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Germans and Canadians at odds on hedge funds

Date: Friday, December 1, 2006
Author: FT.com

All About Alpha ponders on the mystery of the trans-atlantic perception gulf regarding, well, just about everything. This time the Canadians and the Germans are at odds on hedge funds.

Just a few weeks ago, the deputy governor of the Bank of Canada gave hedge funds a hearty pat on the back. Hedge funds, he said, have had a “largely positive impact on the efficiency of financial markets in Canada.”

But the Bundesbank thinks otherwise arguing in its Financial Stability Review that “disruptive effects might be generated by hedge funds, whose major presence in some market segments has a considerable impact on price movements.”

The report goes on to point to shortcomings in risk management by the funds, and to call for “a code of conduct covering not only corporate governance and risk management aspects but also exacting transparency rules.”

The Germans, points out All About Alpha, are a very astute people. They see redeeming qualities in the career of David Hasselhoff.

What is it that they know that the Canadians don’t?

AIMA also takes issue with the Bundesbank’s assessment of the hedge funds.