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February 02, 2007
SLI CEO Slams Hedge Fund Strategies
-- Pushpa Sathish, Staff Writer
Fund managers have come in for criticism from Keith Skeoch, CEO at Standard Life Investment (SLI), one of the biggest fund managers in the United Kingdom, for their increased usage of shorting and other hedge fund strategies. Skeoch warned of the dangers lurking around the corner when fund managers bet on the company’s stock falling even as the board was constructively talking of succession. Shorting can bring down the price of a company’s stock, an occurrence that is not good for long-term investors.
The censure comes following other large fund management houses like Barclays Global Investors, Henderson Global Investors, Gartmore, Morley Fund Management, Legal & General Investment Management, and Threadneedle Investments increasing their use of long-short strategies that are typical of hedge funds. Business Times Online reports:
Mr Skeoch said that increased use of shorting could cause conflicts within a business, particularly a large one that conducted hundreds of trades each day. “If you have one fund manager making a decision to short and one deciding to go long, which trade takes precedence?”
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