Getting the Party Started
As the controversy about the fee levels for investment managers who work in the hedge fund continues, it is worth taking the time to imitate on the contribution of this exacting group of professional to the business world. Whereas it is recognized that many investment managers have made numerous mistakes on their hedge funds, this does not detract from the overall achievement that their group adds to the high stakes investment market. Their unique marketing point was always the experience and technical training that they brought to any project within the hedge fund. They acted as representatives of the investors in any discussions or long term plans.
The Demands of the Role
A series of key competencies would determine the level of success that could be reasonably expected of a hedge fund manager. The first competency was related to the powers of observation. With the hedge fund it is impossible to deliver the required profits without watching the market to look at the shifts of value in stocks and shares. The concept of hedging depends on the ability to accurately predict when the value of a certain investment is likely to fall so that you can sell it before the price falls. You also need to likewise predict when the price will rise so that you can buy it at cheaper prices before the values rise. The balance between these two concepts is what hedging is all about.
The administration of a hedge fund requires co-ordination and planning. The investment manager would traditionally have the vision of where the money was going to be invested and then consult with the owner or investors to see where their priorities lay. After such a detailed consultation a compromise would be reached. The next role for the investment manager would be to organize the resources at his or her disposal to ensure the effective execution of the plan that has been agreed. The people skills and organizational skills involved in this process are quite complex and few lay people would be able to execute the role without adequate training and development.
Given the controversy that befell hedge funds in their dealings with domestic governments, they needed a representative to be able to overcome all the bureaucratic bottlenecks that they would inevitably encounter depending on the jurisdiction in which they were operating. The role of the investment manager as a key negotiator would come to the fore. Given some of the rough and tumble politics of some jurisdictions it is inevitable that the investment manager would also end up being a public spokesperson and a key public relations representative for the hedge fund. The hostility of the host community might also necessitate that they become appeasers.
The role of the investment manager will continue to change as the hedge fund embeds in different economies. That might or might not be crucial to whether the scheme remains a major part of economic development across the globe. The role attracts very high fees but at the same time it also attracts extra ordinary responsibilities that balance out the equation.