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July 16, 2006
Fears over Hedge Fund Operations
While hedge fund business is gaining momentum in the United States and elsewhere in the world, some experts have expressed their concern over it. Recently, John Duffield, founder Chairman of New Star Asset Management, has raised serious concerns about the issue of fund managers front running the unit trusts or investment trusts with hedge funds. Front running is generally a practice of fund managers buying a security for their hedge fund before buying the same stock for their unit trust.
According to Mr. Duffield, when a fund manager is running a long-only fund alongside a hedge fund, there is an obvious reason to be worried. He is against giving fund managers dual roles, which has become a trend now. There are some agencies that monitor such operations. When managers are handed hedge funds to run alongside their conventional business, more emphasis is going to be given on the hedge fund.
Recent volatility in share prices is in no small part due to the flip-flopping of new Federal Reserve boss Ben Bernanke, Ann Hall, manager of Old Mutual Fund Managers' US Select equity fund, claims.
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