According to Mathieu Vaissié, senior portfolio manager at Lyxor Asset Management, European policymakers have miscalculated solvency requirements for institutional investment in hedge funds and other alternatives assets.
Vaissié said the current 49 per cent solvency requirement for 'riskier' investments – as stipulated in the Solvency II legislation scheduled to come into force in 2014 – was too high and that lowering it to 25 per cent would be more accurate and prevent institutional investors from pulling out of hedge funds en masse.
Vaissié said: "There is growing empirical evidence that the complexity of financial markets makes it increasingly challenging for institutional investors to manage their asset/liability profile efficiently. Changes in the regulatory framework and in accounting rules make it even trickier for institutional investors, who now have to rethink their overall investment policy. While the benefits of hedge fund strategies in asset liability management have been documented in the academic literature, the integration of these strategies into the global asset allocation of institutional investors may be jeopardised by recent developments on the regulatory front."
Full article (IPE subscription required)
© IPE International Publishers Ltd.
Key
Hover over the blue highlighted
text to view the acronym meaning
Hover
over these icons for more information
Comments:
No Comments for this Article