This content is from: Portfolio

The Morning Brief: President Obama's Carried Tax Proposal on the Front Burner; SEC Moves Closer to Defining Rules for JOBS Act

Hedge funds expect to be directly and indirectly affected by President Obama’s budget unveiled on Wednesday. As anticipated, the budget included a proposal to tax carried interest as ordinary income. This has been a long-simmering proposal that, perhaps unbeknownst to legislators, many hedge fund managers, including Appaloosa Management’s David Tepper, have supported. Obama also is seeking more money for the Securities and Exchange Commission’s examination program so they can review the growing ranks of hedge funds and private equity funds t required to register with the regulator.

Hedge funds pulled in a net $11.4 billion in February, according to BarclayHedge and TrimTabs Investment Research. This comes on top of the $4.3 billion of inflows in January. On the other hand, funds of hedge funds saw a net $3.3 billion of outflows in February. This means $54.3 billion left the funds of funds industry in the past 12 months.

A top mutual fund manager is hoping to find success in the hedge fund industry. Kris Jenner, formerly the head of T. Rowe Price Group’s $5.8 billion Health Sciences Fund, has raised more than $100 million for his new fund Rock Springs Capital. The Baltimore-based manager will focus on healthcare and biotechnology stocks. Two other former T. Rowe Price analysts will be joining him, Mark Bussard and Graham McPhail.

The Securities and Exchange Commission took a big step closer to implementing the remaining provisions of the Jumpstart Our Business Startups Act when Mary Jo White was sworn in Wednesday as the agency’s new chair. Experts have been saying that the long delayed provision to permit hedge funds to advertise would not be addressed by the SEC until White was officially sitting in her new job. Stay tuned.

Peter Ammon, a director in the Yale University Investments Office, has been named chief investment officer for the University of Pennsylvania. Ammon will be responsible for overseeing management of the University’s $6.8 billion endowment and $1 billion pension plan.

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