Pittsburgh Tribune-Review – A fierce battle is going on both in Washington and on Wall Street over hedge funds. Certain groups are clamoring for more regulation, while others are pressuring to keepthe status quo of little oversight.
While the controversy continues, hedge funds continue to be the darling of Wall Street. Today more than 8,800 hedge funds worldwide have at least $1.2 trillion in assets, according to Hedge Fund Research Inc.
On an average day, between 18 and 22 percent of all trading on the New York Stock Exchange is related to hedge funds, writes Priya Jestin on Hedge Fund Street.
Because these funds play such a significant role in the market, concern is growing that a default by one of the bigger funds could impact the stability of U.S. financial markets.
From the start, hedge funds have operated as the “wild cowboys” of Wall Street. Although the funds themselves operate like conventional mutual funds, hedge fund managers don’t. They are not required to make public any information on their profits, investments or losses. They have little or no accountability to their investors. And the Securities and Exchange Commission does not regulate the funds.
Typically hedge funds have an aggressive investing style, engaging in such things as currency trading and short selling. They also charge significantly higher fees than other funds.
Whether or not the funds warrant the extra risk and higher cost is being hotly debated.
