WEST PALM BEACH, FL (HEDGECO.NET) – Mr. Gross, chief investment officer of US Pimco fund management group has criticized hedge fund managers by charging that they depend on largely leverage, ratherthan skill in trading. Gross called hedge funds a �craze� in the latest edition of the investment outlook publication.
Mutual fund managers have been skeptical of the absolute return claims of hedge fund managers; some charge that hedge fund returns that hedge fund managers claim to be uncorrelated are often correlated. Over the past 4 years hedge funds have outperformed mutual funds, and have attracted significant interest from many stock market investors.
The growth of hedge funds has also affected ways in which mutual fund managers conduct their business, according to Paul Mingay, head of credit strategy at Morley Fund Management. �Hedge funds have certainly sped up investors’ time horizons.� Hedge funds have historically impacted trading in different ways through the amount of capital they pump in and out of markets within a moments notice. With over 8,000 hedge funds in operation, a huge amount of capital could be leveraged to produce significant movements one way or another. Such power and influence exerted by hedge funds have always been at the envy of hedge fund critics who blame all problems on hedge funds.
Hedge funds have also helped to increase market efficiency in many different ways. Adrian Grey, head of international fixed income at Insight Investment, says: �Anomalies that would previously have lasted longer and been a source of profit are now taken out more quickly by the hedge funds.�
Mutual fund managers also cite the poor results posted by hedge funds in recent times to support their allegations that hedge fund returns are often correlated with equity indexes. Such rivalry can be seen from the solid support that mutual fund managers have given to the SEC�s initiatives to regulate the US based hedge funds.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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