Back to basics as Wall Street show signs of revival
Hedge funds, money managers and private equity firms which had been the new homes of departing analysts have been hammered by depreciation, redemptions, closures and mass investor exits leaving many escapees from the investment and research side left by the side of the road. Money managers have also experienced multiple rounds of job losses but, redemptions have slowed.
Capital Group had multiple rounds of cuts and pay freezes; Fidelity has cut their staff with Franklin Templeton, MFS, BlackRock, Alliance-Bernstein, State Street, LeggMason, Janus, Pimco, Boston Company Asset Management, Putnam and many, many more also reduced staff. Close to 1500 hedge funds (15%+) closed in the past year. But, hedge funds are coming back but slowly and are on course to complete their best start to the year since 1999 that might restore investors’ faith in them and other parts of the financial services industry continue to show moderate signs of revival. The WSJ states; hedge funds made an estimated 9.73% in returns for the year to June 24.
Private equity fundraising improved as 82 buyout funds drew $76.2 billion in new commitments. Buyout investment groups raised $60 billion in Q1/09. Buyout funds drew the most capital in Q2/09, $33.9 billion spread between 18 limited partnerships (Preqin).
The securities firms still standing on Wall Street are about to close the most lucrative quarter since the credit crisis erupted (WSJ). Many have just – returned to basics. It remains to be seen whether earnings season supports the outlook for earnings which remain weak over the near term. However, the market has a lot of technical factors driving it as risk appetite returns to the market. Money markets continue to improve and show a lot less stress although aggressive stimulus from the Federal Reserve and other major central banks has boosted liquidity significantly in money markets (FT). But, an interesting WSJ article states that Wells Fargo & Co announced it will expand their securities (Wells Fargo Securities) business that it inherited from Wachovia as basic investment banking is anticipation to rebound.
