Vancouver, British Columbia, V1V 1V1
Phone: 123.456.7890 ABS
September 28, 2011
Mr. James Dimon, CEO
J.P. Morgan Chase & Co.
270 Park Avenue,
New York, NY 10017
Subject: New market for hedge funds
Dear Mr. Dimon:
It is a pleasure for ABS Consultants to be working with J.P. Morgan Chase & Co. As follow-up to our initial conversations, we have considered various trends occurring within the financial arena, and have identified one trend specifically within the space of alternate investments that would most benefit your firm. The concept underlying this trend is the lack of accessibility to hedge funds for non-accredited retail investors, and through the implementation of the forthcoming proposed structure, we are confident J.P Morgan Chase with be able to provide added value to both its clients and its investors.
Hedge Fund Market: The Trend
From the inception of the first hedge fund in 1949 by A.W. Jones, skepticism has surrounded this investment vehicle. Over recent years however, the benefits of diversification have caused a wider breadth of investors to look past their mystique and gain reasonable insight into the investment alternative that has been attracting some of the most affluent of investors for well over 50 years. Now, as mutual funds prove to be by comparison quite inefficient, and a reversion to general stock picking proves difficult with current market turbulence, more and more of the investing public are looking to alternate vehicles. This trend is quickly becoming resolute. Credibility for this is drawn from the massive purchases of mortgage-backed securities in 2007-2008, valued at $8.91 trillion in 2009 even after recessionary levels of write-offs had occurred. Furthermore, with market activity steadily globalizing2, opportunities created by capturing such a trend are incalculable.
Hedge Funds: The Structure
Bibliography: 1 Asian Development Bank, “The US Housing Market Crisis and Its Aftermath.” Freddie Mac 2009, 16-September: 35. 2 Prasad, Eswar S. et al. “Effects of Financial Globalization on Developing Countries: Some Empirical Evidence.” International Monetary Fund 2003, 9-Septeber: 7-8. 3 Sherman, Lynn. Hedge Funds Statistics 101. 2000, 15-July. 2011 25-September. http://www.forbes.com/2000/07/15/feat.html 4 Yahoo Finance. (2011) J.P. Morgan Chase & Co. (JPM). http://ca.finance.yahoo.com/q/bs?s=JPM&annual 5 Moonesawmy, Dunny P. Hedge Funds vs Mutual Funds. 2011, 18-May. 2011 26-September. http://blogs.reuters.com/fundshub/2011/0as/18/hedge-funds-vs-mutual-funds/