Here we are a year after the Madoff mess and the question is: Are we any better off than we were when the whole thing came crashing down?
The answer, of course, is no – nothing has changed. The press still is complaining about the “high fees” hedge fund charge, the government is still threatening to increase hedge fund regulation and investors are still putting money into hedge funds at a record pace.
The fee story is what makes me crazy. As many of you know, I don’t believe that anyone who invests in hedge funds actually complains about the fees but rather it is the people who can’t charge these fees who lead the opposition. The threat of regulation is not a threat at all, but something that will cause the industry to grow by increasing the confidence of investors around the world. They still rightly or wrongly believe that the people who run hedge funds are the best and the brightest money managers around.
A recent article in Reuters – Hedge Funds Tip-Toe Toward An Uncertain Future — is a good read in that it covers many of the issues that the industry is dealing with. The problem is that the writers didn’t get it. They didn’t get the fact that investors, who simply want products that work, believe that that’s what hedge fund managers offer them: Products that work. When the products stop working, or investors lose faith in the manager, they take their money out of the fund.
Now I am not saying that all hedge funds work, nor am I saying that all hedge fund managers are worth the fees they charge. What I am saying is that it’s your money. Don’ do anything with until you perform the right level of due diligence. Don’t believe that just because someone calls himself a hedge fund manager and charges 2 and 20 you are getting your money’s worth. Do the research and make sure you get enough answers to make good decisions.
That being said, hedge fund regulation and asset-raising are two of the many topics we’re going to cover on Tuesday’sHEDGEAnswers conference call. This is second of a series and it’s shaping up to be quite good. The questions are coming in and the discussion is going to be quite lively. I hope you’ll get in on the discussion – register by clicking here.