Each business day HedgeCo.Net keeps you informed with the top hedge fund industry news, opinion and insight from around the globe. From the latest hedge fund launches, to the impact of regulation, competition, and investor activism - we track the topics and people that make a difference to you.
U.S. News & World Report – Andrew Lo, hedge fund manager and director of MIT’s Laboratory for Financial Engineering, is a long-time student of investor behavior, especially the sort that belies the notion that markets move with cool efficiency. Particularly today, he sees animal spirits lurching about in some worrisome ways that could have long-term consequences for markets and the economy. "The big message is that right now all, of us are in a state of emotional shell-shock," he says. That goes for investors, regulators, bankers, and anyone else unlucky enough to get caught up in the fear and uncertainty flowing through the current financial crisis.
In this two-part Q&A with U.S. News, Prof. Lo discusses the best way to build a robust regulatory system for the financial sector (part one is here.) Below, he considers what massive changes in the investment landscape over the past few years might mean for your investments:
CNBC – Top U.S. securities regulator said Tuesday she generally supported requiring hedge funds to register with the Securities and Exchange Commission.
SEC Commissioner Elisse Walter is the latest in a growing number of policymakers to express support for more oversight for the $1.4 trillion industry. "I generally do support that notion (of hedge fund registration)," the Democratic commissioner told Reuters in an interview. "But the devil is in the details. Registration has to be meaningful."
BusinessWeek – With the price of gold racing higher over the past two months, more investors are coming around to the notion that the precious metal may be the best option to protect against a possible economic catastrophe. Among the surprise new buyers? Star hedge fund manager David Einhorn.
Gold rose steadily from its November 2008 low of $682 to close at $910.70 on Jan. 26, a five-month high. Despite selling off about $10 an ounce over the next two days, investors, it seems, have realized that much of the Federal Reserve’s plan for fighting the credit crunch and reviving the economy are also likely to bolster gold’s prospects.
Times Online – Jon Wood, the ballsy and opportunistic hedge fund manager who wagered that there was value in Northern Rock even as the bank was collapsing last autumn, has reportedly lost 85 per cent of his investors’ money.
He is not the only hedgie to be wrong-footed by events. Traders who bet that the crude oil price would continue to strengthen, or that the feeble dollar would continue to weaken, have also lost their shirts in recent weeks.
July was a lousy month for hedge fund returns and August is shaping up as not much better. Most funds are well down in the year to date.
True, mainstream equity investors are no better off. True, too, hedge funds have come through similarly sticky patches before now and still achieved respectable medium-term returns. But this is not a great advertisement for an industry that purports to make money whatever markets are doing.
Making generalisations about hedge funds, however, is rarely a good idea. It is too broad a church.
