Globe and Mail – The embattled hedge fund industry received a ringing endorsement from an unlikely source yesterday — the Bank of Canada.
“Hedge funds have had a largely positive impact on the efficiency of financial markets in Canada,” deputy governor David Longworth told a hedge funds conference north of Toronto. “There appears to be no reason to sound the alarm.”
Hedge funds reduce financial volatility and aid market liquidity, Mr. Longworth said in his remarks. Risk is limited thanks to the varying investment strategies of large hedge funds and the risk management practices of banks, he said.
“Risks become more effectively managed,” he said. “It’s useful to note that the largely positive influence of hedge funds stems from their sophistication, their size, the diversity of their objectives and strategies, and the instruments they use.”
