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.
(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.