The Redeeming Social Value of Hedge Funds

The term hedge fund is synonymous with sinister and secretive in the minds of many. However, this much maligned industry controls in excess of $3 trillion as represented by its collective assets under management and it continues to grow this impressive figure year-over-year.

Hedge funds have earned this unenviable public ire through no fault of their own. For decades, laws, regulations and regulators, have turned the otherwise benign hedge fund industry into the “Skull and Bones Society” of the financial sector. Like Yale’s “Skull and Bones Society”, there is factually nothing maleficent about the hedge fund industry. In truth, the worst thing to be said about the hedge fund industry is they have the most abysmal public relations apparatus on the planet. Hedge funds are the victims of the unintended consequences of the laws which regulate them.

A Force for Good

Millions of ordinary people around the globe benefit from hedge funds directly or indirectly. Pension funds, whose assets represent the hopes, dreams and futures of countless present and future retirees, routinely invest in hedge funds. Hedge funds preserve and grow this wealth, which subsequently ensures a comfortable retirement for untold millions.

Hedge funds invest in the stock of thousands of publicly traded companies which, in turn, provide employment opportunities, conduct research and development, and provide goods and services benefitting consumers and businesses the world over. Hedge funds also invest in business startups, real estate, government bonds, precious metals, currency and employ a host of other innovative investment strategies. In short, hedge funds are a crucial lubricant for the economic engine.

Hedge Fund Philanthropy

As with any industry, group or organization, hedge funds have a few bad apples and the media never passes up the opportunity for a sensational headline only reinforcing public perception that hedge funds are a nasty business conducted in secrecy by unsavory characters whose only motivation is greed.

Receiving significantly less publicity is the considerable charitable work of the global hedge fund industry. Examples include the Robin Hood Foundation, Children’s Investment Fund, Hedge Funds Care and a host of others. Additionally, individual hedge fund managers and founders donate millions to established charities. A recent example is William Ackman’s $10 million donation to TheDream.US, which funds education for immigrants defined by the Dream Act. Not surprisingly, the media is more focused on hedge fund earnings and the occasional bad apple than it is on charitable donations.

What About Jobs?

The important take-away is the hedge fund industry not only employs people directly but also provides employment opportunities to thousands  as a direct result of its day to day operations. A job in the hedge fund industry is a worthy goal. At some point, the industry should wake up and spend a few dollars on a public relations firm. The hedge fund industry deserves some high profile recognition for the millions donated to charitable causes. It is time the public was made aware that Warren Buffet and Bill Gates are not the only philanthropic souls in the financial community. Now there’s a job for someone!

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