Hedge funds have roared back from the financial crisis, delivering profits of $129bn to their clients in just six months. While many industries are still suffering from the aftermath of the global economic downturn, hedge funds appear to be in rude health. LCH Investments has calculated that the 10 leading hedge funds alone made $28bn for their customers in the second half of 2010. That is more than the combined net profits of Goldman Sachs, JP Morgan, Citigroup, Morgan Stanley, Barclays and HSBC over the same period, according to the Financial Times. LCH's figures show how much profit was generated for hedge fund clients. The firms themselves will typically earn a 20% cut of profits, plus a fee of perhaps 2% of funds under management. So if prices go up and then back down again but a hedge fund or investment bank makes a profit then who has made the balancing loss? And is this opportunity available equally to everyone? or do they hold a privileged position. They may be taking greater risks (but to what benefit for the greater economy?) and do they fit well on the risk-reward line or are they skewed towards the latter due to some privileged position e.g. access to better/earlier information or ability to move markets?...perhaps NOT.
Access Investments-Building Awareness - European Union-ROMANIA
Thursday, March 3, 2011
Hedge funds have roared back from the financial crisis, delivering profits of $129bn to their clients in just six months. While many industries are still suffering from the aftermath of the global economic downturn, hedge funds appear to be in rude health. LCH Investments has calculated that the 10 leading hedge funds alone made $28bn for their customers in the second half of 2010. That is more than the combined net profits of Goldman Sachs, JP Morgan, Citigroup, Morgan Stanley, Barclays and HSBC over the same period, according to the Financial Times. LCH's figures show how much profit was generated for hedge fund clients. The firms themselves will typically earn a 20% cut of profits, plus a fee of perhaps 2% of funds under management. So if prices go up and then back down again but a hedge fund or investment bank makes a profit then who has made the balancing loss? And is this opportunity available equally to everyone? or do they hold a privileged position. They may be taking greater risks (but to what benefit for the greater economy?) and do they fit well on the risk-reward line or are they skewed towards the latter due to some privileged position e.g. access to better/earlier information or ability to move markets?...perhaps NOT.
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