Hedge fund managers oversee $1.9 trillion in assets, but no one knows what they invest in or even what those assets are actually worth. That's because hedge funds are not regulated and consequently aren't required to make the same detailed financial disclosures that are required of publicly traded companies. This mystery product comes with a Rolex price-tag. Hedge fund managers generally keep 2% of invested assets and 20% of the profits, known as the "two and twenty rule."
The combination of potentially huge financial rewards and lack of transparency may foster ethical lapses, Thomas Donaldson, Wharton professor of legal studies and business ethics, said during a recent talk on hedge fund ethics. "Remember, some of these are hard-to-value assets, like collateralized debt obligations and credit-default swaps. When you're growing mushrooms in the dark, you might be tempted to paint a rosier picture..."
For the week that ended on November 7, hedge fund selling contributed heavily to steep stock market declines. Several prominent hedge funds are facing the double-whammy of demands for cash from both investors and lenders. Those demands force selling of stocks but also are keeping about $400 billion of cash on the sidelines as fund managers brace for the worst...
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Knowledge@Wharton
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6 - 8 May, 2009 London, UK |
Equity derivatives have been growing in importance over a number of years and are now well established in the financial marketplace. This seminar is for anyone who wishes to be able to price, use, manage or evaluate equity derivatives and exotic equity options. More than half of the seminar is devoted to practical small group sessions.