Over the last six months, maybe longer when not covering the Presidential election, the popular press has had its guns pointed at one thing: the hedge fund industry.
This is not a new phenomenon; in fact at this point it’s status quo.
When things are bad, blame hedge funds; when things are good, complain about hedge fund fees; when things are mediocre, well, blame hedge funds anyway.This is the reality of the sum total of the media coverage of the global hedge fund industry for the aforementioned period. And you know what? The press is probably right. I say this is because hedge funds are the only things doing anything in the global financial markets to drive company and economic performance. Hedge funds are evil when they complain about a company management’s inability to perform. Yet, when the hedge fund spurs action — a reaction to the status quo — companies do seem to perform better.Sure, there have been situations where hedge fund managers’ efforts to drive change at a company have failed — nobody’s perfect — but when was the last time a mutual fund took an active role in an investment in their portfolio? If the press has written about this, I’ve missed it. Perhaps, it was buried behind a story about one complaining about hedge fund fees, liquidity and transparency. The markets need hedge funds to make them work. Investors need them to deliver alpha. The relationships are symbiotic. The best thing about the relationship is that both work together if the situation is broken. If the market does not like a move by a hedge fund, the market reacts accordingly. If an investor is unhappy about fees, performance, liquidity and transparency, well they can redeem, or simply not invest. Simple.
The idea that all hedge funds are the evil that men and women do is absolutely absurd. Without them, both investors and the global markets would be in serious trouble.
Operations for Alternatives is at the beautiful Fontainebleau February 27 and 28. Once again investment management professionals, industry participants, regulators and one or two special guests are going to gather for a two-day immersion on the most pressing issues facing the industry. I do hope you can make it. Learn more by clicking here.
Things that drive me crazy
I racked my brain for 20 minutes and can’t come up with anything. Stay tuned: That will change.