UK - The Alternative Investment Management Association (AIMA) has welcomed the Financial Services Authority's (FSA) comments on the hedge fund industry in its annual Financial Risk Outlook paper.
The FSA acknowledged the growing importance and benefits of hedge funds to financial markets and observed that the overall risk of serious market disruption and confidence erosion from hedge funds remains low.
However the paper concluded the hedge funds and other alternative investments found the operating environment more difficult in 2005 because of reduced market volatility. It noted that some strategies have also become less profitable due to large fund inflows.
AIMA said it accepted the issues raised, specifically valuation practices and asset pricing and has commenced the second phase of its work in this area, working closely with key industry bodies.
Florence Lombard, executive director of AIMA said: “The global hedge fund industry is constantly seeking to review and improve its practices. AIMA’s stated objective is to have a working dialogue and work closely with the FSA.”
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