Money managers under the microscope
Interesting research from the FSA out today, giving us the reassuring conclusion that hedge funds don’t seem to pose a systemic risk to the global financial system.
The two surveys, from October, show that funds were running a “relatively low level” of leverage relative to the assets investors have put into the funds and that risks were largely contained.
If private equity is anything to go by, there is plenty of hope for hedge funds operating in the new, post-Lehman world of lower leverage.
A study by the Center for Entrepreneurial and Financial Studies and Capital Dynamics, out today, finds that two-thirds of private equity’s value creation is down to improving companies it owns or rising market multiples.
Many commentators have written the obituary of the hedge fund industry, or of some of its more esoteric or leverage-dependent strategies, during the credit crisis.
So it may be of some encouragement to see a new launch by Invesco Perpetual, announced today.
In a desperate attempt to win market share, prime brokers are courting blue-chip hedge funds with offers of cheap credit. But are hedge funds biting?
Hedge fund stories from the past 24 hours from Reuters and elsewhere:
More than one witness in Galleon case - Reuters
Ex-UBS bankers plan Tufton tranport fund - Bloomberg
There’s no shortage of resentment in London against the EU’s planned directive on hedge funds, but the Hedge Fund Standards Board on Monday said the rules could actually create one of the problems they’re set up to avoid.
At a CSFI debate at the beautiful Innholder’s Hall in the City, HFSB executive director Thomas Deinet pointed out that, as seen all too often in the credit crisis, in falling markets a fund’s leverage automatically rises.
He said at the Reuters Restructuring Summit in London that by the end of the year banks will issue “in patient”, “out patient” or “morgue” judgements as they go about the business to decide who gets much needed loans and who does not.
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.
There has been no shortage of people lining up to lambast the EU’s draft directive on hedge funds and private equity.
But today the UK’s Financial Services Secretary Lord Myners stepped up the attack, criticizing the draft rules on leverage caps and where funds can be sold and promising a blitzkrieg of lobbying.