Do Hedge Funds Care? Yes, They Really Do!

Like most entrepreneurs, it is often difficult to keep the work/life balance straight. Inevitably, there is a blurred line between work hours and "off" hours. Frequently, I am asked to attend exciting and interesting evening events. The invitations are hard to resist, though they can make for some very long days.

On dark and stormy night last week, I was already running late for one of the most anticipated hedge fund industry events of the year. I quickly collected my things and dashed out the door. A rainy night in New York City makes securing a cab difficult. Weaving through umbrellas and running through puddles, I managed to dive into a just-vacated taxi and blurt out my destination. "Take me to the Hedge Funds Care Gala at Cipriani's on 42nd, please."

The taxi driver quipped, "Hedge Funds Care? Isn't that an oxymoron?"

As a marketer in financial services, it's my mission to help my clients (including hedge funds) position their firms, relying on social/digital media and targeted public relations to create more positive and transparent messaging. Hearing this sentiment expressed by my cab driver reinforced just how pervasive some of these myths about the hedge fund industry had become. I found myself wondering about how and what it might take to change some of the common misconceptions surrounding the hedge fund community.

Attending the event as a journalist, I was immediately impressed by how many of my colleagues were in attendance. Dozens of media outlets spanning broadcast, print and digital were scattered throughout the event, speaking with organizers, founders and sponsors about the positive impact the hedge fund industry has made in the prevention and treatment of child abuse.

A group of reporters gathered around newly elected HFC President and Goldman Sachs Partner Dean Backer, who noted, the 15th Annual Gala is one of dozens of regional events that unite the hedge fund community in supporting this cause. "The hedge fund sector truly is a global community drawing on the skills, resources and talents of professionals committed to protecting society's most vulnerable."

Since its inception in 1998, HFC has awarded over 930 grants totaling more than $33 million. But Mr. Backer's remarks struck a chord for another reason - they spoke directly to another mistaken notion about the industry. The hedge fund sector is an influential and positive community itself. The impact to local economies and businesses offered through jobs, affiliations and philanthropic activities is too often overlooked.

"Over the past 15 years, the annual HFC New York Gala has grown exponentially. In addition to managers the organization is supported by the investment banking community, dozens of service providers, associates and friends of the industry," Mr. Backer added.

While Wall St and the hedge fund industry, has had more than its share of high-profile failures over the past several decades, the vast majority of industry professionals are hard-working, entrepreneurial individuals with long-term objectives that align with those of their investors. It was clear that HFC has succeeded in promoting deeper relationships with the media and others in the broader financial services community while also rallying support for a great cause. HFC raised over $2 million that evening. I thought to myself, "Hedge funds do care, and more people should know about it."

And really, who better than professional money managers to raise and invest funds while applying the skills that make them successful in their day jobs to philanthropic initiatives? The hedge fund industry is populated by professional money managers, who better to raise money, invest it in the proper philanthropic vehicles for the maximum return and in a sustainable model.

As Hedge Funds Care (HFC) Board Members mingled with guests, thanking them for their support and highlighting the good work they've done together, I had a chance to speak with Donald MacNeal, HFC Board Member and Head of the Financial Services Group at Ernst & Young. He was happy to discuss some of the many ways that the organization gets directly involved in the cause. "Child abuse is a hidden issue and has to be addressed through education and treatment delivered at a community level while increasing awareness globally. Few communities are adept at deploying resources in support of a clear objective and drawing attention to a good cause than the hedge fund sector has proved to be," he said.

And the sector is also increasingly proficient at raising awareness of its other positive attributes. In the face of the crisis, the industry rebounded by continuing to attract asset flows from pension funds seeking to benefit from a track record of exceptional returns spanning decades. As more Americans gain access to alternative products, legislators and regulators will continue to keep a watchful eye. In the process, there is hope that the industry will dispel one final fallacy -- that hedge funds are unregulated.

Over the din of the "silent auction," Lifetime Achievement Award and hedge fund industry luminary Paul Roth of Schulte Roth & Zabel offered his view on a sector that is in "great shape" after going through regulations and overcoming high-water marks. He forecast a growth phase where some managers will diversify to offer a full line of product, while others will revert to niche strategies. "Hedge funds will brand themselves to become part of the mainstream asset management world," he suggested.

With the JOBS Act about to be enacted, the hedge fund industry and individual managers themselves will have even greater opportunities to provide transparency and insight into their investment strategies, management, processes, and perspectives. It's clear that HFC and events like this one have played an important role moving the industry forward. Perhaps the New York City taxi drivers should consider a similar strategy...