These are better links as they are available to US investors: A Shares: http://www.superfund.net/us/popupFacts.asp?Mask=32 B Shares: http://www.superfund.net/us/popupFacts.asp?mask=64
Once you stop playing with peanuts and start playing with serious capital you will see things differently, kiddo.
The B shares are still down about 25% YTD, so I sent in a sizable (to me at least) contribution for the month. Good luck to me! :eek:
Baha's Superfund Pitch Grabs Ranieri, Annoys Hedge Fund Rivals By Kambiz Foroohar April 26 (Bloomberg) -- Three salespeople surround a speakerphone in a glass-fronted store across from the main New York Public Library on Fifth Avenue, talking with counterparts in Chicago and Toronto. In the lobby, flat-panel TVs run a loop of commercials for commodity investments. Here, wedged among discount electronics retailers and mobile phone vendors, is what former Vienna cop and college dropout Christian Baha says is the next wave of investing: a company called Superfund that's hawking hedge fund-style funds to the masses. Baha has starred in his own commercials and sponsors U.S. skier Bode Miller and the American Ballet Theatre. In the fall, he rubbed shoulders with ``Desperate Housewives'' actor Teri Hatcher and model Claudia Schiffer at the Women's World Awards in New York, a program that Superfund backs and former Soviet President Mikhail Gorbachev heads. ``If hedge funds are good for the rich, they are good for everyone,'' Baha says. Baha spent four years policing Vienna before starting Superfund 11 years ago in the Austrian capital. Today, Superfund has 20 funds, $1.5 billion under management and 20 offices in 16 countries. Baha, 38, says he wants to follow the path of Charles Merrill, who started what became Merrill Lynch & Co. in 1914, or Edward C. Johnson II, who founded Fidelity Management & Research Co., the predecessor of Fidelity Investments, the world's biggest mutual fund company, in 1946. Moms and Pops In the U.S., Baha invites people with as little as $5,000 to put their money into investments that take hedge fund-like risks. ``Merrill pioneered the retailing of stocks; Fidelity did the same thing with mutual funds,'' says Baha, during a stop at Superfund's offices in Innsbruck, Austria, before he heads out for some late-December skiing. ``One day, Superfund will be a household name.'' It may already be, for different reasons. Baha's pitch to the masses irks industry veterans such as Bill Dunn, founder of Stuart, Florida-based Dunn Capital Management Inc. ``We don't advertise, because we are not going after the $5,000 account,'' says Dunn, whose fund has averaged a 19.2 percent annual return, after fees, during the past 32 years. Baha's promotions have also drawn scrutiny from the U.S. Securities and Exchange Commission. When he unveiled his first U.S. funds in October 2002, he put out a press release that said, ``The Quadriga Superfund LP offers American investors access to the hedge fund world with a minimum investment of only $5,000.'' SEC Scrutiny Baha says the SEC sent him a letter asking him to stop using the phrase ``hedge fund.'' Hedge funds are mostly private and unregulated pools of capital whose managers can buy or sell any assets, participating substantially in the profits of the money invested. Under SEC guidelines introduced in 1982, only investors who have a net worth of $1 million or have income of $200,000 for two consecutive years can invest in hedge funds. In December, SEC Chairman Christopher Cox proposed to raise the net-worth threshold for qualifying investors to $2.5 million. A final decision is expected later this year. After the letter, Baha changed his marketing language. He now calls his U.S. funds ``managed futures.'' He's registered them with the SEC and the Commodities Futures Trading Commission. In black-and-white commercials that aired on cable TV in 2003 and '05, Baha referred viewers to his Web site. Computer Models ``I would love to tell you more about Superfund, but regulations prevent me from describing it on television,'' he said. In April, Baha stepped down as chief executive officer of Superfund Capital Management Inc., the arm that controls the two U.S. funds. He handed executive responsibility to Nigel James, who resides in Grenada, where Superfund Capital Management is based. The nation, which is in the West Indies, has no taxes for foreign companies. In addition to selling through retail branches, Baha offers Superfund through several hundred financial advisers. Like many hedge funds, managed futures funds invest in commodity and financial futures and can bet against securities and use leverage, paying for a portion of the investments and borrowing the rest, says Professor Harry Kat, director of alternative investment research at Cass Business School in London. Baha's two U.S. funds invest in more than 100 markets, including oil, coffee and currency and index futures. Baha and Chief Technology Officer Christian Halper designed