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21 October 2009

Hedgeweek: Revolution in hedge funds business has started


John Lowry, chairman of ML Capital, is warning that many hedge fund managers do not realise the impact of the legislation on the industry, and that many politicians have proposed punitive conditions on funds that are not domiciled within the EU.

John Lowry said that “In 2008, the MSCI World fell by 42 per cent, whilst the average hedge fund fell by 18.3 per cent. Many hedge funds demonstrated they offer significant benefits when used for their original purpose of creating steadier returns for their clients. My company’s recent research shows that this is what is leading to the upsurge of institutional investors’ demand for portfolio-hedging and hedge funds.”

He added that emerging markets are likely to continue as an increasingly popular investment destination for some years. Latin American markets and focused hedge funds will be major beneficiaries, he said.

“However, many Euro-politicians have reacted to the crunch by proposing punitive conditions on the distribution of funds that are not domiciled within the EU. This is protectionism, effectively, and it has been suggested that funds should have an EU identity to trade there, or, at the very least, should hold EU marketing passports. ML Capital’s research suggests that this would immediately slash demand for Latin American funds in their present form, just when they have so much to offer,” said Lowry.

He believes the most restrictive aspects of the proposed UCITS III legislation will not be put into practice.  However, investors now require evidence of greater risk controls and regulation.

 

Press release

 



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