AIMA

The Alternative Investment Management Association

Alternative Investment Management Association Representing the global hedge fund industry

AIMA publishes German language paper on social and economic value of hedge fund industry

09 July 2012

The Alternative Investment Management Association (AIMA), the global hedge fund industry association, has published a German-language educational paper about the social and economic value provided by the hedge fund industry.

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 headline finding of the Imperial study, entitled ‘The Value of the Hedge Fund Industry to Investors, Markets and the Broader Economy’, was that hedge funds outperformed the traditional asset classes between 1994 and 2011, returning 9.07% on average after fees, compared to 7.18% for global stocks, 6.25% for global bonds and 7.27% for global commodities.

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.

And 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. 

Elsewhere, there have been two notable recent studies that have explored additional benefits of hedge funds.

In a paper titled ‘Hedge funds and Chapter 11’, Wei Jiang of Columbia Business School, Kai Li of University of British Columbia - Sauder School of Business,  and Wei Wang of Queen's School of Business  found that the involvement of hedge funds increased the chances that a struggling company would emerge from bankruptcy protection rather than be liquidated. The authors concluded that hedge fund managers were more like “guardian angels” than “vultures”.

And a further piece of research by Blerina Bela Reca of the University of Toledo, Richard W. Sias of the University of Arizona and Harry J. Turtle of Washington State University discovered that hedge funds are less prone to “herding” - following each other into and out of the same investments, a practice that helps to destabilise financial markets – than other market participants.

The paper, 'Hedge Fund Herding and Crowded Trades: The Apologists' Evidence', went on to conclude that hedge funds “make markets more efficient and, as a result, contribute to the efficient allocation of resources in the real economy”.

- Ends –

For media enquiries, please contact Christen Thomson, AIMA’s Director of External Affairs. Tel: +44 (0)20 7822 8380; Email: cthomson@aima.org
 

Notes to editors

  1. The German version of the AIMA paper can be downloaded here: www.aima.org/en/document-summary/index.cfm/docid/57425CD8-E0F2-42F4-B6A80FCB0F3DFC22
  2. The English-language version can be downloaded here: www.aima.org/en/document-summary/index.cfm/docid/BEECE829-C8D4-482F-B0E260A468AF4707
  3. ‘Hedge Fund Herding and Crowded Trades: The Apologists' Evidence’; Blerina Bela Reca, Richard W. Sias, Harry J. Turtle:http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1906932
  4. ‘Hedge funds and Chapter 11’; Jiang W, Li K, Wang W: http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6261.2012.01724.x/full

About AIMA

As the global hedge fund association, the Alternative Investment Management Association (AIMA) has over 1,300 corporate members (with over 6,000 individual contacts) worldwide, based in over 40 countries.

Members include hedge fund managers, fund of hedge funds managers, prime brokers, legal and accounting firms, investors, fund administrators and independent fund directors. They all benefit from AIMA’s active influence in policy development, its leadership in industry initiatives, including education and sound practice manuals and its excellent reputation with regulators worldwide.

AIMA is a dynamic organisation that reflects its members’ interests and provides them with a vibrant global network. AIMA is committed to developing industry skills and education standards and is a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) – the industry’s first and only specialised educational standard for alternative investment specialists. For further information, please visit AIMA’s website, www.aima.org
 

 
 
