"Get Richest Quickest" ~ Part III
This is not a question about the professionals' competency but rather an issue about safeguarding smaller investors' interests. It may sound wrong to question the integrity of our hedge fund managers but what we should really think about is what is at stake.
These are issues difficult to address without engendering unease among fund managers. After all the funds would not perform so brilliantly but for the hard work, experience and even talent of managers. But that's not to say either that they should be let alone all together. No one particularly like to have someone (SEC, IRS, APRA or ASIC) standing in our back while we try to do our job. Shareholders and investors do that well enough, some would say. But we've seen enough market disasters to know not to assume all fund managers are rational and risk averse or that we all act with integrity. Given the size of, and the growth experience by the industry is experiencing, can we say that self regulation will keep the boat dry?
See, I am not a great supporter of government intervention. But I believe there is too much at stake here for the industry not to be monitored by a regulatory body. Note that I said, monitored not regulated. I am not ready yet to say that hedge funds must be regulated. Simply because restrictions on their activities may well mean the end of hedge funds. I think hedge funds can make above market returns because they have much more prerogatives than mutual funds for example.
What I am ready to support though is more regulation on speculative hedge funds. But this would require all funds to registers and nominate one or several investments styles. That also seem to defeat the concept of hedge funds.
In the end? Well scrutiny for now until a compromise is found. That's all I can say. I will continue to post on this topic. Because I learn about the hedge funds every day in the news and other readings.
That being said, I am not a professional so the argument I put forward could be fatally flawed. Maybe it is. If you think so then drop me a line or two.
