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New Managers March 2014

SCOTSTONE COLUMN: Remuneration and the EU

 

Ian Hamilton

This column is authored by Ian Hamilton, who is the founder of IDS Group. IDS provides fund administration services in Africa and Europe through Malta. He is also the founder of Scotstone Investments, a company that has fund structures and services for global emerging new managers.

EU proposed rules on hedge manager's remuneration: Let the choice remain with the investor

"To pay or not to pay? That is the question"

Keeping with the Hamlet theme I am playing Yorik, the Court Jester in this column. The court jester was actually a serious role, often putting topics into perspective through jest and acting as a mirror to the king.

The kings at the moment are the European legislators, bent on bringing hedge fund managers under control through regulations such as AIFMD and now also through attacking remuneration. The unruly nobles who they think earn too much.

We have seen how little the politicians really understand about the hedge fund industry. We saw how the politicians tried to lay the blame of 2008 on hedge funds when the real issue were the banks which had been allowed to grow too big and powerful. The attacks on hedge funds went quiet after the collapse of many banks.

What regulators and politicians do not understand is that there is usually a big fundamental difference between traditional asset management and hedge fund asset management. Traditional asset managers are "asset gathers" and make money through gathering large amounts of assets and earning management fees on these assets regardless of performance.

Hedge Fund Managers are not asset gatherers but "performance chasers". They seek Alpha and no......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.
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