Mark Sievers is, it hardly : Hedge funds are often consulted as to blame for failures in the financial sector. Wrongly, as Markus Sievers explained that defends the industry.
by Mark Sievers, guest author of € on Sunday
As in 2004, hedge funds in Germany have been approved for public sale, the asset class in this country outside the financial sector was still largely unknown. The debate on hedge funds took place mainly in the financial pages of the print media. She was by then objectively and calmly proceed.
But with the sobriety of the reporting was on 17 April 2005 at a blow over. On this day appeared in the newspaper "Bild am Sonntag" an interview with the former SPD chairman Franz Muentefering to financial investors. The decisive statement by the then Chief of the Social Democrats: "Some financial investors [...] have no face, they attack like locusts over companies." What time knew no one: With the publication of the article started an unparalleled career of the term "hedge fund".
The comparison with the
Locusts lags
The accidental alliteration of the words "grasshopper" and "hedge fund" contributed to an almost inflationary use of the word in - especially in economically distant parts of the media. Thus, locusts and hedge funds have become synonymous in the public perception of German, although hedge funds have nothing to do with the practices of the Müntefering actually criticized private-equity industry. Now, seven years after the legendary interview that hardly a day goes by where is the prejudice against the policy on hedge funds, they would destroy businesses and jobs at risk not taken.
But this investment in individual companies basically contradicts the philosophy of hedge funds. The majority holding and subsequent restructuring of companies is the business of private equity firms. In the typical hedge fund strategies, it is about the "passive" taking advantage of trends or the recognition of valuation and interest rate differentials on international markets. Hedge funds are generally designed to achieve a generally positive, regardless of general market performance - regardless of whether prices rise or fall in the capital markets. The investment philosophy that allows, based on the freedom of this asset class of choice for financial instruments inserted and strategies that can be restricted only by extremely illiquid market periods. The know-how of the fund manager plays a crucial role.
Hedge funds are fire alarms
for the Financial Markets
Not only the companies are accused of breaking up the hedge fund. The German political scene picks up the H-word in ritualized form over and over again and castigated hedge fund as a culprit for all the negative developments in the economy and the financial sector: hedge funds made bets high-risk, were cause of the financial crisis, speculating against the euro and even wanted from the collapse of States winning hit.
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The truth is that hedge funds bet on falling share prices or currencies. But she makes the same from a moral point of view of the pet hates of the capital markets? Not at all. Their property, not only increasing, but also to set out for falling markets, has a positive effect preisbereinigenden.
According to a study by Deutsche Bank, the used technique of short selling, the price discovery more efficient, increase liquidity and facilitate the investors to risk management. Hedge funds make a valuable contribution to the viability and fairness of the financial markets. Other studies have also shown that the ban on short selling in 2008 has not impacted positively on prices. Rather, it has increased the uncertainty in the market over the next steps of the regulator.
During the regulatory debate in 2010, often relied on claim that hedge funds were responsible for the euro crisis has so little in common with reality. The trigger just this crisis, which manifested itself with the beinahen state bankruptcy of Greece, were the governments of EU member states. Thus, in the member countries of the European Union in recent decades amassed a gigantic mountain of debt. Hedge funds were among the first to have revealed the negative developments in Greece and served in this regard as less incendiary, but as a fire alarm.
With her scolding, the policy aims
distract from their own mistakes
In particular, the case of Greece, and then the resulting media debate speculators suggest that the policy would detract from self-made errors. But this must not be made on the backs of the "usual suspects". Rather, we need an objective, sophisticated analysis and an honest approach to the issue in public. Especially in matters of stability of the international financial system, it is an existential necessity to deny not the correct analysis. -There's not too late. The reality is directed against those in the long term, which is not her. Such a strategy need not exist.
Wrong is the claim that hedge funds were the cause or accelerant of the last major financial crisis. The reasons why our financial system collapses are almost 2008, not in the hedge fund, but in the banking world to seek himself. There were glaring gaps in regulation. The starting point of the economic and financial crisis was completely overheated real estate market in the United States. Here there was the assumption that every American - even one with no equity - can be made to the homeowner. Then the opaque securitization of receivables and worldwide distribution have damaged investor confidence in the financial markets permanently. A certificate that hedge funds do not trigger the financial crisis were delivered, after detailed analysis, moreover, the International World Securities Commission.
Populism in small, well-
digestible bites
Be used no matter which grievances hedge funds - are the political content is displayed on a simplistic level. This is suitable for an age, to allow the television formats such as talk shows, speeches, only one to two minutes. Today, more detailed analyzes are needed in political debates just as in the evening talk show rounds.
But present circumstances shortened, for politics is also not a free pass to distort the reality - not even if this is consistent with the public perception of hedge funds. The branding of hedge funds as "the evil of the capital markets," misses the reality. She runs the risk of mistaking the true causes of the financial crisis, which could exacerbate the situation. It is the duty of politics to face up to reality and not to wear Stammtisch slogans in public, even if they come with this more acceptable.
Renewed expansion
2010 managed hedge funds with $ 1.9 trillion more money than they were before the financial crisis. Hedge funds are lightly regulated and can thus benefit from the ups and downs in stocks, bonds, currencies and commodities. Typical is the use of derivatives and short selling. The funds pursue different strategies: some rely on computer-driven trend-following models, others are based on economic scenarios, while others invest in some companies that stand before the takeover.
