Funds Hub

Socially useful?

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.

Blowin’ in the wind

The timing of the Alternative Investment Management Association’s hedge fund disclosure initiative indicates just how strong the winds of change are blowing in hedge fund land.

Coming just a day after ECB President Jean-Claude Trichet called the credit crisis “a loud and clear call” for extending hedge fund regulation, the move shows the hedge fund industry feels it must be more active in deciding the future shape of regulation.

The move, which will include regular — probably quarterly – disclosure of systemically significant holdings and risk exposure to national regulators, goes further than that suggested at last month’s Treasury Select Committee by Marshall Wace chairman and Hedge Fund Standards Board trustee Paul Marshall, who had proposed aggregating data through prime brokers.

“The international agenda is starting to gallop away… We can see which way the wind is blowing and we want to exercise leadership,” said AIMA CEO Andrew Baker, adding the proposals had been in the pipeline since early in the new year.

But AIMA’s drive to do this also serves to highlight the low number of funds that have signed up to the HFSB’s voluntary code – a fact seized upon by last month’s Treasury Select Committee.

AIMA is proposing unifying all the industry standards — AIMA, the HFSB, IOSCO, PWG and MFA — into one code. Their fear is that regulators may do this for them.