Europeans aim to publicise benefits of hedge funds through new interest group

Date: Thursday, November 13, 2008
Author: Hedgeweek.com

Preparations are underway for the creation of a new European hedge fund association, hedgemeetings.com, whose purpose will be to communicate the public utility of the industry in wealth creation and risk management. A first meeting for founding participants takes place on November 14 in Paris.

René Friedrich, who has analysed and selected hedge funds since 1996, says he is launching the initiative because the benefits the industry brings to the wider financial world are insufficiently appreciated.

'There are 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,' he says.

'The reality 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.

'A significant number of funds has avoided losses altogether, no small achievement. It can be argued that future regulations that could facilitate greater diversification into hedge funds and funds of hedge funds might ultimately help to reduce the amount of wealth destruction 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 fair and some not, the objective must be to use what is helpful.'