Citywire.co.uk – The polished doors of the poshest hedge fund offices in St. James’s Park have been closed to humble private client managers in recent years.

As the good times rolled the retail market place was of little interest to hedge funds. But now hedge fund managers have been reduced to crowd control stewards – gradually shepherding assets out of their funds – they are discovering the benefits of diversifying into the private client market.

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Tags: assets, citywire, client managers, crowd control, doors, fund-managers, good times, hedge fund, private-client, retail market, rsquo, s park, st-james, stewards

Independent – European leaders backed major reform of hedge funds yesterday as part of structural changes to help the world’s financial institutions emerge stronger from the global economic crisis.

Short-selling by the secretive hedge fund industry — selling borrowed stock in the anticipation that the prices will fall — was blamed by some politicians for exacerbating the banking crisis and economic meltdown.

A copy of the summary from the summit hosted by German Chancellor Angela Merkel in Berlin said banks should bring in reforms to ensure they build up a buffer of resources in good times and called for sanctions against tax havens.

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Tags: angela-merkel, anticipation, banking crisis, banks, berlin, chancellor-angela-merkel, economic meltdown, european leaders, financial-institutions, german chancellor angela merkel, global economic crisis, good times, politicians, sanctions, stock, summit, tax havens

Bloomberg – Looking for a new definition of a hedge fund? How about an organization that takes 20 percent of the profits on your money in the good times, then refuses to let you have it back when the weather turns rough?

We all know the hedge-fund industry had a terrible 2008. With a few honorable exceptions, its promises of being able to deliver steady, positive returns in either a rising or falling market turned out to be empty.

Yet, in many cases, the industry has taken a bad situation and made it worse. Many funds have placed limits on withdrawals that investors can make. In effect, people are locked into a falling asset.

That is a big mistake. In any investment business, the return of capital is far more important than the return on capital. By forcing investors to keep their money tied up during a bad year, the hedge funds are damaging their own reputation, and it may well never recover.

There are numerous examples of funds limiting withdrawals.

Citadel Investment Group LLC said last month it was stopping year-end withdrawals from its two biggest funds after investors sought to take out $1.2 billion, or 12 percent of assets.

Magnetar Capital LLC took similar action after its largest fund lost 30 percent of its value in the year through November.

Cerberus Capital Management LP last month limited redemptions from a hedge fund that lost 16 percent of its value.

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