CityWire.co.uk – John Duffield, founder chairman of New Star Asset Management, has raised serious concerns about the issue of fund managers front running their long-only funds with hedge funds.
He said: ‘That’s the thing that worries me most in this business. When a fund manager is running a long-only fund alongside a hedge fund the temptation is absolutely obvious.’
Duffield was speaking at an investment conference in Monaco this week. He said long-only fund managers who are given hedge funds to run must be watched ‘like a hawk’ to ensure that no conflicts of interest arise between the two funds.
A number of managers at New Star run long-only funds as well as hedge funds although there is no suggestion of impropriety on their part. These include AAA-rated Guy de Blonay, who runs New Star Global Financials (New Star Global Financial Ret) and its Financials hedge fund. It is an increasing trend in the industry and often used as a way to keep talent from straying.
