FSA Survey Shows Hedge Funds are Only ‘Limited’ Risk

August 22, 2012 James Heinsman Quote of the Day

The Financial Services Authority recently published a survey revealing that hedge funds are not as detrimental to the banking and wider financial systems as some may think.

The survey of funds managing assets of around $380 billion discovered that hedge funds pose a ‘limited’ risk to financial stability. The common negative outlook on these funds results from their use of borrowed money, which is put towards enhancing returns.

“Funds continue to report a strong ability to manage the liquidity of their assets and liabilities in aggregate,” the report reads.

The FSA was careful to explain that the survey is based on the individual analysis of numerous members.

“Risks to hedge funds remain from a sudden withdrawal of funding, resulting in forced asset sales. This is of particular concern if funds have significant footprints,” the FSA said.

 

Banking Systems, Financial Risks, Financial Services Authority, FSA, Hedge Funds,

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