a computer program maintained by a research team of 35, including mathematics and computer science Ph.D.s. Betting on Gold Baha says the system exploits trends in commodity prices that go consistently up or down, using models of past price movements. Once a trend is identified, Superfund's ``black box'' issues a buy or sell order. ``The charts never lie,'' Baha says. In Europe, where regulations let Baha use the hedge fund moniker, Superfund ads are plastered on billboards in Austria and on Formula 1 cars in Monaco. An Austrian soccer club outside Linz formerly known as SV Pasching is now FC Superfund, thanks to Baha's funding. In the U.S., Baha hosts investor seminars at New York's W Hotel and in the Fifth Avenue offices. Attendees can nibble on Superfund-branded chocolate shaped like bars of gold bullion and get T-shirts and baseball caps with Superfund's logo. Buffalo for Bull Baha wanted a bull for the company symbol. He saw what he thought was a bull on the Wyoming state flag. It turned out to be a buffalo, says Aaron Smith, Superfund's North American director. Baha added a double elongated S to represent a ski trail -- a nod to the company's Vienna roots and his love of the sport. Smith says the company is revamping the logo to remove the animal. Baha says he picked the name Superfund for his U.S. funds to highlight performance. In 2002, his main fund, Superfund Q-AG, returned more than 38 percent, after fees. He later changed the company's name from Quadriga to Superfund Group. Smith says Baha didn't know that the term superfund had been used in the U.S. since 1980 to designate toxic waste sites that would be cleaned up using federal money. ``When I told him, he said, `Good. We'll clean up the markets,''' says Smith, who joined Superfund in 2002 after two years as an associate at New York-based Morgan Stanley. ``I liked the idea of bringing an institutional product to the retail market,'' Smith says. Rankling Veterans Baha's approach rankles some industry veterans. ``He's an embarrassment to the hedge fund community,'' says John Godden, who heads London-based IGS Group, which invests in hedge funds for pension funds and other institutions. ``Baha is a wonderful self-publicist in a world where self-publicists are not welcome.'' David Harding, who runs London-based competitor Winton Capital Management, predicts Baha won't get far. Winton Capital, like Superfund, offers managed futures funds. ``He's a complete outsider,'' says Harding, whose fund has raised $8 billion since 1997, a year after Baha started Superfund. Winton Futures Fund Ltd. gained 17.8 percent in 2006, outperforming the average hedge fund return of 13 percent as measured by Chicago-based Hedge Fund Research Inc. Baha has a response for his detractors. Superfund Q-AG returned 554 percent from its inception in March 1996 to April 17, 2007, or an average of 18.4 percent a year after fees, according to accounts audited by KPMG Austria GmbH. The fund was available only in Europe and is now closed to the public. Trend Followers Superfund has fallen back to earth in recent years. ``Since the beginning of the Iraq war, trend followers have had a terrible time,'' says Zachary Oxman, a trader who invests in managed futures for Newport Beach, California-based Wisdom Financial Inc. He says he's not recommending Superfund to his clients. Trend followers like Baha need steady rises or declines in prices to make money. If commodities, bonds and foreign currencies are trading in a narrow price range, these programs cannot make high returns because the trends reverse too quickly for the computer programs designed to capture the price movement, Oxman says. In 2003, the Goldman Sachs Commodity Index, a benchmark for the investment performance of commodities, rose or fell 2.5 percent or more on 28 occasions. That year, Superfund Q-AG returned 24.3 percent, after fees. Last year, the index rose or fell 2.5 percent or more 11 times. Superfund Q-AG rose 10.5 percent, after fees. Mutual Fund Gains In the past five years, Superfund's U.S. funds have returned less than the benchmark stock market index for mutual funds. Quadriga Superfund LP-Series A had a 6.9 percent average annual return, after fees, from its October 2002 inception to April 17. The Standard & Poor's 500 Index gained 11.6 percent a year in the same period. Last year, the Series A fund rose 12.9 percent after losing 9.4 percent in 2005. In the first three months of 2007, the fund lost 18.2 percent. Quadriga Superfund LP-Series B fell 25.6 percent in the first quarter of this year, according to documents filed with the SEC. An 8.84 percent plunge in China's benchmark Shanghai Stock Exchange Composite Index on Feb. 27 triggered a global stock market slide. The Dow Jones Industrial Average tumbled 416.02 points to its worst loss since September 2001. Superfund, which had bet on a rising U.S. stock market, lost money on its investments in equity index futures and on European bond futures.
