Last week, the Argyle Executive Forum hosted its 2009 Hedge Fund Leadership Forum in New York. This event attracted more than 200 leaders from the hedge fund industry, with a series of panel discussions centered on the key issues managers now face. Although the sessions were "off the record," we have summarized the key themes from the discussions.
Market and Macroeconomic
• Is this market recovery for real, and should investors be given the “all clear” signal?
• How significant are the risks of major bank failures and sovereign default?
• What are the unintended consequences of quantitative easing and IMF bailouts?
• How significant are the risks of major bank failures and sovereign default?
• What are the unintended consequences of quantitative easing and IMF bailouts?
- What will be the long-term effect on wealth destruction, due to the declines in housing prices and equity values, on consumer spending?
- Is decoupling dead? Can those world economies without debt burdens successfully decouple and grow?
- Is China a sustainable story?
- Was the treatment of Chrysler’s secured lenders a one-off situation, where the government acted to avert systemic risk? Or has the paradigm shifted, adversely impacting distressed investors?
- When will yields on Treasury bonds increase to reflect pessimism related to the government’s ability to service its debt?
- Are commercial real estate and bank loans ticking time bombs?
The Hedge Fund Industry:
- Will fees contract for managers with sub-par performance?
- Will de-leveraging and consolidation within the hedge fund industry create more investment opportunities, as fewer buyers and dollars are competing for good ideas?
- Will more funds close as prospects of reaching their high-water mark diminish?
- As regulators push for transparency, will funds be forced to disclose holdings? Will short sales and positions be revealed?
- Will regulators force funds to disclose their limited partners?
- What will be the impact of changes in the tax code that would reclassify fund returns from capital gains to ordinary income?
- Is SEC registration for funds merely “window dressing,” or will investors benefit?
- Will funds be forced to offer greater liquidity to investors? How can investor needs for liquidity be balanced with managers’ strategies that utilize less liquid asset classes?
- Should managers reduce fees in exchange for longer lock-up periods? Do longer lock-up periods actually benefit investors, by allowing managers to make longer term bets?
