Wednesday's Headlines: Investors flock to hedge funds, despite mediocre returns
Hedge funds are not what they used to be, but investors love them anyway, according to DealBook, which writes, "This year alone, more than $70 billion in new money has gone to hedge funds, mostly from pensions and endowments.
A recent study by the industry tracker Preqin found that 80 percent of investors were weighing new allocations to hedge funds, and 38 percent of investors were planning to add to existing ones.
Historically, hedge funds perform only slightly better than other investments -- the average hedge fund investor earned about 6 percent annually from 1980 to 2008, while they would have earned 5.6 percent in Treasury securities.
To keep pace with growing demand, the funds are changing their structures into more institutional businesses, DealBook reports, which includes investing in "vast marketing, compliance and legal teams. They hire top-notch accounting firms to run audits, and their technology infrastructure rivals that of major banks."
Bank profits rise by 50 percent on lower loss provisions. [WSJ]
A group led by KKR will buy Samson for $7.2 billion. [DealBook]
JPMorgan Chase will buy a 4.7 stake in the London Metal Exchange for $38.9 million from MF Global. [NY Times]
Deutsche weighs its options for its troubled global asset unit. [Bloomberg]
The U.S. Postal Service hired the investment bank Evercore Partners to advise it on a restructuring. [Bloomberg]
The Financial Services Authority has for the first time ever barred a compliance officer from working in the financial services industry. [On Wall Street]
Nomura is in talks with equity firms including the sale of its real estate and research units. [Financial Times]