The paper stresses the financial stability benefits that hedge funds provide to financial markets, and highlights the fact that hedge funds increasingly are performing an important social role by managing investments for pension funds, university endowments, charitable foundations and other socially-important institutional investors. It includes AIMA’s estimate that there are 50,000 people employed directly or indirectly by the hedge fund industry in Europe – the first such statistic of its kind produced – and 300,000 worldwide.
Additionally, the paper sets out to debunk a number of popular myths about the industry, such as that the industry is “unregulated”, takes excessive risks and is “secretive”. AIMA CEO, Andrew Baker, said: “When people in Germany and elsewhere across Europe ask what social value is provided by Europe’s hedge fund industry, they are asking a perfectly legitimate question. And our answer to that question is really very simple. Not only is our industry responsible for 50,000 jobs in Europe, but because institutional investors are increasingly investing in hedge funds, our industry plays a major part in protecting the pensions of ordinary European citizens, boosting the resources of universities and charities and cutting the cost of insurance premiums.”
Separately, these same themes were explored in a recent study by The Centre for Hedge Fund Research at Imperial College in London, commissioned by AIMA and KPMG, the international audit, tax and advisory firm.
The authors of the study also looked at the academic literature and were able to conclude that hedge funds deliver substantial “real economy” benefits. For example, they cited a survey of European hedge fund and private equity managers that found that those industries contributed €9 billion in taxes to European Union governments each year.
The Imperial study also found that not only are hedge funds important liquidity providers in the markets they are active in, they also have a role to play in the efficient allocation of capital, portfolio diversification and financial stability.
Full paper
© AIMA - Alternative Investment Management Association
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