Hedge funds said to make a “social contribution”

Mar 4th, 2009 | Filed under: Editor's Pick, Today's Post | By:
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Critics of hedge fund compensation often argue that hedge fund managers – and by extension, asset managers in general – do not provide a “social good”.  Highly compensated traditional entrepreneurs, they say, make life better for people instead of just shuffling the chairs.

In fairness, it’s not like Obama is encouraging American teens to give back to society by volunteering at their local hedge fund.  No one is encouraging people to “make a difference” by launching a hedge fund and there is no “Hedge Corps” (although there are now many examples of a hedge corpse).  But Edhec’s Arjuna Sittampalam argued earlier this week that hedge funds actually do contribute a social good.  Wrote Sittampalam:

“Amidst all the criticism, there are many aspects in which hedge funds deserve praise. Their strongly pioneering role in venturing into new investment areas, and in the process bringing them to the attention of other investors, is one major aspect. In other ways too, they make a strong social contribution…” (our emphasis)

By “social contribution”, he’s not just talking about hosting society parties in Greenwich either.  Sittampalam is talking about things like Reinsurance, Pulp derivatives, Carbon dioxide emissions credits, Global real estate, including derivatives, Weather derivatives, Credit cards, Higher-risk lending, Socially responsible investments, Film-making and film finance, Catastrophe bonds, Freight derivatives and shipping, Lawsuit funding, Directors’ dealings, Song copyrights and Trade finance.

AIMA CEO Andrew Baker would probably concur with this assessment that hedge funds do provide social good.  As HedgeWeek recently reported: More…

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