HedgeCo.Net

West Palm Beach (HedgeCo.net) – Preparations are underway for the creation of a new European hedge fund association, hedgemeetings.com, which has the objective to communicate the public utility of this industry for wealth creation and risk management. A first meeting for founding participants will take place this Friday, November 14, in Paris.

Rene Friedrich, 45, who has analyzed and selected hedge funds since 1996, is launching the initiative, as he sees the industry’s advantages undervalued, "There a many opinions about the risks of hedge funds and about the wealth created for their managers, but one sees rarely a balanced view of the general public utility of better asset management in general and of hedge fund work in particular. The realness of the benefits only seems to become apparent when the opposite occurs and wealth is lost in financial markets. The fact is that effective asset management contributes wealth to the economy."

"The initiative aims to give the hedge fund industry a more just image: While individual hedge funds can have more risks than other investment products and investors may lose all or part of their invested capital, the industry overall has, so far this year, avoided the degree of wealth loss of equity investments in general. And a notable number of funds even has avoided losses altogether, no small achievement. It can be argued that future regulations, which could facilitate a greater diversification into hedge funds and funds of hedge funds, may ultimately help to reduce the sum of wealth destructions in cyclical downturns."

"Asset management is not a zero sum game, financial investments are the source of capital in projects, and any wealth created, or not lost, is added, or maintained, in the economy. These are basic principles, and for all the criticisms of financial markets, some just and some not, the objective must be to use what is helping," Friedrich concluded.

Alex Akesson

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Hedge funds reduced their bets in the past year that U.S. stocks would gain as the Standard & Poor’s 500 Index declined and credit conditions tightened, Goldman Sachs Group Inc. said.

Such wagers accounted for 32 percent of funds’ equity investments as of June 30, compared with 45 percent a year earlier, analysts led by David Kostin said in an Aug. 21 report.

Hedge funds cut their holdings in financial, consumer and industrial companies, while investments in utilities, telecom services and materials were little changed in the period, Goldman said. Bets that financial stocks would fall accounted for 24 percent of holdings at the end of June; the previous year, 32 percent of funds’ portfolios wagered that financials would rise, the bank said.

Goldman analyzed quarterly filings of 745 hedge funds with combined equity holdings valued at $881 billion. The filings exclude trades using options and futures contracts as well as indexes that may offset funds’ equity holdings. The filings also exclude holdings of companies not based in the U.S.

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