The role of hedge funds in the Crisis
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Hedge Funds: How They Invest Their $2.4 Trillion War Chest

Hedge Funds: How They Invest Their $2.4 Trillion War Chest | The role of hedge funds in the Crisis | Scoop.it
Decoding a mysterious and not entirely magical asset class.
Jill B's insight:

This article, published in Forbes magazine deals with a detailed analysis of the 8 investment strategies used and employed by Hedge funds. 

-Long/short, event driven, multi-strat,discretionary macro,systematic cta,credit,distressed,equity market neutral.

The most important and usually employed, is the long/short strategy . 

It was founded in 1949 and employed for the first time by Alfred W.Jones, considered as the father og Hedge funds.

"In this strategy, hedge fund managers can either purchase stocks that they feel are undervalued or sell short stocks they deem to be overvalued."(Investopedia)

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Hedge funds gripped by crisis of performance - FT.com

Hedge funds gripped by crisis of performance - FT.com | The role of hedge funds in the Crisis | Scoop.it
Hedge funds have a performance problem. Since the turn of the decade, Wall Street’s master stock pickers have spectacularly failed to beat the market.
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What Are Hedge Funds - Definition, How They Work and Risks vs Returns

What Are Hedge Funds - Definition, How They Work and Risks vs Returns | The role of hedge funds in the Crisis | Scoop.it
Hedge funds are usually defined as private investment funds. They promise great rewards, but also present great risks to both investors and the economy. Investments by unregulated hedge fund managers contributed to the global crisis in 2008.
Jill B's insight:

This article,published in Septemver 17,2013,deals with risks and returns of Hedge funds at the Beginning and finishs with the potential role of these particular and speculative funds in the Financial Crisis.

 

The main idea,here, is the following :

By using a high level of leverage, hedge funds are very risky but in the same time very gainful when it's use efficiently.

 

However the main problem is the lack of regulation ,that could lead to several Financial complications and excess.

Indeed, these type of funds are often held to contribute to the Financial Crisis.

That's why since 2010, the dodd-frank Wall Street reform act requires that Hedge funds higher than $150 Million must register with the SEC(Securities and exchange commission)

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Did Hedge Funds Trigger the Financial Crisis?

Did Hedge Funds Trigger the Financial Crisis? | The role of hedge funds in the Crisis | Scoop.it
Hedge funds have mostly been exonerated in the typical narrative of the financial crises, which concentrates blame on some combination of mortgage lenders, investment banks and government agencies.
Jill B's insight:

This article published in 2012 deals with the possible and potential contribution of Hedge funds to the Financial crisis.

In order to answer to the following question :

"Did Hedge Funds trigger the Financial Crisis" ,

the author refers to an academic paper written by two Yale professors and titled “ Collateral Crisis”.

By examining the role of short-term collateralized debt, they conclude that the lack of information or asymmetric information (according to Mr Akerloff and Mr Stieglitz’s purposes) is the key assumption of all financial excesses and complications.

Therefore, leading to Financial Crisis.

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The real role of hedge funds in the crisis - FT.com

The real role of hedge funds in the crisis - FT.com | The role of hedge funds in the Crisis | Scoop.it
Hedge funds have used two arguments to deny any responsibility for causing the subprime crisis.
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The Hedge Fund Trends to Watch for in 2014: Video

The Hedge Fund Trends to Watch for in 2014: Video | The role of hedge funds in the Crisis | Scoop.it
Stay up to date on the latest business news, stock market data and financial trends. Get personal finance advice from leading experts.
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Regulation changes the way hedge funds grow - FT.com

Regulation changes the way hedge funds grow - FT.com | The role of hedge funds in the Crisis | Scoop.it
Few financial institutions have been hit as hard by the onslaught of new global regulation since 2008 as hedge funds.
Jill B's insight:

This article, coming from the Financial Time ,deals with the new face of the hedge funds' industry over the coming years, as a result of the Global Financial Crisis and the new regulations in EU and US.

Indeed, measures undertaken to regulate the industry will affect  how hedge funds will grow over the coming years.

Indeed there are  becoming more expansive for the smaller and for starters.

More  than $3 Billion had been spent for compliance costs and represents an increase of 10% in their annual operating costs.

That's why, just the biggest one can better absorb the costs of the new regulations.

Consequently, the face of the industry will change radically and will affect more particularly participants. 

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Hedge Funds Not a Primary Cause of the Financial Crisis, but Could Contribute to Systemic Risk | RAND

Hedge Funds Not a Primary Cause of the Financial Crisis, but Could Contribute to Systemic Risk | RAND | The role of hedge funds in the Crisis | Scoop.it
Although hedge funds worsened the financial crisis in certain ways, the industry did not play a pivotal role compared to other agents, such as credit rating agencies, mortgage lenders, and issuers of credit default swaps.
Jill B's insight:

This article published in September 2012, refers to the rand report about hedge funds and systemic risk.

As if hedge funds aren’t the main cause in the financial crisis, we can consider them as a trigger.

By stimulating financial disruptions, hedge funds contributed to worsen the Crisis.

The study intends to determine the level of responsibility of these speculative funds in the global financial Crisis.

The report concludes that, as if hedge funds are not a primary cause of the Financial Crisis, there could contribute to systemic risks, also known as market risk “risk inherent to the entire market”, by six ways.

Coincidentally, the main way is the lack of information.

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Hedge funds enjoy post-crisis popularity with 'safe' image

LONDON (Reuters) - Hedge funds may be making their clients less money than mainstream financial markets, but with their portfolios increasingly seen as a safer, low-volatility option in a tough investment...
Jill B's insight:

This article published in September 2013 in Reuters, states with the safer image of hedge funds since the begining of the Financial Crisis.

Indeed, in spite of their numerous detractors and these trouble times, speculative funds are benefiting from a brand image and a higher popularity. 

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