Funds Hub

Money managers under the microscope

Socially useful?

October 7, 2010

Andrew Baker, boss of hedge fund industry lobbyists AIMA, has taken umbrage at the “unsavoury terms” used to refer to his members.

He doesn’t like the biblical monikers of locusts or parasites and gets very prickly indeed at accusations the Mayfair money men might be socially useless.

Not fair, says Baker, and if you want to argue, he’ll set his big, new, socially-useful, mates on you.

He says the hedge fund industry these days is as much about sensibly managing money for the giant pension funds (oh.. and let’s not forget charities and universities) as it is about speculating with the spare cash of the ultra-wealthy.

“Investment by pension funds in hedge funds could mean a more secure or even a bigger pension for you when you retire and lower pension contributions for you while you are still working. Investment by university endowments and charities in hedge funds could mean more resources for them to devote to university education and charitable activities, and less risk of market-related losses.”

So hedge funds are basically just giving money to charity, see?

Well Baker doesn’t quite go that far… and it is a fair enough point at its heart which comes alongside some well-worn arguments about the provision of liquidity and spreading of risk.  You can read his full note below.

The institutionalisation of the hedge fund industry hasn’t really registered with the mainstream media or the public, and although that’s of little concern to most managers, Baker always has half an eye on the approach of new EU regulation.

AIMA has been desperate to align itself with benign institutional investors who pay out pensions, fund universities, or give generously to the needy. It is, after all, trying to win over EU ministers who still know they can win easy political capital from withering digs at hedge funds.

Hedge funds loathe correlation most of the time — but in this case, needs must.

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