High Fees Superfund's fees are among the highest for any funds, says Marc Denogent, a vice president at Hedge Fund Research's investment management arm in Zurich. Superfund charges an annual management fee of 1.85 percent of an investor's assets; 1 percent each year for the cost of creating and distributing the fund; and 0.15 percent for operating expenses. On top of that, Superfund charges a 4 percent annual sales commission on an investment for the first 2 1/2 years. And it adds a brokerage fee of $25 per trade, which Superfund estimates comes to about 3.75 percent of assets every year. In addition, Superfund can take a 25 percent cut of any profits after expenses in any month when a fund reaches a new high. ``The fees are quite high,'' Denogent says. ``Institutional investors will not pay these fees.'' Superfund A has to produce at least a 6.75 percent annual return before investors see any gain, according to the prospectus filed with the SEC. Superfund B has to gain more than 8.63 percent. ``There is an element of sticker shock if you've been used to mutual funds,'' Smith says. Don't Buy Cheap A typical hedge fund charges 2 percent of assets in management fees and takes 20 percent of profits. Winton Capital charges 1 percent of assets in management fees and takes 20 percent of any profits. Dunn Capital charges no management fees and takes 25 percent of gains. ``Nothing cheap is good, and nothing good is cheap,'' Baha says. A Superfund investor would have done much better owning a U.S. stock index fund since October 2002. Vanguard Group Inc.'s Vanguard 500 Index Fund, which tracks the performance of the S&P 500, charges no sales commission and 0.34 percent of assets in total fees. The fund returned 73 percent through March 30 compared with a 23 percent return for the Series A. In addition to having high fees, Superfund may frighten investors who don't have the nerves to weather the funds' swings, says Clarence Parsons, a retired Merrill Lynch broker. ``They're more volatile than other funds,'' says Parsons, who invested $400,000 in a Superfund fund in 2003 and '04. He says he sold some of his investment in January, taking a profit, because he was concerned about the fund's ups and downs. Retail Investors ``I was chasing performance but now have to cut back my exposure,'' he says. As some investors are choosing to be more cautious, the demand for hedge fund-type investments is increasing among the less than wealthy. ``It will get a lot easier for retail investors to invest in hedge funds,'' HFR's Denogent says. In Europe, hedge funds may be as easily available as mutual funds in the next five years, he predicts. In the U.S., Charles Schwab Corp. offers the Hedged Equity Fund, which requires a $50,000 initial investment. UBS AG and OppenheimerFunds Inc. have similar products. In Germany, DWS Investments GmbH, a unit of Deutsche Bank AG, gives people the chance to invest in hedge funds for as little as 50 euros ($67) a month. There's no contract or specified duration for such investments. In March, Britain's Financial Services Authority set out proposals to let people who aren't wealthy put money in funds of hedge funds. The FSA plans to publish draft rules at the end of 2007. Currently, all U.K. citizens can invest in offshore hedge funds or investment trusts traded on the London Stock Exchange, like those offered by RAB Capital Plc. `Game of Craps' Ira Kawaller, a former director of the Chicago Mercantile Exchange, sees danger for ordinary people in the hedge fund world because they're probably not aware of the risks. ``If you don't