Money managers under the microscope
After last year’s record poor performance, investors may view a warning that the quality of hedge funds could get worse with a certain degree of irony.
However, according to the Hedge Fund Standards Board’s chairman Antonio Borges, this is one of the negative effects on the industry that proposed EU laws could have.
What he calls the ‘protectionist element’ of the draft — whereby the EU market could be shut to fund managers from outside unless their host countries adopt similar rules — could mean large hedge funds in London gain a comfortable market position without having to face up to competition from the huge U.S. hedge fund industry.
“It’s not going to kill the industry, because the industry will survive,” Borges told a briefing at Axa Investment Managers this week.
It seems the UK Treasury Select Committee’s very public chastisement of the hedge fund industry in January has had some effect.
At the time, MPs zeroed in on the Hedge Fund Standards Board (HFSB) in particular and the relatively small number of funds it had signed up — 33 in December — even though these funds accounted for half of the European industry.
It is still a moot point whether institutional investors are putting more money into hedge funds or taking money out.
Yesterday Antonio Borges, chairman of the Hedge Fund Standards Board, told Reuters that there had been a “dramatic reversal” since December and that institutions were “returning to the hedge fund industry in a very serious, well thought-through process”.