Geneva hedge funds are losing money two years

Geneva hedge funds are losing money two years after Bernard Madoff was arrested for masterminding a Ponzi scheme that cost investors $ 65 billion.

Money invested in over 180 funds with Geneva-based hedge funds was 14.8 billion U.S. dollars in late October, down from 60 percent a week before the arrest of Madoff the December 11, 2008 , according to data compiled by the Singapore-based Eurekahedge Pte

Union Bancaire Privée, Banco Santander SA optimal investment services and Notz, Stucki & Cie are among at least seven companies based in Geneva that were 7 billion U.S. dollars of losses from the scam Madoff. The model of city banks was a pioneer in the 1960 ruptures and faces competition from investments that charge lower rates, said Drago Indjic, project manager for coverage of the London Business School Funds Center.

"The funds of funds will not explode or implode but gradually fade away, death by a thousand cuts," said Indjic.

The fund managers invest in external funds rather than directly in the markets. Smaller companies often can not cover the cost of checking the credentials of the managers of hedge funds, said Yves Mirabaud, Managing Partner of 191 year old bank private Geneva-based Mirabaud & Cie, which had no investment Madoff.

Decreased UBP

UBP, whose clients lost about $ 700 million holdings Madoff, reported a drop of 71 percent of hedge fund assets to 17 million Swiss francs ($ 17,200,000,000) in the two years until June. The company agreed Dec. 6 to pay as much as $ 500 million to settle claims by the trustee to liquidate the bankrupt investment firm Madoff. UBP said he did not admit any responsibility for its solution and refused to comment further.

Genevalor Benbassat & Cie is also being sued by the administrator. The Geneva-based firm denies the allegation that the company had prior knowledge of the fraud.

The company, which settled their positions of fund of funds after the arrest of Madoff, has suffered a 76 percent drop in assets under administration and management to 440 billion francs, according to Stéphane Benbassat partners.

"We have spent two years trying to defend our clients who have been victims of fraud and risk becoming victims of the system," Benbassat said. "It's premature to talk about rebuilding the company."

Peter Greiff, a spokesman for Spain's Santander, based in Geneva, whose optimal unit lost 3.2 billion U.S. dollars with Madoff, declined comment.

Pictet gains

While some companies struggle to retain customers, Pictet & Cie, the largest private bank in Geneva, reported that net inflows in the hedge fund. Brevan Howard and Bluecrest Capital Management LLP, the largest companies and coverage of Europe's third largest fund, has opened offices in Geneva this year.

"Customers have become increasingly sophisticated and bridge funds of hedge funds through direct investment," said Magne Orglandes, managing partner and head of asset management at St. Gallen-based Wegelin & Co., the largest private bank in Switzerland. "The hedge funds are no longer seen as the solution only investment that provides a decent control downside risk."

Notz Stucki, whose customers lost a net total of 270 million Madoff, said the trend toward single-fund managers may continue for some time before the diversification of funds of funds attract investors back. largest fund of fund firm has attracted more than $ 500 million since July 2009.

"People are still digesting what happened in 2008," said Marc Hoegger, Managing Partner, Notz Stucki. "They are in the business of any alternative, which is a kind of test phase, as an exotic animal."

Mediocre Returns

Geneva funds of funds obtained by an average 0.32 percent in the first 10 months of this year, behind the 7.3 percent gain for single-manager funds worldwide, according to Eurekahedge .

Madoff, 72, is serving a sentence of 150 years in federal prison in North Carolina after admitting he runs the largest Ponzi scheme in history. At the time of his arrest, his statements reflect the accounts of 4900 with $ 65 billion in balances exist.