understand what you are investing in, then it's a game of craps,'' says Kawaller, who now runs his own currency hedge fund in Brooklyn, New York. ``When people have no idea how returns are generated, that disturbs me.'' Dunn, of Dunn Capital Management, says the type of people Baha is targeting don't have the stomach to suffer huge declines. Dunn's fund has a $10 million minimum investment. ``Unsophisticated investors don't have the right philosophy or stamina to withstand losses,'' he says. In July 2006, SEC Chairman Cox told Congress that selling hedge funds to people who aren't wealthy should be viewed with alarm. ``They are generally risky ventures that simply don't make sense for most retail investors,'' Cox said. Ranieri a Fan Baha supporters such as Lewis Ranieri, chairman of Islandia, New York-based CA Inc., say Superfund's investments in gold, copper and other commodities let them diversify. ``The kind of investing they do is not something I'd do on my own,'' says Ranieri, who helped make Salomon Brothers the most-profitable firm on Wall Street in the 1980s by being one of the first to pool mortgages and sell them as securities. Ranieri, a Superfund investor, says he likes the ability to invest in 100 different markets at one time. ``The way they've designed the product makes it very convenient,'' he says. Ranieri, who's chairman of the American Ballet Theatre, met Baha in February 2006. Later, Baha increased his sponsorship of the dance troupe. Neither would disclose the amount. Thomas Boey, a systems analyst from Ramsey, New Jersey, is another fan. He says he noticed Superfund's logo during a Formula 1 race in 2005. A few months later, he saw Superfund's commercial on CNBC. Boey, 40, who'd invested in mutual funds, was searching for alternatives to equities. Started With $5,000 ``After the dot-com bust, I was looking to diversify my portfolio from stocks,'' Boey says. ``Superfund is the only managed futures fund with such a low minimum requirement.'' Boey started with $5,000 in 2005 and adds money every month. ``When the fund goes down, I buy more, and when it goes up, I buy less,'' he says. ``Superfund is tailored for people like me who don't have millions to invest.'' Baha didn't start out on the road to finance. He grew up in a two-bedroom house in Vienna, the only child of a middle-class family. His father was an executive at an insurance company. His mother died when he was 13. Baha joined the police academy after graduating from high school two years later, looking for adventure and independence. He says he regretted the move immediately. ``Within a few weeks, I realized this is not what I wanted to do,'' he says. On The Beat Baha graduated from the academy in 1987 and spent four years on the beat. ``Vienna is not dangerous; it's not New York,'' he says, laughing. Baha says he was always interested in finance, reading books like ``Market Wizards: Interviews With Top Traders'' (Harper & Row, 1990) by Jack D. Schwager. In 1991, he enrolled part time at the University of Vienna to study business administration. A year later, while still in school, he used the money he'd made as a cop to buy the name and client list of Austrian Brokerage Service, a defunct brokerage firm, for 50,000 Austrian schillings ($5,000 at the 1992 exchange rate). He started a discount brokerage. There was no money left, so he converted his apartment into his first office. Baha wrote articles for financial publications, offering himself as a technical charts analyst, recalls Rene Danzinger, a fellow student who's now Superfund's marketing director.
