Funds Hub

Money managers under the microscope

Hedge funds found not guilty

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.

(They even contained a handy definition of systemic risk for those who were wondering: “A risk which, if crystallised without any form of intervention by the authorities, would mean a high likelihood of major, rapid disruption to the effective operation of a core function of the financial system (and so leading to wider economic impact).”)

The news is surely a boost to those — particularly the majority of the UK hedge fund industry — who oppose the EU AIFM directive, but it is far from enough to end the debate.