Reply #41: Treas. Dept Official: US hedge fund industry now less risky [View All]

[UpInArms]

http://today.reuters.com/investing/financeArticle.aspx?type=bondsNews&storyID=2006-04-18T133249Z_01_N18347787_RTRIDST_0_ECONOMY-TREASURY-FUNDS-UPDATE-1.XML

ATLANTA, April 18 (Reuters) - As corporate and public pension funds follow high net worth individuals and endowments into hedge fund investments, these vehicles have become less risky, a Treasury Department official said on Tuesday.

Hedge funds are loosely regulated investment pools that use strategies such as short selling and derivatives trading that differ from traditional equity and bond funds. During three years of U.S. market weakness between 2000 and 2003, institutional investors sought higher returns at hedge funds, with the industry growing over a few years to around 8,000 firms with more than $1 trillion under management.

"I think it is safe to say that as pensions continue to invest in hedge funds, the industry will further adjust and further impose upon itself an institutional risk management regime which should -- at some level -- mitigate risk," Assistant Treasury Secretary Emil Henry said in remarks prepared for delivery to a Federal Reserve Bank of Atlanta conference in Atlanta.

Among signs pointing to greater institutionalization of the hedge fund industry, Henry said investors are now demanding more transparency. The growth of funds of hedge funds has also subjected hedge funds to greater scrutiny, he said.

Treasury will continue to monitor any potential for systemic risks associated with hedge funds and will focus in particular on credit derivatives, Henry said.

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:rofl:

These guys should just take their comedic act on the road!