Commissioners clarify stance on hedge funds

14 October 2009

byPat Ashworth

THE Church Commissioners des­cribed as “misleading” on Monday a Financial Times (FT) report that they were defending hedge funds in their response to a draft European Union (EU) directive on the regula­tion and supervision of these and private equity funds.

The Commissioners and five charitable foundations — Paul Hamlyn, Nuffield, Esmée Fairbairn, the Wellcome Trust, and the Henry Smith Charity — submitted a joint letter to the House of Lords EU Committee in September, high­light-ing concerns about the potential impact of the directive.

They described their combined investment portfolios as worth approximately £19.5 billion, and expressed concern that the directive would “significantly restrict our ability to generate funds to pursue our charitable missions and thus reduce our impact for public good”.

The draft directive requires all funds under management to have a depository that is an EU-authorised credit institution. The six argue that this will restrict access to non-EU funds and fund-managers, and will “introduce significant barriers to owning international assets, and will particularly limit our access to emerging markets”.

The lack of clarity on leverage limits “makes it likely that certain investments strategies will not be made available to European in­vestors.”

The FT took the Church of England to task for, it said, a defence of hedge funds “barely a fortnight after [its] senior cleric urged London bankers to repent for their role in the financial crisis”.

A Church of England spokesman responded: “The Church Commis­sioners have a diversified investment portfolio, and welcome the aim to improve regulations and safeguard investors. However they have con­cerns that “relate particularly to their ability to make investments in private equity, and their represen­tation does not amount to a blanket endorsement of the alternative in­vestment industry in general. The commissioners do not invest with managers who short sell individual stocks.”

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