Hedge funds were not a major contributor to the stock market crash of 2008 and early 2009, but they are very likely to face increased regulation, according to the latest survey of the world’s media from Walek.
Released on the first anniversary of the disclosure of the world’s largest Ponzi scheme, the survey found that while the Bernard L. Madoff Investment Securities scandal impacted the hedge fund industry, poor performance, liquidity issues, and gating of funds were far bigger negatives for hedge funds over the last 12 months.
The survey is the third in a series examining media attitudes toward hedge funds.
“Professional journalists are the filters through which investors, regulators, legislators, and investment managers themselves learn and form opinions about the global hedge fund industry,” says Thomas Walek, founder and president of Walek, a global financial and corporate public relations firm.
As a group, 77 per cent of respondents said that institutional investors will increase allocations to hedge funds over the next 12 months while 64 per cent said high net worth investors will increase allocations to hedge funds over the next year.
However, two-thirds of the world’s media said that over the next year total hedge fund industry assets under management will stay below the record USD2.7trn established before the market crisis.
The survey also found that 81 percent of respondents said hedge funds were not a major contributor to the stock market crash of 2008 and early 2009.
All journalists surveyed said the Madoff scandal impacted the hedge fund industry. However, when asked to identify the two factors that had the largest negative impact on the hedge fund industry over the last year, 53 per cent of media said poor performance, 39 per cent said liquidity, 25 per cent said gates, 22 per cent said the Madoff scandal and 19 per cent said fraud.
When asked about the value of hedge fund of funds, 69 per cent of responding journalists said that fund of hedge funds add value to investors. This is up from 42 per cent in 2005 and 47 per cent in 2002, when similar questions were asked.
A further 77 percent of journalists said that institutions will increase their allocations to hedge funds over the next year, and 64 percent said they believe high net worth investors will increase their allocations to hedge funds in the coming 12 months.
All journalists said they believe that hedge funds will be required to register and 89 per cent said that registration will lead to changes in the hedge fund industry.
