July 03, 2006
Unregulated Hedge Funds – does the market need a ‘regulator’
The hedge fund industry is well over the $1 trillion mark and growing. The Chicago-based Hedge Fund Research Inc.'s data finds that there are nearly 9,000 hedge funds in the market today. With so much money under circulation, what the industry needs most is some policing. However after the court overturned the U.S. Securities and Exchange Commission’s rule that had taken effect on Feb 1st, the whole market is back to its own ways.
Today hedge funds have become such popular investment tools that everyone from pension funds to 401(k) plans to endowments uses them to potentially boost their returns. So the hedge funds are not just for the rich any more. This puts the investors, who are technically not very risk friendly, to face the kind of risk that they should not be taking. A Long Term Capital Management and Bayou Group fund collapse today is likely to cause more damage than ever where the retiring population stands to loose a substantial amount of their savings that is their only means to living. Is it therefore wise to let the industry grow un-policed and un-regulated? Read more on this in the article on the need to police hedge funds.
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