Progress report
An assessment of hedge fund YTD performance in the face of renewed fears for a potential eurozone crash Read More
07/12/2011
Comment: Christen Thomson
Christen Thomson is director of communications at Aima, the Alternative Investment Management Association
Three years on since the last crisis, it’s worth considering what has changed since 2008 and what progress the industry has made in terms of how it is perceived not only by the general
public, but by investors, regulators, policymakers and the press.
It’s easy to forget just how bad some of those headlines were three years ago: ‘Hedge fund horsemen of the apocalypse’, ‘Beasts who can tear firms apart’ and ‘Greedy pig billionaires’ were all real headlines.
We are not seeing the same kind of hostility today. Where hedge funds were specifically blamed for the crisis three years ago, politicians now, insofar as they attribute blame, tend to point the finger at ‘speculators’ and their ‘speculation’.
It may appear a subtle distinction but it is an important one. It means our industry is no longer in the crosshairs. Analysts and commentators have moved on too. Whereas three years ago it was common for our industry to be blamed for the crisis, now there is broad agreement that this is a debt crisis caused by political failures.
In fact, some previously critical commentators have changed their tune. BBC business editor Robert Peston, not noted as a friend of the industry, now says hedge funds are “a model for how the banking system should be reformed”.
All this is not to say that there is not still a lot of mistrust and hostility to the industry out there. There is, and in some ways it is understandable that an industry often associated with wealth and success is the target of criticism.
It is important, however, to differentiate between the industry’s different audiences. For example, investors are a crucial audience of the industry. They pay the bills. It is true that there are grumblings about fees and other concerns (some justified) but in general the picture here is a positive one – the industry’s consumers continue to buy the product.
Regulators are another important audience. Trade associations like Aima have spent years cultivating these relationships, and in general the industry’s regulators have a good technical understanding of the industry and are often sympathetic to its worries.
Of course, with politicians it is a mixed picture. The industry does have important allies, although many of them are understandably cautious about expressing that in public. There is still a lot of negativity within the EU, despite enormous efforts by the industry over the last few years.
In part this is cultural; there is scepticism about the value of the market in general in many countries within the EU that goes way beyond our industry. In part it is political; our industry is seen as an easy football to kick, often for domestic political consumption.
In terms of the press, it is important to generalise between specialists and generalists. Specialist publications like HFMWeek and specialist correspondents for the main business news outlets understand the industry very well. The problem is when a generalist, a journalist who is not familiar with the industry, does a story about it. That’s when the errors and clichés can appear.
It is true that the general public often misunderstand our industry, but the broader context for this is a widespread lack of understanding of financial services as a whole in the industrialised world. Many people do not understand how banks or their mortgages work, so it may be unrealistic to expect them to understand how a complex part of the asset management sector operates.
What the industry can do is to seek to demonstrate its value to the general public. Because institutional investment now makes up a majority of the industry’s AuM it means the industry is now acting as the guardian of many ordinary people’s pension money and other investments. That is an important message for the industry to convey.
- Share
-
Text Size
Decrease text size
Increase text size
60 seconds with... Kenneth Turchin
CAN YOU DESCRIBE YOUR CURRENT ROLE?
I have worked in public accounting and hedge funds and in the past eight years have been selling middle- and back-office services to the alternate investment industry. My role is to build relationships with clients, teach them about SS&C’s products and services, and ensure seamless transactions every time the firm launches a new fund.
IF YOU WERE DOWN TO YOUR LAST £1,000, HOW WOULD YOU INVEST IT?
I would buy THREE shares in Apple and hope for a repeat 383% return in the next five years.
WHAT WOULD YOU DO IF YOU WERE IN PRESIDENT OBAMA’S SHOES?
That’s one pair of size 12 shoes I do not want to be in!
WHO WOULD PLAY YOU IF THEY MADE A MOVIE ABOUT YOUR FIRM?
Kevin Bacon. He is a versatile actor and the centre of the entertainment universe. I am in sales. Everyone in the industry would be linked to me in six steps or less. My client list would be ridiculous.
HFMWeek Daily Snapshot - 17 May
Today: Magnetar Capital subject of SEC probe; Paulson keen on CVR Energy following Icahn involvement; mini victory for US prosecutors in Rajat Gupta insider trading trial; and more...
SS&C wins Form PF mandate from $23bn Lone Pine
SS&C Technologies, the hedge fund administrator, has been mandated by $22.7bn Lone Pine Capital to provide its Form PF reporting solution, HFMWeek has learned.
Squeeze on fees continuing, according to State Street
Downward pressure on fees for hedge fund services such as administration, alongside an increased demand for more transparency on pricing, continues to be a defining industry characteristic, State Street executives said today.
Investor demand for CTAs is on the rise, says Agecroft Partners
Agecroft Partners is seeing widespread demand from institutional investors for Commodity Trading Advisors (CTAs), which is a dramatic change from the historical reluctance of many institutional investors and their consultants to allocate to this strategy.
Read More07/06/2012
UK: Impact of the AIFMD - the real story
Join us and our panel of experts for HFMWeek's Subscribers' Club June's UK breakfast briefing, 'Impact…
31/05/2012
US: Family Offices
The next US HFMWeek Subscribers' Club breakfast, will take place on Thursday May 31. Join us and…
02/02/2011
European Hedge Fund Services Awards 2012
HFMWeek's European Hedge Fund Services Awards are designed to recognise companies that have outperformed...
Be the first to comment on this article!