WEST PALM BEACH, FL (HEDGECO.NET) – According to statements made by industry experts, hedge funds do not pose any dangers to the global financial system; attendees of the recently concluded hedgefund GAIM conference in Lausanne Switzerland were told. According to Mike Cuthbert, an analyst at Bridgewell Securities, \u00c3\u00af\u00c2\u00bf\u00c2\u00bdLTCM happened when hedge funds were relatively new and there tended to be avery few large macro funds,\u00c3\u00af\u00c2\u00bf\u00c2\u00bd according to him.<\/p>\n
According to Culbert, the greater danger lies in the derivatives trading between institutions than from hedge funds. While the world of hedge funds continues to evolve, some strategies are not as profitable as they used to be while strategies such as long\/short equity have grown over the years, according to Martin Cross of Teather & Greenwood funds.<\/p>\n
Hedge fund strategies such as merger and acquisition, convertible bonds, as well as distressed bonds are not as profitable as they were few years ago. However growing number of hedge funds applying statistical analysis and options are among the strategies which still produce healthy returns some experts think.<\/p>\n
Many hedge fund experts think that while the bank\u00c3\u00af\u00c2\u00bf\u00c2\u00bds proprietary trading risks have declined over the years, hedge funds have taken on such risks. According to Luc Estenne, director at Geneva-base Partners Advisers, hedge fund advisers, \u00c3\u00af\u00c2\u00bf\u00c2\u00bdFor hedge funds to play this role they need to be sure of a stable capital base. The stability of their capital base is related to the liquidity they provide to their investors.\u00c3\u00af\u00c2\u00bf\u00c2\u00bd<\/p>\n
Many experts also agreed that while the total global hedge fund assets have seen dramatic increases, [over US $1 trillion], there aren\u00c3\u00af\u00c2\u00bf\u00c2\u00bdt enough investment opportunities to go around according to them. Estenne added, \u00c3\u00af\u00c2\u00bf\u00c2\u00bdMore hedge funds means they will start playing against each other…The returns will decrease, but mostly for arbitrage (mispricing) strategies…as opposed to directional bets.\u00c3\u00af\u00c2\u00bf\u00c2\u00bd<\/p>\n
Most of the experts attending the conference do however agree that most of the assets coming into the global hedge fund management arena will produce more impacts on the long\/short equity management arena, because capacity constraint issues to the extent do not hinder such strategies as it applies to other strategies.<\/p>\n
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net<\/p>\n
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