By Nick Evans
Mon dieu - these political types have some balls, don't
The nonchalant news this month that the irrepressibly
self-assured former IMF managing director Dominique
Strauss-Kahn is hawking around a global macro fund that aims to
raise a mere $2 billion from investors takes some beating as a
display of blasé insouciance about the realities of the
hedge fund world these days.
Of course DSK's pedigree speaks for itself, not least as a
big swinger in the highest echelons of the politico-economic
policy-making world - and as someone who has forged an
impressively wide and varied array of connections with people
from all around the world.
But his background as an economics professor, a corporate
lawyer and a government minister hardly qualifies him as the
most obvious person to be a macro manager - still less the fact
that he was supervising the global economy, while he was not
otherwise engaged, from his supranational berth in Washington
in 2008 when the roof fell in.
Furthermore it appears that the research head for his firm's
new macro fund will be none other than his daughter, Vanessa -
who has been following in her old man's footsteps by practising
as a professor of economics, rather than actually getting
involved in those pesky markets that never behave the way that
academic economists know that they should.
Although the IMF might have had a better crisis than some -
and nobody could blame the former French presidential-hopeful
for seeking new things to do with his time, given that his
preferred career path was so comprehensively blown off course -
someone with DSK's credentials and reputation is not
necessarily what the hedge fund industry needs right now.
At a time when seriously talented and committed money
managers are working flat out to try and make a success of
running hedge fund businesses in an environment that remains
distinctly challenging - thanks in no small part to the
heavy-handed regulatory response that was set in train by the
likes of the G20 and the IMF, while DSK still had his seat at
the top table - Strauss-Kahn's entry into the game looks to be
rather opportunistic at best and somewhat cynical at worst.
But good luck to him and his entourage anyway. Perhaps the
Strauss-Kahn family and their associates will turn out to have
a gift for managing other people's money in macro - an activity
that has been proving rather difficult and demanding of late,
even for those who have been doing it with skill and success
for years - and a new legend will be born.
Or perhaps not. Who knows? This is an unpredictable and
random business at the best of times - which are not concepts
that ivory-tower academics are best equipped at dealing with -
and there is little evidence thus far that egghead economists
make for good macro managers.
Putting aside DSK's heady ambitions, though, there is no
doubt that the hedge fund industry - more so in Europe than
anywhere else - is crying out for a new generation of managers.
And there is also no doubt that the time is now ripe for
talented and proven professionals to go it alone.
The long, dark chill of the post-crash winter in European
hedge fund land is finally over. Spring has returned and Europe
is now back on the map of global investors in a way that has
not been seen since the pre-crisis days.
Money is coming in fast. Many of the biggest brand-name
funds are closed or closing. Capacity constraints are forcing
investors to look beyond the usual suspects for new places to
put their money - with mid-size funds and new launches looking
well set to benefit as allocators become increasingly confident
and adventurous in allocating their money and seeking out new
And it is clear that investors are convinced that their
money is better off in hedge funds than almost anywhere else -
despite the misguided and counter-productive efforts of
politicians and regulators to paint the hedge fund industry as
an extension of the banking sector, unfairly and unwisely
tarring asset managers with the same brush as those brilliant
bankers who drove the bus into the wall.
So the message to a potential new generation of managers
sitting in established firms and still hesitating over whether
or not to venture out on their own should be clear. It's a
difficult thing to do. But it can be done. And the opportunity
to do it is better now than at any time in recent years.
The time for delay is over. The hedge fund industry needs
new blood. Investors are ready for you. And now is the moment
to strike. So dust off those business plans, grab the bull by
the horns, gird your loins and give it a go.
Where Strauss-Kahn goes, let's hope that others - perhaps
with less chutzpah than the 'chaud lapin', but possibly with
more savvy in terms of managing investment affairs - will