Money managers under the microscope
There’s been plenty of confusion over who exactly will be hit by the ‘supertax’ on banker bonuses.
The wording of the Treasury’s clampdown last week suggested some hedge funds and traditional asset managers could be caught — PwC’s John Terry told me that of the 20 hedge funds he had spoken to, around half may have been caught in the net.
However, hedge funds are to fall outside the supertax, confirming a rumour doing the rounds among hedge fund executives.
Speaking at Reuters’ London offices this morning, City minister Paul Myners clarified that the tax would be focused on “the activities of banking”.
For UK-based opponents of the controversial EU hedge fund directive, there are signs the draft could be overhauled.
There has been much debate about whether London’s hedge fund community, angry at plans for a 50 percent tax rate on top earners and the EU’s draft directive proposing tough controls on the sector (not to mention the usual problems of traffic, high property prices and quality in life in London that usually get raised), will head to low-tax Switzerland.
Our analysis today argues that, while a trickle have already left, there are far more who have upped the rhetoric but are simply waiting to see who wins the next election.
With a headline like that, you’d think this would be a story about investing in Bonds.
But in fact a survey by boutique fund firm Moonraker Fund Management shows U.S. hedge fund managers are buying physical gold to protect their wealth against high levels of inflation.
Guest blogger Dale Gabbert heads the funds group in the London office of law firm Reed Smith. His practice covers hedge funds, private equity and property funds and he is the author of Hedge Funds, a legal guide published by Butterworths Lexis Nexis.
The views expressed here are entirely the author’s own and do not constitute Reuters’ point of view.
But one means that shows quite how drastic the change has been is in the area of risk management — not normally the sexiest topic but now an area of real concern for investors.
The hedge fund circuit can be exhausting.
Last Thursday saw the plush fundraising dinner of ARK, the charity headed by Arpad Busson, fiance of Uma Thurman, at London’s Waterloo International.
The next date in the European hedge fund industry’s diary is next week’s annual GAIM conference, held in Monaco (where else?).
With the finalisation of new EU laws on regulation of hedge funds and private equity likely 6 months away, we should be prepared for an awful lot of hand-wringing and much talk of an industry exodus to lakeside retreats in Switzerland.
The latest word on this is that some managers have warned the Treasury that funds are already looking around for alternative locales where their love of leverage attracts less concern.
Some investors may not be fully aware of the risks they face as career-conscious hedge fund managers plump for strategies that build a convincing-looking track record but occasionally backfire badly.
According to a paper by Yale academic Hongjun Yan, hedge fund managers are far more likely to choose so-called ‘nickel’ strategies than ‘black swan’ strategies, even if returns are ultimately lower and they risk the occasional huge loss.
One thing that the credit crisis has demonstrated is that even performing well isn’t always enough to stop investors in need of cash from taking their money out of a hedge fund.