Options, Swaps Questions During classes, Baha posed complicated trading questions that applied to his brokerage firm, says Edwin Fischer, a former University of Vienna professor who now teaches at the University of Graz. ``He'd always ask about options, swaps, hedging and futures,'' Fischer says. After two semesters, Baha dropped out to concentrate on his company. ``He should have stayed on,'' Fischer says. ``We taught options and futures in the fourth year.'' In 1992, Baha teamed with software developer Halper to devise programs for trading. He started his second company, a financial software firm, called TeleTrader.com Software AG. It provided financial news and charting data. Nine years later, in 2001, Teletrader went public in Vienna. Its shares, which are thinly traded, had dropped 54 percent as of Feb. 16. The company, which competes with Bloomberg LP, the parent of Bloomberg News, has lost money trying to gain professional traders and brokerages as customers. Baha remains a board member. TradeCenter In 1995, Halper created a new computer trading system called TradeCenter to detect trends in commodity futures markets. Halper, who is Superfund's biggest shareholder after Baha, declined to be interviewed for this article. During the companies' early years, money was tight. One time, Baha helped install equipment. ``He once went to a client site and climbed on the roof to put up the satellite dish to receive data,'' Danzinger says. Baha started his first fund in March 1996 in Vienna. He called it Quadriga after the four-horse Roman chariot that raced in ancient games. He required a minimum investment of 150,000 schillings and raised the equivalent of $360,000 from his brokerage clients. ``I didn't have any money to invest myself,'' Baha says. ``I had spent it all on setting up the company.'' Shun Traditional Analysis Baha and Halper looked at things such as relative strength, daily volume and opening and closing prices as well as values a commodity might struggle to exceed. They shunned analyzing supply and demand projections, company news such as profit and cash flow and even central bank statements on interest rates. ``We just want to follow the trends and don't care what market we are in,'' North American director Smith says. ``Our system treats corn the same as it would Japanese yen. The system looks at price patterns, volatility streams.'' When the indicators align, the system issues a buy or a sell order. About 30 traders execute the trades from a suite of offices on LaSalle Street in Chicago, eight blocks from the Chicago Mercantile Exchange. ``All fundamental news is already factored in the price,'' Baha says. The fund lost 10 percent in its first year, in 1996. On three occasions, Baha acted on the trading program's signal to sell gold; each time, the trend reversed, leading to fund losses. When the system flashed a sell signal for the fourth time, in November 1996, Baha ignored it. Gold prices fell 11 percent until February 1997. ``We missed one of the biggest moves in gold,'' he says. That decision taught him a lesson: no more human override. ``Emotions, greed and fear can affect trading,'' he says. Celebrations In 1997, Quadriga reported a 21 percent return, after fees, according to KPMG Austria. It followed that with a 63 percent gain in 1998. In March 1998, Bank Austria Creditanstalt AG, a 152-year-old bank now owned by UniCredito Italiano SpA, put $1 million into the fund, increasing the assets to $2.3 million. ``We had great celebrations and lowered minimum investment to $2,500,'' Baha says. ``The idea was you shouldn't be privileged to invest in a hedge fund. Everybody should.'' In 1998, Superfund moved its trading operations to Grenada from Vienna. That same year, Long-Term Capital Management LP, a Greenwich, Connecticut-based hedge fund firm, lost $4.6 billion, prompting Bank Austria to pull its money from Superfund, Baha says. The bank declined to comment. In 2001, with 60 million euros under management, Baha unveiled a savings plan that let people invest as little as 100 euros a month for whatever period they chose. He opened offices in Frankfurt and Zurich. A year later, he started his two funds in the U.S. 30 Percent Growth? With Superfund's recent stuttering performance, rivals point to flaws in Baha's strategy. Chasing retail customers means he's focused on marketing and acquiring new clients, rather than fine- tuning his trading program, Winton's Harding says. Baha declined to comment on how much he spends on marketing. He says almost all of the assets in the company's funds come from individuals, not institutional investors. Baha dismisses the slide in his U.S. funds in the past four years. ``Once we get 30 percent growth, the questions will stop,'' he says. While he's working on that goal, Baha is promoting a new fund: Superfund Gold. The fund converts an investor's cash into ounces of gold. When the investor cashes out, the fund converts the gold back into the currency of the investor's choosing. The fund, which isn't available in the U.S., has a minimum investment requirement of $50,000. ``You can even get paid in gold ounces,'' Baha says. Baha's pitch to pay customers in gold bars adds another twist to his maverick approach. Unless his returns improve, all of the T-shirts and chocolate bars may not be enough to attract the customers Baha is counting on for profits. To contact the reporter on this story: Kambiz Foroohar in New York at kforoohar@bloomberg.net Last Updated: April 26, 2007 00:07 EDT