John Cleese Wows Bermuda Hedge Fund Conference

by Mike Godfrey, Tax-News.com, Hamilton

01 November 2002

This week in Bermuda sees the Ninth Annual MAR Hedge Fund Conference, and while most delegates may chiefly carry away memories of John Cleese, who managed to make them laugh by insulting them, like all the best comedians, other speakers had more serious messages.

There probably are some funny hedge fund jokes, but they weren't in evidence this week. Hedge fund jokes are like viola jokes, hilarious to orchestral musicians but indecipherable to ordinary mortals. John Cleese told some good jokes, but they weren't noticeably to do with hedge funds.

Turning to the serious business, one of the more interesting speeches came from Kenji Kodama, deputy manager of Tokio Marine and Fire Insurance Co. Ltd.'s alternative investment group, who said that Japanese investors are taking a closer look at the high fees hedge fund managers charge now that many of these funds are no longer making much money.

"Net performance is almost flat in 2002. As a result, the costly fee structure has lately drawn investors' attention," he said. "Some Japanese investors are getting reluctant to invest in hedge funds, particularly in funds of funds."

Kodama said that Japanese investment in hedge funds is slower than in the past two years, when $16 billion flowed in from life insurers and regional banks.

Tokio Marine, which is a unit of Millea Holdings, has about $400 million in hedge fund investments, comprising 20 single strategy funds and a fund of hedge funds. Strategies include long/short equity, convertible bonds and other fixed-income instruments. The insurer is looking to diversify into distressed funds and global macro.

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