CHICAGO (HedgeWorld.com)–The fox has been scouting the vineyards otherwise known as the popular press, and all she has to report is, "Boy, are these grapes sour!"
First it was Forbes, which I quit reading altogether. After all, they don't even have good pictures. Now, it's Barron's, which has gone so far over the edge on hedge funds that I'm embarrassed to be seen reading it. I suppose I could always say, "I only read it for the cartoons." This should work at least until The New Yorker gets over its post-9/11 slump and the National Review gets better personals ads again.
The disillusionment started with Alan Abelson's Dec. 17 column, in which he compared an unnamed group of hedge fund managers sitting around "shooting the bull" to the infamous tape of Osama bin Laden and "his buddies chortling over the destruction of the World Trade Center." As a many-time winner of the Ms. Heart of Darkness championship, my sense of humor is as black as anyone's, but this comparison really was in the worst possible taste. As a fellow journalist, I was prepared to make excuses and forgive Abelson his temporary lapse in dignity and humor. After all, I figure most of us have watched way too much television since Sept. 11, and that's a good enough reason for clouded judgment.
"Everyman" and His Hedge Fund
And then the Jan. 7 issue of Barron's landed on my porch, and the cover story hit me right between the eyes. It seems that hedge funds not only fly high, are secretive and risky, but now they're latching on to the mutual fund industry like so many parasites. The heart of the problem seems to be that the hedge fund industry is infecting the mutual fund industry and they're developing new products. How dare they? And in a free market yet!
For the last couple of weeks, I have been carrying around and rereading Erin E. Arvedlund's Jan. 7 article, "Hedging their Bets: Fund Groups Offer Vehicles Once Meant Only For the Rich; Are There Dangers?" I guess I'm waiting for it to sing out a "Te Deum" and provide an accompanying revelation that will show me what's so wrong with these new vehicles. So far, I've had no epiphanies.
"Once a secretive investment playground open only to the super-rich, hedge funds can now be had by the semi-affluent for minimums as low as $25,000," said the article. The author seems to be laboring under the illusion that if the unholy alliance of mutual fund companies and hedge fund managers continues, you may soon "walk past your corner discount brokerage office and see the signs in the window offering hedge funds for Everyman."
Arvedlund seems to have morality plays mixed up with fairytales, or even outright untruths. "Everyman" can't have a hedge fund–even if he does have a spare $25,000 begging to be placed in one. As the article itself states, while some of the new vehicles may have lower minimums–$25,000 to $50,000–a minimum net worth of $1 million to $1.5 million is still required. Doesn't sound like "Everyman" to me, but I haven't seen my neighbor's checkbook lately, so maybe…
