Irish Hedge Funds Hit Back

by Philip Morton, Investors Offshore.com

18 February 2002

The Irish hedge fund sector has hit back at recent remarks made by German Finance Minister Hans Eichel regarding the risky nature of hedge fund investment, arguing that once again, the insustry is being made into a scapegoat for the current economic problems.

Speaking to the Financial Times, Mr Eichel recommended that regulatory supervision of hedge funds be internationally coordinated in order to reduce risks posed to the global financial markets, and urged a ban on the short selling of shares. He also called for the possibility of direct supervision of the alternative investment funds to be considered.

However, at a conference hosted in Dublin by the Alternative Investment Management Association (AIMA), representatives from the industry voiced their anger: 'These remarks show a misunderstanding about what hedge funds are all about,' lamented the General Counsel of Bermuda-based Hemisphere Management, Marty Brandt. 'Not every hedge fund is highly leveraged and risky.'

Indeed, several recent reports have shown that leveraging is at an all time low at the moment, with many fund managers taking on cash holdings of as much as 60% in an attempt to alleviate risk.

Hedge fund managers attending the conference also criticised Mr Eichel's suggestion that direct supervision of hedge funds should be considered, arguing that disclosing detailed information about positions would compromise the performance of their funds.

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