hedging with the result that returns will often not be startling if UK Equities go up, but at least he might also make profits (or no loss) when they are falling.

3. A Hedge Fund

I view this fund manager as one who takes a "Position". A very strong position, and probably very complicated. For example, views will be taken on Indian, Asian, UK equity markets. Corporate bond incomes/defaults. Interest rates. Exchange rates. Commodity prices. Etc. So he will buy a very complex mixture of leveraged instruments that will 'go through the roof' if his scenario works out. [e.g. I think Korean equities will grow 20%, but the Korean Won will devalue 10% giving me only 10% return. So I'll go long in the equites, and doubly short on the Won to produce a 30% overall return]. Now having set all this up, then the manager is largely on the railway track. He is destined to go exactly where that track takes him. Unlike any of the others, he's got virtually no levers or brakes - and nor should he because he is only doing what he intended to do.

[If I were cynical, I would also say that he and all his buddies have banked piles of commission on the expensive set-up costs of all the 'instruments' he and others have set up.]

In Number 1, I am 'gambling' that UK Equities will rise. in Number 2, I'm 'gambling' that the manager is clever, and can earn a crust for me without me losing sleep because FTSE is plummeting. I understand what I am gambling on.

With Number 3, I am gambling on such a mix of outcomes, that I simply don't understand them, and even if I did, probably might not agree with them. To some degree, like an accumulator. Brilliant, because the first 5 horses came home, but sadly the 6th fell at the first, so I've lost all my money! Mr Ladbroke gets his money whatever.

StevieJ

sunil1234 wrote: »

fidelity special situations also went back in quite quick after Mr Bolton left;)

I thought it only went in this week?

http://www.h-l.co.uk/

StevieJ

Rollinghome wrote: »

And never made clear to their customers. Like many funds H-L promote, Artemis Strategic Assets went straight into their Wealth 150 list of recommendations from day one with Mr Hargreaves telling us he'd be investing in it himself. (He didn't say how much.)

It's too easy for customers to mistake the relentless sales literature from Hargreaves Landown and their "Wealth 150" list to be the same as "advice" which they wouldn't be permitted to give. With a huge chunk of the market I think someone needs to look at whether they step over the line.

Why not? I thought they were Financial Advisors but you have to pay more for that bit.