Hedge Fund Trading Strategies Although considered by some as one of the reasons that increased the depth of the global financial crisis, however, hedge funds have become a feature of the future economy, according to the growth achieved over the past year by 15%, as confirmed by Hedge Fund index in December 2009, as It became the Gulf region occupies an important place in the global hedge fund industry.
Defines hedge funds as investment vehicles includes a number of investors are often more than about five hundred investor, and the philosophy of those funds to guarantee a Platinum Profits Review to investors regardless of what may happen in the world market fluctuations, was so named because they adopt an investment strategy that aims or prudent to hedge the risk of exposure for any losses.
As a result of the growth of hedge funds accept many of Gulf investors to invest in them after that the total funds invested in which arrived late last year over a trillion dollars, but it is nevertheless still received marginalized from the other and fear of others because of what was raised around it from criticism, as well as all it described as investment funds set up to be the preserve of the wealthy alone.
Economist Mohammed Omran member of the Saudi Economic Association in his speech for the Hedge Fund Trader X and believes that there is no economic importance in hedge funds because they rely primarily on speculation through “Long / Short” strategies based on speculation over intraday basis using financial derivatives based on speculation price differences and other speculative strategies that do not offer any added value to the economy and business value, stressing that the activity of hedge funds is still unstructured and non-standardized and adds: “That is why we find that the hedge fund operates through areas” Off-shore “such as the islands of Cayman Islands English Channel, Luxembourg and the other to escape from the control of the financial markets bodies and avoid paying taxes to governments.
But economist Dr. Bandar Abdul Karim violates the urbanization of opinion as it is believed that there are several advantages of hedge funds uphold its importance is that these funds have a number of common characteristics that distinguish them from co-investment in general funds, as it is more flexible in terms of investment strategies used, as it works in the regulatory framework more liberal allowing investment funds to be more dynamic with the same investment strategies, and the use of derivatives, as well as it can be a high level of financial leverage.
Abdul Karim pointed out that over the past ten years, hedge funds in the market has achieved steady growth, with its own assets amounted to nearly $ 135 billion in 1996, while the number of those funds in 2009 amounted to nearly 2,000 funds, and by the end of last year, the hedge fund assets under management of nearly 2,024 billion dollars.
Abdul Karim pointed out that criticism of hedge funds often stems from the fact that the funds invested by the Platinum Profits Review increase in value incorrectly, explaining that those criticisms more common in recent years, the period is the manipulation of asset prices, and contribute to financial bubbles.
And he went, Dr. Abdul Karim to the global financial crisis have had a positive impact on the work of hedge funds as shown by the weaknesses inherent in the structures, strategies and processes in such hedge funds, as well as it revealed a lack of capacity for risk management during the recent financial crisis as Hot many hedge funds in a spiral of decline in asset prices, was also facilitate the financing of the margin of the repercussions of the liquidity crisis, as well as the worsening credit crisis that hit the global financial system was paralyzed.
Abdul Karim confirms that the situation has changed a lot after the financial crisis as hedge funds have become more disciplined and organized, and make sure
VirtNext Investments fund managers that they have to face the future major challenges such as increasing regulatory scrutiny by investors, explaining that under such an environment, the fund managers are forced to strengthen controls on the evaluation and strengthening the infrastructure to support risk management.
Mohammed Omran believes that what makes many people accept the acquisition of hedge funds is to distinguish it from other investment instruments (such as stocks and bonds) as having a weak link or even negative with these tools, it is also like any investment activity, are exposed to the risks vary from one fund to another, according to the goals and strategies used, but the main problem out – as is thought – lies in the lack of transparency and disclosure by the managers of these funds was found during the recent global financial crisis and the presence of manipulation customer accounts led to huge losses to subscribers which lose confidence in these funds and raise the voice prompts organized and control around the world .
He denies Urbanism continuity of the monopoly of the wealthy hedge fund if its growth in the future, saying that it happened at the start of its launch, where were these funds are already geared to the wealthy, but he was the passage of time, particularly with the beginning of the current millennium has increased the number of these funds, as intensified competition among them leading to limit reduction minimum “of about 5 to 10 thousand dollars,” until it became appropriate for small investors.
On the future of hedge funds in the Gulf region after the increasing demand from Gulf investors last year, said Dr. Bandar Abdul Karim that increases the growth of these funds in the Gulf Cooperation Council (GCC) that investors are attracted typically different investment returns on a variety of alternative strategies compared with markets traditional, regional, and motivated by the success of these funds managers funds set up offices in Dubai and Bahrain to provide hedge fund products for more to GCC investors.
Abdul Karim pointed out that the regional strong growth and continued liberalization of the markets of the Gulf Cooperation Council (GCC) to attract a wide range of traditional hedge fund managers in the Gulf, pointing out that Dubai is one of the first countries that have adopted hedge funds through rationing their work, pointing out that Dubai International Financial Centre provides platform for major financial institutions and providers of professional services for doing business in the Gulf region, including hedge funds management.
Abdul Karim believes that asset managers in the Gulf region will seek in the future to develop strategies that would make it acceptable hedge funds legally, noting that Islamic finance is constantly evolving, and that hedge funds growth could enter into competition with traditional markets department within the Islamic framework to ensure stay.
However, Dr. Abdul Karim believes that perception adaptation of hedge funds from it funds use derivatives, short-selling, and trading techniques margin to achieve the investment objectives feels Islamic scholars concerned about any of the traditional forms used for derivatives and short selling, which prevents accordance with the principles of Sharia basic Islamic people from the sale of the have-nots.
Dr. Abdul Karim says that because of the imposed law of restrictions on some types of investment, it is the hedge into account several things funds the most important must avoid transactions in goods and services that are not ethical, and earn revenues from securities (usury or interest); excessive ambiguity in contracts , as well as trade in debt contracts, and forward foreign exchange contracts and public forms of options, derivatives and similar so that its mechanism compatible with the provisions of Islamic law, pointing out that the success and sustainability of any Fund is compatible with the provisions of Islamic law in the future will depend on the ability of VirtNext Ltd hedge funds to combine among the techniques and strategies used on the one hand, and between the legitimate requirements of the other.