Hedge Fund Investment on Main Street

The Alternative Investment Management Association (AIMA), an international trade body for the hedge fund industry, is reporting that an absolute majority of all assets under management by hedge funds and funds-of-funds are held by institutional investors. In addition, a third of those assets from institutional investors now come from pension funds.

While the AIMA has some interest in promoting hedge funds and other alternative investments, the breakdown does highlight how a growing number of institutional investors, including pension funds, university endowments, and foundations that are invested in alternative investments, with the numbers growing each year.

While there is certainly reason for individual investors and those on "Main Street" to be upset with some of what has been happening on Wall Street, using a blanket approach of penalizing all of Wall Street could have unintended consequences for individual pensions and those charitable and cultural activities often sponsored by endowments. Saying that "what is good for Wall Street is no longer good for Main Street," to paraphrase some in Washington, could be bad for the average citizen if actions begin to match the rhetoric.

Comments

[ScottyEcono...:]

Good Call

Mar 05 03:31 PM

[Hedgerz237:]

I agree, and I am sick of hearing that catch phrase that politicians love using, "Greed on Wall Street". I think the mortgage and banking system is more to blame than Wall Street firms.

In the years ahead there will likely be significant changes that affect Hedge Fund Formation and Hedge Fund Regulation. There is definite need for the implementation of an <B>Investment Company Accounting Oversight Board</B or ICAOB similar to the PCAOB. The SEC, which is already over burdened with broker-dealer and investment manager audits, could focus more on regulatory issues rather than accounting issues. The SEC auditors are typically lawyers not CPAs. Accounting and financial auditing issues should be left to the experts in their respective fields.

The existence and implementation of an Investment Company Accounting Oversight Board would most likely have stopped Madoff and other Ponzi scammers years ago.

Mar 06 08:33 AM