The rising influence of hedge funds in the global economy

One of the first things in my inbox this morning was an interesting new paper Financing the Economy: The role of alternative asset managers in the non-bank lending environment published today by AIMA, the Alternative Investment Management Association.

The paper looks at the use of financing from hedge funds in sectors such as social housing, health, renewable energy and shipbuilding, as well as the more traditional support the hedge fund industry provides small and medium-sized enterprises who badly need access to capital to grow but have found it increasingly difficult to obtain since the banking crisis.

The concluding part of the paper states:

“The alternative asset management industry plays a vital role in the world’s capital markets. Unlocking gains from market-based finance can produce significant benefits in terms of economic growth. Policymakers have an important role to play in this development as a number of restrictions hinder the activity of asset managers in the private debt space.”

It’s an important observation coming against the backdrop of the world’s political leaders desperately looking for ways to create economic growth. Whilst it may not be the most popular political message to be providing to voters, it’s interesting to think about the impact that a strategy of embracing and supporting the hedge fund industry with a tailored and appropriate degree of regulation might have on kick-starting national economies once again.

Anyway, please do have a look and let us know your thoughts.

Philip Graham
Philip is a partner and expert on offshore funds at Harneys who puts his ever increasing grey hairs down to three young children, supporting Liverpool Football Club, and being married. In no particular order.