Back to Listing

Main Menu

  1. Home
  2. About
    1. Our Core Objectives
    2. AIMA's Policy Principles
    3. Meet the team
    4. AIMA Council
    5. Global Network
    6. Sponsoring Members
    7. Global Partners
    8. FAQs
    9. Opportunities at AIMA
  3. Join AIMA
    1. Benefits of Membership
    2. Membership Fees
    3. Application form
  4. Members
    1. AIMA DDQs
    2. AIMA Annual Reports
    3. AIMA Governance
    4. AIMA Logo
      1. Policy note
    5. AIMA Members' List
    6. AIMA Review of the Year
    7. Committees and Working Groups
    8. Weekly News
    9. Update Profile
  5. Investors
    1. AIMA Investor Services
    2. AIMA Members' List
    3. Investor Steering Committee
    4. Update Profile
  6. Regulation
    1. Asset Management Regulation
      1. EU Asset Management Regulation
        1. AIFMD
        2. European Capital Markets Regulation
        3. MiFID / MiFIR
        4. UCITS
        5. European Venture Capital Directive
        6. Shareholder Rights Directive
        7. European Long Term Investment Fund Regulation
        8. Loan Origination Funds
        9. Capital Raising
        10. AIFMD-Related Events
      2. US Hedge Fund Adviser Regulations
        1. Registration and Reporting
        2. Incentive-Based Compensation
        3. JOBS Act
      3. Asia Pacific Asset Management regulation
      4. Other Jurisdictions’ Asset Management Regulation
      5. Systemically Important Financial Institutions ('SIFIs')
      6. Remuneration
        1. UK
        2. United States
        3. CRD IV and CRR
        4. AIFMD
        5. MiFID
      7. Shadow Banking
      8. Volcker Rule
      9. Other
      10. Systemic Risk Reporting
      11. Dealing Commission
      12. Corporate Governance
    2. Markets Regulation
      1. Bank/Capital Regulation
        1. Capital Requirements Directive
        2. EU Bank Structural Reforms
      2. Derivatives/Clearing
        1. EMIR
        2. MiFID II / MiFIR - Derivatives
        3. MAD / MAR
        4. Dodd-Frank Act Title VII
        5. Hong Kong
        6. IOSCO
        7. Singapore
      3. High Frequency Trading
        1. ESMA Guidelines
        2. MiFID II / MiFIR - HFT
        3. MAD / MAR
        4. Flash Crash
        5. IOSCO
        6. Germany
        7. CFTC Automated Trading
      4. Insurance Regulation
        1. Solvency II
      5. Market Abuse
        1. MAD / MAR
        2. Indices as Benchmarks
      6. Position Limits
        1. MiFID II - Commodities
        2. CFTC Position Limits
      7. Resolution of Financial Institutions
        1. Europe
          1. EU Bank Recovery and Resolution Directive
          2. EU Non-Bank Recovery and Resolution
        2. CPSS-IOSCO
        3. Financial Stability Board
        4. UK
        5. USA
      8. Short Selling
        1. EU Short Selling Regulation
        2. Hong Kong Short Selling Regulation
        3. US Short Selling Regulation
        4. Short Selling Bans
      9. Securities Settlement
      10. Shadow Banking
        1. International Shadow Banking
        2. EU Shadow Banking
      11. Trading
        1. Dodd-Frank Act
        2. MiFID Portal
    3. Tax Affairs
      1. Automatic Exchange of Information (AEOI)
        1. FATCA
        2. EU - AEFI
        3. OECD - Global Standard on AEFI
      2. Australia - Investment Manager Regime (IMR)
      3. Base Erosion - Profit Shifting (BEPS)
      4. FAIFs and FINROFs
      5. FIN 48 and IAS 12
      6. Financial Transaction Tax (FTT)
      7. UK Investment Management Exemption (IME)
      8. UK Offshore Funds Regime
      9. Other
    4. AIMA's Policy Principles
    5. Search
    6. Resources
      1. Guidance Notes
      2. Jurisdictional Guides
      3. Noticeboard
        1. AEOI: FATCA and other regimes
        2. AIFMD
        3. BEPS
        4. CFTC Registration and Exemptions
        5. Corporate Governance
        6. Dealing Commission
        7. Derivatives
        8. FTT
        9. High Frequency Trading
        10. MiFID / MiFIR
        11. Other Hot Asset Management Topics
        12. Other Hot Markets Topics
        13. Other Hot Tax Topics
        14. Position Limits
        15. UK Partnership Tax Review
        16. Trading
        17. Volcker Rule
      4. Hedge Fund Manager Training
      5. Quarterly Regulatory Update
      6. Webinar Programme
      7. Regulatory Compliance Association
        1. About the Regulatory Compliance Association
        2. RCA Curricula and initiatives for alternative investment firms
        3. Meet the regulators and Sr. Fellows
  7. Education
    1. Research
      1. AIMA Research
      2. Industry research
      3. Search research documents
    2. "The Case for Hedge Funds"
      1. Global Hedge Fund Industry Paper: The value of our industry
      2. The Value of the Hedge Fund Industry to Investors, Markets and the Broader Economy: Research commissioned by AIMA and KPMG
      3. The Evolution of an Industry: KPMG/AIMA Global Hedge Fund Survey
      4. Contributing to Communities: A global review of charitable and philanthropic activities by the hedge fund industry
      5. Beyond 60-40: The evolving role of hedge funds in institutional investor portfolios
      6. The Cost of Compliance: Global hedge fund survey by AIMA, MFA and KPMG
      7. Capital Markets and Economic Growth: Long-term trends and policy challenges
      8. Apples and Apples: How to better understand hedge fund performance
      9. The Extra Mile: Partnerships between hedge funds and investors
      10. Key articles by AIMA on the case for hedge funds
    3. AIMA Journal
      1. Recent issues
      2. Search AIMA Journal articles
      3. AIMA Journal Archive
    4. AIMA Guides to Sound Practices
    5. AIMA guides for institutional investors
    6. CAIA Association pages
      1. Fundamentals of Alternative Investments
    7. Regulatory Compliance Association pages
      1. About the Regulatory Compliance Association
      2. RCA Curricula and initiatives for alternative investment firms
      3. Meet the regulators and Sr. Fellows
    8. Certified Investment Fund Director programme
    9. Services to Start-up Managers
    10. Useful Websites
    11. Glossary
  8. Events
    1. AIMA Events
    2. AIMA webinars
    3. Industry events
  9. Media
    1. Press Releases & Statements
    2. AIMA's blog
    3. Media Coverage
      1. Articles by AIMA
        1. Archive
      2. AIMA in the news
      3. Video interviews
      4. Industry news
    4. Media Contact
    5. Press Materials