AIMA Journal editorial by Jack Inglis: The importance of improving public opinion about our industry

By Jack Inglis, CEO, AIMA

Published: 31 March 2016

Since the global financial crisis, politicians, journalists and the general public have questioned the social utility of financial services in general and hedge funds in particular. This public discourse has impacted government decisions, influenced the nature of the post-crisis regulation of our industry and even swayed the investment decisions of pension funds and other investors.

Given what has been at stake, it has been necessary for AIMA to demonstrate, on behalf of the industry, the benefits that alternative asset managers and funds offer to the “real economy” and society. We have carried out research into the employment the industry generates, the taxes it pays, the investments it makes in small businesses, and the impact of its overall activity on economic growth. (‘The Case for Hedge Funds’, which can be downloaded from the AIMA website, pulls together many of the key facts and arguments.)

We have also stepped up our engagement with mainstream media (as an example, you may have seen this interview I gave recently to The Independent newspaper in London) and have increased our activity on Twitter and other social media channels. In addition, we have evolved the way we communicate externally by investing in digital media, including a new website for AIMA to be launched in the next few months that will include additional educational material about alternative asset managers and funds.

I believe that we have made significant headway already. But this is an uphill battle - and there is a long way to go. To help us to understand the scale of the challenge, we commissioned research last year into public perceptions of hedge funds. The research project, which concluded recently, has enabled us to benchmark levels of favourability and test with the public whether our arguments about hedge funds truly resonate with them.

What we have found (not surprisingly) is that a significant minority of the population is sceptical about or hostile towards the industry. However, more people were found to be neutral or undecided. And the research also provided evidence that many sceptics could be won over if they better understood hedge funds’ relevance and value to them.

Why did we choose to measure public perceptions? Had we chosen to poll, say, the industry’s client base – such as pension funds, endowments and sovereign wealth funds – we would have had very different results. The hedge fund industry has grown at about 10% a year since the crisis, thanks to net inflows and amid consistently high levels of client satisfaction.

We also did not poll the regulatory community systematically, although the officials in London and Brussels whom we did approach were clearly reassured by increased levels of regulation and transparency.

But it is vital that we better understand why there are negative public perceptions if we want to prevent disproportionate or unworkable regulation or politically-motivated investor redemptions.

Armed with the findings of this research, the next step will be to develop a programme of engagement that is impactful and resonates with the general public. We will know we are making progress when more members of the public believe that the success of the alternative asset management industry is in their interests, as well as ours.